Edwards Lifesciences 10-Q 2022-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2022

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-15525

EDWARDS LIFESCIENCES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware									36-4316614
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

One Edwards Way

Irvine, California 92614

(Address of principal executive offices and zip code)

(949) 250-2500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $1.00 per share			EW			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒			Accelerated filer			☐			Non-accelerated filer			☐			Smaller reporting company			☐			Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock, $1.00 par value, as of April 25, 2022 was 621,751,736.

EDWARDS LIFESCIENCES CORPORATION

FORM 10-Q

For the quarterly period ended March 31, 2022

TABLE OF CONTENTS

						Page Number
Part I.			FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)			1
			Consolidated Condensed Balance Sheets			1
			Consolidated Condensed Statements of Operations			2
			Consolidated Condensed Statements of Comprehensive Income			3
			Consolidated Condensed Statements of Cash Flows			4
			Consolidated Condensed Statements of Stockholders' Equity			5
			Notes to Consolidated Condensed Financial Statements			7
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			33
Item 4.			Controls and Procedures			33
Part II.			OTHER INFORMATION
Item 1.			Legal Proceedings			34
Item 1A.			Risk Factors			34
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 6.			Exhibits			35
Signatures						36

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements contained in this report to be covered by the safe harbor provisions of such Acts. Some statements other than statements of historical fact in this report or referred to or incorporated by reference into this report are "forward-looking statements" for purposes of these sections. These statements include, among other things, the expected impact of COVID-19 on our business, any predictions, opinions, expectations, plans, strategies, objectives and any statements of assumptions underlying any of the foregoing relating to the company's current and future business and operations, including, but not limited to, financial matters, development activities, clinical trials and regulatory matters, manufacturing and supply operations, and product sales and demand. These statements can sometimes be identified by the use of the forward-looking words such as "may," "believe," "will," "expect," "project," "estimate," "should," "anticipate," "plan," "goal," "continue," "seek," "pro forma," "forecast," "intend," "guidance," "optimistic," "aspire," "confident," other forms of these words or similar words or expressions or the negative thereof. Statements of past performance, efforts, or results about which inferences or assumptions may be made can also be forward-looking statements and are not indicative of future performance or results; these statements can be identified by the use of words such as "preliminary," "initial," diligence," "industry-leading," "compliant," "indications," or "early feedback" or other forms of these words or similar words or expressions or the negative thereof. These forward-looking statements are subject to substantial risks and uncertainties that could cause our results or future business, financial condition, results of operations or performance to differ materially from our historical results or experiences or those expressed or implied in any forward-looking statements contained in this report. These risks and uncertainties include, but are not limited to: uncertainties regarding the severity and duration of the COVID-19 pandemic and its impact on our business and the economy generally, clinical trial or commercial results or new product approvals and therapy adoption; inability or failure to comply with regulations; unpredictability of product launches; competitive dynamics; changes to reimbursement for the company's products; the company’s success in developing new products and avoiding manufacturing and quality issues; the impact of currency exchange rates; the timing or results of research and development and clinical trials; unanticipated actions by the United States Food and Drug Administration and other regulatory agencies; unexpected impacts or expenses of litigation or internal or government investigations; and other risks detailed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2021, as such risks and uncertainties may be amended, supplemented or superseded from time to time by our subsequent reports on Forms 10-Q and 8-K we file with the Securities and Exchange Commission. These forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections.

Unless otherwise indicated or otherwise required by the context, the terms "we," "our," "it," "its," "Company," "Edwards," and "Edwards Lifesciences" refer to Edwards Lifesciences Corporation and its subsidiaries.

