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Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 64 cents in fourth-quarter 2023, in line with the Zacks Consensus Estimate. The figure is also in line with the year-ago quarter’s level.
The quarter’s one-time adjustments primarily include the spin-off of Critical care and the prior period’s ongoing tax.
GAAP EPS were 61 cents in the quarter, down 6.2% year over year.
For the full year, adjusted earnings were $2.30 per share, down 5.7% from the year-ago period’s levels. It also missed the Zacks Consensus Estimate by 8.4%.
Sales Details
Fourth-quarter net sales were $1.53 billion, up 13.8% year over year on a reported basis (up 13% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 2.3%.
Total revenues for 2023 were $6.00 billion, up 11.6% from the year-ago period’s figure. The figure beat the Zacks Consensus Estimate by 0.5%.
Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $979 million, up 13% year over year or 12% at CER. The upside was driven by double-digit constant currency growth in the United States, Europe and Japan. The company’s competitive position was stable globally and local selling prices were also steady. In the United States, the company is witnessing the continued expansion and adoption of the SAPIEN 3 Ultra RESILIA platform. Management is confident that the future of TAVR remains strong, driven by an increased focus on patient activation, a platform that delivers lifetime management for aortic stenosis patients, advances in new technologies such as RESILIA tissue and indication expansion and increased global adoption.
Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $56 million, up 65% from the prior-year quarter’s figure on a reported basis. This performance was driven by the accelerating adoption of the company’s differentiated PASCAL precision platform, the activation of more centers across the United States and Europe and the overall growth of transcatheter edge-to-edge repair therapy.
Surgical Structural Heart sales in the fourth quarter totaled $248 million, up 11% from the year-ago quarter’s levels on a reported basis and 10% at CER. Growth was driven by the adoption of Edwards' premium products, RESILIA products and overall procedure growth.
Critical Care sales totaled $250 million in the fourth quarter, up 11% from the year-ago quarter’s levels on both reported basis and CER. Sales growth was driven by contributions from all product lines and major regions, led by the HemoSphere platform and Smart Recovery technology with strong adoption of Acumen IQ sensors equipped with the Hypotension Prediction Index algorithm.
Margins
In the fourth quarter, gross profit was $1.18 billion, up 7.9%. However, the gross margin contracted 413 basis points (bps) to 76.7%.
The company-provided adjusted gross margin was 76.8%, marking a 320 basis-point (bps) contraction year over year. This year-over-year reduction was due to the unfavorable impact of foreign exchange.
Selling, general and administrative expenses rose 16.8% year over year to $480 million. Research and development expenditures were $270 million, up 16.3% year over year.
During the reported quarter, operating income declined 4.5% year over year to $427.2 million. The operating margin contracted 532 bps to 27.8%.
Cash Position
Edwards Lifesciences exited 2023 with cash and cash equivalents and short-term investments of $1.64 billion compared with $1.22 billion recorded at the end of 2022.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Long-term debt was $597 million at the end of 2023, slightly up from $596.3 million at the end of 2022.
Guidance
The company updated its guidance for full-year 2024.
Edwards Lifesciences now expects full-year 2024 adjusted EPS to be in the range of $2.70-$2.80. The Zacks Consensus Estimate for the metric is pegged at $2.74.
The company now projects total sales for 2024 in the range of $6.30-$6.60 billion, suggesting growth of 8-10%. The Zacks Consensus Estimate for 2024 revenues is pegged at 6.48 billion.
Our Take
Edwards Lifesciences exited the fourth quarter of 2023 on a mixed note, with in-line earnings and better-than-expected revenues. Revenues continued to grow on the strength of a differentiated portfolio of advanced therapies. Within TAVR, in the United States, the company is witnessing continued expansion and adoption of the SAPIEN 3 Ultra RESILIA platform. Further, TMTT performance was driven by the accelerating adoption of the company’s differentiated PASCAL precision platform and the activation of more centers across the United States and Europe.
However, mounting costs and expenses continued to put pressure on margins in the reported quarter. The choppy market conditions due to persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
Zacks Rank and Key Picks
Edwards Lifesciences currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Haemonetics (HAE - Free Report) and McKesson (MCK - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 10.9% for 2025. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Haemonetics, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted EPS of 99 cents, which beat the Zacks Consensus Estimate by 5.3%. For the third quarter, revenues are expected to increase 5.6% year over year.
HAE has an estimated fiscal 2024 earnings growth rate of 28.4% compared with the industry’s 17.3% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 16.1%.
Mckesson reported third-quarter fiscal 2023 adjusted earnings of $6.90, beating the Zacks Consensus Estimate by 8.8%. For the fourth quarter, revenues are expected to increase 9.9% year over year. It currently carries a Zacks Rank #2.
MCK has an estimated earnings growth rate of 14% for fiscal 2025 compared with the industry’s 13.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.9%.
