IRVINE, Calif., July 23,
2020 /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, 2020.
Second Quarter Highlights and Outlook
- Sales declined 15% to $925
million; underlying1 sales declined 14%
- TAVR sales declined 12%; underlying1 sales declined
11%
- Previously announced IP settlement resulted in $368 million charge
- EPS was $(0.20);
adjusted1 EPS decreased 26% to $0.34
- Received FDA approval to initiate EVOQUE tricuspid replacement
pivotal trial
- 2020 sales guidance reiterated: $4.0
billion to $4.5 billion
- 2020 adjusted EPS guidance increased: $1.75 to $1.95 from
$1.58 to $1.75
"Even with the heroic efforts of the healthcare community, we
know that this remains a very difficult time for the patients we
serve as they continue to weigh the risk of COVID-19 against the
severe effects of progressive heart valve disease. Edwards is
committed to providing the opportunity for faster procedures,
shorter hospital stays, and exceptional patient outcomes," said
Michael A. Mussallem, chairman and
CEO. "Irrespective of the unpredictable surges of this deadly
pandemic, there is growing recognition that valve therapy should
not be postponed as these patients have an urgent need."
Second Quarter 2020 Results
Sales for the quarter
ended June 30, 2020 were $925
million, a decrease of 15% over the prior year, or down 14%
on an underlying basis. Diluted earnings per share for the
quarter were negative $0.20, while
adjusted earnings per share decreased 26% to $0.34.
Transcatheter Aortic Valve Replacement (TAVR)
For the
quarter, the company reported global TAVR sales of $594 million, a decrease of 12% over the second
quarter last year, or down 11% on an underlying basis. Globally,
average selling prices were stable.
"As expected, sales were depressed in April as patients and
providers turned their focus to the pandemic response.
However, we were encouraged by steady improvement in procedure
volumes throughout May and June, when approximately 90% of our
active sites performed TAVR cases. This is a testament to the
dedicated heart teams and our committed clinical field teams.
We hear from a number of clinicians that new patients are
increasingly entering the system as they seek treatment for severe
aortic stenosis," said Mussallem.
Transcatheter Mitral and Tricuspid Therapies (TMTT)
In
the mitral position, Edwards is developing repair therapies with
PASCAL and Cardioband as well as replacement therapies with the
SAPIEN M3 and the EVOQUE system. In the tricuspid position,
the company is pursuing the PASCAL and Cardioband repair therapies
and the EVOQUE system for use in tricuspid replacement. The
company has early commercial sales in Europe with several of these therapies, and is
advancing each of these platforms, including five pivotal studies
underway in the U.S.
Second quarter TMTT sales were $6
million, and Edwards was pleased to recently announce an
intellectual property agreement which allows the company to fully
dedicate time and resources to helping patients.
As previously announced, last quarter the company temporarily
paused new enrollments for its active mitral and tricuspid pivotal
clinical trials. In consultation with investigators and
hospitals, more than half of the company's trial sites have been
re-activated and are beginning to treat patients. The company
anticipates enrollment in CLASP IID/IIF and CLASP II TR trials will
continue to increase in the third and fourth quarters and is still
targeting U.S. approval of PASCAL device for patients with
degenerative mitral regurgitation in 2022.
The company is pleased to announce FDA approval to initiate a
pivotal study for the EVOQUE tricuspid replacement system, which is
designed to gain U.S. approval and has breakthrough device
designation from the FDA. The TRISCEND II study is a
prospective, multi-center, randomized pivotal clinical trial to
evaluate the EVOQUE system compared to optimal medical therapy
alone in patients with severe tricuspid regurgitation.
Surgical Structural Heart and Critical Care
Surgical
Structural Heart sales for the quarter were $161 million, a decrease of 26% compared to the
second quarter of 2019, or down 25% on an underlying basis.
