IRVINE, Calif., Feb. 1,
2018 /PRNewswire/ -- 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 company's 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.
About Edwards
Lifesciences
Edwards Lifesciences, based in Irvine,
Calif., is the global leader in patient-focused medical
innovations for structural heart disease, as well as critical care
and surgical monitoring. Driven by a passion to help patients, the
company collaborates with the world's leading clinicians and
researchers to address unmet healthcare needs, working to improve
patient outcomes and enhance lives. For more information, visit
www.Edwards.com and follow us on Twitter @EdwardsLifesci.
Conference Call and Webcast
Information
Edwards Lifesciences will be hosting a conference call today at
2:00 p.m. PT to discuss its fourth quarter results. To
participate in the conference call, dial (877) 704-2848 or (201)
389-0893. For 72 hours following the call, an audio replay
can be accessed by dialing (877) 660-6853 or (201) 612-7415 and
using conference number 13674893. The call will also be
available via live or archived webcast on the "Investor Relations"
section of the Edwards web site at ir.edwards.com or
www.edwards.com. A live stream and archived replay can also be
accessed via mobile devices by downloading Edwards' IR App for
iPhone and iPad or Android.
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These
forward-looking statements can sometimes be identified by the use
of words such as "may," "will," "should," "anticipate," "believe,"
"plan," "project," "estimate," "expect," "intend," "guidance,"
"outlook," "optimistic," "aspire," "confident" or other forms
of these words or similar expressions and include, but are not
limited to, statements made by Mr. Mussallem, full year and first
quarter 2018 financial guidance, and information in the Outlook
section. Forward-looking statements are based on estimates
and assumptions made by management of the company and are believed
to be reasonable, though they are inherently uncertain and
difficult to predict. The company's forward-looking
statements speak only as of the date on which they are made and the
company does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of the statement. If the company does update or
correct one or more of these statements, investors and others
should not conclude that the company will make additional updates
or corrections.
Forward-looking statements involve risks and uncertainties that
could cause actual results or experience to differ materially from
that expressed or implied by the forward-looking statements.
Factors that could cause actual results or experience to differ
materially from that expressed or implied by the forward-looking
statements include uncertainties associated with the timing and
pace of therapy adoption, particularly in THVT; unpredictability of
the effectiveness and timing of new product launches; competitive
changes; the timing and extent of regulatory approvals and
reimbursement levels for the company's products; the company's
success in developing new products and avoiding manufacturing and
quality issues; the impact of currency exchange rates; the timing
or results of R&D and clinical trials; unanticipated actions by
the U.S. Food and Drug Administration and other regulatory
agencies; unexpected litigation impacts or expenses; and other
risks detailed in the company's filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 2016. These filings, along with
important safety information about our products, may be found at
edwards.com.
Edwards, Edwards Lifesciences, the stylized E logo, Edwards
SAPIEN, Edwards SAPIEN 3, SAPIEN, SAPIEN 3, and SAPIEN 3 Ultra are
trademarks of Edwards Lifesciences Corporation. All other
trademarks are the property of their respective owners.
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[1]
|
"Adjusted" amounts
are non-GAAP items. Adjusted sales, or "underlying" or growth
rates, in this press release exclude foreign exchange fluctuations
and sales return reserves associated with THVT product
upgrades. Adjusted sales and "underlying" or growth rates
also exclude the positive impact of THVT stocking sales in Germany,
and the negative impact of de-stocking. Adjusted earnings per
share is a non-GAAP item computed on a diluted basis and in this
press release excludes impairment of long-lived assets,
intellectual property litigation expenses/income, amortization of
intellectual property, fair value adjustments to contingent
consideration liabilities arising from acquisitions, gains and
losses from significant investments, charitable contributions to
the Edwards Lifesciences Foundation, business development
transactions, realignment expenses and the impact from
implementation of tax law changes. Adjusted earnings per share also
excludes the positive impact of THVT stocking sales in Germany, and
the negative impact of de-stocking. See the Non-GAAP
Financial Information page and reconciliation tables
below.
