Sign in
EL

Edwards Lifesciences Corp (EW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 sales were $1.386B (+9% YoY), with Transcatheter Mitral & Tricuspid Therapies (TMTT) up 88% to $105M; adjusted EPS was $0.59 and GAAP EPS $0.58, with results characterized as “better than expected” by management .
  • TAVR sales reached $1.04B (+6% YoY; +5% cc), while Surgical rose to $244M (+6% YoY); strength was broad-based across U.S. and Europe, with Japan slower but improving sequentially .
  • 2025 guidance reaffirmed: 8–10% constant currency sales growth, adjusted EPS $2.40–$2.50; product group ranges: TAVR $4.1–$4.4B, TMTT $500–$530M, Surgical $970M–$1.05B; Q1 2025 guidance $1.35–$1.43B sales, adjusted EPS $0.58–$0.64 .
  • Catalysts: mid‑year asymptomatic TAVR U.S. indication approval, CMS NCD for EVOQUE (expected by end of Q1), and continued European rollout of SAPIEN 3 Ultra RESILIA; management positions these as multi‑year growth drivers .

What Went Well and What Went Wrong

What Went Well

  • TMTT momentum: Q4 TMTT sales surged to $105M (+88% YoY), with strong adoption of PASCAL and EVOQUE; management expects $500–$530M TMTT sales in FY25, underscoring category creation and portfolio differentiation .
  • Practice‑changing evidence: TRISCEND II showed EVOQUE superiority over medical therapy at one year, with 95.3% achieving ≤ mild TR; principal investigators highlight QoL benefits and favorable mortality/hospitalization trends .
  • Broad‑based sales strength: Q4 sales grew 9% to $1.386B, with U.S. +9.2% and Europe +13.6% (10.7% cc), supported by SAPIEN 3 Ultra RESILIA adoption; adjusted operating margin of 25.6% in line with plan .

What Went Wrong

  • Margin compression: Gross margin fell to 78.9% (79.0% adjusted) vs 80.2% prior-year; SG&A rose to 35.5% of sales and R&D to 19.6%, reflecting TMTT field expansion, post‑Critical Care transition costs, and acquisitions .
  • Capacity and regional pressure: Management cited ongoing hospital capacity constraints and “a few instances of regional pressure,” notably slower-than-expected growth in Japan despite sequential improvement .
  • Near‑term growth cadence: Q1 2025 total company and TAVR YoY growth expected below the low end of full-year ranges, with one fewer selling day and typical January funnel reset noted by management; FX headwind of ~$130M projected for FY25 .

Financial Results

Consolidated P&L vs prior quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,385.9 $1,354.4 $1,385.8
Diluted EPS (Cont. Ops) ($USD)$0.61 $0.61 $0.58
Adjusted EPS ($USD)$0.70 $0.67 $0.59
Gross Margin % (GAAP)79.4% 80.6% 78.9%
Operating Margin % (GAAP)26.6% 25.9% 22.6%
Adjusted Operating Margin %——25.6%
SG&A % of Sales32.5% 31.1% 35.5%
R&D % of Sales19.7% 18.7% 19.6%
Effective Tax Rate (GAAP)5.2% 10.1% 11.6%

Product Group Sales (QTD)

Product Group ($USD Millions)Q2 2024Q3 2024Q4 2024
TAVR$1,038.6 $1,023.3 $1,036.3
TMTT$83.0 $91.1 $105.1
Surgical Structural Heart$264.3 $240.0 $244.4
Total (Continuing Ops)$1,385.9 $1,354.4 $1,385.8

Regional Sales (QTD)

