Edwards Lifesciences (NYSE: EW) today reported financial results
for the quarter ended March 31, 2024.
Highlights and Outlook
- Q1 sales grew 10% on a reported and constant currency1 basis to
$1.6 billion
- Q1 TAVR sales grew 6%; constant currency sales grew 8% adjusted
for billing days
- Q1 TMTT sales grew 75%
- Q1 EPS of $0.58; adjusted1 EPS of $0.66
- Raising 2024 sales guidance to the high end of previous 8 to
10%1 range
- Raising full-year 2024 sales guidance for TMTT and Surgical;
confident in TAVR guidance
- Critical Care spin-off on track; raising 2024 sales
guidance
“Edwards is positioned to extend our leadership and deliver
sustainable growth as a result of the strategic investments we have
made across our transcatheter platforms to address the large and
growing needs of patients impacted by aortic, mitral and tricuspid
disease. We are pleased with our total company performance with
first quarter sales growth of 10% as more patients were treated
with our innovative therapies,” said Bernard Zovighian, CEO. “This
encouraging start to the year supports our increased 2024 sales
guidance. Looking beyond 2024, we remain confident in Edwards’
innovation-driven strategy, led by new indications, differentiated
technologies and strategic adjacencies for addressing the
significant unmet needs of structural heart disease patients.”
Transcatheter Aortic Valve Replacement
(TAVR)
For the quarter, the company reported TAVR sales of $1.0
billion, which grew 6%, or 8% on a constant currency basis adjusted
for billing days. Performance was driven by growth in the U.S. and
Japan. Edwards’ global competitive position and selling prices were
both stable. Procedure trends increased as the quarter progressed.
The company expects higher year-over-year second-half growth rates
than in the first and second quarters.
Edwards remains pleased with the performance of its SAPIEN 3
Ultra RESILIA platform, which is the leading platform in the U.S.
and Japan, and the company looks forward to its launch in the
second quarter in Europe.
Edwards is positioned for healthy and sustainable TAVR growth
well into the future driven by the company’s development of
differentiated TAVR technologies, a deep commitment to advancing
patient care through high-quality clinical evidence, and its
investment in patient activation initiatives. Importantly, Edwards’
groundbreaking research into the treatment of aortic stenosis
through its EARLY TAVR and PROGRESS trials could fundamentally
change how AS patients are treated.
Transcatheter Mitral and Tricuspid
Therapies (TMTT)
In the first quarter, the company drove positive momentum around
its unique and broad portfolio strategy of both repair and
replacement technologies for mitral and tricuspid patients. The
company made significant progress advancing important therapies,
including the PASCAL repair system, EVOQUE tricuspid replacement
system, and SAPIEN M3 mitral replacement system.
First quarter sales were $73 million, driven by expanded
adoption and new site activation of PASCAL, supported by continued
double digit TEER market growth in the U.S. and Europe.
In February, EVOQUE became the first transcatheter therapy to
receive U.S. FDA approval for the treatment of patients with
tricuspid regurgitation. With this replacement technology, the
company sees the unique elimination of tricuspid regurgitation,
significant quality of life improvements for patients, and
favorable trends in all-cause mortality and heart failure
hospitalization.
Surgical Structural Heart and Critical
Care
Surgical Structural Heart sales for the quarter were $266
million, which grew 7%, or 8% on a constant currency basis. Growth
was driven by strong global adoption of Edwards’ premium surgical
technologies, INSPIRIS, MITRIS and KONECT. The company continues to
see positive procedure growth globally for the many patients best
treated surgically, including those undergoing complex procedures.
The company continues to expand the overall body of RESILIA
technology evidence, and now expects U.S. and Canada enrollment of
its MOMENTIS clinical study to be completed in the second quarter
of 2024, one year ahead of previous expectations. The study will
continue to open new sites in Europe and Latin America, with global
enrollment continuing into 2025.
Critical Care sales were $251 million for the quarter, which
grew 13%, or 14% on a constant currency basis, driven by
contributions from all product lines. Growth was led by Edwards'
Smart Recovery technologies, including the Acumen IQ sensor. Demand
was also strong for the company's Swan-Ganz catheters and pressure
monitoring devices used in the ICU. Preparations for the spin-off
of Critical Care by year end are ongoing.
Additional Financial
Results
For the quarter, the adjusted gross profit margin was 76.0%,
compared to 77.5% in the same period last year. This year-over-year
reduction was driven by a more favorable impact from foreign
exchange in the prior year.
Selling, general and administrative expenses in the first
quarter were $490 million, or 30.6% of sales, compared to $436
million in the prior year. This increase was driven by investments
in transcatheter field-based personnel in support of the company’s
growth strategy.