Part I. Financial Information

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(in millions, except par value; unaudited)

			March 31, 2022						December 31, 2021
ASSETS
Current assets
Cash and cash equivalents			$	1,030.9					$	862.8
Short-term investments (Note 3)			465.0						604.0
Accounts receivable, net of allowances of $8.7 and $9.3, respectively			636.3						582.2
Other receivables			49.9						82.7
Inventories (Note 2)			730.6						726.7
Prepaid expenses			94.1						85.2
Other current assets			234.5						237.1
Total current assets			3,241.3						3,180.7
Long-term investments (Note 3)			1,623.7						1,834.2
Property, plant, and equipment, net			1,552.2						1,546.6
Operating lease right-of-use assets			90.1						92.1
Goodwill			1,166.3						1,167.9
Other intangible assets, net			322.0						323.6
Deferred income taxes			294.9						246.7
Other assets			129.4						110.8
Total assets			$	8,419.9					$	8,502.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable			$	158.8					$	204.5
Accrued and other liabilities (Note 2)			767.2						802.3
Operating lease liabilities			23.9						25.5
Total current liabilities			949.9						1,032.3
Long-term debt			595.9						595.7
Contingent consideration liabilities (Note 4)			59.1						62.0
Taxes payable			190.0						190.0
Operating lease liabilities			68.4						69.1
Uncertain tax positions			270.7						259.0
Litigation settlement accrual			181.3						191.3
Other liabilities			259.7						267.3
Total liabilities			2,575.0						2,666.7
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.01 par value, authorized 50.0 shares, no shares outstanding			—						—
Common stock, $1.00 par value, 1,050.0 shares authorized, 642.9 and 642.0 shares issued, and 621.4 and 624.1 shares outstanding, respectively			642.9						642.0
Additional paid-in capital			1,769.4						1,700.4
Retained earnings			6,441.7						6,068.1
Accumulated other comprehensive loss (Note 9)			(186.6)						(157.7)
Treasury stock, at cost, 21.5 and 17.9 shares, respectively			(2,822.5)						(2,416.9)
Total stockholders' equity			5,844.9						5,835.9
Total liabilities and stockholders' equity			$	8,419.9					$	8,502.6

The accompanying notes are an integral part of these

consolidated condensed financial statements.

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in millions, except per share information; unaudited)

									Three Months Ended March 31,
															2022						2021
Net sales															$	1,341.2					$	1,216.6
Cost of sales															299.3						293.4
Gross profit															1,041.9						923.2
Selling, general, and administrative expenses															370.3						330.8
Research and development expenses															228.6						207.0
Intellectual property litigation expenses, net															7.1						6.4
Change in fair value of contingent consideration liabilities (Note 4)															(2.9)						(4.5)
Operating income															438.8						383.5
Interest income, net															(0.6)						(0.3)
Other expense (income), net															3.3						(5.5)
Income before provision for income taxes															436.1						389.3
Provision for income taxes															62.5						51.1
Net income															$	373.6					$	338.2
Share information (Note 10)
Earnings per share:
Basic															$	0.60					$	0.54
Diluted															$	0.59					$	0.54
Weighted-average number of common shares outstanding:
Basic															622.1						623.2
Diluted															629.4						631.3

The accompanying notes are an integral part of these

consolidated condensed financial statements.

EDWARDS LIFESCIENCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(in millions; unaudited)

									Three Months Ended March 31,
															2022						2021
Net income															$	373.6					$

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Overview

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Note Regarding Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.

We are the global leader in patient-focused medical innovations for structural heart disease and critical care monitoring. Driven by a passion to help patients, we partner with the world's leading clinicians and researchers and invest in research and development to transform care for those impacted by structural heart disease or who require hemodynamic monitoring during surgery or in intensive care. We conduct operations worldwide and are managed in the following geographical regions: United States, Europe, Japan, and Rest of World. Our products are categorized into the following areas: Transcatheter Aortic Valve Replacement ("TAVR"), Transcatheter Mitral and Tricuspid Therapies ("TMTT"), Surgical Structural Heart ("Surgical"), and Critical Care.

Financial Highlights and COVID-19

The COVID-19 pandemic has adversely impacted, and may further adversely impact, nearly all aspects of our business and markets, including our workforce and the operations of our customers, suppliers, and business partners. Our priority has been to maintain access for patients to our life-saving technologies while providing continuous front-line support to our clinician partners, and protecting the well-being of our employees. Our manufacturing operations have continued to respond to impacts related to COVID-19, and we have been able to supply our technologies around the world. Across the organization, we are proactively managing inventory, assessing alternative logistics options, and closely monitoring the supply of components.

