IRVINE, Calif., Oct. 21, 2020 /PRNewswire/ -- Edwards
Lifesciences (NYSE: EW) today reported financial results for the
quarter ended September 30, 2020.
Third Quarter Highlights and Outlook
- Sales of $1.1 billion grew 4%;
similar underlying1 growth expected in the fourth
quarter
- TAVR global sales grew 6%
- EPS was $0.52;
adjusted1 EPS grew 9% to $0.51
- TMTT clinical trials now enrolling at pre-COVID levels
- 2020 adjusted EPS guidance increased to $1.85 to $1.95 from
$1.75 to $1.95
- 2021 TAVR sales expected to return to double-digit growth
"I am very proud of the way our passionate team is serving
patients during this difficult period. Our supply chain has
delivered and our field team has continued to support the dedicated
clinicians that count on Edwards," said Michael A. Mussallem, chairman and CEO.
"We are pleased to report better-than-expected third quarter
results despite the challenges of the ongoing COVID pandemic."
Third Quarter 2020 Results
Sales for the quarter ended September 30, 2020, were
$1.1 billion, an increase of 4% over
the prior year, on both a reported and underlying basis.
Diluted earnings per share for the quarter were $0.52, while adjusted earnings per share grew 9%
to $0.51.
Transcatheter Aortic Valve Replacement (TAVR)
For the quarter, the company reported global TAVR sales of
$745 million, an increase of 6% over
the third quarter last year. TAVR growth was led by continued
adoption of the Edwards SAPIEN valve platform and a step-up in
procedure volumes as newly diagnosed patients entered the system
and were treated. The company reported therapy adoption
across all geographies, with notable strength in Europe.
"Our observations indicate that most hospitals globally have
determined that they can safely treat their aortic stenosis
patients in need at the same time they care for COVID patients,"
said Mussallem.
Transcatheter Mitral and Tricuspid Therapies (TMTT)
Edwards continues to view the TMTT opportunity as one with
significant unmet patient needs and the potential to drive
significant growth. The company's focus is on the advancement
of three key value drivers, which it believes are the leading
indicators of success: the company's portfolio of differentiated
therapies, favorable real-world clinical outcomes and results from
rigorous pivotal trials which will ultimately support approvals and
adoption.
Third quarter global sales were $12
million as the company resumed activation of new centers in
Europe and increased commercial
procedures. Edwards continues to advance commercialization of
PASCAL in Europe and remains
focused on physician training, procedural success and patient
outcomes. The company is making progress on five TMTT pivotal
studies. While initial pivotal clinical trial results could
be delayed by a couple of quarters, Edwards is now enrolling
patients at pre-COVID rates.
"We continue to believe the TMTT opportunity remains significant
and expect a $3 billion global market
by 2025," said Mussallem. "We reiterate our confidence in
this long-term opportunity and are passionate about bringing a
portfolio of solutions for the many patients in need."
Surgical Structural Heart and Critical Care
Surgical Structural Heart sales for the quarter were $203 million, similar to 2019 levels.
During the third quarter, patients were more willing to seek heart
valve surgery and hospitals more able to manage surgical patient
flow. Ongoing prioritization of heart surgery in many
hospitals also contributed to rebounding case volumes.
Critical Care sales were $181
million for the quarter, in-line with the year-ago
period. Demand for the company's products used in cardiac
surgeries was solid but was offset by the COVID-driven impact of
delayed elective procedures. Sales of Edwards' TruWave
disposable pressure monitoring devices used in the ICU were lifted
by a large one-time order in Europe associated with ICU capacity
expansion.
Additional Financial Results
For the quarter, the company's adjusted gross margin was 75.5%,
down from 75.9% in the prior year quarter. This decrease was
driven by a negative impact from foreign currency fluctuations and
incremental costs associated with responding to COVID, partially
offset by improved manufacturing efficiencies.
