filings.toolsEdwards Lifesciences 10-Q 2025-09-30
Filed 2025-11-05. 8 sections, 238K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
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 September 30, 2025
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 October 31, 2025 was 580.3 million.
EDWARDS LIFESCIENCES CORPORATION
FORM 10-Q
For the quarterly period ended September 30, 2025
TABLE OF CONTENTS
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act” and together with the Securities Act, the “Acts”). We intend the forward-looking statements contained in this report to be covered by the safe harbor provisions of such Acts. Statements other than statements of historical or current fact in this report or referred to or incorporated by reference into this report are “forward-looking statements” for purposes of these safe harbor provisions. 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,” or other forms of these words or similar words or expressions or the negatives thereof. Statements regarding 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,” “potential,” “possible,” “diligence,” “industry-leading,” “compliant,” “indications,” “early feedback,” or other forms of these words or similar words or expressions or the negatives 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: our ability to complete or realize the anticipated benefits of the sale of our discontinued product groups; our ability to develop new products and avoid manufacturing and quality issues; risks or challenges related to integrating acquired businesses; clinical trial or commercial results or new product approvals and therapy adoption; the impact of domestic and global conditions, including current and future tariff actions; dependence on physicians, research institutions, and hospital systems; competition in the markets in which we operate; our reliance on vendors, suppliers, and other third parties; damage, failure, or interruption of our information technology systems; the impact of public health crises; consolidation in the healthcare industry; our ability to protect our intellectual property; our compliance with applicable regulations; our exposure to product liability claims; use of our products in unapproved circumstances; changes to reimbursement for our products; the impact of currency exchange rates; unanticipated actions by the United States Food and Drug Administration and other regulatory agencies; changes to tax laws; 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, 2024, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2025,and as such risks and uncertainties may be further amended, supplemented or superseded from time to time by our subsequent reports on Forms 10-Q and 8-K we file with the SEC. 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, except as required by law. 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, except as required by law.
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
Item 1. Financial Statements
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions, except par value; unaudited)
| September 30, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 2,685.6 | $ | 3,045.2 | |||||||
| Short-term investments (Note 5) | 1,156.4 | 930.7 | |||||||||
| Accounts receivable, net of allowances of $12.6 and $11.6, respectively | 693.3 | 609.1 | |||||||||
| Other receivables | 199.5 | 118.3 | |||||||||
| Inventories (Note 2) | 1,140.9 | 1,086.7 | |||||||||
| Prepaid expenses | 125.2 | 121.0 | |||||||||
| Other current assets | 323.4 | 347.6 | |||||||||
| Current assets of discontinued operations (Note 4) | 34.6 | 26.8 | |||||||||
| Total current assets | 6,358.9 | 6,285.4 | |||||||||
| Long-term investments (Note 5) | 274.7 | 307.9 | |||||||||
| Property, plant, and equipment, net | 1,743.3 | 1,686.0 | |||||||||
| Operating lease right-of-use assets | 96.5 | 98.2 | |||||||||
| Goodwill | 1,768.5 | 1,776.7 | |||||||||
| Other intangible assets, net | 1,130.8 | 1,176.6 | |||||||||
| Deferred income taxes | 1,099.9 | 992.1 | |||||||||
| Other assets (Note 2) | 784.8 | 721.6 | |||||||||
| Non-current assets of discontinued operations (Note 4) | 14.8 | 10.8 | |||||||||
