Edwards Lifesciences Reports First Quarter Results
Highlights and Outlook
-
Q1 sales grew 10% on a reported and constant currency1 basis to
$1.6 billion - Q1 TAVR sales grew 6%; constant currency sales grew 8% adjusted for billing days
- Q1 TMTT sales grew 75%
-
Q1 EPS of
$0.58 ; adjusted1 EPS of$0.66 - Raising 2024 sales guidance to the high end of previous 8 to 10%1 range
- Raising full-year 2024 sales guidance for TMTT and Surgical; confident in TAVR guidance
- Critical Care spin-off on track; raising 2024 sales guidance
“Edwards is positioned to extend our leadership and deliver sustainable growth as a result of the strategic investments we have made across our transcatheter platforms to address the large and growing needs of patients impacted by aortic, mitral and tricuspid disease. We are pleased with our total company performance with first quarter sales growth of 10% as more patients were treated with our innovative therapies,” said
Transcatheter Aortic Valve Replacement (TAVR)
For the quarter, the company reported TAVR sales of
Edwards remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the
Edwards is positioned for healthy and sustainable TAVR growth well into the future driven by the company’s development of differentiated TAVR technologies, a deep commitment to advancing patient care through high-quality clinical evidence, and its investment in patient activation initiatives. Importantly, Edwards’ groundbreaking research into the treatment of aortic stenosis through its EARLY TAVR and PROGRESS trials could fundamentally change how AS patients are treated.
Transcatheter Mitral and Tricuspid Therapies (TMTT)
In the first quarter, the company drove positive momentum around its unique and broad portfolio strategy of both repair and replacement technologies for mitral and tricuspid patients. The company made significant progress advancing important therapies, including the PASCAL repair system, EVOQUE tricuspid replacement system, and SAPIEN M3 mitral replacement system.
First quarter sales were
In February, EVOQUE became the first transcatheter therapy to receive
Surgical Structural Heart and Critical Care
Surgical Structural Heart sales for the quarter were
Critical Care sales were
Additional Financial Results
For the quarter, the adjusted gross profit margin was 76.0%, compared to 77.5% in the same period last year. This year-over-year reduction was driven by a more favorable impact from foreign exchange in the prior year.
Selling, general and administrative expenses in the first quarter were
Research and development expenses in the first quarter were
Cash, cash equivalents and short-term investments totaled
Outlook
Overall, given the strong first quarter performance, the company now expects full-year 2024 sales growth to be at the high end of the prior guidance of 8 to 10% and
The company is maintaining its full-year 2024 adjusted earnings per share guidance of
For the second quarter of 2024, the company projects total sales to be between
About
Conference Call and Webcast Information
The company will be hosting a conference call today at
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can sometimes be identified by the use of words such as “may,” “will,” “should,” “anticipate,” “believe,” “plan,” “project,” “estimate,” “forecast,” “potential,” “predict,” "early clinician feedback," “expect,” “intend,” “guidance,” “outlook,” “optimistic,” “aspire,” “confident” or other forms of these words or similar expressions and include, but are not limited to, statements made by
