• 2003 Net Income Grew 16.5 Percent Excluding Special Charges
• Company Affirms 2004 Financial Outlook
IRVINE, Calif., Feb. 3-- Edwards Lifesciences Corporation (NYSE: EW), a global leader in products and technologies to treat advanced cardiovascular disease, today reported net income for the quarter ended December 31, 2003 of $18.9 million, or $0.31 per diluted share, compared to net income in the prior year period of $21.7 million, or $0.36 per diluted share. Excluding special charges itemized in the table below, net income grew 22.6 percent to $26.6 million, or $0.44 per diluted share.
Fourth quarter sales of $224.1 million increased 10.3 percent compared to the same quarter last year. Sales increased 11.2 percent excluding the German perfusion service business divestiture, and foreign exchange (FX) contributed 8.2 percent to the quarter's growth.
"I'm pleased to report that we achieved our net income, free cash flow and R&D investment goals for the year. Although we missed our original goal for underlying sales growth, our numerous recent product launches give us confidence that our sales growth will accelerate in 2004," said Michael A. Mussallem, Edwards Lifesciences' chairman and CEO.
Sales Results
For the fourth quarter, the company reported Cardiac Surgery sales of $108.0 million, an 11.5 percent increase compared to the same quarter last year, with FX contributing 6.7 percent to the growth. "Competitive pressures in the U.S. continued to impact heart valve sales," Mussallem said. "We are more committed than ever to driving our underlying heart valve sales growth rate back to 10 percent. Through our newly launched products, intensified clinician education programs and expanded investment in our sales resources, we expect to accomplish this goal in 2004."
Critical Care sales of $75.6 million increased 11.6 percent compared to the same quarter last year, with FX contributing 8.6 percent to the growth. "Critical Care's growth was due primarily to market share gains in pressure monitoring products and strong results in emerging global markets," added Mussallem.
Vascular sales were $14.9 million, an 8.8 percent increase compared to the same quarter last year, with FX representing all of the growth. Increasing Lifepath AAA endovascular graft sales in Europe were offset by lower sales of base Vascular products. "The roll-out of our LifeStent peripheral stents continues to progress and we expect these products to meaningfully contribute to Vascular sales growth in the second half of the year," said Mussallem.
Fourth quarter Perfusion sales were essentially unchanged compared to the year ago quarter at $13.9 million. The favorable impact of FX on the quarter's growth rate was offset by the German perfusion service business divestiture.
Sales of Other Distributed Products grew 6.5 percent to $11.7 million in the quarter, with FX offsetting the small underlying sales decline.
Domestic and international sales were $95.3 million and $128.9 million for the quarter, respectively.
Additional Operating Results
For the quarter, Edwards' gross profit margin was 58.1 percent, an improvement from the 57.8 percent reported the previous year, resulting primarily from improved manufacturing performance, partially offset by FX. Selling, general and administrative (SG&A) expenses were $72.2 million for the quarter, or 32.2 percent of sales. SG&A was higher than the year-ago quarter due primarily to FX. Research and development (R&D) investments of $19.0 million increased 7.3 percent compared to the prior year quarter as Edwards continues to invest in its growth initiatives.
During the quarter, the company recorded $9 million in special charges, of which approximately $5 million was related to the previously announced settlement of its arbitration with Baxter International. Other charges in the quarter were $2 million related to the curtailment of the company's pension plan in Puerto Rico, and $2 million of in-process R&D expenses related to an acquisition of minimally invasive cardiac output technology.
In the quarter, the company used a portion of its strong cash flow to repay debt, which at December 31 was $256 million and resulted in a debt to capital ratio of 29 percent.
Twelve-Month Results
Net income for the 12 months ended December 31, 2003 was $79.0 million compared to net income of $55.7 million for 2002. Excluding special charges listed in the tables below, net income for the year increased 16.5 percent to $96.6 million compared to 2002.
Sales for year totaled $860.5 million, an increase of 22.2 percent compared to 2002. The net of the acquisition of the Japan cardiovascular business and the German perfusion services divestiture contributed 11.6 percent to the growth, and FX contributed an additional 6.2 percent. Domestic and international sales for the year were $384.3 million and $476.2 million, respectively.
2004 Outlook
"We are committed to accelerating Edwards' sales growth rate over the next several years. Our current investments in exciting market-expanding technologies, including the recent acquisition of Percutaneous Valve Technologies, Inc. (PVT), give us confidence that Edwards' financial performance will continue to substantially improve. Our recent product launches and sharpened focus provide the basis for a strong 2004 outlook." Mussallem continued, "Our financial goals for the year include driving sales in the range of $915 million and $940 million, growing investments in R&D at or above the underlying sales growth rate, delivering net income growth of 13 to 15 percent excluding the impact of the PVT transaction, and generating $90 million to $95 million of free cash flow. Additionally, we are comfortable with the First Call mean EPS estimates for the first quarter and full-year 2004."
About Edwards Lifesciences
Edwards Lifesciences, a leader in advanced cardiovascular disease treatments, is the number-one heart valve company in the world, and the global leader in acute hemodynamic monitoring. Headquartered in Irvine, Calif., Edwards focuses on four main cardiovascular disease states: heart valve disease, coronary artery disease, peripheral vascular disease and congestive heart failure. The company's global brands, which are sold in approximately 100 countries, include Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty. Additional company information can be found at http://www.edwards.com/.
Conference Call and Web Cast Information
Edwards Lifesciences will be hosting a conference call today at 4:30 p.m. EST to discuss the results of the fourth quarter. To participate in the conference call, dial 877-407-8037 or 201-689-8037. The call will also be available via live or archived Web cast on the "Investor Information" section of the Edwards' Web site at http://www.edwards.com/ or http://www.edwards.com/conference calls. A telephonic replay can be accessed for 72 hours by dialing 877-660-6853 or 201-612-7415 and using account number 2995 and passcode 89258.
This news release includes forward-looking statements that involve risks and uncertainties including those related to product introductions that are expected to impact sales and the sales growth rate, particularly in the Cardiac Surgery product line; growth in heart valve sales; the ability of consummated transactions to further strengthen the company's global leadership; the roll-out of the LifeStent product line, the market for peripheral stents and the expected contribution of LifeStent to sales growth in 2004; the market opportunity for percutaneous heart valve repair and replacement therapies; the achievement of 2004 goals for sales growth, R&D investment, net income growth, earnings per share and free cash flow generation; and more generally, the ability to generate growth through product development and/or acquisition; the ability to generate and maintain sufficient cash resources to increase investment in growth opportunities, repay debt or repurchase shares; the impact of foreign exchange; timing or results of pending or future clinical trials; actions by the U.S. Food and Drug Administration and other regulatory agencies; technological advances in the medical field; product demand and market acceptance; the effect of changing economic conditions; and other risks detailed in the company's filings with the Securities and Exchange Commission. These 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. Actual results or experience could differ materially from that expressed or implied by forward-looking statements.
Edwards Lifesciences, Edwards and PERIMOUNT Magna are trademarks of Edwards Lifesciences Corporation. Carpentier-Edwards, Cosgrove-Edwards, Fogarty, Lifepath AAA, PERIMOUNT and Swan-Ganz are trademarks of Edwards Lifesciences Corporation and are registered in the U.S. Patent and Trademark Office. LifeStent is a trademark of Edwards Lifesciences AG.
View the financial tables (PDF)
Contact Information :
Media, Barry R. Liden, +1-949-250-5070, or Investors, David K. Erickson, +1-949-250-6826, both of Edwards Lifesciences Corporation