10-QPeriod: Q3 FY2009

Edwards Lifesciences Corp Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:EW

Summary

Edwards Lifesciences Corporation's third-quarter 2009 filing shows a robust increase in net sales, up 7.3% year-over-year to $325.7 million, and a significant 5.0% increase for the first nine months to $974.7 million. This growth was primarily driven by strong performance in the Heart Valve Therapy segment, which saw a 17.3% increase in the quarter, fueled by the Edwards SAPIEN transcatheter heart valve and various new pericardial tissue valves. The company also reported improved profitability, with gross profit margin expanding by 4.4 percentage points year-over-year due to a more favorable product mix and effective cost management. Operationally, Edwards Lifesciences successfully divested its hemofiltration product line in September 2009, generating a significant gain and allowing for increased focus on strategic priorities. The company continues to invest heavily in research and development, particularly in its transcatheter heart valve programs, with promising clinical trial updates and anticipated regulatory approvals. Despite ongoing legal proceedings and market uncertainties, management expressed confidence in the company's liquidity and financial flexibility to fund future growth.

Financial Highlights

27 data points
Beta

Revenue

$325.70M

69.8% Gross Margin

Net Income

$73.50M

22.6% Net Margin

EPS (Diluted)

$0.10

Cash & Equivalents

$287.60M

Free Cash Flow

$59.40M

Financial Statements
Beta
Revenue$325.70M
Cost of Revenue$98.50M
Gross Profit$227.20M
R&D Expenses$44.70M
SG&A Expenses$126.10M
Net Income$73.50M
EPS (Basic)$0.11
EPS (Diluted)$0.10
Shares Outstanding (Basic)676.20M
Shares Outstanding (Diluted)705.00M

Key Highlights

  • 1Net sales increased by 7.3% to $325.7 million for the third quarter and 5.0% to $974.7 million for the first nine months of 2009 compared to the prior year periods.
  • 2Gross profit margin improved significantly, increasing by 4.4 percentage points to 69.8% for the third quarter and 4.1 percentage points to 69.5% for the nine-month period.
  • 3The Heart Valve Therapy segment was a key growth driver, with sales up 17.3% in the quarter, largely due to the Edwards SAPIEN transcatheter heart valve and new valve products.
  • 4The company divested its hemofiltration product line in September 2009, realizing a substantial gain and simplifying its product portfolio.
  • 5Research and Development expenses increased by 2.1 percentage points as a percentage of net sales, reflecting continued investment in key growth areas like transcatheter heart valve technology.
  • 6Diluted earnings per share showed strong improvement, rising to $1.25 for the third quarter from $0.56 in the prior year.
  • 7The company repurchased $79.6 million of its common stock under its share repurchase program during the first nine months of 2009.

Frequently Asked Questions

The primary driver of sales growth was the Heart Valve Therapy segment, which saw a 17.3% increase. This was significantly boosted by the performance of the Edwards SAPIEN transcatheter heart valve and the introduction of new pericardial tissue valves like the Carpentier-Edwards PERIMOUNT Magna Ease and Magna valves.

The divestiture of the hemofiltration product line in September 2009 resulted in a pre-tax gain of $43.6 million, positively impacting the 'Special (Gains) Charges, net' line item. It also allowed Edwards Lifesciences to focus on its core strategic priorities.

Edwards Lifesciences continues to invest heavily in its transcatheter heart valve programs, particularly the Edwards SAPIEN and SAPIEN XT valves. The company reported positive progress in clinical trials, including completion of enrollment for key study arms of the PARTNER trial, and anticipates future regulatory approvals in the US and Europe. Management expects these programs to be significant contributors to future sales growth.

The company reported strong operating cash flow of $99.4 million for the nine months ended September 30, 2009. It has access to a $500 million revolving credit facility, of which $102.3 million was outstanding as of September 30, 2009. The company believes its sources of cash are sufficient to meet its current and future requirements.