IRVINE, Calif., July 23, 2019 /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 June 30, 2019.
Second Quarter and Recent Highlights
- Sales grew 15% to $1.1 billion;
underlying1 sales grew 14%
- TAVR sales grew 16%; underlying grew 18%
- EPS was $1.14; adjusted EPS was
$1.38
- Announced increased 2019 sales and EPS guidance
- Strategic decision to discontinue CENTERA platform drove a
$46 million charge
- Favorable TAVR National Coverage Determination issued in
June
- Expects Q3 FDA approval of the SAPIEN 3 valve for patients with
low surgical risk
"We are pleased to report stronger than expected sales growth in
the second quarter, which continued a long-term trend of reaching
more patients with innovative therapies and creating value," said
Michael A. Mussallem, chairman and
CEO. "Increased demand for TAVR therapy resulted in
underlying total company sales growth of 14 percent, which also
reflected strength in all four of our product lines across all
regions."
Second Quarter 2019 Results
Sales for the quarter ended June 30, 2019 were $1.1 billion, up 15 percent over the prior year,
or 14 percent on an underlying basis. Diluted earnings per
share for the quarter was $1.14,
while adjusted earnings per share grew 11 percent, higher than
expected, to $1.38.
Transcatheter Aortic Valve Replacement (TAVR)
For the quarter, the company reported TAVR sales of $678 million, an increase of 16 percent over the
second quarter last year, or 18 percent on an underlying
basis. Edwards grew in-line with estimated global procedure
growth. Global average selling prices remained stable, and
the company estimates its global competitive position was
consistent with the first quarter and prior year.
"We now estimate that in the third quarter the FDA will approve
the SAPIEN 3 valve and SAPIEN 3 Ultra system for patients with
low surgical risk. Over time, we expect the SAPIEN 3 Ultra
valve system will replace SAPIEN 3 valve globally," said
Mussallem. "Given the pending approval for patients at low
surgical risk and the continued excellence and versatility of our
balloon expandable platform, we made the difficult decision to
discontinue the CENTERA program. While the CENTERA valve has
demonstrated excellent clinical outcomes and is performing well for
patients, the time and resources required to optimize
deliverability as well as expanding the indications to match the
SAPIEN 3 valve are significant. Going forward, we believe we
best address patient needs by focusing resources on our robust
pipeline of next generation balloon expandable technologies and
indication expansion trials."
Transcatheter Mitral and Tricuspid Therapies (TMTT)
Second quarter sales in TMTT were $7
million, lifted principally by commercial sales of the
PASCAL transcatheter mitral system in Europe. The company
continues to invest in opportunities to treat
patients suffering from tricuspid and mitral valve disease
with its transcatheter therapies. Edwards remains
on track to achieve its 2019 milestones, including continuing
enrollment in the company's CLASP IID Pivotal Trial, and expects to
initiate three additional pivotal trials by year-end.
Longer term, the company continues to estimate the global TMTT
opportunity to reach $3 billion by
2024.
Surgical Structural Heart and Critical Care
Surgical Structural Heart sales for the quarter were
$218 million, up 15 percent compared
to the second quarter last year, or up two percent on an underlying
basis. Growth was lifted by the sales of premium products,
particularly through adoption of the INSPIRIS RESILIA aortic valve,
which drove an increasing share of surgical aortic valve
procedures.
Critical Care sales were $184
million for the quarter, representing an increase of nine
percent versus last year, on both a reported and underlying
basis. All product categories contributed to this
performance, boosted by strong growth of HemoSphere advanced
monitoring platform sales in the U.S. In April, Edwards
successfully completed its acquisition of CASMED's FORE-SIGHT, a
non-invasive cerebral oximetry monitoring technology.
Additional Financial Results
For the quarter, the company's adjusted gross profit margin was
76.4 percent, compared to 74.4 percent in the same period last
year. This improvement was driven primarily by favorable
impacts from foreign exchange rates and product mix, partially
offset by investments in our global supply chain expansion.
Selling, general and administrative expenses increased 12
percent to $308 million for the
quarter, driven primarily by field personnel related expenses,
including expanding the TMTT field organization in Europe, partially offset by the strengthening
of the U.S. dollar.
