IRVINE, Calif., Oct. 25, 2016 /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 September 30, 2016.
Third Quarter Highlights:
- Sales grew 20.1% to $739.4 million; underlying1 sales were up 18.4%
- Global Transcatheter Heart Valve Therapy (THVT) sales grew 38.5%
- U.S. THVT sales were up 55.9% to $259.5 million
- GAAP EPS was $0.65, an increase of 20.4%; adjusted2 EPS grew 25.9% to $0.68
- Reiterated 2016 global sales guidance and increased earnings guidance
“We are pleased to report strong third quarter underlying sales growth of 18 percent, which was consistent with our increased expectations,” said Michael A. Mussallem, chairman and CEO. “2016 has been a remarkable year for our company. This performance reflects continued strong global adoption of our Edwards SAPIEN 3 valve platform, which remains on track to generate over $300 million more in sales than we originally expected for the year. Consistent with our strategy, we are aggressively investing to bring break-through therapies to an even broader group of patients around the world.”
Third Quarter 2016 Results
Sales for the quarter ended September 30, 2016 were $739.4 million, up 20.1 percent. U.S. and international segment sales for the third quarter were $417.1 million and $322.3 million, respectively. On an underlying basis, sales grew 18.4 percent over the third quarter last year. Net income for the quarter ended September 30, 2016 was $141.4 million, or $0.65 per diluted share.
For the third quarter, the company reported Transcatheter Heart Valve Therapy sales of $410.1 million, a 38.5 percent growth rate over the third quarter last year, or 37.3 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 $259.5 million, a 55.9 percent growth rate over the third quarter last year, or 54.8 percent on an underlying basis. “Overall growth was consistent with our expectations, with robust performance driven by continued strong procedure growth within both large and small TAVR programs,” said Mussallem.
Surgical Heart Valve Therapy product group sales for the quarter were $190.9 million. Reported sales increased 1.6 percent compared to the third quarter last year, or flat on an underlying basis. Globally, mitral valve sales grew slightly, while aortic valve sales declined modestly, compared to last year’s results.
Critical Care product group sales were $138.4 million for the quarter, representing an increase of 5.2 percent versus last year, or 2.5 percent on an underlying basis. Overall results were driven primarily by double-digit growth of our Enhanced Surgical Recovery Program across most regions.
For the quarter, the company’s gross profit margin was 72.8 percent, compared to 76.2 percent in the same period last year. This decrease, which was expected, was driven predominately by foreign exchange.
Selling, general and administrative expenses increased to $229.6 million for the quarter, or 31.1 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 $113.1 million, compared to $101.0 million in the prior year period. This increase was primarily the result of continued investments in our aortic and mitral transcatheter valve programs. The company increased investments with the benefit of this year’s Medical Device Excise Tax suspension.
Cash flow from operating activities for the quarter was $205.9 million. After capital spending of $48.1 million, free cash flow was $157.8 million.
Cash, cash equivalents and short-term investments totaled $1.2 billion at September 30, 2016. Total debt was $600.6 million.
Nine-Month Results
For the nine months ended September 30, 2016, the company recorded net income of $411.0 million, or $1.89 per diluted share, compared to $354.2 million, or $1.61 per diluted share, for the same period in 2015. Net income increased for the nine months by 16.0 percent, or 26.3 percent, on an adjusted basis. And, diluted earnings per share increased 17.4 percent over last year, or increased 27.4 percent, on an adjusted basis.
Net sales for the first nine months of 2016 grew 20.5 percent to $2.2 billion. On an underlying basis, sales grew 19.7 percent.
U.S. and international segment sales for the first nine months of 2016 were $1.2 billion and $1.0 billion, respectively.
During the first nine months of 2016, the company repurchased 4.6 million shares of common stock for $415.9 million.
Outlook
For the full year 2016, the company continues to expect sales to be at the high end of its previous $2.7 to $3.0 billion range based on its strong year-to-date results, and the momentum of transcatheter valve therapy adoption globally.3 Due to strong performance in the third quarter, the company now expects adjusted earnings per share to be between $2.82 and $2.92.
For the fourth quarter of 2016, at current foreign exchange rates, the company projects sales to be between $750 and $790 million, and adjusted earnings per share to be between $0.67 and $0.77.
“We are very pleased with our strong year-to-date performance,” said Mussallem. “As patients and clinicians increasingly prefer TAVR, we remain as optimistic as ever about the long-term growth opportunity. We are committed to aggressively investing in our future, consistent with our focused innovation strategy. We are confident these investments will result in innovative therapies that will enable us to treat a broader group of patients and drive continued strong organic growth.”
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 third 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 13646430. 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, 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. Factors that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements include uncertainties associated with the effectiveness and timing of new product launches, competitive dynamics and rate of therapy adoption, particularly for THVT; the timing and scope of regulatory approvals and reimbursement levels for our products; the company’s success in developing new products and avoiding manufacturing and quality issues; the impact of currency exchange rates and related hedge contracts; the timing or results of pending or future clinical trials; actions by the U.S. Food and Drug Administration and other regulatory agencies; unexpected litigation results or expenses; and other risks detailed in the company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015.
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