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Edwards Lifesciences (EW) Q4 Earnings Meet, Margins Dip
Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 64 cents in fourth-quarter 2023, in line with the Zacks Consensus Estimate. The figure is also in line with the year-ago quarter’s level.
The quarter’s one-time adjustments primarily include the spin-off of Critical care and the prior period’s ongoing tax.
GAAP EPS were 61 cents in the quarter, down 6.2% year over year.
For the full year, adjusted earnings were $2.30 per share, down 5.7% from the year-ago period’s levels. It also missed the Zacks Consensus Estimate by 8.4%.
Sales Details
Fourth-quarter net sales were $1.53 billion, up 13.8% year over year on a reported basis (up 13% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 2.3%.
Total revenues for 2023 were $6.00 billion, up 11.6% from the year-ago period’s figure. The figure beat the Zacks Consensus Estimate by 0.5%.
Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $979 million, up 13% year over year or 12% at CER. The upside was driven by double-digit constant currency growth in the United States, Europe and Japan. The company’s competitive position was stable globally and local selling prices were also steady. In the United States, the company is witnessing the continued expansion and adoption of the SAPIEN 3 Ultra RESILIA platform. Management is confident that the future of TAVR remains strong, driven by an increased focus on patient activation, a platform that delivers lifetime management for aortic stenosis patients, advances in new technologies such as RESILIA tissue and indication expansion and increased global adoption.
Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $56 million, up 65% from the prior-year quarter’s figure on a reported basis. This performance was driven by the accelerating adoption of the company’s differentiated PASCAL precision platform, the activation of more centers across the United States and Europe and the overall growth of transcatheter edge-to-edge repair therapy.
Surgical Structural Heart sales in the fourth quarter totaled $248 million, up 11% from the year-ago quarter’s levels on a reported basis and 10% at CER. Growth was driven by the adoption of Edwards' premium products, RESILIA products and overall procedure growth.
Critical Care sales totaled $250 million in the fourth quarter, up 11% from the year-ago quarter’s levels on both reported basis and CER. Sales growth was driven by contributions from all product lines and major regions, led by the HemoSphere platform and Smart Recovery technology with strong adoption of Acumen IQ sensors equipped with the Hypotension Prediction Index algorithm.
Margins
In the fourth quarter, gross profit was $1.18 billion, up 7.9%. However, the gross margin contracted 413 basis points (bps) to 76.7%.
The company-provided adjusted gross margin was 76.8%, marking a 320 basis-point (bps) contraction year over year. This year-over-year reduction was due to the unfavorable impact of foreign exchange.
Selling, general and administrative expenses rose 16.8% year over year to $480 million. Research and development expenditures were $270 million, up 16.3% year over year.
During the reported quarter, operating income declined 4.5% year over year to $427.2 million. The operating margin contracted 532 bps to 27.8%.
Cash Position
Edwards Lifesciences exited 2023 with cash and cash equivalents and short-term investments of $1.64 billion compared with $1.22 billion recorded at the end of 2022.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Edwards Lifesciences Corporation price-consensus-eps-surprise-chart | Edwards Lifesciences Corporation Quote
Long-term debt was $597 million at the end of 2023, slightly up from $596.3 million at the end of 2022.
Guidance
The company updated its guidance for full-year 2024.
Edwards Lifesciences now expects full-year 2024 adjusted EPS to be in the range of $2.70-$2.80. The Zacks Consensus Estimate for the metric is pegged at $2.74.
The company now projects total sales for 2024 in the range of $6.30-$6.60 billion, suggesting growth of 8-10%. The Zacks Consensus Estimate for 2024 revenues is pegged at 6.48 billion.
Our Take
Edwards Lifesciences exited the fourth quarter of 2023 on a mixed note, with in-line earnings and better-than-expected revenues. Revenues continued to grow on the strength of a differentiated portfolio of advanced therapies. Within TAVR, in the United States, the company is witnessing continued expansion and adoption of the SAPIEN 3 Ultra RESILIA platform. Further, TMTT performance was driven by the accelerating adoption of the company’s differentiated PASCAL precision platform and the activation of more centers across the United States and Europe.
However, mounting costs and expenses continued to put pressure on margins in the reported quarter. The choppy market conditions due to persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
Zacks Rank and Key Picks
Edwards Lifesciences currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Haemonetics (HAE - Free Report) and McKesson (MCK - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 10.9% for 2025. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Haemonetics, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted EPS of 99 cents, which beat the Zacks Consensus Estimate by 5.3%. For the third quarter, revenues are expected to increase 5.6% year over year.
HAE has an estimated fiscal 2024 earnings growth rate of 28.4% compared with the industry’s 17.3% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 16.1%.
Mckesson reported third-quarter fiscal 2023 adjusted earnings of $6.90, beating the Zacks Consensus Estimate by 8.8%. For the fourth quarter, revenues are expected to increase 9.9% year over year. It currently carries a Zacks Rank #2.
MCK has an estimated earnings growth rate of 14% for fiscal 2025 compared with the industry’s 13.5% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.9%.