We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Edwards Lifesciences (EW) Q3 Earnings Match Mark, Margins Dip
Read MoreHide Full Article
Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 59 cents for third-quarter 2023, in line with the Zacks Consensus Estimate. The figure dropped 3.3% year over year.
The quarter’s one-time adjustments primarily include tax gain related to the suspension of certain United States tax regulations surrounding foreign tax credits.
GAAP EPS was 63 cents in the quarter, up 18.2% year over year.
Sales Details
Third-quarter net sales were $1.48 billion, up 12% year over year on a reported basis (up 11% at constant exchange rate or CER). The metric missed the Zacks Consensus Estimate by 0.07%.
Segmental Details
In the third quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $961 million, up 11% year over year or 10% at CER. The company's U.S. and Outside U.S. sales growth rates were comparable. Globally, on a constant currency basis, the company's average selling prices were stable. In the United States, third-quarter TAVR sales were driven by the continued successful launch of SAPIEN 3 Ultra RESILIA. In Europe, sales were driven by the broad-based adoption of the company’s SAPIEN platform. Sales in Japan grew year over year, reflecting a gradual recovery in market growth and strong adoption of SAPIEN 3 Ultra RESILIA.This figure compares with our third quarter’s TAVR model’s projection of $960.2 million.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $52.6 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, as well as key TEER procedural growth. This figure compares favorably with our model’s projection of $46.3 million.
Surgical Structural Heart sales in the third quarter totaled $247 million, up 12% from the year-ago quarter’s levels on a reported basis and 11% at CER. Growth was driven by the adoption of Edwards' premium products, RESILIA products and overall procedure growth. This figure compares with our model’s projection of $247.9 million.
Critical Care sales totaled $221 million in the third quarter, up 7% from the year-ago quarter’s levels on a reported basis and up 6% at CER. Sales growth was led by the Smart Recovery technology portfolio and strong adoption of the Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm. This figure compares with our model’s projection of $224.5 million.
Margins
In the third quarter, gross profit was $1.13 billion, up 6.1%. However, the gross margin contracted 442 basis points (bps) to 76.3%.
The company-provided adjusted gross margin was 76.4%, marking a 460 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 16.5% year over year to $439.6 million. Research and development expenditures were $270.3 million, up 15.7% year over year.
During the reported quarter, operating income declined 7.4% year over year to $420.6 million. The operating margin contracted 604 bps to 28.4%.
Cash Position
Edwards Lifesciences exited third-quarter 2023 with cash and cash equivalents and short-term investments of $1.41 billion compared with $1.51 billion recorded at the end of second-quarter 2023. Long-term debt was $597 million at the end of third-quarter 2023, unchanged sequentially.
Guidance
The company reiterated its guidance for full-year 2023.
The company expects full-year 2023 adjusted EPS to grow in the range of $2.50-$2.60 (unchanged). The Zacks Consensus Estimate for the metric is pegged at $2.55.
The company continues to expect full-year total company and TAVR sales growth in the range of 10-13% on a constant currency basis. The Zacks Consensus Estimate for the same is pegged at $6.01 billion.
For the fourth quarter of 2023, Edwards Lifesciences projects total sales in the range of $1.45-$1.53 billion. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at 1.48 billion.
Adjusted EPS is expected in the band of 60-66 cents. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 59 cents.
Our Take
Edwards Lifesciences exited the third quarter of 2023 on a sluggish note, with in-line earnings and lower-than-expected revenues. Mounting costs and expenses continued to put pressure on margins in the reported quarter. On a year-over-year basis, the company reported a decline in earnings. The choppy market conditions due to persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
On a positive note, revenues continued to grow on the strength of a differentiated portfolio of advanced therapies. In TAVR, U.S. and OUS sales growth rates were comparable. The U.S. and OUS competitive positions were stable. Globally, local selling prices were stable.
Zacks Rank and Other Key Picks
Edwards Lifesciences currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space that are supposed to report earnings soon are Addus HomeCare (ADUS - Free Report) , Insulet (PODD - Free Report) and Inari Medical (NARI - Free Report) .
Addus currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is pegged at $1.05. The same for its revenues stands at $266.2 million.
The Zacks Consensus Estimate for Insulet’s third-quarter 2023 adjusted EPS is currently pegged at 40 cents. The consensus estimate for revenues is pegged at $413.8 million. Insulet currently carries a Zacks Rank #2 (Buy).
Insulet has an estimated long-term growth rate of 41.5%. PODD’s earnings yield is 1.14% against the industry’s -2.62%.
Inari Medical currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is currently pegged at a breakeven level. The same for revenues is pegged at $122.4 million.
NARI has an estimated growth rate of 107.3% for 2023. NARI’s earnings yield is 0.07% against the industry’s yield of -8.47%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Edwards Lifesciences (EW) Q3 Earnings Match Mark, Margins Dip
Edwards Lifesciences Corporation (EW - Free Report) reported adjusted earnings per share (EPS) of 59 cents for third-quarter 2023, in line with the Zacks Consensus Estimate. The figure dropped 3.3% year over year.
