01—Abstract
Summary
Summary of the 10-K filed February 16, 2018. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences Corporation's 2017 10-K report highlights its leading position in patient-focused medical innovations for structural heart disease and critical care monitoring.
The company experienced robust sales growth, primarily driven by its Transcatheter Heart Valve Therapy (THVT) segment, with the Edwards SAPIEN 3 valve seeing significant adoption across major markets like the US, Europe, and Japan. This growth contributed to a strong financial performance, with net sales increasing by 15.9%a year-over-year. Strategic acquisitions in 2017, including Valtech Cardio and Harpoon Medical, further bolstered its product pipeline in mitral and tricuspid valve repair technologies, signaling a continued focus on expanding less invasive treatment options.
The company demonstrated a strong commitment to research and development, investing 16.1%b of net sales in 2017 to drive innovation in its core product areas. While facing increased competition and evolving healthcare landscapes, Edwards Lifesciences maintained its competitive edge through clinical superiority and innovative features.
The company also navigated the complexities of international operations and global regulatory environments, with 44%c of sales generated outside the United States. Significant events during the year included the successful resolution of intellectual property litigation, contributing positively to net income, and the impact of new U.S. tax legislation, which required a one-time tax expense.
02—Key points
Key Highlights
- Edwards Lifesciences reported a 15.9% increase in net sales, reaching $3.435 billion in 2017, driven by strong performance in its Transcatheter Heart Valve Therapy (THVT) segment, up 24.5%.
- The company made strategic acquisitions in 2017, including Valtech Cardio Ltd. for transcatheter mitral and tricuspid valve repair technologies and Harpoon Medical, Inc. for beating-heart mitral valve repair, enhancing its structural heart disease portfolio.
- Research and Development (R&D) expenses increased to $553 million in 2017, representing 16.1% of net sales, underscoring the company's commitment to innovation and new product development.
- The company achieved a significant litigation gain of $112.5 million related to trade secret theft, positively impacting net income for the year.
- Net income for 2017 was $583.6 million, a slight increase from $569.5 million in 2016, despite a $262.0 million tax expense related to new U.S. tax law changes.
- International sales accounted for 44% of total net sales, indicating a strong global presence and diversified revenue streams.
- The company continued its share repurchase program, repurchasing $752.1 million of its common stock in 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Edwards Lifesciences Corp kept $0.17.
- Revenue$3.44B100.0%
- Cost of revenue−$875.3M25.5%
- Gross profit$2.56B74.5%
- Operating costs−$1.47B42.8%
- Operating income$1.09B31.7%
- Interest, other & tax−$505.8M14.7%
- Net income$583.6M17.0%
Where FY2017 revenue went
$3.44B- SG&A: $990.8M, 29% of revenue
- Cost of revenue: $875.3M, 25% of revenue
- Net income: $583.6M, 17% of revenue
- R&D: $552.6M, 16% of revenue
- Interest, other & tax: $505.8M, 15% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 16, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.44B$2.96B | +15.9% |
| Cost of Revenue | $875.30M$797.40M | +9.8% |
| Gross Profit | $2.56B$2.17B | +18.2% |
| R&D Expenses | $552.60M$442.20M | +25.0% |
| SG&A Expenses | $990.80M$904.70M | +9.5% |
| Operating Income | $1.09B$751.20M | +45.0% |
| Interest Expense | $23.20M$19.20M | +20.8% |
| Net Income | $583.60M$569.50M | +2.5% |
| EPS (Basic) | $0.92$0.89 | +3.7% |
| EPS (Diluted) | $0.90$0.87 | +3.4% |
| Shares Outstanding (Basic) | 632.70M639.00M | −1.0% |
| Shares Outstanding (Diluted) | 647.70M653.40M | −0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth for Edwards Lifesciences in 2017?
Revenue growth was primarily driven by the Transcatheter Heart Valve Therapy (THVT) segment, which saw a 24.5% increase in net sales. This growth was largely due to the strong adoption of the Edwards SAPIEN 3 transcatheter heart valve in key markets like the United States, Europe, and Japan.
How did the company strengthen its product pipeline in 2017?
Edwards Lifesciences made two key acquisitions in 2017: Valtech Cardio Ltd., which expanded its capabilities in transcatheter mitral and tricuspid valve repair, and Harpoon Medical, Inc., a pioneer in beating-heart repair for mitral regurgitation. These acquisitions are expected to drive future growth in less invasive treatment options.
What is the company's strategy regarding research and development?
Edwards Lifesciences prioritizes innovation and invested significantly in R&D in 2017, with expenses reaching $553 million, or 16.1% of net sales. The company focuses on developing new products and enhancing existing ones within its core segments of structural heart disease and critical care monitoring.
How did the new U.S. tax law affect the company's financial results?
The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a one-time tax expense of $262.0 million recorded in 2017. While this impacted reported net income, the company also benefited from the reduction in the U.S. federal corporate tax rate for future periods.
What is the company's stance on paying dividends?
Edwards Lifesciences has never paid cash dividends on its capital stock and currently has no plans to do so. The company's policy is to retain future earnings for reinvestment in its business.
06—Continue