Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Edwards Lifesciences Corp., profitability ratios
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).
Profitability metrics between 2017 and 2021 exhibit a general upward trajectory, characterized by high stability in gross margins and a significant rebound in net margins and returns following a contraction in 2020.
- Gross Profitability
- The gross profit margin remained remarkably stable with a consistent upward lean, increasing from 74.52% in 2017 to 76.13% in 2021. This suggests a strong ability to maintain pricing power and control direct production costs over the five-year period.
- Operating and Net Margins
- Operating profit margins experienced significant volatility, with marked declines in 2018 (20.10%) and 2020 (20.46%), before recovering to a peak of 32.30% in 2021. The net profit margin followed a more aggressive growth trend, rising from 16.99% in 2017 to 28.73% in 2021. While the net margin also dipped in 2020, the overall expansion indicates a strengthening of the bottom line relative to revenue growth.
- Return on Equity (ROE) and Return on Assets (ROA)
- Returns on invested capital show a correlation with net profit trends. ROE grew from 19.74% in 2017 to 25.76% in 2021, and ROA increased from 10.25% in 2017 to 17.68% in 2021. Both metrics suffered a decline in 2020 but rebounded strongly in 2021, reflecting improved efficiency in utilizing assets and equity to generate profit.
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Return on Sales
Return on Investment
Gross Profit Margin
Edwards Lifesciences Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 3,983,600) | 3,305,700) | 3,233,600) | 2,783,400) | 2,560,000) | |
| Net sales | 5,232,500) | 4,386,300) | 4,348,000) | 3,722,800) | 3,435,300) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 76.13% | 75.36% | 74.37% | 74.77% | 74.52% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 52.21% | — | — | — | — | |
| Elevance Health Inc. | 17.09% | — | — | — | — | |
| Intuitive Surgical Inc. | 69.32% | — | — | — | — | |
| Medtronic PLC | 65.19% | — | — | — | — | |
| UnitedHealth Group Inc. | 23.60% | — | — | — | — | |
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).
1 2021 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 3,983,600 ÷ 5,232,500 = 76.13%
2 Click competitor name to see calculations.
Between 2017 and 2021, a consistent upward trajectory in both revenue and gross profitability is observed. Net sales expanded from 3,435.3 million to 5,232.5 million, representing a significant growth in scale over the five-year period. Parallel to this, gross profit rose from 2,560.0 million to 3,983.6 million, indicating a successful conversion of higher sales volumes into increased absolute profit.
- Net Sales and Gross Profit Correlation
- Revenue growth was sustained throughout the period, with a notable acceleration between 2018 and 2019 and another sharp increase in 2021. Gross profit followed a nearly identical growth pattern, demonstrating a strong direct correlation between top-line expansion and gross earnings.
- Gross Profit Margin Stability
- The gross profit margin remained exceptionally stable, fluctuating within a narrow range of approximately two percentage points. Between 2017 and 2019, the margin remained nearly flat, hovering around 74%, which suggests a highly predictable cost structure relative to sales growth.
- Margin Expansion Trend
- A positive shift in margin performance is evident beginning in 2020, with the ratio climbing to 75.36% and reaching 76.13% by 2021. This gradual expansion indicates an improvement in operational efficiency, better management of the cost of goods sold, or a shift toward a higher-margin product mix.
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Operating Profit Margin
Edwards Lifesciences Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 1,690,300) | 897,600) | 1,146,800) | 748,200) | 1,095,500) | |
| Net sales | 5,232,500) | 4,386,300) | 4,348,000) | 3,722,800) | 3,435,300) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 32.30% | 20.46% | 26.38% | 20.10% | 31.89% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 19.56% | — | — | — | — | |
| Elevance Health Inc. | 5.15% | — | — | — | — | |
| Intuitive Surgical Inc. | 31.89% | — | — | — | — | |
| Medtronic PLC | 14.89% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.40% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 9.13% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 18.04% | — | — | — | — | |
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).