Selling, general and administrative expenses in the third
quarter were $307 million, or 26.9%
of sales, compared to $306 million in
the prior year. This consistent level of spending included
increased transcatheter structural heart field personnel related
expenses, including expanding the TMTT field organization in
Europe, offset by reduced spending
resulting from COVID.
Research and development expenses in the third quarter were
$196 million, or 17.1% of sales,
compared to $195 million in the prior
year. This consistent level of spending included increased
investments in transcatheter mitral valve replacement clinical
trials, partially offset by lower TAVR clinical trial expenses and
reduced spending resulting from COVID.
Free cash flow for the third quarter was $113 million, defined as cash flow from operating
activities of $216 million, less
capital spending of $103 million.
Cash and investments totaled $1.9
billion at September 30, 2020. Total debt was
$595 million.
Outlook
For the fourth quarter of 2020, the company anticipates
year-over-year underlying sales growth similar to the third
quarter. The company is raising the bottom end of full-year
2020 adjusted earnings per share guidance to $1.85 to $1.95,
versus previous guidance of $1.75 to
$1.95. Looking ahead to 2021,
while still early in the forecasting process, the company
anticipates a return to double-digit TAVR growth and aspires to
double 2020 TMTT sales.
"Edwards is a dedicated member of the critical healthcare
infrastructure and I admire the agility, resourcefulness and
passion of our employees in maintaining their important work on
behalf of patients. Putting patients first has never been more
important than it is today," said Mussallem. "I'm grateful
for our extraordinary team and partners, and I am optimistic about
the future of continuing to deliver innovations to patients around
the world."
About Edwards
Lifesciences
Edwards Lifesciences is the global leader of patient-focused
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 third 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 13710472. 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, fourth quarter, full year 2020
and 2021 financial guidance, and statements regarding the TMTT
opportunity, and the pathway to success in TMTT, including, but not
limited to, approvals and adoption, 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. 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 (SEC), including its Annual Report on Form 10-K
for the year ended December 31, 2019 and the company's other
filings with the SEC. 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, PASCAL, SAPIEN, SAPIEN 3, 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
fluctuations. 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
1,140.9
|
|
|
$
|
1,094.0
|
|
|
$
|
3,194.6
|
|
|
$
|
3,173.9
|
|
Cost of
sales
|
281.0
|
|
|
292.4
|
|
|
784.3
|
|
|
828.2
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
859.9
|
|
|
801.6
|
|
|
2,410.3
|
|
|
2,345.7
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expenses
|
307.2
|
|
|
306.2
|
|
|
889.9
|
|
|
895.0
|
|
Research and
development expenses
|
195.5
|
|
|
195.5
|
|
|
565.0
|
|
|
558.8
|
|
Intellectual property
litigation expenses
|
8.4
|
|
|
7.9
|
|
|
400.8
|
|
|
19.5
|
|
Change in fair value
of contingent consideration liabilities, net
|
(9.0)
|
|
|
(2.3)
|
|
|
8.4
|
|
|
12.4
|
|
Special
charge
|
—
|
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
|
|
|
|
|
|
|
Operating
income
|
357.8
|
|
|
294.3
|
|
|
546.2
|
|
|
836.0
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
(0.8)
|
|
|
(2.8)
|
|
|
(7.1)
|
|
|
(7.2)
|
|
Other income,
net
|
(5.7)
|
|
|
(4.6)
|
|
|
(7.3)
|
|
|
(7.8)
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
364.3
|
|
|
301.7
|
|
|
560.6