Forward-looking statements involve risks and uncertainties that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements. Factors that could cause actual results or experience to differ materially from that expressed or implied by the forward-looking statements include risk and uncertainties associated with the spin-off of our Critical Care product group; our ability to develop new products and avoid manufacturing and quality issues; challenges related to clinical trial or commercial results or new product approvals and therapy adoption; the impact of domestic and global economic conditions; competitive dynamics; our reliance on vendors, suppliers, and other third parties; damage, failure, or interruption of our information technology systems; the impact of public health crises; consolidation in the healthcare industry; our ability to protect our intellectual property; our compliance with applicable regulations; our exposure to product liability claims; use of our products in unapproved circumstances; changes to reimbursement for the company's products; the impact of currency exchange rates; unanticipated actions by the
Edwards,
___________________ | ||
[1] |
"Constant currency” growth rates exclude foreign exchange fluctuations. Sales growth guidance refers to constant currency. “Adjusted” amounts are non-GAAP items. "Constant currency” growth rates in this press release exclude foreign exchange fluctuations. Sales growth guidance refers to constant currency. Adjusted earnings per share is a non-GAAP item computed on a diluted basis and in this press release also excludes an intellectual property agreement and certain litigation expenses, amortization of intangible assets, fair value adjustments to contingent consideration liabilities arising from acquisitions, and one-time separation costs related to the planned spin-off of Critical Care. See “Non-GAAP Financial Information” and reconciliation tables below. |
Unaudited Consolidated Statements of Operations (in millions, except per share data) |
|||||||
|
Three Months Ended
|
||||||
|
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
1,598.2 |
|
|
$ |
1,459.6 |
|
Cost of sales |
|
385.6 |
|
|
|
329.5 |
|
|
|
|
|
||||
Gross profit |
|
1,212.6 |
|
|
|
1,130.1 |
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
489.7 |
|
|
|
436.3 |
|
Research and development expenses |
|
285.2 |
|
|
|
261.2 |
|
Intellectual property agreement and certain litigation expenses |
|
8.9 |
|
|
|
43.5 |
|
Change in fair value of contingent consideration liabilities |
|
— |
|
|
|
0.7 |
|
Separation costs |
|
41.3 |
|
|
|
— |
|
|
|
|
|
||||
Operating income |
|
387.5 |
|
|
|
388.4 |
|
|
|
|
|
||||
Interest income, net |
|
(16.5 |
) |
|
|
(8.6 |
) |
Other income, net |
|
(5.4 |
) |
|
|
(1.6 |
) |
|
|
|
|
||||
Income before provision for income taxes |
|
409.4 |
|
|
|
398.6 |
|
|
|
|
|
||||
Provision for income taxes |
|
58.4 |
|
|
|
58.1 |
|
|
|
|
|
||||
Net income |
$ |
351.0 |
|
|
$ |
340.5 |
|
|
|
|
|
||||
Net loss attributable to noncontrolling interest |
|
(0.9 |
) |
|
|
— |
|
|
|
|
|
||||
Net income attributable to |
$ |
351.9 |
|
|
$ |
340.5 |
|
|
|
|
|
||||
Earnings per share: |
|
|
|
||||
Basic |
$ |
0.58 |
|
|
$ |
0.56 |
|
Diluted |
$ |
0.58 |
|
|
$ |
0.56 |
|
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
||||
Basic |
|
601.6 |
|
|
|
607.5 |
|
Diluted |
|
604.1 |
|
|
|
610.9 |
|
|
|
|
|
||||
Operating statistics |
|
|
|
||||
As a percentage of net sales: |
|
|
|
||||
Gross profit |
|
75.9 |
% |
|
|
77.4 |
% |
Selling, general, and administrative expenses |
|
30.6 |
% |
|
|
29.9 |
% |
Research and development expenses |
|
17.8 |
% |
|
|
17.9 |
% |
Operating income |
|
24.2 |
% |
|
|
26.6 |
% |
Income before provision for income taxes |
|
25.6 |
% |
|
|
27.3 |
% |
Net income |
|
22.0 |
% |
|
|
23.3 |
% |
|
|
|
|
||||
Effective tax rate |
|
14.3 |
% |
|
|
14.6 |
% |
___________________ |
Note: Numbers may not calculate due to rounding. |
Unaudited Balance Sheets (in millions) |
|||||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
1,224.6 |
|
|
$ |
1,144.0 |
|
Short-term investments |
|
473.0 |
|
|
|
500.5 |
|
Accounts receivables, net |
|
817.6 |
|
|
|
775.1 |
|
Other receivables |
|
59.3 |
|
|
|
61.8 |
|
Inventories |
|
1,207.3 |
