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Edwards Lifesciences (EW) Rides on TAVR Amid Rise in Costs
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Edwards Lifesciences (EW - Free Report) continues to gain from the huge penitential of the structural heart market. Yet, stiff competition and rising costs do not bode well. The stock carries a Zacks Rank #3 (Hold).
Edwards Lifesciences expects to maintain its leadership position in the global Transcatheter Aortic Valve Replacement (TAVR) market through an increased focus on expanding patient access by actively leveraging current valve platforms for additional indications. This includes developing next-generation valve platforms and maintaining trusted relationships with clinicians, payers and regulators.
Across the product group, Edwards Lifesciences’ sales growth continues to be driven by its leading SAPIEN platform. In the second quarter, TAVR sales in the United States were particularly aided by improved hospital staffing levels and the continued SAPIEN 3Ultra RESILIA launch. The company recently noted that it will begin enrolment for the ALLIANCE pivotal trial, designed to study the next-generation TAVR technology, SAPIEN X4.
The growth of the Surgical Structural Heart business is driven by increased penetration of Edwards Lifesciences’ premium RESILIA products across all regions. As hospital staffing levels gradually improve, advanced tissue technology continues to be prioritized for aortic and mitral surgical valve replacement procedures.
The company is growing a large body of RESILIA evidence with the MOMENTIS clinical study to demonstrate the durability of the RESILIA tissue in the mitral position. Per the last update, patient enrollment for the study continued in the second quarter.
On the flip side, Edwards Lifesciences has been grappling with escalated expenses for a while. In the second quarter of 2023, the company’s SG&A expenses rose 14.4%. Per management, the expenses are likely to remain around 29%-30% of sales for the full year, as the company continues to invest in field-based personnel and therapy adoption initiatives.
Further, R&D expenses in the second quarter were up 7.8%. Overall R&D costs are likely to remain elevated to nearly 17%-18% of sales, with investments being made in developing new technologies and generating evidence to support TAVR and Transcatheter Mitral and Tricuspid Therapies.
Added to this, during the first quarter of 2023, Edwards Lifesciences entered into an intellectual property agreement with Medtronic, in which the former agreed to a 15-year mutual covenant to not sue with regard to certain structural heart products. A $300 million payment was made to Medtronic in consideration for the agreement — of which approximately has been expensed, and the other half will be amortized over the next 15 years.
In the second quarter, EW recorded a $139 million charge related to the agreement, impacting the company’s bottom line.
A tough competitive landscape and foreign exchange headwinds are the other downsides.
Over the past year, shares of EW have plunged 20.1% compared with the industry’s 3.1% decline.
Haemonetics’stock has risen 11.2% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.74 in 2023 and from $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have increased 174.2% in the past year against the industry’s decline of 5.3%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have risen 23.7% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBonedelivered an earnings surprise of 26.83%.
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Edwards Lifesciences (EW) Rides on TAVR Amid Rise in Costs
Edwards Lifesciences (EW - Free Report) continues to gain from the huge penitential of the structural heart market. Yet, stiff competition and rising costs do not bode well. The stock carries a Zacks Rank #3 (Hold).
Edwards Lifesciences expects to maintain its leadership position in the global Transcatheter Aortic Valve Replacement (TAVR) market through an increased focus on expanding patient access by actively leveraging current valve platforms for additional indications. This includes developing next-generation valve platforms and maintaining trusted relationships with clinicians, payers and regulators.
Across the product group, Edwards Lifesciences’ sales growth continues to be driven by its leading SAPIEN platform. In the second quarter, TAVR sales in the United States were particularly aided by improved hospital staffing levels and the continued SAPIEN 3Ultra RESILIA launch. The company recently noted that it will begin enrolment for the ALLIANCE pivotal trial, designed to study the next-generation TAVR technology, SAPIEN X4.
The growth of the Surgical Structural Heart business is driven by increased penetration of Edwards Lifesciences’ premium RESILIA products across all regions. As hospital staffing levels gradually improve, advanced tissue technology continues to be prioritized for aortic and mitral surgical valve replacement procedures.
Edwards Lifesciences Corporation Price
Edwards Lifesciences Corporation price | Edwards Lifesciences Corporation Quote
The company is growing a large body of RESILIA evidence with the MOMENTIS clinical study to demonstrate the durability of the RESILIA tissue in the mitral position. Per the last update, patient enrollment for the study continued in the second quarter.
On the flip side, Edwards Lifesciences has been grappling with escalated expenses for a while. In the second quarter of 2023, the company’s SG&A expenses rose 14.4%. Per management, the expenses are likely to remain around 29%-30% of sales for the full year, as the company continues to invest in field-based personnel and therapy adoption initiatives.
Further, R&D expenses in the second quarter were up 7.8%. Overall R&D costs are likely to remain elevated to nearly 17%-18% of sales, with investments being made in developing new technologies and generating evidence to support TAVR and Transcatheter Mitral and Tricuspid Therapies.
Added to this, during the first quarter of 2023, Edwards Lifesciences entered into an intellectual property agreement with Medtronic, in which the former agreed to a 15-year mutual covenant to not sue with regard to certain structural heart products. A $300 million payment was made to Medtronic in consideration for the agreement — of which approximately has been expensed, and the other half will be amortized over the next 15 years.
In the second quarter, EW recorded a $139 million charge related to the agreement, impacting the company’s bottom line.
A tough competitive landscape and foreign exchange headwinds are the other downsides.
Over the past year, shares of EW have plunged 20.1% compared with the industry’s 3.1% decline.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Quanterix (QTRX - Free Report) and SiBone (SIBN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’stock has risen 11.2% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.74 in 2023 and from $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have increased 174.2% in the past year against the industry’s decline of 5.3%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for SiBone’s2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have risen 23.7% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBonedelivered an earnings surprise of 26.83%.