01—Abstract
Summary
Summary of the 10-K filed February 14, 2020. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences Corporation (EW) reported robust growth in its 2019 fiscal year, driven primarily by its Transcatheter Aortic Valve Replacement (TAVR) segment, which saw a significant increase in sales due to strong adoption of its SAPIEN 3 and SAPIEN 3 Ultra systems, particularly in the United States.
The company's strategic focus on minimally invasive structural heart disease treatments continues to yield positive financial results, with total net sales increasing by 16.8% year-over-year. Investments in research and development also increased, reflecting a commitment to innovation in structural heart disease and critical care monitoring. Despite overall strong performance, the company incurred a $73.1 milliona charge related to inventory write-offs, including the discontinuation of its CENTERA program, and faced intellectual property litigation expenses.
The company remains a leader in its key product areas, including TAVR, Surgical Structural Heart, and Critical Care, with ongoing development of next-generation technologies and expansion into new markets. Looking ahead, Edwards Lifesciences is well-positioned to capitalize on the growing demand for its advanced cardiovascular solutions.
02—Key points
Key Highlights
- Net sales increased by 16.8% to $4.35 billion in 2019, driven by strong TAVR product performance.
- Transcatheter Aortic Valve Replacement (TAVR) sales grew by 19.9% to $2.74 billion, fueled by the SAPIEN 3 and SAPIEN 3 Ultra systems.
- Surgical Structural Heart sales increased by 10.5% to $841.7 million, supported by the INSPIRIS RESILIA aortic valve.
- Critical Care sales rose by 9.7% to $740.2 million, boosted by the HemoSphere monitoring platform and CASMED acquisition.
- The company invested 17.3% of net sales in research and development, totaling $752.7 million, to drive future innovation.
- Edwards Lifesciences settled patent disputes with Boston Scientific for $180 million in January 2019.
- The company completed the acquisition of CAS Medical Systems, Inc. (CASMED) for $100.8 million to enhance its critical care offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Edwards Lifesciences kept $0.24.
- Revenue$4.35B100.0%
- Cost of revenue−$1.11B25.6%
- Gross profit$3.23B74.4%
- Operating costs−$2.09B48.0%
- Operating income$1.15B26.4%
- Interest, other & tax−$99.9M2.3%
- Net income$1.05B24.1%
Where FY2019 revenue went
$4.35B- SG&A: $1.24B, 29% of revenue
- Cost of revenue: $1.11B, 26% of revenue
- Net income: $1.05B, 24% of revenue
- R&D: $752.7M, 17% of revenue
- Other operating costs: $91.9M, 2.1% of revenue
- Interest, other & tax: $99.9M, 2.3% of revenue
Kept 24% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 14, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.35B$3.72B | +16.8% |
| Cost of Revenue | $1.11B$939.40M | +18.6% |
| Gross Profit | $3.23B$2.78B | +16.2% |
| R&D Expenses | $752.70M$622.20M | +21.0% |
| SG&A Expenses | $1.24B$1.09B | +14.1% |
| Operating Income | $1.15B$748.20M | +53.3% |
| Interest Expense | $20.70M$29.90M | −30.8% |
| Net Income | $1.05B$722.20M | +45.0% |
| EPS (Basic) | $1.68$1.15 | +46.1% |
| EPS (Diluted) | $1.64$1.13 | +45.1% |
| Shares Outstanding (Basic) | 624.80M627.60M | −0.4% |
| Shares Outstanding (Diluted) | 636.70M640.90M | −0.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of Edwards Lifesciences' sales growth in 2019?
The primary driver of sales growth in 2019 was the strong performance of Transcatheter Aortic Valve Replacement (TAVR) products, particularly the Edwards SAPIEN 3 and SAPIEN 3 Ultra systems, which saw increased adoption, especially in the United States. Growth in Surgical Structural Heart and Critical Care segments also contributed positively.
How did the company manage its intellectual property litigation expenses?
Edwards Lifesciences incurred intellectual property litigation expenses, including a significant settlement of $180 million with Boston Scientific in January 2019 to resolve all outstanding patent disputes.
What is the company's strategy regarding product development and innovation?
Edwards Lifesciences is heavily invested in research and development, dedicating 17.3% of its net sales in 2019 to innovation. Key focus areas include advancing transcatheter therapies for mitral and tricuspid valve diseases, developing new TAVR technologies, and enhancing its critical care monitoring systems.
What is the company's financial health and outlook based on this report?
The company demonstrated strong revenue growth and healthy profitability in 2019. With a solid balance sheet, ongoing investment in R&D, and a leading position in key medical device markets, Edwards Lifesciences appears well-positioned for continued growth, though it faces ongoing competition and regulatory considerations.
06—Continue