Second quarter sales were primarily impacted by COVID-19, while
ongoing adoption of TAVR also contributed to U.S. surgical aortic
valve procedure headwinds. The company remains encouraged by
clinician enthusiasm for Edwards' resilient tissue valves, both the
INSPIRIS RESILIA aortic valve and the recently FDA-approved KONECT
RESILIA aortic valved conduit. Additionally, the company
reported successful completion of the first commercial cases of the
HARPOON mitral valve repair system in Europe.
Critical Care sales were $164
million for the quarter, representing a decrease of 11%
versus the second quarter of 2019, or down 10% on an underlying
basis. Increased demand for TruWave disposable pressure
monitoring devices used in the ICU remained strong in the second
quarter, but was not sufficient to offset the COVID-driven impact
of delayed elective procedures. The company also experienced
a decline in HemoSphere advanced monitoring platform orders in the
U.S. as hospitals continue to limit their capital spending as a
result of COVID-19.
Additional Financial Results
For the quarter, the
company's adjusted gross margin was 74.4%, down from 76.4% in the
prior year quarter. This year's rate included incremental costs
associated with responding to COVID-19, and a negative impact from
foreign exchange.
Selling, general and administrative expenses in the second
quarter were $275 million, or 29.7%
of sales, compared to $308 million in
the prior year. This reduced spending resulted from the impact of
COVID-19, which interrupted the company's planned flow of operating
expenses.
Research and development expenses in the second quarter were
$182 million, or 19.7% of sales,
compared to $192 million in the prior
year. This decrease was primarily the result of high clinical
spending in the prior year, as well as reduced current year
clinical trial activity due to COVID-19.
Free cash flow for the second quarter was $123 million, defined as cash flow from operating
activities of $231 million, less
capital spending of $108 million.
Cash and investments totaled $1.7
billion at June 30, 2020. Total debt was
$595 million.
Outlook
The company's guidance assumes that a
progressive recovery is likely during the second half of the year.
The company's sales grew 19% in the second of half of 2019, so
year-over-year comparisons will remain challenging. Even so,
Edwards expects sales in the third quarter to return to 2019
levels, and for sales to start growing again in the fourth
quarter.
Overall, 2020 sales guidance for Edwards continues to be
$4.0 to $4.5
billion. For the third quarter of 2020, the company projects
total sales to be between $1.0 and
$1.2 billion. The company now expects
full-year 2020 adjusted earnings per share of $1.75 to $1.95 on a
post-split basis, versus previous guidance of $1.58 to $1.75, or
on a pre-split basis, $4.75 to
$5.25.
"Due to the unpredictability of COVID-19, including additional
waves and isolated flare ups and the associated impact on the
healthcare system, we are preparing to deal with the ups and downs
of this pandemic for the foreseeable future. Because of the
severe condition of the patients we serve and our strong
patient-focused team, I remain confident in our ability to continue
to successfully deliver during this global crisis," said
Mussallem.
About Edwards Lifesciences
Edwards Lifesciences, based
in Irvine, Calif., is the global
leader of patient-focused medical innovations for structural heart
disease and critical care monitoring. We are driven by a
passion for patients, dedicated to improving and enhancing lives
through partnerships with clinicians and stakeholders across the
global healthcare landscape. For more information, visit
Edwards.com and follow us on Facebook, Instagram, LinkedIn, Twitter
and YouTube.
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 13705594. 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.
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," "potential," "predict," "early
clinician feedback," "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, third quarter and full year 2020
financial guidance, trial enrollment numbers, rate of new patients
entering the system, success in navigating the global crisis,
future therapy opportunities and information in the Outlook
section. Statements of past performance, efforts, or results
about which inferences or assumptions may be made can also be
forward-looking statements and are not indicative of future
performance or results. 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, difficult to predict, and may be outside of the
company's control; these assumptions include, but are not limited
to, that the most severe impacts of COVID-19 have passed and that
the second half of the year will demonstrate a progressive
recovery. 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 risk and uncertainties associated with
COVID-19 pandemic, clinical trial or commercial results or 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, 2019 and its Quarterly Report on
Form 10-Q for the quarter ended March
31, 2020. These filings, along with important safety
information about our products, may be found at edwards.com.
