Edwards Lifesciences Reports Fourth Quarter 2020 Results

Edwards Lifesciences reported financial results for the quarter ended December 31, 2020.

IRVINE, Calif., Jan. 27, 2021 /PRNewswire/ -- Edwards Lifesciences (NYSE: EW) today reported financial results for the quarter ended December 31, 2020.

Fourth Quarter Highlights and Outlook

  • Q4 sales increased 1 percent to $1.2 billion; underlying1 sales flat
  • Q4 TAVR sales grew 2 percent; underlying sales flat
  • Q4 EPS was $0.49; adjusted1 EPS grew 2 percent to $0.50
  • December investor conference highlighted 2021 and long-term outlook
  • 2021 guidance reiterated with sales growth expected in the mid-teens

“Despite unprecedented challenges in 2020, I’m proud of our team’s steadfast dedication to patients and advancing Edwards’ long-term strategy. We continued to invest in developing solutions that extend lives, improve quality of life, and offer greater value to the healthcare system,” said Michael A. Mussallem, chairman and CEO. “As we look to 2021 and beyond, I am as excited as ever about the work happening at Edwards and, more importantly, what we envision for the future of patient care.”

2020 Full Year Results

Sales for the year ended December 31, 2020, were $4.4 billion, up 1 percent over the prior year, on both a reported and underlying basis. Diluted earnings per share for 2020 were $1.30, while adjusted earnings per share of $1.86 were unchanged from the year-ago period.

Transcatheter Aortic Valve Replacement (TAVR)

The company reported fourth quarter global TAVR sales of $776 million, a year-over-year increase of 2 percent on a reported basis and flat on an underlying basis. COVID had a more pronounced impact on the company’s U.S. sales, which declined mid-single digits, while OUS sales increased in the high-single digit range on an underlying, year-over-year basis. Global average selling prices remained stable.

Looking ahead to 2021, the company continues to anticipate underlying sales growth in the 15 to 20 percent range, with significant COVID-related challenges early in 2021 turning to a more normalized growth environment in the second half of the year. Edwards remains confident that this large global opportunity will exceed $7 billion by 2024, which implies a compounded annual growth rate in the low-double digit range.

Transcatheter Mitral and Tricuspid Therapies (TMTT)

TMTT continues to make meaningful progress moving from early-stage development to clinical use across all of Edwards’ platforms, with over 3,000 patients treated to date. To transform treatment and unlock this significant longer-term growth opportunity, TMTT remains focused on three key value drivers: a portfolio of differentiated therapies, positive pivotal trial results to support approvals and adoption, and favorable real-world clinical outcomes.

Despite COVID headwinds, fourth quarter global sales were $13 million, representing sequential improvement versus the third quarter.

Edwards continues to estimate the global TMTT opportunity to reach $3 billion by 2025 and remains committed to transforming the treatment of patients with mitral and tricuspid valve disease around the world.

Surgical Structural Heart and Critical Care

Surgical Structural Heart sales for the quarter were $204 million, down one percent compared to the fourth quarter of 2019, and down two percent on an underlying basis. As hospitals experienced an influx of COVID patients, surgical valve procedures were limited. This was partially offset by continued strong adoption of the company’s premium technologies.

Critical Care sales were $198 million for the quarter, representing a decline of one percent versus the fourth quarter of 2019, or two percent on an underlying basis, driven by the decline in HemoSphere orders in the U.S. as hospitals limited their capital spending. Sales of TruWave disposable pressure monitoring devices used in the ICU were lifted by the increased COVID hospitalizations late in the fourth quarter in both the U.S. and Europe.

Additional Financial Results

For the quarter, the company’s adjusted gross margin was 75.3 percent, compared to 75.8 percent in the same period last year. This reduction was driven by a negative impact from FX and incremental costs associated with responding to COVID, partially offset by lower performance-based compensation.

Selling, general and administrative expenses in the fourth quarter were $339 million, or 28.4 percent of sales, compared to $347 million in the prior year. This decrease was primarily driven by reduced spending resulting from COVID and lower performance-based compensation, partially offset by the impact from FX.

