10-QPeriod: Q1 FY2022

Edwards Lifesciences Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 28, 2022For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported solid financial results for the first quarter of 2022, demonstrating resilience and growth in a challenging macroeconomic environment. Net sales increased by 10.2% to $1.34 billion compared to the prior year's first quarter, driven primarily by strong performance in Transcatheter Aortic Valve Replacement (TAVR) products, which saw an 11.3% increase in sales. This growth was supported by higher sales of the Edwards SAPIEN platform, particularly in the United States and Europe. The company also reported an increase in net income to $373.6 million, up from $338.2 million in the same period last year, translating to diluted earnings per share (EPS) of $0.59, up from $0.54. Despite the impact of the Omicron variant on hospital capacity in early 2022, Edwards Lifesciences successfully navigated these challenges, with operations outside the United States experiencing a less pronounced year-over-year impact from the pandemic. The company's strategic investments in R&D and new product development, including advancements in TMTT and Surgical Structural Heart portfolios, position it for continued future growth.

Financial Highlights

50 data points
Beta

Revenue

$1.34B

77.7% Gross Margin

Net Income

$373.60M

27.9% Net Margin

EPS (Diluted)

$0.59

Total Assets

$8.42B

Cash & Equivalents

$1.04B

Free Cash Flow

$220.60M

Financial Statements
Beta
Revenue$1.34B
Cost of Revenue$299.30M
Gross Profit$1.04B
R&D Expenses$228.60M
SG&A Expenses$370.30M
Operating Income$438.80M
Net Income$373.60M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)622.10M
Shares Outstanding (Diluted)629.40M

Key Highlights

  • 1Net sales increased by 10.2% year-over-year to $1.34 billion, primarily driven by TAVR product sales.
  • 2Net income rose to $373.6 million from $338.2 million in the prior year's quarter.
  • 3Diluted Earnings Per Share (EPS) improved to $0.59 from $0.54 year-over-year.
  • 4Transcatheter Mitral and Tricuspid Therapies (TMTT) sales experienced significant growth of 65.7%, reaching $27.0 million.
  • 5The company actively repurchased shares, spending $405.6 million on treasury stock purchases during the quarter.
  • 6Despite the Omicron variant's impact on hospital capacity in early 2022, the company demonstrated revenue growth, particularly outside the United States.
  • 7Research and Development (R&D) expenses increased, reflecting continued investment in innovation, with 17.0% of net sales dedicated to R&D.

Frequently Asked Questions

Revenue growth was primarily driven by a 10.2% increase in net sales to $1.34 billion. The Transcatheter Aortic Valve Replacement (TAVR) segment was a key contributor, with sales up 11.3% due to higher sales of the Edwards SAPIEN platform, especially in the U.S. and Europe. The Transcatheter Mitral and Tricuspid Therapies (TMTT) segment also showed robust growth, increasing by 65.7%.

The Omicron variant had a notable impact on hospital capacity and procedure volumes in January 2022, particularly in the United States. However, the company managed to achieve overall net sales growth, with operations outside the U.S. experiencing a less pronounced year-over-year impact. The company continues to monitor the pandemic's ongoing effects on its business.

Edwards Lifesciences is actively repurchasing its shares. During the first quarter of 2022, the company spent $405.6 million on treasury stock purchases. As of March 31, 2022, there was remaining authority to purchase approximately $721.2 million of common stock under its repurchase programs.

The company is currently reviewing and investigating potential violations of certain provisions of the Foreign Corrupt Practices Act (FCPA) in Japan and other markets. Additionally, a lawsuit has been filed alleging infringement of patents related to its SAPIEN 3 Ultra product. The company is also subject to ongoing tax audits, including a Notice of Proposed Adjustment from the IRS concerning transfer pricing for Surgical/TAVR intercompany royalty transactions, which could potentially result in significant additional tax expenses. While the company is contesting these matters, their ultimate outcomes are uncertain and could impact financial results.