| Total assets | $ | 13,272.2 | $ | 13,055.3 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 165.0 | $ | 197.4 | |||||||
| Accrued and other liabilities (Note 2) | 1,393.9 | 1,282.4 | |||||||||
| Operating lease liabilities | 26.8 | 23.4 | |||||||||
| Current liabilities of discontinued operations (Note 4) | 2.3 | 2.0 | |||||||||
| Total current liabilities | 1,588.0 | 1,505.2 | |||||||||
| Long-term debt | 598.2 | 597.7 | |||||||||
| Operating lease liabilities | 75.3 | 78.9 | |||||||||
| Uncertain tax positions | 442.9 | 384.6 | |||||||||
| Other liabilities | 362.6 | 426.0 | |||||||||
| Non-current liabilities of discontinued operations (Note 4) | 0.2 | — | |||||||||
| Total liabilities | 3,067.2 | 2,992.4 | |||||||||
| Commitments and contingencies (Note 11) | |||||||||||
| 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, 658.2 and 654.8 shares issued, and 580.7 and 588.6 shares outstanding, respectively | 658.2 | 654.8 | |||||||||
| Additional paid-in capital | 2,697.4 | 2,613.4 | |||||||||
| Retained earnings | 14,149.3 | 13,167.0 | |||||||||
| Accumulated other comprehensive loss (Note 12) | (250.4) | (244.5) | |||||||||
| Treasury stock, at cost, 77.5 and 66.2 shares, respectively | (7,049.5) | (6,192.3) | |||||||||
| Total Edwards Lifesciences Corporation stockholders' equity | 10,205.0 | 9,998.4 | |||||||||
| Noncontrolling interest | — | 64.5 | |||||||||
| Total stockholders' equity | 10,205.0 | 10,062.9 | |||||||||
| Total liabilities and equity | $ | 13,272.2 | $ | 13,055.3 |
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net sales | $ | 1,553.1 | $ | 1,354.4 | $ | 4,498.0 | $ | 4,053.7 | |||||||||||||||
| Cost of sales | 345.2 | 262.9 | 991.2 | 825.3 | |||||||||||||||||||
| Gross profit | 1,207.9 | 1,091.5 | 3,506.8 | 3,228.4 | |||||||||||||||||||
| Selling, general, and administrative expenses | 514.6 | 421.4 | 1,482.3 | 1,297.3 | |||||||||||||||||||
| Research and development expenses | 280.7 | 253.4 | 811.5 | 781.9 | |||||||||||||||||||
| Certain litigation expenses | 90.4 | 10.8 | 116.8 | 27.8 | |||||||||||||||||||
| Change in fair value of contingent consideration liabilities | (12.5) | — | (12.5) | — | |||||||||||||||||||
| Restructuring charges and separation costs (Note 3) | 0.1 | 32.9 | 8.5 | 32.9 | |||||||||||||||||||
| Intangible assets impairment charges | 40.0 | — | 40.0 | — | |||||||||||||||||||
| Other operating (income) expense, net | (12.5) | 22.4 | (52.9) | 22.4 | |||||||||||||||||||
| Operating income, net | 307.1 | 350.6 | 1,113.1 | 1,066.1 | |||||||||||||||||||
| Interest income, net | (38.6) | (24.3) | (112.5) | (56.3) | |||||||||||||||||||
| Loss on impairment (Note 6) | — | — | 47.1 | — | |||||||||||||||||||
| Other non-operating income, net | (2.7) | (27.9) | (4.0) | (35.6) | |||||||||||||||||||
| Income from continuing operations before provision for income taxes | 348.4 | 402.8 | 1,182.5 | 1,158.0 | |||||||||||||||||||
| Provision for income taxes | 56.1 | 40.7 | 190.7 | 107.0 | |||||||||||||||||||
| Net income from continuing operations | 292.3 | 362.1 | 991.8 | 1,051.0 | |||||||||||||||||||
| (Loss) income from discontinued operations, net of tax | (2.0) | 2,707.3 | (13.6) | 2,734.4 | |||||||||||||||||||
| Net income | 290.3 | 3,069.4 | 978.2 | 3,785.4 | |||||||||||||||||||
| Net loss attributable to noncontrolling interest | (0.8) | (1.4) | (4.1) | (3.6) | |||||||||||||||||||
| Net income attributable to Edwards Lifesciences Corporation | $ | 291.1 | $ | 3,070 |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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 leading global structural heart disease innovation company, driven by a passion to improve patient lives. Through breakthrough technologies, world-class evidence, and partnerships with clinicians and healthcare stakeholders, our employees are inspired by our patient-focused culture to deliver life-changing innovations to those who need them most. 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 groups: Transcatheter Aortic Valve Replacement (“TAVR”), Transcatheter Mitral and Tricuspid Therapies (“TMTT”), and Surgical Structural Heart (“Surgical”).
