01—Abstract
Summary
Summary of the 10-K filed February 14, 2022. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences Corporation (EW) reported strong net sales growth of 19.3% to $5.2 billiona for the fiscal year ending December 30, 2021, compared to the previous year.
This growth was primarily driven by a significant increase in Transcatheter Aortic Valve Replacement (TAVR) sales, which rose by 19.8% to $3.4 billionb. Despite challenges from the COVID-19 pandemic impacting procedure volumes and hospital resources, particularly in the latter half of the year, the company demonstrated resilience. The company also saw substantial growth in its Transcatheter Mitral and Tricuspid Therapies (TMTT) segment, with sales more than doubling to $86.0 million, indicating progress in its less invasive structural heart technologies.
The Surgical Structural Heart and Critical Care segments also posted healthy sales increases of 16.7% and 15.1%, respectively. These positive top-line results were supported by ongoing investments in research and development, with R&D expenses increasing by 19% to $903.1 millionc, representing 17.3% of net sales. Financially, the company maintained a solid balance sheet with $903.4 million in cash and cash equivalents and short-term investments in the U.S. as of December 31, 2021.
While the company experienced a significant intellectual property litigation expense in 2020 ($405.4 milliond), it was considerably lower in 2021 ($20.6 million). The company continues to focus on innovation and expanding its market leadership in structural heart disease and critical care monitoring.
02—Key points
Key Highlights
- Net sales increased by 19.3% to $5.2 billion in 2021, driven by strong performance across all product segments.
- Transcatheter Aortic Valve Replacement (TAVR) sales grew 19.8% to $3.4 billion, demonstrating continued market leadership.
- Transcatheter Mitral and Tricuspid Therapies (TMTT) sales more than doubled, increasing by 105.5% to $86.0 million, reflecting advancements in new product adoption.
- Research and Development (R&D) expenses increased 19% to $903.1 million, highlighting a commitment to innovation and future growth.
- The company repurchased $498.5 million of its common stock in 2021, underscoring its commitment to shareholder returns.
- Despite COVID-19 related challenges affecting procedures in H2 2021, overall sales growth remained robust.
- The company reported a diluted EPS of $2.38 for 2021, a significant increase from $1.30 in 2020, partly due to a large litigation settlement in the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Edwards Lifesciences kept $0.29.
- Revenue$5.23B100.0%
- Cost of revenue−$1.25B23.9%
- Gross profit$3.98B76.1%
- Operating costs−$2.29B43.8%
- Operating income$1.69B32.3%
- Interest, other & tax−$187.2M3.6%
- Net income$1.50B28.7%
Where FY2021 revenue went
$5.23B- Net income: $1.50B, 29% of revenue
- SG&A: $1.49B, 29% of revenue
- Cost of revenue: $1.25B, 24% of revenue
- R&D: $903.1M, 17% of revenue
- Interest, other & tax: $187.2M, 3.6% of revenue
Kept 29% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 14, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.23B$4.39B | +19.3% |
| Cost of Revenue | $1.25B$1.08B | +15.6% |
| Gross Profit | $3.98B$3.31B | +20.5% |
| R&D Expenses | $903.10M$760.70M | +18.7% |
| SG&A Expenses | $1.49B$1.23B | +21.6% |
| Operating Income | $1.69B$897.60M | +88.3% |
| Interest Expense | $18.40M$15.80M | +16.5% |
| Net Income | $1.50B$823.40M | +82.5% |
| EPS (Basic) | $2.41$1.32 | +82.6% |
| EPS (Diluted) | $2.38$1.30 | +83.1% |
| Shares Outstanding (Basic) | 623.30M622.60M | +0.1% |
| Shares Outstanding (Diluted) | 631.20M631.90M | −0.1% |
05—Questions
Frequently Asked Questions
What was Edwards Lifesciences' overall financial performance in 2021?
Edwards Lifesciences reported a significant increase in net sales, up 19.3% to $5.2 billion for the year ended December 30, 2021. Diluted Earnings Per Share (EPS) also saw a substantial rise to $2.38, compared to $1.30 in 2020. This growth was driven by strong performance across its key product segments, particularly TAVR.
How did the COVID-19 pandemic impact the company's operations and sales in 2021?
The company experienced impacts from COVID-19, noting that TAVR and surgical procedure volumes varied significantly. While the first half of 2021 saw a strong recovery due to increased vaccinations, the Delta and Omicron variants negatively affected hospital resources and TAVR procedures in the second half of the year. Despite these challenges, the company managed to supply its technologies globally and achieved overall sales growth.
What are the key growth drivers for Edwards Lifesciences?
The primary growth driver is the Transcatheter Aortic Valve Replacement (TAVR) segment, which continues to benefit from technological advancements and increasing adoption. Additionally, the company is heavily investing in and seeing promising growth in its Transcatheter Mitral and Tricuspid Therapies (TMTT) segment, indicating potential for future market expansion in more complex heart valve procedures. Ongoing investment in R&D across all segments fuels its innovation pipeline.
What is the company's stance on shareholder returns and capital allocation?
Edwards Lifesciences has a policy of reinvesting earnings for business growth and has not paid cash dividends historically. In 2021, the company repurchased $498.5 million of its common stock, demonstrating a commitment to returning capital to shareholders. Additionally, the company has an ongoing stock repurchase program with significant remaining authorization.
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