Edwards Lifesciences
2022 Annual Report
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For Sarah Sue Morbitzer,
it was always going
to be “game on!”
Sarah Sue was born with Tetralogy of Fallot, and at four
State Richard M. Ross Heart Hospital. The cardiologist
months old underwent open-heart surgery to build the
said she could continue conditioning and practice, but she
wall between her two ventricles and repair two valves.
might need to adjust her workouts and give herself more
Being the daughter of a high school volleyball coach, Sarah
time for recovery. Not wanting to sit out or slow down,
Sue quickly developed a passion for the sport. She lived just
Sarah Sue decided to get her valve replaced over the
15 minutes away from the Ohio State University and
winter holidays. In December of 2020, she received the
dreamed of one day becoming a volleyball player for the
Edwards SAPIEN 3 Transcatheter Pulmonary Valve System
Buckeyes. In 2020, her dream came true. Upon arriving at
with Alterra Adaptive Prestent. To honor her new valve,
campus to begin workouts with her teammates, Sarah Sue
Sarah Sue proudly named it Valerie. Just one month later,
noticed she was having trouble catching her breath during
she played in her first volleyball match wearing scarlet
conditioning. Knowing her heart history, Sarah Sues’s
and grey. After two successful seasons, Sarah Sue earned
athletic trainer sent her to see a cardiologist at the Ohio
an athletic scholarship at Ohio State.
“I always stepped on the court with a lot of heart and passion,
but after I got my valve, it meant even more.”
CorpCorporaoratete IInformnformation
ation
Corporate
Corporate HeadHeadququararters
ters
Edwards Lifesciences Corporation
One Edwards Way, Irvine, California 92614
1-800-4-A-HEART or (949) 250-2500
Board of Directors
Board of Directors
Michael A. Mussallem
Chairman & Chief Executive Officer,
Edwards Lifesciences Corporation
AnnuAnnuaall Meeting
Meeting
The Annual Meeting of Stockholders will be
held on May 11, 2023 at 10:00 am (Pacific) at
the offices of Edwards Lifesciences Corporation.
Stock
Stock SySymbmbooll
Edwards Lifesciences’ stock is traded
on The New York Stock Exchange
(NYSE) under the symbol EW.
Information on the Internet
Information on the Internet
Edwards Lifesciences’ “Investor Relations”
section of our website – ir.edwards.com –
provides access to a wide range of information
including our press releases, SEC filings and
other company information.
Investor Information
Investor Information
Members of the investing public should
contact Investor Relations at (949) 250-2806
or investor_relations@edwards.com.
Corporate Public Relations
Corporate Public Relations
Members of the news media should call
(949) 250-5070.
Transfer Agent
Transfer Agent
Correspondence about shares, stock certificates
and account information may be directed to:
Computershare Investor Services
P.O. Box 30170
College Station, TX 77842-3170
(800) 446-2617
(781) 575-3120/outside U.S.
computershare.com/investor
Independent Registered Public
Independent Registered Public
Accounting Firm
Accounting Firm
PricewaterhouseCoopers LLP
Orange County, CA
Edwards Lifesciences is an affirmative
action, equal opportunity employer.
Kieran T. Gallahue
Former Chairman &
Chief Executive Officer,
CareFusion Corporation
Leslie S. Heisz
Former Managing Director,
Lazard Frères & Co.
Paul A. LaViolette
Managing Partner &
Chief Operating Officer,
SV Health Investors LLC
Donald E. Bobo, Jr.
Corporate Vice President,
Todd J. Brinton, M.D., F.A.C.C.
Corporate Vice President,
Advanced Technology
Chief Scientific Officer
Daveen Chopra
Corporate Vice President,
Transcatheter Mitral
& Tricuspid Therapies
es
Dirksen J. Lehman
Corporate Vice President,
Public Affairs
Jean-Luc Lemercier
Corporate Vice President,
EMEA, Canada, Latin America
& JAPAC
C
Christine Z. McCauley
Corporate Vice President,
Human Resources
Steven R. Loranger
Former Chairman, President
& Chief Executive Officer,
ITT Corporation
Martha H. Marsh
Former President &
Chief Executive Officer,
Stanford Hospital & Clinics
Ramona Sequeira
President,
.S. Business
Global Portfolio Division,
Takeda Pharmaceutical USA, Inc.
da
a
ac u c l S
Nicholas J. Valeriani
Inc.
Former Chief Executive Officer,
West Health Institute
e Officer,
Gary and Mary West Health Institute
Global Supply Chain & Quality
Arnold A. Pinkston
General Counsel
Gary I. Sorsher
Senior Vice President
ent,
Quality & Regulatory Compliance
Katie M. Szyman
Corporate Vice President,
Critical Care
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
Larry L. Wood
Corporate Vice President &
d
Group President, Transcatheter
Aortic Valve Replacement &
d
Surgical Structural Heart
Bernard J. Zovighian
President
nt
Executive Management
Executive Management
Michael A. Mussallem
Joseph Nuzzolese
Chairman & Chief Executive Officer
Corporate Vice President,
Strategy & Corporate Development
Corporate Vice President,
A Letter to Our Shareholders
Leading Edwards Lifesciences has been the greatest privilege of my life.
As I look back on the past two decades, I reflect on many of Edwards’
extraordinary accomplishments – the development of our life-saving
innovations, the strong patient-focused culture we live every day,
and most importantly, the impact we have had on so many patients
around the world. I am proud of our talented and dedicated leadership
team and our employees who have made all this possible.
The day Edwards became an independent company on April 3, 2000, was exciting, but
our future was still uncharted. We were in the very early stages of creating our company
and the technologies that would go on to change the lives of so many. Now, 23 years later,
I am confident as ever that our future is extremely bright.
While the company and our world have grown and changed since that first day at Edwards,
we have never lost sight of why we are here. True to our Credo, which concludes with,
“Helping patients is our life’s work, and life is now,” we have stayed focused on our long-term,
strategic goals and fostered a patient-focused culture that drives all we do. Impressively, our
most recent internal survey found that 93% of our employees consider what is important to
patients when making decisions.
Edwards Lifesciences I 2022 Annual Report
1
Innovation
Pioneer breakthrough
technologies with
compelling evidence
Leadership
Lead groundbreaking
standards of care through
trusted relationships
Focus
Singular focus on the large
unmet needs of structural
heart and critically ill patients
We have continued to partner with clinicians,
regulators, hospitals and health systems to bring
lifesaving therapies to patients around the world.
For example, we have been involved in more than
800,000 transcatheter aortic valve replacement
(TAVR) procedures since we pioneered the
technology more than a decade ago. We have
stayed true to our innovation strategy, even during
the pandemic, and have strategically invested in
research and development. Our global supply
chain has proven resilient, enabling us to meet
physician and patient needs. We have also continued
to grow our talented and dedicated employees –
now stronger than 17,000 worldwide, including
more than 2,000 engineers.
It is gratifying to reflect on all we have achieved
together, but I also know Edwards is just getting
started. We have a leadership team with unmatched
experience who shares my commitment to patients.
We have worked cohesively for many years,
collaborating on Edwards’ strategy, and I am certain
the company will continue to build on our legacy of
patient impact, innovation and growth.
It is this confidence that underpins my decision to
retire in May of this year and step into a different role
at Edwards. I feel proud of the planful transition that
the Board and I have mapped out. I know that my
successor, Bernard Zovighian, is as right for this new
role as he was to lead our successful Transcatheter
Mitral and Tricuspid Therapies (TMTT) business and,
before that, Surgical Structural Heart (where it all
began for Edwards). He cares deeply about patients,
our employees and our company. He brings to the
job a strong strategic mindset, deep experience in
innovation and passion for establishing trusted
partnerships.
Culture and Strategy Led
The strong culture and patient-focused strategy
we have at Edwards requires establishing critical
partnerships based on mutual trust. It requires an
emphasis on quality, integrity and transparency.
It requires talented employees who are committed
to patients, who think creatively and who are
dedicated to lifelong learning. This in turn requires
a workplace where our employees feel they belong,
where they enjoy and value their work, and where
they can be their best.
Through the commitment to our strategy, we are
continuing to generate high-quality scientific evidence
to demonstrate that our life-saving technologies lead
to substantial health and economic benefits.
Innovation Prioritized
Our leading therapies continue to transform patient
care around the world. To help more patients and
further strengthen our long-term leadership position,
we continue to invest in research and development
at a significant rate of 17-18% of sales.
While many companies in our industry try to grow
through diversification and acquisitions, we have stayed
committed to organic growth through innovation in
structural heart and critical care.
We have considerable research underway to demon-
strate the value of our innovative technologies and
hopefully expand the number and type of patients who
benefit from those technologies. As an example, under
current rules, most people receive treatment when they
are diagnosed with a disease, but many patients with
heart valve failure are not eligible to receive treatment
until they display symptoms. Our pivotal trial, EARLY
TAVR, is studying the treatment of severe aortic stenosis
(AS) patients before debilitating symptoms appear and
may help us to determine if there are dangers associ-
ated with waiting to treat these patients. In addition,
enrollment is continuing in PROGRESS, a pivotal trial
studying the treatment of patients with moderate AS.
The global TAVR market will continue to be driven by
greater awareness and advances in new technologies,
as well as indication expansions and increased global
adoption. We expect to help twice as many TAVR
patients by 2028.
2
Edwards Lifesciences I 2022 Annual Report In the face of systemic tensions that delay or deny
treatment to older patients alongside hospital staffing
challenges and patients reluctant to seek care, we have
also taken on several initiatives to ensure that heart
patients get the care they need. And we are encouraged
by how organizations like the American Heart
Association are engaging to help improve the quality
of care delivery for patients who need it.
In TMTT, we are transforming treatment for patients
with severe mitral and tricuspid valve disease. To do this,
we need differentiated therapies, positive clinical trial
results to support approvals and adoption, and a strong
partnership with clinicians to produce real-world
clinical outcomes.
Clinical experience with our therapies is showing
important progress in addressing the unmet needs
of these patients. We recently shared positive results
from the TRISCEND study of our EVOQUE transcatheter
tricuspid valve replacement system. We aim to achieve
approvals for the EVOQUE system in Europe this year
and in the U.S. by the end of 2024. We are pleased to
see continued adoption of the PASCAL repair system
in Europe and the U.S. with more than 10,000 patients
who have now been treated with PASCAL.
In our Surgical business, we are advancing our leader-
ship by identifying and solving critical unmet patient
needs in cardiac surgery. In 2022, we received FDA
approval to introduce our MITRIS RESILIA valve. We will
also continue to broaden the adoption of our flagship
surgical aortic heart valve, INSPIRIS RESILIA, which is
changing the standard of tissue durability in cardiac
surgery.
In Critical Care, we have improved the quality of care
for more than 16 million patients by creating new
technologies, expanding clinical evidence and driving
adoption. We continue to evolve our hemodynamic
monitoring platform, which uses machine learning to
help clinicians predict and prevent hypotension. We
recently introduced connectivity to this monitoring
platform to allow clinicians to access their patients’
continuous blood pressure data on their smartphones.
We believe our opportunity to serve structural heart
and critical care patients will nearly double to
$20 billion by 2028.
Committed Corporate Citizens
The Edwards Lifesciences Foundation has focused on
supporting programs designed to treat underserved
people to reduce heart valve disease, to strengthen the
communities where Edwards’ employees live and work
and to promote employee volunteerism. We also aspire
to have all our employees engage in charitable efforts
that are meaningful to them, and I am proud to share
that the great majority did so in 2022. Our signature
initiative, Every Heartbeat Matters, is focused on
improving the lives of an additional 2.5 million under-
served structural heart and critical care patients by
the end of 2025.
Sustainability, ethical behavior, supporting community
health, and fair and inclusive practices are part of
everything we do at Edwards. Our commitment to
environmental, social and governance (ESG) practices
continue to lead to numerous awards and recognitions,
including the Dow Jones Sustainability World Index for
the third year in a row. While we are honored to receive
accolades, this is not the reason we embrace ESG
practices. We do so because it’s core to our credo and
behaving as a trusted partner is part of our values.
Strong Global Performance
During a Challenging 2022
Though 2022 was still a challenging year for hospitals
and health systems—which had an impact on our
business—the lingering effects of the pandemic are
dissipating, as hospitals rebuild staffing capacity, and
more heart patients seek care. We have also partnered
with clinicians and hospitals to optimize TAVR programs,
leading to significant reductions in the length of
procedures and hospital stays, as well as the number
of staff needed for the procedure.
In 2022, our company grew eight percent on a constant
currency basis versus 2021. Our 2022 adjusted earnings
per share grew 12 percent. Our results fell short of our
expectations and were primarily impacted by hospital
staffing shortages around the globe, and foreign
currency rates that moved significantly during the year.
We received regulatory approvals to introduce our
industry-leading SAPIEN 3 Ultra RESILIA valve in the
U.S., Japan and other key geographies around the world,
and we are proud we have seen strong adoption of this
valve in both countries. RESILIA tissue now serves as the
platform for Edwards’ new class of valves. A recent study
showed positive results for RESILIA tissue at five years
and provides the potential to extend the durability of
all of our valves.
Our next generation PASCAL Precision mitral repair
system received approval in Europe and early approval
in the U.S. to treat patients suffering from degenerative
mitral regurgitation.
3
Edwards Lifesciences I 2022 Annual Report Our innovative therapies and development will
continue to drive strong organic growth in the years
to come, as will our initiatives to improve patient
access to life-saving care.
Looking to the Future
I feel strongly that Edwards’ best days are ahead, and
the company will thrive and grow with Bernard as
CEO. Aside from his already impressive skills and
decades of medtech experience, including eight years
here at Edwards, he will be supported by our expert,
highly engaged board of directors, as well as our stellar
executive team. At the annual meeting in May, I will
stand for election as non-executive chairman of
Edwards’ Board, and I look forward to my continued
engagement in this role.
To our employees, I want to thank you, again,
for everything that you do for our company and
for patients around the world. It has truly been
my greatest honor to be Edwards’ CEO and I look
forward to supporting Edwards for years to come.
Sincerely,
Michael A. Mussallem
Chairman & Chief Executive Officer
More About Bernard
Bernard J. Zovighian is president
of Edwards Lifesciences, and will
become CEO of the company in
May 2023. In his time as president,
he is working closely alongside
Mike Mussallem in engagement
with Edwards’ board of directors,
executive leadership team,
worldwide employees and other
stakeholders to further Edwards’ patient-focused
innovation strategy. Prior to this leadership transition,
Zovighian served since January 2018 as corporate vice
president responsible for the company’s Transcatheter
Mitral and Tricuspid Therapies (TMTT) business. As
the leader for TMTT, Zovighian established a global
organization focused on developing and delivering
a portfolio of therapies designed to change the
standard of care for mitral and tricuspid patients.
Zovighian joined Edwards Lifesciences in January
2015 as vice president and general manager of the
Surgical Structural Heart business, later serving as
corporate vice president of the surgical business
from 2016 until he began leading TMTT. Prior to
joining Edwards, Zovighian held a variety of roles
with increasing levels of responsibility at Johnson
& Johnson (J&J) for nearly 20 years, in roles such
as regional leadership outside of the United States
and worldwide president of one of the company’s
divisions. He has dual master’s degrees in science
and business from Universities of Marseille, France.
This Annual 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. 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 statements made by the Company’s executives, the Company’s future financial and
strategic goals for 2023 and beyond as well as its expectations for the results of research and development and clinical evidence, the timing and impact of new
product introductions, expected patient benefits of new products, and opportunities for growth and stockholder value, and any statements of assumptions
underlying any of the foregoing. 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. Investors are cautioned not to unduly rely on such forward-looking statements. 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 success in developing new products and avoiding manufacturing and quality issues;
clinical trial or commercial results or new product approvals and therapy adoption; the impact of public health crises, including the COVID-19 pandemic; the
impact of domestic and global economic conditions; competitive dynamics 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; 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 Part I, Item 1A in the Form 10-K attached hereto for a discussion of these risks, 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 that 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. “Adjusted” or “underlying” amounts are non-GAAP. Refer to “Non-GAAP Financial
Information” starting on page 11 as well as our IR website under “Historical financial information” for the most directly comparable GAAP financial measure.
Caution: In the U.S., EVOQUE and SAPIEN M3 are investigational devices and are not commercially available.
4
Edwards Lifesciences I 2022 Annual Report 2022 Highlights
2022 Sales by Geographic Region
2022 Sales by Product Line
n United States
n Europe
n Japan
n Rest of World
58%
22%
9%
11%
17%
65%
16%
2%
n TAVR
n Surgical
n Critical Care
n TMTT
Edwards Sales ($ in billions)
$5.2
$5.4
$4.3
$4.4
$1.9
$2.0
$2.3
$2.5
$3.0
$3.4
$3.7
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
800K+
patients treated
with transcatheter
technologies
2,000+ engineers
17,000+
global employees
8% underlying
sales growth
12% adjusted
EPS growth
5
Edwards Lifesciences I 2022 Annual Report Transcatheter Aortic Valve Replacement
Edwards leads the world in the development of new therapies designed for the nonsurgical replacement of heart
valves. The proven SAPIEN 3 system is commercially available in over 75 countries and is an approved treatment
option for all Severe Symptomatic Aortic Stenosis patients including those at low risk to surgery in Europe, the US,
Japan and other countries around the world based on the superiority of outcomes demonstrated in the PARTNER 3
Trial. Building on the benefits of the SAPIEN 3 platform, the SAPIEN 3 Ultra valve with RESILIA tissue technology
is now available in the US and Japan.
The Edwards SAPIEN 3 Ultra transcatheter heart
valve system with RESILIA tissue is built upon
the proven SAPIEN platform featuring the same
tissue technology used in the leading surgical
valve in the US, a ~40 percent taller*, textured
outer skirt designed to further reduce
paravalvular leak.
Its short frame height is designed to facilitate
coronary access, factoring in the future needs of
patients in the treatment of severe symptomatic
aortic stenosis.
The Edwards Pulmonic platform combines the
SAPIEN 3 valve and the Alterra adaptive prestent
to expand transcatheter therapy for congenital
heart disease patients.
Alterra adaptive
prestent and SAPIEN 3
transcatheter heart valve
* Compared to the Edwards SAPIEN 3 valve.
Edwards SAPIEN 3
Ultra RESILIA
transcatheter heart valve
Edwards SAPIEN 3
Ultra transcatheter heart
valve and delivery system
Transcatheter Mitral & Tricuspid Therapies
Edwards’ focused investment in structural heart initiatives has resulted in the development of multiple
breakthrough therapies for patients suffering from mitral and tricuspid disease.
Our PASCAL repair platform delivers differentiated
transcatheter leaflet repair for patients with mitral
and tricuspid regurgitation. Through continuous
innovation coupled with our high touch procedural
and imaging support, the PASCAL system enables
our physician partners to optimize clinical
outcomes for their patients.
The EVOQUE tricuspid replacement system
expands our treatment options for patients
with tricuspid valve disease, providing a new
transcatheter therapy for patients with limited
options today. SAPIEN M3 and EVOQUE Eos mitral
valve replacement systems are designed to treat
patients with mitral valve disease. We are advancing
our clinical experience with these mitral and
tricuspid replacement therapies through continued
enrollment in pivotal trials and clinical studies.
* Investigational device. Limited to investigational use only.
Edwards
PASCAL
repair system
Edwards EVOQUE*
tricuspid replacement
system
Edwards
Cardioband**
tricuspid
reconstruction
system
The Cardioband tricuspid reconstruction
system is designed to provide individualized
annular reduction with real-time confirmation
of results, leaving options open for future
intervention if required.
** CE Mark in EU. Investigational device and not available
for sale in the US.
