Edwards Lifesciences reports $15.3 million of cash, tightens 2006 EPS guidance

By Angela McDaniels

Seattle, Oct. 19 - Edwards Lifesciences Corp. said it generated free cash flow of $44.2 million during the third quarter ended Sept. 30, calculated as $60.2 million of cash flow from operating activities minus capital expenditures of $16.0 million.

The company ended the quarter with $151.3 million of cash and cash equivalents, compared with $178.6 million at Dec. 31, 2005.

Edwards reiterated its full-year 2006 guidance for free cash flow of $140 million to $150 million, total sales of between $1.02 billion and $1.06 billion and non-GAAP net income growth of 12% to 15%.

The full-year earnings per share estimate was tightened, however, to between $2.03 to $2.05, excluding special items. Earnings per share are expected to be between $0.52 and $0.54 for the fourth quarter.

For the third quarter, net income increased to $27.8 million, or $0.45 per diluted share, from a net loss of $4.4 million, or $0.07 per diluted share, for the same period of 2005.

Non-GAAP net income, which excludes special items and the impact of option expense under the Financial Accounting Standards Board's Statement No.123, grew to $32.5 million, or $0.53 per diluted shared, from $29.0 million, or $0.46 per diluted share, for the same period of last year.

Third-quarter net sales increased slightly to $247.4 million from $240.9 million for the same quarter of 2005.

For the third quarter, the company reported Heart Valve Therapy sales of $117.3 million, a 3.9% increase compared with the same quarter last year.

"In the United States, we are still feeling the effect of a competing product introduced late last year," chairman and chief executive officer Michael A. Mussallem said in a company news release.

"We believe the clinical superiority of our valve product line, combined with planned new product introductions, give us confidence we will accelerate our growth."

Free cash flow generated in the first nine months was $97.0 million, calculated as cash flow from operating activities of $160.8 million minus capital expenditures of $40.0 million and a special item of $23.8 million.

For the nine months ended Sept. 30, net income more than doubled to $109.8 million from $40.7 million for the same period of 2005. Non-GAAP net income increased to $104.1 million, or $1.67 per diluted share, from $91.4 million, or $1.45 per diluted share, for the first nine months of 2005.

Net sales for the first nine months of 2006 totaled $771.4 million, a slight increase over net sales of $748.2 million for the first ninth months of 2005.

Edwards Lifesciences is based in Irvine, Calif., where it produces products and services to treat cardiovascular disease.

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