Research and development expenses in the first quarter were $285
million, or 17.8% of sales, compared to $261 million in the prior
year. The increase was driven by continued investments in
transcatheter valve innovations, including clinical trial
activity.
Cash, cash equivalents and short-term investments totaled $1.7
billion as of March 31, 2024. Total debt was approximately $600
million. Adjusted free cash flow was $206 million.
Outlook
Overall, given the strong first quarter performance, the company
now expects full-year 2024 sales growth to be at the high end of
the prior guidance of 8 to 10% and $6.3 to $6.6 billion. The
company remains confident in TAVR sales growth of 8 to 10% on a
constant currency basis. The company now expects full-year Surgical
Structural Heart sales growth of 6 to 8% and Critical Care sales
growth of 8 to 10%, versus previous expectations of mid-single
digit growth. Full-year TMTT sales are now expected to be in a
range of $320 to $340 million, versus previous guidance which was
the higher end of a $280 to $320 million range.
The company is maintaining its full-year 2024 adjusted earnings
per share guidance of $2.70 to $2.80.
For the second quarter of 2024, the company projects total sales
to be between $1.62 and $1.70 billion, and adjusted EPS of $0.67 to
$0.71.
About Edwards
Lifesciences
Edwards Lifesciences is the global leader of patient-focused
innovations for structural heart disease and critical care
monitoring. We are driven by a passion for patients, dedicated to
improving and enhancing lives through partnerships with clinicians
and stakeholders across the global healthcare landscape. For more
information, visit www.edwards.com and follow us on Facebook,
Instagram, LinkedIn, X and YouTube.
Conference Call and Webcast
Information
The company will be hosting a conference call today at 2:00 p.m.
PT to discuss its first quarter results. To participate in the
conference call, dial (877) 704-2848 or (201) 389-0893. The call
will also be available live and archived on the “Investor
Relations” section of the Edwards website at ir.edwards.com or
www.edwards.com.
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements can sometimes be identified by the use of words such as
“may,” “will,” “should,” “anticipate,” “believe,” “plan,”
“project,” “estimate,” “forecast,” “potential,” “predict,” "early
clinician feedback," “expect,” “intend,” “guidance,” “outlook,”
“optimistic,” “aspire,” “confident” or other forms of these words
or similar expressions and include, but are not limited to,
statements made by Mr. Zovighian, second quarter and full year 2024
financial guidance, statements regarding the international adoption
of TAVR, statements regarding transforming patient treatment,
investments, expansion of evidence, approvals, clinical outcomes,
adoption, and the information in the Outlook section. No inferences
or assumptions should be made from statements of past performance,
efforts, or results which may not be indicative of future
performance or results. Forward-looking statements are based on
estimates and assumptions made by management of the company and are
believed to be reasonable, though they are inherently uncertain,
difficult to predict, and may be outside of the company’s control.
The company's forward-looking statements speak only as of the date
on which they are made and the company does not undertake any
obligation to update any forward-looking statement to reflect
events or circumstances after the date of the statement. If the
company does update or correct one or more of these statements,
investors and others should not conclude that the company will make
additional updates or corrections.
Forward-looking statements involve risks and uncertainties that
could cause actual results or experience to differ materially from
that expressed or implied by the forward-looking statements.
Factors that could cause actual results or experience to differ
materially from that expressed or implied by the forward-looking
statements include risk and uncertainties associated with the
spin-off of our Critical Care product group; our ability to develop
new products and avoid manufacturing and quality issues; challenges
related to clinical trial or commercial results or new product
approvals and therapy adoption; the impact of domestic and global
economic conditions; competitive dynamics; our reliance on vendors,
suppliers, and other third parties; damage, failure, or
interruption of our information technology systems; the impact of
public health crises; consolidation in the healthcare industry; our
ability to protect our intellectual property; our compliance with
applicable regulations; our exposure to product liability claims;
use of our products in unapproved circumstances; changes to
reimbursement for the company's products; the impact of currency
exchange rates; unanticipated actions by the U.S. Food and Drug
Administration and other regulatory agencies; changes to tax laws;
unexpected impacts or expenses of litigation or internal or
government investigations; and other risks detailed in the
company's filings with the Securities and Exchange Commission
(SEC), including its Annual Report on Form 10-K for the year ended
December 31, 2023, and its other filings with the SEC. These
filings, along with important safety information about our
products, may be found at edwards.com.
