Abiomed Inc. (NASDAQ:ABMD)

Current Tax Expense

The current tax expense exhibits a general upward trend over the six-year period. Starting from US$13,424 thousand in 2017, it decreased to US$5,643 thousand in 2018 but then increased consistently year-over-year, reaching US$51,642 thousand in 2022. The most pronounced increase occurred between 2020 and 2022, indicating rising taxable income or changes in tax rates impacting current tax liabilities.

Deferred Tax Expense (Benefit)

The deferred tax expense shows greater volatility as compared to current tax expense. It started with a positive expense of US$25,803 thousand in 2017 and spiked to US$42,624 thousand in 2018. Notably, in 2019, a deferred tax benefit of US$7,745 thousand was recorded, indicating a reversal or reduction of deferred tax liabilities or recognition of deferred tax assets during that year. After 2019, deferred tax expense returned to positive figures with a peak of US$32,953 thousand in 2020, declining subsequently to US$2,413 thousand in 2022. This pattern suggests variability in timing differences between accounting income and taxable income or fluctuations in tax rate assumptions for deferred tax calculations.

Income Tax Provision

The total income tax provision, which sums current and deferred tax amounts, reflects the combined effect of these components. It increased from US$39,227 thousand in 2017 to a high of US$62,695 thousand in 2021, signifying a period of rising overall tax expense burden. However, in 2019 and 2022, the provision declined to US$4,344 thousand and US$54,055 thousand respectively, with the 2019 decline driven largely by the deferred tax benefit recorded that year. The provision's fluctuations indicate sensitivity to both current tax expenses and deferred tax adjustments, reflecting underlying earnings variability and tax rate or policy changes over the period analyzed.

Statutory Income Tax Rate

The statutory income tax rate shows a significant decline from 35% in 2017 to 21% in 2019, remaining stable at 21% through 2022.

Credits

Tax credits were negative throughout the period, fluctuating between -1.5% and -11.3%, indicating a consistent reduction in overall tax rate impact by credits, with notable increases in negative credits in 2020 and 2022.

Non-deductible Acquired In-Process Research and Development (IPR&D)

This component appears only in 2022 at 10.5%, suggesting a recent impact on the tax rate due to acquisition-related non-deductible expenses.

Rate Differential on Foreign Operations

The rate differential has steadily increased from near zero or unreported values in earlier years to 6.5% in 2022, indicating growing influence of foreign operations on the overall tax rate.

Excess Tax Benefits from Stock-Based Awards

Starting with a slight positive effect in 2017 (0.2%), this item turned highly negative in subsequent years, hitting a low of -24.1% in 2019, and remaining negative through 2022, indicating significant tax benefit reductions from stock-based compensation over the period.

State Taxes, Net

State taxes have generally decreased from 3.8% in 2017 to 0.1% in 2019 but increased again to 4.3% by 2022, reflecting variability in state tax impact on the effective rate.

Non-deductible Officers’ Compensation

This component emerged only from 2020 onward, rising gradually from 1.2% to 2% in 2022, suggesting higher executive compensation not deductible for tax purposes.

Permanent Differences

Permanent differences have declined over time from 3.3% in 2017 to below 1% in 2021 and 2022, indicating diminishing impact of non-temporary tax differences.

Change in Valuation Allowance

There was some fluctuation with minor positive and negative values, most notably a 5.3% increase in 2020, then stabilizing at around 0.3% in recent years, indicating variability in deferred tax asset valuation.

Foreign Taxes

Reported only up to 2019, foreign taxes slightly increased from 2% to 4.1%, before data became unavailable in subsequent years.

Other

This category shows small fluctuations, generally close to zero, with a slight negative impact in 2022 (-1%).

Effective Income Tax Rate, Before Effect of Tax Reform Act

The effective rate experiences dramatic variation, dropping sharply to 1.6% in 2019 from 43% in 2017, then rising steadily to 28.4% by 2022, showing significant influence of tax reform and other factors.

Effect of the Tax Reform Act on Net Deferred Tax Assets

This effect was only recorded in 2018 at 13%, reflecting the impact of tax law changes on deferred tax assets specifically in that year.

Effective Income Tax Rate

Following the statutory rate decreases and various adjustments, the overall effective tax rate declined from 43% in 2017 to a low of 1.6% in 2019, and then gradually increased to 28.4% by 2022. This trend suggests notable changes in tax planning, credits, and the impact of tax law reforms over the time period.

