10-QPeriod: Q1 FY2011

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 9, 2011For Securities:EW

Summary

Edwards Lifesciences Corporation reported strong first-quarter 2011 results, with net sales increasing by 18.8% year-over-year to $404.5 million. This growth was primarily driven by the Heart Valve Therapy segment, which saw a significant boost from transcatheter heart valves and surgical tissue valves, and the Critical Care segment. The company also completed the acquisition of Embrella Cardiovascular, Inc. for $42.6 million, strengthening its position in cerebral embolic protection devices. Profitability also improved, with net income rising to $63.9 million, or $0.53 per diluted share, compared to $47.7 million, or $0.40 per diluted share, in the prior year's first quarter. The company demonstrated effective expense management, with SG&A as a percentage of net sales decreasing. Investments in research and development, particularly for the transcatheter heart valve program, were increased to support future growth. The company's balance sheet remains solid, with robust operating cash flows and a significant cash position.

Financial Highlights

45 data points
Beta

Revenue

$404.50M

71.1% Gross Margin

Net Income

$63.90M

15.8% Net Margin

EPS (Diluted)

$0.09

Total Assets

$1.93B

Cash & Equivalents

$325.20M

Free Cash Flow

$1.00M

Financial Statements
Beta
Revenue$404.50M
Cost of Revenue$116.80M
Gross Profit$287.70M
R&D Expenses$59.00M
SG&A Expenses$150.30M
Net Income$63.90M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)689.40M
Shares Outstanding (Diluted)723.00M

Key Highlights

  • 1Net sales increased 18.8% to $404.5 million, driven by strong performance in Heart Valve Therapy and Critical Care segments.
  • 2Heart Valve Therapy sales grew 24.5% to $244.9 million, with notable contributions from transcatheter and surgical tissue valves.
  • 3Critical Care sales rose 14.8% to $120.6 million, boosted by pressure monitoring and the FloTrac system.
  • 4Acquisition of Embrella Cardiovascular, Inc. for $42.6 million to enhance cerebral embolic protection device offerings.
  • 5Net income increased to $63.9 million ($0.53/share) from $47.7 million ($0.40/share) in the prior year's quarter.
  • 6Gross profit margin improved slightly to 71.1% from 71.0%, reflecting a more favorable international product mix.
  • 7Research and Development expenses increased by $13.8 million to $59.0 million, reflecting increased investment in the transcatheter heart valve program.

Frequently Asked Questions

The significant increase in net sales to $404.5 million was primarily driven by strong performance in the Heart Valve Therapy segment, up 24.5% to $244.9 million, fueled by transcatheter heart valves (like the Edwards SAPIEN XT) and surgical tissue valves. The Critical Care segment also contributed positively, growing 14.8% to $120.6 million due to pressure monitoring products and the FloTrac system.

Edwards Lifesciences acquired Embrella Cardiovascular, Inc. on March 11, 2011, for $42.6 million. This strategic acquisition strengthens the company's portfolio in cerebral embolic protection devices, specifically for use during cardiovascular procedures, and provides full rights to Embrella's embolic deflector system.

Profitability improved significantly. Net income rose to $63.9 million in the first quarter of 2011, up from $47.7 million in the same period of 2010. Diluted earnings per share increased to $0.53 from $0.40, reflecting the strong sales growth and improved operational efficiencies.

The company continues to invest heavily in its THV program. Key developments include positive one-year data from the PARTNER Trial (Cohort A and B) for the Edwards SAPIEN valve, with submissions for pre-market approval in the US anticipated. Additionally, the PARTNER II trial for the SAPIEN XT valve is progressing, and the company expects to launch SAPIEN in the US for inoperable patients later in 2011. The company is also pursuing regulatory approvals and trials in Europe and Japan for its THV technologies.