IRVINE, Calif., Feb. 1, 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 December 31, 2016.
Fourth Quarter and Recent Highlights:
- Sales grew 14 percent to $768 million; underlying1 sales were up 15 percent
- Global Transcatheter Heart Valve Therapy (THVT) sales grew 29 percent to $432 million
- U.S. THVT sales were up 38 percent
- EPS was $0.73, an increase of 14 percent; adjusted2 EPS grew 17 percent to $0.75
- FDA approved groundbreaking EARLY-TAVR Trial
"We are pleased to report strong fourth quarter results, which contributed to another successful year for Edwards, as we strengthened our financial performance and product leadership positions," said Michael A. Mussallem, chairman and CEO. "We ended the quarter with underlying sales growth of 15 percent, driven by strong adoption of transcatheter aortic valve replacement (TAVR) therapy, and finished the year with global sales of nearly $3 billion. And, I'm proud to report we invested aggressively in 2016 to bring innovative medical technologies to more patients and drive future growth."
Fourth Quarter 2016 Results
Sales for the quarter ended December 31, 2016 were $767.7 million, up 14.4 percent. U.S. and international segment sales for the fourth quarter were $421.5 million and $346.2 million, respectively. On an underlying basis, sales grew 15.0 percent over the fourth quarter last year. Net income for the quarter ended December 31, 2016 was $158.5 million, or $0.73 per share, or $0.75 per share on an adjusted basis.
For the fourth quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $432.0 million, a 29.2 percent growth rate over the fourth quarter last year, or 31.8 percent on an underlying basis. Growth was led by continued strong therapy adoption across all geographies, with notable strength in the U.S. and Japan.
In the U.S., THVT sales for the quarter were $267.2 million, a 37.8 percent growth rate over the fourth quarter last year, or 41.1 percent on an underlying basis. "Once again, overall performance was strong, with procedures growing broadly across more than 500 hospitals, in both large and small TAVR programs," said Mussallem.
Surgical Heart Valve Therapy sales for the quarter were $189.4 million. Reported sales decreased 3.5 percent compared to the fourth quarter last year, driven by lower aortic valve sales, primarily due to the impact of SAPIEN 3 and continued constrained mitral supply. The company expects the introduction of its next generation platforms to lift underlying sales growth to 1 to 3 percent in 2017.
Critical Care sales were $146.3 million for the quarter, representing an increase of 4.1 percent versus last year, or 2.5 percent on an underlying basis. Growth was driven by its Enhanced Surgical Recovery Program in the U.S. and developing markets.
For the quarter, the company's gross profit margin was 72.2 percent, compared to 73.8 percent in the same period last year. This expected decrease was driven by a reduced year-over-year benefit from foreign exchange hedge contracts and manufacturing expenses associated with capacity expansion. The company expects its gross profit margin, excluding special items, to strengthen in 2017 to between 74 and 76 percent.
Selling, general and administrative expenses increased to $233.6 million for the quarter, or 30.4 percent of sales. This increase was driven by sales and personnel related expenses, primarily in transcatheter heart valves.
Research and development investments for the quarter increased to $114.9 million, compared to $98.2 million in the prior year period. This increase was primarily the result of continued investments in transcatheter aortic and mitral valve programs.
Cash flow from operating activities for the quarter was $201.1 million. After capital spending of $63.2 million, free cash flow was $137.9 million.
Cash, cash equivalents and short-term investments totaled $1.3 billion at December 31, 2016. Total debt was $0.8 billion.
During the fourth quarter, the company repurchased approximately 2.7 million shares for $246 million largely to offset dilution associated with its Valtech Cardio, Ltd. acquisition, which closed on January 23. Average diluted shares outstanding during the quarter were 218 million.
Twelve-Month Results
For the twelve months ended December 31, 2016, compared to the prior year:
- Sales grew 19 percent to $2.96 billion
- U.S. and international segment sales were $1.6 billion and $1.3 billion, respectively
- EPS was $2.61, an increase of 16 percent; adjusted EPS grew 24.6 percent to $2.89
- Repurchased 7.3 million shares of common stock for $662 million
EARLY-TAVR Clinical Trial
The U.S. Food and Drug Administration has approved an IDE study of the Edwards SAPIEN 3 valve evaluating patients diagnosed with severe aortic stenosis who have not yet developed symptoms. Approximately 1,000 patients will be enrolled in 65 leading cardiovascular centers in the new EARLY-TAVR Trial, a superiority study with a two-year composite endpoint. Patients will be randomized to receive either transfemoral TAVR with the SAPIEN 3 valve or clinical surveillance.
Outlook
For the full year 2017, the company continues to expect sales to be between $3.0 and $3.4 billion and adjusted earnings per share to be between $3.30 and $3.45.
For the first quarter of 2017, the company projects sales to be between $760 and $800 million, and adjusted earnings per share to be between $0.79 and $0.89.
"We were very pleased to achieve strong financial performance and significant progress on transformational new therapies across our businesses in 2016, and expect continued growth and progress in 2017," said Mussallem. "We are enthusiastic about the continued expansion of transcatheter-based therapies for the many structural heart patients still in need, which positions us for long-term success. We believe our patient-focused innovation strategy can transform care and bring value to both healthcare systems and shareholders."
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 fourth quarter results. To participate in the conference call, dial (877) 407-8037 or (201) 689-8037. 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 13652092. 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, 2017 and first quarter 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.
To read full press release, please click here.