6
Edwards Lifesciences I 2022 Annual Report
Surgical Structural Heart
Edwards Lifesciences has a proven commitment to ongoing innovation in surgical structural heart solutions,
to advance the state of the art and put better outcomes within reach. Today’s RESILIA tissue portfolio
represents the best of creative scientific minds coming together to address the unmet needs and satisfy
patient demands for better surgical options.
The market-leading INSPIRIS RESILIA aortic
valve is right for today, and ready for tomorrow.
This valve features RESILIA tissue, a bovine
pericardial tissue with advanced anti-calcification
properties. Unlike other valves, the INSPIRIS valve
is specifically designed to deliver a controlled and
predictable expansion during valve-in-valve
deployment, providing a patient lifetime
management solution for the surgeon.
KONECT RESILIA aortic valved conduit is
Edwards Lifesciences’ class of resilient RESILIA
tissue valves. This ready-to-implant aortic
valved conduit helps patients maintain their
active lifestyles and reduces the complexity
of bio-Bentall procedures.
The MITRIS RESILIA mitral
valve is built on the
trusted Carpentier-Edwards
PERIMOUNT valve platform
MITRIS RESILIA
mitral valve
with RESILIA tissue and an
enhanced delivery experience.
Cobalt chromium bands
provide good visibility under fluoroscopy for
easy identification of the landing zone for
potential future transcatheter interventions.
This valve handles the pressure of the mitral
position and allows patients to live without
the quality-of-life compromises required
with mechanical valves.
INSPIRIS RESILIA
aortic valve
KONECT RESILIA
aortic valved conduit
Critical Care
Edwards is the leader in smart hemodynamic monitoring solutions including monitoring platforms,
predictive software, and sensors ranging from invasive to noninvasive, all of which play an important role
in patient recovery. This portfolio of advanced hemodynamic solutions helps clinicians make proactive
decisions for individualized patient care. All monitoring solutions are offered on our HemoSphere monitor,
which brings pressure, flow, and tissue oximetry to a single screen.
Acumen Hypotension Prediction Index software
is a first-of-its-kind predictive software developed
with machine learning. It detects hemodynamic
instability and hypotension up to 15 minutes
before it occurs and enables clinicians to prevent
or treat hypotension. Hypotension is associated
with post-operative complications including acute
kidney injury and myocardial injury.
Acumen Assisted Fluid Management software
is our second software developed with machine
learning. This software predicts if a patient is fluid
responsive, and is designed to help keep patients
in the optimal fluid range.
Our latest Smart Recovery solutions, such as
Acumen IQ sensor and Acumen IQ noninvasive
finger cuff, unlocks our predictive software and
provide clinicians advanced hemodynamic
parameters and decision support to help
them stay ahead of their patient’s rapidly
evolving status.
ForeSight Elite
tissue oximetry
sensor
Our ForeSight tissue oximetry sensor
helps clinicians monitor for low oxygen
levels in the brain or tissue, which can
cause significant complications if left
untreated. With the edition of ForeSight
sensor to our HemoSphere monitor,
Edwards became the first to offer clinicians
the ability to monitor the heart and the
brain from one screen.
HemoSphere advanced
monitoring platform
with HPI software
Acumen IQ
finger cuff
Acumen IQ
sensor
7
Edwards Lifesciences I 2022 Annual Report
Our Aspirations – The Heartbeat of Edwards
At Edwards, our Credo defines our culture, strategic priorities, and our vision for sustainability and long-term
value creation. Our environmental, social and governance (ESG) or sustainability goals are closely aligned with
our corporate aspirations and are intended to address those topics that have been assessed to be of the most
importance to Edwards and its stakeholders.
Transforming patient lives with
breakthrough medical technologies
Excelling as a trusted partner through
distinguished quality and integrity
Edwards is driven by a passion to help patients, partnering
with clinicians to develop innovative technologies in the
areas of structural heart disease and critical care monitoring.
We put patients first, working to produce better
technologies that enable better outcomes for patients.
Edwards conducts business ethically and with integrity,
providing the highest level of care and respect for our
partners. We are committed to the quality and safety
of our products, driving innovation and promoting
resource efficiency.
Fostering an inclusive culture where
all employees grow and thrive
Fulfilling our mission to help patients requires a strong,
healthy and talented workforce. Edwards recruits top
candidates, offers employee wellness and engagement
programs and fosters a diverse and inclusive culture to
help employees deliver their best.
Passionate engagement that
strengthens our communities
Delivering exceptional
shareholder value
Edwards is committed to strengthening the health of
our global communities. With patients as our top priority,
we work to increase access to our innovative therapies,
improve efficiency of healthcare processes, improve
awareness of and treatment for life-threatening diseases
and provide opportunities for our employees to give back.
Through all of our sustainability initiatives and delivering
on our focused company strategy, Edwards is positioned
for long-term profitability that will benefit our stakeholders
and also our bottom line.
8
Edwards Lifesciences I 2022 Annual Report Edwards Lifesciences is the global leader of
patient-focused medical innovations for structural heart
disease and critical care monitoring. Driven by a passion
for patients, the company is dedicated to improving and
enhancing lives through partnerships with clinicians and
stakeholders across the global healthcare landscape.
10
Non-GAAP Financial Information
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles
(“GAAP”), the Company uses non-GAAP historical financial
measures. Management makes adjustments to the GAAP
measures for items (both charges and gains) that (a) do not
reflect the core operational activities of the Company, (b) are
commonly adjusted within the Company’s industry to enhance
comparability of the Company’s financial results with those of
its peer group, or (c) are inconsistent in amount or frequency
between periods (albeit such items are monitored and controlled
with equal diligence relative to core operations). The Company
uses the term “adjusted sales” or “underlying growth rate”when
referring to non-GAAP sales and sales growth information, which
excludes currency exchange rate fluctuations, the conversion
to a consignment inventory system for surgical structural heart
(“Surgical”), and the positive impact of transcatheter aortic
valve replacement (“TAVR”) stocking sales in Germany and
the negative impact of de-stocking. The Company uses the
term “adjusted” to also exclude intellectual property litigation
expenses, fair value adjustments to contingent consideration
liabilitites arising from acquisitions, amortization of intangible
assets, a significant program discontinuation, significant
charges associated with TAVR inventory write offs, the
conversion to a consignment inventory for Surgical, the positive
impact of TAVR stocking sales in Germany and the negative
impact of de-stocking, impairment of long-lived assets, pension
curtailment gains, the purchase of intellectual property, and the
impact from implementation of tax law changes and settlements.
Management uses non-GAAP financial measures internally
for strategic decision making, forecasting future results, and
evaluating current performance. These non-GAAP financial
measures are used in addition to, and in conjunction with,
results presented in accordance with GAAP and reflect an
additional way of viewing aspects of the Company’s operations
by investors that, when viewed with its GAAP results, provide a
more complete understanding of factors and trends affecting the
Company’s business and facilitate comparability to historical
periods.
Non-GAAP financial measures are not prepared in accordance
with GAAP; therefore, the information is not necessarily
comparable to other companies and should be considered as
a supplement to, and not as a substitute for, or superior to,
the corresponding measures calculated in accordance with
GAAP. A reconciliation of non-GAAP historical financial
measures to the most comparable GAAP measure is provided
in the tables below.
Fluctuations in currency exchange rates impact the comparative
results and sales growth rates of the Company’s underlying
business. Management believes that excluding the impact of
foreign exchange rate fluctuations from its sales growth provides
investors a more useful comparison to historical financial results.
Guidance for sales and sales growth rates is provided on an
“underlying basis,” and projections for diluted earnings per
share, net income and growth, gross profit margin, taxes, and
free cash flow are also provided on a non-GAAP basis, as adjusted,
for the items identified above due to the inherent difficulty in
forecasting such items without unreasonable effort. The
Company is not able to provide a reconciliation of the non-GAAP
guidance to comparable GAAP measures due to the unknown
effect, timing, and potential significance of special charges or
gains, and management’s inability to forecast charges associated
with future transactions and initiatives.
Management considers free cash flow to be a liquidity measure
which provides useful information to management and investors
about the amount of cash generated by business operations,
after deducting payments for capital expenditures, which can
then be used for strategic opportunities or other business
purposes including, among others, investing in the Company’s
business, making strategic acquisitions, strengthening the
balance sheet, and repurchasing stock.
Adjusted Net Sales
Twelve months ended December 31 (in millions)
GAAP Net Sales
Impact of Surgical consignment
Impact of Germany stocking
Adjusted Net Sales
Note: Numbers may not calculate due to rounding.
2022
2021
2020
2019
2018
$5,382.4
–
–
$5,232.5
–
–
$4,386.3
–
–
$4,348.0
–
–
$3,722.8
82.5
8.0
$5,382.4
$5,232.5
$4,386.3
$4,348.0
$3,813.3
11
Edwards Lifesciences I 2022 Annual Report
Reconciliation of GAAP to Adjusted Net Income
Twelve months ended December 31 (in millions, except per share data)
GAAP Net Income
Non-GAAP adjustments:
Intellectual property litigation expenses, net
Change in fair value of contingent consideration liabilities, net
Amortization of intangible assets
Program discontinuation
Litigation settlement
TAVR inventory write off
Surgical consignment conversion
TAVR Germany stocking sales
Impairment of long-lived assets
Pension curtailment gain
Purchased in-process research and development
Impact from U.S. tax legislation
Tax audit settlements
2022
2021
2020
2019
2018
$1,521.9
$1,503.1
$823.4
$1,046.9
$722.2
11.9
(35.0)
4.8
47.0
–
–
–
–
–
–
–
–
–
15.5
(121.6)
6.9
–
–
–
–
–
–
–
–
–
–
28.5
12.3
4.6
–
305.1
–
–
–
–
–
–
–
–
25.2
(7.1)
4.0
–
–
55.2
–
–
40.6
–
18.1
–
–
26.4
(8.0)
2.4
–
137.5
–
54.7
4.7
109.3
(6.3)
–
(2.5)
(36.1)
Adjusted Net Income
$1,550.6
$1,403.9
$1,173.9
$1,182.9
$1,004.3
Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
GAAP Diluted Earnings Per Share
$2.44
$2.38
$1.30
$1.64
$1.13
Non-GAAP adjustments:
Intellectual property litigation expenses, net
Change in fair value of contingent consideration liabilities
Amortization of intellectual property
Program discontinuation
Litigation settlement
TAVR inventory write off
Surgical consignment conversion
TAVR Germany stocking sales
Impairment of long-lived assets
Pension curtailment gain
Purchased in-process research and development
Tax audit settlements
Adjusted Diluted Earnings Per Share
Adjusted Free Cash Flow
Twelve months ended December 31 (in millions)
Net cash provided by operating activities
Capital expenditures
Litigation settlements
Tax audit settlement
Repatriation tax payments
Adjusted Free Cash Flow
Adjusted Net Sales Growth
Twelve months ended December 31
GAAP Net Sales Growth Rate
Impact of Surgical consignment
Impact of Germany stocking
Impact of CASMED acquisition
Impact of foreign exchange
Adjusted Net Sales Growth Rate
Note: Numbers may not calculate due to rounding.
0.03
(0.06)
–
0.07
–
–
–
–
–
–
–
–
0.02
(0.19)
0.01
–
–
–
–
–
–
–
–
–
0.05
0.02
0.01
–
0.48
–
–
–
–
–
–
–
0.04
(0.01)
0.01
–
–
0.09
–
–
0.06
–
0.03
–
0.04
(0.01)
–
–
0.21
–
0.09
0.01
0.17
(0.01)
–
(0.06)
$2.48
$2.22
$1.86
$1.86
$1.57
2022
2021
2020
2019
2018
$1,218.2
(244.6)
–
–
–
$1,732.1
(325.8)
–
–
–
$1,054.3
(407.0)
86.4
–
–
$1,182.9
(254.4)
138.3
–
–
$926.7
(238.7)
–
56.7
41.0
$973.6
$1,406.3
$733.7
$1,066.8
$785.7
2022
2.9%
0.0%
0.0%
0.0%
4.8%
7.7%
2021
2020
2019
19.3%
0.0%
0.0%
0.0%
(1.5%)
17.8%
0.9%
0.0%
0.0%
0.0%
(0.3%)
0.6%
16.8%
(2.5%)
(0.3%)
(0.5%)
1.8%
15.3%
2018
8.4%
2.4%
0.3%
0.0%
(1.1%)
10.0%
12
Edwards Lifesciences I 2022 Annual Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
For the Fiscal Year Ended December 31, 2022
OR
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
(State or other jurisdiction of
incorporation or organization)
36-4316614
(I.R.S. Employer
Identification No.)
One Edwards Way Irvine California 92614
(Address of Principal Executive Offices) (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 Symbols(s)
Common Stock, par value $1.00 per share
EW
Name of each exchange on which
registered:
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act. Yes ‘ No È
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 È 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 È 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 È
Non-accelerated filer ‘
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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report È.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recover analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2022 (the last trading day of the
registrant’s most recently completed second quarter): $58,453,646,002 based on the closing price of the registrant’s common stock on the
New York Stock Exchange. This calculation does not reflect a determination that persons are affiliates for any other purpose.
The number of shares outstanding of the registrant’s common stock, $1.00 par value, as of January 31, 2023, was 608,313,396.
Documents Incorporated by Reference
Portions of the registrant’s proxy statement for the 2023 Annual Meeting of Stockholders (to be filed within 120 days of December 31,
2022) are incorporated by reference into Part III, as indicated herein.
[THIS PAGE INTENTIONALLY LEFT BLANK]
EDWARDS LIFESCIENCES CORPORATION
Form 10-K Annual Report—2022
Table of Contents
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
13
23
24
24
24
25
26
26
41
44
101
101
101
101
102
102
102
102
102
103
105
106
[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
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. 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 sections. These statements include, among other things, the expected
impact of COVID-19 on our business, the expected impact of macroeconomic conditions on our business, any
predictions, opinions, expectations, plans, strategies, objectives and any statements of assumptions underlying
any of the foregoing relating to the our 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: our success in
developing new products and avoiding manufacturing and quality issues; clinical trial or commercial results or
new product approvals and therapy adoption; the impact of public health crises, including the COVID-19
pandemic; the impact of domestic and global economic conditions; competitive dynamics 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; 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 Part I, Item 1A below, 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 United States 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.
WEBSITE REFERENCES
In this Annual Report on Form 10-K, we make references to our website at www.edwards.com. References to our
website through this Form 10-K are provided for convenience only and the content of our website does not
constitute a part of, and shall not be deemed incorporated by reference into, this Annual Report on Form 10-K.
1
Item 1.
Business
Overview
Edwards Lifesciences Corporation is 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. Edwards
Lifesciences has been a leader in our field for over six decades. Since our founder, Lowell Edwards, first
dreamed of using engineering to address diseases of the human heart, we have steadily built a company on the
premise of imagining, building, and realizing a better future for patients.
A pioneer in the development of heart valve therapies, we are the world’s leading manufacturer of heart
valve systems and repair products used to replace or repair a patient’s diseased or defective heart valve. Our
innovative work in heart valves encompasses both surgical and transcatheter therapies for heart valve
replacement and repair. In addition, our robust pipeline of future technologies is focused on the less invasive
repair or replacement of the mitral and tricuspid valves of the heart, which are more complex and more
challenging to treat than the aortic valve that is currently the focus of many of our commercially approved valve
technologies. We are also a global leader in hemodynamic and noninvasive brain and tissue oxygenation
monitoring systems used to measure a patient’s cardiovascular function in the hospital setting.
Cardiovascular disease is the number-one cause of death in the world and is the top disease in terms of
health care spending in nearly every country. Cardiovascular disease is progressive in that it tends to worsen over
time and often affects the structure of an individual’s heart.
Patients undergoing treatment for cardiovascular disease can be treated with a number of our medical
technologies, which are designed to address individual patient needs with respect to disease process,
comorbidities, and health status. For example, an individual with a heart valve disorder may have a faulty valve
that is affecting the function of his or her heart or blood flow throughout his or her body. A cardiac surgeon may
elect to remove the valve and replace it with one of our bioprosthetic surgical tissue heart valves or surgically
re-shape and repair the faulty valve with an Edwards Lifesciences annuloplasty ring. Alternatively, a clinician
(typically an interventional cardiologist) may implant an Edwards Lifesciences transcatheter valve or repair
system via a catheter-based approach that does not require traditional open-heart surgery and can be done while
the heart continues to beat. Patients in the hospital setting, including high-risk patients in the operating room or
intensive care unit, are candidates for having their cardiac function or fluid levels monitored by our Critical Care
products through multiple monitoring options, including noninvasive and minimally-invasive technologies.
These technologies enable proactive clinical decisions while also providing the opportunity for improving
diagnoses and developing individualized therapeutic management plans for patients.
Corporate Background
Our principal executive offices are located at One Edwards Way, Irvine, California 92614. The telephone
number at that address is (949) 250-2500. We make available, free of charge on our website located at
www.edwards.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and any amendments to those reports, as soon as reasonably practicable after filing such reports with
the Securities and Exchange Commission (“SEC”). The contents of our website are not incorporated by reference
into this report.
Edwards Lifesciences’ Product and Technology Offerings
The following discussion summarizes the main areas of products and technologies we offer to treat
advanced cardiovascular disease. Our products and technologies are categorized into four main areas:
Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical Structural
2
Heart, and Critical Care. For more information on net sales from these four main areas, see “Net Sales by
Product Group” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
Transcatheter Aortic Valve Replacement
We are the global leader in transcatheter heart valve replacement technologies designed for the minimally-
invasive replacement of aortic heart valves. The Edwards SAPIEN family of valves, including Edwards SAPIEN
XT, the Edwards SAPIEN 3, the Edwards SAPIEN 3 Ultra, and the Edwards SAPIEN 3 Ultra RESILIA
transcatheter heart valves, and their respective delivery systems, are used to treat heart valve disease using
catheter-based approaches for patients who have severe symptomatic aortic stenosis and certain patients with
congenital heart disease. Delivered while the heart is beating, these valves can enable patients to experience a
better quality of life sooner than patients receiving traditional surgical therapies. We began offering our
transcatheter aortic heart valves to patients commercially in Europe in 2007, in the United States in 2011, and in
Japan in 2013. Supported by extensive customer training and service, and a growing body of compelling clinical
evidence, our SAPIEN family of transcatheter aortic heart valves are the most widely prescribed transcatheter
heart valves in the world.
Sales of our transcatheter aortic valve replacement products represented 65% of our net sales in each of
2022, 2021, and 2020, respectively.
Transcatheter Mitral and Tricuspid Therapies
We continue to make significant investments in the development of transcatheter heart valve repair and
replacement technologies designed to treat mitral and tricuspid valve diseases. While many of these technologies
are in development and clinical phases, the PASCAL PRECISION and Cardioband transcatheter valve repair
systems are commercially available in Europe for mitral and tricuspid valve repair. As of 2022, the PASCAL
PRECISION system is also commercially available in the U.S. for degenerative mitral regurgitation patients. The
PASCAL PRECISION system addresses the needs of patients with mitral or tricuspid regurgitation through leaflet
approximation, while the Cardioband system enables clinicians to reduce the valve’s annulus and lower
regurgitation. In addition to transcatheter repair, we believe transcatheter replacement is key to unlocking the full
mitral and tricuspid opportunity. We believe our two-platform mitral replacement strategy positions us for
leadership in the mid-to-long term. SAPIEN M3 is based on the proven SAPIEN valve while EVOQUE Eos is
designed specifically for mitral patients. For tricuspid valve replacement, our EVOQUE system is also sub
30-French, and available in a variety of valve sizes to enable treatment in a wide range of patient anatomies.