|
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited
Consolidated Statements of Operations
|
(in millions, except per share data)
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net sales
|
$
|
888.5
|
|
|
$
|
767.7
|
|
|
$
|
3,435.3
|
|
|
$
|
2,963.7
|
|
Cost of
sales
|
235.3
|
|
|
213.2
|
|
|
875.3
|
|
|
797.4
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
653.2
|
|
|
554.5
|
|
|
2,560.0
|
|
|
2,166.3
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
266.7
|
|
|
233.6
|
|
|
984.7
|
|
|
904.7
|
|
Research and
development expenses
|
146.6
|
|
|
114.9
|
|
|
552.6
|
|
|
442.2
|
|
Intellectual property
litigation (income) expenses, net
|
(104.9)
|
|
|
4.8
|
|
|
(73.3)
|
|
|
32.6
|
|
Change in fair value
of contingent consideration liabilities
|
2.6
|
|
|
—
|
|
|
(9.9)
|
|
|
1.1
|
|
Special charges,
net
|
18.5
|
|
|
—
|
|
|
59.9
|
|
|
34.5
|
|
Interest expense,
net
|
(1.0)
|
|
|
1.5
|
|
|
2.9
|
|
|
8.4
|
|
Other expenses
(income), net
|
0.8
|
|
|
(0.7)
|
|
|
8.2
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
323.9
|
|
|
200.4
|
|
|
1,034.9
|
|
|
737.9
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
288.2
|
|
|
41.9
|
|
|
412.8
|
|
|
168.4
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
35.7
|
|
|
$
|
158.5
|
|
|
$
|
622.1
|
|
|
$
|
569.5
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.17
|
|
|
$
|
0.74
|
|
|
$
|
2.95
|
|
|
$
|
2.67
|
|
Diluted
|
$
|
0.17
|
|
|
$
|
0.73
|
|
|
$
|
2.88
|
|
|
$
|
2.61
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
210.8
|
|
|
213.7
|
|
|
210.9
|
|
|
213.0
|
|
Diluted
|
215.4
|
|
|
217.9
|
|
|
215.9
|
|
|
217.8
|
|
|
|
|
|
|
|
|
|
Operating
statistics
|
|
|
|
|
|
|
|
As a percentage of
net sales:
|
|
|
|
|
|
|
|
Gross
profit
|
73.5
|
%
|
|
72.2
|
%
|
|
74.5
|
%
|
|
73.1
|
%
|
Selling, general, and
administrative expenses
|
30.0
|
%
|
|
30.4
|
%
|
|
28.7
|
%
|
|
30.5
|
%
|
Research and
development expenses
|
16.5
|
%
|
|
15.0
|
%
|
|
16.1
|
%
|
|
14.9
|
%
|
Income before
provision for income taxes
|
36.5
|
%
|
|
26.1
|
%
|
|
30.1
|
%
|
|
24.9
|
%
|
Net income
|
4.0
|
%
|
|
20.6
|
%
|
|
18.1
|
%
|
|
19.2
|
%
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
89.0
|
%
|
|
20.9
|
%
|
|
39.9
|
%
|
|
22.8
|
%
|
|
|
Note: Numbers may not
calculate due to rounding.