Research and development for the second quarter increased 25
percent to $192 million, or 18
percent of sales. This was primarily the result of
significant investments in the company's innovative transcatheter
structural heart programs, including an increase in clinical
research.
During the quarter, the company recorded a $46 million charge primarily comprised of
inventory, related to its strategic decisions regarding its
transcatheter aortic valve portfolio.
Free cash flow for the second quarter was $277 million, defined as cash flow from operating
activities of $341 million, less
capital spending of $64 million.
Consistent with the company's plans to offset dilution from
equity-based compensation, Edwards repurchased 1.4 million shares
in the second quarter for $250
million.
Cash, cash equivalents and short-term investments totaled
$934 million at June 30,
2019. Total debt was $594
million.
Outlook
For 2019, the company now expects total sales to be between
$4.0 billion and $4.3 billion, with underlying sales growth around
the top end of its previous nine to 12 percent range.
Additionally, the company raised its full year 2019 adjusted
earnings per share guidance to $5.20
to $5.40 from $5.10 to $5.35.
For the third quarter 2019, the company projects total sales to
be between $1.02 billion
and $1.06 billion, and adjusted EPS of $1.13 to $1.23.
"We are very pleased with our strong performance in the first
half of 2019. As patients and clinicians increasingly
understand the significant benefits of transcatheter-based
technologies, supported by the substantial body of compelling
evidence, we remain as optimistic as ever about the long-term
growth opportunity. Our foundation of leadership, combined
with a robust technology pipeline, positions us well for continued
longer-term success," said Mussallem.
About Edwards Lifesciences
Edwards Lifesciences, based in Irvine,
Calif., is the global leader in patient-focused medical
innovations for structural heart disease and critical care
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 second 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 13691682. 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, estimates of the
company's competitive position, full year and third quarter 2019
financial guidance, statements regarding expected product
approvals, clinical investments and the company's 2019 milestones,
future therapy opportunities 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 new product
approvals and therapy adoption, particularly in TAVR and TMTT;
unpredictability of product launches; competitive dynamics; changes
to reimbursement 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, 2018. These filings, along
with important safety information about our products, may be found
at edwards.com.
Edwards, Edwards Lifesciences, the stylized E logo, CASMED,
CENTERA, FORE-SIGHT, Edwards SAPIEN, Edwards SAPIEN 3, Edwards
SAPIEN 3 Ultra, SAPIEN 3, SAPIEN 3 Ultra, HemoSphere, INSPIRIS,
INSPIRIS RESILIA, PASCAL, and RESILIA are trademarks of Edwards
Lifesciences Corporation or its affiliates. All other
trademarks are the property of their respective owners. This
statement is made on behalf of Edwards Lifesciences Corporation and
its subsidiaries.
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[1] "Adjusted"
amounts are non-GAAP items. Adjusted sales, or "underlying"
growth rates, in this press release excludes foreign exchange
fluctuations, the positive impact of transcatheter aortic valve
replacement ("TAVR") stocking sales in Germany and the negative
impact of de-stocking, the conversion to a consignment inventory
system for surgical structural heart ("Surgical") and includes the
prior year sales results of a business acquired in the current
year. Adjusted earnings per share is a non-GAAP item computed
on a diluted basis and in this press release excludes intellectual
property litigation income and expenses, amortization of intangible
assets, fair value adjustments to contingent consideration
liabilities arising from acquisitions, charges associated with TAVR
inventory write off and purchase of intellectual property, the
conversion to a consignment inventory system for Surgical, a
significant pension curtailment gain, the positive impact of TAVR
stocking sales in Germany and the negative impact of de-stocking,
and the impact from implementation of tax law changes and
settlements. See the Non-GAAP Financial Information page and
reconciliation tables below.