Surgical Structural Heart
We are innovating in the field of cardiac surgical therapies to improve the quality of life for patients. Our
RESILIA tissue, with published clinical data showing 0% structural valve deterioration through five years1, is
helping us redefine tissue durability standards. Our latest innovation, the INSPIRIS RESILIA aortic valve, is built
on our PERIMOUNT platform, offering RESILIA tissue and VFit technology. INSPIRIS is the leading aortic
surgical valve in the world. Sales of our surgical therapies in the United States also continue to gain traction with
KONECT RESILIA, the first pre-assembled, aortic tissue valved conduit.
The MITRIS RESILIA valve, our newest mitral valve incorporating our latest tissue technology, is now
commercially available in both the U.S. and Japan. We believe the demand for surgical structural heart therapies
is growing worldwide, and that our innovation strategy will continue to strengthen our leadership and positive
impact on patients.
1 Bavaria, et al. Five-year Outcomes of the COMMENCE trial investigating Aortic Valve Replacement with a
Bioprosthetic Valve with a Novel Tissue. The Society of Thoracic Surgeons 2021 Annual Meeting; Bartus, et
al. Final 5-year outcomes following aortic valve replacement with RESILIA tissue bio prosthesis. European
Journal of Cardio-Thoracic Surgery, 2020.
3
Sales of our surgical tissue heart valve products represented 15%, 15%, and 16% of our net sales in 2022,
2021, and 2020, respectively.
Critical Care
We are the world leader in advanced hemodynamic monitoring systems used to measure a patient’s heart
function and fluid status in surgical and intensive care settings. Edwards’ complete hemodynamic portfolio helps
clinicians make proactive clinical decisions that can improve patient recovery. The portfolio includes the
minimally-invasive FloTrac and Acumen IQ sensors, the noninvasive ClearSight and Acumen IQ cuffs, and the
ForeSight noninvasive tissue oximetry sensor. We also support clinical needs with our well-established
Swan-Ganz pulmonary artery catheters and arterial pressure monitoring products. Compatible with our portfolio
of sensors and catheters, the HemoSphere monitoring platform displays valuable physiological information. Our
first predictive algorithm, Acumen Hypotension Prediction Index software, alerts clinicians in advance of a
patient developing dangerously low blood pressure. Our latest algorithm, Acumen Assisted Fluid Management
software, provides patient-specific fluid suggestions to help keep patients in an optimal range during surgery.
Competition
The medical technology industry is highly competitive. We compete with divisions of larger companies as
well as smaller companies that offer competitive product lines in certain geographies in which we operate. We
also compete with both established and newer technologies that target the patients served by our products. New
product development and technological change characterize the areas in which we compete. Our present or future
products could be rendered obsolete or uneconomical as a result of technological advances by one or more of our
present or future competitors or by other therapies, including drug therapies. We believe we hold leadership
positions because we develop and produce safe and effective therapies supported by rigorous clinical studies with
extensive data and with innovative features that enhance patient benefit, product performance, and reliability;
these superior clinical outcomes are in part due to the level of customer and clinical support we provide.
The cardiovascular segment of the medical technology industry is dynamic and subject to significant change
due to cost-of-care considerations, regulatory reform, industry and customer consolidation, and evolving patient
needs. The ability to provide products and technologies that demonstrate value and improve clinical outcomes is
becoming increasingly important for medical technology manufacturers.
We believe that we are a leading global competitor in each of our product lines. In Transcatheter Aortic
Valve Replacement, our primary competitors include Medtronic PLC and Abbott Laboratories (“Abbott”). In
Transcatheter Mitral and Tricuspid Therapies, our primary competitor is Abbott, and there are a considerable
number of large and small companies with development efforts in these fields. In Surgical Structural Heart, our
primary competitors include Medtronic PLC, Abbott, and Artivion, Inc (formerly CryoLife). In Critical Care, we
compete primarily with a variety of companies in specific product lines including ICU Medical, Inc., PULSION
Medical Systems SE, a subsidiary of Getinge AB, Cheetah Medical, Inc., a subsidiary of Baxter International,
and LiDCO Group PLC, a subsidiary of Masimo Corporation.
Sales and Marketing
Our portfolio includes some of the most recognizable cardiovascular device product brands in treating
structural heart disease today. We have a number of product lines that require sales and marketing strategies
tailored to deliver high-quality, cost-effective products and technologies to customers worldwide. Because of the
diverse global needs of the population that we serve, our distribution system consists of several direct sales forces
as well as independent distributors. We are not dependent on any single customer and no single customer
accounted for 10% or more of our net sales in 2022.
To ensure optimal outcomes for patients, we conduct educational symposia and best practices training for
our physician, hospital executive, service line leadership, nursing, and clinical-based customers. We rely
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extensively on our sales and field clinical specialist personnel who work closely with our customers in hospitals.
Field clinical specialists routinely attend procedures where Edwards’ products are being used in order to provide
guidance on the use of our devices, thereby enabling physicians and staff to reach expert proficiency and deliver
positive patient outcomes. Our customers include physicians, nurses, and other clinical personnel, but can also
include decision makers such as service line leaders, material managers, biomedical staff, hospital administrators
and executives, purchasing managers, and ministries of health. Also, for certain of our product lines and where
appropriate, our corporate sales team actively pursues approval of Edwards Lifesciences as a qualified supplier
for hospital group purchasing organizations (“GPOs”) that negotiate contracts with suppliers of medical products.
Additionally, we have contracts with a number of United States and European national and regional buying
groups, including healthcare systems and Integrated Delivery Networks. Where we choose to market our
products is also influenced by the existence of, or potential for, adequate reimbursement to hospitals and other
providers by national healthcare systems.
United States. In the United States, we sell substantially all of our products through our direct sales forces.
In 2022, 58% of our net sales were derived from sales to customers in the United States.
Outside of the United States. In 2022, 42% of our net sales were derived outside of the United States
through our direct sales forces and independent distributors. Of the total sales outside of the United States, 52%
were in Europe, 21% were in Japan, and 27% were in Rest of World. We sell our products in approximately 100
countries, including Japan, Germany, France, United Kingdom, Italy, China, and Canada. A majority of the sales
and marketing approach outside of the United States is direct sales, although it varies depending on each
country’s size and state of development.
Raw Materials and Manufacturing
We operate manufacturing facilities in various geographies around the world. We manufacture our
Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid technologies, and Structural
Surgical Heart products primarily in the United States (California and Utah), Singapore, Costa Rica, and Ireland.
We manufacture our Critical Care products primarily in the Dominican Republic and Puerto Rico.
We use a diverse and broad range of raw and organic materials in the design, development, and manufacture
of our products. We manufacture our non-implantable products from fabricated raw materials including resins,
chemicals, electronics, and metals. Most of our replacement heart valves are manufactured from natural tissues
harvested from animal tissue as well as fabricated materials. We purchase certain materials and components used
in manufacturing our products from external suppliers. In addition, we purchase certain supplies from single
sources for reasons of sole source availability or constraints resulting from regulatory requirements.
We work with our suppliers to mitigate risk and seek continuity of supply while maintaining quality and
reliability. Alternative supplier options are generally considered, identified, and approved for materials deemed
critical to our products, although we do not typically pursue immediate regulatory qualification of alternative
sources due to the strength of our existing supplier relationships and the time and expense associated with the
regulatory validation process.
We comply with all current global guidelines regarding risks for products incorporating animal tissue
intended to be implanted in humans. We follow rigorous sourcing and manufacturing procedures intended to
safeguard humans from potential risks associated with diseases such as bovine spongiform encephalopathy
(“BSE”). We obtain bovine tissue used in our pericardial tissue valve products only from sources within the
United States and Australia, where strong control measures and surveillance programs exist. In addition, bovine
tissue used in our pericardial tissue valve products is from tissue types considered by global health and regulatory
organizations to have shown no risk of infectibility. Our manufacturing and sterilization processes are designed
to render tissue biologically safe from all known infectious agents and viruses.
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Quality Assurance
We are committed to providing quality products to our patients and have implemented modern quality
systems and concepts throughout the organization. The quality system starts with the initial design concept, risk
management, and product specification, and continues through the design of the product, packaging and labeling,
and the manufacturing, sales, support, and servicing of the product. The quality system is intended to design
quality into the products and uses continuous improvement concepts, including Lean/Six Sigma principles,
throughout the product lifecycle.
Our operations are frequently inspected by the many regulators that oversee medical device manufacturing,
including the United States Food and Drug Administration (“FDA”), European Notified Bodies, and other
regulatory entities. The medical technology industry is highly regulated and our facilities and operations are
designed to comply with all applicable quality systems standards, including the International Organization for
Standardization (“ISO”) 13485. These standards require, among other items, quality system controls that are
applied to product design, component material, suppliers, and manufacturing operations. These regulatory
approvals and ISO certifications can be obtained only after a successful audit of a company’s quality system has
been conducted by regulatory or independent outside auditors. Periodic reexamination by an independent outside
auditor is required to maintain these certifications.
Environmental, Health, and Safety
We are committed to providing a safe and healthy workplace and complying with all relevant regulations
and medical technology industry standards. Through our corporate and site level Environmental, Health, and
Safety functions, we establish and monitor programs to reduce pollution, prevent injuries, and maintain
compliance with applicable regulations. In order to measure performance, we monitor and report on a number of
metrics, including regulated and non-regulated waste disposal, energy usage, water consumption, air toxic
emissions, and injuries from our production activities. Each of our manufacturing sites is evaluated regularly
with respect to a broad range of Environmental, Health, and Safety criteria.
Research and Development
In 2022, we made significant investments in research and development as we worked to develop therapies
that we believe have the potential to change the practice of medicine. Research and development spending
increased 5% year over year, representing 18% of 2022 sales. This increase was primarily the result of significant
investments in our transcatheter structural heart programs, including an increase in clinical research for our
mitral and tricuspid therapies. We are engaged in ongoing research and development to deliver clinically
advanced new products, to enhance the effectiveness, ease of use, safety, and reliability of our current leading
products, and to expand the applications of our products as appropriate. We focus on opportunities within
specific areas of structural heart disease and critical care monitoring.
A considerable portion of our research and development investment includes clinical trials and the
collection of evidence that provide data for use in regulatory submissions, and required post-market approval
studies involving applications of our products. Our investment in clinical studies also includes outcomes and
cost-effectiveness data for payers, clinicians, and healthcare systems.
In Transcatheter Aortic Valve Replacement, we are developing new products to further improve and
streamline transcatheter aortic heart valve replacement procedures.
In Transcatheter Mitral and Tricuspid Therapies, we are making significant investments in innovation and
clinical evidence to develop technologies designed to treat mitral and tricuspid valve diseases. In addition to our
internally developed programs, we have made investments in several companies that are independently
developing minimally-invasive technologies to treat structural heart diseases.
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Our Surgical Structural Heart development programs include innovative platforms for patients who are best
treated surgically, specifically active patients and patients with more complex combined procedures.
In our Critical Care product line, we are pursuing the development of a variety of decision support solutions
for our clinicians. This includes next-generation noninvasive and minimally-invasive hemodynamic monitoring
systems, and a next-generation monitor platform. We are also developing a decision support software suite with
advanced algorithms for proactive hemodynamic management, including a semi-closed loop system for
standardized management of patient fluid levels. Lastly, we are developing a connectivity platform that will offer
clinicians additional clinical support, remote monitoring capability, analytics, and insights for their patients’
hemodynamic status.
Our research and development activities are conducted primarily in facilities located in the United States
and Israel. Our experienced research and development staff are focused on product design and development,
quality, clinical research, and regulatory compliance. To pursue primary research efforts, we have developed
alliances with several leading research institutions and universities, and also work with leading clinicians around
the world in conducting scientific studies on our existing and developing products.
Proprietary Technology
Patents, trademarks, and other proprietary rights are important to the success of our business. We also rely
upon trade secrets, know-how, continuing innovations, licensing opportunities, and non-disclosure agreements to
develop and maintain our competitive position.
We own or have rights to a substantial number of patents and have patent applications pending both in the
United States and in foreign countries. We continue to innovate and file new patent applications to protect our
new products and technologies.
Additionally, we are a party to license agreements with various third parties pursuant to which we have
obtained, for varying terms, the exclusive or non-exclusive rights to certain patents held by such third parties in
consideration for cross-licensing rights and/or royalty payments. We have also licensed certain patent rights to
others.
We undertake reasonable measures to protect our patent rights, including monitoring the products of our
competitors for possible infringement of our patents. Litigation has been necessary to enforce certain patent
rights held by us, and we plan to continue to defend and prosecute our rights with respect to such patents.
Moreover, we own certain United States registered trademarks used in our business. Many of our
trademarks have also been registered for use in certain foreign countries where registration is available and where
we have determined it is commercially advantageous to do so.
Government Regulation and Other Matters
Our products and facilities are subject to regulation by numerous government agencies, including the FDA,
European Union member states competent authorities, and the Japanese Pharmaceuticals and Medical Devices
Agency, to confirm compliance with the various laws and regulations governing the development, testing,
manufacturing, labeling, marketing, and distribution of our products.
We are also governed by federal, state, local, and international laws of general applicability, including, but
not limited to, those regulating employee health and safety, labor, competition, trade secret, and the protection of
the environment. Overall, the amount and scope of domestic and foreign laws and regulations applicable to our
business has increased over time. Compliance with these regulations has not had a material effect on our capital
expenditures, earnings, or competitive position to date, but new regulations or amendments to existing
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regulations to make them more stringent could have such an effect in the future. We cannot estimate the expenses
we may incur to comply with potential new laws or changes to existing laws, or the other potential effects these
laws may have on our business.
United States Regulation. In the United States, the FDA has responsibility for regulating medical devices.
The FDA regulates design, development, testing, clinical studies, manufacturing, labeling, promotion, and record
keeping for medical devices, and reporting of adverse events, recalls, or other field actions by manufacturers and
users to identify potential problems with marketed medical devices. Many of the devices that we develop and
market are in a category for which the FDA has implemented stringent clinical investigation and pre-market
clearance or approval requirements. The process of obtaining FDA clearance or approval to market a product is
resource intensive, lengthy, and costly. FDA review may involve substantial delays that adversely affect the
marketing and sale of our products. A number of our products are pending regulatory clearance or approval to
begin commercial sales in various markets. Ultimately, the FDA may not authorize the commercial release of a
medical device if it determines the device is not safe and effective or does not meet other regulatory standards.
Additionally, even if a product is cleared or approved, the FDA may impose restrictions or require testing and
surveillance programs to monitor the effects of these products once commercialized.
The FDA has the authority to halt the distribution of certain medical devices, detain or seize adulterated or
misbranded medical devices, order the repair, replacement, or refund of the costs of such devices, or preclude the
importation of devices that are or appear violative. The FDA also conducts inspections to determine compliance
with the quality system regulations concerning the manufacturing and design of devices and current medical
device reporting regulations, recall regulations, clinical testing regulations, and other requirements. The FDA
may withdraw product clearances or approvals due to failure to comply with regulatory standards, or the
occurrence of unforeseen problems following initial approval, and require notification of health professionals and
others with regard to medical devices that present unreasonable risks of substantial harm to the public health.
Additionally, the failure to comply with FDA or comparable regulatory standards or the discovery of previously
unknown product problems could result in fines, delays, suspensions or withdrawals of regulatory clearances or
approvals, seizures, injunctions, recalls, refunds, civil money penalties, or criminal prosecution. Our compliance
with applicable regulatory requirements is subject to continual review. Moreover, the FDA and several other
United States agencies administer controls over the export of medical devices from the United States and the
import of medical devices into the United States, which could also subject us to sanctions for noncompliance.
We are also subject to additional laws and regulations that govern our business operations, products, and
technologies, including:
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federal, state, and foreign anti-kickback laws and regulations, which generally prohibit payments to
anyone, including physicians as an inducement to purchase or recommend a product;
the Stark law, which prohibits physicians from referring Medicare or Medicaid patients to a provider
that bills these programs for the provision of certain designated health services if the physician (or a
member of the physician’s immediate family) has a financial relationship with that provider;
federal and state laws and regulations that protect the confidentiality of certain patient health
information, including patient records, and restrict the use and disclosure of such information, in
particular, the Health Insurance Portability and Accountability Act of 1996;
the Physician Payments Sunshine Act, which requires public disclosure of the financial relationships of
United States physicians and teaching hospitals with applicable manufacturers, including medical
device, pharmaceutical, and biologics companies;
the False Claims Act, which prohibits the submission of false or otherwise improper claims for
payment to a federally funded health care program, and health care fraud statutes that prohibit false
statements and improper claims to any third-party payor; and
the United States Foreign Corrupt Practices Act, which can be used to prosecute United States
companies for arrangements with foreign government officials or other parties, or for not keeping
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accurate financial records or maintaining adequate internal controls to prevent and detect arrangements
with foreign government officials or other parties.
Failure to comply with these laws and regulations could result in criminal liability, significant fines or
penalties, negative publicity, and substantial costs and expenses associated with investigation and enforcement
activities. To assist in our compliance efforts, we work to adhere to many codes of ethics and conduct regarding
our business activities in the United States and other countries in which we operate. In addition, we have in place
a dedicated team to improve our internal business compliance programs and policies.
Regulation Outside of the United States. Outside of the United States, the regulation of medical devices is
complex. In Europe, our products are subject to extensive regulatory requirements. The regulatory regime in the
European Union (“EU”) for medical devices became mandatory in June 1998. It requires that medical devices
may only be placed on the market if they do not compromise safety and health when properly installed,
maintained, and used in accordance with their intended purpose. National laws conforming to the EU’s
legislation regulate our products under the medical devices regulatory system. Although the more variable
national requirements under which medical devices were formerly regulated have been substantially replaced by
the European Union Medical Devices Directive, individual nations can still impose unique requirements that may
require supplemental submissions. The EU medical device laws require manufacturers to declare that their
products conform to the essential regulatory requirements after which the products may be placed on the market
bearing the CE Mark. Manufacturers’ quality systems for products in all but the lowest risk classification are also
subject to certification and audit by an independent notified body. In Europe, particular emphasis is being placed
on more sophisticated and faster procedures for the reporting of adverse events to the competent authorities.
In May 2017, the EU implemented a new regulatory scheme for medical devices under the Medical Device
Regulation (“MDR”). The MDR became effective on May 26, 2021 and brought significant new requirements for
many medical devices, including enhanced requirements for clinical evidence and documentation, increased
focus on device identification and traceability, new definitions and registration of economic operators throughout
the distribution chain, and additional post-market surveillance and vigilance. Compliance with the MDR requires
re-certification of many of our products to the enhanced standards, and has resulted in and will continue to result
in substantial additional expense. In addition, in the EU, we import some of our devices through our offices in
Switzerland. Switzerland is not a member state of the EU, but is linked to the EU through bilateral treaties;
therefore, the free movement of goods, including medical devices, between the EU and Switzerland after
implementation of the MDR requires a revised Mutual Recognition Agreement (“MRA”). If an MRA covering
the MDR is not put in place, then non-EU manufacturers may be required to make significant changes, including
replacement of Swiss economic operators with operators based in EU member states, and changes will need to be
made to our device labeling and/or packaging to satisfy MDR requirements. If these measures are unable to be
taken, it may no longer be possible to place such devices on the EU market.
In Japan, pre-market approval and clinical studies are required as is governmental pricing approval for
medical devices. Clinical studies are subject to a stringent Japanese “Good Clinical Practices” standard. Approval
time frames from the Japanese Ministry of Health, Labour and Welfare vary from simple notifications to review
periods of one or more years, depending on the complexity and risk level of the device. In addition, importation
of medical devices into Japan is subject to the “Good Import Practices” regulations. As with any highly regulated
market, significant changes in the regulatory environment could adversely affect future sales.
In many of the other foreign countries in which we market our products, we may be subject to regulations
affecting, among other things:
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product standards and specifications;
packaging requirements;
labeling requirements;
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product collection and disposal requirements;
quality system requirements;
import restrictions;
tariffs;
duties; and
tax requirements.
