Edwards Lifesciences Corporation’s EW fourth-quarter 2021 adjusted earnings per share (EPS) of 51 cents lagged the Zacks Consensus Estimate by 7.3%. However, the figure improved 2% year over year.
Full-year adjusted EPS was $2.22, up 19.4% from the year-ago number. The metric lagged the Zacks Consensus Estimate by 1.8%.
GAAP EPS was 53 cents in the quarter compared with the year-ago EPS of 49 cents, reflecting an improvement of 8.2%.
Full-year GAAP EPS was $2.38, reflecting an 83.1% rise from the year-earlier $1.30.
Sales Details
Fourth-quarter net sales were $1.33 billion, up 11.6% year over year on a reported basis. On an underlying basis, growth was 13%. However, the metric lagged the Zacks Consensus Estimate by 0.9%.
Full-year revenues were $5.23 billion, reflecting a 19.3% increase from the year-ago period (up 18% on an underlying basis). However, revenues missed the Zacks Consensus Estimate by 0.4%.
Segmental Details
In the fourth quarter, global sales in the Transcatheter Aortic Valve Replacement (TAVR) product group amounted to $871.5 million, up 12.3% from the prior-year figure on a reported basis. On an underlying basis, growth was 13.2%. Average selling prices were stable worldwide. Outside the United States, total TAVR sales increased 20% on a year-over-year basis.
Transcatheter Mitral and Tricuspid Therapies sales totaled $25.3 million, up 92.6% from the prior-year figure on a reported basis. On an underlying basis, the improvement was 96.4%. The company continued to register strong momentum on increased adoption of the PASCAL platform in Europe.
Surgical Structural Heart sales in the quarter totaled $221.3 million, up 8.4% from the year-ago quarter on a reported basis and 9.3% on an underlying basis. Revenue growth was lifted by increased adoption of the premium RESILIA technologies worldwide.
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Edwards Lifesciences Corporation Price, Consensus and EPS Surprise
Critical Care sales totaled $211.6 million in the fourth quarter, up 6.8% from the year-ago quarter on a reported basis and 8.1% on an underlying basis. The revenue uptick resulted from balanced contributions from all product lines, led by strong HemoSphere sales in the United States.
Margins
In the fourth quarter, gross profit was $1.02 billion, up 13.9%. Gross margin expanded 159 basis points (bps) to 76.7%.
The company-provided adjusted gross margin was 76.8%, reflecting a year-over-year expansion of 150 bps. This increase was primarily driven by favorable impact from foreign exchange.
Selling, general and administrative expenses rose 25.3% year over year to $424 million, primarily driven by personnel-related costs and increased commercial activities compared to the COVID-impacted prior year.
Research and development expenditures were $232.8 million, up 18.9% year over year. This increase was driven by the resumption of medical congresses and commercial activities compared to the COVID-impacted prior year as well as the addition of personnel in preparation for the company's product launches. These developments drove operating costs by 22.9% to $656.8 million.
During the reported quarter, operating income rose 0.6% year over year to $363.4 million. Operating margin contracted 298 bps to 27.3%.
Cash Position
Edwards Lifesciences exited 2021 with cash and cash equivalents and short-term investments of $1.47 billion compared with $1.40 billion recorded at the end of 2020. Long-term debt was $595.7 million at the end of 2021, up from $595 million at the end of 2020.
Cumulative net cash provided by operating activities at the end of 2021 was $1.73 billion compared with $1.05 billion a year ago. Capital expenditure for the same period was $325.8 million compared with $407 million a year ago.
Guidance
The company has initiated its first-quarter 2022 guidance.
For the first quarter of 2022, the company projects total sales in the range of $1.27-$1.35 billion. The Zacks Consensus Estimate for the same is pegged at $1.35 billion.
Adjusted EPS is expected in the band of 54-62 cents. The Zacks Consensus Estimate for the metric is pegged at 59 cents.
The company has reaffirmed its guidance for full-year 2022 provided in December 2021.
Full-year 2022 sales are expected to grow at a low double-digit rate to $5.50-$6.00 billion. The Zacks Consensus Estimate for the same is pegged at $5.77 billion.
The company continues to expect full-year 2022 adjusted EPS in the range of $2.50-$2.65. The Zacks Consensus Estimate for the metric is pegged at $2.54.
Our Take
Edwards Lifesciences exited the fourth quarter of 2021 with lower-than-expected earnings and revenues. Continued choppy market conditions due to the unrelenting spread of new variants of coronavirus are concerning. An increase in operating costs is worrying as well. On a positive note, Edwards Lifesciences registered year-over-year growth in revenues driven by strong sales growth across all four product groups. Continued strong adoption of the SAPIEN 3 Ultra platform and the PASCAL system across Europe looks encouraging as well. Increased adoption of the premium RESILIA technologies worldwide buoys optimism. Strong HemoSphere sales in the United States look impressive. The company has reaffirmed its full-year 2022 outlook, which is indicative of the continuation of this bullish trend.
Zacks Rank & Key Picks
Edwards Lifesciences currently carries a Zacks Rank #3 (Hold).
Here are a few medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
AMN Healthcare Services, Inc. AMN has an Earnings ESP of +10.29% and a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.9% compares favorably with the industry’s 1.1%.
Henry Schein, Inc. HSIC has an Earnings ESP of +2.62% and a Zacks Rank of 2 (Buy).
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC's earnings yield of 6.4% compares favorably with the industry’s 4.4%.
Hologic, Inc. HOLX has an Earnings ESP of +1.56% and a Zacks Rank #2.
Hologic’s long-term earnings growth rate is estimated at 7.4%. HOLX's earnings yield of 5.4% compares favorably with the industry’s (5.4%).
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