During the first quarter of 2021, COVID-19 stressed the global healthcare system during the winter months. However, we saw strong recovery beginning in the second quarter of 2021 as widespread vaccine adoption contributed to an increased number of patients.

During the first quarter of 2022, the Omicron variant had a pronounced impact on hospital capacity, resources, and procedure volumes in January 2022, especially in the United States. Outside the United States, we experienced a less pronounced year-over-year impact from the pandemic.

Our net sales for the first three months of 2022 were $1.3 billion, representing an increase of $124.6 million over the first three months of 2021, driven primarily by sales of our TAVR products.

Our gross profit increase in the three months ended March 31, 2022 was driven by foreign currency exchange rate fluctuations and our sales growth. The increase in our diluted earnings per share in the three months ended March 31, 2022 was also driven by our sales growth, partially offset by increased sales and marketing and research and development expenses.

We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including its impact on our customers, employees, suppliers, vendors, business partners, and distribution channels. The extent to which the COVID-19 global pandemic and measures taken in response thereto impact our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak (including new and more contagious variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, public acceptance and efficacy of vaccines and other treatments, and the associated impact on economic and operating conditions. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts on our financial condition and results of operations.

Healthcare Environment, Opportunities, and Challenges

The medical technology industry is highly competitive and continues to evolve. Our success is measured both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies and providing innovative patient care, and we are committed to defending our intellectual property in support of those developments. Despite the challenges of the COVID-19 pandemic, our dedicated field teams have found creative ways to support physicians, our engineers continued to advance innovation, and our colleagues worked diligently to keep our clinical trials on track. In the first three months of 2022, we invested 17.0% of our net sales in research and development.

Results of Operations

Net Sales Trends

(dollars in millions)

																					Three Months Ended March 31,
																					Percent Change
																					2022						2021						Change
United States																											$	749.5					$	674.7					$	74.8					11.1		%
Europe																											311.1						280.0						31.1						11.1		%
Japan																											135.5						132.3						3.2						2.4		%
Rest of World																											145.1						129.6						15.5						12.0		%
Outside of the United States																											591.7						541.9						49.8						9.2		%
Total net sales																											$	1,341.2					$	1,216.6					$	124.6					10.2		%

Net sales outside of the United States include the impact of foreign currency exchange rate fluctuations. The impact of foreign currency exchange rate fluctuations on net sales is not necessarily indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on international manufacturing and operating costs, and our hedging activities.

Net Sales by Product Group

(dollars in millions)

																					Three Months Ended March 31,
																					Percent Change
																					2022						2021						Change
Transcatheter Aortic Valve Replacement																											$	881.3					$	791.7					$	89.6					11.3		%
Transcatheter Mitral and Tricuspid Therapies																											27.0						16.3						10.7						65.7		%
Surgical Structural Heart																											220.8						213.0						7.8						3.7		%
Critical Care																											212.1						195.6						16.5						8.4		%
Total net sales																											$	1,341.2					$	1,216.6					$	124.6					10.2		%

Transcatheter Aortic Valve Replacement

Net sales of TAVR products increased for the three months ended March 31, 2022 driven by:

• higher sales of the Edwards SAPIEN platform in 2022, primarily the Edwards SAPIEN 3 Ultra valve in the United States and Europe;

partially offset by:

• foreign currency exchange rate fluctuations, which decreased net sales outside of the United States by $16.3 million for the three months ended March 31, 2022, primarily due to the weakening of the Euro and the Japanese yen against the United States dollar.

During the first quarter of 2022, we continued to advance our EARLY TAVR pivotal trial, studying the treatment of severe aortic stenosis patients before their symptoms develop, our PROGRESS pivotal trial for moderate aortic stenosis patients, and our ALLIANCE pivotal trial, studying our next-generation TAVR technology, SAPIEN X4.