Many of the regulations applicable to our devices and products in these countries are similar to those of the
FDA. In some regions, the level of government regulation of medical devices is increasing, which can lengthen
time to market and increase registration and approval costs. In many countries, the national health or social
security organizations require our products to be qualified before they can be marketed and considered eligible
for reimbursement.
Health Care Initiatives. Government and private sector initiatives to limit the growth of health care costs,
including price regulation and competitive pricing, coverage and payment policies, comparative effectiveness
reviews, technology assessments, increasing evidentiary demands, and managed-care arrangements, are
continuing in many countries where we do business, including the United States, Europe, and Japan. As a result
of these changes, the marketplace has placed increased emphasis on the delivery of more cost-effective medical
therapies. For example, government programs, private health care insurance, and managed-care plans have
attempted to control costs by restricting coverage and limiting the level of reimbursement for procedures or
treatments, and some third-party payors require their pre-approval before new or innovative devices or therapies
are utilized by patients. These various initiatives have created increased price sensitivity over medical products
generally and may impact demand for our products and technologies.
The delivery of our products is subject to regulation by the United States Department of Health and Human
Services (“HHS”) and comparable state and foreign agencies responsible for reimbursement and regulation of
health care items and services. Foreign governments also impose regulations in connection with their health care
reimbursement programs and the delivery of health care items and services. Reimbursement schedules regulate
the amount the United States government will reimburse hospitals and doctors for the inpatient care of persons
covered by Medicare. HHS’ Centers for Medicare & Medicaid Services (“CMS”) may also review whether and/
or under what circumstances a procedure or technology is reimbursable for Medicare beneficiaries. Changes in
current coverage and reimbursement levels could have an adverse effect on market demand and our pricing
flexibility. The CMS National Coverage Determination for Transcatheter Aortic Valve Replacement was issued
in June 2019. The modernized requirements and more streamlined patient evaluation process are meaningful
enhancements that may help ensure equitable access for more patients suffering from severe aortic stenosis.
Health care cost containment efforts have also prompted domestic hospitals and other customers of medical
device manufacturers to consolidate into larger purchasing groups to enhance purchasing power. The medical
technology industry has also experienced some consolidation, partly in order to offer a broader range of products
to large purchasers. As a result, transactions with customers are larger, more complex, and tend to involve more
long-term contracts than in the past. These larger customers, due to their enhanced purchasing power, may have a
material impact on product pricing.
These laws or any future legislation, including deficit reduction legislation, could impact medical procedure
volumes, reimbursement for our products, and demand for our products or the prices at which we sell our
products.
Seasonality
Our quarterly net sales are influenced by many factors, including new product introductions, acquisitions,
regulatory approvals, patient and physician holiday schedules, and other factors. Net sales in the third quarter are
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typically lower than other quarters of the year due to the seasonality of the United States and European markets,
where summer vacation schedules normally result in fewer medical procedures.
Human Capital Management Strategy
Human Capital Management (“HCM”) Governance
The primary goals of our talent management strategy are to attract and maintain a motivated, professional
workforce and to ensure alignment on our patient-focused innovation strategy.
Our Board of Directors routinely engages with leadership to review and discuss our human capital
management (“HCM”), with time dedicated at each regularly scheduled meeting to discuss talent management,
which include topics such as talent strategy, diversity, succession planning, employee development, employee
health, safety, and welfare, results of employee surveys, and compensation. Our Board of Directors also annually
approves the strategic talent imperatives that are tied to our Key Operating Drivers (“KODs”). Our KODs are
tracked using a point system across our entire organization that focus the Company and management toward
short-, medium-, and long-term goals. The strategic talent imperatives are developed to identify talent related
initiatives that support achievement of the KODs.
In addition, the Chief Executive Officer (“CEO”) and his leadership team have talent management related
performance goals tied to their compensation; these Performance Management Objectives are reviewed on an
annual basis, tracked, and then reported to and evaluated by our Board of Directors.
As we scale to reach more patients around the world, we have integrated our Talent & Organization
(“T&O”) Strategy with our Edwards Strategic Planning process. The purpose of our T&O Strategy is to
anticipate dynamic global trends related to our workforce, develop our talent to meet future organizational needs,
and enable us to be well-poised to meet these needs. Our T&O Strategy enables us to explore external workforce
signals, share insights, and identify and build emerging capabilities across our organization. This has enabled us
to build a comprehensive succession planning process that allows us to build strong talent from within while we
pursue an aggressive recruiting process to fill any gaps with highly qualified external talent. This consistent and
scalable approach looks across all our product groups, regions, and significant functions to align and elevate
priorities, critical capabilities, and organizational evolutions in line with our strategic plan. This integrated
approach informs our yearly objectives and fuels our talent roadmap across the strategic horizon.
Our HCM governance includes a global talent development review (“TDR”) process to align our business
strategy with talent strategies, assess talent against future organizational needs, evaluate critical talent
populations, and enhance the strength of our succession planning. We track our performance regularly.
Culture
Investing in our workforce means our employees can stay focused on our patient-focused innovation
strategy and the development of life-saving therapies for the patients we serve. We are committed to maintaining
an ethical culture where we celebrate diversity, promote good health and safety, empower employees to speak up,
and ensure that employees’ voices are heard. We strive to offer competitive employee well-being packages and
are committed to fair and equitable pay practices. We track compensation patterns in all geographies where we
operate, and we regularly look for ways to ensure fair and equitable pay.
Diversity, Inclusion, and Belonging
We are committed to fostering an environment where all employees can grow and thrive. A diverse
workforce results in a broader range of perspectives, helping drive our commitment to innovation. We have
established a Diversity, Inclusion, and Belonging strategy that includes our four focus areas of Business, People,
Communication, and Community, and whose overriding priority is “The Patient.” As a practice, all employees
receive unconscious bias training as a foundational aspect of our culture.
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Employee Listening
We believe in empowering our employees and providing avenues that enable their voices to be heard. We
conduct a multilingual global employee survey, called myVoice, to gain employees’ feedback in a confidential
manner. The CEO and Executive Leadership Team hold themselves accountable to act on the results of the
survey, and these results are reviewed by management with our Board of Directors. This initiative helps us gain
insights on various topics including patient focus, diversity, inclusion and belonging, quality, innovation,
engagement, as well as a sense of support at all levels of the organization. Speak-Up is a resource available to all
employees to bring forth compliance related concerns; a key element of our compliance program is that each
employee is accountable for maintaining ethical business practices. In addition, during each quarterly townhall
meeting, our CEO answers questions that have been submitted to him by employees. Answers to questions that
are not covered in the townhall meeting are posted online internally.
Total Well-being
We understand that good health leads to better performance. We offer competitive employee well-being
packages that include, among other things, health and wellness insurance, health savings accounts, family
support services, and a variety of site-specific programs. We regularly evaluate our well-being package to make
modifications that are aligned with the competitive landscape, legislative changes, and the unique needs of our
population. We also provide robust well-being programs that address prevention, nutrition, mental health,
physical activity, financial fitness, and community service. In recent years, mental well-being has become a
central topic for organizations worldwide. As part of our regular evaluation and commitment to putting
employees first, we launched a new program, Mind+, which offers a wide variety of mental well-being programs
for our employees. This commitment extends to creating a work environment where employees can feel
confident speaking about mental well-being with their managers and know how best to access the tools and
resources available to support them. We believe there are strong benefits when employees are feeling their best.
Employees who are mentally healthy are more innovative, resilient, better decision-makers, and able to build
stronger relationships. We also believe that prioritizing and promoting Mind+ allows us to help patients around
the world to live longer, healthier, and more productive lives and supports employees to be their best self at home
and at work.
Talent Development
Edwards has established a long-term aspiration to grow and develop talent significantly, centering our
efforts around critical leadership and technical skills for the present and future needs of the business. Our
learning and development structure and processes strive to meet the internal demand to develop our talent in such
a way that demonstrates impact at scale and delivered to our workforce through optimized learning modalities.
This includes leadership training programs, including our ethical decision making training program for managers.
Headcount and Labor Representation
As of December 31, 2022, we had approximately 17,300 employees worldwide, the majority of whom were
located in the United States, Singapore, the Dominican Republic, and Costa Rica. None of our North American
employees are represented by a labor union. In various countries outside of North America, we interact with trade
unions and work councils that represent employees.
Additional details regarding diversity, talent development, compensation, and employee health and safety
can be found in our Sustainability Report posted on our website at www.edwards.com under “About Us —
Corporate Responsibility.”
References to our website in this Annual Report on Form 10-K are provided for convenience only and the
content on our website does not constitute a part of this Report.
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Item 1A. Risk Factors
Our business and assets are subject to varying degrees of risk and uncertainty. An investor should carefully
consider the risks described below, as well as other information contained in this Annual Report on Form 10-K
and in our other filings with the SEC. Additional risks not presently known to us or that we currently deem
immaterial may also adversely affect our business. If any of these events or circumstances occurs, our business,
financial condition, results of operations, or prospects could be materially harmed. In that case, the value of our
securities could decline and an investor could lose part or all of his or her investment. In addition, forward-
looking statements within the meaning of the federal securities laws that are contained in this Annual Report on
Form 10-K or in our other filings or statements may be subject to the risks described below as well as other risks
and uncertainties. Please read the cautionary notice regarding forward-looking statements in Part I above.
Please note that the headers and summary provided below are only intended to assist the reader in navigating
the risk factors; some risks, present or future, may implicate multiple types of risks. Please read all risk factors in
their entirety.
Summary of Risk Factors
We group our risk factors into three principal sections: (1) Business and Operating Risks; (2) Market and
Other External Risks and (3) Legal, Compliance and Regulatory Risks. The following summarizes the principal
risks and uncertainties affecting our business, financial condition, and results of operations. This summary should
not be relied upon as an exhaustive summary of the material risks facing our business and you should read this
summary together with the more detailed description of risks and uncertainties discussed below.
Business and Operating Risks
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Failure to successfully innovate and market products
• Unsuccessful clinical trials or procedures
• Manufacturing, logistics, or quality problems
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Public health crises, including pandemics and epidemics
• Competition
• Dependence on key physicians and research institutions
• Reliance on vendors, suppliers, and other third parties
• Damage, failure, or interruption of our information technology systems, including due to cyber-based
attacks and breaches
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Failure to recruit and retain qualified talent or execute management succession plans
• Underperforming operations or unsuccessful business acquisitions or strategic alliances
Market and Other External Risks
• Risks associated with international sales and operations
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Inability to obtain government reimbursement or reductions in reimbursement levels
Industry consolidation
Legal, Compliance and Regulatory Risks
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Inability to protect our intellectual property
Inability to defend against intellectual property claims from third parties
• Compliance with government regulations
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• Losses from product liability claims
• Use of products in unapproved circumstances
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Substantial costs from environmental, health and safety regulations
• Climate change
• Regulatory actions relating to animal borne illnesses
Business and Operating Risks
Failure to successfully innovate and develop new and differentiated products in a timely manner and
effectively market these products could have a material effect on our prospects.
Our continued growth and success depend on our ability to innovate and develop new and differentiated
products in a timely manner and effectively market these products. Without the timely innovation and
development of products, our products could be rendered obsolete or less competitive because of the introduction
of a competitor’s newer technologies or changing customer preferences. Innovating products requires the
devotion of significant financial and other resources to research and development activities; however, there is no
certainty that the products we are currently developing will complete the development process, or that we will
obtain the regulatory or other approvals required to market such products in a timely manner or at all. Even if we
timely innovate and develop products, our ability to successfully market them could be constrained by a number
of different factors, including competitive products and pricing, barriers in patients’ treatment pathway
(including disease awareness, detection, and diagnosis), the need for regulatory clearance, restrictions imposed
on approved indications, and uncertainty over third-party reimbursement. Failure in any of these areas could have
a material effect on our prospects.
Unsuccessful clinical trials or procedures relating to products could have a material adverse effect on our
prospects.
The regulatory approval process for new products and new indications for existing products requires
extensive clinical trials and procedures, including early clinical feasibility and regulatory studies. Unfavorable or
inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or
third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary
approvals and the market’s view of our future prospects. Such clinical trials and procedures are inherently
uncertain and there can be no assurance that these trials or procedures will be enrolled or completed in a timely
or cost-effective manner or result in a commercially viable product or indication; failure to do so could have a
material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even
after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures
may be contradicted by subsequent analyses. In addition, results from our clinical trials or procedures may not be
supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted,
or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be
adversely affected. Clinical trials or procedures may be delayed, suspended, or terminated by us, the FDA, or
other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks or
any other reasons, and any such delay, suspension, or termination could have a material adverse effect on our
prospects or the market’s view of our future prospects.
If we or one of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems,
our business could be materially adversely affected.
The manufacture and sterilization of many of our products is highly complex due in part to rigorous
regulatory requirements. Quality is extremely important due to the serious and costly consequences of a product
failure. Problems can arise for a number of reasons, including disruption of facility utilities, equipment
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malfunction, failure to follow protocols and procedures, raw material problems, software problems, cyber
incidents, or human error. Disruptions can occur at any time, including during production line transfers and
expansions. Disruptions can also occur if our manufacturing and warehousing facilities are damaged by
earthquakes, hurricanes, volcanoes, fires, and other natural disasters or catastrophic circumstances. As we expand
into new markets and scale new products for commercial production, we may face unanticipated delays or surges
in demand which could strain our production capacity and lead to other types of disruption. If any of these
manufacturing, logistics, or quality problems arise or if we or one of our suppliers or logistics partners otherwise
fail to meet internal quality standards or those of the FDA or other applicable regulatory body, our reputation
could be damaged, we could become subject to a safety alert or a recall, we could incur product liability and
other costs, product approvals and production could be delayed, and our business could otherwise be materially
adversely affected.
We are subject to risks associated with public health crises, including the COVID-19 pandemic and other
pandemics or epidemics.
We are subject to risks associated with public health crises, including the global health concerns related to
the COVID-19 pandemic. The COVID-19 pandemic has adversely impacted and is likely to further adversely
impact nearly all aspects of our business and markets, including our workforce and operations and the operations
of our customers, suppliers, and business partners. Other public health crises, including any future epidemics or
pandemics, could result in similar adverse impacts on our business and markets. Financial or operational impacts
that we have experienced in connection with the COVID-19 pandemic and may experience as a result of future
COVID-19 outbreaks or other public health crises include:
•
•
Staffing shortages at hospitals which can add to the barriers along the patient treatment pathway;
Impacts and delays to clinical trials, our pipeline milestones, or regulatory clearances and approvals;
• The inability to meet our customers’ needs or other obligations due to disruptions to our operations or
the operations of our third-party partners, suppliers, contractors, logistics partners, or customers
including disruptions to production, development, manufacturing, administrative, and supply
operations and arrangements; or
•
Significant volatility or reductions in demand for our products.
Depending on the severity of the financial and operational impacts, our business, financial condition, and
results of operations may be materially adversely impacted. The extent to which the COVID-19 pandemic or
other future public health crises may impact our business, results of operations, and financial condition depends
on many factors which are highly uncertain and are difficult to predict. These factors include, but are not limited
to, the duration and spread of any outbreak, its severity, the actions to contain or address the impact of the
outbreak, the timing, distribution, and efficacy of vaccines and other treatments, United States and foreign
government actions to respond to possible reductions in global economic activity, and how quickly and to what
extent normal economic and operating conditions can resume.
We operate in highly competitive markets, and if we do not compete effectively, our business will be harmed.
We face substantial competition and compete with technologies of many types and companies of all sizes on
the basis of cost-effectiveness, technological innovations, product performance, brand name recognition, breadth
of product offerings, real or perceived product advantages, pricing and availability and rate of reimbursement. In
addition, given the trend toward value-based healthcare, if we are not able to continue to demonstrate the full
value of our differentiated products to healthcare providers and payors, our competitive position could be
adversely affected. See “Competition” under “Business” in Part I, Item 1 included herein.
The success of many of our products depends upon certain key physicians and research institutions.
We work with leading global physicians and research institutions who provide considerable knowledge and
experience. These physicians may assist us as researchers, marketing consultants, product trainers and
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consultants, inventors, and as public speakers. If new laws, regulations, or other developments limit our ability to
appropriately engage these professionals or with the research institutions of which they are a part or to continue
to receive their advice and input or we are otherwise unsuccessful in maintaining strong working relationships
with these physicians or their research institutions, the development, marketing, and successful use of our
products could suffer, which could have a material adverse effect on our business, financial condition, and results
of operations.
We rely on third parties in the design, manufacture, and sterilization of our products. Any failure by or loss of
a vendor could result in delays and increased costs, which may adversely affect our business.
We rely on third parties for a broad range of raw and organic materials and other items in the design,
manufacture, and sterilization of our products, and we purchase certain supplies and services from single sources
for reasons of quality assurance, cost-effectiveness, availability, constraints resulting from regulatory
requirements, and other reasons. We experience from time to time, and may continue to experience, supply
interruptions due to a variety of factors, including:
• General economic conditions that could adversely affect the financial viability of our vendors;
• Vendors’ election to no longer service or supply medical technology companies, including due to the
burdens of applicable quality requirements and regulations or for no reason at all;
• The limitation or ban of certain chemicals or other materials used in the manufacture of our products;
and
• Delays or shortages due to trade or regulatory embargoes.
Additionally, any significant increases in the cost of raw materials, whether due to inflationary pressure,
supply constraints, regulatory changes, or otherwise, could adversely impact our operating results. A change or
addition to our vendors could require significant effort due to the rigorous regulations and requirements of the
FDA and other regulatory authorities; it could be difficult to establish additional or replacement sources on a
timely basis or at all, which could have a material adverse effect on our business.
Failure to protect our information technology infrastructure and our products against cyber-based attacks,
network security breaches, service interruptions, or data corruption could materially disrupt our operations
and adversely affect our business and operating results.
The operation of our business depends on our information technology systems. We rely on our information
technology systems to, among other things, effectively manage sales and marketing data, accounting and
financial functions, inventory management, product development tasks, clinical data, customer service and
technical support functions. Our information technology systems are vulnerable to damage or interruption from
earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data
network failures, security breaches, and data corruption.
In addition, our information technology infrastructure and products are vulnerable to cyber-based attacks.
Cyber-based attacks can include, but are not limited to, computer viruses, denial-of-service attacks, phishing
attacks, ransomware attacks, and other introduction of malware to computers and networks; unauthorized access
through the use of compromised credentials; exploitation of design flaws, bugs, or security vulnerabilities;
intentional or unintentional acts by employees or other insiders with access privileges; and intentional acts of
vandalism by third parties and sabotage. In addition, United States federal and state laws and regulations, and the
laws and regulations of jurisdictions outside of the United States, such as the General Data Protection Regulation
(“GDPR”) adopted by the European Union and the California Privacy Rights Act (“CRPA”) and the California
Consumer Privacy Act, as amended by the CRPA (the “CCPA”), can expose us to investigations and
enforcement actions by regulatory authorities and claims from individuals potentially resulting in penalties and
significant legal liability, if our information technology security efforts are inadequate. In addition, we rely upon
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technology suppliers, including cloud-based data management applications hosted by third-party service
providers, whose security and information technology systems are subject to similar risks.
Significant disruption in either our or our service providers’ or suppliers’ information technology or the
security of our products could impede our operations or result in decreased sales, result in liability claims or
regulatory penalties, or lead to increased overhead costs, product shortages, loss or misuse of proprietary or
confidential information, intellectual property, or sensitive or personal information, all of which could have a
material adverse effect on our reputation, business, financial condition, and operating results.
Our business and results of operations may be adversely affected if we are unable to recruit and retain
qualified talent or are otherwise unsuccessful in the execution of our management succession plans.