Edwards, Edwards Lifesciences, the stylized E logo, Cardioband,
CLASP, EVOQUE, HARPOON, HemoSphere, INSPIRIS, INSPIRIS RESILIA,
KONECT, KONECT RESILIA, PASCAL, RESILIA, SAPIEN, SAPIEN M3,
TRISCEND, and TruWave 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 rate
fluctuations and includes the prior year sales results of a
business acquired as if the acquisition had occurred at the
beginning of the earliest period presented. Adjusted earnings
per share is a non-GAAP item computed on a diluted basis and in
this press release excludes intellectual property litigation
expenses, amortization of intangible assets, fair value adjustments
to contingent consideration liabilities arising from acquisitions,
significant charges associated with TAVR inventory write-offs, and
the purchase of intellectual property. 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
925.0
|
|
|
$
|
1,086.9
|
|
|
$
|
2,053.7
|
|
|
$
|
2,079.9
|
|
Cost of
sales
|
238.2
|
|
|
304.0
|
|
|
503.3
|
|
|
535.8
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
686.8
|
|
|
782.9
|
|
|
1,550.4
|
|
|
1,544.1
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
274.9
|
|
|
308.5
|
|
|
582.7
|
|
|
588.8
|
|
Research and
development expenses
|
182.1
|
|
|
191.9
|
|
|
369.5
|
|
|
363.3
|
|
Intellectual property
litigation expenses
|
379.9
|
|
|
7.0
|
|
|
392.4
|
|
|
11.6
|
|
Change in fair value
of contingent consideration liabilities, net
|
19.6
|
|
|
8.0
|
|
|
17.4
|
|
|
14.7
|
|
Special
charge
|
—
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
(169.7)
|
|
|
267.5
|
|
|
188.4
|
|
|
541.7
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
(1.8)
|
|
|
(2.4)
|
|
|
(6.3)
|
|
|
(4.4)
|
|
Other expense
(income), net
|
0.3
|
|
|
(1.4)
|
|
|
(1.6)
|
|
|
(3.2)
|
|
|
|
|
|
|
|
|
|
(Loss) income before
(benefit from) provision for income taxes
|
(168.2)
|
|
|
271.3
|
|
|
196.3
|
|
|
549.3
|
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
(46.3)
|
|
|
29.0
|
|
|
7.6
|
|
|
57.3
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(121.9)
|
|
|
$
|
242.3
|
|
|
$
|
188.7
|
|
|
$
|
492.0
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per share: (A)
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.20)
|
|
|
$
|
0.39
|
|
|
$
|
0.30
|
|
|
$
|
0.79
|
|
Diluted
|
$
|
(0.20)
|
|
|
$
|
0.38
|
|
|
$
|
0.30
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding: (A)
|
|
|
|
|
|
|
|
Basic
|
620.3
|
|
|
624.4
|
|
|
622.5
|
|
|
624.1
|
|
Diluted
|
620.3
|
|
|
636.2
|
|
|
627.7
|
|
|
636.4
|
|
|
|
|
|
|
|
|
|
Operating
statistics
|
|
|
|
|
|
|
|
As a percentage of
net sales:
|
|
|
|
|
|
|
|
Gross
profit
|
74.2
|
%
|
|
72.0
|
%
|
|
75.5
|
%
|
|
74.2
|
%
|
Selling, general, and
administrative expenses
|
29.7
|
%
|
|
28.4
|
%
|
|
28.4
|
%
|
|
28.3
|
%
|
Research and
development expenses
|
19.7
|
%
|
|
17.7
|
%
|
|
18.0
|
%
|
|
17.5
|
%
|
Operating (loss)
income
|
(18.3)
|
%
|
|
24.6
|
%
|
|
9.2
|
%
|
|
26.0
|
%
|
(Loss) income before
(benefit from) provision for income taxes
|
(18.2)
|
%
|
|
25.0
|
%
|
|
9.6
|
%
|
|
26.4
|
%
|
Net (loss)
income
|
(13.2)
|
%
|
|
22.3
|
%
|
|
9.2
|
%
|
|
23.7
|
%
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
27.5
|
%
|
|
10.7
|
%
|
|
3.9
|
%
|
|
10.4
|
%
|
|
|
|
|
|
Note: Numbers may not
calculate due to rounding.
