Edwards dropped 21 percent to $84.60 at 4:01 p.m. New York time, the biggest decline since October 2000. In a statement yesterday, the Irvine, California-based maker of medical devices said preliminary sales for the quarter were $448 million, below the company’s July expectation of $465 million to $485 million.
The forecast miss was due to lower-than-expected sales of transcatheter heart valves, a replacement for faulty aortic valves that can be implanted through small incisions to avoid open-heart surgery, Edwards said in the statement. Chief Executive Officer Michael Mussallem said demand was hurt by government cutbacks in Europe and limited insurance reimbursements in the U.S.
“At this point, it’s hard to see what turns this trend around,” Michael Weinstein, a JPMorgan Chase & Co. analyst in New York, said in note to clients today. “The competitive landscape will only get tougher over the next six to 12 months” with St. Jude Medical Inc. and Boston Scientific Corp. (BSX) due to release minimally invasive valves.
The sales, while an increase of 9 percent from a year earlier, were still “disappointing,” Weinstein said. Analysts had anticipated $476.5 million for quarterly sales, according to the average of 19 estimates compiled by Bloomberg.
The company is expected to get broader approval from the Food and Drug Administration for the valve known as Sapien “any day,” which will double the potential U.S. market, said Larry Biegelsen, an analyst with Wells Fargo Securities in New York. Approval of a new method to implant the devices without going through the femoral artery in coming weeks should help with insurance reimbursement, he said today in a note to investors.
The slowdown in European sales, particularly in Germany where the devices were widely embraced, may be longer lasting, he said. Japan is expected to clear the valve in late 2013, which will bolster international sales, while the company’s next generation device is expected to help Edwards maintain the lead in the market as competitors emerge, Biegelsen said.
The company said it will release full quarterly earnings on Oct. 19. Edwards’s shares had risen 49 percent in the last 12 months through yesterday.
St. Jude is based in St. Paul, Minnesota, and Boston Scientific in Natick, Massachusetts.
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