Stock Analysis on Net
Stock Analysis on Net

Edwards Lifesciences Corp. (NYSE:EW)

This company has been moved to the archive! The financial data has not been updated since February 14, 2022.

Common-Size Income Statement

Edwards Lifesciences Corp., common-size consolidated income statement

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12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of sales -23.87 -24.64 -25.63 -25.23 -25.48
Gross profit 76.13% 75.36% 74.37% 74.77% 74.52%
Selling, general, and administrative expenses -28.55 -28.01 -28.57 -29.24 -28.66
Research and development expenses -17.26 -17.34 -17.31 -16.71 -16.09
Intellectual property litigation income (expenses), net -0.39 -9.24 -0.77 -5.75 2.13
Change in fair value of contingent consideration liabilities, net 2.37 -0.31 0.14 0.15 0.29
Special charges 0.00 0.00 -1.49 -3.12 -0.28
Other operating expenses 0.00 0.00 0.00 0.00 -0.02
Operating income 32.30% 20.46% 26.38% 20.10% 31.89%
Interest expense -0.35 -0.36 -0.48 -0.80 -0.68
Interest income 0.33 0.53 0.74 0.86 0.59
Special gains (charges) 0.00 0.00 0.00 0.19 -1.46
Foreign exchange gains (losses), net 0.10 0.28 0.14 0.18 -0.16
Gain (loss) on investments 0.11 0.01 0.01 -0.05 -0.08
Non-service cost components of net periodic pension benefit credit (cost) -0.01 -0.01 0.00 0.00 0.00
Other 0.04 -0.02 0.05 -0.03 0.02
Other income (expense), net 0.24% 0.26% 0.19% 0.11% -0.22%
Income before provision for income taxes 32.53% 20.90% 26.83% 20.45% 30.13%
Provision for income taxes -3.80 -2.13 -2.75 -1.05 -13.14
Net income 28.73% 18.77% 24.08% 19.40% 16.99%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial performance between 2017 and 2021 is characterized by expanding gross margins and a general upward trend in net profitability, despite significant volatility in operating expenses related to non-recurring items. The common-size analysis reveals a strong ability to maintain high gross margins while scaling operations.

Gross Profitability and Cost Management
Gross profit margins demonstrated a consistent upward trajectory, rising from 74.52% in 2017 to 76.13% in 2021. This improvement is driven by a gradual reduction in the cost of sales, which decreased from 25.48% to 23.87% over the period, suggesting enhanced production efficiency or favorable pricing strategies.
Operating Expense Stability
Selling, general, and administrative expenses remained relatively stable, fluctuating within a narrow band between 28.01% and 29.24%. Similarly, research and development expenditures showed consistency, ranging from 16.09% to 17.34%, indicating a sustained commitment to innovation as a fixed percentage of total revenue.
Impact of Non-Recurring Items
Operating income was subject to notable volatility due to intellectual property litigation and special charges. Intellectual property litigation expenses peaked at 9.24% of net sales in 2020, contributing to a dip in operating income that year. Special charges also impacted the results in 2018 and 2019, reaching 3.12% and 1.49% respectively. Despite these fluctuations, operating income recovered strongly to 32.30% by 2021.
Net Income and Taxation Trends
Net income as a percentage of net sales grew from 16.99% in 2017 to 28.73% in 2021. This expansion was influenced not only by operating performance but also by a significant shift in the tax provision. The provision for income taxes was highest in 2017 at 13.14% of net sales and remained substantially lower in subsequent years, ranging between 1.05% and 3.80%, which bolstered the final net profit margin.

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