On September 3, 2024, we sold our Critical Care product group (“Critical Care”). In addition, as a next step in our disposal plan to exit businesses that are not focused on implantable medical innovations for structural heart disease, we have entered into a definitive agreement to sell a non-core product group for $85 million up-front consideration, subject to customary adjustments, and additional earnouts of up to $40 million. The sale is expected to close in the fourth quarter of 2025. We concluded that Critical Care met the criteria to be classified as held-for-sale in June 2024 and that the non-core product group met the criteria to be classified as held-for-sale in September 2024. We determined that, when considered together, the conditions for discontinued operations presentation had been met with respect to Critical Care and the non-core product group (collectively, the “discontinued product groups”). As such, the historical financial condition and results of the discontinued product groups have been reflected as discontinued operations in our consolidated condensed financial statements. Prior period amounts have been adjusted to reflect the discontinued operations presentation. Our discussion and analysis of our results of operations is reflective of our continuing operations. See Note 4 to the Consolidated Condensed Financial Statements for further information.
In response to recent changes to U.S. trade policy, such as increased tariffs on imports and including non-U.S. retaliatory tariffs, we have and will continue to assess potential impacts on our business. As needed, we will pursue options to mitigate the impact of tariffs, including through our supply chain and potential exemptions and exclusions. Failure to sufficiently mitigate the impact of tariffs, including significant inflation and other impacts on our customers, could also reduce demand for our products and adversely affect our business, financial condition and results of operations. Given the uncertainties around U.S. trade policy and future tariff rates, we are unable to predict the nature of the tariffs and whether we will be able to successfully mitigate their impact.
Financial Highlights
Our net sales for the first nine months of 2025 were $4.5 billion, representing an increase of $444.3 million compared to the first nine months of 2024, driven primarily by sales of our TAVR and TMTT products.
Our gross profit increased in the nine months ended September 30, 2025, driven primarily by our sales growth. Gross profit as a percentage of sales decreased primarily due to impact from foreign currency rate fluctuations and higher operational expenses. The decrease in our diluted earnings per share in the nine months ended September 30, 2025, was driven by our aforementioned operational performance.
Healthcare Environment, Opportunities, and Challenges
The medical technology industry is highly competitive and continues to evolve. We measure our success both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies and innovations, and we are committed to defending our intellectual property in support of those developments. Our vision for growth is to treat patients with both valvular and non-valvular structural heart disease, such as heart failure, which is a natural progression of the disease for many patients suffering from aortic stenosis and mitral and tricuspid regurgitation.
We are dedicated to generating robust clinical, economic, and quality-of-life evidence that is increasingly expected by patients, clinicians, and payors in the current healthcare environment, with the goal of encouraging the adoption of innovative new medical therapies that demonstrate superior outcomes.
New Accounting Standards
Information on new accounting standards is included in Note 1 to the Consolidated Condensed Financial Statements.
Results of Operations
Net Sales by Region
(dollars in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Percent Change | Percent Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 907.5 | $ | 804.6 | $ | 102.9 | 12.8 | % | $ | 2,636.1 | $ | 2,393.1 | $ | 243.0 | 10.2 | % | |||||||||||||||||||||||||||||||
| Europe | 387.9 | 319.8 | 68.1 | 21.3 | % | 1,107.9 | 978.0 | 129.9 | 13.3 | % | |||||||||||||||||||||||||||||||||||||
| Japan | 90.1 | 81.4 | 8.7 | 10.6 | % | 267.2 | 253.9 | 13.3 | 5.2 | % | |||||||||||||||||||||||||||||||||||||
| Rest of World | 167.6 | 148.6 | 19.0 | 12.7 | % | 486.8 | 428.7 | 58.1 | 13.5 | % | |||||||||||||||||||||||||||||||||||||