Our continued success depends, in large part, on our ability to hire and retain qualified people and execute
on our talent management and succession plans, and if we are unable to do so, our business and operations may
be impaired or disrupted. See “Human Capital Management Strategy” under “Business” in Part I, Item 1
included herein. Competition for highly qualified people is intense, and there is no assurance that we will be
successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or
employees moving to new positions, or other highly qualified personnel.
If we identify underperforming operations or products or if there are unforeseen operating difficulties and
expenditures in connection with business acquisitions or strategic alliances, we may be required, from time to
time, to recognize charges, which could be substantial and which could adversely affect our results of
operations.
We actively manage a portfolio of research and development products, and we regularly explore potential
acquisitions of complementary businesses, technologies, services, or products, as well as potential strategic
alliances. From time to time, we identify operations and products that are underperforming, do not fit with our
longer-term business strategy or there may be unforeseen operating difficulties and significant expenditures
during the integration of an acquired business, technology, service, or product into our existing operations. We
may seek to dispose of these underperforming operations or products, and we may also seek to dispose of other
operations or products for strategic or other business reasons. If we cannot dispose of an operation or product on
acceptable terms, we may voluntarily cease operations related to that product. In addition, we may be required to
take charges or write-downs in connection with acquisitions and divestitures. In particular, acquisitions of
businesses engaged in the development of new products may give rise to developed technology and/or in-process
research and development assets. To the extent that the value of these assets decline, we may be required to write
down the value of the assets. Also, in connection with certain asset acquisitions, we may be required to take an
immediate charge related to acquired in-process research and development assets. Any of these events could
result in charges, which could be substantial and which could adversely affect our results of operations.
Market and Other External Risks
Because we operate globally, our business is subject to a variety of risks associated with international sales
and operations.
Our extensive global operations and business activity as well as the fact that many of our manufacturing
facilities and suppliers are outside of the United States exposes us to certain financial, economic, political, and
other risks, including those listed below.
Domestic and Global Economic Conditions. We have been impacted and may continue to be negatively
impacted by general domestic and global economic conditions, although we cannot predict the extent to which
such conditions may negatively impact our business. These include, but are not limited to, conditions impacting
inflation, credit and capital markets, interest rates, tax law, including tax rate and policy changes, factors
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affecting global economic stability, and the political environment relating to health care. These and other
conditions could also adversely affect our customers, payers, vendors and other stakeholders and may impact
their ability or decision to purchase our products or make payments on a timely basis.
Health Care Legislation and Other Regulations. We are subject to various federal and foreign laws that
govern our domestic and international business practices. For example, in the United States, the Affordable Care
Act, the Medicare Access and CHIP Reauthorization Act of 2015, and the 21st Century Cures Act, or any future
legislation, including deficit reduction legislation, could impact medical procedure volumes, reimbursement for
our products, and demand for our products or the prices at which we sell our products. In addition, a Mutual
Recognition Agreement still under negotiation for the Medical Device Regulation can result in a lack of free
movement of medical devices between the European Union and Switzerland, can impact our access in the
European Union and can, ultimately, have a material effect on our business, financial condition, and results of
operations. For more information about these laws as they relate to our business, see the section entitled
“Government Regulation and Other Matters” in Part I, Item 1, “Business.”
In addition, the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act, and similar
laws in other jurisdictions contain prohibitions against bribery and other illegal payments, and make it an offense
to fail to have procedures in place that prevent such payments. Penalties resulting from any violation of these
laws could adversely affect us and our business.
Taxes. We are subject to income taxes in the United States as well as other jurisdictions.
• Provision for Income Taxes. Our provision for income taxes and our effective tax rate could fluctuate
due to changes in the mix of earnings and losses in countries with differing statutory tax rates. Our
income tax provision could also be impacted by changes in excess tax benefits of stock-based
compensation, federal and state tax credits, non-deductible expenses, changes in the valuation of
deferred tax assets and liabilities and our ability to utilize them, the applicability and creditability of
withholding taxes, and effects from acquisitions.
•
•
•
Tax Reform. Our provision for income taxes could be materially impacted by changes in accounting
principles or evolving tax laws, including, but not limited to, global corporate tax reform and base-
erosion and tax transparency efforts. For example, many countries are aligning their international tax
rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit
Shifting recommendations and action plans that aim to standardize and modernize international
corporate tax policy, including changes to cross-border taxes, transfer pricing documentation rules,
nexus-based tax practices, and taxation of digital activities. The effective dates of implementation, the
interactions of tax reforms in multiple jurisdictions, and uncertainty related to dispute resolution
mechanisms could impact our provision for income taxes.
Tax Audits. We are subject to ongoing tax audits in the various jurisdictions in which we operate. Tax
authorities may disagree with certain positions we have taken and assess additional taxes. Although we
regularly assess the likely outcomes of the audits and record reserves for potential tax payments, the
calculation of tax liabilities involves the application of complex tax laws, and our estimates could be
different than the amounts for which we are ultimately liable.
Tax Incentives. We benefit from various global tax incentives extended to encourage investment or
employment. Several foreign jurisdictions have granted us tax incentives which require renewal at
various times in the future. If our incentives are not renewed or we cannot or do not wish to satisfy all
or part of the tax incentive conditions, we may lose the tax incentives and could be required to refund
tax incentives previously realized. As a result, our provision for income taxes could be higher than it
would have been had we maintained the benefits of the tax incentives.
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Other economic, political, and social risks. In addition to the factors enumerated above, we are from time
to time impacted by a variety of other factors associated with doing business internationally that can harm our
future results, including the following:
•
•
•
trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or
surcharges;
cultural or other local factors affecting financial terms with customers;
differing labor regulations;
• military conflict, political unrest, or wars; and
•
currency exchange rate fluctuations; that is, decreases in the value of the United States dollar to the
Euro or the Japanese yen, as well as other currencies in which we transact business, have the effect of
increasing our reported revenues even when the volume of sales outside of the United States has
remained constant. Increases in the value of the United States dollar relative to the Euro or the Japanese
yen, as well as other currencies, have the opposite effect. Significant increases or decreases in the value
of the United States dollar could have a material adverse effect on our revenues, cost of sales, or results
of operations.
If government and other third-party payors decline to reimburse our customers for our products or impose
other cost containment measures to reduce reimbursement levels, our ability to profitably sell our products
will be harmed.
We sell our products and technologies to hospitals and other health care providers, nearly all of which
receive reimbursement for the health care services provided to patients from third-party payors, such as
government programs (both domestic and outside of the United States), private insurance plans, and managed
care programs. The ability of customers to obtain appropriate reimbursement for their products from private and
governmental third-party payors is critical to our success. The availability of reimbursement affects which
products customers purchase and the prices they are willing to pay. Reimbursement varies from country to
country and can significantly impact acceptance of new products.
Government and other third-party payors are increasingly attempting to contain health care costs by limiting
both coverage and the level of reimbursement for medical products and services. Reimbursement levels may be
decreased in the future. Additionally, future legislation, regulation, or reimbursement policies of third-party
payors may otherwise adversely affect the demand for and price levels of our products. The introduction of cost
containment incentives, combined with closer scrutiny of health care expenditures by both private health insurers
and employers, has resulted in increased discounts and contractual adjustments to hospital charges for services
performed. Hospitals or physicians may respond to such cost-containment pressures by substituting lower cost
products or other therapies.
Third-party payors may deny reimbursement if they determine that a device used in a procedure was not
used in accordance with cost-effective treatment methods as determined by such third-party payors or was used
for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and
devices. We believe that many of our existing products are cost-effective, even though the one-time cost may be
significant, because they are intended to improve quality of life and reduce overall health care costs over a long
period of time. We cannot be certain that these third-party payors will recognize these cost savings and quality of
life benefits instead of merely focusing on the lower initial costs associated with competing therapies. If our
products are not considered cost-effective by third-party payors, our customers may not be reimbursed for them,
resulting in lower sales of our products.
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Continued consolidation in the health care industry could have an adverse effect on our sales and results of
operations.
The health care industry has been consolidating, and organizations such as GPOs, independent delivery
networks, and large single accounts, such as the United States Veterans Administration, continue to consolidate
purchasing decisions for many of our health care provider customers. As a result, transactions with customers are
larger and more complex, and tend to involve more long-term contracts. The purchasing power of these larger
customers has increased, and may continue to increase, causing downward pressure on product pricing. If we are
not one of the providers selected by one of these organizations, we may be precluded from making sales to its
members or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to
other selected providers that are able to offer volume discounts based on purchases of a broader range of medical
equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on
our revenues, profit margins, business, financial condition, and results of operations. We expect that market
demand, governmental regulation, third-party reimbursement policies, and societal pressures will continue to
drive consolidation and increase pricing pressure.
Legal, Compliance, and Regulatory Risks
Our inability to protect our intellectual property or failure to maintain the confidentiality and integrity of data
or other sensitive company information, by cyber-attack or other event, could have a material adverse effect
on our business.
Our success and competitive position are dependent in part upon our ability to protect our proprietary
intellectual property through a combination of patents and trade secrets. We cannot guarantee that the protective
steps we take are adequate to protect these rights:
•
Patents issued to or licensed by us in the past or in the future may be challenged and held invalid.
• As our patents expire, we may be unsuccessful in extending their protection through patent term
extensions.
• Confidentiality agreements with certain employees, consultants, and other third parties intended to
protect, in part, trade secrets and other proprietary information could be breached, and we may not have
adequate remedies.
• Others could independently develop substantially equivalent proprietary information or gain access to
our trade secrets or proprietary information, design around our technology, or develop competing
technologies.
• Our intellectual property, other proprietary technology, and other sensitive company information is
dependent on sophisticated information technology systems and is potentially vulnerable to cyber-
attacks, loss, theft, damage, destruction from system malfunction, computer viruses, loss of data
privacy, or misappropriation or misuse of it by those with permitted access, and other events.
• We may not detect infringement.
•
Intellectual property protection may also be unavailable or limited in some foreign countries.
We spend significant resources to protect and enforce our intellectual property rights, sometimes resulting in
expensive and time-consuming litigation that is complex and may ultimately be unsuccessful. Our inability to
protect our intellectual property could have a material adverse effect on our business or prospects.
Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation
or licensing expenses or be prevented from selling products.
During recent years, we and our competitors have been involved in substantial litigation regarding patent
and other intellectual property rights which is typically costly and time-consuming. We may be forced to defend
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against claims and legal actions alleging infringement of the intellectual property rights of others, and, if our
defense is unsuccessful, we could have significant liabilities to third parties or face injunctions that bar the sale of
our products, or could require us to seek licenses from third parties. Such licenses may not be available on
commercially reasonable terms, may prevent us from manufacturing, selling, or using certain products, or may be
non-exclusive, which could provide our competitors access to the same technologies.
In addition, third parties could also obtain patents that may require us to either redesign products, negotiate
licenses from such third parties, which may be costly, unavailable or require us to exit a particular product
offering.
We and our customers are subject to rigorous governmental regulations and we may incur significant
expenses to comply with these regulations and develop products that are compatible with these regulations. In
addition, failure to comply with these regulations could subject us to substantial sanctions which could
adversely affect our business, results of operations, and financial condition.
The medical technologies we create, study, manufacture, and market globally are subject to rigorous
regulation and scrutiny by the FDA and various other federal, state, and foreign governmental authorities,
including the European Union’s European Commission who promulgated the European Medical Device
Regulation (“EU MDR”). Government regulation applies to nearly all aspects of our products’ lifecycles,
including testing, clinical study, manufacturing, transporting, sourcing, safety, labeling, storing, packaging,
recordkeeping, reporting, advertising, promoting, distributing, marketing, and importing or exporting of medical
devices and products. In general, unless an exemption applies, a medical device or product must receive
regulatory approval or clearance before it can be marketed or sold. Modifications to existing products or the
marketing of new uses for existing products also may require regulatory approvals, approval supplements, or
clearances. If we are unable to obtain these required approvals, we may be required to cease manufacturing and
sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as
appropriate clearance or approval is obtained. More specifically relating to the EU MDR which came into effect
in May 2017 and became applicable in May 2021 with a staggered transition period, all regulated products must
be assessed by notified bodies (organizations designated by EU member states) as to whether they meet the
technical requirements of the EU MDR before entering the market in Europe. During the transition period, with
the influx of submissions to the notified bodies, any delay on obtaining approvals may result in a disruption of
device supply or a further delay in getting a device to market. In addition, in the EU, we import some of our
devices through our offices in Switzerland. Switzerland is not a member state of the EU, but is linked to the EU
through bilateral treaties; therefore, the free movement of goods, including medical devices, between the EU and
Switzerland after implementation of the EU MDR requires a revised MRA. If an MRA covering the EU MDR is
not put in place, then non-EU manufacturers may be required to make significant changes, including replacement
of Swiss economic operators with operators based in EU member states, and changes will need to be made to our
device labeling and/or packaging to satisfy EU MDR requirements. If these measures are unable to be taken, it
may no longer be possible to place such devices on the EU market.
Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our
interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been
maintained. Regulatory submissions may require the provision of additional data and may be time consuming
and costly, and their outcome is uncertain. Regulatory agencies may also change policies, adopt additional
regulations, or revise existing regulations, each of which could prevent or delay approval or clearance of devices,
or could impact our ability to market a previously cleared, approved, or unregulated device. Our failure to
comply with these regulatory requirements of the FDA, the European Commission, or other applicable regulatory
requirements in the United States or elsewhere might subject us to administratively or judicially imposed
sanctions. These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties,
injunctions, debarment, product seizure or detention, product recalls and total or partial suspension of production,
sale and/or promotion. Any of the foregoing actions could result in decreased sales including as a result of
negative publicity and product liability claims, and could have a material adverse effect on our financial
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condition, results of operations, and prospects. In addition to the sanctions for noncompliance described above,
commencement of an enforcement proceeding, inspection, or investigation could divert substantial management
attention from the operation of our business and have an adverse effect on our business, results of operations, and
financial condition.
We are also subject to various United States and foreign laws pertaining to health care pricing, anti-
corruption, and fraud and abuse, including prohibitions on kickbacks and the submission of false claims laws and
restrictions on relationships with physicians and other referral sources. These laws are broad in scope and are
subject to evolving interpretation, which could require us to incur substantial costs to monitor compliance. If we
are found not to be in compliance, we may be required to alter our practices or have sanctions imposed against us
and our officers and employees, including substantial fines, imprisonment, and exclusion from participation in
governmental health care programs.
In addition, as a global company, we are subject to global data privacy and security laws, regulations and
codes of conduct that apply to our businesses. We are required to comply with increasingly complex and
changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure
and other processing of personal data in the United States and in other countries, which may include, but are not
limited to, The Health Insurance Portability and Accountability Act, as amended (“HIPAA”), The Health
Information Technology for Economic and Clinical Health Act, the CCPA, the CRPA, and the GDPR. The
GDPR imposes stringent European Union data protection requirements and provides for significant penalties for
noncompliance. HIPAA also imposes stringent data privacy and security requirements and the regulatory
authority has imposed significant fines and penalties on organizations found to be out of compliance. The CCPA
and the CRPA provides consumers with a private right of action against companies who have a security breach
due to lack of appropriate security measures. We or our third-party providers and business partners may also be
subjected to audits or investigations by one or more domestic or foreign government agencies relating to
compliance with information security and privacy laws and regulations, and noncompliance with the laws and
regulations could result in substantial and material fines or class action litigation.
Additional risks related to government regulation are also described under “Health Care Legislation and
Other Regulations” in the risk factor above titled “Because we operate globally, our business is subject to a
variety of risks associated with international sales and operations.”
We may incur losses from product liability or other claims that could adversely affect our operating results.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and
marketing of medical technologies. Our products are often used in surgical and intensive care settings with
seriously ill patients. In addition, many of the devices we manufacture and sell are designed to be implanted in
the human body for long periods of time. Component failures, manufacturing and assembly flaws, design defects,
software defects, medical procedure errors, or inadequate disclosure of product-related risks or information could
result in an unsafe condition, injury to, or death of, patients. Such problems could result in product liability,
medical malpractice or other lawsuits and claims, safety alerts, or product recalls in the future. We establish
reserves and may incur charges in excess of those reserves. Although we maintain product liability and other
insurance with coverages we believe are adequate, product liability or other claims may exceed insurance
coverage limits, fines, and penalties. In addition, regulatory sanctions may not be covered by insurance, or
insurance may not continue to be available or available on commercially reasonable terms. These litigation
matters and regulatory actions, recalls or other actions, regardless of outcome, could have a material adverse
effect on our business, reputation, and ability to attract and retain customers.
Use of our products in unapproved circumstances could expose us to liabilities.
The marketing approval from the FDA and other regulators of certain of our products are, or are expected to
be, limited to specific indications. We are prohibited from marketing or promoting any unapproved use of our
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products. Physicians, however, can use these products in ways or circumstances other than those strictly within
the scope of the regulatory approval. Although the product training we provide to physicians and other health
care professionals is conducted in compliance with applicable laws, and therefore, is mainly limited to approved
uses or for clinical trials, no assurance can be given that claims might not be asserted against us if our products
are used in ways or for procedures that are not approved.
Our operations are subject to environmental, health, and safety regulations that could result in substantial
costs.
Our operations are subject to environmental, health, and safety laws, and regulations concerning, among
other things, the generation, handling, transportation, and disposal of hazardous substances or wastes, the cleanup
of hazardous substance releases, and emissions or discharges into the air or water. We have incurred and may
incur in the future expenditures in connection with environmental, health and safety laws, and regulations. New
laws and regulations, violations of these laws or regulations, stricter enforcement of existing requirements, or the
discovery of previously unknown contamination could require us to incur costs or could become the basis for
new or increased liabilities that could be material.
Climate change, or legal, regulatory or market measures to address climate change, may materially adversely
affect our financial condition and business operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the
atmosphere could present risks to our future operations from natural disasters and extreme weather conditions,
such as hurricanes, tornadoes, seismic events, wildfires, or flooding. Such extreme weather conditions could pose
physical risks to our facilities and disrupt operation of our supply chain and may impact operational costs.
Concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects
of climate change on the environment. If such laws or regulations are more stringent than current legal or
regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory
obligations, and it may adversely affect our raw material sourcing, manufacturing operations, and the distribution
of our products.
We are subject to risks arising from concerns and/or regulatory actions relating to animal borne illnesses,
including “mad cow disease.”
Certain of our products, including pericardial tissue valves, are manufactured using bovine tissue. Concerns
relating to the potential transmission of animal borne illnesses, including BSE, commonly known as “mad cow
disease,” from cows to humans may result in reduced acceptance of products containing bovine materials.
Certain medical device regulatory agencies have considered whether to continue to permit the sale of medical
devices that incorporate bovine material. We obtain bovine tissue only from closely controlled sources within the
United States and Australia. The bovine tissue used in our pericardial tissue valves is from tissue types
considered by global health and regulatory organizations to have shown no risk of infectibility for the suspected
BSE infectious agent. We have not experienced any significant adverse impact on our sales as a result of
concerns regarding BSE, but no assurance can be given that such an impact may not occur in the future.
Item 1B. Unresolved Staff Comments
None.
23
Item 2.
Properties
The locations and uses of our major properties are as follows:
North America
Irvine, California
Draper, Utah
Haina, Dominican Republic
Añasco, Puerto Rico
Central America
Cartago, Costa Rica
Europe
Nyon, Switzerland
Prague, Czech Republic
Shannon, Limerick, Ireland
Asia
Singapore
Tokyo, Japan
Shanghai, China
Caesarea, Israel
(1) Owned property.
(2) Leased property.
