Edwards Lifesciences Reports Strong Gains in First Quarter Net Income and EPS Fueled by Solid Sales Growth and Higher Gross Profit Margin

Apr 26, 2001, 01:00 ET from Edwards Lifesciences Corporation

    IRVINE, Calif., April 26 /PRNewswire/ -- Edwards Lifesciences Corporation
 (NYSE:   EW) today reported 56 percent net income growth and 50 percent earnings
 per share growth for the first quarter ended March 31, 2001 driven by higher
 sales and gross profit.
     Net income for the quarter was $14.2 million, or $0.24 per diluted share,
 compared to pro forma net income excluding non-recurring expenses of
 $9.1 million, or $0.16 per diluted share for the same quarter a year earlier.
 Cash earnings (net income plus goodwill amortization) for the quarter were
 $19.9 million, or $0.33 per diluted share.  Earnings before interest, taxes,
 depreciation and amortization (EBITDA) were $41.8 million for the quarter.
 Net income for the quarter excludes the one-time, non-cash impact of adopting
 a new accounting rule.(1)
     "Edwards Lifesciences is off to a very good start for 2001 and our results
 reflect solid company-wide performance," said Michael A. Mussallem, chairman
 and CEO.  "Edwards' results were led by another quarter of strong double-digit
 Cardiac Surgery sales.  Our gross profit margin continues to increase -- a
 benefit of strong growth in our most profitable franchises, as well as the
 divestiture of lower margin businesses last year.  These favorable comparisons
 are evidence that our transformation efforts are beginning to take effect."
     Edwards' first quarter net sales were $191.9 million, a 2.6 percent
 decrease compared to the same period last year.  Excluding the impact of
 foreign exchange and the divestiture of the company's Novacor and Bentley
 operations in 2000, net sales increased 6.3 percent.  For the quarter,
 domestic and international sales were $123.3 million and $68.6 million,
 respectively.
 
     Product Line Results
     Cardiac Surgery sales for the quarter were $84.9 million, up 10.8 percent
 over last year.  Excluding the effect of foreign exchange and divestitures,
 Cardiac Surgery sales increased 15.3 percent.  Results in this product line
 were attributable to an overall increase in heart valve procedures and
 continued strong sales of the company's pericardial tissue valve products,
 including the Carpentier-Edwards mitral PERIMOUNT pericardial tissue heart
 valve.  Based upon the valve's success to date, the company remains confident
 that this product will become the leading mitral tissue valve in the U.S. by
 year-end 2001.
     Critical Care sales were $52.2 million for the quarter, a 1.3 percent
 increase compared to last year.  Excluding the effect of foreign exchange,
 Critical Care sales increased 4.6 percent.  Results in this product line
 continue to be generated primarily by upgrading customers to more advanced
 technology catheter products from base hemodynamic catheters.
     Perfusion Products and Services sales for the quarter were $41.3 million,
 a 24.8 percent decrease from last year.  Excluding the effect of foreign
 exchange and divestitures, sales in this product line declined 4.6 percent and
 continue to be impacted by the growth in "beating heart" coronary artery
 bypass surgeries.  However, the U.S. perfusion services business is beginning
 to benefit from the company's performance improvement efforts.
     Vascular sales for the quarter were $13.1 million, a 4.8 percent decrease
 compared to last year.  Excluding the effect of foreign exchange and sales of
 the currently suspended Lifepath AAA Endovascular Graft System, sales
 increased 2.0 percent.  The company remains confident that it can reenter the
 market with its Lifepath AAA product by the end of the year.
 
     Additional Operating Results
     Edwards' gross profit margin for the first quarter was 49.9 percent, up
 substantially compared to the pro forma 46.1 percent recorded for the same
 period in 2000.  The company's gross margin continues to benefit from the
 elimination in 2000 of lower margin product lines, and strong sales this year
 of higher margin products.  Partially offsetting the increase was the impact
 of foreign exchange.
     For the quarter, selling, general and administrative expenses were
 $53.8 million, or 28.0 percent of sales.  Included in the results were a
 number of one-time costs including expenses associated with the strategic
 realignment of the organization announced earlier this year.
     Research and development (R&D) expenses as a percentage of sales were
 6.8 percent in the first quarter compared to 6.6 percent of sales in the year
 ago period.  "There are numerous opportunities to develop and commercialize
 technologies for treating advanced cardiovascular disease," said Mussallem.
 "Edwards remains committed to pursuing these opportunities by ramping up its
 R&D spending through the remainder of this year and beyond."
     As a result of strong current and forecasted sales growth from products
 manufactured and sold in the United States, the company's effective tax rate
 increased to 29 percent.
 
