10-QPeriod: Q1 FY2021

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 28, 2021For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported solid financial performance for the first quarter of 2021, with net sales increasing by 7.8% year-over-year to $1.22 billion. This growth was primarily driven by a strong performance in the Transcatheter Aortic Valve Replacement (TAVR) segment, which saw a 6.7% increase in sales, and continued adoption of the PASCAL platform in Transcatheter Mitral and Tricuspid Therapies (TMTT). The company also noted a recovery in Critical Care product demand. Despite a slight decrease in gross margin percentage due to foreign currency fluctuations and incremental COVID-19 related costs, overall profitability improved. Net income rose to $338.2 million, leading to diluted earnings per share of $0.54, up from $0.50 in the prior year. The company continues to invest in R&D, particularly in TMTT and aortic valve innovations. Management remains confident in its liquidity and ability to fund operations, though they continue to monitor the ongoing impacts of the COVID-19 pandemic.

Financial Highlights

51 data points
Beta

Revenue

$1.22B

75.9% Gross Margin

Net Income

$338.20M

27.8% Net Margin

EPS (Diluted)

$0.54

Total Assets

$7.21B

Cash & Equivalents

$1.19B

Free Cash Flow

$194.50M

Financial Statements
Beta
Revenue$1.22B
Cost of Revenue$293.40M
Gross Profit$923.20M
R&D Expenses$207.00M
SG&A Expenses$330.80M
Operating Income$383.50M
Net Income$338.20M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)623.20M
Shares Outstanding (Diluted)631.30M

Key Highlights

  • 1Net sales increased by 7.8% to $1.22 billion, driven by TAVR and TMTT product sales.
  • 2Diluted earnings per share (EPS) improved to $0.54 from $0.50 in the prior year's quarter.
  • 3The TAVR segment showed robust growth, with net sales up 6.7% year-over-year.
  • 4TMTT sales experienced significant growth of 56.7%, indicating strong adoption of the PASCAL platform.
  • 5Gross profit margin slightly decreased due to foreign currency impacts and COVID-19 related costs, but overall operating income increased.
  • 6The company repurchased $302.6 million of its common stock, including an accelerated share repurchase program.
  • 7Management expressed confidence in liquidity, with $1.17 billion in cash and cash equivalents at quarter-end.

Frequently Asked Questions

In the first quarter of 2021, Edwards Lifesciences reported a 7.8% increase in net sales, reaching $1.22 billion, compared to $1.13 billion in the first quarter of 2020. Diluted earnings per share rose to $0.54 from $0.49. This growth was primarily fueled by increased sales in the TAVR and TMTT segments.

The primary drivers of sales growth are sales of Transcatheter Aortic Valve Replacement (TAVR) products, such as the Edwards SAPIEN 3 Ultra System, and the continued adoption of the PASCAL platform for Transcatheter Mitral and Tricuspid Therapies (TMTT), especially in Europe. Sales of Surgical Structural Heart and Critical Care products also contributed to the overall increase.

The company highlighted the ongoing impact of the COVID-19 pandemic as a significant factor that has adversely affected and may continue to affect its business, operations, and financial condition. Uncertainty exists regarding the pace of vaccinations outside the United States and its potential impact on international sales. Additionally, the company is subject to ongoing tax audits, with a recent draft notice of proposed adjustment from the IRS potentially leading to significant additional tax expense if not resolved favorably.

Edwards Lifesciences maintained a strong liquidity position, with $1.17 billion in cash and cash equivalents as of March 31, 2021. The company generated $300.5 million in cash flow from operating activities and has a $750 million undrawn credit facility. Management believes these resources are sufficient to fund its operations for the next twelve months.