|
|
(A) All
share and per share amounts were adjusted for the May 29, 2020
three-for-one stock split.
|
EDWARDS
LIFESCIENCES CORPORATION
Unaudited Balance
Sheets
(in
millions)
|
|
|
June 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
903.5
|
|
|
$
|
1,179.1
|
|
Short-term
investments
|
260.3
|
|
|
337.8
|
|
Accounts and other
receivables, net
|
567.9
|
|
|
599.1
|
|
Inventories,
net
|
735.1
|
|
|
640.9
|
|
Prepaid
expenses
|
57.3
|
|
|
59.1
|
|
Other current
assets
|
166.2
|
|
|
168.0
|
|
Total current
assets
|
2,690.3
|
|
|
2,984.0
|
|
|
|
|
|
Long-term
investments
|
594.4
|
|
|
585.5
|
|
Property, plant, and
equipment, net
|
1,195.6
|
|
|
1,060.3
|
|
Operating lease
right-of-use assets
|
84.7
|
|
|
80.1
|
|
Goodwill
|
1,167.7
|
|
|
1,167.7
|
|
Other intangible
assets, net
|
333.5
|
|
|
336.5
|
|
Deferred income
taxes
|
204.1
|
|
|
172.2
|
|
Other
assets
|
153.8
|
|
|
101.8
|
|
|
|
|
|
Total
assets
|
$
|
6,424.1
|
|
|
$
|
6,488.1
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
849.4
|
|
|
$
|
876.9
|
|
Operating lease
liabilities
|
23.8
|
|
|
25.5
|
|
Total current
liabilities
|
873.2
|
|
|
902.4
|
|
|
|
|
|
Long-term
debt
|
594.7
|
|
|
594.4
|
|
Contingent
consideration liabilities
|
189.9
|
|
|
172.5
|
|
Taxes
payable
|
214.2
|
|
|
236.6
|
|
Operating lease
liabilities
|
66.0
|
|
|
58.9
|
|
Uncertain tax
positions
|
181.3
|
|
|
171.7
|
|
Other long-term
liabilities
|
465.7
|
|
|
203.3
|
|
|
|
|
|
Stockholders'
equity (A)
|
|
|
|
Common
stock
|
633.5
|
|
|
218.1
|
|
Additional paid-in
capital
|
1,323.9
|
|
|
1,623.3
|
|
Retained
earnings
|
3,930.3
|
|
|
3,741.6
|
|
Accumulated other
comprehensive loss
|
(146.1)
|
|
|
(156.0)
|
|
Treasury stock, at
cost
|
(1,902.5)
|
|
|
(1,278.7)
|
|
Total stockholders'
equity
|
3,839.1
|
|
|
4,148.3
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
6,424.1
|
|
|
$
|
6,488.1
|
|
|
|
|
|
|
(A)
Current year balances reflect the May 29, 2020 three-for-one stock
split. Balances at December 31, 2019 were not retroactively
adjusted to reflect the stock split.
|
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 rate fluctuations and
includes the prior year sales results of a business acquired as if
the acquisition had occurred at the beginning of the earliest
period presented. The Company uses the term "adjusted" to also
exclude intellectual property litigation expenses, amortization of
intangible assets, fair value adjustments to contingent
consideration liabilities arising from acquisitions, significant
charges associated with transcatheter aortic valve replacement
("TAVR") inventory write offs, and the purchase of intellectual
property.
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.
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.
The items described below are adjustments to the GAAP
financial results in the reconciliations that follow:
Litigation Settlement - In the second quarter of 2020,
the Company recorded a $367.9 million
charge to settle certain patent litigation related to transcatheter
mitral and tricuspid repair products.