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EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited
Consolidated Statements of Operations
|
(in millions, except per share data)
|
|
|
Three Months
Ended June
30,
|
|
Six Months
Ended June
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
Cost of
sales
|
304.0
|
|
|
246.2
|
|
|
535.8
|
|
|
479.8
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
782.9
|
|
|
697.5
|
|
|
1,544.1
|
|
|
1,358.7
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
308.5
|
|
|
274.9
|
|
|
588.8
|
|
|
530.9
|
|
Research and
development expenses
|
191.9
|
|
|
154.1
|
|
|
363.3
|
|
|
297.3
|
|
Intellectual property
litigation expenses
|
7.0
|
|
|
5.5
|
|
|
11.6
|
|
|
11.2
|
|
Change in fair value
of contingent consideration liabilities, net
|
8.0
|
|
|
10.9
|
|
|
14.7
|
|
|
14.7
|
|
Special
charge
|
—
|
|
|
—
|
|
|
24.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Operating
income
|
267.5
|
|
|
252.1
|
|
|
541.7
|
|
|
504.6
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
(2.4)
|
|
|
—
|
|
|
(4.4)
|
|
|
(0.8)
|
|
Special
gain
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.1)
|
|
Other (income)
expense, net
|
(1.4)
|
|
|
1.1
|
|
|
(3.2)
|
|
|
(2.0)
|
|
|
|
|
|
|
|
|
|
Income before
provision for (benefit from) income taxes
|
271.3
|
|
|
251.0
|
|
|
549.3
|
|
|
514.5
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
29.0
|
|
|
(31.7)
|
|
|
57.3
|
|
|
25.2
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
242.3
|
|
|
$
|
282.7
|
|
|
$
|
492.0
|
|
|
$
|
489.3
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.16
|
|
|
$
|
1.35
|
|
|
$
|
2.37
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|
|
$
|
2.33
|
|
Diluted
|
$
|
1.14
|
|
|
$
|
1.32
|
|
|
$
|
2.32
|
|
|
$
|
2.28
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
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|
|
Basic
|
208.1
|
|
|
209.5
|
|
|
208.0
|
|
|
209.8
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|
Diluted
|
212.1
|
|
|
214.0
|
|
|
212.1
|
|
|
214.5
|
|
|
|
|
|
|
|
|
|
Operating
statistics
|
|
|
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|
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|
|
As a percentage of
net sales:
|
|
|
|
|
|
|
|
Gross
profit
|
72.0
|
%
|
|
73.9
|
%
|
|
74.2
|
%
|
|
73.9
|
%
|
Selling, general, and
administrative expenses
|
28.4
|
%
|
|
29.1
|
%
|
|
28.3
|
%
|
|
28.9
|
%
|
Research and
development expenses
|
17.7
|
%
|
|
16.3
|
%
|
|
17.5
|
%
|
|
16.2
|
%
|
Operating
income
|
24.6
|
%
|
|
26.7
|
%
|
|
26.0
|
%
|
|
27.4
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%
|
Income before
provision for (benefit from) income taxes
|
25.0
|
%
|
|
26.6
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%
|
|
26.4
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%
|
|
28.0
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%
|
Net income
|
22.3
|
%
|
|
30.0
|
%
|
|
23.7
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%
|
|
26.6
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%
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
10.7
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%
|
|
(12.6)
|
%
|
|
10.4
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%
|
|
4.9
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%
|
|
|
|
|
|
|
|
|
Note: Numbers may not
calculate due to rounding.
