Abiomed plunges 30% on federal investigation into Impella marketing

Abiomed logo

Wall Street investors fled from heart pump maker Abiomed (NSDQ:ABMD) today, with shares down more 30% in mid-day trading following the company’s latest earnings report and news of a federal investigation.

Abiomed unveiled today that it received notice from the U.S. Attorney’s Office for the District of Columbia that the agency is conducting an investigation into marketing and labeling for the Impella 2.5 implantable heart pump.

Yesterday the Danvers, Mass.-based medical device maker received a subpoena from the Health Insurance Portability and Accountability Act, according to regulatory documents.

"The subpoena seeks documents related to the Impella 2.5 and we understand the investigation focuses primarily on marketing and labeling issues," according to an Abiomed SEC filing. "We are in the process of responding to the subpoena and intend to cooperate fully."

Abiomed chairman, president & CEO Michael Minogue told investors during a conference call today that the company plans to be completely transparent about the investigation, but couldn’t offer any additional details.

Impella 2.5 won FDA 510(k) clearance in June 2008, Minogue said, with indication for "partial circulatory support, using an extracorporeal bypass control unit for periods of up to 6 hours," with additional indication for use during procedures not requiring cardiopulmonary bypass.

"We don’t have any other clarity on this," Minogue said. "Again, there’s questions, it’s an investigation. We’re going to provide everything that we have, and we’ll cooperate fully. So we don’t have any other information other than that."

The Impella heart pumps were a real stand-out for the company during its recent fiscal quarter, with sales up more than 30% year-over-year.

During the 3 months ended Sept. 30, 2012, Impella sales totaled $32.8 million, a 32% increase in sales compared with the same period last year. Of those sales, $30.8 million came from the U.S., according to the company’s earnings report.

The company reported impressive numbers overall, with 27% growth in revenues and more than 800% growth in profits. Abiomed’s per-share earnings beat Wall Street’s consensus estimates by 8¢.

Abiomed earned $5.5 million, or 13¢ per diluted share, on sales of $37.4 million during its 2nd quarter. That compared with earnings of $601,000, or 2¢ per diluted shares, on $29.5 million in sales during the 2nd quarter of fiscal 2012.

The device maker affirmed its fiscal year 2013 revenue guidance, which it expects to be in the range of $155 million to $157 million, representing growth of 23-24%.

The strong numbers didn’t do much for the company on Wall Street, where ABMD shares were down 30% to trade at $13.87 as of about 12:50 p.m.

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