|
|
|
851.0
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
39.1
|
|
|
27.0
|
|
|
46.7
|
|
|
84.3
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
325.2
|
|
|
$
|
274.7
|
|
|
$
|
513.9
|
|
|
$
|
766.7
|
|
|
|
|
|
|
|
|
|
Earnings per
share: (A)
|
|
|
|
|
|
|
|
Basic
|
$
|
0.52
|
|
|
$
|
0.44
|
|
|
$
|
0.83
|
|
|
$
|
1.23
|
|
Diluted
|
$
|
0.52
|
|
|
$
|
0.43
|
|
|
$
|
0.82
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding: (A)
|
|
|
|
|
|
|
|
Basic
|
622.1
|
|
|
624.6
|
|
|
622.3
|
|
|
624.3
|
|
Diluted
|
631.0
|
|
|
636.3
|
|
|
628.8
|
|
|
636.3
|
|
|
|
|
|
|
|
|
|
Operating
statistics
|
|
|
|
|
|
|
|
As a percentage of
net sales:
|
|
|
|
|
|
|
|
Gross
profit
|
75.4
|
%
|
|
73.3
|
%
|
|
75.4
|
%
|
|
73.9
|
%
|
Selling, general, and
administrative expenses
|
26.9
|
%
|
|
28.0
|
%
|
|
27.9
|
%
|
|
28.2
|
%
|
Research and
development expenses
|
17.1
|
%
|
|
17.9
|
%
|
|
17.7
|
%
|
|
17.6
|
%
|
Operating
income
|
31.4
|
%
|
|
26.9
|
%
|
|
17.1
|
%
|
|
26.3
|
%
|
Income before
provision for income taxes
|
31.9
|
%
|
|
27.6
|
%
|
|
17.5
|
%
|
|
26.8
|
%
|
Net income
|
28.5
|
%
|
|
25.1
|
%
|
|
16.1
|
%
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
10.7
|
%
|
|
8.9
|
%
|
|
8.3
|
%
|
|
9.9
|
%
|
|
|
|
|
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)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,024.0
|
|
|
$
|
1,179.1
|
|
Short-term
investments
|
271.3
|
|
|
337.8
|
|
Accounts receivable,
net
|
549.7
|
|
|
543.6
|
|
Other
receivables
|
122.0
|
|
|
55.5
|
|
Inventories,
net
|
773.3
|
|
|
640.9
|
|
Prepaid
expenses
|
68.6
|
|
|
59.1
|
|
Other current
assets
|
171.5
|
|
|
168.0
|
|
Total current
assets
|
2,980.4
|
|
|
2,984.0
|
|
|
|
|
|
Long-term
investments
|
599.0
|
|
|
585.5
|
|
Property, plant, and
equipment, net
|
1,276.3
|
|
|
1,060.3
|
|
Operating lease
right-of-use assets
|
89.5
|
|
|
80.1
|
|
Goodwill
|
1,170.0
|
|
|
1,167.7
|
|
Other intangible
assets, net
|
332.4
|
|
|
336.5
|
|
Deferred income
taxes
|
215.2
|
|
|
172.2
|
|
Other
assets
|
138.0
|
|
|
101.8
|
|
|
|
|
|
Total
assets
|
$
|
6,800.8
|
|
|
$
|
6,488.1
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
822.1
|
|
|
$
|
876.9
|
|
Operating lease
liabilities
|
24.2
|
|
|
25.5
|
|
Total current
liabilities
|
846.3
|
|
|
902.4
|
|
|
|
|
|
Long-term
debt
|
594.9
|
|
|
594.4
|
|
Contingent
consideration liabilities
|
180.9
|
|
|
172.5
|
|
Taxes
payable
|
214.2
|
|
|
236.6
|
|
Operating lease
liabilities
|
71.0
|
|
|
58.9
|
|
Uncertain tax
positions
|
199.2
|
|
|
171.7
|
|
Other
liabilities
|
484.0
|
|
|
203.3
|
|
|
|
|
|
Stockholders'
equity (A)
|
|
|
|
Common
stock
|
635.0
|
|
|
218.1
|
|
Additional paid-in
capital
|
1,381.6
|
|
|
1,623.3
|
|
Retained
earnings
|
4,255.5
|
|
|
3,741.6
|
|
Accumulated other
comprehensive loss
|
(157.9)
|
|
|
(156.0)
|
|
Treasury stock, at
cost
|
(1,903.9)
|
|
|
(1,278.7)
|
|
Total stockholders'
equity
|
4,210.3
|
|
|
4,148.3
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
6,800.8
|
|
|
$
|
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 - The Company recorded a
$46.2 million charge in the second
quarter of 2019 and a $26.9 million
charge in the third quarter of 2019, 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,
$12.0 million and $7.0 million in the second quarter of 2020 and
2019, respectively, and $8.4 million
and $7.9 million in the third 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, expenses of $19.6
million and $8.0 million in
the second quarter of 2020 and 2019, respectively, and income of
$9.0 million and $2.3 million in the third 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, $1.3 million and $1.2
million in the second quarter of 2020 and 2019,
respectively, and $1.0 million and
$1.3 million in the third 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.
