Abiomed Inc. (NASDAQ:ABMD)

Net Operating Profit After Taxes (NOPAT)

The company's NOPAT showed a significant upward trend from 2017 through 2021, increasing from 79,888 thousand USD in 2017 to a peak of 259,982 thousand USD in 2021. However, in 2022 there was a notable decline to 140,811 thousand USD, indicating a considerable reduction in profitability compared to the previous year.

Cost of Capital

The cost of capital remained relatively stable over the years, fluctuating marginally between 18.44% and 18.5%. This indicates a consistent benchmark for evaluating investment returns throughout the analyzed period.

Invested Capital

Invested capital experienced substantial growth from 226,723 thousand USD in 2017 to 737,876 thousand USD in 2021, more than tripling over this timeframe. In 2022, there was a slight contraction to 693,367 thousand USD. This growth phase reflects increased resource allocation, potentially for expansion or capital projects, followed by a moderate reduction in the latest year.

Economic Profit

Economic profit demonstrated a strong positive trajectory from 2017 to 2019, rising from 38,079 thousand USD to 161,639 thousand USD. Subsequently, it declined each year until 2022, where it dropped sharply to 12,598 thousand USD. This trend suggests diminishing returns on invested capital despite previously marked improvements, with profitability under pressure in recent years.

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 exhibited a significant increase from 38,079 thousand US dollars in 2017 to a peak of 161,639 thousand US dollars in 2019. Following this peak, a decline is observable, with values decreasing to 129,768 thousand in 2020 and further to 12,598 thousand in 2022, indicating a substantial reduction in profitability by the end of the period.

Invested Capital

Invested capital demonstrated a consistent upward trend over the analyzed years. Starting at 226,723 thousand US dollars in 2017, it more than tripled to reach 693,367 thousand US dollars by 2022. This steady increase suggests ongoing investment or asset accumulation within the company.

Economic Spread Ratio

The economic spread ratio increased sharply from 16.8% in 2017 to a high of 39.91% in 2018, signaling increased returns relative to the cost of capital during that period. Thereafter, a gradual decline ensues, dropping to 1.82% by 2022, which implies diminishing returns on invested capital relative to its cost and possibly reflecting increased capital costs or reduced profitability efficiency.

Overall Summary

The data indicate that while the company expanded its invested capital substantially during the period, the economic profit and spread ratio peaked in the middle years and then declined considerably toward the end. This pattern may reflect operational or market challenges impacting profitability despite growing capital investments. The sharp reduction in both economic profit and spread ratio in the final years is noteworthy and may require strategic evaluation to address potential inefficiencies or external conditions affecting performance.

Economic Profit

The economic profit exhibited significant growth from 38,079 thousand USD in 2017 to a peak of 161,639 thousand USD in 2019. However, following this peak, there was a noticeable decline, dropping to 129,768 thousand USD in 2020 and further to 12,598 thousand USD by 2022. This indicates a decreasing trend in economic profitability over the most recent years despite previous gains.

Adjusted Revenue

The adjusted revenue showed a consistent upward trend across the entire timeframe. It increased steadily from 447,021 thousand USD in 2017 to 1,033,793 thousand USD in 2022. This reflects sustained growth in top-line performance, with a substantial revenue increase especially after 2020.

Economic Profit Margin

The economic profit margin followed a pattern similar to economic profit, rising from 8.52% in 2017 to a maximum of 20.97% in 2019. Subsequently, it decreased sharply to 1.22% in 2022, indicating much lower profitability relative to revenue. This decline suggests that despite revenue growth, the company faced challenges in maintaining efficient profit generation.

Overall Insights

While revenue consistently expanded during the period analyzed, economic profit and profit margin experienced volatility, notably declining after 2019. This divergence points to cost pressures, increased expenses, or other operational inefficiencies impacting profitability. Management may need to address these factors to convert higher revenue into sustainable economic profits.