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Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 70 cents in the second quarter of 2024, in line with the Zacks Consensus Estimate. The figure also increased 6.1% from the year-ago quarter’s level.
The company’s previously announced sale of Critical Care for $4.2 billion remains on track and is expected to close in the late third quarter of 2024. The unit is now presented as discontinued operations.
On this note, GAAP EPS from continuing operations was 61 cents in the second quarter compared with 42 cents in the second quarter of 2023. The quarter’s one-time adjustments primarily include certain litigation expenses, amortization of intangible assets and separation costs related to the planned sale of Critical Care, among others.
Sales Details
In the second quarter, sales were $1.39 billion compared with $1.53 billion in the year-ago period. The metric also missed the Zacks Consensus Estimate by 16.2%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (“TAVR”) product group amounted to $1.04 billion, up 4.7% year over year or 5.8% at CER. This compares with our model’s projection of $1.06 billion for the second quarter of 2024.
The company remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the United States and Japan. Edwards is actively pursuing significant opportunities to grow TAVR globally over the long term and remains committed to advancing science for aortic stenosis patients through the PROGRESS and EARLY TAVR trials, which could fundamentally change how AS patients are treated.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Transcatheter Mitral and Tricuspid Therapies (“TMTT”) sales totaled $83 million, up 74.4% from the prior-year quarter’s figure on a reported basis (up 74.7% at CER). This compares with our model’s projection of $87.4 million for the second quarter of 2024.
This performance was driven by the PASCAL system and the early commercial introduction of the EVOQUE system in the United States and Europe.
Surgical Structural Heart sales in the second quarter totaled $264.3 million, up 3.1% from the year-ago quarter’s levels on a reported basis and 4.6% at CER. This compares with our model’s projection of $258.3 million for the second quarter of 2024.
Growth was driven by the strong global adoption of Edwards’ premium surgical technologies, INSPIRIS, MITRIS and KONECT. The company continues to see positive procedure growth globally for the many patients best treated surgically, including those undergoing complex procedures.
Critical Care sales totaled $246.4 million in the second quarter, up 5% from the year-ago quarter’s levels on a reported basis and 6.7% on CER. This compares with our model’s projection of $241.6 million for the second quarter of 2024.
Growth was led by pressure monitoring devices used in the ICU, with strong contributions from smart recovery technologies, including the Acumen IQ sensor. Demand was also strong for Swan-Ganz catheters.
Margins
In the second quarter, the gross profit was $1.10 billion, up 6%. However, the gross margin contracted 76 basis points (bps) to 79.4%.
The company-provided adjusted gross margin was 77.1% compared with 77.7% in the same period last year. This reduction was due to the unfavorable impact of foreign exchange.
SG&A expenses rose 9.8% year over year to $450.8 million. R&D expenditures were $272.6 million, up 11.9% year over year.
During the reported quarter, the operating income fell 1.9% year over year to $377.2 million. The operating margin contracted 246 bps to 27.2%.
Cash Position
Edwards Lifesciences exited the second quarter of 2024 with cash and cash equivalents and short-term investments of $1.99 billion compared with $1.69 billion recorded at the end of the first quarter of 2024.
The long-term debt was $597.3 million at the end of the second quarter, slightly up from $597.2 million at the end of the first quarter.
Guidance
Edwards Lifesciences projects the full-year 2024 sales growth to be 8% to 10% (previous outlook suggested sales of $6.3 billion-$6.6 billion, growth to be at the high end of the prior guidance of 8%-10%). The Zacks Consensus Estimate for the metric is pegged at $6.56 billion.
For the third quarter, the company projects EPS in the range of 67-71 cents. The Zacks Consensus Estimate for the metric is pegged at 69 cents.
The company expects third-quarter sales between $1.56 and $1.64 billion, assuming Critical Care is included for the entire third quarter. The Zacks Consensus Estimate for the metric is pegged at $1.62 billion.
Our Take
Edwards Lifesciences exited the second quarter of 2024 with earnings matching estimates, while revenues lagged the same. The ongoing growth and expansion of structural heart therapies, including newly approved tricuspid therapies and other fast-growing structural heart therapies, put pressure on hospital workflows and resulted in slow sales growth for TAVR. The contraction of both margins during the quarter is discouraging as well.
On a positive note, the TMTT arm reported strong growth in both repair and replacement therapies for mitral and tricuspid patients. In Surgical Heart, Edwards continues to expand the overall body of RESILIA tissue technology evidence and completed enrollment in the United States and Canada for its MOMENTIS clinical study in the second quarter, one year ahead of previous expectations.
Zacks Rank and Key Picks
Edwards Lifesciences currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgicalreported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgicalhas an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compares favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.
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Edwards Lifesciences (EW) Q2 Earnings Meet Mark, Margins Crash
Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 70 cents in the second quarter of 2024, in line with the Zacks Consensus Estimate. The figure also increased 6.1% from the year-ago quarter’s level.
