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Edwards Lifesciences (EW) Beats on Q4 Earnings and Revenues
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Edwards Lifesciences Corporation’s (EW - Free Report) fourth-quarter 2017 adjusted earnings per share (EPS) came in at 94 cents, excluding net expense of $223.5 million or $1.04 per share as an impact of U.S. tax reform. Reported EPS came in at 17 cents.
The adjusted EPS figure beat the Zacks Consensus Estimate of 90 cents by 4.4%. However, adjusted earnings improved 25.3% year over year, primarily driven by strong sales growth at the company’s transcatheter heart valves business.
Full-year 2017 adjusted EPS came in at $3.80, beating the Zacks Consensus Estimate of $3.76 by 1.1%. Moreover, the figure beat the year-ago number by 31%.
Sales Details
Fourth-quarter sales improved 15.7% to $888.5 million. Moreover, the figure beat the Zacks Consensus Estimate of $862.9 million by 2.9%. Underlying sales increased 15.9% (including the impact of Germany stocking sales as customers in the nation chose to purchase additional inventory of the SAPIEN 3 valve in anticipation of a potential supply interruption resulting from recent intellectual property litigation).
Net revenues in 2017 totaled $3.44 billion, outpacing the Zacks Consensus Estimate of $3.39 billion. The figure also improved 16.2% from the year-ago number.
Revenues were primarily driven by considerable growth in transcatheter heart valve sales as well as strong performance by Surgical Heart Valve Therapy and Critical Care product lines too.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
In the fourth quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $519.3 million, reflecting 20.2% growth over the prior-year quarter. In the United States, THVT sales totaled $326.7 million, up 22.3% year over year. Growth was driven by excellent clinical performance by SAPIEN 3 as well continued strong therapy implementation across all regions.
Surgical Heart Valve Therapy sales in the quarter were $204.9 million, up 8.2% from the prior-year quarter. This was led by strong demand for the EDWARDS INTUITY Elite valve system and solid uptake of core products outside the United States.
Critical Care sales were $164.3 million in the reported quarter, representing an increase of 12.3% from fourth-quarter 2016. Solid growth across all product categories was driven by strong growth in the company's core products, mainly in the United States and China.
Margins
In the fourth quarter, gross margin expanded 130 basis points (bps) to 73.5% owing to a more profitable product mix led by growing sales of transcatheter valves. This was however partially offset by the shutdown of the company's manufacturing plant in Switzerland.
SG&A expenses rose 14.2% year over year to $266.7 million on account of sales and personnel-related expenses, primarily in the Transcatheter Valve (THV) segment. R&D expenditures increased 27.6% year over year to $146.6 million owing to continued investments in the transcatheter aortic valve and mitral valve program. Adjusted operating margin in the quarter expanded 20 bps to 27% as the rise in revenues outweighed the increase in operating expenses.
Cash Position
Edwards Lifesciences exited 2017 with cash and cash equivalents and short-term investments of $1.34 billion, compared with $1.27 billion at the end of 2016. Long-term debt in 2017 totaled $438.4 million, compared with $822.3 million reported in the previous year.
Cash flow from operating activities was $1 billion in 2017. Excluding capital spending of $168.1 million, free cash flow was $831.9 million. During the quarter, average diluted shares outstanding were 215.4 million.
2018 Guidance Raised
Edwards Lifesciences has raised its 2018 sales expectations to the high end of the previously projected range of $3.5-$3.9 billion. The Zacks Consensus Estimate for full-year revenues is $3.71 billion, well within the guided range. Adjusted EPS expectations have also been raised to $4.43–$4.63 from the previous range of $4.10-$4.30. The Zacks Consensus Estimate for full-year adjusted EPS stands at $4.16, near the low end of the company’s guided range.
For the first quarter of 2018, the company projects sales between $900 million and $950 million. The Zacks Consensus Estimate for revenues is $889.2 million, below the company’s projected range. The company estimates adjusted EPS between $1.04 and $1.14. Meanwhile, the Zacks Consensus Estimate for adjusted EPS is $1.01, which is also below the company‘s forecasted range.
Our Take
Edwards Lifesciences exited the fourth quarter on a solid note. Strong transcatheter valve sales in the domestic market as well as overseas is a major positive. The company also performed well on its gross margin front.
Management expects to gain traction in the ever-expanding TAVR market, based on increasing preference in favor of transcatheter aortic valve replacement as well as compelling clinical evidence, leading to strong adoption of THV therapy. However, tough competition in the cardiac devices market and reimbursement issues continue to pose challenges.
PetMed recently reported third-quarter fiscal 2018 results. Adjusted earnings per share was 44 cents, up 88.3% from the prior-year quarter. Revenues in the reported quarter rose 13.7% on a year-over-year basis to $60.1 million.
PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.
ResMed posted second-quarter fiscal 2018 adjusted earnings per share of $1, up 36.9% from the prior-year quarter. Revenues in the reported quarter increased 13.4% year over year (up 11% at constant exchange rate or CER) to $601.3 million.
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Edwards Lifesciences (EW) Beats on Q4 Earnings and Revenues
Edwards Lifesciences Corporation’s (EW - Free Report) fourth-quarter 2017 adjusted earnings per share (EPS) came in at 94 cents, excluding net expense of $223.5 million or $1.04 per share as an impact of U.S. tax reform. Reported EPS came in at 17 cents.
