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What Led to Edwards Lifesciences’ Stellar Performance in 1Q16?

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Nov. 20 2020, Updated 3:47 p.m. ET

Overview

Edwards Lifesciences (EW) is the leader in the transcatheter heart valve market and has a strong portfolio of TAVR (transcatheter aortic valve replacement) products under the brand name Sapien. These valves are used to treat patients suffering from advanced cardiovascular disease. Medtronic’s (MDT) CoreValve is a major competitor of EW’s Sapien products in the TAVR market. St. Jude Medical (STJ) and Boston Scientific (BSX) also manufacture TAVR products and present significant competition to Edwards Lifesciences. Investors seeking exposure to Edwards Lifesciences and its peers can invest in the First Trust Health Care AlphaDEX Fund (FXH). EW accounts for approximately 2.6% of FXH’s holdings.

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1Q16 performance

Edwards Lifesciences (EW) reported ~$697 million in total revenue in 1Q16. Of that, ~$366 million was contributed by the company’s THV (Transcatheter Heart Valve) Therapy segment. The segment accounted for about 53% of Edwards Lifesciences’ total revenues. This sales figure represents a ~38% YoY (year-over-year) increase in 1Q16 as compared to the YoY sales growth of ~32% in the previous quarter.

In the Unites States, THV sales grew by approximately 64%, whereas the international sales registered a growth of ~13% on a YoY basis. The strong THV sales growth, however, is expected to be weighed down by the increasing competition in the segment, and the company will likely experience market share erosion in the near future. However, the total THV market size is also expected to grow at a fast pace driven by the continued adoption of TAVR therapies worldwide. To learn more about opportunities in this segment, read Rising THV Demand Could Drive Edwards Lifesciences’ Growth.

Key growth drivers

The strong procedure growth in the United States and in international markets is driving THV sales growth on a YoY basis. This therapy has enormous growth potential going forward. The launch of Sapien 3 valves in the United States in July 2015 also fueled this segment’s growth. Also, the positive clinical results for the use of Sapien valves in intermediate-risk patients are expected to broaden the market size in the near future. The company has also initiated clinical trials for the use of Sapien TAVR technology in low-risk patients, which will further expand its customer base and strengthen the long-term growth potential of the product segment.

In the next part of this series, we’ll look at Edward Lifesciences’ gross margin.

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