Net Operating Loss and Tax Credit Carryforwards

The values increased notably from 8,814 thousand USD in 2017 to a peak of 62,835 thousand USD in 2019, followed by a decline in 2020 and 2021, ending at 29,802 thousand USD in 2022. This suggests an initial buildup of carryforwards with a subsequent reduction in later years.

Stock-Based Compensation

Stock-based compensation fluctuated moderately over the period, starting at 16,560 thousand USD in 2017, decreasing to a low of 13,271 thousand USD in 2018, then stabilizing around 13,600 to 15,500 thousand USD through 2022. The overall trend shows a relatively stable expense pattern related to stock-based compensation.

Nondeductible Reserves and Accruals

The amount presented steady growth from 10,303 thousand USD in 2017 to 15,441 thousand USD in 2022, indicating increasing nondeductible provisions over the years.

Foreign Net Operating Loss Carryforwards

These carryforwards declined gradually from 13,634 thousand USD in 2017 to 6,778 thousand USD in 2020, with a slight recovery to 9,107 thousand USD by 2022, reflecting fluctuating foreign tax loss positions.

Deferred Revenue

Deferred revenue showed minor variations, with an overall increase from 4,308 thousand USD in 2017 to 5,830 thousand USD in 2022, signaling potential growth in unearned revenue obligations.

Other, Net

This category generally decreased from 3,443 thousand USD in 2017 to a low around 312 thousand USD in 2022, indicating reduced miscellaneous net assets or liabilities.

Deferred Tax Assets, Before Valuation Allowance

A significant increase occurred from 57,062 thousand USD in 2017 to a peak of 99,712 thousand USD in 2019, followed by a decline to 75,100 thousand USD in 2022. This pattern shows an accumulation followed by a reduction in deferred tax assets before valuation adjustments.

Valuation Allowance

The valuation allowance was negative and decreased from -2,468 thousand USD in 2017 to -19,405 thousand USD in 2022, with a notable jump in allowance magnitude occurring after 2019, suggesting increased reservations against deferred tax assets.

Deferred Tax Assets

Net deferred tax assets after valuation allowance climbed from 54,594 thousand USD in 2017 to a peak of 98,410 thousand USD in 2019, then declined sharply to 50,854 thousand USD in 2021 before slightly recovering to 55,695 thousand USD in 2022, indicating volatility driven by changes in valuation allowance and underlying assets.

Goodwill

The goodwill balance remained negative throughout, ranging from -9,444 thousand USD in 2017 to approximately -7,829 thousand USD in 2022, showing moderate fluctuations without clear trend direction.

In-Process Research and Development

This intangible asset was consistently negative and relatively stable until 2020, after which it dropped significantly to -12,496 thousand USD in 2021 and stayed near that level in 2022, reflecting increased impairment or valuation changes related to research and development projects in recent years.

Depreciation

Data on depreciation starts in 2018, showing a marked increase in expense from -1,011 thousand USD in 2018 to -14,197 thousand USD in 2022. This suggests accelerated depreciation or increased asset base over the period.

Basis Differences on Other Investments

Starting from no values in early years, this liability account grew from -7,146 thousand USD in 2019 to -11,442 thousand USD in 2022, indicating increasing differences in tax basis on investments that may affect deferred taxes.

Domestic Deferred Tax Liability on Foreign Net Operating Loss Carryforwards

This liability decreased significantly from -6,836 thousand USD in 2017 to around -393 thousand USD in 2022, demonstrating a decline in domestic tax obligations linked to foreign losses.

Deferred Tax Liabilities

Deferred tax liabilities increased substantially over the period from -20,654 thousand USD in 2017 to -45,924 thousand USD in 2022, reflecting growing obligations potentially associated with timing differences or other taxable temporary differences.

Net Deferred Tax Assets (Liabilities)

Net deferred tax assets after accounting for liabilities rose sharply from 33,940 thousand USD in 2017 to 76,680 thousand USD in 2019, but then experienced a significant decline to 9,771 thousand USD by 2022, showing considerable variability with a downward trend in the most recent years.

Deferred Tax Assets

The balance of deferred tax assets displayed a general upward trend from 2017 to 2019, increasing from $34,723 thousand to $77,502 thousand. This sharp growth over two years suggests an accumulation of deductible temporary differences or carryforwards. However, in the subsequent years, there was a notable decline, with figures dropping significantly to $43,336 thousand in 2020 and further to around $11,000 thousand in both 2021 and 2022. This decline could indicate realizations of deferred tax assets or reassessments due to changes in projected taxable income or tax planning strategies.