(1)
Corporate Headquarters, Research and Development, Regulatory
and Clinical Affairs, Manufacturing, Marketing, Administration
(1),(2) Manufacturing, Administration
(1),(2) Manufacturing
(2) Manufacturing
(1),(2) Manufacturing
(1)
(2)
Administration, Marketing
Administration
(1),(2) Manufacturing
(1),(2) Manufacturing, Distribution, Administration
(2)
(2)
(2)
Administration, Marketing, Distribution
Administration, Marketing
Research and Development
We believe our properties have been well maintained, are in good operating condition, and are adequate for
current needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative
facilities.
Item 3.
Legal Proceedings
For a description of our material pending legal proceedings, please see Note 18 to the “Consolidated
Financial Statements” of this Annual Report on Form 10-K, which is incorporated by reference.
Item 4. Mine Safety Disclosures
Not applicable.
24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information
Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “EW.”
Number of Stockholders
On January 31, 2023, there were 8,019 stockholders of record of our common stock.
Dividends
We have never paid any cash dividends on our capital stock and have no current plans to pay any cash
dividends. Our current policy is to retain any future earnings for use in our business.
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
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs
(in millions) (b)
October 1, 2022 through October 31, 2022 . . . . . .
November 1, 2022 through November 30, 2022 . .
December 1, 2022 through December 31, 2022 . .
1,381,903
8,284,153
2,003,416
$83.66
72.91
72.91
1,381,903
8,283,860
2,003,416
$1,666.0
1,061.6
915.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,669,472
74.18
11,669,179
(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 4, 2021, the Board of Directors approved a stock repurchase program providing for up to
$1.0 billion of repurchases of our common stock. In July 2022, the Board of Directors approved an
additional $1.5 billion of repurchases of our common stock under this program, effective July 28, 2022.
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.
25
Performance Graph
The following graph compares the performance of our common stock with that of the S&P 500 Index and
the S&P 500 Health Care Equipment Index. The cumulative total return listed below assumes an initial
investment of $100 at the market close on December 31, 2017 and reinvestment of dividends. Stockholder
returns over the indicated period should not be considered indicative of future stockholder returns.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
400
300
s
r
a
l
l
o
D
200
100
0
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
Edwards Lifesciences
S&P 500
S&P 500 Health Care Equipment
Total Cumulative Return
2018
2019
2020
2021
2022
Edwards Lifesciences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Health Care Equipment . . . . . . . . . . . . . . . . . . . .
$135.90
95.62
116.24
$206.98
125.72
150.32
$242.83
148.85
176.83
$344.82
191.58
211.05
$198.59
156.89
171.25
Item 6.
[Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents the factors that had a material effect on our results of operations
during the two years ended December 31, 2022. Also discussed is our financial position as of December 31, 2022.
You should read this discussion in conjunction with the historical consolidated financial statements and related
notes included elsewhere in this Form 10-K. For a discussion related to the results of operations for 2021 compared
to 2020 and a discussion related to our consolidated cash flows for 2021 compared to 2020, refer to Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual
Report on Form 10–K filed with the Securities and Exchange Commission on February 14, 2022.
Overview
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
26
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 Market Update
s
n
o
i
l
l
i
m
n
i
$
6,000
5,000
4,000
3,000
2,000
1,000
2021
2022
Net Sales
Gross profit
Diluted Earnings per Share
2.38
2.44
e
r
a
h
s
r
e
p
$
2.8
2.4
2.0
1.6
1.2
0.8
0.4
0.0
Net Income
2021
2022
COVID-19 and Macroeconomic Uncertainties
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 to address potential
supply constraints.
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. However, the Delta variant had a significant impact on hospital
resources during the last two months of the third quarter of 2021, and the Omicron variant had a significant
impact during December 2021, especially in the United States.
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. Our 2022 sales were also
impacted by slower than expected improvement in United States hospital staffing shortages and foreign currency
headwinds. In the second half of 2022, we faced COVID-19 headwinds in Japan, which created significant strain
on hospital capacity.
In addition to the impacts described above, the global economy, including the financial and credit markets,
has recently experienced extreme volatility and disruptions, including increases to inflation rates, rising interest
27
rates, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability.
The severity and duration of the impact of these conditions on our business cannot be predicted. See Item 1A,
“Risk Factors,” for additional information.
2022 Financial Highlights
Despite the challenges to our business in 2022 due to COVID-19 and macroeconomic factors, our net sales
for 2022 were $5.4 billion, representing an increase of $149.9 million over 2021, driven by sales growth of our
TAVR products.
Our gross profit increase in 2022 was driven by our sales growth and the positive impact of our foreign
currency hedging program.
The increase in our diluted earnings per share in 2022 was driven by a) the aforementioned increase in our
gross profit and b) a decrease in our diluted weighted-average shares outstanding, driven by our increased share
repurchase activity. This increase was partially offset by a) changes in the fair value of our contingent
consideration liabilities, which resulted in a $121.6 million after tax gain in 2021 compared to a $35.0 million
after tax gain in 2022, b) an after-tax charge of $47.0 million in 2022, primarily related to the impairment of
intangible assets resulting from our decision to exit our HARPOON surgical mitral repair system program, and c)
increased sales and marketing and research and development expenses in 2022.
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 2022, we invested 17.6%
of our net sales in research and development. The following is a summary of important developments during
2022:
• we received United States Food and Drug Administration (“FDA”) approval for the MITRIS RESILIA
valve, a tissue valve replacement specifically designed for the heart’s mitral position;
• we received CE Mark approval for the PASCAL Precision transcatheter valve repair system for patients
suffering from mitral and tricuspid regurgitation, and FDA approval for PASCAL Precision for patients
with degenerative mitral regurgitation; and
• we launched the SAPIEN 3 Ultra RESILIA valve following FDA approval.
We are dedicated to generating robust clinical, economic, and quality-of-life evidence 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.
28
Results of Operations
Net Sales by Major Regions
(dollars in millions)
Years Ended December 31,
Change
2022
2021
$
%
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
$2,963.1
$169.5
5.7%
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,174.8
473.6
601.4
Outside of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,249.8
1,190.3
528.9
550.2
2,269.4
(15.5)
(55.3)
51.2
(19.6)
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
$5,232.5
$149.9
(1.3)%
(10.4)%
9.3%
(0.9)%
2.9%
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. For more information, see “Quantitative and
Qualitative Disclosures About Market Risk.”
Net Sales by Product Group
(dollars in millions)
Transcatheter Aortic Valve Replacement . . . . . . . . . . . . . . . . . . . . . . .
Transcatheter Mitral and Tricuspid Therapies . . . . . . . . . . . . . . . . . . .
Surgical Heart Valve Therapy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,518.2
116.1
893.1
855.0
$3,422.5
86.0
889.1
834.9
$ 95.7
30.1
4.0
20.1
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
$5,232.5
$149.9
2.8%
35.1%
0.4%
2.4%
2.9%
Years Ended December 31,
Change
2022
2021
$
%
Transcatheter Aortic Valve Replacement
For the years ended December 31, 2022 and 2021:
)
s
n
o
i
l
l
i
M
(
$
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
$3,422.5
$3,518.2
2021
2022
29
The increase in net sales of TAVR products was driven by:
•
higher sales of the Edwards SAPIEN platform in 2022, primarily the Edwards SAPIEN 3 Ultra valve in
the United States, Europe, and Rest of World, the Edwards SAPIEN 3 Ultra RESILIA valve in the
United States, and the Edwards SAPIEN 3 in Japan;
partially offset by:
•
foreign currency exchange rate fluctuations, which decreased net sales outside of the United States by
$140.2 million primarily due to the weakening of the Euro and the Japanese yen against the United
States dollar.
During 2022, we continued to advance our EARLY TAVR pivotal trial, studying the treatment of severe
aortic stenosis patients before their symptoms develop, and our PROGRESS pivotal trial, studying moderate
aortic stenosis patients. During the second quarter of 2022, we began treating patients in our ALLIANCE pivotal
trial, studying our next-generation TAVR technology, SAPIEN X4, and during the fourth quarter of 2022, we
began the introduction of the SAPIEN 3 Ultra Resilia valve in the United States.
Transcatheter Mitral and Tricuspid Therapies
For the years ended December 31, 2022 and 2021:
$116.1
$86.0
)
s
n
o
i
l
l
i
M
(
$
140
120
100
80
60
40
20
0
2021
2022
The increase in net sales of TMTT products was due primarily to continued adoption of our PASCAL system
in Europe.
During August 2022, we received European regulatory approval for PASCAL Precision for patients
suffering from mitral and tricuspid regurgitation, and in September 2022, we received FDA approval for
PASCAL Precision for patients with degenerative mitral regurgitation. In mitral replacement, we continued to
treat patients through the ENCIRCLE pivotal trial for SAPIEN M3 and completed enrollment in the MISCEND
early feasibility study for EVOQUE Eos. We also continued to make progress in enrolling the TRISCEND II
pivotal trial of the EVOQUE replacement system and the CLASP IITR pivotal trial with the PASCAL repair
system in patients with symptomatic, severe tricuspid regurgitation.
30
Surgical Structural Heart
For the years ended December 31, 2022 and 2021:
$889.1
$893.1
)
s
n
o
i
l
l
i
M
(
$
1,000
800
600
400
200
0
2021
2022
The increase in net sales of Surgical products was due primarily to strong adoption of the INSPIRIS
RESILIA aortic valve, primarily in the United States and Europe, and the MITRIS RESILIA valve, primarily in the
United States. These increases were partially offset by the impact of foreign currency exchange rate fluctuations,
which decreased net sales outside of the United States by $46.5 million primarily due to the weakening of the
Euro and the Japanese yen against the United States dollar.
In March 2022, we received FDA approval for the MITRIS RESILIA valve and initiated the product launch
in the United States in April 2022. MITRIS RESILIA is a tissue valve replacement specifically designed for the
heart’s mitral position and incorporates our advanced RESILIA technology. In early 2023, we began enrolling
patients in our MOMENTS clinical study to demonstrate the durability of RESILIA tissue in the mitral position.
Critical Care
For the years ended December 31, 2022 and 2021:
)
s
n
o
i
l
l
i
M
(
$
1,000
800
600
400
200
0
$834.9
$855.0
2021
2022
31
The increase in net sales of Critical Care products was driven by:
•
•
•
increased demand for our capital products, primarily the HemoSphere monitoring platform in the
United States and Japan;
increased demand for our pressure monitoring products, primarily in the United States; and
increased demand for our 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
$39.5 million primarily due to the weakening of the Japanese yen and the Euro against the United
States dollar.
Gross Profit
s
n
o
i
l
l
i
m
n
i
$
5,000
4,000
3,000
2,000
1,000
0
For the years ended December 31, 2022 and 2021:
$3,983.6
76.1%
$4,302.0
79.9%
2021
2022
Gross profit
Percent of net sales
85
80
75
70
e
g
a
t
n
e
c
r
e
P
The increase in gross profit as a percentage of net sales in 2022 compared to 2021 was driven primarily by a
3.6 percentage point increase from the impact of our foreign currency hedging program, which includes hedge
contract gains and natural hedges (primarily the strengthening of the United States dollar against the Euro and the
Japanese yen).
Selling, General, and Administrative (“SG&A”) Expenses
For the years ended December 31, 2022 and 2021:
s
n
o
i
l
l
i
m
n
i
$
1,800
1,500
1,200
900
600
300
0
$1,493.7
28.5%
$1,567.6
29.1%
40
35
30
25
20
e
g
a
t
n
e
c
r
e
P
2021
2022
SG&A
Percent of net sales
32
SG&A expenses increased in 2022 compared to 2021 due primarily to a resumption of in-person
commercial activities following COVID-19 and higher field-based personnel-related costs, primarily TAVR and
TMTT in the United States. Foreign currency exchange rate fluctuations decreased expenses by $63.1 million
due primarily to the strengthening of the United States dollar against the Euro and the Japanese yen.
Research and Development (“R&D”) Expenses
For the years ended December 31, 2022 and 2021:
s
n
o
i
l
l
i
m
n
i
$
1200
900
600
300
0
$903.1
17.3%
$945.2
17.6%
2021
2022
R&D
Percent of net sales
30
25
20
15
10
e
g
a
t
n
e
c
r
e
P
R&D expenses increased marginally in 2022 compared to 2021 due primarily to continued investments in
our transcatheter innovations, including increased clinical trial activity.
Change in Fair Value of Contingent Consideration Liabilities, net
The change in fair value of contingent consideration liabilities resulted in income of $35.8 million and
$124.1 million in in 2022 and 2021, respectively. The income in 2022 was due to changes in projected
probabilities of milestone achievement and our decision in the third quarter of 2022 to exit our HARPOON
surgical mitral repair system program. The income in 2021 was attributable to changes in the projected
probabilities of milestone achievements and the projected timing of cash inflows from product sales.
Special Charge
For information on special charge, see Note 4 to the “Consolidated Financial Statements.”
Interest Expense
Interest expense was $19.2 million and $18.4 million in 2022 and 2021, respectively. The increase in
interest expense resulted primarily from lower capitalized interest due to decreased facilities construction.
Interest Income
Interest income was $35.5 million and $17.4 million in 2022 and 2021, respectively. The increase in interest
income resulted primarily from a higher average yield on our investments.
33
Other Income, net
(in millions)
Foreign exchange losses (gains), net . . . . . . . . . . . . . . . .
Gain on insurance settlement . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments . . . . . . . . . . . . . . . . . . . . . . .
Non-service cost components of net periodic pension
benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2022
$ 1.2
(3.8)
1.1
(1.1)
—
2021
$ (5.0)
—
(5.8)
0.3
(2.2)
Total other income, net
. . . . . . . . . . . . . . . . . . . . . .
$(2.6)
$(12.7)
The net foreign exchange losses (gains) relate to the foreign currency fluctuations primarily in our global
trade and intercompany receivable and payable balances, partially offset by the gains and losses on foreign
currency derivative instruments.
The gain on insurance settlement relates to an insurance recovery for damaged cargo shipments of heart
valves.
The loss (gain) on investments primarily represents our net share of gains and losses in investments
accounted for under the equity method, and realized gains and losses on investments in equity securities.
The non-service cost components of net periodic pension benefit cost includes the costs or gains of our
defined benefit plans that are not attributed to services rendered by eligible employees during the year, such as
interest costs, expected return on plan assets, and amortization of actuarial gains or losses.
Provision for Income Taxes
($ in millions)
Years Ended December 31,
Change
2022
2021
$
%
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$245.5
13.9%
$198.9
$46.6
23.4%
11.7%
Our effective income tax rate in 2022 and 2021 was 13.9% and 11.7%, respectively. Our effective tax rate
for 2022 increased in comparison to 2021 primarily due to the decrease in the tax benefit from the change in fair
value of contingent consideration liabilities and the decrease in the excess tax benefit from employee share-based
compensation.
In 2022, the difference between our 13.9% effective tax rate and the Federal statutory rate of 21% was
primarily due to (1) foreign earnings taxed at lower rates, (2) Federal and California research and development
credits, (3) the excess tax benefit from employee share-based compensation and (4) the tax benefit from the
change in fair value of contingent consideration liabilities.
As of December 31, 2022, we had $189.8 million of gross California research expenditure tax credits that
we expect to use in future periods. The credits may be carried forward indefinitely. Based upon anticipated future
taxable income, we expect that it is more likely than not that all California research expenditure tax credits will
be utilized, although the utilization of the full benefit is expected to occur over a number of years into the distant
future.
34
As of December 31, 2022, our gross uncertain tax positions were $475.3 million. We estimate that these
liabilities would be reduced by $182.1 million from offsetting tax benefits associated with the correlative effects
of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net amount of
$293.2 million, if not required, would favorably affect our effective tax rate.
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 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.
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. An APA between Switzerland and Japan covering tax years 2020 through 2024 was executed in 2021.
The execution of the other APA renewals depends on many variables outside of our control.
At December 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 and on.
The audits of our United States federal income tax returns through 2014 have been closed. The IRS
fieldwork for the 2015 through 2017 tax years was completed during the second quarter of 2021, except for
transfer pricing and related matters. The IRS began its examination of the 2018 through 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 $210 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 during the fourth quarter of
2021. During the second quarter of 2022, we received the IRS’s rebuttal to our protest and were notified that the
case had been transferred to the IRS Independent Office of Appeals. The opening conference is scheduled for the
first quarter of 2023. We continue to evaluate all possible remedies available to us, which could take several
years to resolve. 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. While 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 made an advance payment of tax in November 2022 to prevent the further accrual of interest on
any potential deficiency.
35
Certain Surgical/TAVR intercompany royalty transactions covering tax years 2015 through 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 December 31, 2022. We have considered this information, as well as
information regarding the NOPA and rebuttal 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 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.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes,
among other provisions, changes to the U.S. corporate income tax system, including (1) a 15% minimum tax
based on “adjusted financial statement income,” which is effective for tax years beginning after December 31,
2022, and (2) a one percent excise tax on net repurchases of stock after December 31, 2022. While we continue
to evaluate the IRA and its application to our business, we do not expect the IRA will have a material impact on
our consolidated financial statements.
We have received tax incentives in certain non-United States tax jurisdictions, the primary benefit for which
will expire in 2029. The tax reductions as compared to the local statutory rates were $247.4 million ($0.40 per
diluted share) and $208.0 million ($0.33 per diluted share) for the years ended December 31, 2022 and 2021,
respectively.
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.
The Tax Cuts and Jobs Act of 2017 (the “2017 Act”) included extensive changes to the international tax
regime. The 2017 Act required a deemed repatriation of post-1986 undistributed foreign earnings and profits. The
one-time transition tax liability, as adjusted, is payable in three remaining annual installments, as outlined in the
contractual obligations table presented under “Material Cash Requirements” below. As of December 31, 2022,
we had a remaining tax obligation of $188.5 million related to the deemed repatriation. See Note 17 to the
“Consolidated Financial Statements” for additional information about the one-time transition tax.
As of December 31, 2022, cash and cash equivalents and short-term investments held in the United States
and outside of the United States were $731.8 million and $483.5 million, respectively. During 2022, we
repatriated cash of $934.0 million. We assert that $1.0 billion of our foreign earnings continue to be permanently
reinvested and our intent is to repatriate $580.8 million of our foreign earnings as of December 31, 2022. The
estimated net tax liability on the indefinitely reinvested earnings if repatriated is $14.9 million.
We had a Five-Year Credit Agreement (the “Prior Credit Agreement”) which was scheduled to mature on
April 28, 2023 and provided up to an aggregate of $750.0 million in borrowings in multiple currencies. In July
2022, we entered into a new Five-Year Credit Agreement (the “New Credit Agreement”) which provides for a
$750.0 million multi-currency unsecured revolving credit facility and replaced the Prior Credit Agreement. The
New Credit Agreement matures on July 15, 2027. We may increase the amount available under the New 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. The New Credit Agreement contains various financial and other
covenants, including a maximum leverage ratio, as defined in the agreement. As of December 31, 2022, no
amounts were outstanding, and we were in compliance with all covenants under the New Credit Agreement.
36
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 December 31, 2022, we have not elected to redeem any of the 2018 Notes. As
of December 31, 2022, the carrying value of the 2018 Notes was $596.3 million. For further information on our
debt, see Note 10 to the “Consolidated Financial Statements.”
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 2022, under the Board authorized repurchase program, we repurchased a total of
20.0 million shares at an aggregate cost of $1.7 billion. As of December 31, 2022, we had remaining authority to
purchase $915.6 million of our common stock under the share repurchase program.
Certain of our business acquisitions involve contingent consideration arrangements. Payment of additional
consideration in the future may be required, contingent upon the acquired business reaching certain performance
milestones, such as attaining specified revenue levels or obtaining regulatory approvals. For further information,
see Note 11 to the “Consolidated Financial Statements.”