1 2021 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 1,690,300 ÷ 5,232,500 = 32.30%
2 Click competitor name to see calculations.
The financial performance from 2017 through 2021 is characterized by consistent revenue expansion contrasted with significant volatility in operating profitability. While the top line grew steadily, the ability to convert these sales into operating income fluctuated, suggesting varying levels of operational efficiency or periodic increases in operating expenses.
- Net Sales Trend
- A consistent upward trajectory is observed in net sales, which increased from US$ 3,435,300 thousand in 2017 to US$ 5,232,500 thousand in 2021. This indicates steady market growth and revenue scaling throughout the analyzed period.
- Operating Income Volatility
- Operating income did not mirror the linear growth of sales, exhibiting a fluctuating pattern. Notable contractions occurred in 2018 (US$ 748,200 thousand) and 2020 (US$ 897,600 thousand), while a significant peak was reached in 2021 at US$ 1,690,300 thousand.
- Operating Profit Margin Analysis
- The operating profit margin demonstrated substantial variance, characterized by cyclic contractions and expansions. The margin declined from 31.89% in 2017 to 20.10% in 2018, recovered to 26.38% in 2019, and decreased again to 20.46% in 2020. By 2021, the margin rebounded to its highest level in the period at 32.30%, signaling a strong recovery in cost management and operational leverage.
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Net Profit Margin
Edwards Lifesciences Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,503,100) | 823,400) | 1,046,900) | 722,200) | 583,600) | |
| Net sales | 5,232,500) | 4,386,300) | 4,348,000) | 3,722,800) | 3,435,300) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 28.73% | 18.77% | 24.08% | 19.40% | 16.99% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 16.42% | — | — | — | — | |
| Elevance Health Inc. | 4.46% | — | — | — | — | |
| Intuitive Surgical Inc. | 29.85% | — | — | — | — | |
| Medtronic PLC | 11.97% | — | — | — | — | |
| UnitedHealth Group Inc. | 6.06% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 7.14% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 15.24% | — | — | — | — | |
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).
1 2021 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,503,100 ÷ 5,232,500 = 28.73%
2 Click competitor name to see calculations.
The analysis of profitability metrics between 2017 and 2021 reveals a general upward trajectory in both top-line revenue and bottom-line efficiency, despite a period of volatility in 2020.
- Revenue and Net Income Growth
- Net sales exhibited consistent year-over-year growth, increasing from 3.44 billion US dollars in 2017 to 5.23 billion US dollars in 2021. Net income followed a similar growth pattern for the first three years, peaking at approximately 1.05 billion US dollars in 2019 before experiencing a contraction in 2020 to 823.4 million US dollars. A significant recovery occurred in 2021, with net income reaching a period high of 1.50 billion US dollars.
- Net Profit Margin Performance
- The net profit margin demonstrated a positive expansion from 2017 to 2019, rising from 16.99% to 24.08%. A contraction was observed in 2020, where the margin fell to 18.77%, coinciding with a period where net income decreased despite a slight increase in net sales. This downward movement was reversed in 2021, with the margin expanding to 28.73%, representing the highest level of profitability relative to sales in the analyzed timeframe.
- Operational Efficiency Trends
- The divergence between net sales and net income in 2020 indicates a temporary compression of margins, suggesting a rise in operating expenses or non-operating losses during that fiscal year. The subsequent surge in 2021 indicates a substantial improvement in operational leverage or a shift toward higher-margin revenue streams, resulting in the most efficient conversion of sales to profit over the five-year period.
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Return on Equity (ROE)
Edwards Lifesciences Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,503,100) | 823,400) | 1,046,900) | 722,200) | 583,600) | |
| Stockholders’ equity | 5,835,900) | 4,574,300) | 4,148,300) | 3,140,400) | 2,956,200) | |
| Profitability Ratio | ||||||
| ROE1 | 25.76% | 18.00% | 25.24% | 23.00% | 19.74% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | 19.75% | — | — | — | — | |
| Elevance Health Inc. | 16.93% | — | — | — | — | |
| Intuitive Surgical Inc. | 14.32% | — | — | — | — | |
| Medtronic PLC | 7.01% | — | — | — | — | |
| UnitedHealth Group Inc. | 24.09% | — | — | — | — | |
| ROE, Sector | ||||||
| Health Care Equipment & Services | 17.28% | — | — | — | — | |
| ROE, Industry | ||||||
| Health Care | 25.44% | — | — | — | — | |
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).
