IRVINE, Calif., June 4, 2001 -- Edwards Lifesciences Corporation (NYSE: EW), a global leader in products and technologies to treat advanced cardiovascular disease, today announced that it has entered into a definitive agreement to sell its U.S. perfusion services subsidiary to Fresenius Medical Care AG (NYSE: FMS, FMS_p; Frankfurt Stock Exchange: FME, FME3) for approximately $45 million in cash.
Under terms of the agreement, an affiliate of Fresenius Medical Care will acquire Edwards Lifesciences Cardiovascular Resources Inc. (CRI), Edwards' San Diego-based U.S. perfusion services subsidiary. CRI is the premier provider of contract perfusion services in the United States, serving a diverse group of nearly 500 private, public and government hospitals. CRI employs approximately 800 people, including clinical perfusionists and technicians who perform more than 110,000 perfusion, autotransfusion and other blood-related procedures per year. The transaction is expected to close at the end of June.
"Edwards Lifesciences' strategy is to focus on products and technologies to treat advanced cardiovascular disease," said Michael A. Mussallem, Edwards' chairman and CEO. "With the divestiture in August 2000 of our Bentley line of perfusion products, maintaining a U.S. perfusion services presence is no longer consistent with our strategy or core capabilities. Fresenius Medical Care is ideally positioned to best capitalize on the strengths of CRI, and this transaction represents an excellent opportunity and strategic fit for CRI and its people. As part of a much broader healthcare services company, CRI will be better positioned to reach its full potential -- further benefiting patients and customers."
Mussallem added: "I'm very pleased with the leading global franchises that Edwards Lifesciences will have going forward. This transaction enables us to increase our focus on these core franchises and on targeted investments aimed at applying technology to unmet clinical needs."
Fresenius Medical Care, headquartered in Bad Homburg, Germany, is a leading global provider of renal dialysis services. Fresenius entered the U.S. perfusion services business in January 2001 with the acquisition of Everest Healthcare Services Corporation and subsequently created its Extracorporeal Alliance division, which focuses on perfusion, apheresis, autotransfusion, acute dialysis and blood product collection services. With the acquisition of CRI, Fresenius Medical Care Extracorporeal Alliance will significantly enhance its ability to provide extracorporeal blood services nationwide.
Pretax Charge and Impact on 2001 Financials
In conjunction with the transaction, Edwards expects to record in the second quarter a pretax charge of approximately $100 million, about $75 million of which is directly associated with the sale, and the remainder relating primarily to other asset impairments. As a result of this transaction and charge, approximately $90 million of goodwill and other intangible assets will be eliminated.
U.S. perfusion services sales were approximately $30 million for the quarter ended March 31, 2001 and were expected to remain at about this level for the remainder of the year.
"Edwards is well on its way to achieving its previously stated 2001 net income growth rate of 20 percent and we remain comfortable with analysts' consensus earnings estimates for the year," said Mussallem. "The modest accretion expected to result from this transaction gives us confidence in our previous commitments while enabling us to continue to pursue growth opportunities."
J.P. Morgan is serving as financial advisor to Edwards for the transaction.
Edwards Lifesciences is the leading provider of products and technologies used in the treatment of late-stage cardiovascular disease. Headquartered in Irvine, Calif., Edwards focuses on cardiac surgery, critical care and vascular products and technologies, and is the leader in tissue replacement heart valves and heart valve repair products. The company's global brands, which are sold in over 80 countries, include Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty. Additional company information can be found at www.edwards.com.
Conference Call and Webcast Information
Edwards Lifesciences will be hosting a conference call today at 10:30 a.m. EDT to discuss this press release. The call can be accessed by dialing 800-328-1391 or 706-645-9218. Additionally, the call can be accessed via live webcast at www.edwards.com . A telephonic replay can be accessed for 72 hours by dialing 800-642-1687 or 706-645-9291 and using passcode 1074096. Additionally, the call will be archived on the company's website.
Edwards Lifesciences and Edwards are trademarks of Edwards Lifesciences Corporation. Carpentier-Edwards, Cosgrove-Edwards, Swan-Ganz and Fogarty are trademarks of Edwards Lifesciences Corporation, registered in the U.S. Patent and Trademark Office.
This news release includes forward-looking statements that involve risks and uncertainties, including those related to targeted sales, gross profit margin and net income goals for 2001, the successful and timely completion of the Fresenius Medical Care transaction, the company's transformation into a faster growing organization, the ability to consummate targeted technology investments and acquisitions, and more generally, timing or results of pending or future clinical trials, actions by the U.S. Food and Drug Administration and European Union, technological advances in the medical field, product demand and market acceptance, the effect of changing economic conditions, the impact of foreign exchange, and other risks detailed in the company's filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.