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
September 30, 2020
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
1,140.9
|
|
|
75.4
|
%
|
|
$
|
357.8
|
|
|
$
|
325.2
|
|
|
$
|
0.52
|
|
|
10.7
|
%
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|
8.4
|
|
|
0.01
|
|
|
0.3
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
(9.0)
|
|
|
(9.0)
|
|
|
(0.02)
|
|
|
—
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.0
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts (D)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
0.2
|
|
Adjusted
|
|
$
|
1,140.9
|
|
|
75.5
|
%
|
|
$
|
358.2
|
|
|
$
|
323.8
|
|
|
$
|
0.51
|
|
|
11.2
|
%
|
|
|
|
|
Three Months Ended
September 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS (C)
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
1,094.0
|
|
|
73.3
|
%
|
|
$
|
294.3
|
|
|
$
|
274.7
|
|
|
$
|
0.43
|
|
|
8.9
|
%
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory
write-off
|
|
—
|
|
|
2.5
|
|
|
26.9
|
|
|
26.9
|
|
|
0.03
|
|
|
1.3
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
7.9
|
|
|
7.9
|
|
|
0.01
|
|
|
0.4
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
(2.3)
|
|
|
(2.3)
|
|
|
—
|
|
|
(0.1)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
1.3
|
|
|
1.3
|
|
|
—
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.6)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7)
|
|
|
—
|
|
|
0.2
|
|
Adjusted
|
|
$
|
1,094.0
|
|
|
75.9
|
%
|
|
$
|
328.1
|
|
|
$
|
299.2
|
|
|
$
|
0.47
|
|
|
10.8
|
%
|
|
|
|
|
Nine Months Ended
September 30, 2020
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
3,194.6
|
|
|
75.4
|
%
|
|
$
|
546.2
|
|
|
$
|
513.9
|
|
|
$
|
0.82
|
|
|
8.3
|
%
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation
settlement
|
|
—
|
|
|
—
|
|
|
367.9
|
|
|
367.9
|
|
|
0.48
|
|
|
2.9
|
|
TAVR inventory write
off
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Surgical consignment
conversion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TAVR Germany stocking
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
32.9
|
|
|
32.9
|
|
|
0.04
|
|
|
0.6
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|
8.4
|
|
|
0.01
|
|
|
—
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.2
|
|
|
4.0
|
|
|
4.0
|
|
|
0.01
|
|
|
—
|
|
Purchase of
intellectual property
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Pension curtailment
gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68.6)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8)
|
|
|
—
|
|
|
0.1
|
|
Adjusted
|
|
$
|
3,194.6
|
|
|
75.6
|
%
|
|
$
|
959.4
|
|
|
$
|
857.7
|
|
|
$
|
1.36
|
|
|
11.9
|
%
|
|
|
|
|
Nine Months Ended