|
|
|
1,168.2 |
|
Prepaid expenses |
|
138.1 |
|
|
|
146.8 |
|
Other current assets |
|
250.6 |
|
|
|
239.3 |
|
Total current assets |
|
4,170.5 |
|
|
|
4,035.7 |
|
Long-term investments |
|
455.6 |
|
|
|
583.9 |
|
Property, plant, and equipment, net |
|
1,767.9 |
|
|
|
1,749.4 |
|
Operating lease right-of-use assets |
|
98.4 |
|
|
|
94.0 |
|
|
|
1,252.8 |
|
|
|
1,253.5 |
|
Other intangible assets, net |
|
446.8 |
|
|
|
428.4 |
|
Deferred income taxes |
|
776.7 |
|
|
|
754.6 |
|
Other assets |
|
767.6 |
|
|
|
463.7 |
|
Total assets |
$ |
9,736.3 |
|
|
$ |
9,363.2 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
1,086.0 |
|
|
$ |
1,170.5 |
|
Operating lease liabilities |
|
24.8 |
|
|
|
24.9 |
|
Total current liabilities |
|
1,110.8 |
|
|
|
1,195.4 |
|
Long-term debt |
|
597.2 |
|
|
|
597.0 |
|
Taxes payable |
|
79.6 |
|
|
|
80.6 |
|
Operating lease liabilities |
|
77.2 |
|
|
|
73.0 |
|
Uncertain tax positions |
|
336.6 |
|
|
|
339.3 |
|
Litigation agreement accrual |
|
82.0 |
|
|
|
94.2 |
|
Other liabilities |
|
266.5 |
|
|
|
264.3 |
|
Total liabilities |
|
2,549.9 |
|
|
|
2,643.8 |
|
Stockholders’ equity |
|
|
|
||||
Common stock |
|
651.8 |
|
|
|
650.5 |
|
Additional paid-in capital |
|
2,379.8 |
|
|
|
2,274.4 |
|
Retained earnings |
|
9,344.3 |
|
|
|
8,992.4 |
|
Accumulated other comprehensive loss |
|
(233.3 |
) |
|
|
(242.8 |
) |
|
|
(5,024.7 |
) |
|
|
(5,024.5 |
) |
|
|
7,117.9 |
|
|
|
6,650.0 |
|
Noncontrolling interest |
|
68.5 |
|
|
|
69.4 |
|
Total equity |
|
7,186.4 |
|
|
|
6,719.4 |
|
Total liabilities and equity |
$ |
9,736.3 |
|
|
$ |
9,363.2 |
|
Non-GAAP Financial Information
To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), the Company uses non-GAAP historical financial measures. Management makes adjustments to the GAAP measures for items (both charges and gains) that (a) do not reflect the core operational activities of the
Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results, and evaluating current performance. These non-GAAP financial measures are used in addition to, and in conjunction with, results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company's operations by investors that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting the Company's business and facilitate comparability to historical periods.
Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. A reconciliation of non-GAAP historical financial measures to the most comparable GAAP measure is provided in the tables below.
Fluctuations in currency exchange rates impact the comparative results and sales growth rates of the Company's underlying business. Management believes that excluding the impact of currency exchange rate fluctuations from its sales growth provides investors a more useful comparison to historical financial results. The impact of the fluctuations has been detailed in the "Reconciliation of Sales by
Guidance for sales and sales growth rates is provided on a "constant currency basis," and projections for diluted earnings per share, net income and growth, gross profit margin, taxes, and free cash flow are also provided on a non-GAAP basis, as adjusted, for the items identified above due to the inherent difficulty in forecasting such items without unreasonable efforts. The Company is not able to provide a reconciliation of the non-GAAP guidance to comparable GAAP measures due to the unknown effect, timing, and potential significance of special charges or gains, and management's inability to forecast charges associated with future transactions and initiatives.
Management considers free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by business operations, after deducting payments for capital expenditures, which can then be used for strategic opportunities or other business purposes including, among others, investing in the Company's business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock.
