Edwards Lifesciences Corporation has released its second quarter financial results which are, on face value, bucking the trend by showing sales growth of almost 16% (albeit excluding currency impact) to $482m compared with the equivalent period last year. Closer examination reveals that growth is almost exclusively related to the company’s Sapien transcatheter heart valve, launched in U.S and seeing continued growth internationally.
Excluding special items, second quarter diluted earnings per share was $0.67, an increase of 36.7 percent over Q2 2011.
Second quarter net sales increased 11.8 percent to $482.0 million compared to the same period last year. Sales growth excluding the impact of foreign exchange was 15.7 percent.
Sales by division
Surgical Heart Valve Therapy product group sales of $200.5 million, declined 2.3 percent from the second quarter last year and were flat on an underlying(1) basis. Surgical heart valve sales growth was slightly negative compared to last year, and global pricing remained solid.
Sticking out like a sore thumb in the numbers, sales of transcatheter heart valves (THV) were $145.8 million for the quarter, 71% growth over the second quarter last year, or 83% on an underlying basis. This was largely driven by the U.S. launch of the SAPIEN valve, with sales of $61.4 million, and the product continued to show sales growth outside US of 15% on an underlying basis.
Critical Care product group sales were $135.7 million for the quarter, including vascular sales of $12.5 million. Critical care sales were $123.2 million, a decline of 3.5 percent, or 1.1 percent on an underlying basis. The company’s press release states that growth of advanced technology disposable products was offset by lower sales of hardware in the U.S. and a reduction of distributor inventory in China.
Further down the income statement
Excluding the impact of charges related to voluntary recalls of heart valves and critical care catheters, gross profit margin was 74.8 percent, compared to 70.4 percent in the same period last year. This improvement was driven by foreign exchange and a favorable product mix.
Sapien launch costs hit the selling, general and administrative expenses line, which came in at $182.4 million for the quarter compared to $163.2 million in the same period last year.
Research and development for the quarter grew 14% to $74.0 million, primarily the result of investment in The PARTNER II Trial, and new product development efforts in the company’s transcatheter valve programs.
Michael A. Mussallem, chairman and CEO stated “Given the strong second quarter performance of SAPIEN, we now expect $240 to $260 million of U.S. sales in 2012.”
“For the full year, we now expect global THV sales in the range of $550 to $600 million, and an underlying growth rate over last year that is between 80 and 90 percent.”
“Even in a challenging economic environment, we reported strong sales growth this quarter driven by the continued success of our U.S. transcatheter heart valve launch.”
“As the number of U.S. SAPIEN procedures grows rapidly, we are extremely pleased with the continued high success rate being achieved. During the quarter, we also cleared two significant milestones, the favorable FDA panel evaluating the SAPIEN valve for high-risk surgical patients and the issuance of the final National Coverage Decision defining U.S. reimbursement.”
The full release can be found here.
Source: Edwards Lifesciences Corporation, Market Wire