Heart valve maker Edwards Lifesciences Corp. (EW) Monday reported a jump in second quarter profit, as share gains across all regions drove double digit growth in heart valve therapy. Results also reflects a 2.4% increase in quarterly sales that breezed past Street estimates. Earnings also came in well above analysts expectation for the quarter. Citing strong results in the first half, the medical equipment maker said its now expects its second half to be much stronger than it expected earlier. However, the company's earnings forecast for the third quarter is short of current analysts' expectation.
For the second quarter, net income of Edwards rose to $47.5 million or $0.81 per share from $39.7 million or $0.67 per share from the same quarter a year ago.
Results for the quarter included a special charge of $1.5 million related to the pending hemofiltration product line divestiture. Excluding special items, second quarter net income was $46.4 million or $0.79 per share, up from $39.0 million or $0.66 per share in the prior-year quarter.
Earnings per shares rose 20.9% compared to a year ago, while adjusted earnings rose 19.7% from the year-earlier quarter.
On average, twenty-two analysts polled by Thomson Reuters expected earnings of $0.76 per share for the quarter. Analysts' estimates typically exclude one-time items.
Edwards' net sales for the quarter increased 2.4% to $335.5 million from $327.6 million in the corresponding quarter last year, exceeding Street estimates of $329.83 million.
Underlying sales growth was 9.8%, which primarily excludes an $18.4 million negative impact from foreign exchange and the divestiture of the LifeStent product line.
Michael Mussallem, Chief Executive Officer said, "With the continued adoption of our transcatheter heart valves, we remain confident that we will reach more than $100 million in sales outside of the U.S. this year. Additionally, we continue to make progress towards bringing this exciting technology to U.S. patients as we approach completion of our PARTNER trial enrollment."
In the sequentially preceding first quarter, Edwards reported a profit that tripled from the prior year to $60.5 million or $1.03 per share, on a quarterly sales that increased 5.6% to $313.5 million from the comparable quarter a year ago.
Amongst others in the industry, Hospira Inc. (HSP), a specialty pharmaceutical and medication delivery company, reported a more than two-fold rise in its first-quarter profit to $165.5 million or $1.03 per share, driven by an income tax gain from the settlement of a U.S. Sales, however, were down 3.3% at $859.7 million.
St. Jude Medical, Inc. (STJ) in its first quarter, reported a rise in profit to $201.3 million or $0.58 per share, as sales increased 12% to $1.13 billion from last year on strong double-digit growth across all segments.
For the quarter under review, Heart Valve Therapy sales of the company were $182.1 million, driven primarily by sale of Edwards SAPIEN transcatheter valve, which grew to $26.5 million in the quarter.
Referring to strong performance in the Heart Valve segment, the company said it was now raising the midpoint of its prior Heart Valve Therapy sales guidance for 2009 by $25 million to $690 to $710 million.
Sales from the Critical Care segment were $113.0 million for the quarter. Underlying growth of 2.3% over prior year excluded a $6.2 million reduction from foreign exchange.
Commenting on the segment performance, Mussallem said, "We expect new product introductions to drive higher Critical Care growth rates in the second half of the year. However, in light of the divestiture of our hemofiltration business, and continued weakness in hardware sales, we are lowering our prior Critical Care sales guidance for 2009 by $20 million to $435 to $455 million.
Sales from the Cardiac Surgery Systems sales were $24.1 million. Excluding foreign exchange, underlying growth was 8.5% from the year-earlier quarter, primarily due to strong sales of minimally invasive surgery products.
Vascular sales declined to $16.3 million, impacted by the divestiture of the LifeStent product line. Domestic and international sales for the quarter were $143.5 million and $192.0 million, respectively.
Edwards' gross profit margin was 69.6%, compared to 65.5% in the same quarter last year. Gross profit margin was boosted mainly by product mix and the favorable impact of foreign exchange hedge agreements
Driven primarily by higher transcatheter heart valve sales and marketing expenses in Europe, selling, general and administrative expenses surged 38.3% to $128.5 million, while research and development expenses were $42.6 million, or 12.7% of sales.
Research and developmental expenses rose 20.3% from the prior year impacted by additional spending on the transcatheter heart valve and FloTrac programs.
For the six months period, Edwards' net income surged to $108.0 million or $1.85 per share from $57.9 million or $0.98 per share in the prior-year period. Excluding special items, net income for the period was $87.4 million or $1.49 per share.
Net sales for the period rose 3.9% to $649.0 million. Underlying sales growth was 10.6 percent, which primarily excludes a $28.4 million negative impact from foreign exchange.
Commenting on the company's performance, Mussallem said, "Overall, we have had a very successful first six months, and are expecting a strong second half of the year. Our underlying sales growth estimate of 10 to 12 percent for 2009 remains unchanged and we expect to meet or exceed all of our previously stated financial goals,"
For the third quarter, Edwards said it expects earnings, excluding special items, in a range of $0.66 to $0.70 per share, below current Street estimates of $0.71 per share for the quarter.
Citing strong six-month results, the company, however, said it was raising its full year-2009 forecast to a range between $3.00 and $3.06 per share, while expecting to be at the upper end of its goal, to grow earnings per share by 15 to 19%. Analysts' currently expect earnings of $3.00 per share for the year.
On July 1, 2009, brokerage, UBS initiated a 'Neutral' rating on Edwards share, with a mean target of $67.82.
EW closed Monday's regular trading at $68.11, up $0.11 or 0.16%, on a volume of $0.48 million shares . In after-hours, the stock further gained $0.01 or 0.01%, to trade at $68.01. In the last 52-week period, the stock traded in the range of $44.76 to $68.23, with a three-month average volume of $0.45 million shares.
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