Edwards Lifesciences (EW) Q1 Earnings Top, 2024 Sales View Up

Edwards Lifesciences Corporation EW reported adjusted earnings per share (EPS) of 66 cents in first-quarter 2024, surpassing the Zacks Consensus Estimate by 3.1%. The figure also increased 6.5% from the year-ago quarter’s level.

The quarter’s one-time adjustments primarily include certain litigation expenses and amortization of intangible assets, among others.

GAAP EPS were 58 cents in the quarter, up 3.6% year over year.

Sales Details

First-quarter net sales were $1.59 billion, up 9.5% year over year on a reported and constant exchange rate or CER basis. The metric surpassed the Zacks Consensus Estimate by 1.4%.

Segmental Details

In the first quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $1.01 billion, up 6.3% year over year or 6.6% at CER. The upside is driven by growth in the United States and Japan. The company’s global competitive position and selling prices were stable. Procedure trends increased as the quarter progressed. This compares with our model projection of $1.02 billion for first-quarter 2024.

Edwards remains pleased with the performance of its SAPIEN 3 Ultra RESILIA platform. The company is positioned for healthy and sustainable TAVR growth well into the future, driven by the development of differentiated TAVR technologies, a deep commitment to advancing patient care through high-quality clinical evidence and its investment in patient activation initiatives.

Transcatheter Mitral and Tricuspid Therapies (TMTT) sales totaled $72.9 million, up 75.2% from the prior-year quarter’s figure on a reported basis. This performance was driven by the expanded adoption and new site activation of PASCAL, supported by continued double-digit TEER market growth in the United States and Europe. This compares with our model projection of $70.7 million for the first quarter of 2024.

Edwards Lifesciences Corporation Price, Consensus and EPS Surprise

 

Edwards Lifesciences Corporation Price, Consensus and EPS Surprise

Edwards Lifesciences Corporation price-consensus-eps-surprise-chart | Edwards Lifesciences Corporation Quote

 

Surgical Structural Heart sales in the first quarter totaled $266 million, up 7.2% from the year-ago quarter’s levels on a reported basis and 7.9% at CER. Growth was driven by the adoption of Edwards' premium surgical technologies, INSPIRIS, MITRIS and KONECT.  This compares with our model projection of $251.3 million for the first quarter of 2024.

Critical Care sales totaled $251 million in the first quarter, up 13.3% from the year-ago quarter’s levels on a reported basis and 14.4% on CER. Contributions from all product lines drove sales growth. Growth was led by Edwards' Smart Recovery technologies, including the Acumen IQ sensor. This compares with our model projection of $232.8 million for the first quarter of 2024.

Margins

In the first quarter, gross profit was $1.21 billion, up 7.3%. However, the gross margin contracted 155 basis points (bps) to 75.9%.

The company-provided adjusted gross margin was 76%, marking a 150- 150-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 12.2% year over year to $489.7 million. Research and development expenditures were $285.2 million, up 9.2% year over year.

During the reported quarter, operating income rose 1.2% year over year to $437.7 million. The operating margin contracted 225 bps to 27.4%.

Cash Position

Edwards Lifesciences exited the first quarter of 2024 with cash and cash equivalents and short-term investments of $1.69 billion compared with $1.64 billion recorded at the end of the fourth quarter of 2023.

Long-term debt was $597.2 million at the end of the first quarter, slightly up from $597 million at the end of the fourth quarter.

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 $3.09.

The company now projects total sales for 2024 to be in the high range of prior guidance of $6.30-$6.60 billion, suggesting growth of 8-10%. The Zacks Consensus Estimate for 2024 revenues is pegged at $7.14 billion.

For the second quarter of 2024, the company projects total sales to be between $1.62 and $1.70 billion. The Zacks Consensus Estimate for 2024 revenues is pegged at $1.64 billion.

Adjusted EPS is expected in the band of 67 cents to 71 cents. The Zacks Consensus Estimate for the metric is pegged at $2.76.

Our Take

Edwards Lifesciences exited the first quarter of 2024 on a bullish note, with earnings and revenues beating estimates. Revenues continued to grow on the strength of a differentiated portfolio of advanced therapies. The company continues to witness strong performance of its SAPIEN 3 Ultra RESILIA platform, which is the leading platform in the United States and Japan. Further, expanded adoption and new site activation of PASCAL, supported by continued double-digit TEER market growth in the United States and Europe during the reported quarter, also look encouraging.  The raised 2024 sales outlook raises optimism about the stock.

However, mounting costs and expenses continued to put pressure on margins in the reported quarter. Choppy market conditions stemming from 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 Inspire Medical Systems INSP, Transmedics Group TMDX and Exact Sciences EXAS.

Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2023 EPS of 49 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Revenues of $192.5 million topped the consensus estimate by 0.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inspire Medical Systems has an estimated earnings growth rate of 51.4% in 2024 compared with the industry’s 19.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 353.6%.

Transmedics Group, sporting a Zacks Rank #1, reported a fourth-quarter 2024 EPS of 12 cents, versus the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $81.2 million outpaced the Zacks Consensus Estimate by 18.9%.

TMDX has an estimated 2024 earnings growth rate of 81.8% compared to the industry’s 14.6%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 107.8%.

Exact Sciences, carrying a Zacks Rank #2, reported a fourth-quarter 2024 loss of 27 cents per share, narrower than the Zacks Consensus Estimate of a loss of 53 cents. Revenues of $646.9 million topped the Zacks Consensus Estimate by 2.4%.

EXAS has an estimated earnings growth rate of 23.9% in 2024 compared with the industry’s 13% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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