01—Abstract
Summary
Summary of the 8-K filed October 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences (EW) reported third quarter 2024 results on October 24, 2024, with sales from continuing operations rising 8.9% GAAP (9.6% on a constant-currency basis) to $1,354.4 milliona.
Growth was led by Transcatheter Mitral and Tricuspid Therapies (TMTT), which grew 73% to $91.1 millionb on the PASCAL and EVOQUE launches, while TAVR grew 6.5% to $1,023.3 million and Surgical Structural Heart grew 4.3% to $240.0 million (5.1% constant currency). Diluted EPS was $5.13 on a GAAP basis, but this was inflated by $2.7 billion of income from discontinued operations tied to the sale of the Critical Care business. Continuing-operations diluted EPS was $0.61 GAAP and $0.67 adjusted, which the company described as slightly ahead of its own Q3 guidance.
Profitability held up well on an adjusted basis. The adjusted gross margin was 80.7%, up from 79.9% a year earlier, and GAAP operating margin was 25.9%, down from 29.4%, reflecting higher SG&A (31.1% of sales, driven by field-force expansion for the transcatheter launches), R&D up 4% to $253.4 millionc, and $32.9 million in restructuring charges tied to a global workforce realignment. Management reiterated full-year 2024 sales growth guidance of 8% to 10% on a constant-currency basis, along with its product-group guidance, and guided Q4 sales to $1.33 to $1.39 billion and Q4 adjusted EPS to $0.53 to $0.57.
Balance sheet and capital return remained strong. Cash and equivalents were about $3.5 billiond and total debt about $600 million at September 30, 2024.
Edwards repurchased $1.0 billion of stock in the quarter and has roughly $1.4 billion left under its current authorization. The company also flagged clinical catalysts at the TCT conference, including EARLY TAVR, CLASP IID two-year outcomes, and TRISCEND II one-year data, which investors will watch for effects on the long-term TAVR and TMTT growth outlook.
02—Key points
Key Highlights
- Continuing-operations sales rose 8.9% GAAP and 9.6% constant currency to $1,354.4 million, slightly ahead of guidance expectations.
- TMTT sales surged 73% to $91.1 million, driven by PASCAL and the EVOQUE launch in the U.S. and Europe.
- TAVR sales grew 6.5% to $1,023.3 million, with stable global pricing and competitive position; U.S. growth was in line with global constant-currency growth.
- Adjusted gross margin expanded to 80.7% from 79.9%, while GAAP operating margin fell to 25.9% from 29.4% due to higher SG&A and restructuring charges.
- GAAP diluted EPS of $5.13 includes $2.7 billion of discontinued-operations income from the Critical Care sale; continuing-operations adjusted EPS was $0.67.
- Full-year 2024 sales growth guidance of 8% to 10% (constant currency) was reiterated, with Q4 sales guided to $1.33 to $1.39 billion and Q4 adjusted EPS to $0.53 to $0.57.
- Strong capital position with about $3.5 billion in cash, roughly $600 million of debt, $1.0 billion in Q3 buybacks, and about $1.4 billion remaining under the repurchase authorization.
03—Questions
Frequently Asked Questions
Why is GAAP diluted EPS of $5.13 so much higher than the adjusted EPS of $0.67?
The GAAP figure includes $2.7 billion of income from discontinued operations, mainly the one-time gain on the sale of the Critical Care business. Continuing-operations diluted EPS was $0.61 on a GAAP basis, and adjusted EPS of $0.67 excludes items such as litigation expenses, restructuring charges, a charitable contribution, and a gain on remeasuring a previously held interest.
Is TMTT becoming a meaningful growth driver for Edwards?
Yes. TMTT sales of $91.1 million grew 73% year over year, led by the PASCAL system and the EVOQUE tricuspid replacement launch. It remains small relative to TAVR, which generated about $1.0 billion in the quarter, but it is the fastest-growing product group and is supported by upcoming pivotal data such as CLASP IID two-year outcomes and TRISCEND II.
Why did operating margin decline even though gross margin improved?
GAAP operating margin fell to 25.9% from 29.4%. Adjusted gross margin improved to 80.7%, but SG&A rose to 31.1% of sales because of field-force expansion for the transcatheter launches, R&D increased to 18.7% of sales, and the company recorded $32.9 million in restructuring charges and $10.8 million in IP and litigation expenses.
Did Edwards change its full-year 2024 outlook?
No. The company reiterated its full-year sales growth guidance of 8% to 10% on a constant-currency basis, along with its product-group guidance. It also guided Q4 sales to $1.33 to $1.39 billion and Q4 adjusted EPS to $0.53 to $0.57.
What catalysts should investors watch after this report?
The company highlighted clinical data at the TCT conference the following week, including the EARLY TAVR trial in asymptomatic severe aortic stenosis, two-year CLASP IID outcomes for PASCAL in degenerative mitral regurgitation, and one-year TRISCEND II data for EVOQUE. Enrollment in the CLASP IITR tricuspid trial was also completed, and the JOURNEY pivotal trial for the J-Valve AR system began implants.
04—Continue