Edwards Lifesciences Corporation EW reported third-quarter 2024 adjusted earnings per share (EPS) of 67 cents, in line with the Zacks Consensus Estimate. The figure increased 21.8% from the year-ago quarter’s level.
On this note, GAAP EPS from continuing operations was 61 cents compared with 55 cents in the third quarter of 2023. The quarter’s one-time adjustments primarily include certain litigation expenses and amortization of intangible assets.
In the quarter, the company completed the sale of Critical Care, which has been recognized as a discontinued operation. EPS from discontinued operations for the quarter was $4.42.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, EW stock fell marginally 0.4% yesterday.
EW’s Sales Details
In the third quarter, sales totaled $1.35 billion, up 8.9% year over year. The metric, however, missed the Zacks Consensus Estimate by 14.6%.
Third-quarter sales from continuing operations grew 9% year over year on a reported basis (up 10% at constant exchange rate or CER).
Segmental Details of EW
Global sales in the Transcatheter Aortic Valve Replacement (“TAVR”) product group amounted to $1.02 billion, up 6.5% year over year or 7.2% at CER. This compares with our model’s projection of $1.01 billion for the third quarter of 2024.
The company remains pleased with the performance of its SAPIEN 3 Ultra RESILIA, the leading platform in the United States and Japan. In Europe, EW continues to introduce the SAPIEN 3 Ultra RESILIA valve. Additionally, Edwards Lifesciences received CE Mark approval for its Alterra system for congenital heart patients.
Transcatheter Mitral and Tricuspid Therapies (“TMTT”) sales totaled $91.1 million, up 73.4% from the prior-year figure on a reported basis (73.7% at CER). This compares with our model’s projection of $87.5 million for the third quarter of 2024.
This performance was driven by the PASCAL system and the continued introduction of EVOQUE system in the United States and Europe.
Surgical Structural Heart sales in the third quarter totaled $240 million, up 4.3% from the year-ago level on a reported basis and 5.1% at CER. This compares with our model’s projection of $262.5 million for the third quarter of 2024.
This growth was driven by the strong global adoption of Edwards Lifesciences’ premium surgical technologies, specifically the INSPIRIS, MITRIS and KONECT devices. The company continues to see positive procedure growth globally for patients best treated surgically, including those undergoing complex procedures.
Margins
The gross profit was $1.09 billion, up 9.9% year over year. The gross margin expanded 74 basis points (bps) to 80.6%.
The adjusted gross margin was 80.7% compared with 79.9% a year ago.
SG&A expenses rose 10.3% year over year to $421.4 million. R&D expenditures amounted to $253.4 million, up 4.4% year over year.
The operating income, however, rose 13.2% year over year to $416.7 million. The operating margin expanded 116 bps to 30.8%.
EW’s Cash Position
Edwards Lifesciences exited the third quarter with cash and cash equivalents of $3.50 billion compared with $1.99 billion at the end of the second quarter of 2024. Debt amounted to $600 million, in line with the previous quarter’s level.
Guidance
The company restated its 2024 guidance.
Edwards Lifesciences projects full-year 2024 sales growth of 8-10%. The Zacks Consensus Estimate for the metric is pegged at $6.20 billion.
For the fourth quarter, the company projects EPS in the range of 53-57 cents. The Zacks Consensus Estimate for the metric is pegged at 60 cents.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
The company expects fourth-quarter sales to be between $1.33 billion and $1.39 billion. The Zacks Consensus Estimate for the metric is pegged at $1.39 billion.
Our Take
Edwards Lifesciences’ third-quarter earnings met estimates, while revenues lagged the same. Both TAVR and TMTT contributed significantly to third-quarter growth as more patients benefited from the company’s catheter-based structural heart therapies. Moreover, the expansion of both margins during the quarter is encouraging.
The TMTT arm reported strong growth in both repair and replacement therapies for mitral and tricuspid patients. Edwards Lifesciences also announced the completion of enrollment in the CLASP II TR trial, studying patients with tricuspid regurgitation treated with the PASCAL system randomized against optimal medical therapy alone. In Surgical Heart, Edwards Lifesciences continues expanding the body of RESILIA tissue technology evidence.
EW completed the sale of its Critical Care segment during the reported quarter. According to Edwards Lifesciences, the divestment will help the company focus on its core structural heart business and channelize its investments toward sustainable growth.
EW’s Zacks Rank and Key Picks
Edwards Lifesciences currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Phibro Animal Health PAHC, Veracyte VCYT and HealthEquity HQY.
Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.
Veracyte, sporting a Zacks Rank #1 at present, posted second-quarter 2024 earnings of 30 cents per share, which beat the Zacks Consensus Estimate of a loss of 3 cents. Revenues of $114.4 million surpassed the Zacks Consensus Estimate by 14%.
VCYT has an estimated earnings growth rate of 115.7% for 2024 compared with the industry’s 13.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
HealthEquity, carrying a Zacks Rank #2 (Buy) at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.
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