1 2021 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 1,503,100 ÷ 5,835,900 = 25.76%
2 Click competitor name to see calculations.
The profitability profile demonstrates a general upward trajectory over the five-year period, characterized by substantial growth in net income and a consistent expansion of the equity base. While a notable contraction occurred in 2020, the recovery in 2021 indicates strong resilience and enhanced capital efficiency.
- Net Income Trends
- Net income exhibited significant growth, rising from US$ 583.6 million in 2017 to US$ 1.5 billion by 2021. A temporary decline was observed in 2020, where earnings fell to US$ 823.4 million from the previous year's US$ 1.05 billion, followed by a sharp recovery in the final year of the period.
- Stockholders' Equity Accumulation
- The equity base showed a steady and uninterrupted increase, growing from US$ 2.96 billion in 2017 to US$ 5.84 billion in 2021. This consistent upward trend suggests a continuous increase in the company's net asset value and a strengthened capital position.
- Return on Equity (ROE) Performance
- ROE improved from 19.74% in 2017 to a peak of 25.24% in 2019. A significant dip to 18.00% occurred in 2020, directly correlating with the contraction in net income. The metric rebounded strongly in 2021 to reach its highest level of 25.76%, indicating that the company successfully increased its profit generation efficiency even as the equity base expanded.
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Return on Assets (ROA)
Edwards Lifesciences Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,503,100) | 823,400) | 1,046,900) | 722,200) | 583,600) | |
| Total assets | 8,502,600) | 7,237,100) | 6,488,100) | 5,323,700) | 5,695,800) | |
| Profitability Ratio | ||||||
| ROA1 | 17.68% | 11.38% | 16.14% | 13.57% | 10.25% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | 9.40% | — | — | — | — | |
| Elevance Health Inc. | 6.26% | — | — | — | — | |
| Intuitive Surgical Inc. | 12.58% | — | — | — | — | |
| Medtronic PLC | 3.87% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.15% | — | — | — | — | |
| ROA, Sector | ||||||
| Health Care Equipment & Services | 7.28% | — | — | — | — | |
| ROA, Industry | ||||||
| Health Care | 9.46% | — | — | — | — | |
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).
1 2021 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 1,503,100 ÷ 8,502,600 = 17.68%
2 Click competitor name to see calculations.
Between 2017 and 2021, the Return on Assets (ROA) exhibited a general upward trajectory, increasing from 10.25% to 17.68%. Despite a notable contraction in 2020, the overall trend indicates an improvement in the efficiency with which the company utilized its asset base to generate net earnings over the five-year period.
- Net Income Performance
- Net income demonstrated significant growth, rising from US$ 583.6 million in 2017 to US$ 1.5 billion in 2021. A temporary decline was observed in 2020, where income dropped to US$ 823.4 million from the previous year's US$ 1.05 billion, followed by a sharp recovery in 2021.
- Asset Base Expansion
- Total assets grew steadily from 2018 onward, expanding from US$ 5.32 billion to US$ 8.50 billion by the end of 2021. This consistent increase in the asset base suggests ongoing investment in company resources, though it creates a higher threshold for maintaining profitability ratios.
- ROA Dynamics and Volatility
- The ROA peaked in 2021 at 17.68%, marking the highest level of asset productivity in the period analyzed. The decline to 11.38% in 2020 is attributable to a dual impact: a reduction in net income occurring simultaneously with an increase in total assets, which compressed the ratio. The subsequent surge in 2021 indicates that income growth significantly outpaced asset expansion in the final year.
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