What: After releasing fourth-quarter results and forecasting additional growth in 2016, Edwards Lifesciences Corp. (NYSE:EW) saw its shares climb 10.4% last month, according to S&P Global Market Intelligence.
So what: Sales at the heart-valve maker continue to grow as surgeons increasingly embrace transcatheter heart valve (THV) procedures in high-risk patients.
In large part thanks to growing demand for the company's Sapient THV, Edwards Lifesciences sales grew 8.6% to $671.1 million in the fourth quarter. Ex-out the negative drag on overseas sales caused by the strong dollar, and the company grew 15.1%.
Full-year results were similarly strong.
Revenue improved 7.4% to $2.5 billion in 2015, and adjusting out currency headwinds results in sales growth of 16.8%.
Importantly, a shift in product mix to the profit-friendly Sapient, and the benefit of leveraging more sales against fixed costs, allowed the company to deliver fourth-quarter and full-year adjusted EPS of $0.63 and $2.29, respectively. Notably, the 2015 full-year EPS figure was an impressive 30.9% higher than 2014.
Now what: THV product sales rose 25% to $334.3 million in Q4, and that gives the company plenty of momentum to deliver on management's outlook for 2016. Edwards Lifesciences CEO Michael Mussallem expects another 15% to 25% THV growth this year because of "momentum and expectation of continued therapy adoption."
If he's right, then the company has a good shot at delivering on its top-line sales guidance of $2.6 billion to $2.85 billion and EPS guidance of between $2.57 and $2.67 in 2016
Given that the company's been one of the brightest shining stars in med-tech over the past few years, Mussallem's optimism seems warranted. In fact, management may be low-balling guidance. After all, the company has outpaced industry watchers' outlooks in each of the past four quarters, and if the company's R&D and marketing team can expand the THV patient pool to include more people, then the company may be able to over-deliver again this year. That prospect could be even more likely given that the bottom line benefits from Congress' decision in December to suspend the 2.3% medical-device tax for two years.
Overall, while the med-tech space is highly competitive, Edwards Lifesciences has the go-to THV solution, and I think that advantage may be reason enough to stash shares in it away in portfolios.