10-QPeriod: Q1 FY2009

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 8, 2009For Securities:EW

Summary

Edwards Lifesciences Corporation reported a significant increase in net income for the first quarter of 2009 compared to the same period in 2008, driven by strong performance in its Heart Valve Therapy segment, particularly the Edwards SAPIEN transcatheter heart valve. Net sales also saw a healthy increase, fueled by international growth in Heart Valve Therapy. The company has made progress in its clinical trials, including the PARTNER trial for transcatheter heart valves. While Vascular product sales declined due to the divestiture of the LifeStent product line, overall gross profit margins improved, and the company continued to invest in research and development for its innovative product pipeline. The company also resolved a key legal matter, receiving a favorable ruling in a patent infringement case against Cook.

Financial Highlights

5 data points
Beta

Revenue

$313.50M

69.1% Gross Margin

Net Income

$60.50M

19.3% Net Margin

EPS (Diluted)

$0.09

Financial Statements
Beta
Revenue$313.50M
Gross Profit$216.50M
Net Income$60.50M
EPS (Basic)$0.09
EPS (Diluted)$0.09

Key Highlights

  • 1Net income surged to $60.5 million in Q1 2009 from $18.2 million in Q1 2008, a substantial improvement for investors.
  • 2Total net sales increased by 5.6% to $313.5 million, with international sales showing robust growth of 10.7%.
  • 3Heart Valve Therapy segment was a key driver of growth, with net sales up 16.2% to $170.4 million, boosted by the Edwards SAPIEN transcatheter heart valve.
  • 4Gross profit margin improved significantly to 69.1% from 65.3% in the prior year's quarter.
  • 5Research and Development expenses increased by $7.0 million to $39.9 million, reflecting continued investment in product innovation, particularly in transcatheter heart valves and glucose monitoring.
  • 6The company received a favorable ruling in a patent infringement lawsuit against Cook regarding the Edwards SAPIEN transcatheter heart valve.
  • 7Cash flow from operating activities was negative ($36.0 million) due to a large payment to terminate a securitization program in Japan.

Frequently Asked Questions

Edwards Lifesciences reported a substantial increase in net income to $60.5 million for the first quarter of 2009, up from $18.2 million in the same period of 2008. Net sales also grew by 5.6% to $313.5 million, driven primarily by international sales and strong performance in the Heart Valve Therapy segment.

The primary growth driver was the Heart Valve Therapy segment, which saw a 16.2% increase in net sales, largely due to the success of the Edwards SAPIEN transcatheter heart valve and other tissue heart valves. International sales, particularly in Europe, also contributed significantly to the overall revenue growth.

The company received a favorable ruling in a patent infringement case against Cook concerning its Edwards SAPIEN transcatheter heart valve. Operationally, while cash flow from operations was negative, it was primarily due to a one-time payment to terminate a securitization program in Japan. The company continues to invest in R&D and advance clinical trials for its key products.

The company's cash and cash equivalents decreased during the quarter. While it received a milestone payment related to the LifeStent product line, it also made significant debt payments and repurchased stock. The company has an investment in a money market fund that is illiquid but expects to receive redemptions over time.