The company’s previously announced sale of Critical Care for $4.2 billion remains on track and is expected to close in the late third quarter of 2024. The unit is now presented as discontinued operations.
On this note, GAAP EPS from continuing operations was 61 cents in the second quarter compared with 42 cents in the second quarter of 2023. The quarter’s one-time adjustments primarily include certain litigation expenses, amortization of intangible assets and separation costs related to the planned sale of Critical Care, among others.
Sales Details
In the second quarter, sales were $1.39 billion compared with $1.53 billion in the year-ago period. The metric also missed the Zacks Consensus Estimate by 16.2%.
Segmental Details
In the second quarter, global sales in the Transcatheter Aortic Valve Replacement (“TAVR”) product group amounted to $1.04 billion, up 4.7% year over year or 5.8% at CER. This compares with our model’s projection of $1.06 billion for the second quarter of 2024.
The company remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the United States and Japan. Edwards is actively pursuing significant opportunities to grow TAVR globally over the long term and remains committed to advancing science for aortic stenosis patients through the PROGRESS and EARLY TAVR trials, which could fundamentally change how AS patients are treated.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Edwards Lifesciences Corporation price-consensus-eps-surprise-chart | Edwards Lifesciences Corporation Quote
Transcatheter Mitral and Tricuspid Therapies (“TMTT”) sales totaled $83 million, up 74.4% from the prior-year quarter’s figure on a reported basis (up 74.7% at CER). This compares with our model’s projection of $87.4 million for the second quarter of 2024.
This performance was driven by the PASCAL system and the early commercial introduction of the EVOQUE system in the United States and Europe.
Surgical Structural Heart sales in the second quarter totaled $264.3 million, up 3.1% from the year-ago quarter’s levels on a reported basis and 4.6% at CER. This compares with our model’s projection of $258.3 million for the second quarter of 2024.
Growth was driven by the strong global adoption of Edwards’ premium surgical technologies, INSPIRIS, MITRIS and KONECT. The company continues to see positive procedure growth globally for the many patients best treated surgically, including those undergoing complex procedures.
Critical Care sales totaled $246.4 million in the second quarter, up 5% from the year-ago quarter’s levels on a reported basis and 6.7% on CER. This compares with our model’s projection of $241.6 million for the second quarter of 2024.
Growth was led by pressure monitoring devices used in the ICU, with strong contributions from smart recovery technologies, including the Acumen IQ sensor. Demand was also strong for Swan-Ganz catheters.
Margins
In the second quarter, the gross profit was $1.10 billion, up 6%. However, the gross margin contracted 76 basis points (bps) to 79.4%.
The company-provided adjusted gross margin was 77.1% compared with 77.7% in the same period last year. This reduction was due to the unfavorable impact of foreign exchange.
SG&A expenses rose 9.8% year over year to $450.8 million. R&D expenditures were $272.6 million, up 11.9% year over year.
During the reported quarter, the operating income fell 1.9% year over year to $377.2 million. The operating margin contracted 246 bps to 27.2%.
Cash Position
Edwards Lifesciences exited the second quarter of 2024 with cash and cash equivalents and short-term investments of $1.99 billion compared with $1.69 billion recorded at the end of the first quarter of 2024.
The long-term debt was $597.3 million at the end of the second quarter, slightly up from $597.2 million at the end of the first quarter.
Guidance
Edwards Lifesciences projects the full-year 2024 sales growth to be 8% to 10% (previous outlook suggested sales of $6.3 billion-$6.6 billion, growth to be at the high end of the prior guidance of 8%-10%). The Zacks Consensus Estimate for the metric is pegged at $6.56 billion.
For the third quarter, the company projects EPS in the range of 67-71 cents. The Zacks Consensus Estimate for the metric is pegged at 69 cents.
The company expects third-quarter sales between $1.56 and $1.64 billion, assuming Critical Care is included for the entire third quarter. The Zacks Consensus Estimate for the metric is pegged at $1.62 billion.
Our Take
Edwards Lifesciences exited the second quarter of 2024 with earnings matching estimates, while revenues lagged the same. The ongoing growth and expansion of structural heart therapies, including newly approved tricuspid therapies and other fast-growing structural heart therapies, put pressure on hospital workflows and resulted in slow sales growth for TAVR. The contraction of both margins during the quarter is discouraging as well.
On a positive note, the TMTT arm reported strong growth in both repair and replacement therapies for mitral and tricuspid patients. In Surgical Heart, Edwards continues to expand the overall body of RESILIA tissue technology evidence and completed enrollment in the United States and Canada for its MOMENTIS clinical study in the second quarter, one year ahead of previous expectations.
Zacks Rank and Key Picks
Edwards Lifesciences currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgicalreported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgicalhas an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compares favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.