Edwards stock surges on strong sales, profits due to legal settlement

Edwards Lifesciences' Sapien XT--Courtesy of Edwards

Edwards Lifesciences ($EW) stock soared 10% this morning on the back of a strong quarter, highlighted by the $750 million upfront payment it received from Medtronic ($MDT) to settle a patent dispute over the companies' competing artificial valves aimed at patients too frail to undergo open heart surgery.

While the payment provides a one-time cash infusion, Edwards will also receive annual royalty payments from Medtronic of between $40 million and $60 million via royalty payments on sales of the latter's CoreValve transcatheter aortic valve replacement (TAVR).

Profit shot up to $547 million from $93.3 million thanks to the litigation charge, while revenues increased 11% to $575 million, indicating that the settlement was not the only reason for the successful quarter.

Most notably strong sales of its flagship Sapien TAVR propelled sales of the company's transcatheter heart valves to $219.7 million, a 21% increase year-over-year. "In Europe, adoption of transcatheter valve therapy continues to be quite strong and we believe we gained share with SAPIEN 3," CEO Michael Mussallem said in a statement. "Representing more than half of our European THV sales, SAPIEN 3 is being very well received by clinicians who appreciate its best-in-class low profile and paravalvular leak solution."

Sales of conventional heart valves (those implanted using open heart surgery) rose almost 5% to $214 million. The critical care segment experienced 8% growth to sales of $141 million. Edwards said the segment got a boost from the launch of the ClearSight noninvasive monitoring system to provide hemodynamic information such as cardiac output and blood pressure.

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