|
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited Balance
Sheets
|
(in
millions)
|
|
|
December 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
818.3
|
|
|
$
|
930.1
|
|
Short-term
investments
|
519.2
|
|
|
341.0
|
|
Accounts and other
receivables, net
|
462.2
|
|
|
414.6
|
|
Inventories,
net
|
554.9
|
|
|
396.6
|
|
Prepaid
expenses
|
60.6
|
|
|
45.9
|
|
Other current
assets
|
116.9
|
|
|
111.8
|
|
Total current
assets
|
2,532.1
|
|
|
2,240.0
|
|
|
|
|
|
Long-term
investments
|
567.0
|
|
|
532.1
|
|
Property, plant, and
equipment, net
|
679.7
|
|
|
580.0
|
|
Goodwill
|
1,126.5
|
|
|
626.1
|
|
Other intangible
assets, net
|
468.0
|
|
|
204.8
|
|
Deferred income
taxes
|
214.3
|
|
|
203.8
|
|
Other
assets
|
108.9
|
|
|
123.2
|
|
|
|
|
|
Total
assets
|
$
|
5,696.5
|
|
|
$
|
4,510.0
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
749.7
|
|
|
$
|
532.5
|
|
Short-term
debt
|
598.0
|
|
|
—
|
|
Contingent
consideration liabilities
|
51.7
|
|
|
—
|
|
Total current
liabilities
|
1,399.4
|
|
|
532.5
|
|
|
|
|
|
Long-term
debt
|
438.4
|
|
|
822.3
|
|
Contingent
consideration liabilities
|
192.6
|
|
|
31.6
|
|
Taxes
payable
|
359.7
|
|
|
159.5
|
|
Uncertain tax
positions
|
164.6
|
|
|
229.8
|
|
Other long-term
liabilities
|
147.1
|
|
|
115.3
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
stock
|
212.0
|
|
|
242.6
|
|
Additional paid-in
capital
|
1,166.9
|
|
|
1,167.8
|
|
Retained
earnings
|
2,000.6
|
|
|
3,906.3
|
|
Accumulated other
comprehensive loss
|
(132.7)
|
|
|
(198.4)
|
|
Treasury stock, at
cost
|
(252.1)
|
|
|
(2,499.3)
|
|
Total stockholders'
equity
|
2,994.7
|
|
|
2,619.0
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
5,696.5
|
|
|
$
|
4,510.0
|
|
EDWARDS LIFESCIENCES CORPORATION
Non-GAAP Financial
Information
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"),
the Company uses non-GAAP historical financial measures.
Management makes adjustments to the GAAP measures for items (both
charges and gains) that (a) do not reflect the core operational
activities of the Company, (b) are commonly adjusted within the
Company's industry to enhance comparability of the Company's
financial results with those of its peer group, or (c) are
inconsistent in amount or frequency between periods (albeit such
items are monitored and controlled with equal diligence relative to
core operations). The Company uses the term "adjusted sales"
or "underlying growth rate" when referring to non-GAAP sales
information, which excludes foreign exchange fluctuations, sales
return reserves associated with transcatheter heart valve therapy
("THVT") product upgrades, and the positive impact of THVT stocking
sales in Germany and the negative impact of de-stocking. The
Company uses the term "adjusted" to also exclude intellectual
property litigation income and expenses, amortization of
intellectual property, fair value adjustments to contingent
consideration liabilities arising from acquisitions, gains and
losses from significant investments, impairments, litigation, the
positive impact of THVT stocking sales in Germany and the negative
impact of de-stocking, realignment expenses, sales return reserves
and related costs associated with THVT product upgrades, charitable
contributions to the Edwards Lifesciences Foundation, business
development transactions, and the impact from implementation of tax
law changes. Fluctuations in exchange rates impact the
comparative results and sales growth rates of the Company's
underlying business. Management believes that excluding the impact
of foreign exchange rate fluctuations from its sales growth
provides investors a more useful comparison to historical financial
results. The impact of foreign exchange rate fluctuations has been
detailed in the "Reconciliation of Sales by Product Group and
Region."
Guidance for sales and sales growth rates is provided on an
"underlying basis," and projections for diluted earnings per share,
net income and growth, gross profit margin, taxes, and free cash
flow are also provided on a non-GAAP basis as adjusted for the
items identified below due to the inherent difficulty in
forecasting such items. The Company is not able to provide a
reconciliation of the non-GAAP guidance to comparable GAAP measures
due to the unknown effect, timing, and potential significance of
special charges or gains, and management's inability to forecast
charges associated with future transactions and initiatives.
Management considers free cash flow to be a liquidity measure
which provides useful information to management and investors about
the amount of cash generated by business operations, after
deducting payments for capital expenditures, which can then be used
for strategic opportunities or other business purposes including,
among others, investing in the Company's business, making strategic
acquisitions, strengthening the balance sheet, and repurchasing
stock.
Management uses non-GAAP financial measures internally for
strategic decision making, forecasting future results, and
evaluating current performance. These non-GAAP financial
measures are used in addition to and in conjunction with results
presented in accordance with GAAP and reflect an additional way of
viewing aspects of the Company's operations by investors that, when
viewed with its GAAP results, provide a more complete understanding
of factors and trends affecting the Company's business and
facilitate comparability to historical periods.
