Edwards(EW) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Performance Overview Edwards Lifesciences reported strong Q1 2024 sales growth of 10% to $1.6 billion, driven by TMTT, leading to raised full-year guidance Highlights and Outlook Edwards Lifesciences achieved strong Q1 2024 sales growth of 10% to $1.6 billion, raising full-year guidance due to robust segment performance Q1 2024 Key Financial Results | Metric | Q1 2024 Result | | :--- | :--- | | Total Sales | $1.6 billion (+10% YoY) | | TAVR Sales Growth | 6% (8% adj. for billing days) | | TMTT Sales Growth | 75% | | EPS | $0.58 | | Adjusted EPS | $0.66 | - The company raised its 2024 sales guidance to the high end of the 8-10% range, citing a strong start to the year. Guidance was specifically increased for TMTT, Surgical, and Critical Care segments[3][4] - The planned spin-off of the Critical Care business is on track for completion by year-end[4] Business Segment Performance Transcatheter Aortic Valve Replacement (TAVR) TAVR sales reached $1.0 billion, growing 6% (8% adjusted), driven by U.S. and Japan, with stable competitive positioning Q1 2024 TAVR Performance | Metric | Q1 2024 Value | | :--- | :--- | | Sales | $1.0 billion | | Reported Growth | 6% | | Constant Currency Growth (adj. for billing days) | 8% | - Growth was driven by performance in the U.S. and Japan, with stable selling prices and competitive position[5] - The SAPIEN 3 Ultra RESILIA platform is the leading platform in the U.S. and Japan and is set for a European launch in Q2[6] Transcatheter Mitral and Tricuspid Therapies (TMTT) TMTT sales surged 75% to $73 million, fueled by PASCAL adoption and the U.S. FDA approval of the EVOQUE system Q1 2024 TMTT Performance | Metric | Q1 2024 Value | | :--- | :--- | | Sales | $73 million | | YoY Growth | 75% | - Growth was driven by the expanded adoption and new site activation of the PASCAL repair system[9] - In February, the EVOQUE system received U.S. FDA approval, becoming the first transcatheter therapy for treating tricuspid regurgitation[10] Surgical Structural Heart and Critical Care Surgical Structural Heart grew 7% to $266 million, and Critical Care grew 13% to $251 million, with the spin-off on track Q1 2024 Segment Sales and Growth | Segment | Q1 2024 Sales | Reported Growth | Constant Currency Growth | | :--- | :--- | :--- | :--- | | Surgical Structural Heart | $266 million | 7% | 8% | | Critical Care | $251 million | 13% | 14% | - Surgical growth was driven by strong global adoption of premium technologies including INSPIRIS, MITRIS, and KONECT[11] - Critical Care growth was led by Smart Recovery technologies, including the Acumen IQ sensor, and strong demand for Swan-Ganz catheters[12][13] Financial Results and Outlook Additional Financial Results Q1 2024 adjusted gross margin was 76.0%, with increased operating expenses and a strong $1.7 billion cash position Q1 2024 vs Q1 2023 Selected Financials | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Adjusted Gross Profit Margin | 76.0% | 77.5% | | SG&A Expenses | $490 million | $436 million | | R&D Expenses | $285 million | $261 million | Balance Sheet Highlights | Balance Sheet Item | As of March 31, 2024 | | :--- | :--- | | Cash, cash equivalents & short-term investments | $1.7 billion | | Total Debt | ~$600 million | | Adjusted Free Cash Flow | $206 million | Outlook Edwards Lifesciences raised full-year 2024 sales guidance to the high end of 8-10% ($6.3-$6.6 billion), maintaining EPS guidance Updated Full-Year 2024 Guidance | Segment | Expected Sales Growth | | :--- | :--- | | Total Sales | High end of 8-10% range | | TAVR | 8-10% (constant currency) | | Surgical Structural Heart | 6-8% | | Critical Care | 8-10% | | TMTT | $320 - $340 million | Q2 2024 Guidance | Metric | Q2 2024 Projection | | :--- | :--- | | Total Sales | $1.62 - $1.70 billion | | Adjusted EPS | $0.67 - $0.71 | - The company maintained its full-year 2024 adjusted earnings per share guidance of $2.70 to $2.80[18] Financial Statements Unaudited Consolidated Statements of Operations Q1 2024 net sales increased to $1.60 billion, with diluted EPS of $0.58, despite higher operating expenses Q1 2024 vs Q1 2023 Income Statement (in millions, except EPS) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $1,598.2 | $1,459.6 | | Gross profit | $1,212.6 | $1,130.1 | | Operating income | $387.5 | $388.4 | | Net income attributable to Edwards | $351.9 | $340.5 | | Diluted EPS | $0.58 | $0.56 | Unaudited Balance Sheets Total assets increased to $9.74 billion, with total liabilities decreasing and total equity growing to $7.19 billion Balance Sheet Summary (in millions) | Account | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,224.6 | $1,144.0 | | Total current assets | $4,170.5 | $4,035.7 | | Total assets | $9,736.3 | $9,363.2 | | Total liabilities | $2,549.9 | $2,643.8 | | Total equity | $7,186.4 | $6,719.4 | Non-GAAP Financial Measures and Reconciliations Explanation of Non-GAAP Measures Non-GAAP measures provide a clearer view of core operational performance by excluding non-recurring or non-core items - Non-GAAP adjustments are made for items that do not reflect core operational activities, are inconsistent in frequency, or are commonly adjusted within the industry[28] - Key adjustments in Q1 2024 include certain litigation expenses ($8.9M), amortization of intangibles ($1.4M), and separation costs for the Critical Care spin-off ($41.3M)[33][34][35] Reconciliation of GAAP to Non-GAAP Financial Information GAAP diluted EPS of $0.58 was adjusted to $0.66 non-GAAP, reflecting adjustments for litigation, amortization, and separation costs Q1 2024 GAAP to Non-GAAP Reconciliation | Metric | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Gross Profit Margin | 75.9% | +0.1% | 76.0% | | Operating Income | $387.5M | +$51.6M | $439.1M | | Net Income | $351.9M | +$45.4M | $397.3M | | Diluted EPS | $0.58 | +$0.08 | $0.66 | Reconciliation of Sales by Product and Region Total sales grew 9.9% constant currency, with strong performance in the U.S. and significant TMTT growth Q1 2024 Sales Growth by Product Group (Constant Currency) | Product Group | Constant Currency Growth Rate | | :--- | :--- | | Transcatheter Aortic Valve Replacement | 6.6% | | Transcatheter Mitral and Tricuspid Therapies | 72.2% | | Surgical Structural Heart | 7.9% | | Critical Care | 14.4% | | Total | 9.9% | Q1 2024 Sales Growth by Region (Constant Currency) | Region | Constant Currency Growth Rate | | :--- | :--- | | United States | 10.8% | | Europe | 8.4% | | Japan | 8.2% | | Rest of World | 9.4% | Reconciliation of Cash Flow and TAVR Growth Rate Adjusted free cash flow was $206.2 million, and TAVR constant currency growth adjusted to 7.7% for billing days Adjusted Free Cash Flow (in millions) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(53.5) | $314.1 | | Adjustments (Tax deposit, Separation costs) | $325.0 | - | | Capital expenditures | $(65.3) | $(61.5) | | Adjusted Free Cash Flow | $206.2 | $252.6 | - The TAVR constant currency growth rate of 6.6% adjusts to 7.7% when accounting for the impact of fewer billing days in the quarter compared to the prior year[41]