Region ($USD Millions)Q2 2024Q3 2024Q4 2024
United States$816.8 $804.6 $812.9
Europe$335.6 $319.8 $343.7
Japan$87.4 $81.4 $85.9
Rest of World$146.1 $148.6 $143.3
Outside U.S.$569.1 $549.8 $572.9
Total$1,385.9 $1,354.4 $1,385.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
Total Company Sales (cc growth)FY 2025Maintain prior investor day guidance 8%–10% Maintained
Adjusted EPSFY 2025Maintain prior investor day guidance $2.40–$2.50 Maintained
TAVR SalesFY 2025Maintain prior investor day guidance $4.1–$4.4B Maintained
TMTT SalesFY 2025Maintain prior investor day guidance $500–$530M Maintained
Surgical SalesFY 2025Maintain prior investor day guidance $970M–$1.05B Maintained
Adjusted Gross Margin %FY 2025—78%–79% Maintained vs prior commentary
Adjusted Tax RateFY 2025—15%–18% New detail (affirmed)
FX ImpactFY 2025—~$130M sales headwind (~2.5 pts) Update
Avg Diluted SharesFY 2025—585–595M Affirmed
Total Company SalesQ1 2025—$1.35–$1.43B New quarter guide
Adjusted EPSQ1 2025—$0.58–$0.64 New quarter guide
Total Company SalesQ4 2024$1.33–$1.39B (set in Q3) $1,385.8M Near top of range
Adjusted EPSQ4 2024$0.53–$0.57 (set in Q3) $0.59 Beat guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Hospital capacity/workflowFocus on trials/portfolio; no specific capacity commentary Hospitals exploring investments to address workflow for structural heart patients Capacity remains a focus; year-end screening slowdown impacts Q1 cadence Improving gradually; still constraining near-term
Asymptomatic TAVR (EARLY TAVR)Results expected at TCT; potential to streamline care EARLY TAVR results coming; largest RCT in asymptomatic severe AS Expect mid-year U.S. indication approval; multi-year catalyst with guideline/policy changes Building awareness; multiyear uplift post-approval
EVOQUE/NCD/NTAPEarly commercial intro; strong demand; NCD process initiated TRISCEND II late-breaking pending; CLASP II TR enrollment completed Positive TRISCEND II outcomes; NTAP live since Oct 1; NCD expected end of Q1; demand strong Accelerating adoption; broadening access
TMTT executionTMTT +75% YoY; PASCAL/EVOQUE adoption starting TMTT +73% YoY; PASCAL and EVOQUE progressing TMTT +88% YoY; on track for $500–$530M in FY25 Scaling across geographies/products
Regional trendsEurope strong; Japan weaker on FX; U.S. solid U.S. in-line; Europe strong; Japan slower U.S./Europe led; Japan slower but sequentially up U.S./EU momentum; Japan lagging
Tariffs/FX——Tariffs expected immaterial; FY25 FX headwind ~$130M manageable headwinds
R&D and acquisitionsStrong R&D investment; trials progressing Continued trial activity; completed CLASP II TR enrollment R&D up 12% on acquisitions; portfolio expanded (JC Medical, Innovalve, Endotronix) Sustained investment for long-term growth

Management Commentary

  • “We exited the year in a strong position with three important growth drivers: TAVR, Mitral and Tricuspid, and two emerging opportunities in Structural Heart Failure and Aortic Regurgitation” — Bernard Zovighian, CEO .
  • “Our plan is to grow total company sales 10% annually on average... while strengthening profit margins to drive long-term value for shareholders” — CEO, outlining medium-term ambitions .
  • “Adjusted operating profit margin in Q4 of 25.6% was in line with our expectation... 2025 operating margins continue to be 27% to 28% with annual expansion thereafter” — Scott Ullem, CFO .
  • “We see [EARLY TAVR] as a multiyear catalyst... indication is a big thing; longer term, it’s guideline changes and policy updates” — Larry Wood, Global Group President TAVR & Surgical .
  • “We see both PASCAL and EVOQUE as two key growth drivers... both U.S. and Europe will be large growth drivers for TMTT in 2025” — Daveen Chopra, Head of TMTT .

Q&A Highlights

  • TMTT scale-up drivers: EVOQUE and PASCAL adoption trajectories expected to continue growing, with training expanding monthly; centers building procedural efficiency over time .
  • Near-term cadence: Q1 YoY growth for total company and TAVR guided below full-year ranges due to one fewer selling day and typical January slowdown; growth expected to be higher in subsequent quarters .
  • NCD and NTAP for EVOQUE: NTAP active since Oct 1; positive NCD expected by end of Q1; management sees NCD as enabling broader access without altering rollout plans materially .
  • Regional color: Japan identified as a growth opportunity despite Q4 underperformance; management intends to strengthen capabilities and accelerate innovation for the region .
  • Operating expense mix: FY25 op margin improvement (~200 bps vs Q4) expected to be ~100 bps each from R&D and SG&A as a % of sales, with spend levels held roughly flat vs Q4 .

Estimates Context

  • Street consensus from S&P Global was unavailable due to access limits at the time of analysis; as a result, formal “vs consensus” beats/misses cannot be quantified here. Management characterized Q4 sales/EPS as “better than expected,” and actuals were above company’s Q4 EPS guidance range and near the top of the sales range . Values retrieved from S&P Global were unavailable at this time.

Key Takeaways for Investors

  • Mix shift toward TMTT is accelerating; EVOQUE/PASCAL adoption and pending M3 EU approval are building a second leg of growth beyond TAVR, with FY25 TMTT guided to $500–$530M .
  • Asymptomatic TAVR approval (mid‑2025) and subsequent guideline/policy changes are multi‑year catalysts; expect back‑half weighted benefits rather than immediate step‑change .
  • Near-term cadence softer in Q1 (one fewer selling day, capacity reset), but trajectory improves later in 2025; traders should focus on sequential momentum and hospital capacity signals .
  • Margin path credible: adjusted op margin guided to 27–28% in FY25 with expansion thereafter; watch SG&A/R&D ratio normalization and FX headwind management (~$130M) .
  • Regional breadth intact: U.S. and Europe lead; Japan remains a medium-term opportunity as capabilities and adoption improve .
  • Evidence base is strengthening: TRISCEND II one-year superiority and QoL benefits provide durable clinical tailwind for EVOQUE; expect policy coverage (NCD) to extend access .
  • Balance sheet supports optionality (≈$3B cash; $1.4B repurchase authorization); capital deployment can underpin EPS growth ahead of revenue as margins expand .