10-QPeriod: Q2 FY2021

Edwards Lifesciences Corp Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 30, 2021For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported a strong second quarter for 2021, demonstrating significant recovery from the prior year's pandemic-impacted period. Net sales surged by 48.7% year-over-year to $1.376 billion, driven by robust performance across all product segments, particularly Transcatheter Aortic Valve Replacement (TAVR), which saw a 51.7% increase in sales. The company also experienced substantial growth in Surgical Structural Heart and Critical Care products, with Transcatheter Mitral and Tricuspid Therapies showing remarkable percentage growth. This top-line growth translated into a significant improvement in profitability, with net income soaring to $489.5 million, a stark contrast to the net loss in the prior year's quarter, resulting in diluted EPS of $0.78. The company's operational improvements, including higher procedure volumes and reduced COVID-19 related costs, contributed to a healthier gross margin. While selling, general, and administrative expenses increased due to higher personnel costs and expanded commercial activities, the overall financial performance indicates a strong rebound and positive momentum. Investors should note the company's continued investment in R&D for transcatheter innovations and its ongoing efforts to manage supply chain complexities and potential uncertainties from global healthcare dynamics.

Financial Highlights

51 data points
Beta

Revenue

$1.38B

75.7% Gross Margin

Net Income

$489.50M

35.6% Net Margin

EPS (Diluted)

$0.78

Total Assets

$7.66B

Cash & Equivalents

$1.33B

Free Cash Flow

$456.80M

Financial Statements
Beta
Revenue$1.38B
Cost of Revenue$334.30M
Gross Profit$1.04B
R&D Expenses$225.30M
SG&A Expenses$374.50M
Operating Income$542.10M
Net Income$489.50M
EPS (Basic)$0.79
EPS (Diluted)$0.78
Shares Outstanding (Basic)622.30M
Shares Outstanding (Diluted)629.90M

Key Highlights

  • 1Net sales increased significantly by 48.7% to $1.376 billion for the three months ended June 30, 2021, compared to $925.0 million in the prior year period.
  • 2Net income for the quarter was $489.5 million, a substantial improvement from a net loss of $121.9 million in the second quarter of 2020.
  • 3Diluted earnings per share (EPS) for the quarter was $0.78, compared to a loss per share of $0.20 in the prior year period.
  • 4The Transcatheter Aortic Valve Replacement (TAVR) segment showed strong sales growth of 51.7%, driven by higher procedure volumes and adoption of the SAPIEN platform.
  • 5Surgical Structural Heart sales increased by 47.5% and Critical Care sales by 31.3%, indicating broad-based recovery across key business areas.
  • 6The company repurchased $402.3 million of its common stock during the first six months of 2021, signaling confidence and a commitment to shareholder returns.
  • 7The company reported a substantial increase in cash provided by operating activities, reaching $826.6 million for the six months ended June 30, 2021.

Frequently Asked Questions

Edwards Lifesciences experienced a significant turnaround in the second quarter of 2021. Net sales increased by 48.7% to $1.376 billion, and the company reported a net income of $489.5 million, a substantial improvement from a net loss of $121.9 million in the same period of 2020. Diluted earnings per share also improved to $0.78 from a loss of $0.20.

The primary driver of sales growth was the Transcatheter Aortic Valve Replacement (TAVR) segment, which saw a 51.7% increase due to higher procedure volumes and strong adoption of the SAPIEN platform. Growth was also robust in Surgical Structural Heart (up 47.5%) and Critical Care (up 31.3%), reflecting a general recovery in healthcare procedures and increased demand for the company's products.

While the company saw a strong recovery in the second quarter of 2021 due to widespread vaccine adoption, it continues to monitor the impact of COVID-19. Uncertainty remains, particularly for sales outside the United States, due to slower vaccination progress and the emergence of new variants. The company is focused on managing inventory, logistics, and closely monitoring its supply chain.

The company is currently investigating potential violations of the Foreign Corrupt Practices Act (FCPA) related to certain employee actions in Japan and has voluntarily notified the SEC and DOJ. The outcome of this investigation is unpredictable and could potentially lead to fines or penalties. Additionally, there's a notice of proposed adjustment from the IRS regarding transfer pricing for tax years 2015-2017, which could result in additional tax expense. The company disagrees with this proposal and is evaluating its options.