Deferred Tax Liabilities

Deferred tax liabilities remained relatively stable over the analyzed period, fluctuating within a narrow range between $781 thousand and $903 thousand. This stability suggests consistent timing differences that give rise to deferred tax liabilities without major changes in tax positions or asset bases that affect these liabilities.

Overall Observations

The significant changes observed in deferred tax assets compared to the relatively stable deferred tax liabilities indicate that the company's tax position underwent meaningful shifts primarily on the asset side. The steep rise and subsequent sharp decline in deferred tax assets might reflect variations in taxable income forecasts, tax law changes, or adjustments in internal tax accounting policies impacting recognition and measurement of deferred taxes.

The analysis of the financial data reveals distinct trends over the six-year period ending March 31, 2022, for the company's reported and deferred income tax adjusted figures.

Total Assets

Both reported and adjusted total assets demonstrate consistent growth throughout the period. Reported total assets increased from approximately $550 million in 2017 to $1.67 billion in 2022, reflecting a more than threefold increase. Adjusted total assets follow a similar trajectory, rising from about $516 million to $1.66 billion. The adjusted figures are consistently slightly lower than reported values, indicating the impact of deferred income tax adjustments that reduce asset valuations marginally.

Total Liabilities

Total liabilities also increased but at a more modest pace compared to assets. Reported liabilities rose from $98 million to $170 million, and adjusted liabilities trend closely, moving from $97.6 million to $169 million. The relatively stable relationship between reported and adjusted liabilities suggests deferred income tax adjustments have minor effects on the liabilities reported.

Stockholders’ Equity

Stockholders’ equity has shown strong growth, rising from $452 million reported in 2017 to $1.5 billion in 2022. Adjusted equity follows the same increasing pattern, albeit at slightly lower levels—from $418 million to $1.49 billion. The ongoing widening gap between total assets and liabilities has facilitated this equity growth, denoting healthy capital accumulation over the period.

Net Income

Net income, both reported and adjusted, displays more variability. Reported net income experienced significant growth from $52 million in 2017, peaking at $259 million in 2019, then declined to $136 million by 2022. Adjusted net income shows a similar trend with higher initial values and peaks, increasing from $78 million in 2017 to $255 million in 2021 before dropping to $139 million in 2022. This decline in net income in the most recent year merits attention, as it represents a downturn after several years of increasing profitability.

In summary, the company demonstrates robust asset and equity growth aligned with increasing liabilities at a moderate pace. The deferred income tax adjustments consistently lower the reported figures slightly but do not alter the overall growth trends. The net income volatility, especially the recent decline, suggests potential challenges impacting profitability which should be investigated further. Overall, the financial position appears strong with sustained capital and asset expansion over the analyzed timeframe.

Net Profit Margin Trends

The reported net profit margin demonstrated a general upward trend from 11.7% in 2017 to a peak of 33.66% in 2019, followed by a decline to 13.23% by 2022. Similarly, the adjusted net profit margin increased from 17.5% in 2017 to 32.66% in 2019, then decreased to 13.46% in 2022. This pattern indicates strong profitability growth peaking in 2019, with a subsequent reduction in profitability over the following years.

Total Asset Turnover

The reported total asset turnover ratio showed a steady decline from 0.81 in 2017 to 0.57 in 2021, with a slight recovery to 0.62 in 2022. The adjusted ratios exhibit a similar pattern, starting at 0.86 in 2017, decreasing to 0.57 in 2021, and improving marginally to 0.62 in 2022. This trend suggests diminishing efficiency in asset utilization over the majority of the period, with a minor improvement at the end.

Financial Leverage

Financial leverage ratios remained relatively stable throughout the period, with reported leverage slightly decreasing from 1.22 in 2017 to 1.11 in 2022. Adjusted leverage followed a closely aligned trajectory, decreasing from 1.23 to 1.11. This stability implies consistent use of debt relative to equity during these years without significant changes in capital structure risk.

Return on Equity (ROE)

Reported ROE increased substantially from 11.53% in 2017 to a high of 27.65% in 2019 before falling sharply to 9.08% by 2022. Adjusted ROE followed a similar pattern but maintained higher levels, rising to 29.21% in 2019 and declining to 9.3% in 2022. These results imply that shareholder returns were significantly stronger during the middle of the reviewed period but weakened notably in the last two years.

Return on Assets (ROA)

Reported ROA rose from 9.47% in 2017 to 24.57% in 2019, then decreased to 8.16% in 2022. The adjusted ROA started higher at 15.11%, peaked at 25.72% in 2019, and declined to 8.35% by 2022. This pattern mirrors the profitability and asset efficiency trends, reinforcing the observation of peak operational performance around 2019 followed by a downturn.