The adjusted EPS figure beat the Zacks Consensus Estimate of 90 cents by 4.4%. However, adjusted earnings improved 25.3% year over year, primarily driven by strong sales growth at the company’s transcatheter heart valves business.
Full-year 2017 adjusted EPS came in at $3.80, beating the Zacks Consensus Estimate of $3.76 by 1.1%. Moreover, the figure beat the year-ago number by 31%.
Sales Details
Fourth-quarter sales improved 15.7% to $888.5 million. Moreover, the figure beat the Zacks Consensus Estimate of $862.9 million by 2.9%. Underlying sales increased 15.9% (including the impact of Germany stocking sales as customers in the nation chose to purchase additional inventory of the SAPIEN 3 valve in anticipation of a potential supply interruption resulting from recent intellectual property litigation).
Net revenues in 2017 totaled $3.44 billion, outpacing the Zacks Consensus Estimate of $3.39 billion. The figure also improved 16.2% from the year-ago number.
Revenues were primarily driven by considerable growth in transcatheter heart valve sales as well as strong performance by Surgical Heart Valve Therapy and Critical Care product lines too.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise | Edwards Lifesciences Corporation Quote
Segments Details
In the fourth quarter, the company reported Transcatheter Heart Valve Therapy (THVT) sales of $519.3 million, reflecting 20.2% growth over the prior-year quarter. In the United States, THVT sales totaled $326.7 million, up 22.3% year over year. Growth was driven by excellent clinical performance by SAPIEN 3 as well continued strong therapy implementation across all regions.
Surgical Heart Valve Therapy sales in the quarter were $204.9 million, up 8.2% from the prior-year quarter. This was led by strong demand for the EDWARDS INTUITY Elite valve system and solid uptake of core products outside the United States.
Critical Care sales were $164.3 million in the reported quarter, representing an increase of 12.3% from fourth-quarter 2016. Solid growth across all product categories was driven by strong growth in the company's core products, mainly in the United States and China.
Margins
In the fourth quarter, gross margin expanded 130 basis points (bps) to 73.5% owing to a more profitable product mix led by growing sales of transcatheter valves. This was however partially offset by the shutdown of the company's manufacturing plant in Switzerland.
SG&A expenses rose 14.2% year over year to $266.7 million on account of sales and personnel-related expenses, primarily in the Transcatheter Valve (THV) segment. R&D expenditures increased 27.6% year over year to $146.6 million owing to continued investments in the transcatheter aortic valve and mitral valve program. Adjusted operating margin in the quarter expanded 20 bps to 27% as the rise in revenues outweighed the increase in operating expenses.
Cash Position
Edwards Lifesciences exited 2017 with cash and cash equivalents and short-term investments of $1.34 billion, compared with $1.27 billion at the end of 2016. Long-term debt in 2017 totaled $438.4 million, compared with $822.3 million reported in the previous year.
Cash flow from operating activities was $1 billion in 2017. Excluding capital spending of $168.1 million, free cash flow was $831.9 million. During the quarter, average diluted shares outstanding were 215.4 million.
2018 Guidance Raised
Edwards Lifesciences has raised its 2018 sales expectations to the high end of the previously projected range of $3.5-$3.9 billion. The Zacks Consensus Estimate for full-year revenues is $3.71 billion, well within the guided range. Adjusted EPS expectations have also been raised to $4.43–$4.63 from the previous range of $4.10-$4.30. The Zacks Consensus Estimate for full-year adjusted EPS stands at $4.16, near the low end of the company’s guided range.
For the first quarter of 2018, the company projects sales between $900 million and $950 million. The Zacks Consensus Estimate for revenues is $889.2 million, below the company’s projected range. The company estimates adjusted EPS between $1.04 and $1.14. Meanwhile, the Zacks Consensus Estimate for adjusted EPS is $1.01, which is also below the company‘s forecasted range.
Our Take
Edwards Lifesciences exited the fourth quarter on a solid note. Strong transcatheter valve sales in the domestic market as well as overseas is a major positive. The company also performed well on its gross margin front.
Management expects to gain traction in the ever-expanding TAVR market, based on increasing preference in favor of transcatheter aortic valve replacement as well as compelling clinical evidence, leading to strong adoption of THV therapy. However, tough competition in the cardiac devices market and reimbursement issues continue to pose challenges.
Zacks Rank & Key Picks
Edwards Lifesciences has a Zacks Rank #3 (Hold).
A few better-ranked stocks that reported solid results this earnings season are, PetMed Express (PETS - Free Report) , PerkinElmer and ResMed (RMD - Free Report) . While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and ResMed carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PetMed recently reported third-quarter fiscal 2018 results. Adjusted earnings per share was 44 cents, up 88.3% from the prior-year quarter. Revenues in the reported quarter rose 13.7% on a year-over-year basis to $60.1 million.
PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.
ResMed posted second-quarter fiscal 2018 adjusted earnings per share of $1, up 36.9% from the prior-year quarter. Revenues in the reported quarter increased 13.4% year over year (up 11% at constant exchange rate or CER) to $601.3 million.
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