|
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited Balance
Sheets
|
(in
millions)
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
726.8
|
|
|
$
|
714.1
|
|
Short-term
investments
|
207.5
|
|
|
242.4
|
|
Accounts and other
receivables, net
|
609.6
|
|
|
537.3
|
|
Inventories,
net
|
624.9
|
|
|
607.0
|
|
Prepaid
expenses
|
55.7
|
|
|
54.3
|
|
Other current
assets
|
130.2
|
|
|
131.8
|
|
Total current
assets
|
2,354.7
|
|
|
2,286.9
|
|
|
|
|
|
Long-term
investments
|
412.9
|
|
|
506.3
|
|
Property, plant, and
equipment, net
|
931.1
|
|
|
867.5
|
|
Operating lease
right-of-use assets
|
71.2
|
|
|
—
|
|
Goodwill
|
1,173.9
|
|
|
1,112.2
|
|
Other intangible
assets, net
|
385.6
|
|
|
343.2
|
|
Deferred income
taxes
|
163.8
|
|
|
174.0
|
|
Other
assets
|
80.3
|
|
|
33.6
|
|
|
|
|
|
Total
assets
|
$
|
5,573.5
|
|
|
$
|
5,323.7
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
673.2
|
|
|
$
|
876.6
|
|
Operating lease
liabilities
|
23.8
|
|
|
—
|
|
Total current
liabilities
|
697.0
|
|
|
876.6
|
|
|
|
|
|
Long-term
debt
|
594.1
|
|
|
593.8
|
|
Contingent
consideration liabilities
|
193.3
|
|
|
178.6
|
|
Taxes
payable
|
236.7
|
|
|
259.4
|
|
Operating lease
liabilities
|
50.4
|
|
|
—
|
|
Uncertain tax
positions
|
139.5
|
|
|
124.9
|
|
Other long-term
liabilities
|
162.2
|
|
|
150.0
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Common
stock
|
216.9
|
|
|
215.2
|
|
Additional paid-in
capital
|
1,512.3
|
|
|
1,384.4
|
|
Retained
earnings
|
3,186.7
|
|
|
2,694.7
|
|
Accumulated other
comprehensive loss
|
(138.2)
|
|
|
(138.5)
|
|
Treasury stock, at
cost
|
(1,277.4)
|
|
|
(1,015.4)
|
|
Total stockholders'
equity
|
3,500.3
|
|
|
3,140.4
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
5,573.5
|
|
|
$
|
5,323.7
|
|
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, the
conversion to a consignment inventory system for surgical
structural heart ("Surgical"), the positive impact of transcatheter
aortic valve replacement ("TAVR") stocking sales in Germany and the
negative impact of de-stocking, and includes the prior year sales
results of a business acquired in the current year. The Company
uses the term "adjusted" to also exclude intellectual property
litigation income and expenses, amortization of intangible assets,
fair value adjustments to contingent consideration liabilities
arising from acquisitions, the positive impact of TAVR stocking
sales in Germany and the negative impact of de-stocking, the
conversion to a consignment inventory system for Surgical,
significant pension curtailment gains, charges associated with TAVR
inventory write off and purchase of intellectual property, and the
impact from implementation of tax law changes and settlements.
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 above 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:
TAVR Inventory Write Off - The Company recorded a
$46.2 million charge, primarily
comprised of the write off of inventory in response to strategic
decisions regarding its TAVR portfolio.
Intellectual Property Litigation Expenses - The Company
incurred intellectual property litigation expenses of $4.6 million and $5.7
million in the first quarter of 2019 and 2018, respectively,
and $7.0 million and $5.5 million in the second quarter of 2019 and
2018, respectively.
Change in Fair Value of Contingent Consideration Liabilities,
net - The Company recorded expenses related to changes in the
fair value of its contingent consideration liabilities arising from
acquisitions in the amount of $6.7
million and $3.8 million in
the first quarter of 2019 and 2018, respectively, and $8.0 million and $10.9
million in the second quarter of 2019 and 2018,
respectively.
Amortization of Intangible Assets - The Company recorded
amortization expense related to developed technology, patents and
trademarks in the amount of $0.5
million and $0.6 million in
the first quarter of 2019 and 2018, respectively, and $1.2 million and $0.7
million in the second quarter of 2019 and 2018,
respectively.
Purchase of Intellectual Property - The Company recorded
a $24.0 million charge in the first
quarter of 2019 related to the acquisition of early-stage
transcatheter intellectual property and associated clinical and
regulatory experience.
Surgical Consignment Conversion - In the first and second
quartera of 2018, the Company recorded a sales return reserve of
$34.7 million ($30.8 million, net of related costs) and
$28.4 million ($24.6 million, net of related costs),
respectively, related to its conversion to a consignment inventory
system for surgical heart valves.
TAVR 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 intellectual property litigation.
In the first quarter of 2018, these customers consumed on a net
basis $8.0 million ($6.0 million, net of related costs) of their
stocking inventory.
Pension Curtailment Gain - The Company recorded a
$7.1 million gain in the first
quarter of 2018 related to the curtailment of its defined benefit
plan resulting from the closure of its manufacturing plant in
Switzerland.
