Edwards Lifesciences Corp., Orange County’s most valuable publicly traded medical device maker, reported third quarter sales that signaled its biggest unit might be returning to prior sales growth levels.
Its transcatheter aortic valve replacement (TAVR) unit grew sales 6.5% to $1.02 billion. It’s on the high end of a July prediction for second half sales in the unit to grow 5% to 7%. Earlier in the year, it had forecasted 8% to 10% annual growth for the unit.
“We thought Edwards ‘met’ the TAVR bar, but the result may have been a bit below more bullish expectations,” Raymond James analyst Jayson Bedford wrote in a note to investors.
Edwards saw its market cap plunge $16.5 billion, or 31%, on July 25 after unexpectedly slashing its sales outlook for its TAVR Unit, which contributed 65% of the company’s net sales in 2023. It was the biggest setback for Chief Executive Bernard Zovighian since he took over last year from Michael Mussallem.
Overall, Edwards reported third quarter company wide sales climbed 8.9% to $1.35 billion, which was in line with analysts’ estimates. The company’s fastest growing unit was the transcatheter and tricuspid therapies (TMTT) business, where sales jumped 73% to $91 million, driven largely by global adoption of the company’s Pascal Precision heart implant and Evoque tricuspid valve replacement system. Sales at its surgical structural heart unit increased 4% to $240 million.
The results were “slightly ahead” of company expectations, Zovighian told analysts on a conference call.
“TAVR and TMTT both contributed significantly to growth in the third quarter as more patients globally benefited from our catheter-based structural heart therapies,” Zovighian said.
Since the second quarter drop, shares in Edwards have risen about 17% to $68.52 and a $42 billion market cap.
Nets $2.7B From Sale
The company also reported it netted $2.7 billion after tax from the September sale of its critical care unit to Becton, Dickinson and Co.; its announced sale price was $4.2 billion.
Edwards said it’s bought back $1 billion in shares in the third quarter and still has another $1.4 billion under its current share repurchase authorization.
The company said it’s spending about $1.5 billion on three acquisitions this year: JenaValve, Endotronix and Innovalve Bio Medical.
As of Sept. 30, the company still had $3.5 billion in cash and equivalents, up from $2 billion on June 30.
Hospital Workflow Constraints Impact TAVR Sales
The company attributed the slow growth to hospital workflows struggling to keep up with newly approved tricuspid and structural heart therapies, stressing that it’s not due to a lack of patients.
Edwards regardless has a positive outlook for the fourth quarter, forecasting a higher volume of TAVR procedures.
The company said it’s having ongoing discussions with hospital administrators and physicians about best practices to overcome physical constraints and staffing issues.