Summary
Edwards Lifesciences Corporation's (EW) third-quarter 2015 report shows solid revenue growth, primarily driven by its Transcatheter Heart Valve Therapy (THV) segment, which benefited from the launch of the Edwards SAPIEN 3 valve in the United States and Europe. Despite a significant increase in net sales for the nine months ended September 30, 2015, net income for the same period saw a substantial decrease compared to the prior year. This decline was largely attributable to a substantial one-time litigation settlement payment received from Medtronic in the second quarter of 2014, which significantly boosted prior-year net income. The company successfully integrated the acquisition of CardiAQ Valve Technologies, Inc. in August 2015, aimed at strengthening its mitral heart valve program, though this also resulted in significant goodwill and IPR&D intangible assets. Cash flows from operations remain healthy, though lower than the prior year due to the absence of the Medtronic settlement payment. The company maintains a strong liquidity position and continues to invest in research and development to drive future innovation and growth, particularly within its core THV offerings.
Financial Highlights
48 data points| Revenue | $615.50M |
| Cost of Revenue | $146.70M |
| Gross Profit | $468.80M |
| R&D Expenses | $101.00M |
| SG&A Expenses | $212.00M |
| Net Income | $118.10M |
| EPS (Basic) | $0.18 |
| EPS (Diluted) | $0.18 |
| Shares Outstanding (Basic) | 645.60M |
| Shares Outstanding (Diluted) | 659.70M |
Key Highlights
- 1Net sales increased by 6.9% to $1,822.6 million for the nine months ended September 30, 2015, compared to $1,704.9 million in the prior year, driven by strong performance in the Transcatheter Heart Valve Therapy (THV) segment.
- 2The launch of the Edwards SAPIEN 3 valve in the United States (July 2015) and its continued rollout in Europe (January 2014) significantly contributed to THV sales growth.
- 3Acquisition of CardiAQ Valve Technologies, Inc. closed on August 26, 2015, for $348.0 million (plus potential milestone payments), adding a transcatheter mitral valve replacement system to the company's portfolio, resulting in $250 million in goodwill.
- 4Net income for the nine months ended September 30, 2015, decreased by 49.5% to $354.2 million compared to $701.9 million in the prior year, primarily due to a $750 million litigation settlement payment received from Medtronic in Q2 2014.
- 5Operating cash flow for the nine months ended September 30, 2015, was $445.9 million, a decrease from $929.1 million in the prior year, largely due to the absence of the Medtronic settlement payment in the current period.
- 6Research and Development (R&D) expenses increased to $284.9 million for the nine months ended September 30, 2015, up from $262.5 million in the prior year, reflecting continued investment in new product development, particularly in THV and Surgical Heart Valve Therapy.
- 7The company repurchased $175.0 million of its common stock during 2015 and had $777.5 million remaining authority for future repurchases as of September 30, 2015.