Transcatheter Mitral and Tricuspid Therapies

Net sales of TMTT products increased for the three months ended March 31, 2022 primarily due to continued adoption of our PASCAL system in Europe. We remain on track for United States approval of PASCAL Precision for patients with degenerative mitral regurgitation late this year.

We continue to advance the enrollment of our CLASP trials. We also continued to broaden our experience with both of our transcatheter mitral replacement therapies through the ENCIRCLE pivotal trial for SAPIEN M3 and the MISCEND study for EVOQUE Eos. And, we continue to make progress in enrolling the TRISCEND II pivotal trial of the EVOQUE system.

Surgical Structural Heart

Net sales of Surgical products increased for the three months ended March 31, 2022 primarily due to increased sales of the INSPIRIS RESILIA aortic valve and the KONECT aortic valved conduit, primarily in the United States. Foreign currency exchange rate fluctuations decreased net sales outside of the United States by $5.4 million for the three months ended March 31, 2022 primarily due to the weakening of the Euro and the Japanese yen against the United States dollar.

In March 2022, we received United States Food and Drug Administration approval for the MITRIS RESILIA valve, a tissue valve replacement specifically designed for the heart's mitral position and incorporating our advanced RESILIA technology.

Critical Care

Net sales of Critical Care products increased for the three months ended March 31, 2022 primarily due to:

• increased demand for our HemoSphere monitoring platform, pressure monitoring products, and enhanced surgical recovery products, primarily in the United States;

partially offset by:

• foreign currency exchange rate fluctuations, which decreased net sales outside of the United States by $4.5 million for the three months ended March 31, 2022, primarily due to the weakening of the Euro and the Japanese yen against the United States dollar.

Gross Profit

The increase in gross profit as a percentage of net sales for the three months ended March 31, 2022 was driven primarily by a 2.4 percentage point increase for the three months ended March 31, 2022 due to the impact of foreign currency exchange rate fluctuations, primarily the strengthening of the United States dollar against the Euro and Japanese yen.

Selling, General, and Administrative ("SG&A") Expenses

SG&A expenses increased for the three months ended March 31, 2022 primarily due to higher field-based personnel-related costs and commercial activities in support of our growth. Foreign currency exchange rate fluctuations decreased expenses by $6.9 million for the three months ended March 31, 2022 due to the weakening of the Euro and the Japanese yen against the United States dollar.

Research and Development ("R&D") Expenses

R&D expenses increased for the three months ended March 31, 2022 primarily due to continued investments in our transcatheter innovations, including increased clinical trial activity.

Change in Fair Value of Contingent Consideration Liabilities

The change in fair value of contingent consideration liabilities resulted in income of $2.9 million and $4.5 million for the three months ended March 31, 2022 and 2021, respectively. The income was driven by increased discount rates, partially offset by the accretion of interest due to the passage of time. For further information, see Note 4 to the "Consolidated Condensed Financial Statements."

Other Expense (Income), net

(in millions)

									Three Months Ended March 31,
															2022						2021
Foreign exchange losses (gains), net															$	2.5					$	(1.7)
Loss (gain) on investments															0.9						(2.7)
Other															(0.1)						(1.1)
Other expense (income), net															$	3.3					$	(5.5)

The net foreign exchange losses (gains) relate to the foreign currency fluctuations in our global trade and intercompany receivable and payable balances, partially offset by the gains and losses on derivative instruments intended as an economic hedge of those exposures.

The loss (gain) on investments primarily represents our net share of gains and losses in investments accounted for under the equity method, and realized gains and losses on investments in equity securities.

Provision for Income Taxes

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside the United States which have statutory tax rates typically lower than the United States tax rate. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.

Our effective income tax rate was 14.3% and 13.1% for the three months ended March 31, 2022 and 2021, respectively. The increase in the effective rate between the three months ended March 31, 2022 and 2021 is primarily due to the estimated impact of U.S. foreign tax credit regulations published by the U.S. Treasury on January 4, 2022. These regulations limit the

amount of foreign taxes that are creditable against U.S. income taxes. In addition, the effective rates for the three months ended March 31, 2022 and 2021 were lower than the federal statutory rate of 21% primarily due to (1) foreign earnings taxed at lower rates, (2) Federal and California research and development credits, and (3) the tax benefit from employee share-based compensation.