September 30, 2019
|
|
|
Net
Sales
|
|
Gross
Profit
Margin
|
|
Operating
Income
|
|
Net
Income
|
|
Diluted
EPS (C)
|
|
Effective
Tax Rate
|
GAAP
|
|
$
|
3,173.9
|
|
|
73.9
|
%
|
|
$
|
836.0
|
|
|
$
|
766.7
|
|
|
$
|
1.20
|
|
|
9.9
|
%
|
Non-GAAP adjustments:
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
TAVR inventory write
off
|
|
—
|
|
|
2.3
|
|
|
73.1
|
|
|
73.1
|
|
|
0.09
|
|
|
0.8
|
|
Intellectual property
litigation expenses
|
|
—
|
|
|
—
|
|
|
19.5
|
|
|
19.5
|
|
|
0.03
|
|
|
0.3
|
|
Change in fair value
of contingent consideration liabilities, net
|
|
—
|
|
|
—
|
|
|
12.4
|
|
|
12.4
|
|
|
0.02
|
|
|
(0.1)
|
|
Amortization of
intangible assets
|
|
—
|
|
|
0.1
|
|
|
3.0
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
Purchase of
intellectual property
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
24.0
|
|
|
0.03
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect on non-GAAP
adjustments (B)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.9)
|
|
|
—
|
|
|
—
|
|
Prior period ongoing
tax impacts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5)
|
|
|
—
|
|
|
—
|
|
Adjusted
|
|
$
|
3,173.9
|
|
|
76.3
|
%
|
|
$
|
968.0
|
|
|
$
|
873.3
|
|
|
$
|
1.37
|
|
|
11.2
|
%
|
|
|
|
|
|
(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 impact on the effective tax rate
is reflected on each individual non-GAAP adjustment line
item.
|
(C)
|
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
|
Nine Months
Ended
September 30,
|
|
2020
|
GAAP Diluted
Weighted-Average Shares Outstanding
|
628.8
|
|
Dilutive effect of
stock plans
|
3.0
|
|
Adjusted Diluted
Weighted-Average Shares Outstanding
(A)
|
631.8
|
|
|
|
|
|
|
(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 was 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)
|
|
3Q
2020
|
|
3Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX Impact
|
|
3Q 2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
744.6
|
|
|
$
|
700.0
|
|
|
$
|
44.6
|
|
|
6.4
|
%
|
|
$
|
—
|
|
|
$
|
4.4
|
|
|
$
|
704.4
|
|
|
5.7
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
12.1
|
|
|
9.7
|
|
|
2.4
|
|
|
23.7
|
%
|
|
—
|
|
|
0.4
|
|
|
10.1
|
|
|
19.8
|
%
|
Surgical
Structural Heart
|
|
203.3
|
|
|
204.1
|
|
|
(0.8)
|
|
|
(0.3)
|
%
|
|
—
|
|
|
1.9
|
|
|
206.0
|
|
|
(1.0)
|
%
|
Critical
Care
|
|
180.9
|
|
|
180.2
|
|
|
0.7
|
|
|
0.4
|
%
|
|
—
|
|
|
0.2
|
|
|
180.4
|
|
|
0.3
|
%
|
Total
|
|
$
|
1,140.9
|
|
|
$
|
1,094.0
|
|
|
$
|
46.9
|
|
|
4.3
|
%
|
|
$
|
—
|
|
|
$
|
6.9
|
|
|
$
|
1,100.9
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Product Group (YTD)
|
|
YTD
3Q
2020
|
|
YTD
3Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