Non-GAAP financial measures are not prepared in accordance with
GAAP; therefore, the information is not necessarily comparable to
other companies and should be considered as a supplement to, and
not as a substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. A reconciliation of
non-GAAP historical financial measures to the most comparable GAAP
measure is provided in the tables below.
The items described below are adjustments to the GAAP
financial results in the reconciliations that follow:
Intellectual Property Litigation (Income) Expenses, net -
In the fourth quarter of 2017, the Company recorded a $112.5 million gain for a litigation payment
related to the theft of trade secrets. The Company incurred
intellectual property litigation expenses of $10.2 million and $12.2
million in the first quarter of 2017 and 2016, respectively,
$7.7 million and $9.1 million in the second quarter of 2017 and
2016, respectively, $13.7 million and
$6.5 million in the third quarter of
2017 and 2016, respectively, and $7.6
million and $4.8 million in
the fourth quarter of 2017 and 2016, respectively.
Charitable Foundation Contribution - The Company recorded
a $25.0 million charge in the fourth
quarter of 2017 for a charitable contribution to the Edwards
Lifesciences Foundation.
THVT Germany Stocking Sales - In the first quarter of
2017, the Company recorded $61.8
million in net stocking sales ($48.0
million, net of related costs) to customers in Germany, as these customers elected to
purchase additional inventory in anticipation of a potential supply
interruption resulting from recent intellectual property
litigation. In the second, third and fourth quarters of 2017,
these customers consumed on a net basis $22.5 million ($17.9
million, net of related costs), $17.0
million ($13.3 million, net of
related costs) and $20.9 million
($16.3 million, net of related
costs), respectively, of their stocking inventory.
Investment Gain - In the fourth quarter of 2017, in
connection with the acquisition of Harpoon Medical, Inc., the
Company remeasured its previously held ownership interest to fair
market value and recognized a gain of $6.5
million.
Change in Fair Value of Contingent Consideration
Liabilities - The Company recorded expenses related to changes
in the fair value of its contingent consideration liabilities
arising from acquisitions of $1.1
million and $0.6 million in
the first quarter of 2017 and 2016, respectively, $3.1 million and $0.4
million in the second quarter of 2017 and 2016,
respectively, a gain of $16.7 million
and expenses of $0.1 million in the
third quarter of 2017 and 2016, and expenses of $2.6 million in the fourth quarter of 2017.
Amortization of Intellectual Property - The Company
recorded amortization expense related to intellectual property of
$2.1 million and $1.7 million in the first quarter of 2017 and
2016, respectively, $2.0 million and
$1.9 million in the second quarter of
2017 and 2016, respectively, $2.1
million and $2.0 million in
the third quarter of 2017 and 2016, respectively, and $1.6 million and $1.9
million in the fourth quarter of 2017 and 2016,
respectively.
Impairment of Long-lived Assets - The Company recorded a
$31.2 million charge in the second
quarter of 2017 related to the other-than-temporary impairment of
one of its cost method investments and an associated long-term
asset related to the Company's option to acquire this investee.
Realignment Expenses - The Company recorded a
$10.2 million charge in the third
quarter of 2017 related to severance expenses and other costs
associated with the planned closure of its manufacturing plant in
Switzerland.
Purchased In-process Research and Development
("IPR&D") - The Company recorded a $34.5 million charge in the second quarter of
2016 related to the acquisition of technology for use in its
transcatheter heart valve programs.
THVT Sales Return Reserve and Related Costs - In the
first quarter of 2016, the Company recorded a $1.7 million reversal of its sales return reserve
($1.5 million, net of related costs)
upon delivery of the next-generation THVT products in the United States. In addition, in the
first quarter of 2016, the Company recorded inventory reserves of
$1.6 million related to estimated
excess THVT inventory expected upon introduction of next-generation
THVT products in Japan.