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. For further information, see Note 8 to the “Consolidated
Financial Statements.”
On July 12, 2020, we reached the Settlement Agreement with Abbott to settle all outstanding patent disputes
between the companies in cases related to transcatheter mitral and tricuspid repair products. The Settlement
Agreement resulted in us recording an estimated $367.9 million pretax charge in June 2020 related to past
damages. In addition, we will incur royalty expenses through May 2024 totaling an estimated $70 million. We
made a one-time $100.0 million payment to Abbott in July 2020, and are making quarterly payments in
subsequent years. For further information, see Note 3 to the “Consolidated Financial Statements.”
Consolidated Cash Flows—For the twelve months ended December 31, 2022 and 2021
Operating Cash Flows
Investing Cash Flows
Financing Cash Flows
s
n
o
i
l
l
i
) 2,000
1,500
1,000
500
0
M
$
(
s
n
o
i
l
l
i
) 500
0
-500
-1,000
-1,500
-2,000
M
$
(
)
s
n
o
i
l
l
i
M
(
$
0
-500
-1,000
-1,500
-2,000
2021
2022
2021
2022
2021
2022
Net cash flows provided by operating activities of $1.2 billion for 2022 decreased $513.9 million from
2021 due to an increase in tax payments, an increase in inventory builds compared to the prior year, and a higher
bonus payout in 2022 associated with 2021 performance.
Net cash provided by investing activities of $252.3 million in 2022 consisted primarily of net proceeds
from investments of $661.0 million, partially offset by capital expenditures of $244.6 million and payments of
$109.6 million for options to acquire other companies. For further information, see Note 8 to the “Consolidated
Financial Statements.”
Net cash used in investing activities of $1.7 billion in 2021 consisted primarily of net purchases of
investments of $1.4 billion and capital expenditures of $325.8 million.
37
We currently anticipate making capital expenditures of approximately $300.0 million in 2023 as we
continue to invest in our operations.
Net cash used in financing activities of $1.6 billion in 2022 consisted primarily of purchases of treasury
stock of $1.7 billion, partially offset by proceeds from stock plans of $146.4 million.
Net cash used in financing activities of $356.3 million in 2021 consisted primarily of purchases of treasury
stock of $512.8 million, partially offset by proceeds from stock plans of $158.6 million.
Material Cash Requirements
A summary of our material cash requirements as of December 31, 2022 is as follows (in millions):
Contractual Obligations
Payments Due by Period
Total
Year 1
Years
2-3
Years
4-5
After 5
Years
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on debt
Transition tax on unremitted foreign earnings and profits (a)
. . . .
Litigation settlement obligation (minimum payments) . . . . . . . . . .
Pension obligations (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and other commitments (c) . . . . . . . . . . . . . . . . . . . . . . .
$ 600.0
102.7
106.4
188.5
162.5
2.4
34.3
$ — $ — $ — $600.0
26.0
8.6
—
—
—
1.0
18.7
31.0
39.3
38.9
141.4 —
12.5
100.0
—
—
2.8
12.0
27.0
19.6
47.1
50.0
2.4
18.5
Total contractual cash obligations (d), (e) . . . . . . . . . . . . . . . . . . . .
$1,196.8
$164.6
$323.7
$72.9
$635.6
(a) As of December 31, 2022, we had recorded $188.5 million of income tax liabilities related to the one-time
transition tax that resulted from the enactment of the 2017 Act. The transition tax is due in eight annual
installments, with the first five installments paid in 2018 through 2022. The remaining installment amounts
will be equal to 15% of the total liability payable in 2023, 20% in 2024, and 25% in 2025. See Note 17 to
the “Consolidated Financial Statements” for additional information about the one-time transition tax.
(b) The amount included in “Less Than 1 Year” reflects anticipated contributions to our various pension plans.
Anticipated contributions beyond one year are not determinable. The total accrued benefit liability for our
pension plans recognized as of December 31, 2022 was $23.5 million. This amount is impacted by, among
other items, pension expense funding levels, changes in plan demographics and assumptions, and
investment returns on plan assets. Therefore, we are unable to make a reasonably reliable estimate of the
amount and period in which the liability might be paid, and did not include this amount in the contractual
obligations table. See Note 13 to the “Consolidated Financial Statements” for further information.
(c) Purchase and other commitments consists primarily of open purchase orders for the acquisition of goods and
services in the normal course of business. We have excluded open purchase orders with a remaining term of
less than one year. For certain purchase and other commitments, such as commitments to fund equity
method or other investments, the timing of the payment is not certain. In these cases, the maturity dates in
the table reflect our best estimates.
(d) As of December 31, 2022, the gross liability for uncertain tax positions, including interest, was
$519.8 million and relates primarily to transfer pricing matters which are discussed in detail in Note 17 to
the “Consolidated Financial Statements.” Based upon the information currently available and numerous
possible outcomes, we cannot reasonably estimate the amount and period in which the liability might be
paid, and did not include this amount in the contractual obligations table.
(e) We acquire assets still in development, enter into research and development arrangements, acquire
businesses, and sponsor certain clinical trials that often require milestone, royalty, or other future payments
to third-parties, contingent upon the occurrence of certain future events. In situations where we have no
ability to influence the achievement of the milestone or otherwise avoid the payment, we have included
those payments in the table above. However, we have excluded from the table contingent milestone
38
payments and other contingent liabilities for which we cannot reasonably predict future payments or for
which we can avoid making payment by unilaterally deciding to stop development of a product or cease
progress of a clinical trial. We estimate that these contingent payments could be up to $810.0 million if all
milestones or other contingent obligations are met. This amount includes certain milestone-based contingent
obligations that may be paid through a combination of cash and issuance of common stock, and certain
sales-based royalties in excess of minimum payment thresholds related to litigation settlements.
Critical Accounting Policies and Estimates
Our results of operations and financial position are determined based upon the application of our accounting
policies, as discussed in the notes to the “Consolidated Financial Statements.” Certain of our accounting policies
represent a selection among acceptable alternatives under GAAP. In evaluating our transactions, management
assesses all relevant GAAP and chooses the accounting policy that most accurately reflects the nature of the
transactions.
The application of accounting policies requires the use of judgments and estimates. These matters that are
subject to judgments and estimates are inherently uncertain, and different amounts could be reported using
different assumptions and estimates. Management uses its best estimates and judgments in determining the
appropriate amount to reflect in the consolidated financial statements, using historical experience and all
available information. We also use outside experts where appropriate. We apply estimation methodologies
consistently from year to year.
We believe the following are the critical accounting policies which could have the most significant effect on
our reported results and require subjective or complex judgments by management.
Revenue Recognition
When we recognize revenue from the sale of our products, the amount of consideration we ultimately
receive varies depending upon the return terms, sales rebates, discounts, and other incentives that we may offer,
which are accounted for as variable consideration when estimating the amount of revenue to recognize. The
estimate of variable consideration requires significant judgment. We include estimated amounts in the transaction
price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when
the uncertainty associated with the variable consideration is resolved. The estimates of variable consideration and
determination of whether to include estimated amounts in the transaction price are based largely upon an
assessment of historical payment experience, historical relationship to revenues, estimated customer inventory
levels, and current contract sales terms with direct and indirect customers. Product returns are typically not
significant because returns are generally not allowed unless the product is damaged at time of receipt. If the
historical data and inventory estimates used to calculate the variable consideration do not approximate future
activity, our financial position, results of operations, and cash flows could be impacted.
In addition, in limited circumstances, we may allow customers to return previously purchased products,
such as for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale
of the earlier generation product based upon an estimate of the amount of product to be returned when the next-
generation products are shipped to the customer. Uncertain timing of next-generation product approvals,
variability in product launch strategies, product recalls, and variation in product utilization all affect the estimates
related to sales returns and could cause actual returns to differ from these estimates.
Our sales adjustment related to distributor rebates given to our United States distributors represents the
difference between our sales price to the distributor and the negotiated price to be paid by the end-customer. We
validate the distributor rebate accrual quarterly through either a review of the inventory reports obtained from our
distributors or an estimate of the distributor’s inventory. This distributor inventory information is used to verify
the estimated liability for future distributor rebate claims based on historical rebates and contract rates. We
periodically monitor current pricing trends and distributor inventory levels to ensure the credit for future
distributor rebates is fairly stated.
39
Intangible Assets and Long-lived Assets
We acquire intangible assets in connection with business combinations and asset purchases. The acquired
intangible assets are recorded at fair value, which is determined based on a discounted cash flow analysis. The
determination of fair value requires significant estimates, including, but not limited to, the amount and timing of
projected future cash flows, the discount rate used to discount those cash flows, the assessment of the asset’s life
cycle, including the timing and expected costs to complete in-process projects, and the consideration of legal,
technical, regulatory, economic, and competitive risks.
In-process research and development assets acquired in business combinations is reviewed for impairment
annually, or whenever an event occurs or circumstances change that would indicate the carrying amount may be
impaired. Additionally, management reviews the carrying amounts of other intangible and long-lived assets
whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. The
impairment reviews require significant estimates about fair value, including estimation of future cash flows,
selection of an appropriate discount rate, and estimates of long-term growth rates.
Contingent Consideration
We record contingent consideration resulting from a business combination at its fair value on the acquisition
date. We determine the fair value of the contingent consideration based primarily on the following factors:
•
•
•
discount rates used to present value the projected cash flows;
the probability of success of clinical events and regulatory approvals, and/or meeting commercial
milestones; and
projected payment dates.
On a quarterly basis, we revalue these obligations and record changes in their fair value as an adjustment to
earnings. Changes to contingent consideration obligations can result from adjustments to discount rates, accretion
of the discount rates due to the passage of time, changes in our estimates of the likelihood or timing of achieving
development or commercial milestones, changes in the probability of certain clinical events, or changes in the
assumed probability associated with regulatory approval.
The assumptions related to determining the value of contingent consideration include a significant amount
of judgment, and any changes in the underlying estimates could have a material impact on the amount of
contingent consideration expense recorded in any given period.
Income Taxes
The determination of our provision for income taxes requires significant judgment, the use of estimates, and
the interpretation and application of complex tax laws. Realization of certain deferred tax assets, primarily tax
credits, net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the
appropriate jurisdiction prior to the expiration of the carryforward periods. Failure to achieve forecasted taxable
income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets and could
result in an increase in our effective tax rate on future earnings.
We have made an accounting policy election to recognize the United States tax effects of global intangible
low-taxed income as a component of income tax expense in the period the tax arises.
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our income tax
returns are periodically audited by domestic and foreign tax authorities. These audits include questions regarding
our tax filing positions, including the timing and amount of deductions and the allocation of income amongst
various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable
40
accounting guidance on uncertainty in income taxes. Significant judgment is required in evaluating our uncertain
tax positions, including estimating the ultimate resolution to intercompany pricing controversies between
countries when there are numerous possible outcomes. We review these tax uncertainties quarterly and adjust the
liability as events occur that affect potential liabilities for additional taxes, such as the progress of tax audits,
lapsing of applicable statutes of limitations, negotiations between tax authorities, identification of new issues,
and issuance of new legislation, regulations, or case law.
For additional details on our income taxes, see Note 2 and Note 17 to the “Consolidated Financial
Statements.”
Stock-based Compensation
We measure and recognize compensation expense for all stock-based awards based on estimated fair values.
Stock-based awards consist of stock options, service-based restricted stock units, market-based restricted stock
units, and employee stock purchase subscriptions. The fair value of each option award and employee stock
purchase subscription is estimated on the date of grant using the Black-Scholes option valuation model. The fair
value of market-based restricted stock units is determined using a Monte Carlo simulation model, which uses
multiple input variables to determine the probability of satisfying the market condition requirements. The Black-
Scholes and Monte Carlo models require various highly judgmental assumptions, including stock price volatility,
risk-free interest rate, and expected option term. Stock-based compensation expense is recorded net of estimated
forfeitures. Judgment is required in estimating the stock awards that will ultimately be forfeited. If actual results
differ significantly from these estimates, stock-based compensation expense and our results of operations would
be impacted.
Legal Contingencies
We are or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits, including
those related to products and services currently or formerly manufactured or performed by us, workplace and
employment matters, matters involving real estate, our operations or health care regulations, or governmental
investigations. We accrue for loss contingencies to the extent that we conclude that it is probable that a loss will
be incurred and the amount of the loss can be reasonably estimated. If a reasonable estimate of a known or
probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses
is recognized if no amount within the range is a better estimate than any other. If we determine that a loss is
possible, but not probable, and the range of the loss can be reasonably determined, then we disclose the range of
the possible loss. These matters raise difficult and complex factual and legal issues and are subject to many
uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the
jurisdiction in which each suit is brought, and differences in applicable law. As such, significant judgment is
required in determining our legal accruals. We describe our legal proceedings in Note 18 to the “Consolidated
Financial Statements.”
New Accounting Standards
Information regarding new accounting standards is included in Note 2 to the “Consolidated Financial
Statements.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our business and financial results are affected by fluctuations in world financial markets, including changes
in currency exchange rates and interest rates. We manage these risks through a combination of normal operating
and financing activities and derivative financial instruments. We do not use derivative financial instruments for
trading or speculative purposes.
41
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and
our long-term debt. Our investment strategy is focused on preserving capital and supporting our liquidity
requirements, while earning a reasonable market return. We invest in a variety of debt securities, primarily time
deposits, commercial paper, United States and foreign government and agency securities, asset-backed securities,
corporate debt securities, and municipal debt securities. The market value of our investments may decline if
current market interest rates rise. As of December 31, 2022, we had $1.6 billion of investments in debt securities
which had an average remaining term to maturity of 0.98 years. Taking into consideration the average maturity
of our debt securities, a hypothetical 0.5% to 1.0% absolute increase in interest rates at December 31, 2022
would have resulted in a $7.8 million to $15.5 million decrease in the fair value of these investments. Such a
decrease would only result in a realized loss if we choose or are forced to sell the investments before the
scheduled maturity, which we currently do not anticipate.
For more information related to investments, see Note 7 to the “Consolidated Financial Statements.”
We are also exposed to interest rate risk on our debt obligations. As of December 31, 2022, we had
$600.0 million of 2018 Notes outstanding that carry a fixed rate, and also had available a $750.0 million Credit
Agreement that carries a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”). As of
December 31, 2022, there were no borrowings outstanding under the Credit Agreement. Based on our
December 31, 2022 variable debt levels, a hypothetical 1.0% absolute increase in floating market interest rates
would not have impacted our interest expense since we had no variable debt outstanding during the year. As of
December 31, 2022, a hypothetical 1.0% absolute increase in market interest rates would decrease the fair value
of the fixed-rate debt by approximately $26.7 million. This hypothetical change in interest rates would not impact
the interest expense on the fixed-rate debt.
For more information related to outstanding debt obligations, see Note 10 to the “Consolidated Financial
Statements.”
Currency Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include the
translation of local currency balances and results of our non-United States subsidiaries into United States dollars,
currency gains and losses related to intercompany and third-party transactions denominated in currencies other
than a subsidiary’s functional currency, and currency gains and losses associated with intercompany loans. Our
principal currency exposures relate to the Euro and the Japanese yen. Our objective is to minimize the volatility
of our exposure to these risks through a combination of normal operating and financing activities and the use of
derivative financial instruments in the form of foreign currency forward exchange contracts and cross currency
swap contracts. The total notional amount of our derivative financial instruments entered into for foreign
currency management purposes at December 31, 2022 was $2.0 billion. A hypothetical 10% increase (or
decrease) in the value of the United States dollar against all hedged currencies would increase (or decrease) the
fair value of these derivative contracts by $158.2 million. Any gains or losses on the fair value of derivative
contracts would generally be offset by gains and losses on the underlying transactions, so the net impact would
not be significant to our financial condition or results of operations.
For more information related to outstanding foreign exchange contracts, see Note 2 and Note 12 to the
“Consolidated Financial Statements.”
Credit Risk
Derivative financial instruments involve credit risk in the event the financial institution counterparty should
default. It is our policy to execute such instruments with major financial institutions that we believe to be
creditworthy. At December 31, 2022, all derivative financial instruments were with bank counterparties assigned
42
investment grade ratings by national rating agencies. We further diversify our derivative financial instruments
among counterparties to minimize exposure to any one of these entities. We have not experienced a counterparty
default and do not anticipate any non-performance by our current derivative counterparties.
Concentrations of Risk
We invest excess cash in a variety of debt securities, and diversify the investments between financial
institutions. Our investment policy limits the amount of credit exposure to any one issuer.
In the normal course of business, we provide credit to customers in the health care industry, perform credit
evaluations of these customers, and maintain allowances for potential credit losses, which have historically been
adequate compared to actual losses. In 2022, we had no customers that represented 10% or more of our total net
sales or accounts receivable, net.
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 December 31, 2022, we had $1.6 billion of investments in debt
securities of various companies, of which $1.1 billion were long-term. In addition, we had $108.3 million of
investments in equity instruments. 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.
43
Item 8.
Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . .
45
Financial Statements:
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the Years Ended December 31, 2022, 2021, and 2020:
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
49
50
51
52
53
All other schedules are omitted as they are not applicable or the required information is furnished in the
Consolidated Financial Statements or notes thereto.
44
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Edwards Lifesciences Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Edwards Lifesciences Corporation and its
subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of
operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the
period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated
financial statements”). We also have audited the Company’s internal control over financial reporting as of
December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing
under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and
on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
45
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and
(ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Uncertain Tax Positions Related to Intercompany Transfer Pricing
As described in Note 17 to the consolidated financial statements, the Company had an uncertain gross tax
position liability balance of $475.3 million as of December 31, 2022, of which a majority is related to
intercompany transfer pricing. As disclosed by management, the Company is subject to income taxes in the
United States and numerous foreign jurisdictions. The Company’s income tax returns in these jurisdictions are
periodically audited by domestic and foreign tax authorities. These audits include questions regarding the
Company’s tax filing positions, including the timing and amount of deductions and the allocation of income
amongst various tax jurisdictions. Significant judgment is required by management in evaluating uncertain tax
positions, including estimating the ultimate resolution to intercompany pricing controversies between countries
when there are numerous possible outcomes.
The principal considerations for our determination that performing procedures relating to uncertain tax positions
related to intercompany transfer pricing is a critical audit matter are the significant judgment by management
when determining uncertain tax positions related to intercompany transfer pricing, including a high degree of
estimation uncertainty in estimating the ultimate resolution to intercompany pricing controversies between
countries when there are numerous possible outcomes. This in turn led to a high degree of auditor judgment,
effort, and subjectivity in performing procedures to evaluate the accurate measurement of uncertain tax positions
related to intercompany transfer pricing. In addition, the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to intercompany transfer pricing, and controls over measurement of the liability. These
procedures also included, among others, (i) testing the information used in the calculation of the liability for
uncertain tax positions related to intercompany transfer pricing, including US federal filing positions, and the
related final income tax returns; (ii) testing the calculation of the liability for uncertain tax positions related to
intercompany transfer pricing, by jurisdiction, including management’s assessment of the technical merits of tax
positions and estimates of the amount of tax benefit expected to be sustained; (iii) testing management’s
46
assessment of possible outcomes of uncertain tax positions related to intercompany transfer pricing controversies
between countries; and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.
Professionals with specialized skill and knowledge were used to assist in the evaluation of the accurate
measurement of the Company’s uncertain tax positions related to intercompany transfer pricing, including
evaluating the reasonableness of management’s assessment of whether tax positions are more-likely-than not to
be sustained and the amount of potential tax benefit to be realized, and the application of relevant tax laws.
/s/ PricewaterhouseCoopers LLP
Irvine, California
February 13, 2023
We have served as the Company’s auditor since 1999.
