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Why Is Edwards Lifesciences (EW) Up 7.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences Q4 Earnings Fall Shy of Estimates
Edwards Lifesciences fourth-quarter 2021 adjusted earnings per share of 51 cents lagged the Zacks Consensus Estimate by 7.3%. However, the figure improved 2% year over year.
Full-year adjusted earnings per share was $2.22, up 19.4% from the year-ago number. The metric lagged the Zacks Consensus Estimate by 1.8%.
GAAP earnings per share was 53 cents in the quarter compared with the year-ago earnings per share of 49 cents, reflecting an improvement of 8.2%.
Full-year GAAP earnings per share was $2.38, reflecting an 83.1% rise from the year-earlier $1.30.
Sales Details
Fourth-quarter net sales were $1.33 billion, up 11.6% year over year on a reported basis. On an underlying basis, growth was 13%. However, the metric lagged the Zacks Consensus Estimate by 0.9%.
Full-year revenues were $5.23 billion, reflecting a 19.3% increase from the year-ago period (up 18% on an underlying basis). However, revenues missed the Zacks Consensus Estimate by 0.4%.
Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $871.5 million, up 12.3% from the prior-year figure on a reported basis. On an underlying basis, growth was 13.2%. Average selling prices were stable worldwide. Outside the United States, total TAVR sales increased 20% on a year-over-year basis.
Transcatheter Mitral and Tricuspid Therapies sales totaled $25.3 million, up 92.6% from the prior-year figure on a reported basis. On an underlying basis, the improvement was 96.4%. The company continued to register strong momentum on increased adoption of the PASCAL platform in Europe.
Surgical Structural Heart sales in the quarter totaled $221.3 million, up 8.4% from the year-ago quarter on a reported basis and 9.3% on an underlying basis. Revenue growth was lifted by increased adoption of the premium RESILIA technologies worldwide.
Critical Care sales totaled $211.6 million in the fourth quarter, up 6.8% from the year-ago quarter on a reported basis and 8.1% on an underlying basis. The revenue uptick resulted from balanced contributions from all product lines, led by strong HemoSphere sales in the United States.
Margins
In the fourth quarter, gross profit was $1.02 billion, up 13.9%. Gross margin expanded 159 basis points (bps) to 76.7%.
The company-provided adjusted gross margin was 76.8%, reflecting a year-over-year expansion of 150 bps. This increase was primarily driven by favorable impact from foreign exchange.
Selling, general and administrative expenses rose 25.3% year over year to $424 million, primarily driven by personnel-related costs and increased commercial activities compared to the COVID-impacted prior year.
Research and development expenditures were $232.8 million, up 18.9% year over year. This increase was driven by the resumption of medical congresses and commercial activities compared to the COVID-impacted prior year as well as the addition of personnel in preparation for the company's product launches. These developments drove operating costs by 22.9% to $656.8 million.
During the reported quarter, operating income rose 0.6% year over year to $363.4 million. Operating margin contracted 298 bps to 27.3%.
Cash Position
Edwards Lifesciences exited 2021 with cash and cash equivalents and short-term investments of $1.47 billion compared with $1.40 billion recorded at the end of 2020. Long-term debt was $595.7 million at the end of 2021, up from $595 million at the end of 2020.
Cumulative net cash provided by operating activities at the end of 2021 was $1.73 billion compared with $1.05 billion a year ago. Capital expenditure for the same period was $325.8 million compared with $407 million a year ago.
Guidance
The company has initiated its first-quarter 2022 guidance.
For the first quarter of 2022, the company projects total sales in the range of $1.27-$1.35 billion. The Zacks Consensus Estimate for the same is pegged at $1.35 billion.
Adjusted earnings per share is expected in the band of 54-62 cents. The Zacks Consensus Estimate for the metric is pegged at 59 cents.
The company has reaffirmed its guidance for full-year 2022 provided in December 2021.
Full-year 2022 sales are expected to grow at a low double-digit rate to $5.50-$6.00 billion. The Zacks Consensus Estimate for the same is pegged at $5.77 billion.
