Edwards Lifesciences Corp. (NYSE:EW)

The analysis of the financial data reveals several notable trends in the valuation of intangible assets over the five-year period ending December 31, 2021.

Goodwill

Goodwill values remained relatively stable, experiencing minor fluctuations. The amount slightly decreased from $1,126,500 thousand in 2017 to $1,117,900 thousand in 2021, with a small peak in 2020 at $1,173,200 thousand.

Patents

The value of patents showed remarkable stability, holding steady around the $185,700 to $186,100 thousand range throughout the period, indicating no significant additions or impairments.

Developed Technology

Developed technology assets experienced fluctuations during the period. After a decline from $190,800 thousand in 2017 to $119,800 thousand in 2018, the value rebounded to approximately $153,900 thousand by 2021. This suggests possible amortization effects offset by acquisitions or revaluations.

Other Intangible Assets

The 'Other' category of intangible assets showed variability with missing data in 2018. The value increased from $3,700 thousand in 2017 to a peak of $12,600 thousand in 2020, then slightly decreased to $12,400 thousand in 2021, indicating possible new asset recognition or reclassification activities in later years.

Finite-Lived Intangible Assets, Cost

These assets exhibited a declining trend, decreasing from $380,600 thousand in 2017 to $352,000 thousand in 2021. This decline suggests amortization and possible asset disposals or write-downs.

Accumulated Amortization

Accumulated amortization consistently increased in magnitude (becoming more negative), moving from -$227,900 thousand in 2017 to -$246,500 thousand in 2021. This trend is consistent with ongoing amortization of finite-lived intangible assets.

Finite-Lived Intangible Assets, Net Carrying Value

The net carrying value fell sharply from $152,700 thousand in 2017 to $80,200 thousand in 2018, then gradually increased to $105,500 thousand by 2021. This initial drop followed by recovery points to asset impairments or write-offs in 2018, with subsequent capital expenditures or revaluations.

In-Process Research and Development (IPR&D) / Indefinite-Lived Intangible Assets

Both categories are reported with identical values, decreasing from $315,300 thousand in 2017 to $218,100 thousand by 2019, and then remaining stable through 2021. This indicates a significant impairment or completion of certain projects by 2019, followed by stabilization.

Other Intangible Assets

There was a notable decrease in the balance of other intangible assets, falling from $468,000 thousand in 2017 to $323,600 thousand in 2021. This decline reflects possible impairments, disposals, or amortization exceeding additions in this category.

Goodwill and Other Intangible Assets (Total)

The combined balance demonstrates a decline from $1,594,500 thousand in 2017 to $1,491,500 thousand in 2021, with a trough in 2018 at $1,455,400 thousand and a gradual recovery thereafter. This overall trend indicates a moderate reduction in total intangible assets, potentially due to impairments, amortization, and divestitures that were only partially offset by new acquisitions or capitalizations.

The financial data demonstrates a consistent upward trend in both reported and adjusted total assets over the five-year period. Reported total assets increased from approximately 5,695,800 thousand US dollars at the end of 2017 to 8,502,600 thousand US dollars by the end of 2021. Similarly, adjusted total assets, which exclude goodwill effects, showed growth from 4,569,300 thousand US dollars in 2017 to 7,334,700 thousand US dollars in 2021. This indicates an overall expansion in the asset base, with the adjusted figures suggesting substantial accumulation of tangible or non-goodwill assets.

Stockholders' equity, both reported and adjusted, also exhibited positive growth trends throughout the same period. Reported stockholders' equity rose steadily from 2,956,200 thousand US dollars in 2017 to 5,835,900 thousand US dollars in 2021. Adjusted stockholders' equity followed a similar path, increasing from 1,829,700 thousand US dollars to 4,668,000 thousand US dollars over the five years. The pattern reveals strengthening ownership interest in the company after accounting for goodwill.

Notably, the difference between reported and adjusted figures, which reflects the impact of goodwill and similar intangible assets, widened over time. For total assets, the gap increased from around 1,126,500 thousand US dollars in 2017 to about 1,167,900 thousand US dollars in 2021. In stockholders’ equity, the difference expanded from approximately 1,126,500 thousand US dollars in 2017 to 1,167,900 thousand US dollars in 2021 as well. This suggests that the company’s goodwill and intangible asset components have grown in tandem with their overall asset and equity base.

In summary, the data indicates consistent growth in both asset size and shareholder equity, with a notable increase in goodwill-related adjustments. This pattern suggests ongoing acquisition or development of intangible assets alongside solid expansion of tangible resources and equity capital. The sustained positive trajectory reflects healthy financial strengthening over the period analyzed.