| Outside of the United States | 645.6 | 549.8 | 95.8 | 17.4 | % | 1,861.9 | 1,660.6 | 201.3 | 12.1 | % | |||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 1,553.1 | $ | 1,354.4 | $ | 198.7 | 14.7 | % | $ | 4,498.0 | $ | 4,053.7 | $ | 444.3 | 11.0 | % |
Net sales outside of the United States include the impact of foreign currency exchange rate fluctuations, as further detailed in the discussion below. 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| Percent Change | Percent Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||||||||||||||||||||||||||||||||||
| Transcatheter Aortic Valve Replacement | $ | 1,149.9 | $ | 1,023.3 | $ | 126.6 | 12.4 | % | $ | 3,327.4 | $ | 3,069.8 | $ | 257.6 | 8.4 | % | |||||||||||||||||||||||||||||||
| Transcatheter Mitral and Tricuspid Therapies | 145.2 | 91.1 | 54.1 | 59.3 | % | 394.9 | 247.0 | 147.9 | 59.8 | % | |||||||||||||||||||||||||||||||||||||
| Surgical Structural Heart | 258.0 | 240.0 | 18.0 | 7.5 | % | 775.7 | 736.9 | 38.8 | 5.3 | % | |||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 1,553.1 | $ | 1,354.4 | $ | 198.7 | 14.7 | % | $ | 4,498.0 | $ | 4,053.7 | $ | 444.3 | 11.0 | % |
Transcatheter Aortic Valve Replacement Sales
Net sales of TAVR products increased for the three and nine months ended September 30, 2025, driven by higher sales of the Edwards SAPIEN platform in 2025, primarily due to higher sales of the Edwards SAPIEN 3 Ultra RESILIA valve in the United States and Europe. In addition, during the three and nine months ended September 30, 2025, foreign currency exchange rate fluctuations increased net sales outside of the United States by $17.0 million and $13.2 million, respectively, primarily due to the strengthening of the Euro against the United States dollar.
In April 2025, we received United States Food and Drug Administration approval for the SAPIEN 3 platform for severe aortic stenosis patients without symptoms.
Transcatheter Mitral and Tricuspid Therapies Sales
Net sales of TMTT products increased for the three and nine months ended September 30, 2025, primarily due to higher sales of our PASCAL transcatheter edge-to-edge repair system and our continued launch of the EVOQUE tricuspid valve replacement system in the United States and Europe.
In April 2025, we received a CE Mark for the Edwards SAPIEN M3 mitral valve replacement system for the transcatheter treatment of patients with symptomatic (moderate-to-severe or severe) mitral regurgitation who are deemed unsuitable for surgery or transcatheter edge-to-edge therapy.
Surgical Structural Heart Sales
Net sales of Surgical products increased for the three and nine months ended September 30, 2025, primarily due to higher sales of the INSPIRIS RESILIA aortic valve in the United States, Europe and Rest of World, the MITRIS RESILIA valve in the United States, Europe, and China, and the KONECT RESILIA tissue valved conduit in the United States.
In June 2025, we received a CE Mark for the KONECT RESILIA aortic valved conduit, the first ready-to-implant solution with RESILIA tissue specifically designed for bio-Bentall procedures.
Gross Profit
Our gross profit increased in the three and nine months ended September 30, 2025, primarily driven by our sales growth discussed above. Gross profit as a percentage of net sales decreased for the three and nine months ended September 30, 2025, primarily driven by a 1.1 percentage point negative impact from foreign currency rate fluctuations, including the settlement of foreign currency hedging contracts, for the three months ended September 30, 2025, and higher operational expenses for both the three and nine months ended September 30, 2025.
Selling, General, and Administrative (“SG&A”) Expenses
SG&A expenses increased for the three and nine months ended September 30, 2025, primarily due to (a) higher field-based personnel-related costs in support of our growth strategy initiatives, primarily in the United States (b) increased performance-based compensation expenses, and (b) increased professional services costs to support the transition services agreement. Foreign currency exchange rate fluctuations increased expenses by $7.3 million and $1.9 million during the three and nine months ended September 30, 2025, primarily due to the weakening of United States dollar against the Euro.
Research and Development (“R&D”) Expenses
R&D expenses increased for the three and nine months ended September 30, 2025, primarily due to increased clinical activity related to our recent investments in implantable heart failure management innovations and higher performance-based compensation expense, partially offset by decreased investments in our transcatheter aortic valve innovations.