In the normal course of business, the Internal Revenue Service (“IRS”) and other taxing authorities are in different stages of examining various years of our tax filings. During these audits we may receive proposed audit adjustments that could be material. Therefore, there is a possibility that an adverse outcome in these audits could have a material effect on our results of operations and financial condition. We strive to resolve open matters with each tax authority at the examination level and could reach agreement with a tax authority at any time. While we have accrued for matters we believe are more likely than not to require settlement, the eventual outcome with a tax authority may result in a tax liability that is more or less than that reflected in the consolidated condensed financial statements. Furthermore, we may later decide to challenge any assessments, if made, and may exercise our right to appeal. The uncertain tax positions are reviewed quarterly and adjusted as events occur that affect potential liabilities for additional taxes, such as lapsing of applicable statutes of limitations, proposed assessments by tax authorities, negotiations between tax authorities, identification of new issues, and issuance of new legislation, regulations, or case law.

We executed an Advance Pricing Agreement ("APA") in 2018 between the United States and Switzerland governments for tax years 2009 through 2020 covering various, but not all, transfer pricing matters. The unagreed transfer pricing matters, namely Surgical Structural Heart and Transcatheter Aortic Valve Replacement (collectively "Surgical/TAVR") intercompany royalty transactions, then reverted to IRS Examination for further consideration as part of the respective years' regular tax audits. In addition, we executed other bilateral APAs as follows: during 2017, an APA between the United States and Japan covering tax years 2015 through 2019; and during 2018, APAs between Japan and Singapore and between Switzerland and Japan covering tax years 2015 through 2019. We have filed to renew all the APAs which cover transactions with Japan for the years 2020 and forward. The execution of some or all these APA renewals depends on many variables outside of our control.

At March 31, 2022, all material state, local, and foreign income tax matters have been concluded for years through 2015. While not material, we continue to address matters in India for years from 2010.

The audits of our United States federal income tax returns through 2014 have been closed. The IRS audit field work for the 2015-2017 tax years was substantially completed during the fourth quarter of 2020, except for transfer pricing and related matters. The IRS began its examination of the 2018, 2019, and 2020 tax years during the first quarter of 2022.

During 2021, we received a Notice of Proposed Adjustment (“NOPA”) from the IRS for the 2015-2017 tax years relating to transfer pricing involving certain Surgical/TAVR intercompany royalty transactions between our United States and Switzerland subsidiaries. The NOPA proposes an increase to our United States taxable income which could result in additional tax expense for this period of approximately $180 million and represents a significant change to previously agreed upon transfer pricing methodologies for these types of transactions. We have formally disagreed with the NOPA and submitted a formal protest on the matter to the IRS Independent Office of Appeals during the fourth quarter of 2021. We also have received the final Revenue Agent's Report for these tax years. We continue to evaluate all possible remedies available to us, which could take several years to resolve. No payment of any amount related to the NOPA is required to be made, if at all, until all applicable proceedings have been completed. We believe the amounts previously accrued related to this uncertain tax position are sufficient and, accordingly, have not accrued any additional amount based on the NOPA received.

Certain Surgical/TAVR intercompany royalty transactions covering tax years 2015-2022 that were not resolved under the APA program remain subject to IRS examination, and those transactions and related tax positions remain uncertain as of March 31, 2022. We have considered this information, as well as information regarding the NOPA described above, in our evaluation of our uncertain tax positions. The impact of these unresolved transfer pricing matters, net of any correlative repatriation tax adjustment, may be significant to our consolidated condensed financial statements. Based on the information currently available and numerous possible outcomes, we cannot reasonably estimate what, if any, changes in our existing uncertain tax positions may occur in the next 12 months and, therefore, have continued to record the uncertain tax positions as a long-term liability.

