Biggest Device Maker Still;
Trials Less, Gives More
Edwards Lifesciences Corp. (NYSE: EW) in Irvine still has the biggest market cap of an OC-based company; it’s just lower than it was six weeks ago.
Its shares are down 23% since mid-February when the coronavirus fallout began to affect markets. Some healthcare firms have fared better than the wider universe of public companies because they’re often involved in helping fight COVID-19. Masimo Corp. shares (Nasdaq: MASI) actually rose in March (see story, page 1) and Edwards dropped only 8% for the month.
The heart valve maker’s shares were trading in the $180s last week and a $38 billion market cap; Edwards had been flirting with a value just north of $50 billion through most of the year, before the virus hit.
Employees are working from home unless job duties require their physical presence on-site, a spokesperson said. The company declined to comment on layoffs or furloughs due to the virus. Edwards has 14,000 workers globally, with about 5,000 in OC.
Chief Executive Mike Mussallem said the company’s foundation is issuing grants to more than 20 organizations that provide safety-net support in the communities where company employees live and work.
“The global community is facing unprecedented and unpredictable challenges,” Mussallem wrote in a letter posted on the company’s website.
Some ongoing clinical trials were also affected.
Edwards paused enrollments for some current transcatheter mitral and tricuspid therapies (TMTT) clinical trials since hospitals are deferring elective surgeries.
Separately, the company on March 29 announced its Sapien 3 valve showed “excellent results” in a two-year trial.
Edwards last year spent $753 million on research and development.
—A. Leigh Corbett
‘Operation-Critical’ Work
Continuing for Glaukos
Glaukos Corp. (NYSE: GKOS) was active before the coronavirus hit, buying companies and licensing technology to expand from making medical devices to treat glaucoma to add drugmaking for the same purpose.
More recently, the San Clemente company “is maintaining streamlined manufacturing.”
This includes shifting employees to work within mandates related to the size of groups gathering in any one place and how people interact within them.
“Employees involved in operation-critical processes are organized into a number of small shifts to minimize the time any one individual is required to be onsite,” the company said on March 24.
Most employees work from home.
It declined to comment on furloughs and layoffs related to the virus. About 280 of Glaukos’ 500 employees are in OC, according to the Business Journal’s September list of medical device makers.
The company makes a stent to treat glaucoma patients, along with other devices and, more recently, pharmaceuticals to treat various conditions of the eye.
In late March, it withdrew first quarter and annual revenue guidance issued Feb. 27 and said it will update numbers on its first quarter conference call in May.
It expects business to be affected in the short-term as procedures are deferred by the virus outbreak, Glaukos said at the time.
Proactive moves “to implement several initiatives to best preserve our near-term and future growth opportunities,” are underway, CEO Tom Burns said.
Costs cuts in “non-essential discretionary spending” are included. Glaukos has, for instance, restricted travel for corporate purposes.
The company has a “strong current financial position” and had about $183 million in cash and equivalents as of Dec. 31, the press release said.
Its shares are down 56% since mid-February to about $30 and a $1.3 billion market cap.
—A. Leigh Corbett
REIT’s Future Look: Ups Dividend, Share Buyback
CareTrust REIT Inc. (Nasdaq: CTRE) owns more than 21,000 beds at 216 skilled nursing, senior housing and other healthcare-related properties in 24 states.
That put it right in the middle of the coronavirus pandemic.
Its shares dipped just a dollar from mid-February to about $22 at the beginning of March, then fell to a low of $8 on March 18, as global numbers of illness from the virus grew.
That didn’t deter CareTrust, which is known for buying premium properties already in good shape.
On March 12, it raised its quarterly dividend from 22.5 cents to 25 cents a share. A week later, it said it would buy back $150 million in shares over three years. By last week, it traded at about $13.50 and a $1.3 billion market cap.
“We are pleased to be returning additional value to shareholders again,” Greg Stapley, CareTrust’s chairman and chief executive officer, said in a March 12 statement.
The growth in the company’s dividend is consistent with its asset and earnings growth, Stapley said. CareTrust reported net debt ratio of 3.3 times its adjusted profit (earnings before interest, taxes, depreciation and amortization) as of Dec. 31, well below its targeted leverage range of 4 to 5 that metric, the company said in a Feb. 20 report on its 2019 results. Net real estate investments were valued at $1.4 billion and it had $20.3 million in cash as of Dec. 31.
On Feb. 20, the company lowered its 2020 guidance but not due to the coronavirus. Instead, it cited an unexpected payoff of a mortgage loan last December and some additional early loan payoffs in 2020.
It intends to hold its annual meeting April 30 at its San Clemente headquarters, according to its March 20 proxy. It’s monitoring the coronavirus to determine if it will hold a virtual meeting instead.
—Peter J. Brennan
