The Great Abiomed Comeback Begins (NASDAQ: ABMD)

Abiomed (NASDAQ: ABMD) was already having a tough year before the coronavirus hit equity markets like a missile in February. Shares were already down close to 60% from their 2018 highs by the end of January, just about when equities started to turn south. By the end of March, they were down a full 40% from January and close to 80% from 2018 as investors continued to shed shares of the $35 billion med device company.

However, like most other stocks in the month of April, they saw a huge bounce as the risk-off sentiment quickly turned to risk-on. Coming into yesterday’s fiscal Q4 earnings release, they were up 40% off the lows of March. For any investors on Wall Street that were thinking about using this bounce to get the name out of their portfolio, they might be considering giving it a second chance in the face of the fresh numbers and news.

Even though the company was unable to offer forward guidance for the coming year in the face of COVID-19 uncertainty, the reported numbers from last quarter did paint a much more stable picture than many were expecting. Non-GAAP EPS managed a small beat on analyst expectations while revenue had a small miss. Looking at the bigger picture though, revenue for the full year 2020 was up almost 10% on 2019 and operating income was up 11%.

Impella Keeps The Pump Going

Like many med device and pharma companies, the bulk of their revenue stems from only one or two banner products. For Abiomed, it’s their Impella heart pump. Worldwide revenue in Q4 for this was down about 1% compared to the same quarter last year which is very promising. Patient utilization of the device fell off a cliff in March as the coronavirus pandemic shut down all non-essential businesses and excursions and medical staff turned their attention to treating coronavirus patients. But looking at full-year worldwide revenue from Impella, it was up 9% so we know that growth and momentum here is going in the right direction.

Taking this into account, the company’s CEO, Michael Minouge, said with the release; “everyone at Abiomed would like to express our thanks to the frontline healthcare workers and medical community for all they are doing to support patients and provide much needed medical care. Also, I appreciate our employees who continue to directly support patients 24x7 at hospitals and our headquarters manufacturing, service and shipping teams who continue to come to work to make and ship our Impella heart pumps. We will endure the challenges and come out stronger as Abiomed 2.0 because of the investments in innovation to have products that are smaller, smarter, and more connected in the cloud with AI algorithms for heart recovery.”

Breethe Acquisition

One of these investments that was announced the day before Thursday’s earnings release is Abiomed’s acquisition of Breethe, a “developer of a novel extracorporeal membrane oxygenation (ECMO) system that will complement and expand Abiomed’s product portfolio to more comprehensively serve the needs of patients whose lungs can no longer provide sufficient oxygenation, including patients suffering from cardiogenic shock or respiratory failures such as due to ARDS, H1N1, SARS, or COVID-19.”

It’s a bit of a mouthful but basically means Abiomed now has a COVID-19 related product, that’s obviously in hot demand, to add to its revenue streams. Terms of the acquisition have not been disclosed yet but it’s clear that investors are starting to think that Abiomed’s beaten-down share price is no longer an accurate reflection of the company’s profit making abilities. Between news of the acquisition breaking and the earnings report that followed, shares had their best day in five years on Thursday and closed close to highs, up a full 13% on the day.

Shares are facing a tough downward trend but you can’t help but feel they’re as well prepared to do so as they have been in recent years. If Breethe can supplement the lost revenue from Impella and if the latter can bounce back hard as the coronavirus restrictions retreat, we could have a serious comeback story on our hands.