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Edwards Lifesciences Blows Past Q2 Earnings Estimates

Investors might not be overly excited about Edwards Lifesciences' (NYSE: EW) stock performance so far in 2020. But its shares are still beating the S&P 500 index. And the medical device maker now has a positive catalyst.

Edwards Lifesciences announced its second-quarter results after the market closed on Thursday, and the stock jumped 5% in after-hours trading. Here are highlights from the company's Q2 update.

Surgeon at work

Image source: Getty Images.

By the numbers

Edwards reported second-quarter revenue of $925 million, a 15% decrease from the prior-year total of $1.1 billion. But it handily beat the consensus Wall Street estimate of $797.5 million.

The company announced a Q2 net loss of $121.9 million, or $0.20 per share, based on generally accepted accounting principles (GAAP). This represented a steep decline from the GAAP net income of $242.3 million, or $0.38 per share, reported in the same quarter of 2019. 

But the bottom line looked much better on an adjusted basis. The company recorded adjusted earnings in Q2 of $0.34 per share. While that was lower than $0.40 per share in the prior-year period, it doubled the average analyst estimate of $0.17. The revenue and earnings beats should be catalysts for the stock.

Behind the numbers

As always, business for Edwards' transcatheter aortic valve replacement (TAVR) largely drove the company's overall results. TAVR sales in Q2 fell 12% year over year to $594 million mainly because of the coronavirus pandemic. CEO Michael Mussallem said the company expected this decline and noted that "sales were depressed in April as patients and providers turned their focus to the pandemic response."

The story was even worse for Edwards' surgical structural heart products. Sales sank 26% year over year to $161 million. COVID-19 was again the primary culprit behind this decline. But the adoption of TAVR devices also came at the expense of the company's surgical aortic valves in the U.S.

Edwards reported that critical-care sales slipped 11% from the prior-year period to $164 million due mainly to the pandemic. However, the company noted that increased demand for its TruWave disposable pressure-monitoring devices was strong in Q2.

Transcatheter mitral and tricuspid therapies remained only a small part of Edwards' business in the second quarter, with sales totaling $6 million.

Looking ahead

Edwards maintained its full-year 2020 sales guidance between $4 billion and $4.5 billion. The company boosted its earnings outlook, however, and now expects that adjusted earnings per share will come in between $1.75 and $1.95, compared with the previous guidance of $1.58 to $1.75 per share.

The wild card for the healthcare stock is the pandemic. Edwards' guidance assumes that the situation will continue to improve in the second half of 2020. The company has already seen steady growth in procedure volume in May and June. But the future remains uncertain with a possible worsening of the coronavirus outbreak in the fall.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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