10-QPeriod: Q3 FY2021

Edwards Lifesciences Corp Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 29, 2021For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported solid financial results for the nine months ending September 30, 2021, demonstrating significant year-over-year growth. Net sales increased by 22.2% to $3.9 billion, primarily driven by strong performance in Transcatheter Aortic Valve Replacement (TAVR) products, which saw a 22.6% increase. The company also experienced growth across its Surgical Structural Heart and Critical Care segments, indicating a recovery from the impacts of the COVID-19 pandemic and increased adoption of its technologies. The company's net income for the first nine months of 2021 more than doubled to $1.17 billion compared to $513.9 million in the prior year, partly due to a significant litigation settlement charge in the prior year. Operating cash flow also saw a substantial increase, highlighting the company's ability to generate cash from its core operations. Despite some impacts from the Delta variant on TAVR procedures late in the third quarter, the overall financial trajectory for Edwards Lifesciences appears positive, with continued investment in research and development to support future innovation.

Financial Highlights

50 data points
Beta

Revenue

$1.31B

76.2% Gross Margin

Net Income

$340.10M

26.0% Net Margin

EPS (Diluted)

$0.54

Total Assets

$8.16B

Cash & Equivalents

$1.52B

Free Cash Flow

$471.20M

Financial Statements
Beta
Revenue$1.31B
Cost of Revenue$311.70M
Gross Profit$998.50M
R&D Expenses$238.00M
SG&A Expenses$364.40M
Operating Income$390.30M
Net Income$340.10M
EPS (Basic)$0.55
EPS (Diluted)$0.54
Shares Outstanding (Basic)623.60M
Shares Outstanding (Diluted)631.70M

Key Highlights

  • 1Net sales for the nine months ended September 30, 2021, increased by 22.2% to $3.9 billion, up from $3.2 billion in the same period of 2020.
  • 2Transcatheter Aortic Valve Replacement (TAVR) product sales grew by 22.6% year-over-year, reaching $2.55 billion for the first nine months of 2021.
  • 3Net income for the nine months ended September 30, 2021, was $1.17 billion, a significant increase from $513.9 million in the prior year.
  • 4Operating cash flow for the first nine months of 2021 was $1.36 billion, a substantial increase from $654.5 million in the prior year.
  • 5The company repurchased approximately 4.7 million shares of common stock for $402.3 million during the first nine months of 2021, demonstrating a commitment to returning capital to shareholders.
  • 6Despite challenges from the Delta variant impacting U.S. TAVR procedures late in Q3 2021, the overall sales trends across product segments show resilience and growth.
  • 7Research and development expenses increased by 18.6% to $670.3 million for the first nine months of 2021, reflecting continued investment in innovation.

Frequently Asked Questions

The primary driver of revenue growth was the strong performance of Transcatheter Aortic Valve Replacement (TAVR) products, which increased by 22.6% year-over-year. This growth was supported by improved COVID-19 conditions compared to 2020 and continued adoption in key markets like the United States, Europe, and Japan. Sales in Surgical Structural Heart and Critical Care also contributed positively.

The COVID-19 pandemic continued to have an impact, particularly affecting TAVR procedures in the U.S. due to the Delta variant's strain on hospital resources towards the end of Q3 2021. While the company has generally seen a recovery in procedure volumes and demand compared to the significant disruptions in 2020, ongoing variants and global healthcare system stress create uncertainty for the remainder of the year.

Edwards Lifesciences actively engages in share repurchases. During the first nine months of 2021, the company repurchased approximately 4.7 million shares for $402.3 million. This includes activity under an accelerated share repurchase agreement and reflects a commitment to returning capital to shareholders, managing dilution from stock plans, and capitalizing on market conditions. As of September 30, 2021, approximately $1.2 billion remained authorized for future repurchases.

The company is undergoing a review and investigation into potential violations of the Foreign Corrupt Practices Act (FCPA) in Japan and other markets, the outcome of which is currently unpredictable. Additionally, a patent infringement lawsuit was filed in September 2021 regarding the SAPIEN 3 Ultra product; the company believes the claims are without merit and will defend itself vigorously. A significant tax matter involves a proposed adjustment from the IRS related to transfer pricing, which could result in additional tax expense, though the company believes its current accruals are sufficient and is pursuing remedies.