Liquidity and Capital Resources

Our sources of cash liquidity include cash and cash equivalents, short-term investments, cash from operations, and amounts available under credit facilities. We believe that these sources are sufficient to fund the current and long-term requirements of working capital, capital expenditures, and other financial commitments. However, we periodically consider

various financing alternatives and may, from time to time, seek to take advantage of favorable interest rate environments or other market conditions.

As of March 31, 2022, cash and cash equivalents and short-term investments held in the United States and outside of the United States were $794.6 million and $701.3 million, respectively.

We have a Five-Year Credit Agreement ("the Credit Agreement") which matures on April 28, 2023. The Credit Agreement provides up to an aggregate of $750.0 million in borrowings in multiple currencies. Subject to certain terms and conditions, we may increase the amount available under the Credit Agreement by up to an additional $250.0 million in the aggregate. As of March 31, 2022, there were no borrowings outstanding under the Credit Agreement. We were in compliance with all covenants at March 31, 2022.

In June 2018, we issued $600.0 million of 4.3% fixed-rate unsecured senior notes (the "2018 Notes") due June 15, 2028. As of March 31, 2022, the total carrying value of the 2018 Notes was $595.9 million.

From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Board of Directors. We consider several factors in determining when to execute share repurchases, including, among other things, expected dilution from stock plans, cash capacity, and the market price of our common stock. During the three months ended March 31, 2022, under the Board authorized repurchase programs, we repurchased a total of 3.6 million shares at an aggregate cost of $405.2 million. As of March 31, 2022, we had remaining authority to purchase $721.2 million of our common stock.

At March 31, 2022, there had been no material changes in our cash requirements from known contractual and other obligations, including commitments for capital expenditures, as disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2021.

Consolidated Cash Flows - For the three months ended March 31, 2022 and 2021:

Net cash flows provided by operating activities of $293.3 million for the three months ended March 31, 2022 decreased $7.2 million over the same period last year primarily due to a higher bonus payout in 2022 associated with 2021 performance, partially offset by improved operating performance in 2022.

Net cash provided by investing activities of $229.5 million for the three months ended March 31, 2022 consisted primarily of net proceeds from investments of $299.3 million, partially offset by capital expenditures of $72.7 million.

Net cash used in investing activities of $49.7 million for the three months ended March 31, 2021 consisted primarily of capital expenditures of $106.0 million, partially offset by net proceeds from investments of $59.8 million.

Net cash used in financing activities of $368.1 million for the three months ended March 31, 2022 consisted primarily of purchases of treasury stock of $405.6 million, partially offset by proceeds from stock plans of $37.5 million.

Net cash used in financing activities of $274.3 million for the three months ended March 31, 2021 consisted primarily of purchases of treasury stock of $302.6 million, partially offset by proceeds from stock plans of $31.6 million.

Critical Accounting Policies and Estimates

The consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated condensed financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies and estimates which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained on pages 34-36 in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes from the information discussed therein.

Interest Rate Risk, Foreign Currency Risk, Credit Risk, and Concentrations of Risk

For a complete discussion of our exposure to interest rate risk, foreign currency risk, credit risk, and concentrations of risk, refer to Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes from the information discussed therein.

Investment Risk

We are exposed to investment risks related to changes in the underlying financial condition and credit capacity of certain of our investments. As of March 31, 2022, we had $2.0 billion of investments in debt securities of various companies, of which $1.5 billion were long-term. In addition, we had $92.1 million of investments in equity instruments of public and private companies. Should these companies experience a decline in financial performance, financial condition, or credit capacity, or fail to meet certain development milestones, including as a result of the impact of COVID-19 or interest rate fluctuations on their business or operations or otherwise, a decline in the investments' value may occur, resulting in unrealized or realized losses.