Edwards, Edwards Lifesciences, the stylized E logo, EVOQUE,
MOMENTIS, PASCAL, PASCAL Precision, RESILIA, SAPIEN, SAPIEN 3,
SAPIEN 3 Ultra, and SAPIEN 3 Ultra RESILIA are trademarks of
Edwards Lifesciences Corporation or its affiliates. All other
trademarks are the property of their respective owners.
___________________
[1]
"Constant currency” growth rates exclude foreign exchange
fluctuations. Sales growth guidance refers to constant currency.
“Adjusted” amounts are non-GAAP items. "Constant currency” growth
rates in this press release exclude foreign exchange fluctuations.
Sales growth guidance refers to constant currency. Adjusted
earnings per share is a non-GAAP item computed on a diluted basis
and in this press release also excludes an intellectual property
agreement and certain litigation expenses, amortization of
intangible assets, fair value adjustments to contingent
consideration liabilities arising from acquisitions, and one-time
separation costs related to the planned spin-off of Critical Care.
See “Non-GAAP Financial Information” and reconciliation tables
below.
EDWARDS LIFESCIENCES
CORPORATION
Unaudited Consolidated Statements of
Operations
(in millions, except per share data)
Three Months Ended
March 31,
2024
2023
Net sales
$
1,598.2
$
1,459.6
Cost of sales
385.6
329.5
Gross profit
1,212.6
1,130.1
Selling, general, and administrative
expenses
489.7
436.3
Research and development expenses
285.2
261.2
Intellectual property agreement and
certain litigation expenses
8.9
43.5
Change in fair value of contingent
consideration liabilities
—
0.7
Separation costs
41.3
—
Operating income
387.5
388.4
Interest income, net
(16.5
)
(8.6
)
Other income, net
(5.4
)
(1.6
)
Income before provision for income
taxes
409.4
398.6
Provision for income taxes
58.4
58.1
Net income
$
351.0
$
340.5
Net loss attributable to noncontrolling
interest
(0.9
)
—
Net income attributable to Edwards
Lifesciences Corporation
$
351.9
$
340.5
Earnings per
share:
Basic
$
0.58
$
0.56
Diluted
$
0.58
$
0.56
Weighted-average
common shares outstanding:
Basic
601.6
607.5
Diluted
604.1
610.9
Operating
statistics
As a percentage of net sales:
Gross profit
75.9
%
77.4
%
Selling, general, and administrative
expenses
30.6
%
29.9
%
Research and development expenses
17.8
%
17.9
%
Operating income
24.2
%
26.6
%
Income before provision for income
taxes
25.6
%
27.3
%
Net income
22.0
%
23.3
%
Effective tax rate
14.3
%
14.6
%
___________________ Note: Numbers may not calculate due to
rounding.
EDWARDS LIFESCIENCES
CORPORATION
Unaudited Balance Sheets
(in millions)
March 31, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
1,224.6
$
1,144.0
Short-term investments
473.0
500.5
Accounts receivables, net
817.6
775.1
Other receivables
59.3
61.8
Inventories
1,207.3
1,168.2
Prepaid expenses
138.1
146.8
Other current assets
250.6
239.3
Total current assets
4,170.5
4,035.7
Long-term investments
455.6
583.9
Property, plant, and equipment, net
1,767.9
1,749.4
Operating lease right-of-use assets
98.4
94.0
Goodwill
1,252.8
1,253.5
Other intangible assets, net
446.8
428.4
Deferred income taxes
776.7
754.6
Other assets
767.6
463.7
Total assets
$
9,736.3
$
9,363.2
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued
liabilities
$
1,086.0
$
1,170.5
Operating lease liabilities
24.8
24.9
Total current liabilities
1,110.8
1,195.4
Long-term debt
597.2
597.0
Taxes payable
79.6
80.6
Operating lease liabilities
77.2
73.0
Uncertain tax positions
336.6
339.3
Litigation agreement accrual
82.0
94.2
Other liabilities
266.5
264.3
Total liabilities
2,549.9
2,643.8
Stockholders’ equity
Common stock
651.8
650.5
Additional paid-in capital
2,379.8
2,274.4
Retained earnings
9,344.3
8,992.4
Accumulated other comprehensive loss
(233.3
)
(242.8
)
Treasury stock, at cost
(5,024.7
)
(5,024.5
)
Total Edwards Lifesciences Corporation
stockholders’ equity
7,117.9
6,650.0
Noncontrolling interest
68.5
69.4
Total equity
7,186.4
6,719.4
Total liabilities and equity
$
9,736.3
$
9,363.2
EDWARDS LIFESCIENCES CORPORATION Non-GAAP Financial
Information
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles (“GAAP”),
the Company uses non-GAAP historical financial measures. Management
makes adjustments to the GAAP measures for items (both charges and
gains) that (a) do not reflect the core operational activities of
the Company, (b) are commonly adjusted within the Company’s
industry to enhance comparability of the Company’s financial
results with those of its peer group, or (c) are inconsistent in
amount or frequency between periods (albeit such items are
monitored and controlled with equal diligence relative to core
operations). The Company uses the terms "adjusted" and “constant
currency" when referring to non-GAAP sales and sales growth
information, respectively, which excludes currency exchange rate
fluctuations. The Company uses the term "billing days adjusted
growth rate" when also excluding the impact of billing days. The
Company uses the term “adjusted” to also exclude certain litigation
expenses, intellectual property agreements, amortization of
intangible assets, fair value adjustments to contingent
consideration liabilities arising from acquisitions, and one-time
separation costs related to the planned spin-off of Critical
Care.