The quarter’s one-time adjustments primarily include tax gain related to the suspension of certain United States tax regulations surrounding foreign tax credits.
GAAP EPS was 63 cents in the quarter, up 18.2% year over year.
Sales Details
Third-quarter net sales were $1.48 billion, up 12% year over year on a reported basis (up 11% at constant exchange rate or CER). The metric missed the Zacks Consensus Estimate by 0.07%.
Segmental Details
In the third quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $961 million, up 11% year over year or 10% at CER. The company's U.S. and Outside U.S. sales growth rates were comparable. Globally, on a constant currency basis, the company's average selling prices were stable. In the United States, third-quarter TAVR sales were driven by the continued successful launch of SAPIEN 3 Ultra RESILIA. In Europe, sales were driven by the broad-based adoption of the company’s SAPIEN platform. Sales in Japan grew year over year, reflecting a gradual recovery in market growth and strong adoption of SAPIEN 3 Ultra RESILIA.This figure compares with our third quarter’s TAVR model’s projection of $960.2 million.
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 $52.6 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, as well as key TEER procedural growth. This figure compares favorably with our model’s projection of $46.3 million.
Surgical Structural Heart sales in the third quarter totaled $247 million, up 12% from the year-ago quarter’s levels on a reported basis and 11% at CER. Growth was driven by the adoption of Edwards' premium products, RESILIA products and overall procedure growth. This figure compares with our model’s projection of $247.9 million.
Critical Care sales totaled $221 million in the third quarter, up 7% from the year-ago quarter’s levels on a reported basis and up 6% at CER. Sales growth was led by the Smart Recovery technology portfolio and strong adoption of the Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm. This figure compares with our model’s projection of $224.5 million.
Margins
In the third quarter, gross profit was $1.13 billion, up 6.1%. However, the gross margin contracted 442 basis points (bps) to 76.3%.
The company-provided adjusted gross margin was 76.4%, marking a 460 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 16.5% year over year to $439.6 million. Research and development expenditures were $270.3 million, up 15.7% year over year.
During the reported quarter, operating income declined 7.4% year over year to $420.6 million. The operating margin contracted 604 bps to 28.4%.
Cash Position
Edwards Lifesciences exited third-quarter 2023 with cash and cash equivalents and short-term investments of $1.41 billion compared with $1.51 billion recorded at the end of second-quarter 2023. Long-term debt was $597 million at the end of third-quarter 2023, unchanged sequentially.
Guidance
The company reiterated its guidance for full-year 2023.
The company expects full-year 2023 adjusted EPS to grow in the range of $2.50-$2.60 (unchanged). The Zacks Consensus Estimate for the metric is pegged at $2.55.
The company continues to expect full-year total company and TAVR sales growth in the range of 10-13% on a constant currency basis. The Zacks Consensus Estimate for the same is pegged at $6.01 billion.
For the fourth quarter of 2023, Edwards Lifesciences projects total sales in the range of $1.45-$1.53 billion. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at 1.48 billion.
Adjusted EPS is expected in the band of 60-66 cents. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 59 cents.
Our Take
Edwards Lifesciences exited the third quarter of 2023 on a sluggish note, with in-line earnings and lower-than-expected revenues. Mounting costs and expenses continued to put pressure on margins in the reported quarter. On a year-over-year basis, the company reported a decline in earnings. The choppy market conditions due to persistent foreign exchange impact and stiff competition within the medical device industry are concerns.
On a positive note, revenues continued to grow on the strength of a differentiated portfolio of advanced therapies. In TAVR, U.S. and OUS sales growth rates were comparable. The U.S. and OUS competitive positions were stable. Globally, local selling prices were stable.
Zacks Rank and Other Key Picks
Edwards Lifesciences currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space that are supposed to report earnings soon are Addus HomeCare (ADUS - Free Report) , Insulet (PODD - Free Report) and Inari Medical (NARI - Free Report) .
Addus currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is pegged at $1.05. The same for its revenues stands at $266.2 million.
Addus has a long-term historical growth rate of 12.6%. ADUS’ earnings yield of 5.24% compares favorably with the industry’s yield of 4.37%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Insulet’s third-quarter 2023 adjusted EPS is currently pegged at 40 cents. The consensus estimate for revenues is pegged at $413.8 million. Insulet currently carries a Zacks Rank #2 (Buy).
Insulet has an estimated long-term growth rate of 41.5%. PODD’s earnings yield is 1.14% against the industry’s -2.62%.
Inari Medical currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is currently pegged at a breakeven level. The same for revenues is pegged at $122.4 million.
NARI has an estimated growth rate of 107.3% for 2023. NARI’s earnings yield is 0.07% against the industry’s yield of -8.47%.