10-QPeriod: Q3 FY2020

Edwards Lifesciences Corp Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 26, 2020For Securities:EW

Summary

Edwards Lifesciences Corporation reported solid performance for the nine months ended September 30, 2020, with net sales reaching $3.2 billion, a slight increase of 0.7% over the prior year, primarily driven by growth in Transcatheter Aortic Valve Replacement (TAVR) products. While the COVID-19 pandemic presented challenges, impacting procedure volumes and operations, the company demonstrated resilience, with TAVR and Transcatheter Mitral and Tricuspid Therapies (TMTT) procedure volumes showing improvement in the latter half of the second and third quarters. The company also resolved a significant legal matter, settling patent disputes with Abbott Laboratories for an estimated $367.9 million pre-tax charge. Despite this, and other ongoing investments in R&D and share repurchases, Edwards Lifesciences maintained a healthy cash position, with $1,024.0 million in cash and cash equivalents at quarter-end. The company's strategic focus on innovation and patient-centric solutions continues to drive its product development and market position.

Financial Highlights

52 data points
Beta

Revenue

$1.14B

75.4% Gross Margin

Net Income

$325.20M

28.5% Net Margin

EPS (Diluted)

$0.52

Total Assets

$6.80B

Cash & Equivalents

$1.03B

Free Cash Flow

$112.80M

Financial Statements
Beta
Revenue$1.14B
Cost of Revenue$281.00M
Gross Profit$859.90M
R&D Expenses$195.50M
SG&A Expenses$307.20M
Operating Income$357.80M
Net Income$325.20M
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)622.10M
Shares Outstanding (Diluted)631.00M

Key Highlights

  • 1Net sales for the nine months ended September 30, 2020, were $3.2 billion, a 0.7% increase compared to the prior year, driven by TAVR sales.
  • 2Transcatheter Aortic Valve Replacement (TAVR) sales increased by 5.3% to $2.1 billion for the nine months ended September 30, 2020.
  • 3The company settled patent litigation with Abbott Laboratories, resulting in a $367.9 million pre-tax charge in June 2020.
  • 4Despite COVID-19 impacts, procedure volumes for TAVR and TMTT showed recovery in Q2 and Q3 2020 after initial declines.
  • 5Research and Development (R&D) expenses remained robust, representing 17.7% of net sales for the first nine months of 2020.
  • 6The company repurchased $614.7 million of its common stock during the first nine months of 2020.
  • 7Cash and cash equivalents stood at $1,024.0 million as of September 30, 2020.

Frequently Asked Questions

COVID-19 adversely impacted operations and procedure volumes, particularly in the early stages of the pandemic. While TAVR and TMTT procedure volumes declined starting in March 2020, they began to improve in May 2020 and continued to recover through Q3. The company actively managed its supply chain and manufacturing operations to maintain product availability.

Edwards Lifesciences settled all outstanding patent disputes with Abbott Laboratories, related to transcatheter mitral and tricuspid repair products. This settlement resulted in a pre-tax charge of $367.9 million in June 2020 and will involve royalty expenses through May 2024. The resolution of this litigation removes a significant legal overhang for the company.

Transcatheter Aortic Valve Replacement (TAVR) sales showed strong growth, increasing by 5.3% for the nine months. Transcatheter Mitral and Tricuspid Therapies (TMTT) also saw significant growth of 36.5%, driven by the PASCAL system in Europe. Surgical Structural Heart sales decreased due to COVID-19 and TAVR adoption, while Critical Care sales saw a decline primarily due to delayed surgical procedures and reduced hospital capital spending.

Edwards Lifesciences maintained a strong financial position with $1,024.0 million in cash and cash equivalents as of September 30, 2020. Operating activities generated $654.3 million in cash for the nine months. The company also has access to a $750.0 million credit facility, with no outstanding borrowings as of the reporting date.