     Recent Highlights
     During the quarter, Edwards announced several key developments.  In March,
 the company received U.S. FDA approval of the Edwards Prima Plus stentless
 heart valve, a next-generation treatment available to cardiac surgeons who
 prefer a stentless alternative for replacing a patient's aortic heart valve.
 Edwards now offers the most comprehensive portfolio of tissue heart valve
 products in the U.S.
     Earlier in the quarter, Edwards entered into an agreement with PLC Medical
 Systems to distribute in the U.S. the company's newest carbon dioxide
 TMR Heart Laser system, an innovative therapeutic option for treating severe
 angina.
     Also during the quarter, Edwards announced the creation of a new
 organizational design that aligns the company more closely with its strategy
 to increase growth, and better focuses its resources to more effectively
 pursue opportunities to enhance its product pipeline.
 
     Outlook for 2001
     "Our earnings outlook for the balance of the year remains positive and
 unchanged," Mussallem concluded.  "We are well positioned to achieve our
 previously stated financial goals for 2001, which include accelerated sales
 growth, growing net income by 20 percent and generating EBITDA above
 $170 million.  And, we continue to be comfortable with analysts' consensus
 estimates for 2001."
 
     About Edwards Lifesciences
     Edwards Lifesciences is the leading provider of products and services used
 in the treatment of late-stage cardiovascular disease.  Headquartered in
 Irvine, Calif., Edwards focuses on cardiac surgery, critical care, vascular
 systems and perfusion products and services, and is the leader in tissue
 replacement heart valves and heart valve repair products.  The company's
 global brands, which are sold in over 80 countries, include
 Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty.  Additional
 company information can be found at www.edwards.com.
 
     Conference Call and Webcast Information
     Edwards Lifesciences will be hosting a conference call today at
 5:00 p.m. EDT to discuss this press release.  The call can be accessed by
 dialing 800-328-1391 or 706-645-9218.  Additionally, the call can be accessed
 via live webcast at www.edwards.com.  A telephonic replay can be accessed for
 72 hours by dialing 800-642-1687 or 706-645-9291 and using passcode 651519.
 Additionally, the call will be archived on the company's website.
 
     (1) Net income and earnings per share for the quarter ended March 31, 2001
         exclude the cumulative effect of a change in accounting principle
         relating to the adoption of Statement of Financial Accounting
         Standards No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," which resulted in an after-tax reduction in net income of
         $1.5 million, or $0.02 per diluted share.
 
     This news release includes forward-looking statements that involve risks
 and uncertainties, including those related to sales growth, EBITDA, net income
 and earnings per share goals for 2001, sales of the Carpentier-Edwards mitral
 PERIMOUNT pericardial tissue heart valve and the Edwards Prima Plus stentless
 bioprosthesis, efforts aimed at stimulating sales growth and enhancing the
 company's product pipeline, the impact of foreign exchange, performance
 improvements in the Perfusion Services product line, the market reentry of the
 Lifepath AAA Endovascular Graft System, the ability to increase R&D spending,
 the estimation of the effective income tax rate, and more generally, timing or
 results of pending or future clinical trials, actions by the U.S. Food and
 Drug Administration and European Union, 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 are inherently uncertain and difficult to
 predict.  Actual results or experience could differ materially from the
 forward-looking statements.
 
     Edwards Lifesciences, Edwards, Lifepath AAA and Edwards Prima Plus are
 trademarks of Edwards Lifesciences Corporation.  Carpentier-Edwards,
 Cosgrove-Edwards, Fogarty, PERIMOUNT and Swan-Ganz are trademarks of Edwards
 Lifesciences Corporation and are registered in the U.S. Patent and Trademark
 Office.
 