The items described below are adjustments to the GAAP financial results in the reconciliations that follow:
Certain Litigation Expenses - The Company incurred certain litigation expenses of
Change in Fair Value of Contingent Consideration Liabilities - The Company recorded expense of
Amortization of Intangible Assets - The Company recorded amortization expense related to developed technology and patents in the amount of
Separation Costs - The Company incurred separation costs of
Intellectual Property Agreement - The Company recorded a
Provision for Income Taxes - The income tax impacts of the expenses and gains discussed above are based upon the items' forecasted effect upon the Company's full year effective tax rate. Adjustments to forecasted items unrelated to the expenses and gains above, as well as impacts related to interim reporting, will have an effect on the income tax impact of these items in subsequent periods.
Adjusted Free Cash Flow - The Company defines free cash flow as cash flows from operating activities less capital expenditures. During 2024, the Company excluded from its calculation payments for separation costs associated with the planned spin-off of Critical Care and a material tax deposit made to mitigate interest on potential tax liabilities that the Company is contesting through the judicial process.
Unaudited Reconciliation of GAAP to Non-GAAP Financial Information (in millions, except per share and percentage data) |
||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||
|
|
|
|
Gross
|
|
Operating
|
|
Net Income
|
|
Diluted
|
|
Effective
|
||||||
GAAP |
|
$ |
1,598.2 |
|
75.9 |
% |
|
$ |
387.5 |
|
$ |
351.9 |
|
$ |
0.58 |
|
14.3 |
% |
Non-GAAP adjustments: (A) (B) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Certain litigation expenses |
|
|
— |
|
— |
|
|
|
8.9 |
|
|
7.4 |
|
|
0.01 |
|
— |
|
Amortization of intangible assets |
|
|
— |
|
0.1 |
|
|
|
1.4 |
|
|
1.2 |
|
|
— |
|
(0.1 |
) |
Separation costs |
|
|
— |
|
— |
|
|
|
41.3 |
|
|
36.8 |
|
|
0.07 |
|
(0.2 |
) |
Adjusted |
|
$ |
1,598.2 |
|
76.0 |
% |
|
$ |
439.1 |
|
$ |
397.3 |
|
$ |
0.66 |
|
14.0 |
% |
|
|
Three Months Ended |
||||||||||||||||
|
|
|
|
Gross
|
|
Operating
|
|
Net Income
|
|
Diluted
|
|
Effective
|
||||||
GAAP |
|
$ |
1,459.6 |
|
77.4 |
% |
|
$ |
388.4 |
|
$ |
340.5 |
|
$ |
0.56 |
|
14.6 |
% |
Non-GAAP adjustments: (A) (B) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Certain litigation expenses |
|
|
— |
|
— |
|
|
|
6.5 |
|
|
5.3 |
|
|
0.01 |
|
0.1 |
|
Change in fair value of contingent consideration liabilities |
|
|
— |
|
— |
|
|
|
0.7 |
|
|
0.6 |
|
|
— |
|
— |
|
Amortization of intangible assets |
|
|
— |
|
0.1 |
|
|
|
1.5 |
|
|
1.3 |
|
|
— |
|
— |
|
Intellectual property agreement |
|
|
— |
|
— |
|
|
|
37.0 |
|
|
30.5 |
|
|
0.05 |
|
0.2 |
|
Adjusted |
|
$ |
1,459.6 |
|
77.5 |
% |
|
$ |
434.1 |
|
$ |
378.2 |
|
$ |
0.62 |
|
14.9 |
% |
___________________ | ||
(A) |
