Edwards Lifesciences (EW)

Business Overview

Edwards Lifesciences sells heart valves, so procedures carry its economics and there are no machines to count. FY2025 net sales were $6,067.6M. Reported growth was +11.5% and constant-currency (CC) growth +10.7%. Edwards does not use the word "organic"; its CC rate excludes foreign exchange and newly acquired products.

Transcatheter aortic valve replacement (TAVR), a valve delivered through a catheter, was 74% of net sales, about $4.5B, growing +8.6% CC. Transcatheter mitral and tricuspid therapies (TMTT), catheter treatments for two other heart valves, were 9% of sales, and Surgical Structural Heart, valves fitted in open surgery, 17%. With no placed-system count like Intuitive's 11,106 da Vinci units or Abbott's more than 8M Libre users, procedure adoption is the demand signal for the business.

GAAP gross margin was 78.0%, the highest of the six. GAAP operating margin was 20.8%; adjusted operating margin was 27.1%, against 27.8% in FY2024. R&D was $1,079.2M, 17.8% of sales, the highest share in the set.

How the Numbers Read

Constant-currency growth (+10.7%). Growth comparisons use the +10.7% CC rate; reported growth was +11.5%. The organic growth guide explains how the labels differ between Medtronic (4.9% organic), Boston Scientific (15.8% organic) and Edwards (CC only). At +10.7% CC, Edwards grew about as fast as Stryker (10.3% organic) and faster than Medtronic and Abbott, which grew at mid-single-digit organic rates.

TAVR concentration (74%, $4.5B). The procedure volumes guide uses Edwards as its case of procedures driving revenue with no capital installed base filed. FY2025 SEC filings disclose no global implant count, centre count or cumulative patient total. The 74% TAVR share is the closest filed figure; it measures product concentration, and Edwards files no group recurring share.

R&D intensity (17.8%). Nearly a fifth of sales goes on TMTT and next-generation TAVR. Stryker spent 6.5%, Abbott 6.6%, Medtronic 8.1%, Boston Scientific 10.2% and Intuitive Surgical 13.0%. Edwards concentrates its spending on one therapy area, where the diversified peers spread theirs across segments.

Free cash flow (~$1.3B). Operating cash flow of $1,595.2M less capex of $260.2M, from the 10-K.

Valuation Framework

Edwards has the smallest revenue base in the set and the highest gross margin (78.0% GAAP). Any growth-adjusted P/E for it should divide by the +10.7% group CC rate, not TAVR's +8.6% alone; the growth-adjusted P/E guide explains why a product-line growth rate paired with a group multiple misleads.

A forecast rests on TAVR adoption in severe aortic stenosis, a narrowing of the heart's aortic valve that becomes common with age. TMTT, at 9% of sales, is what would dilute the 74% concentration if it ramps, so its timing belongs in every sensitivity table. Medtronic and Abbott sell competing TAVR valves (Boston Scientific stopped selling its ACURATE valves in 2025), and Edwards' gross margin depends on its TAVR share holding.

What to Watch in the Financials

TAVR growth (+8.6% CC on $4.5B). The group grew faster, at +10.7%, because TMTT grew 53.1% at constant currency; Surgical Structural Heart grew 4.3%. With TAVR at 74% of sales, a sustained slowdown below high single digits would drag the whole group.

TMTT ramp (9% of sales). The offset to TAVR concentration. R&D at 17.8% of sales is paying for it; unless TMTT revenue rises, concentration stays high.

Adjusted operating margin (27.1% against 27.8%). Down 70 bps despite the 78.0% gross margin. On GAAP lines, SG&A rose from 32.9% to 34.4% of sales while R&D fell from 19.4% to 17.8%.

Constant currency against reported (+10.7% / +11.5%). Currency and acquisitions make a small difference. Read the CC footnote each quarter, and do not describe the rate as organic when Edwards does not.

Key Risks

TAVR concentration (74%). Competition from Medtronic and Abbott, changes to clinical guidelines and limits on centre capacity all hit the same revenue.

TMTT execution. Mitral and tricuspid programmes are the answer to concentration. Delays extend the dependence on TAVR.

Procedure capacity. TAVR demand follows an ageing population and cardiology referral patterns. Shortages of hospital staff or catheter-lab time show up in procedure growth before they reach prices.

What the Screening Shows

Against the Medtech Sector Primer screens:

• Growth: +10.7% constant currency (not labelled organic); +11.5% reported.
• TAVR: 74% of net sales (~$4.5B, +8.6% CC), the main concentration figure.
• Gross margin: 78.0% GAAP, highest of the six.
• R&D: 17.8% of sales, highest in the set.
• Operating margin: 20.8% GAAP / 27.1% adjusted.
• Installed base and recurring mix: neither filed.
• FCF: ~$1.3B (operating cash flow less capex).

TAVR at 74% of sales is the filed concentration figure and TMTT at 9% the disclosed offset. With no implant count or recurring share filed, procedure adoption and the TMTT ramp are what a model of Edwards has to forecast.