Provision for Income Taxes - During the fourth quarter of
2017, the Company recorded a $223.5
million tax expense related to the implementation of U.S.
tax law changes and a $12.9 million
tax benefit related to a tax audit settlement. The income tax
impact of the expenses and gains discussed above is based upon the
forecasted items' effect upon the Company's full year effective tax
rate. Adjustments to forecasted items unrelated to these
expenses and gains, as well as impacts related to interim
reporting, will have an effect on the income tax impact of these
items in subsequent periods.
Adjusted Free Cash Flow - The Company defines free cash
flow as cash flows from operating activities less capital
expenditures. During 2017, the Company also excluded from its
calculation of free cash flow a receipt of a litigation payment and
the amount of an escrow deposit related to the purchase of a
building.
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
(in millions,
except per share and percentage data)
|
|
RECONCILIATION OF
GAAP TO ADJUSTED NET INCOME
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP Net
Income
|
|
$
|
35.7
|
|
|
$
|
158.5
|
|
|
$
|
622.1
|
|
|
$
|
569.5
|
|
Growth Rate
%
|
|
(77.5)
|
%
|
|
|
|
9.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
Intellectual property
litigation (income) expenses, net
|
|
(104.9)
|
|
|
4.8
|
|
|
(73.3)
|
|
|
32.6
|
|
Charitable foundation
contribution
|
|
25.0
|
|
|
—
|
|
|
25.0
|
|
|
—
|
|
THVT Germany stocking
sales
|
|
16.3
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
Investment
gain
|
|
(6.5)
|
|
|
—
|
|
|
(6.5)
|
|
|
—
|
|
Change in fair value
of contingent consideration liabilities
|
|
2.6
|
|
|
—
|
|
|
(9.9)
|
|
|
1.1
|
|
Amortization of
intellectual property
|
|
1.6
|
|
|
1.9
|
|
|
7.8
|
|
|
7.5
|
|
Impairment of
long-lived assets
|
|
—
|
|
|
—
|
|
|
31.2
|
|
|
—
|
|
Realignment
expenses
|
|
—
|
|
|
—
|
|
|
10.2
|
|
|
—
|
|
Purchased
IPR&D
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.5
|
|
THVT sales return
reserve and related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
Impact of U.S. tax
legislation
|
|
223.5
|
|
|
—
|
|
|
223.5
|
|
|
—
|
|
Tax audit
settlement
|
|
(12.9)
|
|
|
—
|
|
|
(12.9)
|
|
|
—
|
|
Tax effect on
reconciling items (B)
|
|
23.9
|
|
|
(3.6)
|
|
|
3.0
|
|
|
(14.2)
|
|
Ongoing tax impact of
non-fourth quarter items
|
|
(1.2)
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
Adjusted Net
Income
|
|
$
|
203.1
|
|
|
$
|
163.6
|
|
|
$
|
819.7
|
|
|
$
|
631.1
|
|
Growth Rate
%
|
|
24.1
|
%
|
|
|
|
29.9
|
%
|
|
|
RECONCILIATION OF
GAAP TO ADJUSTED DILUTED EARNINGS PER SHARE
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP Diluted
Earnings Per Share
|
|
$
|
0.17
|
|
|
$
|
0.73
|
|
|
$
|
2.88
|
|
|
$
|
2.61
|
|
Growth Rate
%
|
|
(76.7)
|
%
|
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
(A), (C)
|
|
|
|
|
|
|
|
|
Intellectual property
litigation (income) expenses, net
|
|
(0.31)
|
|
|
0.01
|
|
|
(0.21)
|
|
|
0.10
|
|
Charitable foundation
contribution
|
|
0.07
|
|
|
—
|
|
|
0.07
|
|
|
—
|
|
THVT Germany stocking
sales
|
|
0.06
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Investment
gain
|
|
(0.03)
|
|
|
|
|
(0.03)
|
|
|
|
Change in fair value
of contingent consideration liabilities
|
|
0.01
|
|
|
—
|
|
|
(0.05)
|
|
|
0.01
|
|
Amortization of
intellectual property
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
0.02
|
|
Impairment of
long-lived assets
|
|
—
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
Realignment
expenses
|
|
—
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
Purchased
IPR&D
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
Impact of U.S. tax
legislation
|
|
1.04
|
|
|
|
|
1.04
|
|
|
|
Tax audit
settlement
|
|
(0.06)
|
|
|
|
|
(0.06)
|
|
|
|
Ongoing tax impact of
non-fourth quarter items
|
|
(0.01)
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
Adjusted Diluted
Earnings Per Share
|
|
$
|
0.94
|
|
|
$
|
0.75
|
|
|
$
|
3.80
|
|
|
$
|
2.90
|
|
Growth Rate
%
|
|
25.3
|
%
|
|
|
|
31.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Note: Numbers may not
calculate due to rounding.
