01—Abstract
Summary
Summary of the 10-K filed February 13, 2023. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences Corporation (EW) reported its 2022 full-year results, demonstrating resilience despite prevailing macroeconomic challenges and the lingering effects of the COVID-19 pandemic.
The company achieved net sales of $5.4 billiona, a 2.9% increase year-over-year, driven primarily by strong performance in its Transcatheter Aortic Valve Replacement (TAVR) segment, which represented 65% of total net sales. The company continues to invest heavily in research and development, with R&D expenses increasing by 5% year-over-year, representing 18% of sales, focusing on next-generation TAVR technologies and expanding its Transcatheter Mitral and Tricuspid Therapies (TMTT) offerings. Despite foreign currency headwinds that impacted international sales by $140.2 million, Edwards Lifesciences maintained effective foreign currency hedging programs, contributing to a gross profit increase.
The company also saw growth in its Surgical Structural Heart and Critical Care segments. Management highlighted key regulatory approvals and product launches in 2022, including FDA approval for the MITRIS RESILIA valve and PASCAL Precision system, and the launch of the SAPIEN 3 Ultra RESILIA valve in the U.S. While the company is navigating various risks, including regulatory compliance, competition, and supply chain considerations, its strategic focus on innovation and patient-centric solutions positions it for continued leadership in the structural heart disease and critical care monitoring markets.
02—Key points
Key Highlights
- Net sales for 2022 reached $5.4 billion, an increase of 2.9% compared to 2021, primarily driven by the TAVR segment.
- The company invested 17.6% of its net sales in R&D during 2022, signaling a strong commitment to innovation, particularly in TAVR and TMTT.
- Key product advancements in 2022 included FDA approval for the MITRIS RESILIA valve and PASCAL Precision system, and the U.S. launch of the SAPIEN 3 Ultra RESILIA valve.
- Despite foreign currency headwinds negatively impacting international sales by $140.2 million, the company's hedging programs helped offset some of these effects.
- The company repurchased $1.7 billion of its common stock in 2022, demonstrating a commitment to returning capital to shareholders.
- Operating income for 2022 was $1.75 billion, reflecting a slight increase from the prior year, despite increased SG&A and R&D expenses.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Edwards Lifesciences Corp kept $0.34.
- Revenue$4.46B100.0%
- Cost of revenue−$723.7M16.2%
- Gross profit$3.74B83.8%
- Operating costs−$2.24B50.2%
- Operating income$1.50B33.6%
- Interest, other & tax$23.5M0.5%
- Net income$1.52B34.1%
Where FY2022 revenue went
$4.46B- Operating income: $1.50B, 34% of revenue
- SG&A: $1.36B, 30% of revenue
- R&D: $843.6M, 19% of revenue
- Cost of revenue: $723.7M, 16% of revenue
- Other operating costs: $40.7M, 0.9% of revenue
Kept 34% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 13, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $4.46B$5.23B | −14.7% |
| Cost of Revenue | $723.70M$1.25B | −42.1% |
| Gross Profit | $3.74B$3.98B | −6.1% |
| R&D Expenses | $843.60M$903.10M | −6.6% |
| SG&A Expenses | $1.36B$1.49B | −9.1% |
| Operating Income | $1.50B$1.69B | −11.4% |
| Interest Expense | $19.20M$18.40M | +4.3% |
| Net Income | $1.52B$1.50B | +1.3% |
| EPS (Basic) | $2.46$2.41 | +2.1% |
| EPS (Diluted) | $2.44$2.38 | +2.5% |
| Shares Outstanding (Basic) | 619.00M623.30M | −0.7% |
| Shares Outstanding (Diluted) | 624.20M631.20M | −1.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Edwards Lifesciences' net sales growth in 2022?
The primary driver of net sales growth in 2022 was the continued strong performance of the Transcatheter Aortic Valve Replacement (TAVR) segment, particularly the Edwards SAPIEN platform, which saw increased sales in the United States, Europe, and Rest of World markets. Growth was also supported by the Surgical Structural Heart and Critical Care segments.
How did foreign currency fluctuations impact Edwards Lifesciences' financial results?
Foreign currency exchange rate fluctuations negatively impacted net sales by $140.2 million in 2022, primarily due to the weakening of the Euro and Japanese yen against the U.S. dollar. However, the company's foreign currency hedging program helped to mitigate some of these effects on gross profit.
What are the key areas of investment for Edwards Lifesciences' research and development?
Edwards Lifesciences significantly invests in R&D, with 17.6% of net sales dedicated to this in 2022. Key focus areas include developing new products and enhancing existing ones within the Transcatheter Aortic Valve Replacement (TAVR) and Transcatheter Mitral and Tricuspid Therapies (TMTT) segments, as well as advancing decision support solutions for its Critical Care product line.
What is the company's stance on dividends and share repurchases?
Edwards Lifesciences has never paid cash dividends and currently plans to retain earnings for business reinvestment. The company actively engages in share repurchases, having repurchased $1.7 billion of its common stock in 2022, as part of an ongoing program authorized by its Board of Directors.
What are the major risks and challenges highlighted in the filing for Edwards Lifesciences?
Key risks and challenges identified include the ability to innovate and market new products successfully, potential issues in clinical trials or procedures, manufacturing and quality control, public health crises, intense competition, reliance on third-party suppliers, and the impact of government regulations and reimbursement policies. Intellectual property protection and cybersecurity are also noted as critical risk areas.
06—Continue