Total Asset Turnover

The reported total asset turnover ratio showed a slight increase from 0.6 in 2017 to 0.7 in 2018, followed by a gradual decline to 0.62 by 2021. The adjusted total asset turnover, which excludes goodwill, consistently registered higher values than the reported figures, indicating a more efficient use of assets when goodwill is excluded. This adjusted ratio peaked at 0.88 in 2018 before gradually decreasing to 0.71 in 2021, reflecting a similar declining trend as the reported figures over the latter periods.

Financial Leverage

Both reported and adjusted financial leverage ratios demonstrated a declining trend over the five-year period. The reported financial leverage decreased steadily from 1.93 in 2017 to 1.46 in 2021, indicating reduced reliance on debt or financial obligations relative to equity. The adjusted financial leverage, which accounts for adjustments related to goodwill, started at a higher level of 2.5 in 2017 but exhibited a more pronounced decrease, reaching 1.57 in 2021. This trend suggests an improvement in the capital structure with less leverage over time.

Return on Equity (ROE)

The reported ROE improved from 19.74% in 2017 to a peak of 25.24% in 2019, experienced a dip to 18% in 2020, then rebounded to 25.76% in 2021. The adjusted ROE, which adjusts for goodwill, reflected higher values throughout the period, reaching a peak of 35.61% in 2018 before declining to 24.21% in 2020 and partially recovering to 32.2% in 2021. This pattern reveals volatility in profitability, with a notable drop in 2020 likely influenced by external factors, followed by a recovery phase.

Return on Assets (ROA)

The reported ROA increased steadily from 10.25% in 2017 to 16.14% in 2019, declined to 11.38% in 2020, and then surged to 17.68% in 2021. The adjusted ROA showed a similar but consistently higher trend, starting at 12.77% in 2017, peaking at 19.68% in 2019, dropping to 13.58% in 2020, and reaching a high of 20.49% in 2021. The fluctuations in ROA align with those observed for ROE and suggest resilience in asset profitability after adjusting for goodwill.

Overall Insights

The company demonstrated generally positive trends in efficiency, leverage management, and profitability from 2017 to 2021. Adjusted metrics, which exclude goodwill, consistently showed stronger performance and efficiency, highlighting the impact of goodwill on the financial ratios. The dip in 2020 performance across most indicators corresponds with a possible external disruption, followed by a strong recovery in 2021. The progressive reduction in financial leverage alongside improved returns suggests enhanced financial health and operational effectiveness over the period.

Total Assets (Reported and Adjusted)

The reported total assets exhibited a fluctuating but overall increasing trend from 2017 to 2021. The value initially decreased from approximately 5.70 billion US$ in 2017 to about 5.32 billion US$ in 2018, followed by a steady rise reaching 8.50 billion US$ by 2021. Similarly, the adjusted total assets, which exclude goodwill, followed a comparable pattern but consistently remained lower than the reported figures. Adjusted assets decreased from 4.57 billion US$ in 2017 to 4.21 billion US$ in 2018 and then increased each year thereafter, reaching approximately 7.33 billion US$ in 2021. This indicates significant growth in tangible or goodwill-excluded assets over the latter years.

Total Asset Turnover (Reported and Adjusted)

The reported total asset turnover ratio showed a modest increase from 0.6 in 2017 to 0.7 in 2018, suggesting improved efficiency in generating revenue from assets. However, it then declined over the following years, reaching 0.62 by 2021, indicating a reduction in efficiency relative to the asset base. The adjusted total asset turnover consistently reported higher ratios compared to the reported version, reflecting potentially better operational efficiency when goodwill is excluded. This ratio peaked at 0.88 in 2018, then gradually declined to 0.71 in 2021. Despite the decrease, the adjusted turnover remained substantially higher than the reported, suggesting that intangible assets such as goodwill might be diluting the apparent efficiency metrics.

Insight Summary

Overall, the data reveals that while the asset base (both reported and adjusted) expanded significantly between 2018 and 2021, the efficiency in utilizing these assets to generate revenue (total asset turnover) weakened after 2018. The adjusted turnover being higher indicates that goodwill and intangible assets impact the efficiency ratios negatively. This may suggest growing investment in intangibles or acquisitions that increase asset values but do not immediately translate into proportional revenue increases. The trends highlight a need for careful monitoring of asset utilization and underlying asset quality to maintain operational efficiency.

The analysis of the financial data over the five-year period reveals several notable trends and changes concerning assets, equity, and financial leverage, both on a reported and goodwill-adjusted basis.

Assets

Reported total assets exhibited a generally upward trajectory, increasing from approximately 5.7 billion USD at the end of 2017 to 8.5 billion USD by the end of 2021. This growth, however, experienced a slight dip in 2018 before resuming a steady rise in subsequent years. Adjusted total assets, which exclude goodwill and other intangible assets, followed a similar pattern but consistently remained lower, reflecting the impact of intangible asset adjustments. The adjusted asset base grew from around 4.57 billion USD in 2017 to approximately 7.33 billion USD in 2021, showing robust expansion over the analyzed period.