Certain Litigation Expenses
We incurred certain litigation expenses related to legal proceedings, intellectual property litigation and tax litigation of $90.4 million and $10.8 million during the three months ended September 30, 2025 and 2024, respectively, and $116.8 million and $27.8 million during the nine months ended September 30, 2025 and 2024, respectively (See Note 11 to the Consolidated Condensed Financial Statements).
Change in Fair Value of Contingent Consideration Liabilities
The change in fair value of contingent consideration liabilities resulted in net gain of $12.5 million in the three and nine months ended September 30, 2025. The net gain was primarily due to changes in projected probabilities of milestone achievements. There were no changes in fair value of contingent consideration liabilities recognized in the three and nine months ended September 30, 2024.
Intangible Assets Impairment Charges
Intangible assets impairment charges of $40.0 million in three and nine months ended September 30, 2025 related to full impairment of certain developed technology assets. There were no intangible assets impairment charges recognized in the three and nine months ended September 30, 2024.
Other Operating (Income) Expense
Other operating income, net of $12.5 million and $52.9 million in three and nine months ended September 30, 2025, respectively, included income from a transition services agreement of $12.7 million and $50.5 million, respectively (see Note 4 to the Consolidated Condensed Financial Statements).
Interest Income
Interest income was $38.6 million and $112.5 million for the three and nine months ended September 30, 2025, respectively, and $24.3 million and $56.3 million for the three and nine months ended September 30, 2024, respectively. The increase in interest income was primarily due to a higher average investment balance during the three and nine months ended September 30, 2025.
Loss on Impairment
Loss on impairment of $47.1 million in the nine months ended September 30, 2025 included loss on impairment related to our determination to not exercise an option to acquire one of our VIE investments (see Note 6 to the Consolidated Condensed Financial Statements).
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 attributable to continuing operations was 16.1% and 10.1% for the three months ended September 30, 2025 and 2024, respectively, and 16.1% and 9.2% for the nine months ended September 30, 2025 and 2024, respectively. The increase in the effective rate between the nine months ended September 30, 2025 and 2024 was primarily due to an increase in global minimum tax (“Pillar Two,” as noted below), a decrease in the tax benefit from employee share-based compensation, and a decrease in the benefit from favorable global income tax audit settlements. In addition, the effective rates for the nine months ended September 30, 2025 and 2024 were lower than the federal statutory rate of 21% primarily due to (1) foreign earnings taxed at lower rates, (2) United States federal and California research and development credits, and (3) the tax benefit from employee share-based compensation. The effective rates include a tax benefit (shortfall) from employee share-based compensation attributable to continuing operations of $(0.3) million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively, and $0.8 million and $10.1 million for the nine months ended September 30, 2025 and 2024, respectively.
Many countries are implementing some or all of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting Pillar Two (“Pillar Two”) rules that impose a global minimum tax of 15% on reported profits. Although Pillar Two provides a framework for applying the minimum tax, countries may enact Pillar Two slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar Two. In addition, in January 2025, the United States issued an executive order announcing opposition to aspects of these rules. As countries continue to enact and refine the Pillar Two rules, we will evaluate the potential effects of Pillar Two on our effective tax rate. In 2025, we expect the Pillar Two provisions to result in additional tax expense of approximately $50 million.
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 financial condition and results of operations. We strive to resolve open matters with each tax authority at the examination level and could reach an 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 final outcome with a tax authority may result in a tax liability that is materially different from that reflected in the consolidated 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 believe that adequate amounts of tax and related penalty and interest have been provided for any adjustments that may result from our uncertain tax positions.
In the first quarter of 2022, we executed an Advance Pricing Agreement (“APA”) between Japan and Switzerland covering distribution transactions for tax years 2020 through 2024, and in 2023, we executed an APA between Japan and the United States covering tax years 2020 through 2024. We also executed an APA in the fourth quarter of 2024 between Japan and Singapore covering tax years 2022 through 2026 with roll-back terms to cover the distribution of TAVR products beginning in 2020 and the distribution of Surgical products beginning in 2018. Also in the fourth quarter of 2024, we filed with the Japanese tax authorities an APA renewal application between Japan and the United States covering tax years 2025 through 2029. We filed the APA renewal application with the United States tax authorities in the first quarter of 2025 and are engaged in ongoing discussions.
