Edwards Lifesciences Reports Fourth Quarter Results
IRVINE, Calif., Feb. 1, 2018 -- Edwards Lifesciences Corporation (NYSE: EW), the global leader in patient-focused innovations for structural heart disease and critical care monitoring, today reported financial results for the quarter ended December 31, 2017.
Fourth Quarter and Full Year Highlights:
Sales grew 16 percent in the fourth quarter and the full year
Fourth quarter global THVT sales grew 20 percent; underlying1 sales increased 22 percent
Fourth quarter EPS declined 77 percent driven by special charges related to U.S. tax reform; adjusted EPS grew 25 percent
Full year 2017 EPS grew 10 percent; adjusted EPS grew 31 percent
Increased 2018 sales and earnings guidance
"We are pleased to report robust fourth quarter results including double-digit organic revenue growth in each region. Our company finished the quarter and year strong, both at 16 percent sales growth," said Michael A. Mussallem, chairman and CEO. "Our strong 2017 growth was driven by clinician and patient preferences for our innovative and meaningful therapies. Profitability was also strong in 2017, with adjusted EPS growing over 30 percent, even as we continued to invest aggressively in our technology pipeline and infrastructure."
Fourth Quarter 2017 Results
Sales for the quarter ended December 31, 2017 were $888.5 million, up 15.7 percent. Total adjusted sales were $909.4 million, up 15.9 percent over the fourth quarter last year. Net income for the quarter ended December 31, 2017 was $35.7 million, or $0.17 per share. Adjusted EPS grew 25.3 percent to $0.94.
For the quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $519.3 million, a 20.2 percent growth rate over the fourth quarter last year. Adjusted THVT sales were $540.2 million, up 22.0 percent on an underlying basis, including the adjustment for the consumption of stocking inventory in Germany. Double-digit underlying TAVR sales growth across all regions was driven by continued strong therapy adoption.
In the U.S., THVT sales for the quarter were $326.7 million, a 22.3 percent growth rate over the fourth quarter last year. "These strong results were driven by robust therapy adoption across the more than 575 TAVR centers, and we did not experience as much of a slowdown as we typically see in the last weeks of the year. Additionally, our best-in-class SAPIEN 3 valve continued to provide excellent outcomes, including faster patient recovery, enhanced quality of life, and exceptional value to the healthcare system," said Mussallem.
Surgical Heart Valve Therapy sales for the quarter were $204.9 million, up 8.2 percent compared to the fourth quarter last year, or up 5.7 percent on an underlying basis. Growth was driven by strong sales of aortic valves across all regions and share gains driven by new products.
Critical Care sales were $164.3 million for the quarter, representing an increase of 12.3 percent versus last year, or 10.9 percent on an underlying basis. This performance was driven by strong growth across the product portfolio, and most notably in the U.S. and China.
For the quarter, the companys gross profit margin was 73.5 percent, compared to 72.2 percent in the same period last year. This improvement primarily reflects the benefit of a more profitable product mix, led by growing sales of TAVR, partially offset by expenses associated with the planned closure of the company's manufacturing plant in Switzerland, which was announced last year.
Selling, general and administrative expenses increased 14.2 percent to $266.7 million for the quarter. This increase was driven by personnel related and performance-based compensation expenses, and the strengthening of the Euro against the dollar.
Research and development investments for the fourth quarter increased 27.6 percent to $146.6 million, or 16.5 percent of sales. Investments for the full year 2017 increased 25.0 percent to $552.6 million, or 16.1 percent of sales. This increase was primarily the result of continued investments in transcatheter structural heart programs, including spending on clinical trials.
The passage of U.S. tax reform in December resulted in a net $223.5 million tax expense related primarily to the deemed repatriation of unremitted foreign earnings.
Adjusted free cash flow for the fourth quarter was $174.5 million, defined as cash flow from operating activities of $363.9 million, less capital spending of $76.9 million, and excluding the receipt of a $112.5 million litigation payment. For the full year 2017, adjusted free cash flow was $695.1 million.
Cash, cash equivalents and short-term investments totaled $1.3 billion at December 31, 2017. Total debt was $1.0 billion.
Outlook
For the full year 2018, given the company's sales momentum and current foreign exchange rates, Edwards increased its sales estimate to be at the higher end of its $3.5 to $3.9 billion guidance. Additionally, the company now expects its estimate for 2018 adjusted earnings per share to be between $4.43 and $4.63, which also benefits from a lower projected tax rate.
For the first quarter 2018, at current foreign exchange rates, the company projects total sales to be between $900 and $950 million, and adjusted EPS of $1.04 to $1.14.
"Our strong 2017 reinforces our confidence in our focused innovation strategy and longer term outlook, and we look forward to an exciting 2018 as we continue to aggressively invest in our future. We expect to achieve a number of important milestones supporting progress in the development of transformative therapies across all of our product lines. Our differentiated strategy continues to benefit patients and serve us well as we plan for future growth and value creation. And, we are focused on staying at the forefront by creating strong evidence for promising new therapies for the patients we serve in the many years to come," said Mussallem.
https://www.edwards.com/sg/ns20180201