Stockholders’ Equity

Reported stockholders’ equity increased steadily each year, moving from roughly 2.96 billion USD in 2017 to nearly 5.84 billion USD at the end of 2021. The adjusted equity, excluding goodwill-related adjustments, displayed a comparable growth pattern, increasing from about 1.83 billion USD in 2017 to 4.67 billion USD in 2021. This parallel rise suggests that the company's net worth, both on a reported and adjusted basis, strengthened significantly over the five years, with the adjusted figures consistently lower due to the exclusion of goodwill and other intangible assets.

Financial Leverage

Reported financial leverage, calculated as total assets divided by stockholders' equity, showed a decreasing trend over the period, starting at 1.93 in 2017 and declining to 1.46 by the end of 2021. This indicates a gradual reduction in reliance on debt or other liabilities relative to equity financing on a reported basis. The adjusted financial leverage ratio, which may provide a more conservative view by excluding goodwill, started higher at 2.5 in 2017 and similarly decreased to 1.57 in 2021. Although higher than the reported ratio, the consistent downward trend indicates improving equity strength relative to assets, suggesting enhanced financial stability and potentially reduced financial risk.

Stockholders’ Equity

The reported stockholders’ equity shows a consistent upward trend from 2,956,200 thousand US dollars in 2017 to 5,835,900 thousand US dollars in 2021. This reflects an increase of nearly 97.5% over the five-year period. Similarly, the adjusted stockholders’ equity also increases steadily, from 1,829,700 thousand US dollars in 2017 to 4,668,000 thousand US dollars in 2021, marking a growth of approximately 155.2%. The adjusted figures remain lower than the reported figures each year, indicating that the adjustments, possibly relating to goodwill or other intangible assets, significantly affect the equity base.

Return on Equity (ROE)

The reported ROE exhibits fluctuations across the period analyzed. It increases from 19.74% in 2017 to 25.24% in 2019, declines to 18% in 2020, and then recovers to 25.76% in 2021. This pattern suggests variability in profitability relative to reported equity, with a notable dip in 2020. The adjusted ROE, which likely accounts for goodwill adjustments, is consistently higher than the reported ROE each year. Starting at 31.9% in 2017, it peaks at 35.61% in 2018, slightly decreases to 35.12% in 2019, then dips more significantly to 24.21% in 2020 before rising again to 32.2% in 2021. The adjusted ROE trend mirrors the reported ROE in terms of direction but indicates stronger profitability from an equity perspective when adjustments are considered.

Overall Insights

Both reported and adjusted stockholders’ equity values demonstrate substantial growth over the five years, reflecting a strengthening equity position. The adjustments applied reduce the equity figures substantially but reveal higher returns on equity, suggesting that excluding certain intangibles or goodwill-related items shows greater efficiency in utilizing equity to generate profits. The dip in 2020 for both ROE measures indicates a year of reduced profitability or other challenges affecting returns, followed by a recovery in 2021. This pattern might align with external economic factors or company-specific events that impacted performance temporarily.

The analysis of the financial data reveals notable trends in both reported and goodwill-adjusted measures over the five-year period ending December 31, 2021.

Total Assets

The reported total assets demonstrate a general upward trajectory, increasing from approximately $5.70 billion in 2017 to $8.50 billion in 2021. This indicates substantial growth in the company's asset base over the period. Similarly, the adjusted total assets, which exclude goodwill, also increase from roughly $4.57 billion in 2017 to $7.33 billion in 2021. The adjusted figures consistently remain lower than the reported totals, reflecting the exclusion of goodwill in their calculation.

Return on Assets (ROA)

The reported ROA shows some fluctuations but an overall strengthening trend. It begins at 10.25% in 2017, rises to a peak of 16.14% in 2019, experiences a decline to 11.38% in 2020, then recovers to 17.68% by 2021. This pattern indicates variability in profitability relative to assets but with a positive outcome by the end of the period. The adjusted ROA, which provides insight excluding goodwill impacts, follows a similar trend but with higher values: starting at 12.77% in 2017, rising to 19.68% in 2019, dipping to 13.58% in 2020, and reaching 20.49% in 2021. This suggests that profitability measured on goodwill-adjusted assets is consistently more favorable, and the company shows improved efficiency in asset utilization over time when goodwill is excluded.

Overall, the data indicates consistent asset growth and improving returns, particularly when goodwill is adjusted out of the asset base. The dip in 2020 ROA values aligns with a period of temporary reduced efficiency or external challenges, but recovery in 2021 demonstrates a strong rebound in profitability and asset utilization.