01—Abstract
Summary
Summary of the 8-K filed February 11, 2025. Cited figures are marked; the original filing is the authoritative source.
Edwards Lifesciences reported fourth-quarter 2024 sales of $1.39 billiona, up 9.4% on a GAAP basis and 8.8% on a constant-currency basis, which the company described as better than expected with growth across all product groups.
TAVR sales rose 6% to $1.04 billionb, and Transcatheter Mitral and Tricuspid Therapies (TMTT) more than doubled in growth terms, rising 88% to $105 million. Full-year 2024 sales reached $5.44 billion, up 8.6%, with TMTT up 78% to $352 million. Surgical Structural Heart sales were $244 million, up 6%.
Profitability was mixed on a GAAP basis but in line with management's plan. Q4 GAAP diluted EPS from continuing operations was $0.58c, versus $0.55 a year earlier, and adjusted EPS was $0.59. The GAAP operating margin was 22.6%, compared with 25.6% adjusted.
Gross margin was 78.9% GAAP and 79.0% adjusted, down from 80.2% a year earlier. Higher SG&A (35.5% of sales, up from 32.9%) reflects TMTT field teams, Critical Care sale transition costs, and acquisitions. R&D rose 12% to $271 milliond.
Management reiterated 2025 guidance of 8%-10% constant-currency sales growth, adjusted EPS of $2.40-$2.50, and adjusted operating margin of 27%-28%. It guided Q1 2025 sales to $1.35-$1.43 billion and adjusted EPS to $0.58-$0.64. The balance sheet remains strong, with about $3.0 billion in cash and equivalents against roughly $600 million of total debt.
Management continues to expect FDA approval of the asymptomatic severe aortic stenosis TAVR indication by mid-2025, which is the key near-term catalyst. Full-year 2024 results also include large discontinued-operations income of $2.77 billion, tied to the Critical Care divestiture, so investors should focus on continuing-operations figures when assessing the core business.
02—Key points
Key Highlights
- Q4 2024 sales of $1.39B grew 9.4% GAAP (8.8% constant currency), better than expected, with growth across all product groups; FY2024 sales of $5.44B grew 8.6%.
- TMTT was the standout: Q4 sales of $105M rose 88%, and FY2024 sales of $352M rose 78%, driven by PASCAL and EVOQUE.
- TAVR Q4 sales of $1.04B grew 6% (5% constant currency), with FY2024 sales of $4.1B up 6%; pricing and competitive position were described as stable.
- Q4 GAAP diluted EPS from continuing operations was $0.58 (adjusted $0.59), with GAAP operating margin of 22.6% (25.6% adjusted) and gross margin of 78.9%, down from 80.2% a year earlier.
- 2025 guidance was reiterated: 8%-10% constant-currency sales growth, adjusted EPS of $2.40-$2.50, adjusted gross margin of 78%-79%, and adjusted operating margin of 27%-28%.
- Q1 2025 guidance calls for sales of $1.35-$1.43B and adjusted EPS of $0.58-$0.64.
- The company still expects FDA approval of the asymptomatic severe AS TAVR indication by mid-2025, following the EARLY TAVR trial, and European SAPIEN M3 mitral replacement approval by mid-2025. The balance sheet shows about $3.0B in cash against about $600M in debt.
03—Questions
Frequently Asked Questions
Did Edwards beat expectations in Q4 2024?
Management described Q4 sales of $1.39B as better than expected, with strength across all product groups. Adjusted EPS of $0.59 was also led by top-line performance. Q4 operating margin of 22.6% GAAP (25.6% adjusted) was in line with management's internal expectations, although SG&A and R&D spending rose sharply.
Why did SG&A and R&D grow faster than sales?
SG&A rose to $492M, or 35.5% of sales, from $417M, reflecting TMTT field-based sales teams, transition costs from the Critical Care sale, and growth acquisitions. R&D rose 12% to $271M, mainly because a full quarter of spending from acquisitions closed in 2024 was included. Management expects to hold operational SG&A and R&D roughly flat in dollar terms in 2025 and to lower both as a percentage of sales over time.
What are the key catalysts for 2025?
The main near-term catalyst is expected FDA approval by mid-2025 of the TAVR indication for asymptomatic severe aortic stenosis, based on the EARLY TAVR trial. Other items include European approval of SAPIEN M3 for mitral replacement by mid-2025, continued EVOQUE and PASCAL adoption in TMTT, and emerging opportunities in structural heart failure and aortic regurgitation. Management also pointed to increasing contributions from new structural heart therapies in 2026 and beyond.
How should investors interpret the large 2024 net income figure?
Full-year 2024 net income of $4.17B includes $2.77B of income from discontinued operations, mostly related to the Critical Care divestiture. Income from continuing operations was $1.40B, or $2.34 GAAP diluted EPS. Investors should use continuing-operations results and adjusted metrics, since the discontinued-operations gain is a one-time item and not part of the core business.
What do the non-GAAP adjustments exclude, and are they material?
Adjusted results exclude items such as litigation expenses, amortization of intangibles, separation costs related to the Critical Care sale, acquisition contract termination costs, and gains on remeasurement of previously held interests. In Q4 2024, the adjustments moved EPS from $0.58 GAAP to $0.59 adjusted and lifted the operating margin from 22.6% to 25.6%. These items are modest relative to the total, but they should be reviewed alongside GAAP figures.
04—Continue