Management uses non-GAAP financial measures internally for
strategic decision making, forecasting future results, and
evaluating current performance. These non-GAAP financial measures
are used in addition to, and in conjunction with, results presented
in accordance with GAAP and reflect an additional way of viewing
aspects of the Company's operations by investors that, when viewed
with its GAAP results, provide a more complete understanding of
factors and trends affecting the Company's business and facilitate
comparability to historical periods.
Non-GAAP financial measures are not prepared in accordance with
GAAP; therefore, the information is not necessarily comparable to
other companies and should be considered as a supplement to, and
not as a substitute for, or superior to, the corresponding measures
calculated in accordance with GAAP. A reconciliation of non-GAAP
historical financial measures to the most comparable GAAP measure
is provided in the tables below.
Fluctuations in currency exchange rates impact the comparative
results and sales growth rates of the Company's underlying
business. Management believes that excluding the impact of currency
exchange rate fluctuations from its sales growth provides investors
a more useful comparison to historical financial results. The
impact of the fluctuations has been detailed in the "Reconciliation
of Sales by Product Group and Region."
Guidance for sales and sales growth rates is provided on a
"constant currency basis," and projections for diluted earnings per
share, net income and growth, gross profit margin, taxes, and free
cash flow are also provided on a non-GAAP basis, as adjusted, for
the items identified above due to the inherent difficulty in
forecasting such items without unreasonable efforts. The Company is
not able to provide a reconciliation of the non-GAAP guidance to
comparable GAAP measures due to the unknown effect, timing, and
potential significance of special charges or gains, and
management's inability to forecast charges associated with future
transactions and initiatives.
Management considers free cash flow to be a liquidity measure
which provides useful information to management and investors about
the amount of cash generated by business operations, after
deducting payments for capital expenditures, which can then be used
for strategic opportunities or other business purposes including,
among others, investing in the Company's business, making strategic
acquisitions, strengthening the balance sheet, and repurchasing
stock.
The items described below are
adjustments to the GAAP financial results in the reconciliations
that follow:
Certain Litigation Expenses - The Company incurred
certain litigation expenses of $8.9 million and $6.5 million in the
first quarter of 2024 and 2023, respectively.
Change in Fair Value of Contingent Consideration
Liabilities - The Company recorded expense of $0.7 million in
the first quarter of 2023 related to changes in the fair value of
its contingent consideration liabilities arising from
acquisitions.
Amortization of Intangible Assets - The Company recorded
amortization expense related to developed technology and patents in
the amount of $1.4 million and $1.5 million in the first quarter of
2024 and 2023, respectively.
Separation Costs - The Company incurred separation costs
of $41.3 million during the first quarter of 2024 related primarily
to consulting, legal, tax, and other professional advisory services
associated with its planned spin-off of Critical Care.
Intellectual Property Agreement - The Company recorded a
$37.0 million charge in the first quarter of 2023 related to an
Intellectual Property Agreement with Medtronic, Inc. for a 15-year
covenant not to sue.
Provision for Income Taxes - The income tax impacts of
the expenses and gains discussed above are based upon the items'
forecasted effect upon the Company's full year effective tax rate.
Adjustments to forecasted items unrelated to the expenses and gains
above, as well as impacts related to interim reporting, will have
an effect on the income tax impact of these items in subsequent
periods.
Adjusted Free Cash Flow - The Company defines free cash
flow as cash flows from operating activities less capital
expenditures. During 2024, the Company excluded from its
calculation payments for separation costs associated with the
planned spin-off of Critical Care and a material tax deposit made
to mitigate interest on potential tax liabilities that the Company
is contesting through the judicial process.