 
     Edwards Lifesciences Corporation
 
     Consolidated Statements of Operations(a)          Three Months Ended
     (Unaudited)                                            March 31,
     (in millions, except per share data)              2001          2000(b)
 
     Net sales                                        $191.9        $197.1
       Cost of goods sold                               96.2         106.2
 
     Gross profit                                       95.7          90.9
       Selling, general and administrative
        expenses                                        53.8          52.4
       Research and development expenses                13.1          13.1
       Goodwill amortization                             5.7           8.6
       Non-recurring spin-off expenses                   0.0           1.4
       Other operating income                           (3.9)         (3.5)
 
     Operating income                                   27.0          18.9
       Interest expense, net                             5.5           7.3
       Other expense, net                                1.5           0.7
 
     Income before provision for income taxes           20.0          10.9
       Provision for income taxes                        5.8           2.8
 
     Net income                                        $14.2          $8.1
 
     Weighted average common shares outstanding
      used to calculate basic earnings per share        58.7          58.2
 
     Basic earnings per share                          $0.24         $0.14
 
     Basic earnings per share before
      non-recurring spin-off expenses                  $0.24         $0.16
 
     Weighted average common shares outstanding
      used to calculate diluted earnings per share      60.3          58.2
 
     Diluted earnings per share                        $0.24         $0.14
 
     Diluted earnings per share before
      non-recurring spin-off expenses                  $0.24         $0.16
 
 
     Operating Statistics
 
     As a percent of net sales:
       Gross profit                                    49.9%         46.1%
       Selling, general and administrative
        expenses                                       28.0%         26.6%
       Research and development expenses                6.8%          6.6%
       Operating income                                14.1%          9.6%
       Income before provision for income taxes        10.4%          5.5%
       Net income                                       7.4%          4.1%
     Effective tax rate                                29.0%         25.7%
 
     (a) Net income and earnings per share for the quarter ended March 31, 2001
         exclude the cumulative effect of a change in accounting principle
         relating to the adoption of Statement of Financial Accounting
         Standards No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," which resulted in an after-tax reduction in net income of
         $1.5 million, or $0.02 per diluted share.
 
     (b) Financial results prior to April 1, 2000 are pro forma.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X29688758
 
 

SOURCE Edwards Lifesciences Corporation
    IRVINE, Calif., April 26 /PRNewswire/ -- Edwards Lifesciences Corporation
 (NYSE:   EW) today reported 56 percent net income growth and 50 percent earnings
 per share growth for the first quarter ended March 31, 2001 driven by higher
 sales and gross profit.
     Net income for the quarter was $14.2 million, or $0.24 per diluted share,
 compared to pro forma net income excluding non-recurring expenses of
 $9.1 million, or $0.16 per diluted share for the same quarter a year earlier.
 Cash earnings (net income plus goodwill amortization) for the quarter were
 $19.9 million, or $0.33 per diluted share.  Earnings before interest, taxes,
 depreciation and amortization (EBITDA) were $41.8 million for the quarter.
 Net income for the quarter excludes the one-time, non-cash impact of adopting
 a new accounting rule.(1)
     "Edwards Lifesciences is off to a very good start for 2001 and our results
 reflect solid company-wide performance," said Michael A. Mussallem, chairman
 and CEO.  "Edwards' results were led by another quarter of strong double-digit
 Cardiac Surgery sales.  Our gross profit margin continues to increase -- a
 benefit of strong growth in our most profitable franchises, as well as the
 divestiture of lower margin businesses last year.  These favorable comparisons
 are evidence that our transformation efforts are beginning to take effect."
     Edwards' first quarter net sales were $191.9 million, a 2.6 percent
 decrease compared to the same period last year.  Excluding the impact of
 foreign exchange and the divestiture of the company's Novacor and Bentley
 operations in 2000, net sales increased 6.3 percent.  For the quarter,
 domestic and international sales were $123.3 million and $68.6 million,
 respectively.
 
