Shares of Edwards Lifesciences Corp. (EW -2.66%), a medical-device company focused on heart disease, reported impressive growth across the board after the market closed yesterday. The market is so impressed, it's driven the stock up 9% as of 11:28 a.m. EDT on Wednesday.
On a GAAP basis, first-quarter sales rose 24% higher than the prior-year period to $884 million, and earnings jumped 61% to $1.06 per share. Adjusting for the cautious overstocking of heart valves in Germany, and other factors, brings year-on-year sales and earnings-per-share growth for the quarter down to 19% and 32% respectively.
Over the past couple years, Edwards Lifesciences stock has bounced around as investors have become increasingly concerned about its ability to contend with Medtronic (NYSE: MDT). The medical-device industry's 900-pound gorilla is a major player in the valve replacement space, but today's earnings report suggests a slimmed-down Edwards Lifesciences can dance around the behemoth without getting squashed. First-quarter sales of transcatheter heart valve therapies, the company's bread and butter, surged 46.6% higher year on year to $539.2 million.
After such a strong start to 2017, Edwards Lifesciences raised its full-year earnings outlook a few notches higher. Instead of a range of $3.30 to $3.45 per share, the company now expects adjusted earnings this year to land between $3.43 and $3.55 per share.
Before investors get used to the company's recent growth spurt, it's important to realize its valve-replacement advantage over Medtronic might not last much longer. Last summer Edwards Lifesciences' Sapien 3 valves became the first to earn approval from the U.S. Food and Drug Administration for use in patients deemed at intermediate risk of not surviving the standard open-heart valve replacement surgery.
The agency's decision made the Sapien 3 the only replacement valve available for patients seen as having a 3% to 15% chance of not surviving open-heart surgery. Last month, Medtronic announced results from a successful clinical trial that will probably result in its own replacement valves entering the same space. Investors will want to keep their eyes peeled for signs the Sapien 3 valves can continue landing punches with the industry's fiercest competitor in the ring.