The audits of our United States federal income tax returns through 2014 have been closed. The IRS audit field work for the 2015 through 2017 tax years was completed during the second quarter of 2021, except for transfer pricing and related matters. The IRS is currently examining the 2018 through 2020 tax years. At September 30, 2025, all material state, local, and foreign income tax matters have been concluded for years through 2015.
During 2021, we received a Notice of Proposed Adjustment (“NOPA”) from the IRS for the 2015 through 2017 tax years relating to transfer pricing involving Surgical/TAVR intercompany royalty transactions between our United States and Switzerland subsidiaries. The NOPA proposed a substantial increase to our United States taxable income, which could result in additional tax expense for the 2015 through 2017 period of approximately $255 million and reflects a departure from a transfer pricing method we had previously agreed upon with the IRS. We disagreed with the NOPA and pursued an administrative appeal with the IRS Independent Office of Appeals (“Appeals”). The Appeals process culminated in the third quarter of 2023 when we and Appeals concluded that a satisfactory resolution of the matter at the administrative level was not possible.
During the fourth quarter of 2023, Appeals issued a notice of deficiency (“NOD”) increasing our 2015 through 2017 United States federal income tax in amounts resulting from the income adjustments previously reflected in the NOPA. The additional tax sought in excess of our filing position is $269.3 million before consideration of interest and a repatriation tax offset.
We plan to vigorously contest the additional tax claimed by the IRS through the judicial process. Final resolution of this matter is not likely within the next 12 months. We believe the amounts previously accrued related to this uncertain tax position are appropriate for a number of reasons, including the interpretation and application of relevant tax laws and accounting standards to our facts and, accordingly, have not accrued any additional amount based on the NOD and other proceedings to date. Nonetheless, the outcome of the judicial process cannot be predicted with certainty, and it is possible that the outcome of that process could have a material impact on our consolidated financial statements. As noted below, similar material tax disputes may arise for the 2018 through 2024 tax years. We made deposits with the IRS of $75 million in November 2022, and $305.1 million in March 2024, to prevent the further accrual of interest on that portion of any additional tax and interest we may ultimately be found to owe while we prepare to contest through the judicial process the IRS's entitlement to any of the additional tax claimed by the IRS. The IRS converted those deposits to advance payments, and, on December 20, 2024, we filed administrative claims for refunds of those payments with the IRS for the 2015 through 2017 tax years. Though the IRS could still deny those refund claims, we are now able to sue for refunds in the appropriate judicial forum even without an IRS denial.
Surgical/TAVR intercompany royalty transactions covering tax years 2018 through 2024 remain subject to IRS examination, and those transactions and related tax positions remain uncertain as of September 30, 2025. We have considered this information, as well as information regarding the NOD and other proceedings described above, in our evaluation of our uncertain tax positions. The impact of these unresolved transfer pricing matters, net of any correlative tax adjustments, may be significant to our consolidated 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.
During the first quarter of 2024, we received a notice of assessment from the Israel Tax Authority (the “ITA”) wherein the ITA claimed that we owe approximately $110 million of tax excluding interest and penalties in connection with a claimed 2017 transfer of intellectual property. On July 31, 2025, the ITA formally informed us that it was withdrawing its 2017 assessment but reserves the right to evaluate whether intellectual property was transferred in later years. We maintain that we did not transfer intellectual property outside of Israel and would vigorously defend that position through administrative proceedings including with appeals if the issue is raised in later years. If necessary, we expect to defend that position through judicial proceedings. During the fourth quarter of 2024, we received a notice of assessment from the ITA claiming that we owe additional tax of approximately $16 million excluding interest and penalties for the 2018 through 2022 tax years based entirely on the collateral impacts of the 2017 assessment. We filed a formal appeal in the first quarter of 2025 and, if necessary, expect to defend its position through judicial proceedings. While the appeals process for the 2018 through 2022 years runs through March 2026, we expect the 2018 through 2022 assessment to also be withdrawn prior to expiration of the appeals process based on the ITA’s conclusion that IP was not transferred in 2017.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act,
modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact to our estimated annual effective rate for 2025 and we are currently evaluating the potential impact on future periods.
