Abiomed Inc. (NASDAQ:ABMD)

The data reveals significant movements in the company's financial performance over the six-year period ending March 31, 2022. Key indicators such as net operating profit after taxes (NOPAT), invested capital, cost of capital, and economic profit provide insights into operational efficiency and value creation.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a strong upward trend from 2017 to 2019, increasing from approximately 79.9 million USD to 253.6 million USD, indicating substantial improvement in operational profitability. However, this growth moderates in 2020 and 2021, with slight fluctuations around a high level (239.7 million USD in 2020 and 260.0 million USD in 2021). Notably, there is a significant decline in 2022, where NOPAT drops to roughly 140.8 million USD, nearly half of the previous year's figure, signaling a considerable reduction in profitability.

Cost of Capital

The cost of capital remains remarkably stable throughout the period, fluctuating marginally around 18.2%. This constancy suggests that the company's risk profile and financing conditions have not materially changed and that shifts in economic profit and returns are unlikely due to changes in capital costs.

Invested Capital

Invested capital displays a consistent upward trend from 2017 through 2021, increasing from approximately 226.7 million USD to 737.9 million USD. This reflects ongoing investment and asset growth. In 2022, however, invested capital decreases to around 693.4 million USD, indicating a reversal in capital deployment or divestiture activities.

Economic Profit

Economic profit, illustrating value creation above the cost of capital, grows substantially from 38.6 million USD in 2017 to a peak of 162.9 million USD in 2019. Afterward, it declines year-over-year through 2021 (131.2 million USD in 2020 and 125.3 million USD in 2021), and sharply falls to approximately 14.3 million USD in 2022. This steep reduction in economic profit aligns with the decreased NOPAT and the slight reduction in invested capital, reflecting diminished value generation in the most recent year.

Overall, the data indicates robust growth in profitability and invested capital through 2019, followed by stabilization and eventual decline in key profitability measures in 2022. While the cost of capital remained unchanged, the sharp drop in economic profit and NOPAT in the final year suggests potential challenges in operational performance or market conditions leading to reduced economic value creation.

Net Income

The net income demonstrates an overall increasing trend from 2017 to 2021, starting at 52,116 thousand US dollars in 2017 and more than quadrupling to 225,525 thousand US dollars by 2021. However, in the latest period reported (2022), net income declined significantly to 136,505 thousand US dollars, representing a reduction of approximately 39.5% compared to 2021. This sharp decrease after several years of growth may indicate emerging operational challenges or external factors impacting profitability.

Net Operating Profit After Taxes (NOPAT)

NOPAT follows a similar upward pattern from 2017 to 2021, increasing from 79,888 thousand US dollars to a peak of 259,982 thousand US dollars in 2021. This progressive increase suggests improving operating efficiency and strong core profitability over this period. However, like net income, NOPAT experienced a noteworthy contraction in 2022, falling to 140,811 thousand US dollars, which constitutes a decrease of approximately 45.8% relative to 2021. The decrease in NOPAT correlates with the drop in net income, reinforcing the indication of decreased operational performance in the latest year.

Comparative Insights

Both profitability measures show consistent and substantial growth over the first five years reviewed, reflecting positive business momentum. The alignment in trends between net income and NOPAT suggests that the company’s profitability changes are primarily driven by operating activities rather than non-operating factors. The pronounced decline in 2022 in both metrics represents a notable deviation from prior periods, which warrants further investigation into causes such as market conditions, cost structure changes, or other external influences.

Income Tax Provision

The income tax provision fluctuates considerably over the period analyzed. It initially increased from 39,227 thousand US dollars in March 2017 to a peak of 48,267 thousand US dollars in March 2018. Subsequently, it sharply declined to 4,344 thousand US dollars in March 2019, indicating a significant reduction in tax liabilities or adjustments for that year. However, it rebounded markedly to 53,816 thousand US dollars in March 2020 and continued to rise to 62,695 thousand US dollars in March 2021 before decreasing again to 54,055 thousand US dollars in March 2022. This pattern suggests considerable variability likely influenced by changes in taxable income, tax planning strategies, or tax legislation.

Cash Operating Taxes

Cash operating taxes show an inconsistent but generally upward trend over the years. Starting at 13,626 thousand US dollars in March 2017, there is a notable decline to 5,738 thousand US dollars in March 2018. This is followed by a recovery to 12,089 thousand US dollars in March 2019. From March 2020 onwards, cash operating taxes consistently increase, reaching 20,943 thousand US dollars, 33,340 thousand US dollars in March 2021, and peaking at 51,674 thousand US dollars by March 2022. The sharp increase in recent years could reflect higher taxable operational earnings or timing differences between accounting income and tax payments.

