EW

Edwards is the clear leader in structural heart, and the top line proves it: FY2025 revenue of $6.07B grew +11.5%, driven by TAVR and TMTT, with a fortress 78.0% gross margin and a clean balance sheet (liabilities/equity 0.32x, $2.94B cash, just $598M long-term debt, retained earnings $14.2B). Operating cash flow rebounded +194% to $1.60B and the company is returning capital ($893M of buybacks, shares -1.2%). The pipeline is genuinely productive — FDA approval of SAPIEN 3 for asymptomatic severe aortic stenosis, FDA + CE Mark for the SAPIEN M3 transseptal mitral system, ENCIRCLE and CLASP IIF/PARTNER 3 readouts — and management reinvested 18% of sales into R&D ($1.08B). This is a high-quality compounder, not a turnaround.

The scary-looking numbers are mostly optical. Net income fell -74.3% to $1.07B and diluted EPS dropped -73.7% to $1.83, but FY2024's $4.17B was inflated by the gain on the Critical Care sale to BD (treated as discontinued operations), so the comparison is apples-to-oranges. MD&A attributes the 2025 decline to higher personnel costs, one-time impairments on investments, and elevated litigation expense — items that depress reported EPS below the franchise's true earning power. Operating income, a cleaner read on the ongoing business, fell only -8.3% to $1.26B (20.8% margin), so the underlying engine is intact even as margins softened on 'higher operational expenses.'