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 September 30, 2025, cash and cash equivalents, and short-term investments held in the United States and outside of the United States were $3.4 billion and $438.0 million, respectively.
We have a Five-year Credit Agreement (the “Credit Agreement”) which provides for a $750.0 million multi-currency unsecured revolving credit facility and matures on July 15, 2027. We may increase the amount available under the Credit Agreement by up to an additional $250.0 million in the aggregate and extend the maturity date for an additional year, subject to agreement of the lenders. As of September 30, 2025, no amounts were outstanding under the Credit Agreement.
In June 2018, we issued $600.0 million of 4.3% fixed-rate unsecured senior notes (the “2018 Notes”) due June 15, 2028. We may redeem the 2018 Notes, in whole or in part, at any time and from time to time at specified redemption prices. As of September 30, 2025, we have not elected to redeem any of the 2018 Notes. As of September 30, 2025, the carrying value of the 2018 Notes was $598.2 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 nine months ended September 30, 2025, under the Board authorized repurchase program, we repurchased a total of 11.2 million shares at an aggregate cost of $844.9 million, including pursuant to $750 million accelerated share repurchase agreements executed during the period (see Note 10 to the Consolidated Condensed Financial Statements). As of September 30, 2025, we had remaining authority to purchase $2.1 billion of our common stock under the share repurchase program.
In July 2024, we entered into agreements and plans of mergers to acquire multiple medical device companies for a total aggregate cash purchase price of $1.5 billion, subject to certain adjustments. Three of these transactions closed in 2024, and upon closing we paid $1.1 billion. These three agreements include up to an additional $225.0 million of potential payments upon achievement of certain regulatory, performance, and sales milestones. The remaining agreement is expected to close in 2026 for an aggregate cash purchase price of $500.0 million, subject to certain adjustments, plus up to an additional $445.0 million upon achievement of certain regulatory and sales milestones.
We have purchased options to acquire and have agreed to provide promissory notes to various entities. These arrangements could result in additional cash outlays in the future should we decide to exercise the options or should the entities draw on the promissory notes.
At September 30, 2025, 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, 2024.
Consolidated Cash Flows - For the nine months ended September 30, 2025 and 2024:
Net cash flows provided by operating activities of $1,144.3 million for the nine months ended September 30, 2025, increased $474.5 million over the same period last year primarily due to (1) lower tax payments during the nine months ended September 30, 2025, which included $175.3 million of local tax payments associated with the sale of Critical Care, compared to the nine months ended September 30, 2024, which included a $305.1 million tax deposit we made to mitigate interest on potential tax liabilities we are contesting through the judicial process (see Note 14 to the Consolidated Condensed Financial Statements), and (2) improved operating performance.
Net cash used in investing activities of $514.6 million for the nine months ended September 30, 2025, consisted primarily of net purchases of investments of $198.5 million, capital expenditures of $162.8 million, an issuance of notes receivable of $93.4 million, a payment for a net working capital adjustment of $36.3 million related to the sale of Critical Care, and payment of acquisition options of $19.6 million.
Net cash provided by investing activities of $2.9 billion for the nine months ended September 30, 2024, consisted primarily of the sale of our Critical Care product group for proceeds of $3.9 billion, partially offset by capital expenditures of $202.6 million and net proceeds from investments of $2.3 million.
Net cash used in financing activities of $945.4 million for the nine months ended September 30, 2025, consisted primarily of purchases of treasury stock of $852.8 million and purchase of the remaining noncontrolling interest in a subsidiary of $233.7 million, partially offset by proceeds from stock plans of $141.8 million.
Net cash used in financing activities of $1.0 billion for the nine months ended September 30, 2024, consisted primarily of purchases of treasury stock of $1.2 billion, partially offset by proceeds from stock plans of $150.9 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 sales 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 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, 2024. There have been no significant changes from the information discussed therein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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, 2024. There have been no material 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 September 30, 2025, we had $1,223.2 million of investments in debt securities, of which $66.9 million were long-term. In addition, we had $207.9 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, a decline in the investments' value may occur, resulting in unrealized or realized losses. See Note 5 to the Consolidated Condensed Financial Statements for additional information.
