(Source: MARKETWIRE)
Edwards Lifesciences Corporation (NYSE: EW), a world leader in
products and technologies to treat advanced cardiovascular disease,
today reported net income for the quarter ended September 30, 2009 of
$73.5 million, or $1.25 per diluted share, compared to net income of
$32.9 million, or $0.56 per diluted share, for the same period in
2008. Excluding special items detailed in the reconciliation table
below, third quarter 2009 net income was $41.8 million, or $0.71 per
diluted share. Third quarter diluted earnings per share increased
123.2 percent over last year. Excluding special items, diluted
earnings per share grew 26.8 percent.
Third quarter net sales increased 7.3 percent to $325.7 million.
Underlying(1) sales growth was 13.1 percent, which excludes a $3.4
million negative impact from foreign exchange and an $11.9 million
reduction from divested products.
"We are pleased to report strong third quarter sales and earnings
growth, led by Heart Valve Therapy," said Michael A. Mussallem,
Edwards Lifesciences' chairman and CEO. "In addition, Critical Care
sales growth stepped up during the quarter."
"This quarter's results were also highlighted by strong
international transcatheter valve sales growth and the recent approval
of 2010 reimbursement in Germany. We also continued to make steady
progress on U.S. approval and next generation systems."
Sales Results
For the third quarter, the company reported Heart Valve Therapy sales
of $174.1 million. Excluding the impact of $2.1 million from foreign
exchange, underlying growth of 19.2 percent over prior year was
driven by new products.
"In the U.S., surgical heart valve sales increased to double-digit
growth, driven by our new Magna valves. Additionally, transcatheter
heart valve sales doubled in the quarter to $26.4 million and we now
expect 2009 sales of approximately $110 million," said Mussallem.
Critical Care sales were $114.2 million for the quarter. Underlying
growth of 8.4 percent over prior year excludes a $0.5 million
reduction from foreign exchange, as well as the impact of the
divested hemofiltration product line.
"Underlying growth increased substantially from a first half rate of
2.0 percent, driven by strong sales from our FloTrac and pressure
monitoring products," said Mussallem.
Cardiac Surgery Systems sales for the quarter were $22.3 million.
Excluding foreign exchange, underlying growth was 6.2 percent over
prior year due to strong international sales, partially offset by a
voluntary product recall.
Vascular sales were $15.1 million, a decline from $23.5 million in
the same quarter last year due primarily to the divestiture of the
LifeStent product line.
Domestic and international sales for the third quarter were $137.0
million and $188.7 million, respectively.
Additional Operating Results
For the quarter, Edwards' gross profit margin was 69.8 percent
compared to 65.4 percent in the same period last year. This
improvement was due primarily to product mix and, to a lesser extent,
the favorable impact of foreign exchange.
Selling, general and administrative expenses were $126.1 million for
the quarter, or 38.7 percent of sales, compared to $119.3 million in
the prior year. The increase was driven by higher sales and
marketing expenses, primarily for the Edwards SAPIEN transcatheter
heart valve program in Europe, partially offset by foreign exchange.
Research and development expenses (R&D) for the quarter were $44.7
million, or 13.7 percent of sales. As a result of additional spending
on transcatheter heart valve technology and glucose monitoring, R&D
investments increased 27.4 percent compared to prior year.
During the quarter, Edwards recorded a number of special items that
resulted in a net $38.2 million pre-tax gain. The main components
were a $43.6 million gain associated with the sale of the company's
hemofiltration product line, a $15.0 million gain from the achievement
of the final LifeStent milestone, and a $15.0 million charge for a
charitable contribution to The Edwards Lifesciences Fund. All of the
components of the net special gain are detailed in the reconciliation
table below.
Free cash flow for the quarter was $74.4 million, calculated as cash
from operating activities of $71.5 million, minus capital expenditures
of $12.1 million, plus $15.0 million related to the charitable fund
contribution.