EDWARDS LIFESCIENCES
CORPORATION
Unaudited Reconciliation of GAAP to
Non-GAAP Financial Information
(in millions, except per share and
percentage data)
Three Months Ended March 31,
2024
Net Sales
Gross Profit Margin
Operating Income
Net Income Attributable to
Edwards Lifesciences Corporation
Diluted EPS
Effective Tax Rate
GAAP
$
1,598.2
75.9
%
$
387.5
$
351.9
$
0.58
14.3
%
Non-GAAP
adjustments: (A) (B)
Certain litigation expenses
—
—
8.9
7.4
0.01
—
Amortization of intangible assets
—
0.1
1.4
1.2
—
(0.1
)
Separation costs
—
—
41.3
36.8
0.07
(0.2
)
Adjusted
$
1,598.2
76.0
%
$
439.1
$
397.3
$
0.66
14.0
%
Three Months Ended March 31,
2023
Net Sales
Gross Profit Margin
Operating Income
Net Income Attributable to
Edwards Lifesciences Corporation
Diluted EPS
Effective Tax Rate
GAAP
$
1,459.6
77.4
%
$
388.4
$
340.5
$
0.56
14.6
%
Non-GAAP
adjustments: (A) (B)
Certain litigation expenses
—
—
6.5
5.3
0.01
0.1
Change in fair value of contingent
consideration liabilities
—
—
0.7
0.6
—
—
Amortization of intangible assets
—
0.1
1.5
1.3
—
—
Intellectual property agreement
—
—
37.0
30.5
0.05
0.2
Adjusted
$
1,459.6
77.5
%
$
434.1
$
378.2
$
0.62
14.9
%
___________________
(A)
See description of non-GAAP adjustments under "Non-GAAP Financial
Information."
(B)
The tax effect on non-GAAP adjustments is calculated based upon the
impact of the relevant tax jurisdictions’ statutory tax rates on
the Company’s estimated annual effective tax rate, or discrete rate
in the quarter, as applicable. The impact on the effective tax rate
is reflected on each individual non-GAAP adjustment line item.
RECONCILIATION OF
GAAP OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW
Three Months Ended March
31,
2024
2023
Net cash (used in) provided by
operating activities
$
(53.5
)
$
314.1
Capital expenditures
(65.3
)
(61.5
)
Tax deposit
305.1
—
Separation cost payments
19.9
—
Adjusted Free Cash Flow (A)
206.2
252.6
___________________
(A)
See description of "Adjusted Free Cash Flow" under "Non-GAAP
Financial Information."
RECONCILIATION OF
SALES BY PRODUCT GROUP AND REGION
2023 Adjusted
Sales by Product Group (QTD)
1Q 2024
1Q 2023
Change
GAAP Growth
Rate*
FX Impact
1Q 2023 Adjusted Sales
Constant Currency
Growth Rate *
Transcatheter Aortic Valve
Replacement
$
1,007.9
$
947.9
$
60.0
6.3
%
$
(2.1
)
$
945.8
6.6
%
Transcatheter Mitral and Tricuspid
Therapies
72.9
41.6
31.3
75.2
%
0.7
42.3
72.2
%
Surgical Structural Heart
266.1
248.2
17.9
7.2
%
(1.4
)
246.8
7.9
%
Critical Care
251.3
221.9
29.4
13.3
%
(2.3
)
219.6
14.4
%
Total
$
1,598.2
$
1,459.6
$
138.6
9.5
%
$
(5.1
)
$
1,454.5
9.9
%
2023 Adjusted
Sales by Region (QTD)
1Q 2024
1Q 2023
Change
GAAP Growth
Rate*
FX Impact
1Q 2023 Adjusted Sales
Constant Currency
Growth
Rate *
United States
$
940.7
$
849.1
$
91.6
10.8
%
$
—
$
849.1
10.8
%
Europe
367.8
331.1
36.7
11.1
%
8.3
339.4
8.4
%
Japan
110.8
114.1
(3.3
)
(2.8
)%
(11.7
)
102.4
8.2
%
Rest of World
178.9
165.3
13.6
8.2
%
(1.7
)
163.6
9.4
%
Outside of the United States
657.5
610.5
47.0
7.7
%
(5.1
)
605.4
8.6
%
Total
$
1,598.2
$
1,459.6
$
138.6
9.5
%
$
(5.1
)
$
1,454.5
9.9
%
___________________ * Numbers may not calculate due to rounding.
RECONCILIATION OF
TAVR BILLING DAYS ADJUSTED GROWTH RATE
Three Months Ended March
31,
2024
TAVR constant currency growth
rate
6.6
%
Impact of billing days
1.1
%
TAVR billing days adjusted growth
rate
7.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425889009/en/
Media Contact: Amy Hytowitz, 949-250-4009 Investor
Contact: Mark Wilterding, 949-250-6826
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