TAVR Inventory Write Off - In the second quarter of 2019,
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 $12.5 million and $4.6
million in the first quarter of 2020 and 2019, respectively,
and $12.0 million and $7.0 million in the second quarter of 2020 and
2019, respectively.
Change in Fair Value of Contingent Consideration Liabilities,
net - The Company recorded income of $2.2 million and expense of $6.7 million in the first quarter of 2020 and
2019, respectively, and expenses of $19.6
million and $8.0 million in
the second quarter of 2020 and 2019, respectively, related to
changes in the fair value of its contingent consideration
liabilities arising from acquisitions.
Amortization of Intangible Assets - The Company recorded
amortization expense related to developed technology, patents and
trademarks in the amount of $1.7
million and $0.5 million in
the first quarter of 2020 and 2019, respectively, and $1.3 million and $1.2
million in the second quarter of 2020 and 2019,
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.
(Benefit from) Provision for Income Taxes - 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.
EDWARDS
LIFESCIENCES CORPORATION
Unaudited
Reconciliation of GAAP to Non-GAAP Financial
Information
(in millions,
except per share and percentage data)
|
|
|
|
Three Months Ended
June 30, 2020
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
(Loss)
Income
|
|
Net
(Loss)
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
925.0
|
|
|
74.2
|
%
|
|
$
|
(169.7)
|
|
|
$
|
(121.9)
|
|
|
$
|
(0.20)
|
|
|
27.5
|
%
|
Non-GAAP
adjustments: (A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation
settlement
|
|
—
|
|
|
—
|
|
|
367.9
|
|
|
367.9
|
|
|
0.49
|
|
|
(22.9)
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
12.0
|
|
|
12.0
|
|
|
0.02
|
|
|
0.4
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
19.6
|
|
|
19.6
|
|
|
0.03
|
|
|
3.1
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.2
|
|
|
1.3
|
|
|
1.3
|
|
|
—
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65.4)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
925.0
|
|
|
74.4
|
%
|
|
$
|
231.1
|
|
|
$
|
213.5
|
|
|
$
|
0.34
|
|
|
8.2
|
%
|
|
|
|
|
Three Months Ended
June 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS (D)
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
1,086.9
|
|
|
72.0
|
%
|
|
$
|
267.5
|
|
|
$
|
242.3
|
|
|
$
|
0.38
|
|
|
10.7
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory
write-off
|
|
—
|
|
|
4.3
|
|
|
46.2
|
|
|
46.2
|
|
|
0.06
|
|
|
1.0
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
7.0
|
|
|
7.0
|
|
|
0.01
|
|
|
0.2
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
8.0
|
|
|
0.01
|
|
|
(0.2)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.2
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
Purchase of
intellectual property
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.3)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
1,086.9
|
|
|
76.4
|
%
|
|
$
|
329.9
|
|
|
$
|
293.6
|
|
|
$
|
0.46
|
|
|
12.0
|
%
|
|
|
|
|
Six Months Ended
June 30, 2020
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax
Rate
|
GAAP
|
|
$
|
2,053.7
|
|
|
75.5
|
%
|
|
$
|
188.4
|
|
|
$
|
188.7
|
|
|
$
|
0.30
|
|
|
3.9
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation
settlement
|
|
—
|
|
|
—
|
|
|
367.9
|
|
|
367.9
|
|
|
0.49
|
|
|
6.7
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
24.5
|
|
|
24.5
|
|
|
0.03
|
|
|
1.5
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
17.4
|
|
|
17.4
|
|
|
0.02
|
|
|
0.2
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
3.0
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67.6)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
2,053.7
|
|
|
75.6
|
%
|
|
$
|
601.2
|
|
|
$
|
533.9
|
|
|
$
|
0.84
|
|
|
12.3
|
%
|
|
|
|
|
Six Months Ended
June 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS (D)
|
|
Effective
Tax
Rate
|
GAAP
|
|
$
|
2,079.9
|
|
|
74.2
|
%
|
|
$
|
541.7
|
|
|
$
|
492.0
|
|
|
$
|
0.77
|
|
|
10.4
|
%
|
Non-GAAP adjustments:
(A) (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory write
off
|
|
—
|
|
|
2.2
|
|
|
46.2
|
|
|
46.2
|
|
|
0.06
|
|
|
0.6
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
11.6
|
|
|
11.6
|
|
|
0.02
|
|
|
0.1
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
14.7
|
|
|
14.7
|
|
|
0.02
|
|
|
(0.1)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.7
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
Purchase of
intellectual property
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
24.0
|
|
|
0.03
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit from)
provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.3)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
2,079.9
|
|
|
76.5
|
%
|
|
$
|
639.9
|
|
|
$
|
574.1
|
|
|
$
|
0.90
|
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
(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.