Total debt at September 30, 2009 was $102.3 million. Cash and cash
equivalents were $287.6 million at the end of the quarter, resulting
in net cash of $185.3 million.
During the quarter, the company repurchased 385,000 shares of common
stock for $25.1 million.
Nine-Month Results
For the nine months ended September 30, 2009, the company recorded
net income of $181.5 million, or $3.10 per diluted share, compared to
$90.8 million, or $1.54 per diluted share for 2008. Excluding special
items detailed in the reconciliation table below, net income for the
first nine months in 2009 was $129.2 million, or $2.20 per diluted
share, compared to $105.1 million, or $1.78 per diluted share, for
the same period last year. For the nine months ended September 30,
2009, diluted earnings per share increased 101.3 percent over last
year. Excluding special items, diluted earnings per share grew 23.6
percent.
Net sales for the first nine months of 2009 increased 5.0 percent to
$974.7 million. Underlying sales growth was 11.4 percent, which
excludes a $31.8 million negative impact from foreign exchange and
$20.2 million reduction from discontinued products.
Domestic and international sales for the nine months were $415.4
million and $559.3 million, respectively.
During the first nine months, the company repurchased 1.3 million
shares of common stock for $79.6 million.
2009 Outlook
"Based on strong year-to-date results, we are increasing our full
year sales guidance to between $1.305 and $1.325 billion for 2009 and
we continue to expect to meet or exceed all of our previously stated
financial goals," said Mussallem.
"Excluding special items, we estimate that fourth quarter 2009
diluted earnings per share will be between $0.82 and $0.86. For full
year 2009, excluding special items, we are increasing the mid-point
of our guidance for diluted earnings per share and our new range is
$3.02 to $3.06, representing an annual growth rate of 18 to 20
percent."
About Edwards Lifesciences
Edwards Lifesciences is the global leader in the science of heart
valves and hemodynamic monitoring, with more than five decades of
experience in partnering with clinicians to develop life-saving
innovations. Headquartered in Irvine, Calif., Edwards treats advanced
cardiovascular disease with its market-leading heart valve therapies,
and critical care and vascular technologies, which are sold in
approximately 100 countries. The company's global brands include
Carpentier-Edwards, Cosgrove-Edwards, Edwards SAPIEN, FloTrac,
Fogarty, PERIMOUNT Magna and Swan-Ganz. Additional company
information can be found at http://www.edwards.com.
Conference Call and Webcast Information
Edwards Lifesciences will be hosting a conference call today at 5:00
p.m. ET 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 account number 2995 and
conference number 334198. The call will also be available via live
or archived webcast on the "Investor Relations" section of the
Edwards web site at www.edwards.com or
www.edwards.com/InvestorRelations.
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," or other similar expressions and
include, but are not limited to, the company's financial goals or
expectations for sales, gross profit margin improvement, net income,
earnings per share and free cash flow; regulatory approval of new
products in, and competitive dynamics associated with, the company's
heart valve therapy product line; the continued adoption and sales of
the FloTrac system; the timing and progress of clinical studies
relating to the company's transcatheter valve technologies and the
market opportunity for these products; and the impact of foreign
exchange and special items on the company's 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 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.
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
the opportunities for the company's transcatheter valve programs and
the ability of the company to continue to lead in the development of
this field; the company's success in creating new market
opportunities for its products and the timing of new product
launches; the impact of currency exchange rates; the timing or
results of pending or future clinical trials; actions by the U.S.
Food and Drug Administration and other regulatory agencies; 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, 2008.
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"), the
company uses non-GAAP financial measures that exclude certain items,
such as special charges and gains, results of discontinued and
acquired product lines, and fluctuations in exchange rates.
Management does not consider the excluded items part of day-to-day
business or reflective of the core operational activities of the
company as they result from transactions outside the ordinary course
of business. Management uses non-GAAP financial measures internally
for strategic decision making, forecasting future results and
evaluating current performance.
