10-KPeriod: FY2020

Edwards Lifesciences Corp Annual Report, Year Ended Dec 31, 2020

Filed February 12, 2021For Securities:EW

Summary

Edwards Lifesciences Corporation reported net sales of $4.386 billion for the fiscal year ended December 30, 2020, representing a slight increase of 0.9% compared to 2019. This growth was primarily driven by the Transcatheter Aortic Valve Replacement (TAVR) segment, which saw a 4.4% increase in sales, bolstered by the adoption of the SAPIEN 3 Ultra System. Despite the global COVID-19 pandemic impacting procedure volumes and clinical trial enrollments, the company demonstrated resilience, maintaining operations and supplying its life-saving technologies. The company also settled a significant patent litigation with Abbott in July 2020, incurring a pre-tax charge of $367.9 million. Financially, Edwards Lifesciences maintained a strong balance sheet with total assets of $7.237 billion and total stockholders' equity of $4.574 billion. The company reported diluted earnings per share of $1.30 for 2020, a decrease from $1.64 in 2019, largely due to the aforementioned litigation settlement. Research and development spending increased by 1% to 17% of net sales, reflecting continued investment in innovation, particularly in the transcatheter mitral and tricuspid therapies pipeline. The company's strategic focus on minimally invasive solutions for structural heart disease positions it well for future growth in a dynamic healthcare market.

Financial Highlights

55 data points
Beta

Revenue

$4.39B

75.4% Gross Margin

Net Income

$823.40M

18.8% Net Margin

EPS (Diluted)

$1.30

Total Assets

$7.24B

Cash & Equivalents

$1.20B

Free Cash Flow

$647.30M

Financial Statements
Beta
Revenue$4.39B
Cost of Revenue$1.08B
Gross Profit$3.31B
R&D Expenses$760.70M
SG&A Expenses$1.23B
Operating Income$897.60M
Interest Expense$15.80M
Net Income$823.40M
EPS (Basic)$1.32
EPS (Diluted)$1.30
Shares Outstanding (Basic)622.60M
Shares Outstanding (Diluted)631.90M

Key Highlights

  • 1Net sales for 2020 reached $4.386 billion, a 0.9% increase over 2019, driven by TAVR product sales.
  • 2The TAVR segment continues to be the largest contributor to net sales, accounting for 65% of the total.
  • 3The company settled significant patent litigation with Abbott for $367.9 million (pre-tax charge), impacting 2020 earnings.
  • 4Research and Development (R&D) expenses increased by 1% to $760.7 million, representing 17.3% of net sales, with a focus on TMTT and TAVR programs.
  • 5The COVID-19 pandemic impacted procedure volumes and clinical trial enrollments, though manufacturing and supply operations remained robust.
  • 6Edwards Lifesciences ended 2020 with a strong liquidity position, holding $1.183 billion in cash and cash equivalents.
  • 7The company's stock performance showed a cumulative total return of 346.53% from 2016 to 2020, outperforming the S&P 500 and S&P 500 Health Care Equipment indices.

Frequently Asked Questions

The COVID-19 pandemic significantly impacted Edwards Lifesciences' business in 2020. Procedure volumes for TAVR and Surgical products experienced substantial drops starting in March 2020 due to patient and physician concerns about COVID-19. Clinical trial enrollments were also paused and subsequently negatively affected by resurgences of the virus. However, the company's manufacturing and supply operations remained operational, and demand for Critical Care products, particularly pressure monitoring systems, increased due to COVID-19 hospitalizations.

In July 2020, Edwards Lifesciences settled all outstanding patent disputes with Abbott Laboratories related to transcatheter mitral and tricuspid repair products. This settlement resulted in a significant pre-tax charge of $367.9 million recorded in 2020, which impacted the company's net income and diluted earnings per share. Additionally, the settlement includes royalty payments through May 2024.

Edwards Lifesciences' growth strategy is focused on patient-focused medical innovations for structural heart disease and critical care monitoring. Key initiatives include continued investment in research and development for transcatheter mitral and tricuspid therapies, expansion of its TAVR offerings with next-generation technologies like the SAPIEN 3 Ultra System, and enhancing its critical care monitoring capabilities. The company aims to transform patient care by providing less invasive and more effective treatment options.

Edwards Lifesciences maintains a strong financial position, with significant cash and cash equivalents and access to credit facilities. The company generated $1.054 billion in cash from operating activities in 2020. It also engages in share repurchases, having repurchased $614.7 million of its common stock in 2020, and has a $750 million credit agreement with no outstanding borrowings as of December 31, 2020. The company's policy is to retain future earnings for use in its business rather than paying dividends.