|
(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.
|
(D)
|
All per share amounts
were adjusted for the May 29, 2020 three-for-one stock
split.
|
RECONCILIATION OF
GAAP DILUTED WEIGHTED-AVERAGE SHARES TO ADJUSTED DILUTED
WEIGHTED-AVERAGE SHARES
|
|
|
Three Months
Ended June 30,
|
|
2020
|
GAAP Diluted
Weighted-Average Shares Outstanding
|
620.3
|
Dilutive effect of
stock plans
|
9.2
|
Adjusted Diluted
Weighted-Average Shares Outstanding
(A)
|
629.5
|
|
|
|
|
|
|
|
(A)
|
GAAP diluted
weighted-average shares outstanding excludes shares associated with
the Edwards' stock plans during the three months ended June 30,
2020 as the impact is anti-dilutive since Edwards reported a net
loss during that period. After reflecting the non-GAAP
adjustments above, these shares become dilutive.
|
RECONCILIATION OF
SALES BY PRODUCT GROUP AND REGION
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Product Group (QTD)
|
|
2Q
2020
|
|
2Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
2Q 2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
594.3
|
|
|
$
|
677.7
|
|
|
$
|
(83.4)
|
|
|
(12.3)
|
%
|
|
$
|
—
|
|
|
$
|
(5.5)
|
|
|
$
|
672.2
|
|
|
(11.5)
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
6.1
|
|
|
7.0
|
|
|
(0.9)
|
|
|
(11.2)
|
%
|
|
—
|
|
|
(0.2)
|
|
|
6.8
|
|
|
(9.3)
|
%
|
Surgical
Structural Heart
|
|
160.9
|
|
|
217.8
|
|
|
(56.9)
|
|
|
(26.1)
|
%
|
|
—
|
|
|
(2.7)
|
|
|
215.1
|
|
|
(25.1)
|
%
|
Critical
Care
|
|
163.7
|
|
|
184.4
|
|
|
(20.7)
|
|
|
(11.3)
|
%
|
|
1.2
|
|
|
(3.3)
|
|
|
182.3
|
|
|
(10.2)
|
%
|
Total
|
|
$
|
925.0
|
|
|
$
|
1,086.9
|
|
|
$
|
(161.9)
|
|
|
(14.9)
|
%
|
|
$
|
1.2
|
|
|
$
|
(11.7)
|
|
|
$
|
1,076.4
|
|
|
(14.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Product Group (YTD)
|
|
YTD
2Q
2020
|
|
YTD
2Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
YTD 2Q
2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
1,336.5
|
|
|
$
|
1,275.4
|
|
|
$
|
61.1
|
|
|
4.8
|
%
|
|
$
|
—
|
|
|
$
|
(10.5)
|
|
|
$
|
1,264.9
|
|
|
5.7
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
16.6
|
|
|
11.3
|
|
|
5.3
|
|
|
47.6
|
%
|
|
—
|
|
|
(0.3)
|
|
|
11.0
|
|
|
51.2
|
%
|
Surgical
Structural Heart
|
|
354.3
|
|
|
432.5
|
|
|
(78.2)
|
|
|
(18.1)
|
%
|
|
—
|
|
|
(4.8)
|
|
|
427.7
|
|
|
(17.1)