Research and development expenses in the fourth quarter were $196 million, or 16.4 percent of sales, compared to $194 million in the prior year. This small increase was primarily the result of higher investments in transcatheter mitral valve replacement and costs associated with discontinuing the SUTRAFIX program, partially offset by reduced performance-based compensation.

Free cash flow for the fourth quarter was $287 million, defined as cash flow from operating activities of $400 million, less capital spending of $113 million.

Cash and investments totaled $2.2 billion at December 31, 2020. Total debt was $595 million.

Outlook

Overall, full year 2021 sales guidance for Edwards remains $4.9 to $5.3 billion. Additionally, the company continues to expect full year 2021 adjusted earnings per share of $2.00 to $2.20.

For the first quarter of 2021, the company projects total sales to be between $1.1 and $1.2 billion, and adjusted EPS of $0.43 to $0.50.

“Even though we expect a COVID impact on sales in the start of the year, we are continuing to invest now in our innovations that have tremendous opportunity to enhance patients’ lives and bring significant value to the healthcare system,” said Mussallem. “We recognize the uncertain impact and timeframe for recovery from this unique global challenge but remain confident that our patient-focused strategy of continued investment positions us to be even stronger when the world emerges from the pandemic.”

About Edwards Lifesciences

Edwards Lifesciences is the global leader of patient-focused innovations for structural heart disease and critical care monitoring. We are driven by a passion for patients, dedicated to improving and enhancing lives through partnerships with clinicians and stakeholders across the global healthcare landscape. For more information, visit Edwards.com and follow us on Facebook, Instagram, LinkedIn, Twitter and YouTube.

Conference Call and Webcast Information

Edwards Lifesciences will be hosting a conference call today at 2:00 p.m. PT to discuss its fourth 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 13714408. 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.

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,” “potential,” “predict,” “early clinician feedback,” “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, first quarter and full year 2021 financial guidance, and statements regarding the TAVR and TMTT opportunity, the compounded annual growth rate for TAVR, and the pathway to success in TMTT, including, but not limited to, approvals, adoption, clinical outcomes, and information in the Outlook section. No inferences or assumptions should be made from statements of past performance, efforts, or results which may not be indicative of future performance or results. 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, difficult to predict, and may be outside of the company’s control. The company’s forward-looking statements speak only as of the date on which they are made and the company does 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. Factors that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements include risk and uncertainties associated with COVID pandemic, clinical trial or commercial results or new product approvals and therapy adoption; unpredictability of product launches; competitive dynamics; changes to reimbursement for the company’s products; the company’s success in developing new products and avoiding manufacturing and quality issues; the impact of currency exchange rates; the timing or results of R&D and clinical trials; unanticipated actions by the U.S. Food and Drug Administration and other regulatory agencies; unexpected litigation impacts or expenses; and other risks detailed in the company’s filings with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year ended December 31, 2019 and the company’s other filings with the SEC. These filings, along with important safety information about our products, may be found at edwards.com.

Edwards, Edwards Lifesciences, the stylized E logo, HemoSphere, TruWave, and SUTRAFIX are trademarks of Edwards Lifesciences Corporation or its affiliates. All other trademarks are the property of their respective owners. This statement is made on behalf of Edwards Lifesciences Corporation and its subsidiaries.

[1]

“Adjusted” amounts are non-GAAP items. Adjusted sales, or “underlying” growth rates, in this press release excludes foreign exchange fluctuations and includes the prior year sales results of a business acquired as if the acquisition had occurred at the beginning of the earliest period presented. Adjusted earnings per share is a non-GAAP item computed on a diluted basis and in this press release also excludes intellectual property litigation expenses, amortization of intangible assets, fair value adjustments to contingent consideration liabilities arising from acquisitions, significant charges associated with TAVR inventory write-offs, impairment of long-lived assets, and the purchase of intellectual property. See the Non-GAAP Financial Information page and reconciliation tables below.

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SOURCE Edwards Lifesciences Corporation

Company Codes: NYSE:EW

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