Edwards Lifesciences stock fell Friday after the company said its all-important TAVR segment will face numerous — but one-time — challenges in the fourth quarter.
TAVR is shorthand for transcatheter aortic heart-valve replacements. This is a nonsurgical means of replacing a faulty aortic heart valve without resorting to open-heart surgery. It's also Edwards' biggest moneymaker. But fourth-quarter sales will grow less than the 5% to 7% that was expected for the year.
"Management highlighted that fourth-quarter TAVR sales would be weaker year over year due to one-time items relating to the hurricanes in the Southeast, IV fluid shortages and a $5 million rebate adjustment in China," William Blair analyst Margaret Kaczor Andrew said in a report to clients.
But she noted Edwards reiterated all parts of its full-year guidance. The company still expects 5% to 7% growth for its TAVR division this year and for TMTT sales to come in at the high end of its outlook for $320 million to $340 million. TMTT, or transcatheter mitral tricuspid therapy, is another means of swapping out a failing heart valve without surgery. Surgical sales are still expected to rise 6% to 8%.
On today's stock market, Edwards Lifesciences stock skidded 1.4% to 69.38.
Edwards Lifesciences Stock: Mixed Sales
There were a lot of moving parts in Edwards' third-quarter report, Evercore ISI analyst Vijay Kumar said in a report. Among them, the company wrapped the divestiture of its critical care business.
As a result, overall sales proved a mixed bag. The company's total revenue advanced roughly 9% to $1.35 billion. That excludes the now-divested critical care business. Analysts projected $1.57 billion in sales, but that included $206 million from the critical care division. Excluding that, Edwards' sales still narrowly missed the $1.37 billion forecast.
Total TAVR sales climbed 7.2% in constant currency to $1.01 billion. The company says its competitive position and pricing remained stable globally. William Blair's Andrew noted the company's share loss outside the U.S. also improved sequentially.
"As we have heard from others in our coverage universe this quarter, management noted a slower start in July and August with procedural volumes recovering through September," she said.
TMTT Sales Beat Expectations
Despite this seasonality, TMTT sales beat expectations by 3.5%, she said. TMTT generated $91 million in sales, helped by the introduction of a new system called Evoque in the U.S. and Europe.
Notably, earnings on an adjusted basis topped the Street's call by a penny, coming in at 67 cents per share. Earnings grew almost 14%. But guidance for earnings to come in at 53 cents to 57 cents a share in the fourth quarter was "modestly below our assumption," Andrew said.
Edwards reiterated its expectation for sales to grow 8% to 10% this year. Edwards Lifesciences stock analysts projected flat sales at $6.04 billion.
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