Comparative Insights

The contrasting patterns between income tax provision and cash operating taxes are of note. While income tax provision shows extreme variability, cash operating taxes trend more steadily upwards after an initial decline. This discrepancy might indicate differences between accrued tax expenses and actual cash tax payments, possibly due to deferred tax assets or liabilities, tax credits, or changes in accounting estimates. The rise in cash taxes despite fluctuations in tax provision could imply a strengthening of the company's cash tax outflows in recent years.

The financial data over the six-year period reveals notable trends in the capital structure and equity position. There is a pronounced fluctuation in total reported debt and leases, with an initial sharp decline from 23,800 thousand USD in 2017 to 10,089 thousand USD in 2018. This is followed by moderate increases and decreases over the subsequent years, culminating in a value of 9,507 thousand USD in 2022, which remains below the initial figure in 2017. This suggests efforts to reduce or manage debt levels with some variability year-over-year.

The stockholders’ equity demonstrates consistent and substantial growth throughout the period. Starting at 452,071 thousand USD in 2017, it more than triples by 2022, reaching 1,503,326 thousand USD. This steady increase signals strengthening equity financing and accumulation of retained earnings or capital contributions, indicating a robust equity base and potentially improved financial stability over time.

Invested capital shows an overall increasing trend from 226,723 thousand USD in 2017 to a peak of 737,876 thousand USD in 2021, before a slight decline to 693,367 thousand USD in 2022. This upward movement may reflect ongoing investments in business operations, assets, or strategic initiatives. The minor decrease in the final year could be indicative of divestments, asset disposals, or revaluation adjustments.

Total Reported Debt & Leases

Initial significant reduction followed by moderate fluctuations, ending below the initial value, suggesting active debt management.

Stockholders’ Equity

Consistent and strong growth, tripling over the period, reflecting enhanced financial strength and shareholder value.

Invested Capital

General upward trend with a peak in 2021 and slight decline in 2022, indicating increased capital investment with some recent contraction.

Economic Profit

The economic profit exhibits a rising trend from 2017 to 2019, increasing from 38,636 thousand US dollars to 162,865 thousand US dollars. This growth slows and reverses starting in 2020, declining to 131,233 thousand in 2020, then further to 125,306 thousand in 2021, and culminating in a sharp drop to 14,307 thousand in 2022.

Invested Capital

Invested capital shows consistent growth from 2017 through 2021, rising from 226,723 thousand US dollars to 737,876 thousand US dollars. However, this trend reverses in 2022 where invested capital declines to 693,367 thousand, suggesting a reduction in asset base or capital employed in the most recent period.

Economic Spread Ratio

The economic spread ratio starts at 17.04% in 2017 and increases significantly to 40.16% in 2018, indicating improved profitability relative to capital employed. The ratio then declines steadily over the subsequent years, dropping to 32.73% in 2019, followed by 22.06% in 2020, and continuing downward to 16.98% in 2021. In 2022, there is a pronounced decrease to 2.06%, signaling a substantial reduction in the return on invested capital above its cost.

Summary of Trends and Insights

The data reveals an initial phase of strong growth and profitability improvement from 2017 to 2019, reflected in rising economic profit, invested capital, and a high economic spread ratio. From 2020 onward, a downturn is visible as economic profit declines despite still elevated levels of invested capital until 2021. The sharp decrease in economic spread ratio by 2022 points to diminishing efficiency in generating economic profit on capital invested. The decline in invested capital in 2022, combined with the significant drop in economic profit and spread, may indicate strategic adjustments, potential operational challenges, or changing market conditions impacting overall financial performance.

The financial data reveals key trends over the six-year period ending March 31, 2022.

Adjusted Revenue

There is a consistent upward trend in adjusted revenue throughout the period. Starting at approximately $447 million in 2017, revenue steadily increased each year, reaching over $1 billion by 2022. The growth appears robust, with no years showing a decline, indicating strong sales performance and market expansion.

Economic Profit

Economic profit showed significant growth from 2017 through 2019, rising from about $38.6 million to approximately $163 million. However, this figure declined notably in 2020 and 2021, falling to around $131 million and $125 million respectively, before plunging drastically to approximately $14.3 million in 2022. This pattern suggests increasing challenges to profitability despite rising revenues, particularly in the most recent year.

Economic Profit Margin

The economic profit margin experienced a substantial increase from 8.64% in 2017 to a peak of 21.13% in 2019. Following this peak, the margin decreased to 15.56% in 2020 and continued a downward trajectory arriving at just 1.38% by 2022. This sharp contraction indicates diminished efficiency or increased costs relative to revenue, severely impacting profitability margins.

In summary, while revenue growth has been strong and steady over the six years, economic profit and profit margins tell a different story, highlighting declining profitability after 2019. The steep fall in economic profit and margins in the last year merits further investigation into operational costs, margin pressures, or external factors influencing earnings quality despite top-line growth.