The company continues to expect full-year 2022 adjusted earnings per share in the range of $2.50-$2.65. The Zacks Consensus Estimate for the metric is pegged at $2.54.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Edwards Lifesciences has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Edwards Lifesciences (EW) Up 7.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Edwards Lifesciences (EW - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Edwards Lifesciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Edwards Lifesciences Q4 Earnings Fall Shy of Estimates
Edwards Lifesciences fourth-quarter 2021 adjusted earnings per share of 51 cents lagged the Zacks Consensus Estimate by 7.3%. However, the figure improved 2% year over year.
Full-year adjusted earnings per share was $2.22, up 19.4% from the year-ago number. The metric lagged the Zacks Consensus Estimate by 1.8%.
GAAP earnings per share was 53 cents in the quarter compared with the year-ago earnings per share of 49 cents, reflecting an improvement of 8.2%.
Full-year GAAP earnings per share was $2.38, reflecting an 83.1% rise from the year-earlier $1.30.
Sales Details
Fourth-quarter net sales were $1.33 billion, up 11.6% year over year on a reported basis. On an underlying basis, growth was 13%. However, the metric lagged the Zacks Consensus Estimate by 0.9%.
Full-year revenues were $5.23 billion, reflecting a 19.3% increase from the year-ago period (up 18% on an underlying basis). However, revenues missed the Zacks Consensus Estimate by 0.4%.
Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $871.5 million, up 12.3% from the prior-year figure on a reported basis. On an underlying basis, growth was 13.2%. Average selling prices were stable worldwide. Outside the United States, total TAVR sales increased 20% on a year-over-year basis.
Transcatheter Mitral and Tricuspid Therapies sales totaled $25.3 million, up 92.6% from the prior-year figure on a reported basis. On an underlying basis, the improvement was 96.4%. The company continued to register strong momentum on increased adoption of the PASCAL platform in Europe.
Surgical Structural Heart sales in the quarter totaled $221.3 million, up 8.4% from the year-ago quarter on a reported basis and 9.3% on an underlying basis. Revenue growth was lifted by increased adoption of the premium RESILIA technologies worldwide.
Critical Care sales totaled $211.6 million in the fourth quarter, up 6.8% from the year-ago quarter on a reported basis and 8.1% on an underlying basis. The revenue uptick resulted from balanced contributions from all product lines, led by strong HemoSphere sales in the United States.
Margins
In the fourth quarter, gross profit was $1.02 billion, up 13.9%. Gross margin expanded 159 basis points (bps) to 76.7%.
The company-provided adjusted gross margin was 76.8%, reflecting a year-over-year expansion of 150 bps. This increase was primarily driven by favorable impact from foreign exchange.
Selling, general and administrative expenses rose 25.3% year over year to $424 million, primarily driven by personnel-related costs and increased commercial activities compared to the COVID-impacted prior year.
Research and development expenditures were $232.8 million, up 18.9% year over year. This increase was driven by the resumption of medical congresses and commercial activities compared to the COVID-impacted prior year as well as the addition of personnel in preparation for the company's product launches. These developments drove operating costs by 22.9% to $656.8 million.
During the reported quarter, operating income rose 0.6% year over year to $363.4 million. Operating margin contracted 298 bps to 27.3%.
Cash Position
Edwards Lifesciences exited 2021 with cash and cash equivalents and short-term investments of $1.47 billion compared with $1.40 billion recorded at the end of 2020. Long-term debt was $595.7 million at the end of 2021, up from $595 million at the end of 2020.
Cumulative net cash provided by operating activities at the end of 2021 was $1.73 billion compared with $1.05 billion a year ago. Capital expenditure for the same period was $325.8 million compared with $407 million a year ago.
Guidance
The company has initiated its first-quarter 2022 guidance.
For the first quarter of 2022, the company projects total sales in the range of $1.27-$1.35 billion. The Zacks Consensus Estimate for the same is pegged at $1.35 billion.
Adjusted earnings per share is expected in the band of 54-62 cents. The Zacks Consensus Estimate for the metric is pegged at 59 cents.
The company has reaffirmed its guidance for full-year 2022 provided in December 2021.
Full-year 2022 sales are expected to grow at a low double-digit rate to $5.50-$6.00 billion. The Zacks Consensus Estimate for the same is pegged at $5.77 billion.
The company continues to expect full-year 2022 adjusted earnings per share in the range of $2.50-$2.65. The Zacks Consensus Estimate for the metric is pegged at $2.54.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Edwards Lifesciences has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edwards Lifesciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.