10-QPeriod: Q1 FY2019

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 26, 2019For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported strong first-quarter 2019 results, with total net sales increasing by 11.0% year-over-year to $993.0 million. This growth was primarily driven by a robust performance in the Transcatheter Aortic Valve Replacement (TAVR) segment, which saw an 8.4% increase in sales, largely attributed to the successful adoption of the Edwards SAPIEN 3 valve and the launch of the Ultra System. The Surgical Structural Heart segment also demonstrated significant strength, with a 19.6% increase in net sales, notably in the United States and Japan. Net income for the quarter rose to $249.7 million, or $1.18 per diluted share, compared to $206.6 million, or $0.96 per diluted share, in the prior year. This improved profitability was supported by a higher gross profit margin, partly due to favorable foreign currency movements and an improved product mix, along with a lower effective tax rate. The company also recently completed the acquisition of CAS Medical Systems, Inc. for approximately $100 million, aimed at enhancing its hemodynamic monitoring platform, signaling continued strategic investment in its growth areas.

Financial Highlights

51 data points
Beta

Revenue

$993.00M

76.7% Gross Margin

Net Income

$249.70M

25.1% Net Margin

EPS (Diluted)

$0.39

Total Assets

$5.47B

Cash & Equivalents

$709.20M

Free Cash Flow

-$40.70M

Financial Statements
Beta
Revenue$993.00M
Cost of Revenue$231.80M
Gross Profit$761.20M
R&D Expenses$171.40M
SG&A Expenses$280.30M
Operating Income$274.20M
Net Income$249.70M
EPS (Basic)$0.40
EPS (Diluted)$0.39
Shares Outstanding (Basic)623.70M
Shares Outstanding (Diluted)636.60M

Key Highlights

  • 1Total net sales grew 11.0% to $993.0 million in Q1 2019 compared to Q1 2018.
  • 2Transcatheter Aortic Valve Replacement (TAVR) sales increased 8.4% to $597.7 million, driven by strong SAPIEN 3 valve adoption.
  • 3Surgical Structural Heart sales surged 19.6% to $214.7 million, supported by the INSPIRIS RESILIA aortic valve.
  • 4Net income increased by 20.8% to $249.7 million, with diluted EPS rising to $1.18 from $0.96.
  • 5Gross profit margin improved due to favorable foreign currency rates, product mix, and prior year inventory adjustments.
  • 6The company completed the acquisition of CAS Medical Systems, Inc. for approximately $100 million to bolster its critical care offerings.
  • 7R&D expenses increased by 19.4% to $171.4 million, reflecting continued investment in transcatheter structural heart programs.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in the Transcatheter Aortic Valve Replacement (TAVR) segment, particularly higher sales of the Edwards SAPIEN 3 valve in the United States. The Surgical Structural Heart segment also saw significant growth, especially in aortic tissue valves like the INSPIRIS RESILIA in the United States and Japan. The launch of the Edwards PASCAL transcatheter valve repair system in Europe also contributed to growth in the TMTT segment.

Net income increased by 20.8% to $249.7 million. This improvement was supported by an 11.0% increase in net sales, a higher gross profit margin due to favorable foreign currency impacts and product mix, and a lower effective tax rate. Diluted earnings per share rose to $1.18 from $0.96 in the prior year.

Edwards Lifesciences acquired CAS Medical Systems, Inc. for approximately $100 million. This acquisition is strategic as CASMED focuses on non-invasive monitoring of tissue oxygenation, which the company plans to integrate into its existing hemodynamic monitoring platform, further strengthening its Critical Care offerings.

Edwards Lifesciences is involved in multiple lawsuits filed by Abbott Laboratories alleging infringement of patents related to the Edwards PASCAL heart valve repair system in the US and various European countries. Edwards is also suing Abbott, alleging infringement of its patents related to heart implant technology. While the company states it intends to defend itself vigorously and management does not believe these 'Other Lawsuits' would have a material adverse effect on overall financial position, the resolution of any litigation carries inherent uncertainty and could impact net income or cash flows in a specific period.