Provision for (Benefit from) Income Taxes - During the
first quarter of 2018, the Company recorded a $24.0 million tax expense to adjust its estimated
provisional amounts related to the implementation of U.S. tax law
changes. During the second quarter of 2018, the Company recorded a
$36.1 million tax benefit related to
the settlement of tax audits and a $17.3
million benefit related to the reorganization of a foreign
entity and adjustments to estimated provisional amounts resulting
from the U.S. tax law changes. The income tax impact of the
expenses and gains discussed above is based upon the items'
forecasted 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 the first quarter of 2019, the Company
excluded from its calculation of free cash flow payments related to
a litigation settlement.
EDWARDS
LIFESCIENCES CORPORATION
|
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
|
(in millions,
except per share and percentage data)
|
|
GAAP TO ADJUSTED
RECONCILIATIONS
|
|
|
|
Three Months Ended
June 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax
Rate
|
GAAP
|
|
$
|
1,086.9
|
|
|
72.0
|
%
|
|
$
|
267.5
|
|
|
$
|
242.3
|
|
|
$
|
1.14
|
|
|
10.7
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory write
off
|
|
—
|
|
|
4.3
|
|
|
46.2
|
|
|
46.2
|
|
|
0.18
|
|
|
1.0
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
7.0
|
|
|
7.0
|
|
|
0.02
|
|
|
0.2
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
8.0
|
|
|
0.04
|
|
|
(0.2)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.2
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
Purchase of
intellectual property
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.3)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts (D)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
1,086.9
|
|
|
76.4
|
%
|
|
$
|
329.9
|
|
|
$
|
293.6
|
|
|
$
|
1.38
|
|
|
12.0
|
%
|
|
|
|
|
|
Three Months Ended
June 30, 2018
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
943.7
|
|
|
73.9
|
%
|
|
$
|
252.1
|
|
|
$
|
282.7
|
|
|
$
|
1.32
|
|
|
(12.6)
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
Surgical consignment
conversion
|
|
28.4
|
|
|
0.4
|
|
|
24.6
|
|
|
24.6
|
|
|
0.09
|
|
|
2.7
|
|
TAVR Germany stocking
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
5.5
|
|
|
5.5
|
|
|
0.02
|
|
|
0.6
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
10.9
|
|
|
10.9
|
|
|
0.05
|
|
|
0.5
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
0.7
|
|
|
0.7
|
|
|
—
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.7)
|
|
|
—
|
|
|
—
|
|
Tax audit
settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.1)
|
|
|
(0.17)
|
|
|
12.5
|
|
Impacts from U.S. tax
legislation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17.3)
|
|
|
(0.07)
|
|
|
5.9
|
|
Prior period ongoing
tax impacts (D)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
972.1
|
|
|
74.4
|
%
|
|
$
|
293.8
|
|
|
$
|
264.4
|
|
|
$
|
1.24
|
|
|
9.7
|
%
|
|
|
|
|
|
Six Months Ended
June 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
2,079.9
|
|
|
74.2
|
%
|
|
$
|
541.7
|
|
|
$
|
492.0
|
|
|
$
|
2.32
|
|
|
10.4
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory write
off
|
|
—
|
|
|
2.2
|
|
|
46.2
|
|
|
46.2
|
|
|
0.18
|
|
|
0.6
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
11.6
|
|
|
11.6
|
|
|
0.04
|
|
|
0.1
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
14.7
|
|
|
14.7
|
|
|
0.07
|
|
|
(0.1)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.7
|
|
|
1.7
|
|
|
0.01
|
|
|
—
|
|
Impairment of
long-lived assets
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
24.0
|
|
|
0.09
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.3)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts (D)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
2,079.9
|
|
|
76.5
|
%
|
|
$
|
639.9
|
|
|
$
|
574.1
|
|
|
2.71
|
|
|
11.3
|
%
|
|
|
|
|
|
Six Months Ended
June 30, 2018
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
1,838.5
|
|
|
73.9
|
%
|
|
$
|
504.6
|
|
|
$
|
489.3
|
|
|
$
|
2.28
|
|
|
4.9
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
SHV consignment
conversion
|
|
63.1
|
|
|
0.5
|
|
|
55.4
|
|
|
55.4
|
|
|
0.21
|
|
|
1.1
|
|
TAVR Germany stocking
sales
|
|
8.0
|
|
|
—
|
|
|
6.0
|
|
|
6.0
|
|
|
0.02
|
|
|
0.2
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|
11.2
|
|
|
0.04
|
|
|
0.3
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
14.7
|
|
|
14.7
|
|
|
0.07
|
|
|
—
|
|
Amortization of
intangible assets
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
|
0.01
|
|
|
—
|
|
Pension curtailment
gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.1)
|
|
|
(0.03)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.9)
|
|
|
—
|
|
|
—
|
|
Tax audit
settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36.1)
|
|
|
(0.17)
|
|
|
6.2
|
|
Impacts from U.S. tax
legislation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.7
|
|
|
0.03
|
|
|
(1.2)
|
|
Prior period ongoing
tax impacts (D)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
1,909.6
|
|
|
74.4
|
%
|
|
$
|
593.2
|
|
|
$
|
527.6
|
|
|
2.46
|
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(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 TAVR 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.