     Product Line Results
     Cardiac Surgery sales for the quarter were $84.9 million, up 10.8 percent
 over last year.  Excluding the effect of foreign exchange and divestitures,
 Cardiac Surgery sales increased 15.3 percent.  Results in this product line
 were attributable to an overall increase in heart valve procedures and
 continued strong sales of the company's pericardial tissue valve products,
 including the Carpentier-Edwards mitral PERIMOUNT pericardial tissue heart
 valve.  Based upon the valve's success to date, the company remains confident
 that this product will become the leading mitral tissue valve in the U.S. by
 year-end 2001.
     Critical Care sales were $52.2 million for the quarter, a 1.3 percent
 increase compared to last year.  Excluding the effect of foreign exchange,
 Critical Care sales increased 4.6 percent.  Results in this product line
 continue to be generated primarily by upgrading customers to more advanced
 technology catheter products from base hemodynamic catheters.
     Perfusion Products and Services sales for the quarter were $41.3 million,
 a 24.8 percent decrease from last year.  Excluding the effect of foreign
 exchange and divestitures, sales in this product line declined 4.6 percent and
 continue to be impacted by the growth in "beating heart" coronary artery
 bypass surgeries.  However, the U.S. perfusion services business is beginning
 to benefit from the company's performance improvement efforts.
     Vascular sales for the quarter were $13.1 million, a 4.8 percent decrease
 compared to last year.  Excluding the effect of foreign exchange and sales of
 the currently suspended Lifepath AAA Endovascular Graft System, sales
 increased 2.0 percent.  The company remains confident that it can reenter the
 market with its Lifepath AAA product by the end of the year.
 
     Additional Operating Results
     Edwards' gross profit margin for the first quarter was 49.9 percent, up
 substantially compared to the pro forma 46.1 percent recorded for the same
 period in 2000.  The company's gross margin continues to benefit from the
 elimination in 2000 of lower margin product lines, and strong sales this year
 of higher margin products.  Partially offsetting the increase was the impact
 of foreign exchange.
     For the quarter, selling, general and administrative expenses were
 $53.8 million, or 28.0 percent of sales.  Included in the results were a
 number of one-time costs including expenses associated with the strategic
 realignment of the organization announced earlier this year.
     Research and development (R&D) expenses as a percentage of sales were
 6.8 percent in the first quarter compared to 6.6 percent of sales in the year
 ago period.  "There are numerous opportunities to develop and commercialize
 technologies for treating advanced cardiovascular disease," said Mussallem.
 "Edwards remains committed to pursuing these opportunities by ramping up its
 R&D spending through the remainder of this year and beyond."
     As a result of strong current and forecasted sales growth from products
 manufactured and sold in the United States, the company's effective tax rate
 increased to 29 percent.
 
     Recent Highlights
     During the quarter, Edwards announced several key developments.  In March,
 the company received U.S. FDA approval of the Edwards Prima Plus stentless
 heart valve, a next-generation treatment available to cardiac surgeons who
 prefer a stentless alternative for replacing a patient's aortic heart valve.
 Edwards now offers the most comprehensive portfolio of tissue heart valve
 products in the U.S.
     Earlier in the quarter, Edwards entered into an agreement with PLC Medical
 Systems to distribute in the U.S. the company's newest carbon dioxide
 TMR Heart Laser system, an innovative therapeutic option for treating severe
 angina.
     Also during the quarter, Edwards announced the creation of a new
 organizational design that aligns the company more closely with its strategy
 to increase growth, and better focuses its resources to more effectively
 pursue opportunities to enhance its product pipeline.
 
     Outlook for 2001
     "Our earnings outlook for the balance of the year remains positive and
 unchanged," Mussallem concluded.  "We are well positioned to achieve our
 previously stated financial goals for 2001, which include accelerated sales
 growth, growing net income by 20 percent and generating EBITDA above
 $170 million.  And, we continue to be comfortable with analysts' consensus
 estimates for 2001."
 
     About Edwards Lifesciences
     Edwards Lifesciences is the leading provider of products and services used
 in the treatment of late-stage cardiovascular disease.  Headquartered in
 Irvine, Calif., Edwards focuses on cardiac surgery, critical care, vascular
 systems and perfusion products and services, and is the leader in tissue
 replacement heart valves and heart valve repair products.  The company's
 global brands, which are sold in over 80 countries, include
 Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty.  Additional
 company information can be found at www.edwards.com.
 
