Insulet Q1 Earnings Top, 2024 Revenue View Raised

Insulet Corporation PODD reported GAAP earnings per share of 73 cents for first-quarter 2024, which significantly improved from the year-ago period's EPS of 34 cents. The figure also exceeded the Zacks Consensus Estimate by 87.2%.

First-quarter 2023 adjusted earnings per share were 23 cents.

Revenues

Revenues in the first quarter totaled $441.7 million, beating the Zacks Consensus Estimate by 4.3%. The top line jumped 23.3% year over year (up 22.8% at the constant exchange rate or CER). CER growth exceeded the company's guidance range of 17% to 20% projected growth from first-quarter 2023.

Q1 in Detail

Insulet's Total Omnipod revenues of $433 million reflected an increase of 21.1% year over year (up 20.5% at CER). International Omnipod revenues of $115.3 million rose 16.9% (up 14.8% at CER). U.S. Omnipod revenues grew 22.7% year over year to $317.7 million.

The Drug Delivery business revenues totaled $8.7 million compared with $0.5 million in the year-ago period.

Margins

Gross profit in the reported quarter was $306.8 million, up 27.6% from the prior-year quarter's levels. Gross margin of 69.5% expanded 230 basis points year over year.

Selling, general & administrative expenses rose 22.7% to $199.7 million.

Research and development expenses edged up 0.2% year over year to $50.2 million.

The operating profit in the quarter was $56.9 million, surging 105.4% from the year-ago quarter's operating profit of $27.7 million. Operating margin of 12.9% expanded 515 basis points year over year.

Cash Position

Insulet exited the first quarter of 2024 with cash and cash equivalents of $751.2 million, compared with $704.2 million at the end of 2023.

2024 Guidance

Insulet updated its full-year 2024 guidance and issued guidance for second-quarter 2024.

For 2024, the company expects revenue growth in the range of 14-18% (earlier guidance was 12-17% growth). The Zacks Consensus Estimate for total revenues is pegged at $1.97 billion, suggesting 15.9% growth from the 2023 reported number.

Insulet's total Omnipod revenue growth is expected to be in the range of 15-19% (13-18% guided previously). The company expects Drug Delivery revenues to decline in the range of 50-60% (unchanged).

For the second quarter of 2024, Insulet projects revenue growth of 15-18%. The Zacks Consensus Estimate for total revenues is pegged at $462.8 million, suggesting 16.7% growth from the second quarter of 2023.

Total Omnipod revenues are likely to grow 18-21%. Drug Delivery revenue decline is expected to be in the range of 70%-75% (approximately $4 million to $5 million).

Our Take

Insulet exited the first quarter of 2024 with better-than-expected earnings and revenues. The company's performance benefited from continued high demand for Omnipod 5 — both in the United States and globally. The company noted that in the first quarter, more than half of Insulet's total international new customer starts were Omnipod 5.

During the quarter, Insulet launched the U.S. limited market release of Omnipod 5 integrated with Dexcom's G7 sensor and European limited market releases of Omnipod 5 with "sensor of choice."

The expansion of both margins is encouraging.

However, the decline in the Drug Delivery guidance is discouraging. Further, the industrywide issue of supply chain disruptions and rising expenses continue to challenge business operations.

Zacks Rank and Key Picks

Insulet currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Medpace MEDP, ResMed RMD and Encompass Health Corporation EHC.

Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million increased 17.7% from last year's comparable figure.

Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry's 12.3%. The company's earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.

ResMed, sporting a Zacks Rank #1, reported first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.

RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared to the industry's 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.

Encompass Health, carrying a Zacks Rank #2 (Buy), reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.

EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry's 11.7% growth. The company's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.

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