|
RECONCILIATION OF
SALES BY PRODUCT GROUP AND REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Adjusted
|
|
|
Sales by Product Group (QTD)
|
|
2Q
2019
|
|
2Q
2018
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
Surgical
Consignment
Conversion
|
|
Germany
Stocking
|
|
FX
Impact
|
|
2Q 2018
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
677.7
|
|
|
$
|
584.0
|
|
|
$
|
93.7
|
|
|
16.0
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10.6)
|
|
|
$
|
573.4
|
|
|
18.2
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
7.0
|
|
|
0.9
|
|
|
6.1
|
|
|
NM
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
NM
|
|
Surgical
Structural Heart
|
|
217.8
|
|
|
190.3
|
|
|
27.5
|
|
|
14.5
|
%
|
|
—
|
|
|
28.4
|
|
|
—
|
|
|
(5.4)
|
|
|
213.3
|
|
|
2.1
|
%
|
Critical
Care
|
|
184.4
|
|
|
168.5
|
|
|
15.9
|
|
|
9.4
|
%
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
(3.9)
|
|
|
168.8
|
|
|
9.2
|
%
|
Critical Care excluding
CASMED
|
|
179.6
|
|
|
168.5
|
|
|
11.1
|
|
|
6.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8)
|
|
|
164.7
|
|
|
9.0
|
%
|
CASMED
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
|
NM
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
4.1
|
|
|
15.9
|
%
|
Total
|
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
143.2
|
|
|
15.2
|
%
|
|
$
|
4.2
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
(19.9)
|
|
|
$
|
956.4
|
|
|
13.6
|
%
|
Total Sales excluding
CASMED
|
|
$
|
1,082.1
|
|
|
$
|
943.7
|
|
|
$
|
138.4
|
|
|
14.7
|
%
|
|
$
|
—
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
(19.8)
|
|
|
$
|
952.3
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Adjusted
|
|
|
Sales by Product Group (YTD)
|
|
YTD
2Q
2019
|
|
YTD
2Q
2018
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
Surgical
Consignment
Conversion
|
|
Germany
Stocking
|
|
FX
Impact
|
|
YTD 2Q
2018
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
1,275.4
|
|
|
$
|
1,135.1
|
|
|
$
|
140.3
|
|
|
12.4
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
$
|
(25.3)
|
|
|
$
|
1,117.8
|
|
|
14.1
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
11.3
|
|
|
1.4
|
|
|
9.9
|
|
|
NM
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
NM
|
|
Surgical
Structural Heart
|
|
432.5
|
|
|
369.8
|
|
|
62.7
|
|
|
17.0
|
%
|
|
—
|
|
|
63.1
|
|
|
—
|
|
|
(12.2)
|
|
|
420.7
|
|
|
2.8
|
%
|
Critical
Care
|
|
360.7
|
|
|
332.2
|
|
|
28.5
|
|
|
8.6
|
%
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
(8.5)
|
|
|
327.9
|
|
|
10.0
|
%
|
Critical Care excluding
CASMED
|
|
355.9
|
|
|
332.2
|
|
|
23.7
|
|
|
7.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.4)
|
|
|
323.8
|
|
|
9.9
|
%
|
CASMED
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
|
NM
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
4.1
|
|
|
15.9
|
%
|
Total
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
|
$
|
241.4
|
|