Overall Insights

The data reveals that the company experienced significant improvements in profitability, asset utilization, and shareholder returns from 2017 through 2019. After this peak period, all key performance indicators show a marked decline, particularly from 2020 onward. The financial leverage remained fairly constant, suggesting the performance shifts were more attributable to operational factors rather than changes in capital structure. Adjusted metrics generally present higher profitability and return figures compared to reported ones, highlighting the impact of income tax adjustments on reported financial results. The modest recovery observed in asset turnover ratios in 2022 may indicate early signs of operational stabilization.

The financial data exhibits notable fluctuations in net income and profit margins over the analyzed periods. The reported net income demonstrates a significant increase from 2017 through 2019, peaking in 2019 at 259,016 thousand US dollars. However, this growth trend reverses from 2020 onwards, with income declining to 136,505 thousand US dollars by 2022, indicating a substantial reduction in reported profitability.

Adjusted net income follows a somewhat similar trajectory, rising from 77,919 thousand US dollars in 2017 to a peak of 254,905 thousand US dollars in 2021. Notably, adjusted net income remains relatively stable around the 250,000 thousand US dollars mark between 2019 and 2021 before contracting sharply to 138,918 thousand US dollars in 2022. This pattern suggests that adjustments to reported figures mitigate some fluctuations, yet the downward trend in the most recent period remains pronounced.

Examining profitability ratios, the reported net profit margin illustrates a robust increase from 11.7% in 2017 to a high of 33.66% in 2019. Post-2019, the margin decreases markedly to 13.23% in 2022, reflecting diminished profitability relative to revenues. A similar pattern is observable in the adjusted net profit margin, which rises from 17.5% in 2017 to 32.66% in 2019 and stabilizes around 28% to 30% between 2020 and 2021. The margin then falls to 13.46% in 2022, aligning closely with the reported margin’s decline.

Overall, the data indicates a period of growth and improved profitability culminating in 2019, followed by a contraction phase through 2022. The alignment of reported and adjusted figures suggests that deferred income tax adjustments influence the reported outcomes but do not significantly alter the overarching trend. This pattern may merit attention to underlying factors contributing to declining profitability in the latter periods.

The financial data indicates a consistent growth in both reported and adjusted total assets over the six-year period ending March 31, 2022. Reported total assets increased from approximately $550 million in 2017 to over $1.67 billion in 2022. Similarly, adjusted total assets rose from around $516 million in 2017 to approximately $1.66 billion in 2022. This trend reflects significant asset accumulation and expansion over the timeframe analyzed.

In terms of asset utilization, the reported total asset turnover ratio demonstrated a gradual decline from 0.81 in 2017 to a low of 0.57 in 2021, before slightly improving to 0.62 in 2022. The adjusted total asset turnover ratio showed a similar pattern, decreasing from 0.86 in 2017 to 0.57 in 2021, then recovering marginally to 0.62 in 2022. These ratios suggest that the company generated less revenue per dollar of assets over time, reaching its lowest efficiency in 2021, with some improvement noted in the final year.

Asset Growth

Both reported and adjusted total assets increased consistently each year, indicating ongoing capital investment and asset base expansion.

Asset Turnover Ratios

The declining trend in both reported and adjusted total asset turnover ratios from 2017 to 2021 implies reduced efficiency in using assets to generate revenue. The partial recovery in 2022 may indicate operational improvements or more effective utilization of the expanded asset base.

Comparison of Reported vs. Adjusted Figures

Adjusted total assets are consistently lower than reported total assets, reflecting accounting adjustments related to income tax considerations. Despite these adjustments, the overall trends in asset size and turnover ratios remain aligned, suggesting that the adjustments do not materially alter the observed financial dynamics.

The financial data reveals a consistent upward trajectory in both total assets and stockholders’ equity over the analyzed period. Reported total assets increased from approximately $550 million in 2017 to about $1.67 billion in 2022, reflecting a near threefold growth. Adjusted total assets followed a similar pattern, rising from around $516 million to approximately $1.66 billion, indicating that deferred income tax adjustments slightly reduce the total asset base but maintain a consistent growth trend.

Similarly, stockholders’ equity demonstrated substantial growth. Reported equity expanded from $452 million in 2017 to $1.5 billion in 2022, while adjusted equity values, accounting for deferred taxes, rose from $418 million to nearly $1.5 billion during the same timeframe. The close alignment between reported and adjusted equity in later years suggests a diminishing impact of deferred tax adjustments on equity over time.

