10-QPeriod: Q1 FY2015

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 29, 2015For Securities:EW

Summary

Edwards Lifesciences Corporation reported strong financial results for the first quarter of 2015, demonstrating significant year-over-year growth. Net sales increased by 13.0% to $590.3 million, driven primarily by a substantial 41.9% surge in Transcatheter Heart Valve Therapy (THV) sales. This growth was bolstered by the successful launches of the Edwards SAPIEN XT in the US and the SAPIEN 3 in Europe, alongside favorable product mix and foreign currency impacts. Profitability also saw a marked improvement, with net income more than doubling to $123.4 million, leading to a 100% increase in both basic and diluted earnings per share to $1.14 and $1.12, respectively. The company's gross profit margin expanded significantly by 4.9 percentage points to 77.0%, attributed to a combination of favorable foreign currency exchange rates, a one-time benefit from a prior year THV sales return reserve, and an improved product mix. These positive financial trends underscore the company's robust market position and effective strategic execution.

Financial Highlights

46 data points
Beta

Revenue

$590.30M

77.0% Gross Margin

Net Income

$123.40M

20.9% Net Margin

EPS (Diluted)

$0.19

Total Assets

$3.49B

Cash & Equivalents

$457.00M

Free Cash Flow

$52.50M

Financial Statements
Beta
Revenue$590.30M
Cost of Revenue$136.00M
Gross Profit$454.30M
R&D Expenses$86.40M
SG&A Expenses$202.50M
Net Income$123.40M
EPS (Basic)$0.19
EPS (Diluted)$0.19
Shares Outstanding (Basic)646.50M
Shares Outstanding (Diluted)661.80M

Key Highlights

  • 1Net sales grew 13.0% year-over-year to $590.3 million, driven by strong performance in the Transcatheter Heart Valve Therapy (THV) segment.
  • 2THV sales experienced a significant 41.9% increase, fueled by new product launches (Edwards SAPIEN XT in the US, SAPIEN 3 in Europe) and favorable market dynamics.
  • 3Net income more than doubled to $123.4 million, a 104.6% increase compared to the prior year.
  • 4Earnings per share (EPS) saw substantial growth, with diluted EPS rising 100% to $1.12.
  • 5Gross profit margin improved by 4.9 percentage points to 77.0%, benefiting from foreign currency impacts, a prior-year inventory adjustment, and a richer product mix.
  • 6The company continued to invest in innovation, with R&D expenses representing 14.6% of net sales.
  • 7Edwards Lifesciences repurchased $100 million of its common stock during the quarter, demonstrating a commitment to returning value to shareholders.

Frequently Asked Questions

The primary driver for the 13.0% increase in net sales to $590.3 million was the strong performance of the Transcatheter Heart Valve Therapy (THV) segment, which grew by 41.9%. This growth was largely attributable to the launches of the Edwards SAPIEN XT valve in the United States and the Edwards SAPIEN 3 valve in Europe, as well as royalties from a Medtronic license agreement and a favorable sales reserve adjustment in the prior year. International sales saw growth in THV and Surgical Heart Valve Therapy, although this was partially offset by a significant negative impact from foreign currency fluctuations.

Profitability saw a substantial improvement. Net income more than doubled to $123.4 million, a 104.6% increase year-over-year. This was supported by a significant expansion in gross profit margin, which rose 4.9 percentage points to 77.0%. This margin improvement was due to favorable foreign currency impacts, a one-time benefit related to a THV sales return reserve in the prior year, and an improved product mix driven by THV sales. As a result, diluted earnings per share increased by 100% to $1.12.

The company highlighted strong momentum in its Transcatheter Heart Valve Therapy (THV) segment, with continued product development and clinical data supporting future growth. The company submitted its pre-market approval application for the Edwards SAPIEN 3 THV system in the U.S. and began enrollment in trials for new valve platforms. While Surgical Heart Valve Therapy and Critical Care segments saw slight decreases in net sales, these were largely due to foreign currency headwinds. The overall focus remains on innovation within structural heart disease and critical care.

Edwards Lifesciences maintained a strong liquidity position with $605.1 million in cash and cash equivalents and short-term investments held in the U.S. and $765.7 million held internationally. The company has a $750 million credit facility with no outstanding borrowings as of March 31, 2015. The company continued its share repurchase program, repurchasing $100 million of common stock during the quarter, demonstrating a commitment to shareholder returns while also investing approximately 14.6% of net sales in research and development.