|
13.1
|
%
|
|
$
|
4.2
|
|
|
$
|
63.1
|
|
|
$
|
8.0
|
|
|
$
|
(46.0)
|
|
|
$
|
1,867.8
|
|
|
11.4
|
%
|
Total Sales excluding
CASMED
|
|
$
|
2,075.1
|
|
|
$
|
1,838.5
|
|
|
$
|
236.6
|
|
|
12.9
|
%
|
|
$
|
—
|
|
|
$
|
63.1
|
|
|
$
|
8.0
|
|
|
$
|
(45.9)
|
|
|
$
|
1,863.7
|
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Adjusted
|
|
|
Sales by Region (QTD)
|
|
2Q
2019
|
|
2Q
2018
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
Surgical
Consignment
Conversion
|
|
Germany
Stocking
|
|
FX
Impact
|
|
2Q
2018
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
624.9
|
|
|
$
|
512.1
|
|
|
$
|
112.8
|
|
|
22.0
|
%
|
|
$
|
3.5
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
544.0
|
|
|
14.8
|
%
|
Europe
|
|
241.7
|
|
|
228.0
|
|
|
13.7
|
|
|
6.0
|
%
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
(12.7)
|
|
|
215.7
|
|
|
12.0
|
%
|
Japan
|
|
113.1
|
|
|
102.6
|
|
|
10.5
|
|
|
10.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.3)
|
|
|
101.3
|
|
|
11.6
|
%
|
Rest of
World
|
|
107.2
|
|
|
101.0
|
|
|
6.2
|
|
|
6.3
|
%
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
(5.9)
|
|
|
95.4
|
|
|
12.4
|
%
|
International
|
|
462.0
|
|
|
431.6
|
|
|
30.4
|
|
|
7.1
|
%
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
(19.9)
|
|
|
412.4
|
|
|
12.0
|
%
|
Total
|
|
$
|
1,086.9
|
|
|
$
|
943.7
|
|
|
$
|
143.2
|
|
|
15.2
|
%
|
|
$
|
4.2
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
(19.9)
|
|
|
$
|
956.4
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Adjusted
|
|
|
Sales by Region (YTD)
|
|
YTD
2Q
2019
|
|
YTD
2Q
2018
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
Surgical
Consignment
Conversion
|
|
Germany
Stocking
|
|
FX
Impact
|
|
YTD 2Q
2018
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
1,187.7
|
|
|
$
|
991.6
|
|
|
$
|
196.1
|
|
|
19.8
|
%
|
|
$
|
3.5
|
|
|
$
|
63.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,058.2
|
|
|
12.2
|
%
|
Europe
|
|
476.4
|
|
|
458.0
|
|
|
18.4
|
|
|
4.0
|
%
|
|
0.4
|
|
|
—
|
|
|
8.0
|
|
|
(30.6)
|
|
|
435.8
|
|
|
9.3
|
%
|
Japan
|
|
211.5
|
|
|
195.3
|
|
|
16.2
|
|
|
8.2
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.6)
|
|
|
191.7
|
|
|
10.3
|
%
|
Rest of
World
|
|
204.3
|
|
|
193.6
|
|
|
10.7
|
|
|
5.6
|
%
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
(11.8)
|
|
|
182.1
|
|
|
12.2
|
%
|
International
|
|
892.2
|
|
|
846.9
|
|
|
45.3
|
|
|
5.4
|
%
|
|
0.7
|
|
|
—
|
|
|
8.0
|
|
|
(46.0)
|
|
|
809.6
|
|
|
10.2
|
%
|
Total
|
|
$
|
2,079.9
|
|
|
$
|
1,838.5
|
|
|
$
|
241.4
|
|
|
13.1
|
%
|
|
$
|
4.2
|
|
|
$
|
63.1
|
|
|
$
|
8.0
|
|
|
$
|
(46.0)
|
|
|
$
|
1,867.8
|
|
|
11.4
|
%
|
|
|
|
|
|
|
* Numbers may not
calculate due to rounding.
|
NM - Not
meaningful
|
View original
content:http://www.prnewswire.com/news-releases/edwards-lifesciences-reports-second-quarter-results-300889700.html
SOURCE Edwards Lifesciences Corporation