Edwards Lifesciences Q3 Profit More Than Doubles; Updates FY09 Outlook

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(RTTNews) - Wednesday, Edwards Lifesciences Corp. (EW | Quote | Chart | News | PowerRating) reported a surge in its third-quarter profit, helped by one-time gains, as sales grew more than 7%, led by heart valve therapy. In addition, the medical equipment maker revised its fiscal 2009 guidance, citing strong results in the first nine months.

The Irvine, California-based company reported net income for the third quarter of $73.5 million or $1.25 per share, compared to $32.9 million or $0.56 per share in the year-ago quarter.

The company said its recent quarter included a number of special items that resulted in a net $38.2 million pre-tax gain. The main components were a $43.6 million gain associated with the sale of the company's hemofiltration product line, a $15.0 million gain from the achievement of the final LifeStent milestone, and a $15.0 million charge for a charitable contribution to The Edwards Lifesciences Fund.

Excluding special items, non-GAAP net income for the third quarter of 2009 was $41.8 million or $0.71 per share. On average, twenty-five analysts polled by Thomson Reuters expected the company to earn $0.70 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 7.3% to $325.7 million from $303.6 million in the prior-year quarter. Twenty-one analysts had a revenue consensus estimate of $313.80 million for the third quarter. Underlying sales growth was 13.1%, which primarily excludes a $3.4 million negative impact from foreign exchange and an $11.9 million reduction from divested products.

Michael Mussallem, Edwards Lifesciences' chairman and chief executive officer said, "This quarter's results were also highlighted by strong international transcatheter valve sales growth and the recent approval of 2010 reimbursement in Germany. We also continued to make steady progress on U.S. approval and next generation systems."

Amongst others in the industry, Baxter International Inc. (BAX | Quote | Chart | News | PowerRating), a healthcare company, reported a 12% rise in its third-quarter profit to $530.0 million, and an 18% increase in its earnings per share to $0.87, driven by margin expansion and lower expenses. Sales, however, were nearly flat at $3.15 billion.

St. Jude Medical, Inc. (STJ | Quote | Chart | News | PowerRating), in its third quarter, reported a fall in profit to $166.94 million or $0.48 per share, as sales increased 7% to $1.16 billion.

For the quarter under review, Heart Valve Therapy sales generated sales of $174.1 million, driven primarily by sale of Magna valves and sale of transcatheter valve, which totaled $26.4 million in the quarter. With strong performance in the Heart Valve segment, the company said it is expecting transcatheter heart valve sales of about $110 million for 2009.

Sales from the Critical Care segment were $114.2 million for the quarter. Underlying growth of 8.4% over prior year excluded a $0.5 million reduction from foreign exchange and the impact of the divested hemofiltration product line.

Cardiac Surgery Systems sales for the quarter were $22.3 million. Excluding foreign exchange, underlying growth was 6.2% over prior year primarily due to strong international sales, partially offset by a voluntary product recall.

Vascular sales declined to $15.1 million, impacted by the divestiture of the LifeStent product line. Domestic and international sales for the quarter were $137.0 million and $188.7 million, respectively.

For the recent quarter, Edwards' gross profit margin was 69.8% compared to 65.4% in the same period last year, due primarily to product mix and, to a lesser extent, the favorable impact of foreign exchange.

For the nine-month period, the company's net income surged to $181.5 million or $3.10 per share from $90.8 million or $1.54 per share in the similar period of 2008. Adjusted net income rose to $181.5 million or $3.10 per share from $92.5 million or $1.54 per share in the year-ago period. Net sales for the year-to-date period rose to $974.7 million from $928.0 million in the same period of 2008.

Looking ahead for the fourth quarter, the company expects adjusted net earnings to be in the range of $0.82 - $0.86 per share, while analysts expect earnings of $0.83 per share.

Further, the company said it is raising its full-year sales outlook, based on strong year-to-date results, and increasing the mid-point of its guidance for adjusted earnings per share.

The company now expects its full-year sales in the range of $1.305 billion - $1.325 billion and adjusted earnings per share of $3.02 - $3.06. Analysts currently expect earnings of $3.03 per share, on revenues of $1.29 billion, for fiscal 2009. Earlier, the company had forecast full year-2009 earnings of $3.00 - $3.06 per share and revenues of $1.24 billion - $1.30 billion.

EW closed Wednesday's regular trading at $71.10, down $0.53 or 0.74%, on a volume of $0.38 million shares. In after-hours, the stock gained $0.90 or 1.27%, to trade at $72.00. In the last 52-week period, the stock traded in the range of $44.76 to $72.45, with a three-month average volume of $0.37 million shares.

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