With respect to financial leverage, both reported and adjusted ratios show a gradual decline over the years, moving from about 1.22 and 1.23 respectively in 2017 to 1.11 in 2022. This trend indicates a slight reduction in reliance on debt or liabilities relative to equity and assets, contributing to potentially lower financial risk. The adjusted financial leverage remains slightly higher than the reported leverage each year, consistent with the adjustments made for deferred income taxes.

Overall, the company exhibits strong asset and equity growth, accompanied by a modest decrease in financial leverage. The adjustments for deferred income taxes slightly lower the asset and equity bases but do not materially alter the positive trends observed in the reported financial data. This suggests effective growth management with a progressively conservative financial structure over the reported period.

The financial data reveals notable trends in the reported and adjusted net income, stockholders’ equity, and return on equity (ROE) of the company over the six-year period ending March 31, 2022.

Net Income

Both reported and adjusted net income saw substantial growth from 2017 to 2019, with reported net income increasing from $52.1 million to $259.0 million, and adjusted net income rising from $77.9 million to $251.3 million. This indicates a strong improvement in profitability during this period. However, from 2019 onwards, net income exhibited more volatility. Reported net income declined to $203.0 million in 2020, briefly increased to $225.5 million in 2021, and then dropped significantly to $136.5 million in 2022. Adjusted net income followed a similar pattern but showed a slightly less pronounced peak in 2021 at $254.9 million before falling to $138.9 million in 2022. The divergence between reported and adjusted figures suggests that adjustments related to income taxes have a material impact on net income.

Stockholders’ Equity

Stockholders' equity experienced consistent growth throughout the entire period. Reported equity increased steadily from $452.1 million in 2017 to $1.50 billion in 2022, more than tripling over six years. Adjusted stockholders’ equity followed a similar trajectory, rising from $418.1 million to $1.49 billion. The convergence of reported and adjusted equity values in later years indicates diminishing differences related to tax adjustments or other factors incorporated in the adjustments.

Return on Equity (ROE)

ROE, both reported and adjusted, displayed an upward trend from 2017 through 2019, highlighting improving efficiency in generating profit from equity. Reported ROE climbed from 11.53% in 2017 to a peak of 27.65% in 2019, while adjusted ROE increased from 18.64% to 29.21% over the same period. Following the peak, ROE decreased notably, with reported ROE falling to 9.08% and adjusted ROE to 9.30% by 2022. This drop in ROE corresponds with the decline in net income in 2022 and suggests a reduced return on shareholders' investments relative to prior years despite the continued growth in equity base.

In summary, the period from 2017 to 2019 was characterized by strong growth in profitability and efficiency, as evidenced by rising net income and ROE. From 2020 onwards, earnings became more volatile and returned to levels closer to the early years, despite continued increases in equity, leading to diminished ROE. The divergence between reported and adjusted figures points to the significance of income tax effects and other adjustments in assessing the company’s financial performance over time.

The analysis of the financial data over the six-year period reveals several notable trends in reported and adjusted income, total assets, and return on assets (ROA) for the company.

Net Income

Reported net income demonstrates significant growth from 2017 to 2019, increasing from approximately $52.1 million to $259.0 million. However, there is a decline observed after 2019, with reported income dropping to about $136.5 million by 2022. Adjusted net income follows a similar upward trajectory initially, rising from $77.9 million in 2017 to a peak of around $254.9 million in 2021, before falling to $138.9 million in 2022. The adjusted figures consistently exceed reported net income, suggesting the impact of deferred income tax adjustments on profitability.

Total Assets

Reported total assets show steady growth across the entire period, expanding from $550.4 million in 2017 to $1.67 billion in 2022. Adjusted total assets also increase continuously, with a slightly lower base and ending figure, rising from $515.7 million to $1.66 billion. This consistent asset growth indicates ongoing investment and expansion activities by the company.

Return on Assets (ROA)

Reported ROA increased substantially from 9.47% in 2017 to a peak of 24.57% in 2019, marking a period of strong operational efficiency and profitability relative to asset base. Following this peak, ROA declined markedly to 8.16% by 2022. Adjusted ROA exhibits a similar pattern with a peak at 25.72% in 2019, followed by a decline to 8.35% in 2022. The narrower spread between reported and adjusted ROAs suggests that adjustments moderate the observed profitability but maintain the overall trend.

Overall, the company experienced robust growth in net income and ROA through 2019, supported by rising asset levels. Post-2019, a downward trend in profitability is evident despite continued asset growth, indicating challenges in maintaining returns on an expanding asset base. The adjustments for deferred income taxes consistently raise reported income and ROA figures, highlighting their material effect on financial performance metrics.