YTD 3Q
2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
Transcatheter
Aortic Valve Replacement
|
|
$
|
2,081.1
|
|
|
$
|
1,975.4
|
|
|
$
|
105.7
|
|
|
5.3
|
%
|
|
$
|
—
|
|
|
$
|
(6.1)
|
|
|
$
|
1,969.3
|
|
|
5.7
|
%
|
Transcatheter
Mitral and Tricuspid Therapies
|
|
28.7
|
|
|
21.0
|
|
|
7.7
|
|
|
36.5
|
%
|
|
—
|
|
|
0.1
|
|
|
21.1
|
|
|
36.5
|
%
|
Surgical
Structural Heart
|
|
557.6
|
|
|
636.6
|
|
|
(79.0)
|
|
|
(12.4)
|
%
|
|
—
|
|
|
(2.9)
|
|
|
633.7
|
|
|
(12.0)
|
%
|
Critical
Care
|
|
527.2
|
|
|
540.9
|
|
|
(13.7)
|
|
|
(2.5)
|
%
|
|
7.5
|
|
|
(4.4)
|
|
|
544.0
|
|
|
(3.1)
|
%
|
Total
|
|
$
|
3,194.6
|
|
|
$
|
3,173.9
|
|
|
$
|
20.7
|
|
|
0.7
|
%
|
|
$
|
7.5
|
|
|
$
|
(13.3)
|
|
|
$
|
3,168.1
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Region (QTD)
|
|
3Q
2020
|
|
3Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
3Q 2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
662.0
|
|
|
$
|
647.8
|
|
|
$
|
14.2
|
|
|
2.2
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
647.8
|
|
|
2.2
|
%
|
Europe
|
|
253.8
|
|
|
222.6
|
|
|
31.2
|
|
|
13.9
|
%
|
|
—
|
|
|
8.7
|
|
|
231.3
|
|
|
10.2
|
%
|
Japan
|
|
113.9
|
|
|
112.9
|
|
|
1.0
|
|
|
0.8
|
%
|
|
—
|
|
|
1.0
|
|
|
113.9
|
|
|
—
|
%
|
Rest of
World
|
|
111.2
|
|
|
110.7
|
|
|
0.5
|
|
|
0.7
|
%
|
|
—
|
|
|
(2.8)
|
|
|
107.9
|
|
|
3.1
|
%
|
International
|
|
478.9
|
|
|
446.2
|
|
|
32.7
|
|
|
7.3
|
%
|
|
—
|
|
|
6.9
|
|
|
453.1
|
|
|
5.8
|
%
|
Total
|
|
$
|
1,140.9
|
|
|
$
|
1,094.0
|
|
|
$
|
46.9
|
|
|
4.3
|
%
|
|
$
|
—
|
|
|
$
|
6.9
|
|
|
$
|
1,100.9
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjusted
|
|
|
Sales by Region (YTD)
|
|
YTD
3Q
2020
|
|
YTD
3Q
2019
|
|
Change
|
|
GAAP
Growth
Rate*
|
|
CASMED
Acquisition
|
|
FX
Impact
|
|
YTD 3Q
2019
Adjusted
Sales
|
|
Underlying
Growth
Rate *
|
United
States
|
|
$
|
1,845.6
|
|
|
$
|
1,835.5
|
|
|
$
|
10.1
|
|
|
0.6
|
%
|
|
$
|
6.7
|
|
|
$
|
—
|
|
|
$
|
1,842.2
|
|
|
0.2
|
%
|
Europe
|
|
707.8
|
|
|
699.0
|
|
|
8.8
|
|
|
1.2
|
%
|
|
0.4
|
|
|
(5.2)
|
|
|
694.2
|
|
|
2.0
|
%
|
Japan
|
|
330.7
|
|
|
324.4
|
|
|
6.3
|
|
|
1.9
|
%
|
|
0.2
|
|
|
4.2
|
|
|
328.8
|
|
|
0.6
|
%
|
Rest of
World
|
|
310.5
|
|
|
315.0
|
|
|
(4.5)
|
|
|
(1.4)
|
%
|
|
0.2
|
|
|
(12.3)
|
|
|
302.9
|
|
|
2.5
|
%
|
International
|
|
1,349.0
|
|
|
1,338.4
|
|
|
10.6
|
|
|
0.8
|
%
|
|
0.8
|
|
|
(13.3)
|
|
|
1,325.9
|
|
|
1.8
|
%
|
Total
|
|
$
|
3,194.6
|
|
|
$
|
3,173.9
|
|
|
$
|
20.7
|
|
|
0.7
|
%
|
|
$
|
7.5
|
|
|
$
|
(13.3)
|
|
|
$
|
3,168.1
|
|
|
0.8
|
%
|
|
* Numbers may not
calculate due to rounding.
|
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SOURCE Edwards Lifesciences Corporation