Edwards Lifesciences Reports Second Quarter Results

IRVINE, Calif., July 26, 2017 /PRNewswire/ -- Edwards Lifesciences Corporation (NYSE: EW), the global leader in patient-focused innovations for structural heart disease and critical care monitoring, today reported financial results for the quarter ended June 30, 2017. 

Second Quarter and Recent Highlights:

• Sales grew 11 percent to $842 million; underlying¹ sales increased 15 percent to $864 million
• Global THVT sales grew 16 percent to $488 million; underlying sales increased 23 percent
• U.S. THVT sales grew 28 percent to $316 million
• EPS was $0.86, an increase of 48 percent; adjusted² EPS grew 42 percent to $1.08
• 2017 adjusted EPS guidance increased to $3.65 to $3.85, from $3.43 to $3.55
• Recent FDA approvals of SAPIEN 3 valve-in-valve, INSPIRIS RESILIA and HemoSphere

"We are pleased to report another quarter of strong performance, which continued the trend of robust growth driven by long term investments in innovative therapies," said Michael A. Mussallem, chairman and CEO.  "Strong demand for TAVR therapy resulted in total sales growth of 15 percent on an underlying basis, which also reflected strength in all three of our product lines across all regions.  And our transcatheter mitral and tricuspid valve technologies continue to represent exciting opportunities for breakthrough therapies for patients in need."

Second Quarter 2017 Results

Sales for the quarter ended June 30, 2017 were $841.8 million, up 10.9 percent. Including the consumption of $22.5 million of stocking inventory in Germany, on an underlying basis sales grew 15.3 percent over the second quarter last year.  Net income for the quarter ended June 30, 2017 was $186.1 million, or $0.86 per share.  Adjusted earnings per share grew 42.1 percent to $1.08.  Both reported and adjusted earnings per share include a $0.13 favorable impact from the company's excess tax benefit related to employee stock-based compensation compared to last year.

For the quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $487.5 million, a 16.5 percent growth rate over the second quarter last year, or 23.3 percent on an underlying basis. Growth was led by continued strong therapy adoption across all geographies. 

As a reminder, in the first quarter customers in Germany purchased a net $61.8 million of  SAPIEN 3 valves as additional inventory in anticipation of a potential supply interruption resulting from intellectual property litigation in that country.  The company included these stocking sales in its reported results, but excluded them from the adjusted results reported in the first quarter, and will add them back to the adjusted results in subsequent quarters as this inventory is consumed to better reflect actual hospital usage.

In the U.S., THVT sales for the quarter were $316.3 million, a 28.4 percent growth rate over the second quarter last year.  "Therapy adoption continued to be strong, and our SAPIEN 3 valve has sustained its excellent clinical performance across large and small valve centers," said Mussallem. 

Surgical Heart Valve Therapy sales for the quarter were $207.1 million, up 4.2 percent compared to the second quarter last year, or up 5.7 percent on an underlying basis.  This growth benefitted from the recovery of the 2016 mitral valve supply interruption that lowered sales last year.  Also lifting growth was continued strong demand of the EDWARDS INTUITY Elite valve system, which more than offset a shift of surgical aortic valve procedures to TAVR in the U.S.

Critical Care sales were $147.2 million for the quarter, representing an increase of 3.7 percent versus last year, or 5.1 percent on an underlying basis.  Strong performance was driven by double-digit growth in the company's Enhanced Surgical Recovery program, particularly in the U.S. and Asia Pacific.

For the quarter, the company's gross profit margin was 74.9 percent, compared to 73.3 percent in the same period last year. This increase was driven primarily by a more profitable product mix, led by growing sales of transcatheter valves.

Selling, general and administrative expenses increased to $243.8 million for the quarter, compared to $228.8 million in the prior year quarter. This increase was driven primarily by sales and marketing expenses related to transcatheter valves.

Research and development investments for the second quarter increased to $134.4 million, compared to $112.5 million in the prior year period.  This increase was primarily the result of continued investments in transcatheter valve development programs.

Cash flow from operating activities for the second quarter was $197.7 million.  After capital spending of $58.0 million, free cash flow was $139.7 million.

Cash, cash equivalents and short-term investments totaled $1.13 billion at June 30, 2017.  Total debt was $1.02 billion.

During the second quarter, the company repurchased 0.8 million shares for $73.8 million.  Average diluted shares outstanding during the quarter were 215.7 million.

Outlook

For the full year 2017, given the strong first half results, the company's full year sales estimate is now at the high end of its previous $3.2 to $3.4 billion guidance.  The company is also raising its estimate for 2017 adjusted earnings per share to $3.65 to $3.85, from $3.43 to $3.55.

For the third quarter of 2017, the company projects underlying sales, adjusting for the impact of Germany stocking sales consumption, to be between $810 and $850 million, and adjusted earnings per share of $0.80 to $0.90.

"As we reflect on our first half results, we are very pleased with the performance achieved across all of our product lines and believe our future remains bright," said Mussallem.  "We are confident our valuable innovations will result in a continued strong outlook as we deliver important solutions for the patients we serve."

About Edwards Lifesciences        

Edwards Lifesciences, based in Irvine, Calif., is the global leader in patient-focused medical innovations for structural heart disease, as well as critical care and surgical monitoring. Driven by a passion to help patients, the company collaborates with the world's leading clinicians and researchers to address unmet healthcare needs, working to improve patient outcomes and enhance lives. For more information, visit www.Edwards.com and follow us on Twitter @EdwardsLifesci.

Conference Call and Webcast Information          

Edwards Lifesciences will be hosting a conference call today at 2:00 p.m. PT to discuss its second quarter results.  To participate in the conference call, dial (877) 704-2848 or (201) 389-0893.  For 72 hours following the call, an audio replay can be accessed by dialing (877) 660-6853 or (201) 612-7415 and using conference number 13665308.  The call will also be available via live or archived webcast on the "Investor Relations" section of the Edwards web site at ir.edwards.com or www.edwards.com. A live stream and archived replay can also be accessed via mobile devices by downloading Edwards' IR App for iPhone and iPad or Android.

This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements can sometimes be identified by the use of words such as "may," "will," "should," "anticipate," "believe," "plan," "project," "estimate," "expect," "intend," "guidance," "outlook," "optimistic," "aspire," "confident"  or other forms of these words or similar expressions and include, but are not limited to, statements made by Mr. Mussallem, third quarter and full year 2017 financial guidance, and information in the Outlook section.  Forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though they are inherently uncertain and difficult to predict.  Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement.  If the company does update or correct one or more of these statements, investors and others should not conclude that the company will make additional updates or corrections.

Forward-looking statements involve risks and uncertainties that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements. 

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