|
|
|
(A)
|
See description of
non-GAAP adjustments on the "Non-GAAP Financial Information"
page.
|
|
|
(B)
|
The tax effect on
non-GAAP adjustments is calculated based upon the impact of the
relevant tax jurisdictions' statutory tax rates on the Company's
estimated annual effective tax rate, or discrete rate in the
quarter, as applicable. The tax effect on the THVT Germany
stocking sales adjustment is calculated using the global effective
tax rate.
|
|
|
(C)
|
All amounts are tax
effected, calculated based upon the impact of the relevant tax
jurisdictions' statutory tax rates on the Company's estimated
annual effective tax rate, or discrete rate in the quarter, as
applicable.
|
THVT UNDERLYING
SALES GROWTH OUTSIDE THE UNITED STATES
|
|
|
|
Three Months
Ended
December 31,
|
|
|
2017
|
|
2016
|
GAAP THVT Sales
Outside the United States
|
|
$
|
192.6
|
|
|
$
|
164.8
|
|
Adjustment for THVT
Germany stocking sales
|
|
20.9
|
|
|
—
|
|
Foreign exchange
impact
|
|
—
|
|
|
10.7
|
|
THVT Underlying
Sales Outside the United States
|
|
$
|
213.5
|
|
|
$
|
175.5
|
|
Underlying Growth
Rate %
|
|
21.7
|
%
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP TAX RATE
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP Tax
Rate
|
|
89.0
|
%
|
|
20.9
|
%
|
|
39.9
|
%
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
Intellectual property
litigation (income) expenses, net
|
|
37.6
|
|
|
0.6
|
|
|
0.2
|
|
|
0.5
|
|
Charitable foundation
contribution
|
|
(5.4)
|
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
THVT Germany stocking
sales
|
|
(4.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Investment
gain
|
|
2.7
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Change in fair value
of contingent consideration liabilities
|
|
(0.8)
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
Amortization of
intellectual property
|
|
(0.3)
|
|
|
0.2
|
|
|
(0.1)
|
|
|
0.1
|
|
Impairment of
long-lived assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Realignment
expenses
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
—
|
|
Purchased
IPR&D
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0)
|
|
Impact of U.S. tax
legislation
|
|
(103.2)
|
|
|
—
|
|
|
(22.0)
|
|
|
—
|
|
Tax audit
settlement
|
|
5.9
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Ongoing tax impact of
non-fourth quarter items
|
|
0.6
|
|
|
(0.7)
|
|
|
—
|
|
|
—
|
|
Non-GAAP Tax
Rate
|
|
21.3
|
%
|
|
21.0
|
%
|
|
19.6
|
%
|
|
22.4
|
%
|
|
|
(A)
|
See description of
non-GAAP adjustments on the "Non-GAAP Financial Information"
page.
|
RECONCILIATION OF
GAAP OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW
|
|
|
2017
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
Net cash provided
by operating activities
|
$
|
363.9
|
|
|
$
|
1,000.7
|
|
Capital
expenditures
|
(51.9)
|
|
|
(168.1)
|
|
Deposit of cash in
escrow
|
(25.0)
|
|
|
(25.0)
|
|
Litigation
settlement
|
(112.5)
|
|
|
(112.5)
|
|
Adjusted Free Cash
Flow (A)
|
$
|
174.5
|
|
|
$
|
695.1
|
|
|
|
Note: Numbers may not
calculate due to rounding.
|
|
|
(A)
|
See description of
"Adjusted Free Cash Flow" on the Non-GAAP Financial Information
page.