Item 4. Controls and Procedures
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 September 30, 2025. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of September 30, 2025, 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 September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 5. Other Information
In connection with the previously-announced transition of Scott Ullem from his role as the Company’s Chief Financial Officer by midyear 2026, the Company entered into a transition agreement with Mr. Ullem on November 4, 2025 (the “Encore Agreement”). Mr. Ullem will continue to be employed with the Company on a full-time basis through June 30, 2026, and the Encore Agreement provides that Mr. Ullem will be employed with the Company on a reduced schedule as a Strategic Advisor, to provide support for the transition of his duties and on such other matters as the Company may request his assistance, from July 1, 2026 through June 30, 2028 (subject to earlier termination in accordance with the Encore Agreement; the “Encore Period”). As compensation during the Encore Period, Mr. Ullem will be entitled to (A) base salary of $25,000 and a bonus of 45% of such base salary for the first month of the Encore Period, and (B) total base salary of $271,250 for the last twenty-three months of the Encore Period (collectively, “Encore Compensation”). The Encore Agreement terminates Mr. Ullem’s Change-in-Control Severance Agreement with the Company effective June 30, 2026. However, the Encore Agreement also provides that, should the Company terminate Mr. Ullem’s employment due to his death, disability, or without “Cause” (as defined in the Encore Agreement) before June 30, 2028, Mr. Ullem will (so long as he (or his estate) provides the Company with a general release of claims) be entitled to (1) continued payment of his Encore Compensation (as severance) through June 30, 2028, and (2) accelerated vesting of his then-outstanding and unvested stock options, restricted stock units and performance-based restricted stock units granted by us (subject to satisfaction of any applicable performance-based vesting conditions).
The foregoing summary of the Encore Agreement is qualified in its entirety by reference to the full text of the Encore Agreement, which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Part II. Other Information
Item 1. Legal Proceedings
Please see Part I, Item 1, Note 11 to the Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q for a description of our legal proceedings, which is incorporated by reference herein.
Item 1A. Risk Factors
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, 2024. 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 Purchased | Average Price Paid per Share | Total Number of Shares 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) (a) (b) | ||||||||||||||||||||||||||||
| July 1, 2025 through July 31, 2025 | 886,758 | $ | 71.06 | 886,758 | $ | 1,091.5 | ||||||||||||||||||||||||||
| August 1, 2025 through August 31, 2025 | 5,108,557 | 79.05 | 5,108,557 | 687.7 | ||||||||||||||||||||||||||||
| September 1, 2025 through September 30, 2025 | 1,723,262 | 77.87 | 1,723,262 | 2,053.5 | ||||||||||||||||||||||||||||
| Total | 7,718,577 | 77.86 | 7,718,577 | |||||||||||||||||||||||||||||
(a) In August 2024, the Board of Directors approved a stock repurchase program providing for up to $1.5 billion of repurchases of our common stock. In September 2025, the Board of Directors approved an additional $1.5 billion of repurchases under this program. Repurchases under the program may be made on the open market, including pursuant to a Rule 10b5-1 plan, and in privately negotiated transactions. The repurchase program does not have an expiration date.
(b) In August 2025, we entered into a $500.0 million accelerated share repurchase (“ASR”) agreement and received, on August 19, 2025, an initial delivery of 5.1 million shares of our common stock, representing approximately 80 percent of the total contract value. The ASR agreement settled on September 15, 2025 and we received an additional 1.2 million shares of our common stock. Shares purchased pursuant to the ASR agreement are presented in the table above in the periods in which they were received.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the third quarter of 2025, none of our directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.
Item 6. Exhibits
The exhibits listed in the Exhibit Index below are filed, furnished, or incorporated by reference as part of this report on Form 10-Q.
- Represents management contract or compensatory plan.
Filed herewith.
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: | November 5, 2025 | By: | /s/ SCOTT B. ULLEM | ||||||||
| Scott B. Ullem Corporate Vice President, Chief Financial Officer (Principal Financial Officer; Duly Authorized Officer) | |||||||||||
| Date: | November 5, 2025 | By: | /s/ ANDREW M. DAHL | ||||||||
| Andrew M. Dahl Senior Vice President, Corporate Controller (Principal Accounting Officer) |