     Conference Call and Webcast Information
     Edwards Lifesciences will be hosting a conference call today at
 5:00 p.m. EDT to discuss this press release.  The call can be accessed by
 dialing 800-328-1391 or 706-645-9218.  Additionally, the call can be accessed
 via live webcast at www.edwards.com.  A telephonic replay can be accessed for
 72 hours by dialing 800-642-1687 or 706-645-9291 and using passcode 651519.
 Additionally, the call will be archived on the company's website.
 
     (1) Net income and earnings per share for the quarter ended March 31, 2001
         exclude the cumulative effect of a change in accounting principle
         relating to the adoption of Statement of Financial Accounting
         Standards No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," which resulted in an after-tax reduction in net income of
         $1.5 million, or $0.02 per diluted share.
 
     This news release includes forward-looking statements that involve risks
 and uncertainties, including those related to sales growth, EBITDA, net income
 and earnings per share goals for 2001, sales of the Carpentier-Edwards mitral
 PERIMOUNT pericardial tissue heart valve and the Edwards Prima Plus stentless
 bioprosthesis, efforts aimed at stimulating sales growth and enhancing the
 company's product pipeline, the impact of foreign exchange, performance
 improvements in the Perfusion Services product line, the market reentry of the
 Lifepath AAA Endovascular Graft System, the ability to increase R&D spending,
 the estimation of the effective income tax rate, and more generally, timing or
 results of pending or future clinical trials, actions by the U.S. Food and
 Drug Administration and European Union, 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 are inherently uncertain and difficult to
 predict.  Actual results or experience could differ materially from the
 forward-looking statements.
 
     Edwards Lifesciences, Edwards, Lifepath AAA and Edwards Prima Plus are
 trademarks of Edwards Lifesciences Corporation.  Carpentier-Edwards,
 Cosgrove-Edwards, Fogarty, PERIMOUNT and Swan-Ganz are trademarks of Edwards
 Lifesciences Corporation and are registered in the U.S. Patent and Trademark
 Office.
 
 
     Edwards Lifesciences Corporation
 
     Consolidated Statements of Operations(a)          Three Months Ended
     (Unaudited)                                            March 31,
     (in millions, except per share data)              2001          2000(b)
 
     Net sales                                        $191.9        $197.1
       Cost of goods sold                               96.2         106.2
 
     Gross profit                                       95.7          90.9
       Selling, general and administrative
        expenses                                        53.8          52.4
       Research and development expenses                13.1          13.1
       Goodwill amortization                             5.7           8.6
       Non-recurring spin-off expenses                   0.0           1.4
       Other operating income                           (3.9)         (3.5)
 
     Operating income                                   27.0          18.9
       Interest expense, net                             5.5           7.3
       Other expense, net                                1.5           0.7
 
     Income before provision for income taxes           20.0          10.9
       Provision for income taxes                        5.8           2.8
 
     Net income                                        $14.2          $8.1
 
     Weighted average common shares outstanding
      used to calculate basic earnings per share        58.7          58.2
 
     Basic earnings per share                          $0.24         $0.14
 
     Basic earnings per share before
      non-recurring spin-off expenses                  $0.24         $0.16
 
     Weighted average common shares outstanding
      used to calculate diluted earnings per share      60.3          58.2
 
     Diluted earnings per share                        $0.24         $0.14
 
     Diluted earnings per share before
      non-recurring spin-off expenses                  $0.24         $0.16
 
 
     Operating Statistics
 
     As a percent of net sales:
       Gross profit                                    49.9%         46.1%
       Selling, general and administrative
        expenses                                       28.0%         26.6%
       Research and development expenses                6.8%          6.6%
       Operating income                                14.1%          9.6%
       Income before provision for income taxes        10.4%          5.5%
       Net income                                       7.4%          4.1%
     Effective tax rate                                29.0%         25.7%
 
     (a) Net income and earnings per share for the quarter ended March 31, 2001
         exclude the cumulative effect of a change in accounting principle
         relating to the adoption of Statement of Financial Accounting
         Standards No. 133, "Accounting for Derivative Instruments and Hedging
         Activities," which resulted in an after-tax reduction in net income of
         $1.5 million, or $0.02 per diluted share.
 
     (b) Financial results prior to April 1, 2000 are pro forma.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X29688758
 
 SOURCE  Edwards Lifesciences Corporation