10-QPeriod: Q2 FY2022

Edwards Lifesciences Corp Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 29, 2022For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) reported its second quarter and year-to-date results for the period ending June 30, 2022. While overall net sales saw a slight increase of 4.7% to $2.7 billion for the first six months of the year, driven by Transcatheter Aortic Valve Replacement (TAVR) products, the company faced headwinds in the second quarter. Net sales for the three months ended June 30, 2022, were essentially flat year-over-year at $1.37 billion, impacted by slower-than-expected improvement in US hospital staffing and unfavorable foreign currency exchange rates. Despite these challenges, the company demonstrated strong operational execution, with gross profit increasing due to sales growth and a positive impact from its foreign currency hedging program. However, diluted earnings per share saw a decline for the six-month period, largely attributed to changes in the fair value of contingent consideration liabilities and increased operating expenses related to sales, marketing, and R&D investments. The company continues to invest heavily in innovation, particularly in its TAVR and Transcatheter Mitral and Tricuspid Therapies (TMTT) segments, with significant clinical trial activity underway. Management remains confident in its liquidity and ability to fund its operations and strategic initiatives, including a substantial ongoing share repurchase program.

Financial Highlights

50 data points
Beta

Revenue

$1.37B

80.4% Gross Margin

Net Income

$406.40M

29.6% Net Margin

EPS (Diluted)

$0.65

Total Assets

$8.43B

Cash & Equivalents

$1.20B

Free Cash Flow

$289.10M

Financial Statements
Beta
Revenue$1.37B
Cost of Revenue$269.40M
Gross Profit$1.10B
R&D Expenses$250.80M
SG&A Expenses$409.00M
Operating Income$459.50M
Net Income$406.40M
EPS (Basic)$0.65
EPS (Diluted)$0.65
Shares Outstanding (Basic)620.90M
Shares Outstanding (Diluted)626.70M

Key Highlights

  • 1Net sales for the six months ended June 30, 2022, increased by 4.7% to $2.72 billion, primarily driven by TAVR product sales.
  • 2The company experienced flat net sales for the three months ended June 30, 2022 ($1.37 billion), impacted by US hospital staffing shortages and unfavorable foreign currency movements.
  • 3Gross profit increased for the six months ended June 30, 2022, benefiting from sales growth and the positive impact of foreign currency hedging.
  • 4Diluted earnings per share decreased for the six months ended June 30, 2022, due to changes in fair value of contingent consideration liabilities and increased operating expenses.
  • 5Research and Development expenses increased in the first half of 2022, reflecting continued investment in transcatheter innovations and clinical trials.
  • 6The company repurchased $746.4 million of its common stock during the first six months of 2022 and announced an additional $1.5 billion repurchase authorization.
  • 7Edwards Lifesciences is actively engaged in pivotal trials for next-generation TAVR technologies and expansion of its TMTT offerings, including PASCAL Precision and EVOQUE systems.

Frequently Asked Questions

For the three months ended June 30, 2022, Edwards Lifesciences reported net sales of $1,373.9 million, which was nearly flat compared to $1,376.0 million in the same period last year. The company cited slower-than-expected improvement in US hospital staffing and foreign currency headwinds as factors impacting sales.

Net sales for the six months ended June 30, 2022, increased by 4.7% to $2,715.1 million. The primary driver was the strong performance of Transcatheter Aortic Valve Replacement (TAVR) products, which saw a 5.6% increase in sales.

As of June 30, 2022, Edwards Lifesciences had cash and cash equivalents of $1,198.1 million and short-term investments of $317.7 million, totaling over $1.5 billion in liquid assets. The company reported total assets of $8,425.1 million and total liabilities of $2,481.5 million, indicating a solid balance sheet. Management believes its sources of liquidity are sufficient to meet its current and long-term requirements.

Edwards Lifesciences is involved in ongoing investigations related to potential violations of the Foreign Corrupt Practices Act (FCPA) in Japan and other markets, the outcome of which is uncertain. The company is also defending against a patent infringement lawsuit related to its SAPIEN 3 Ultra product and received a 'show cause' letter from the EPA regarding hazardous waste management at its Irvine facility. While management does not believe any of these matters will have a material adverse effect on its overall financial condition, they introduce potential risks and uncertainties.