See description of non-GAAP adjustments under "Non-GAAP Financial Information." | |
(B) |
The tax effect on non-GAAP adjustments is calculated based upon the impact of the relevant tax jurisdictions’ statutory tax rates on the Company’s estimated annual effective tax rate, or discrete rate in the quarter, as applicable. The impact on the effective tax rate is reflected on each individual non-GAAP adjustment line item. |
RECONCILIATION OF GAAP OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW |
|||||||
|
Three Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Net cash (used in) provided by operating activities |
$ |
(53.5 |
) |
|
$ |
314.1 |
|
Capital expenditures |
|
(65.3 |
) |
|
|
(61.5 |
) |
Tax deposit |
|
305.1 |
|
|
|
— |
|
Separation cost payments |
|
19.9 |
|
|
|
— |
|
Adjusted Free Cash Flow (A) |
|
206.2 |
|
|
|
252.6 |
|
___________________ | ||
(A) |
See description of "Adjusted Free Cash Flow" under "Non-GAAP Financial Information." |
RECONCILIATION OF SALES BY PRODUCT GROUP AND REGION |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
2023 Adjusted |
|
|
||||||||||
Sales by |
|
|
1Q 2024 |
|
|
1Q 2023 |
|
Change |
|
GAAP
|
|
FX
|
|
1Q 2023
|
|
Constant
|
||||||
Transcatheter Aortic Valve Replacement |
|
$ |
1,007.9 |
|
$ |
947.9 |
|
$ |
60.0 |
|
6.3 |
% |
|
$ |
(2.1 |
) |
|
$ |
945.8 |
|
6.6 |
% |
Transcatheter Mitral and Tricuspid Therapies |
|
|
72.9 |
|
|
41.6 |
|
|
31.3 |
|
75.2 |
% |
|
|
0.7 |
|
|
|
42.3 |
|
72.2 |
% |
Surgical Structural Heart |
|
|
266.1 |
|
|
248.2 |
|
|
17.9 |
|
7.2 |
% |
|
|
(1.4 |
) |
|
|
246.8 |
|
7.9 |
% |
Critical Care |
|
|
251.3 |
|
|
221.9 |
|
|
29.4 |
|
13.3 |
% |
|
|
(2.3 |
) |
|
|
219.6 |
|
14.4 |
% |
Total |
|
$ |
1,598.2 |
|
$ |
1,459.6 |
|
$ |
138.6 |
|
9.5 |
% |
|
$ |
(5.1 |
) |
|
$ |
1,454.5 |
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
2023 Adjusted |
|
|
||||||||||||
Sales by Region (QTD) |
|
|
1Q 2024 |
|
|
1Q 2023 |
|
Change |
|
GAAP
|
|
FX
|
|
1Q 2023
|
|
Constant
Rate * |
|||||||
|
|
$ |
940.7 |
|
$ |
849.1 |
|
$ |
91.6 |
|
|
10.8 |
% |
|
$ |
— |
|
|
$ |
849.1 |
|
10.8 |
% |
|
|
|
367.8 |
|
|
331.1 |
|
|
36.7 |
|
|
11.1 |
% |
|
|
8.3 |
|
|
|
339.4 |
|
8.4 |
% |
|
|
|
110.8 |
|
|
114.1 |
|
|
(3.3 |
) |
|
(2.8 |
)% |
|
|
(11.7 |
) |
|
|
102.4 |
|
8.2 |
% |
Rest of World |
|
|
178.9 |
|
|
165.3 |
|
|
13.6 |
|
|
8.2 |
% |
|
|
(1.7 |
) |
|
|
163.6 |
|
9.4 |
% |
Outside of |
|
|
657.5 |
|
|
610.5 |
|
|
47.0 |
|
|
7.7 |
% |
|
|
(5.1 |
) |
|
|
605.4 |
|
8.6 |
% |
Total |
|
$ |
1,598.2 |
|
$ |
1,459.6 |
|
$ |
138.6 |
|
|
9.5 |
% |
|
$ |
(5.1 |
) |
|
$ |
1,454.5 |
|
9.9 |
% |
___________________ |
* Numbers may not calculate due to rounding. |
RECONCILIATION OF TAVR BILLING DAYS ADJUSTED GROWTH RATE |
||
|
Three Months
|
|
|
2024 |
|
TAVR constant currency growth rate |
6.6 |
% |
Impact of billing days |
1.1 |
% |
TAVR billing days adjusted growth rate |
7.7 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425889009/en/
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