Evaluation of Disclosure Controls and Procedures. Our management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2022. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of March 31, 2022 that our disclosure controls and procedures are designed at a reasonable assurance level and effective in providing reasonable assurance that the information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are reviewing and investigating whether business activities in Japan and other markets violate certain provisions of the Foreign Corrupt Practices Act ("FCPA"). We voluntarily notified the United States Securities and Exchange Commission ("SEC") and the United States Department of Justice ("DOJ") during 2021 that we have engaged outside counsel to conduct this review and investigation. We have provided status updates to the SEC and DOJ since that time. Any determination that our operations or activities are not in compliance with existing laws, including the FCPA, could result in the imposition of fines, penalties, and equitable remedies. We cannot currently predict the outcome of the review and investigation or the potential impact on our financial statements.

On September 28, 2021, Aortic Innovations LLC, a non-practicing entity, filed a lawsuit against Edwards Lifesciences Corporation and certain of its subsidiaries (“Edwards”) in the United States District Court for the District of Delaware alleging that Edwards’ SAPIEN 3 Ultra product infringes certain of its patents. We are unable to predict the ultimate outcome of this matter or estimate a range of possible exposure; therefore, no amounts have been accrued. We believe the claims to be without merit and will vigorously defend ourselves in this litigation.

We are subject to various environmental laws and regulations both within and outside of the United States. Our operations, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of continuing compliance with environmental protection laws, management believes that such compliance will not have a material impact on our financial results. Our threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary exposure is involved is $1 million.

A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended December 31, 2021. There have been no material changes to our Risk Factors as previously reported.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period												Total Number of Shares (or Units) Purchased (a)						Average Price Paid per Share (or Unit)						Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (b), (c)
January 1, 2022 through January 31, 2022												1,067,289						$	116.15					1,067,289						$	1,002.5
February 1, 2022 through February 28, 2022												2,269,943						110.30						2,266,408						752.5
March 1, 2022 through March 31, 2022												296,516						105.39						296,516						721.2
Total												3,633,748						111.62						3,630,213

(a) The difference between the total number of shares (or units) purchased and the total number of shares (or units) purchased as part of publicly announced plans or programs is due to shares withheld by us to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees.

(b) On May 8, 2019, the Board of Directors approved a stock repurchase program authorizing us to purchase up to $1.0 billion of our common stock. On May 4, 2021, the Board of Directors approved a new stock repurchase program providing for an additional $1.0 billion of repurchases of our common stock. Repurchases under the programs may be made on the open market, including pursuant to a Rule 10b5-1 plan, and in privately negotiated transactions. These repurchase programs do not have an expiration date.

(c) In January 2022, we entered into a $250.0 million accelerated share repurchase ("ASR") agreement and received, on February 1, 2022, an initial delivery of 1.9 million shares of our common stock, representing approximately 80 percent of

the total contract value. The ASR agreement concluded and on February 17, 2022, we received an additional 0.3 million shares. Shares purchased pursuant to the ASR agreement are presented in the table above in the periods in which they were received.

The exhibits listed in the Exhibit Index below are filed, furnished, or incorporated by reference as part of this report on Form 10-Q.

Exhibit No.						Description
3.1						Amended and Restated Certificate of Incorporation of Edwards Lifesciences Corporation, dated May 16, 2013 (incorporated by reference to Exhibit 3.1 in Edwards Lifesciences' report on Form 8-K filed on May 17, 2013)
3.2						Certificate of Amendment of Amended and Restated Certificate of Incorporation of Edwards Lifesciences Corporation, dated May 7, 2020 (incorporated by reference to Exhibit 3.1 in Edwards Lifesciences’ report on Form 8-K filed on May 8, 2020)
3.3						Bylaws of Edwards Lifesciences Corporation, as amended and restated as of July 15, 2021 (incorporated by reference to Exhibit 3.1 in Edwards Lifesciences' report on Form 8-K filed on July 15, 2021)
31.1						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Inline Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						EDWARDS LIFESCIENCES CORPORATION
						(Registrant)
Date:			April 28, 2022			By:			/s/ SCOTT B. ULLEM
									Scott B. Ullem Chief Financial Officer (Principal Financial Officer; Duly Authorized Officer)
Date:			April 28, 2022			By:			/s/ ROBERT W.A. SELLERS
									Robert W.A. Sellers Corporate Controller (Principal Accounting Officer)