Edwards Lifesciences Reports Second Quarter Results

IRVINE, Calif., July 28, 2015 /PRNewswire/ -- Edwards Lifesciences Corporation (NYSE: EW), the global leader in the science of heart valves and hemodynamic monitoring, today reported net income for the quarter ended June 30, 2015 of $112.7 million, or $1.02 per diluted share.  Adjusted net income on a non-GAAP basis was $124.4 million, or $1.13 per diluted share, compared to $0.88 per diluted share in the prior year period. In the year ago period, GAAP net income was $5.09 per diluted share, which included a $750 million payment to Edwards from a litigation settlement.

Net sales for the quarter ended June 30, 2015 were $616.8 million.  U.S. and international segment sales for the second quarter were $302.7 million and $314.1 million, respectively. The strengthening of the U.S. dollar continued to have a significant negative impact on reported sales. On an underlying1 basis, sales grew 17.7 percent.

"Strong performance this quarter was boosted by growing global TAVR therapy adoption, with our transcatheter heart valves posting impressive growth," said Michael A. Mussallem, chairman and CEO.  "We are now underway with the U.S. launch of our most advanced SAPIEN 3 transcatheter heart valve, which has demonstrated improved outcomes for patients suffering from severe, symptomatic aortic stenosis."

Sales Results
For the second quarter, the company reported Transcatheter Heart Valve Therapy (THV) sales of $281.4 million, a 28.1 percent growth rate over the second quarter last year, or 42.2 percent on an underlying basis.  Significant procedure growth resulted in strong sales of the company's innovative, market-leading products in both the U.S. and internationally. Globally, average selling prices remained stable.

In the U.S., THV sales for the quarter, including royalties, were $143.7 million. On an underlying basis, sales were $148.7 million and grew 62.3 percent compared to the prior year period. Outside the U.S., THV sales were $137.7 million, representing 2.7 percent growth, or 25.4 percent on an underlying basis.

"We are very encouraged by the strength of the clinical outcomes and we are confident that global TAVR therapy adoption will remain robust," said Mussallem. "With the early U.S. approval of SAPIEN 3, we now expect our underlying sales growth in 2015 to be in the 25 to 35 percent range."

Surgical Heart Valve Therapy product group sales for the quarter were $204.0 million. Reported sales decreased 4.6 percent compared to the second quarter last year, and increased 3.5 percent on an underlying basis. Growth was driven by global surgical heart valve units, partially offset by the ongoing exit of previously announced non-strategic products.

Critical Care product group sales were $131.4 million for the quarter, representing a decrease of 7.1 percent versus last year, or an increase of 1.3 percent on an underlying basis.

Additional Operating Results
For the quarter, the company's gross profit margin was 74.3 percent, compared to 73.7 percent in the same period last year. Excluding an inventory write-off related to the launch of SAPIEN 3, this quarter's rate would have been approximately two percentage points higher.  The year over year increase was driven by the positive impact from foreign exchange contracts and a favorable product mix, offset by multiple investments in operations. If foreign exchange rates remain at current levels, the company now expects its full year gross profit rate to be between 76 and 77 percent, excluding special items. Assuming current rates, as foreign exchange positions expire, the company expects to lose the significant positive contribution to gross profit in 2016.

Selling, general and administrative expenses decreased to $213.9 million for the quarter, or 34.7 percent of sales. This decrease was driven by the favorable foreign exchange impact on expenses outside the U.S.

Research and development investments for the quarter increased to $97.5 million compared to $89.1 million in the prior year period.  This increase was primarily a result of continued investments in the company's aortic and mitral valve programs.

Cash flow from operating activities for the quarter was $170.1 million. After capital spending of $18.4 million, free cash flow was $151.7 million.

Cash, cash equivalents and short-term investments totaled $1.4 billion at June 30, 2015.  Total debt was $600.3 million.

Six-Month Results
For the six months ended June 30, 2015, the company recorded net income of $236.1 million, or $2.14 per diluted share, compared to $607.3 million, or $5.63 per diluted share, for the same period in 2014.  Net income declined for the six months by 61.1 percent, or increased 40.9 percent, excluding special items. And, diluted earnings per share decreased 62.0 percent over last year, or increased 38.0 percent, excluding special items.

Net sales for the first six months of 2015 grew 10.0 percent to $1.2 billion.  On an underlying basis, sales grew 19.4 percent.

U.S. and international segment sales for the first six months of 2015 were $586.2 million and $620.9 million, respectively.

During the first six months of 2015, the company repurchased approximately 1.3 million shares of common stock for $179.9 million.

Outlook
The company continues to expect full year 2015 total sales to be between $2.3 billion to $2.5 billion.  The company is increasing its guidance for full year 2015 diluted earnings per share, excluding special items, to a range of $4.30 to $4.40, from its previous range of $4.10 to $4.30.  For the third quarter of 2015, at current foreign exchange rates, the company projects total sales to be between $580 million and $620 million, and diluted earnings per share, excluding special items, to be between $0.92 and $1.00.

"Our strong year-to-date momentum reinforces our leadership position and places us on a path to exceed our earlier financial expectations as greater numbers of patients are served by transcatheter therapies," said Mussallem. "And, we believe we are poised for continued growth as we remain committed to our strategy of transforming patient care with innovative technologies."

About Edwards Lifesciences
Edwards Lifesciences is the global leader in the science of heart valves and hemodynamic monitoring.  Driven by a passion to help patients, the company partners with clinicians to develop innovative technologies in the areas of structural heart disease and critical care monitoring, enabling them to save and enhance lives.