Abiomed Beats on Impella Boost - Analyst Blog

Cardiac assist devices maker Abiomed (ABMD) ended fiscal 2011 on a positive note as its results beat expectations in the fourth quarter. The company's adjusted (excluding one-time items other than stock-based compensation expenses) net loss per share of 4 cents was lower than the Zacks Consensus Estimate of a loss of 5 cents.

For the full year, adjusted net loss of 27 cents a share also beat the Zacks Consensus Estimate of a loss of 32 cents.

However, on a reported basis, the Massachusetts-based company incurred a loss of $1.8 million (or 5 cents a share) in the fourth quarter compared with a profit of roughly $1 million (or 3 cents a share) a year ago.

The prior-year quarter's results were boosted by gains on divestiture of the company's stake in ventricular assist devices maker World Heart Corp (WHRT). Moreover, the bottom line in the reported quarter was dragged down by higher sales and marketing costs.

For fiscal 2011, losses narrowed to $11.8 million (or 32 cents per share) from $19 million (or 52 cents a share) on the heels of healthy contributions from the company's popular Impella cardiac pumps.

Revenues & Margins

Revenues surged 24% year over year in the fourth quarter to $28.5 million, beating the Zacks Consensus Estimate of $28 million. The solid growth was fueled by higher sales of Impella systems (including Impella 2.5 and 5.0), which are used for the support of acute pre-shock patients or for prophylactic support of patients undergoing high-risk percutaneous coronary intervention.

For the fiscal year, sales shot up 18% to $101.2 million, also ahead of the Zacks Consensus Estimate of $100 million.

Global Impella revenues zoomed 34% year over year in the quarter to $22.4 million driven by strong traction of the device. Roughly 769 commercial patients in the U.S. were treated with these devices during the quarter, a 41% annualized growth. Cumulatively, around 5,000 patients have been reportedly treated with Impella since its launch in 2008.  

Impella reorders in the U.S. jumped 39% in the fourth quarter and 82% in fiscal 2011. Abiomed opened 28 new U.S. Impella 2.5 sites in the quarter compared with 21 new sites in the prior year.

Abiomed's legacy non-Impella business continues to shrink with revenues falling 2% to $6.1 million. Gross margin improved to 80% from 73% a year-ago on the back of solid sales. 

Balance Sheet and Cash Flow

Abiomed exited fiscal 2011, cash equivalents and short-term marketable securities of $60.3 million, up 3% year over year, with no debt. The company generated $1.6 million in cash from operation during the year.

Guidance

Moving ahead, the company envisions total revenue for fiscal 2012 in the range of $120 million to $125 million, a 20%-24% year over year increase. The current corresponding Zacks Consensus Estimate is $120 million. Impella sales are expected to increase roughly 20%-35%, which underscore strong demand trend for the device. However, non-Impella sales have been forecast to trim roughly 25% in 2012.

Abiomed is enjoying solid demand for its Impella products. Impella utilization continues to grow at a healthy pace as manifested by the increasing number of patients being treated with the device. Gains from Impella continue to offset losses from the company's hemorrhaging non-impella business. However, Abiomed still remains a loss-making entity and operates in an intensely competitive environment and faces significant reimbursement risk.

The company faces competition from organizations developing permanent heart assist products including Thoratec Corporation (THOR). Currently, we have a Neutral recommendation on Abiomed.