|
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
($ in
millions)
|
|
RECONCILIATION OF
SALES BY PRODUCT GROUP AND REGION
|
|
|
|
|
|
|
|
|
|
|
|
2017 Adjusted
|
|
2016 Adjusted
|
|
|
Sales by Product Group (QTD)
|
|
4Q
2017
|
|
4Q
2016
|
|
Change
|
|
GAAP Growth Rate*
|
|
Germany
Stocking
|
|
4Q 2017
Adjusted
Sales
|
|
Sales Return Reserve
|
|
FX Impact
|
|
4Q 2016
Adjusted
Sales
|
|
Underlying Growth Rate *
|
Transcatheter
Heart Valve Therapy
|
|
$
|
519.3
|
|
|
$
|
432.0
|
|
|
$
|
87.3
|
|
|
20.2
|
%
|
|
$
|
20.9
|
|
|
$
|
540.2
|
|
|
$
|
—
|
|
|
$
|
10.7
|
|
|
$
|
442.7
|
|
|
22.0
|
%
|
Surgical Heart
Valve Therapy
|
|
204.9
|
|
|
189.4
|
|
|
15.5
|
|
|
8.2
|
%
|
|
—
|
|
|
204.9
|
|
|
—
|
|
|
4.5
|
|
|
193.9
|
|
|
5.7
|
%
|
Critical
Care
|
|
164.3
|
|
|
146.3
|
|
|
18.0
|
|
|
12.3
|
%
|
|
—
|
|
|
164.3
|
|
|
—
|
|
|
1.9
|
|
|
148.2
|
|
|
10.9
|
%
|
Total
|
|
$
|
888.5
|
|
|
$
|
767.7
|
|
|
$
|
120.8
|
|
|
15.7
|
%
|
|
$
|
20.9
|
|
|
$
|
909.4
|
|
|
$
|
—
|
|
|
$
|
17.1
|
|
|
$
|
784.8
|
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
2017 Adjusted
|
|
2016 Adjusted
|
|
|
Sales by Product Group (YTD)
|
|
YTD
4Q 2017
|
|
YTD
4Q 2016
|
|
Change
|
|
GAAP Growth Rate*
|
|
Germany
Stocking
|
|
YTD 4Q
2017
Adjusted
Sales
|
|
Sales Return Reserve
|
|
FX Impact
|
|
YTD 4Q
2016
Adjusted
Sales
|
|
Underlying Growth Rate *
|
Transcatheter
Heart Valve Therapy
|
|
$
|
2,027.2
|
|
|
$
|
1,628.5
|
|
|
$
|
398.7
|
|
|
24.5
|
%
|
|
$
|
(1.4)
|
|
|
$
|
2,025.8
|
|
|
$
|
(1.7)
|
|
|
$
|
5.2
|
|
|
$
|
1,632.0
|
|
|
24.1
|
%
|
Surgical Heart
Valve Therapy
|
|
807.1
|
|
|
774.9
|
|
|
32.2
|
|
|
4.2
|
%
|
|
—
|
|
|
807.1
|
|
|
—
|
|
|
0.8
|
|
|
775.7
|
|
|
4.0
|
%
|
Critical
Care
|
|
601.0
|
|
|
560.3
|
|
|
40.7
|
|
|
7.3
|
%
|
|
—
|
|
|
601.0
|
|
|
—
|
|
|
(1.0)
|
|
|
559.3
|
|
|
7.5
|
%
|
Total
|
|
$
|
3,435.3
|
|
|
$
|
2,963.7
|
|
|
$
|
471.6
|
|
|
15.9
|
%
|
|
$
|
(1.4)
|
|
|
$
|
3,433.9
|
|
|
$
|
(1.7)
|
|
|
$
|
5.0
|
|
|
$
|
2,967.0
|
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Adjusted
|
|
2016 Adjusted
|
|
|
Sales by Region (QTD)
|
|
4Q
2017
|
|
4Q
2016
|
|
Change
|
|
GAAP Growth
Rate*
|
|
Germany
Stocking
|
|
4Q 2017
Adjusted
Sales
|
|
Sales Return
Reserve
|
|
FX Impact
|
|
4Q 2016
Adjusted
Sales
|
|