|
%
|
Critical
Care
|
|
346.3
|
|
|
360.7
|
|
|
(14.4)
|
|
|
(4.0)
|
%
|
|
7.5
|
|
|
(4.6)
|
|
|
363.6
|
|
|
(4.7)
|
%
|
Total
|
|
$
|
2,053.7
|
|
|
$
|
2,079.9
|
|
|
$
|
(26.2)
|
|
|
(1.3)
|
%
|
|
$
|
7.5
|
|
|
$
|
(20.2)
|
|
|
$
|
2,067.2
|
|
|
(0.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Region (QTD)
|
|
2Q
2020
|
|
2Q
2019
|
|
Change
|
|
GAAP
Growth Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
2Q 2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
516.2
|
|
|
$
|
624.9
|
|
|
$
|
(108.7)
|
|
|
(17.4)
|
%
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
626.0
|
|
|
(17.5)
|
%
|
Europe
|
|
204.7
|
|
|
241.7
|
|
|
(37.0)
|
|
|
(15.2)
|
%
|
|
0.1
|
|
|
(7.6)
|
|
|
234.2
|
|
|
(12.5)
|
%
|
Japan
|
|
106.8
|
|
|
113.1
|
|
|
(6.3)
|
|
|
(5.5)
|
%
|
|
—
|
|
|
2.2
|
|
|
115.3
|
|
|
(7.5)
|
%
|
Rest of
World
|
|
97.3
|
|
|
107.2
|
|
|
(9.9)
|
|
|
(9.5)
|
%
|
|
—
|
|
|
(6.3)
|
|
|
100.9
|
|
|
(3.3)
|
%
|
International
|
|
408.8
|
|
|
462.0
|
|
|
(53.2)
|
|
|
(11.5)
|
%
|
|
0.1
|
|
|
(11.7)
|
|
|
450.4
|
|
|
(9.1)
|
%
|
Total
|
|
$
|
925.0
|
|
|
$
|
1,086.9
|
|
|
$
|
(161.9)
|
|
|
(14.9)
|
%
|
|
$
|
1.2
|
|
|
$
|
(11.7)
|
|
|
$
|
1,076.4
|
|
|
(14.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Region (YTD)
|
|
YTD
2Q
2020
|
|
YTD
2Q
2019
|
|
Change
|
|
GAAP
Growth Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
YTD 2Q
2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
1,183.6
|
|
|
$
|
1,187.7
|
|
|
$
|
(4.1)
|
|
|
(0.3)
|
%
|
|
$
|
6.7
|
|
|
$
|
—
|
|
|
$
|
1,194.4
|
|
|
(0.9)
|
%
|
Europe
|
|
454.0
|
|
|
476.4
|
|
|
(22.4)
|
|
|
(4.7)
|
%
|
|
0.4
|
|
|
(13.9)
|
|
|
462.9
|
|
|
(1.9)
|
%
|
Japan
|
|
216.8
|
|
|
211.5
|
|
|
5.3
|
|
|
2.5
|
%
|
|
0.2
|
|
|
3.2
|
|
|
214.9
|
|
|
0.9
|
%
|
Rest of
World
|
|
199.3
|
|
|
204.3
|
|
|
(5.0)
|
|
|
(2.5)
|
%
|
|
0.2
|
|
|
(9.5)
|
|
|
195.0
|
|
|
2.2
|
%
|
International
|
|
870.1
|
|
|
892.2
|
|
|
(22.1)
|
|
|
(2.5)
|
%
|
|
0.8
|
|
|
(20.2)
|
|
|
872.8
|
|
|
(0.3)
|
%
|
Total
|
|
$
|
2,053.7
|
|
|
$
|
2,079.9
|
|
|
$
|
(26.2)
|
|
|
(1.3)
|
%
|
|
$
|
7.5
|
|
|
$
|
(20.2)
|
|
|
$
|
2,067.2
|
|
|
(0.6)
|
%
|
|
|
|
* Numbers may not
calculate due to rounding.
|
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SOURCE Edwards Lifesciences Corporation