Devices & Diagnostics

EW performs slightly better than expected in Q2, looks forward to SAPIEN, mitral developments

Edwards LifeSciences Corp. reported a total revenue of $517 million for Q2, with 7.3 percent increased net sales, “driven by strong sales of transcatheter and surgical heart valves in both the U.S. and Europe,” CEO Michael Mussalem said. Combined, the two provided 16 percent of sales in the U.S., helped by the SAPIEN launch in the U.S.. […]

Edwards LifeSciences Corp. reported a total revenue of $517 million for Q2, with 7.3 percent increased net sales, “driven by strong sales of transcatheter and surgical heart valves in both the U.S. and Europe,” CEO Michael Mussalem said. Combined, the two provided 16 percent of sales in the U.S., helped by the SAPIEN launch in the U.S..

“For the quarter, our gross profit margin was 75.8% compared to 73.1% in the same period last year,” CFO Thomas Abate said, the result of a combination of sales and currency exchange rates.

Looking forward, Q3 might be affected by seasonality. Through the end of this year and into 2014, the company will continue to launch SAPIEN products, battle Medtronic over intellectual property and begin work on first in man mitral implants.

“The difference between Q2 and going forward, Q3 and Q4, is we lose some of the benefit on the year-over-year comparison due to FX,” CFO Thomas Abate said. In the first half of the year, the company had about $150 million from FX to “help.” “That pretty much dissipates in the back half. We still get benefit but not in comparison to last year. In terms of the manufacturing inefficiencies, if we can see that it’ll probably affect Q3, and potentially we think of them as near term, I can’t predict the exact phase out the way that would work. But remember, it’s somewhat related to all of the products that are coming in the beginning of ’14. So we’re trying to get ready for (SAPIEN) XT launches in the U.S., you’ve got (SAPIEN 3) Europe and those things. So production right now, we’re balancing a lot of things at the same time. And we also had a big adjustment we took to China in the first half, which affected the volumes in Critical Care. And that’s probably run through the system by the end of this year.”

EW anticipates receiving a CE Mark for the SAPIEN 3 by the end of the year. Though EW is excited about SAPIEN 3, a balloon-expandable valve, the product probably won’t make a big impact on stocking, Mussalem said. “We think that it’s going to open up the indication. But right now, it’s likely to have the same indication as we have today.”

“Sites are continuing to clear their capacity, they’re continuing to make some improvements on economics. And so, there’s a gradual, but I don’t expect sort of an abrupt change, and much change in the overall trajectory until we get to a (SAPIEN) XT introduction next year,” Mussalem said.

The company will also move toward first in man mitral implants, which Mussalem sees as a series, but would not elaborate on the timeline.

Of course, the continuing European litigation against Medtronic was also a focus. Mussalem said it could be two to six months before a decision is made in its suit against Medtronic on the validity of its Spenser patent in Germany.