Underlying Growth Rate *
|
United
States
|
|
$
|
493.7
|
|
|
$
|
421.5
|
|
|
$
|
72.2
|
|
|
17.2
|
%
|
|
$
|
—
|
|
|
$
|
493.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
421.5
|
|
|
17.1
|
%
|
Europe
|
|
204.0
|
|
|
184.6
|
|
|
19.4
|
|
|
10.4
|
%
|
|
20.9
|
|
|
224.9
|
|
|
—
|
|
|
17.1
|
|
|
201.7
|
|
|
11.5
|
%
|
Japan
|
|
97.3
|
|
|
83.0
|
|
|
14.3
|
|
|
17.3
|
%
|
|
—
|
|
|
97.3
|
|
|
—
|
|
|
(2.0)
|
|
|
81.0
|
|
|
20.1
|
%
|
Rest of
World
|
|
93.5
|
|
|
78.6
|
|
|
14.9
|
|
|
18.9
|
%
|
|
—
|
|
|
93.5
|
|
|
—
|
|
|
2.0
|
|
|
80.6
|
|
|
16.0
|
%
|
International
|
|
394.8
|
|
|
346.2
|
|
|
48.6
|
|
|
14.0
|
%
|
|
20.9
|
|
|
415.7
|
|
|
—
|
|
|
17.1
|
|
|
363.3
|
|
|
14.4
|
%
|
Total
|
|
$
|
888.5
|
|
|
$
|
767.7
|
|
|
$
|
120.8
|
|
|
15.7
|
%
|
|
$
|
20.9
|
|
|
$
|
909.4
|
|
|
$
|
—
|
|
|
$
|
17.1
|
|
|
$
|
784.8
|
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
2017 Adjusted
|
|
2016 Adjusted
|
|
|
Sales by Region (YTD)
|
|
YTD
4Q 2017
|
|
YTD
4Q 2016
|
|
Change
|
|
GAAP Growth
Rate*
|
|
Germany
Stocking
|
|
YTD 4Q
2017
Adjusted
Sales
|
|
Sales Return
Reserve
|
|
FX Impact
|
|
YTD 4Q
2016
Adjusted
Sales
|
|
Underlying Growth Rate *
|
United
States
|
|
$
|
1,907.6
|
|
|
$
|
1,615.7
|
|
|
$
|
291.9
|
|
|
18.1
|
%
|
|
$
|
—
|
|
|
$
|
1,907.6
|
|
|
$
|
(1.7)
|
|
|
$
|
—
|
|
|
$
|
1,614.0
|
|
|
18.2
|
%
|
Europe
|
|
831.0
|
|
|
749.0
|
|
|
82.0
|
|
|
10.9
|
%
|
|
(1.4)
|
|
|
829.6
|
|
|
—
|
|
|
10.2
|
|
|
759.2
|
|
|
9.3
|
%
|
Japan
|
|
350.3
|
|
|
309.3
|
|
|
41.0
|
|
|
13.3
|
%
|
|
—
|
|
|
350.3
|
|
|
—
|
|
|
(9.5)
|
|
|
299.8
|
|
|
16.8
|
%
|
Rest of
World
|
|
346.4
|
|
|
289.7
|
|
|
56.7
|
|
|
19.5
|
%
|
|
—
|
|
|
346.4
|
|
|
—
|
|
|
4.3
|
|
|
294.0
|
|
|
17.8
|
%
|
International
|
|
1,527.7
|
|
|
1,348.0
|
|
|
179.7
|
|
|
13.3
|
%
|
|
(1.4)
|
|
|
1,526.3
|
|
|
—
|
|
|
5.0
|
|
|
1,353.0
|
|
|
12.8
|
%
|
Total
|
|
$
|
3,435.3
|
|
|
$
|
2,963.7
|
|
|
$
|
471.6
|
|
|
15.9
|
%
|
|
$
|
(1.4)
|
|
|
$
|
3,433.9
|
|
|
$
|
(1.7)
|
|
|
$
|
5.0
|
|
|
$
|
2,967.0
|
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Numbers may not
calculate due to rounding.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/edwards-lifesciences-reports-fourth-quarter-results-300592218.html
SOURCE Edwards Lifesciences Corporation