Abiomed Falls, Sees Flat Fiscal Q1 Loss and Miss Estimates

Shares of Abiomed Inc. (ABMD) dipped roughly 4.0% after posting a loss of $1.7 million or 4 cents per share for the first quarter of fiscal 2015 that was flat compared with the year-ago quarter. With this, the company missed the Zacks Consensus Estimate of earnings of 2 cents per share for the quarter.

The loss is attributable to higher costs and expenses that more than offset the impact of increased revenues for the quarter.

Abiomed, Inc - Earnings Surprise | FindTheBest

Revenues

Revenues in the quarter rose 14.4% to $48.8 million, in line with the Zacks Consensus Estimate of $49 million. Globally, Impella revenues grew 16% to $45.0 million in the quarter with a 13% rise in the U.S. to $40.1 million. U.S. Impella patient usage went up 16% to $34.1 million in the quarter.

Abiomed revealed that an additional 24 hospitals purchased Impella 2.5 during the quarter, bringing the total number of customer sites to 883. However, revenues from new Impella 2.5 sites decreased $0.3 million year-over-year to $2.1 million in the quarter.

As part of Abiomed's continued Impella CP launch, an additional 62 hospitals purchased Impella CP during the quarter, bringing the total number of Impella CP U.S. sites to 451. Revenue from placing Impella CP fell $0.3 million to $2.9 million in the quarter.

At the end of the quarter, 50% of U.S. customers have the Impella CP and 38% of them have the Impella 5.0. Revenue from placing Impella 5.0 at 12 sites increased $0.3 million to $0.8 million in the quarter. Outside the U.S., Impella revenues shot up 55% to $5.1 million.

Service revenues in the quarter escalated 27% to $3.3 million. Revenues from the legacy product AB5000 fell $0.9 million to $0.4 million in the fiscal first quarter.

Expenses and Margins

Costs and expenses rose 14.5% to $50.3 million in the quarter, comprising $9.1 million of research and development expenses and $31.6 million of selling, general and administrative (SG&A) expenses. The majority of increase in SG&A was related to continuing investment in field personnel, training and customer support.

Gross margin in the quarter increased 60 basis points (bps) to 80.2% from 79.6% a year ago, mainly due to fewer placements of the AIC consoles, which totaled 166 this year compared to 191 in the previous fiscal year. At the end of the quarter, 84% of Impella sites have the AIC console.

Operating (loss) margin in the quarter dropped 10 bps to 3.0% from 3.1% in the first quarter of fiscal 2014.

Financial Position

Abiomed had cash and cash equivalents of $34.7 million as of Jun 30, 2014, up 66.1% from $20.9 million as of Mar 31, 2014. The company had no debt at the quarter-end.

Guidance

For fiscal 2015, Abiomed reiterated its revenues guidance between $205 and $212 million, up 12 to 15% over the prior fiscal year. The Zacks Consensus Estimate of $208 million lies within the guided range.

Operating margin is now expected in the range of 1 to 4%, down from the prior guidance of 5 to 7% for the year, mainly due to incorporating the acquisition of ECP.

Our Take

We are disappointed with lower earnings and higher expenses of Abiomed. We also look down on the trimmed operating margin guidance for the full fiscal year. Abiomed currently has a Zacks Rank #4 (Sell).

Some better-ranked medical instruments stocks include Accuray Incorporated (ARAY), Alphatec Holdings, Inc. (ATEC), and Heartware International Inc. (HTWR). All of them carry a Zacks Rank #1 (Strong Buy).

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