47
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
Current assets
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments (Note 7)
Accounts receivable, net of allowances of $7.9 and $9.3, respectively . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments (Note 7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant, and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets (Note 6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net (Note 9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other liabilities (Note 5)
Operating lease liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities (Notes 8 and 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation settlement accrual (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Notes 6, 10, and 18)
Stockholders’ equity (Note 14)
December 31,
2022
2021
$
769.0
446.3
643.0
56.1
875.5
110.0
195.9
3,095.8
1,239.0
1,632.8
92.3
1,164.3
285.2
484.0
299.1
$ 8,292.5
$
201.9
795.0
25.5
1,022.4
596.3
26.2
143.4
69.5
267.5
143.0
217.5
2,485.8
$
862.8
604.0
582.2
82.7
726.7
85.2
237.1
3,180.7
1,834.2
1,546.6
92.1
1,167.9
323.6
246.7
110.8
$ 8,502.6
$
204.5
802.3
25.5
1,032.3
595.7
62.0
190.0
69.1
259.0
191.3
267.3
2,666.7
Preferred stock, $0.01 par value, authorized 50.0 shares, no shares outstanding . . . .
Common stock, $1.00 par value, 1,050.0 shares authorized, 646.3 and 642.0 shares
issued, and 608.3 and 624.1 shares outstanding, respectively . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 38.0 and 17.9 shares, respectively . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
646.3
1,969.3
7,590.0
(254.9)
(4,144.0)
5,806.7
$ 8,292.5
642.0
1,700.4
6,068.1
(157.7)
(2,416.9)
5,835.9
$ 8,502.6
The accompanying notes are an integral part of these consolidated financial statements.
48
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share information)
Years Ended December 31,
2022
2021
2020
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
1,080.4
$5,232.5
1,248.9
$4,386.3
1,080.6
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general, and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual property litigation expenses, net (Note 3) . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration liabilities, net
(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special charge (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,302.0
1,567.6
945.2
15.8
(35.8)
60.7
1,748.5
19.2
(35.5)
(2.6)
1,767.4
245.5
3,983.6
1,493.7
903.1
20.6
(124.1)
—
1,690.3
18.4
(17.4)
(12.7)
1,702.0
198.9
3,305.7
1,228.4
760.7
405.4
13.6
—
897.6
15.8
(23.4)
(11.5)
916.7
93.3
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$ 823.4
Share information (Note 2):
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2.46
2.44
$
$
2.41
2.38
$
$
1.32
1.30
Weighted-average number of common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
619.0
624.2
623.3
631.2
622.6
631.9
The accompanying notes are an integral part of these consolidated financial statements.
49
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Years Ended December 31,
2022
2021
2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Other comprehensive (loss) income, net of tax (Note 15):
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized pension credits (costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on available-for-sale investments . . . . . . . . . . . . . . . .
Reclassification of net realized investment loss to earnings . . . . . . . . . . . . . .
Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46.3)
(5.9)
13.7
(77.5)
18.8
(97.2)
(50.1)
57.4
11.6
(24.1)
8.6
3.4
32.4
(40.2)
(4.2)
6.6
0.3
(5.1)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,424.7
$1,506.5
$818.3
The accompanying notes are an integral part of these consolidated financial statements.
50
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended December 31,
2022
2021
2020
$ 1,521.9
$ 1,503.1
$ 823.4
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation (Notes 2 and 14) . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration liabilities, net
(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities: . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation settlement accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .
Accounts and other receivables, net
Cash flows from investing activities
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of held-to-maturity investments (Note 7) . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of held-to-maturity investments
(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of available-for-sale investments (Note 7) . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of available-for-sale investments
(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for acquisition option (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuances of notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collections of notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . .
139.6
27.2
126.8
55.1
(35.8)
51.5
(254.5)
7.8
(84.1)
(213.4)
0.1
(21.4)
(45.0)
(5.6)
(52.0)
1,218.2
134.8
28.5
109.3
4.0
(124.1)
(36.8)
(41.4)
9.4
(91.1)
19.0
7.9
195.2
(29.2)
62.0
(18.5)
1,732.1
(244.6)
(353.5)
(325.8)
(250.0)
419.5
(315.8)
138.0
(1,629.3)
939.6
(109.6)
(52.3)
18.0
(20.2)
(28.8)
252.3
391.2
(13.1)
(5.1)
20.0
(4.0)
(44.4)
(1,722.5)
Cash flows from financing activities
Proceeds from issuance of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on debt and finance lease obligations . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(0.2)
(1,727.1)
146.4
(3.6)
(1,584.5)
5.2
(7.0)
(512.8)
158.6
(0.3)
(356.3)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in cash, cash equivalents, and restricted
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents, and restricted cash at beginning of year . . . . . . . . . . . . . . . .
Cash, cash equivalents, and restricted cash at end of year . . . . . . . . . . . . . . . . . . . . .
19.2
13.9
(20.5)
(94.8)
867.4
772.6
(332.8)
1,200.2
867.4
$
15.8
1,184.4
$1,200.2
$
The accompanying notes are an integral part of these consolidated financial statements.
51
107.2
28.2
92.6
—
13.6
(21.2)
(49.4)
17.7
41.9
(120.6)
(28.5)
(84.5)
270.5
(52.9)
16.3
1,054.3
(407.0)
(162.0)
212.2
(689.7)
564.8
(10.0)
(27.0)
—
(0.3)
(12.1)
(531.1)
16.2
(17.0)
(625.4)
140.5
(1.2)
(486.9)
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
Common Stock
Treasury Stock
Shares
Par
Value Shares Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
$(1,278.7) $1,623.3 $3,741.6
823.4
$(156.0)
$ 4,148.3
823.4
(5.1)
(5.1)
BALANCE AT DECEMBER 31,
2019 . . . . . . . . . . . . . . . . . . . . . . . 218.1 $218.1
9.0
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
4.5
4.5
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
Stock issued to effect stock split . . . . 413.8
413.8
BALANCE AT DECEMBER 31,
3.1
(625.4)
136.0
92.6
(413.8)
2020 . . . . . . . . . . . . . . . . . . . . . . . 636.4
636.4
12.1
(1,904.1)
1,438.1
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
5.6
5.6
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
BALANCE AT DECEMBER 31,
153.0
109.3
5.8
(512.8)
2021 . . . . . . . . . . . . . . . . . . . . . . . 642.0
642.0
17.9
(2,416.9)
1,700.4
140.5
92.6
(625.4)
—
4,574.3
1,503.1
3.4
158.6
109.3
(512.8)
5,835.9
1,521.9
4,565.0
1,503.1
(161.1)
3.4
6,068.1
1,521.9
(157.7)
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
4.3
4.3
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
BALANCE AT DECEMBER 31,
142.1
126.8
20.1
(1,727.1)
(97.2)
(97.2)
146.4
126.8
(1,727.1)
2022 . . . . . . . . . . . . . . . . . . . . . . . 646.3 $646.3
38.0
$(4,144.0) $1,969.3 $7,590.0
$(254.9)
$ 5,806.7
The accompanying notes are an integral part of these consolidated financial statements.
52
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Edwards Lifesciences Corporation (“Edwards Lifesciences” or the “Company”) conducts operations
worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of
World. Edwards Lifesciences is focused on technologies that treat structural heart disease and critically ill
patients. The products and technologies provided by Edwards Lifesciences are categorized into the following
main areas: Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical
Structural Heart, and Critical Care.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Edwards Lifesciences and its
majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Company reviews its investments in other entities to determine whether the Company is the primary
beneficiary of a variable interest entity (“VIE”). The Company would be the primary beneficiary of the VIE, and
would be required to consolidate the VIE, if it has the power to direct the significant activities of the entity and
the obligation to absorb losses or receive benefits from the entity that may be significant to the VIE. Based on the
Company’s analysis, it determined it is not the primary beneficiary of any material VIEs; however, future events
may require VIEs to be consolidated if the Company becomes the primary beneficiary.
Use of Estimates
The consolidated financial statements of Edwards Lifesciences have been prepared in accordance with
generally accepted accounting principles in the United States of America (“GAAP”) which have been applied
consistently in all material respects. The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.
Foreign Currency Translation
When the local currency of the Company’s foreign entities is the functional currency, all assets and
liabilities are translated into United States dollars at the rate of exchange in effect at the balance sheet date.
Income and expense items are translated at the weighted-average exchange rate prevailing during the period. The
effects of foreign currency translation adjustments for these entities are deferred and reported in stockholders’
equity as a component of “Accumulated Other Comprehensive Loss.” The effects of foreign currency transactions
denominated in a currency other than an entity’s functional currency are included in “Other Income, net.”
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to the customer in an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those
products or services.
The Company generates nearly all of its revenue from direct product sales and sales of products under
consignment arrangements. Revenue from direct product sales is recognized at a point in time when the
performance obligation is satisfied upon delivery of the product. Revenue from sales of consigned inventory is
recognized at a point in time when the performance obligation is satisfied once the product has been implanted or
53
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
used by the customer. The Company periodically reviews consignment inventories to confirm the accuracy of
customer reporting. The Company also generates a small portion of its revenue from service contracts, and
recognizes revenue from service contracts ratably over the term of the contracts. Sales taxes and other similar
taxes that the Company collects concurrent with revenue-producing activities are excluded from revenue. The
Company does not typically have any significant unusual payment terms beyond 90 days in its contracts with
customers. In addition, the Company receives royalty payments for the licensing of certain intellectual property
and recognizes the royalty when the subsequent sale of product using the intellectual property occurs.
The amount of consideration the Company ultimately receives varies depending upon the return terms, sales
rebates, discounts, and other incentives that the Company may offer, which are accounted for as variable
consideration when estimating the amount of revenue to recognize. The Company includes estimated amounts in
the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is resolved. The estimates of variable
consideration and determination of whether to include estimated amounts in the transaction price are based
largely upon an assessment of historical payment experience, historical relationship to revenues, estimated
customer inventory levels, and current contract sales terms with direct and indirect customers.
The Company’s sales adjustment related to distributor rebates given to the Company’s United States
distributors represents the difference between the Company’s sales price to the distributor and the negotiated
price to be paid by the end-customer. This distributor rebate is recorded as a reduction to sales and a reduction to
the distributor’s accounts receivable at the time of sale to a distributor. The Company periodically monitors
current pricing trends and distributor inventory levels to ensure the credit for future distributor rebates is fairly
stated.
The Company offers volume rebates to certain group purchasing organizations (“GPOs”) and customers
based upon targeted sales levels. Volume rebates offered to GPOs are recorded as a reduction to sales and an
obligation to the GPOs, as the Company expects to pay in cash. Volume rebates offered to customers are
recorded as a reduction to sales and either a reduction to accounts receivable if the Company expects a net
payment from the customer, or as an obligation to the customer if the Company expects to pay in cash. The
provision for volume rebates is estimated based upon customers’ contracted rebate programs, projected sales
levels, and historical experience of rebates paid. The Company periodically monitors its customer rebate
programs to ensure that the allowance and liability for accrued rebates is fairly stated.
Product returns are typically not significant because returns are generally not allowed unless the product is
damaged at time of receipt. In limited circumstances, the Company may allow customers to return previously
purchased products, such as for next-generation product offerings. For these transactions, the Company defers
recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of
product to be returned when the next-generation products are shipped to the customer.
The Company sells separately priced service contracts, which range from 12 to 36 months, to owners of its
hemodynamic monitors. The Company invoices the customer the total amount of consideration at the inception
of the contract and recognizes revenue ratably over the term of the contract. As of December 31, 2022 and 2021,
$10.6 million and $10.2 million, respectively, of deferred revenue associated with outstanding service contracts
was recorded in “Accrued and Other Liabilities” and “Other Liabilities.” During 2022, the Company recognized
as revenue $7.2 million that was included in the balance of deferred revenue as of December 31, 2021, and
during 2021, the Company recognized as revenue $7.3 million that was included in the balance of deferred
revenue as of December 31, 2020.
54
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A limited number of the Company’s contracts with customers contain multiple performance obligations. For
these contracts, the transaction price is allocated to each performance obligation based on its relative standalone
selling price charged to other customers.
The Company applies the optional exemption of not disclosing the amount of the transaction price allocated
to unsatisfied performance obligations for contracts with an original expected duration of one year or less.
Shipping and Handling Costs
Shipping costs, which are costs incurred to physically move product from the Company’s premises or third
party distribution centers, including storage, to the customer’s premises, are included in “Selling, General, and
Administrative Expenses.” Handling costs, which are costs incurred to store at the Company’s premises, move,
and prepare products for shipment, are included in “Cost of Sales.” For the years ended December 31, 2022,
2021, and 2020, shipping costs of $87.4 million, $85.3 million, and $74.0 million, respectively, were included in
“Selling, General, and Administrative Expenses.”
Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less at the
time of purchase to be cash equivalents. These investments are valued at cost, which approximates fair value.
Investments
The Company invests its excess cash in debt securities, including time deposits, commercial paper, United
States government and agency securities, asset-backed securities, corporate debt securities, and municipal debt
securities. Investments with maturities of one year or less are classified as short-term, and investments with
maturities greater than one year are classified as long-term. Investments that the Company has the ability and
intent to hold until maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt
securities that are classified as available-for-sale are carried at fair value with unrealized gains and losses
included in “Accumulated Other Comprehensive Loss.” The Company determines the appropriate classification
of its investments in debt securities at the time of purchase and reevaluates such designation at each balance sheet
date.
The Company also has long-term equity investments in companies that are in various stages of
development. These investments are reported at fair value or under the equity method of accounting, as
appropriate. Equity investments that do not have readily determinable fair values are recorded at cost minus
impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the
identical or similar investment of the same issuer. The Company accounts for investments in limited partnerships
and limited liability corporations, whereby the Company owns a minimum of 3% of the investee’s outstanding
voting stock, under the equity method of accounting. These investments are recorded at the amount of the
Company’s investment and adjusted each period for the Company’s share of the investee’s income or loss, and
dividends paid.
Realized gains and losses on investments that are sold are determined using the specific identification
method, or the first-in, first-out method, depending on the investment type, and recorded to “Other Income, net.”
Income relating to investments in debt securities is recorded to “Interest Income.”
55
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equity investments without readily determinable fair value are considered impaired when there is an
indication that the fair value of the Company’s interest is less than the carrying amount. Equity method
investments are considered impaired when there is an indication of an other-than-temporary decline in value
below the carrying amount. Impairments of equity investments are recorded in “Other Income, net.”
Debt securities in an unrealized loss position are written down to fair value through “Other Income, net” if
the Company intends to sell the security or it is more likely than not that the Company will be required to sell the
security before recovery of its amortized cost basis. For debt securities in an unrealized loss position that do not
meet the aforementioned criteria, the Company assesses whether the decline in fair value has resulted from credit
losses or other factors. In making this assessment, the Company considers the length of time and the extent to
which the security’s fair value has been below cost, changes to the rating of the security by a rating agency, and
any adverse conditions specifically related to the security, among other factors. When a credit loss exists, the
Company compares the present value of cash flows expected to be collected from the debt security to the
amortized cost basis of the security to determine the allowance amount that should be recorded, if any.
Accounts Receivable
The majority of the Company’s accounts receivable arise from direct product sales and sales of products
under consignment arrangements, and have payment terms that generally require payment within 30 to 90 days.
The Company does not adjust its receivables for the effects of a significant financing component at contract
inception if collection of the receivable is expected within one year or less from the time of sale. In countries
where the Company has experienced a pattern of payments extending beyond the stated terms and collection of
the receivable is expected beyond one year from the time of sale, the Company assesses whether the customer
has a significant financing component and discounts the receivable and reduces the related revenues over the
period of time that the Company estimates those amounts will be paid using the country’s market-based
borrowing rate for such period.
The Company provides reserves against accounts receivable for estimated losses that may result from a
customer’s inability to pay based on customer-specific analysis and general matters such as current assessments
of past due balances, economic conditions and forecasts, and historical credit loss activity. Amounts determined
to be uncollectible are charged or written-off against the reserve.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Market value for
raw materials is based on replacement costs, and for other inventory classifications is based on net realizable
value.
A write-down for excess or slow moving inventory is recorded for inventory which is obsolete, damaged,
nearing its expiration date (generally triggered at six months prior to expiration), or slow moving (generally
defined as quantities in excess of a two-year supply).
The Company allocates to inventory general and administrative costs that are related to the production
process. These costs include insurance, manufacturing accounting and human resources personnel, and
information technology. During the years ended December 31, 2022, 2021, and 2020, the Company allocated
$88.1 million, $77.9 million, and $63.1 million, respectively, of general and administrative costs to inventory.
General and administrative costs included in inventory at December 31, 2022 and 2021 were $43.7 million and
$33.7 million, respectively.
56
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
At December 31, 2022 and 2021, $128.6 million and $125.8 million, respectively, of the Company’s
finished goods inventories were held on consignment.
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Depreciation is principally calculated for financial
reporting purposes on the straight-line method over the estimated useful lives of the related assets, which range
from 10 to 40 years for buildings and improvements, from 3 to 15 years for machinery and equipment, and from
3 to 5 years for software. Leasehold improvements are amortized over the life of the related facility leases or the
asset, whichever is shorter. Straight-line and accelerated methods of depreciation are used for income tax
purposes. Construction in progress is not depreciated until the asset is ready for its intended use.
Depreciation expense for property, plant, and equipment was $133.9 million, $127.0 million, and
$101.8 million for the years ended December 31, 2022, 2021, and 2020, respectively.
Leases
The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets
represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are
recognized at lease commencement based upon the estimated present value of unpaid lease payments over the
lease term. The Company uses its incremental borrowing rate based on the information available at lease
commencement in determining the present value of unpaid lease payments. The Company’s incremental
borrowing rate is determined based on the estimated rate of interest for collateralized borrowing over a similar
term as the associated lease. Right-of-use assets also include any lease payments made at or before lease
commencement and any initial direct costs incurred, and exclude any lease incentives received.
The Company determines the lease term as the noncancellable period of the lease, and may include options
to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases
with a term of 12 months or less are not recognized on the balance sheet. Certain of the Company’s leases
include variable lease payments that are based on costs incurred or actual usage, or adjusted periodically based
on an index or a rate. The Company’s leases do not contain any residual value guarantees.
The Company accounts for the lease and non-lease components as a single lease component for all of its
leases except vehicle leases, for which the lease and non-lease components are accounted for separately.
Operating leases are included in “Operating Lease Right-of-Use Assets” and “Operating Lease Liabilities”
on the Company’s consolidated balance sheets. See Note 6 for further information.
Acquisitions
Businesses that the Company acquires are included in its results of operations as of the acquisition date. The
purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. The
excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill.
Acquisition-related expenses are recognized separately from the business combination and are expensed as
incurred. Contingent consideration obligations incurred in connection with a business combination are recorded
at their fair values on the acquisition date and remeasured on a quarterly basis, with changes in their fair value
57
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
recorded as an adjustment to earnings, until the related contingencies have been resolved. When the assets
acquired do not meet the definition of a business combination, the transactions is accounted for as an asset
acquisition. In an asset acquisition, the cost of the acquisition is allocated to the assets acquired and liabilities
assumed based on their relative fair values. Upfront payments related to in-process research and development
projects with no alternative future use are expensed upon acquisition.
Impairment of Goodwill and Long-lived Assets
Goodwill is reviewed for impairment annually in the fourth quarter of each fiscal year, or whenever an event
occurs or circumstances change that would indicate that the carrying amount may be impaired. Goodwill is tested
for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is
more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit
does not pass the qualitative assessment, then the Company performs a quantitative impairment test. The
Company determined, after performing a qualitative review of each reporting unit, that it is more likely than not
that the fair value of each of its reporting units substantially exceeds the respective carrying amounts.
Accordingly, in 2022, 2021, and 2020, the Company did not record any goodwill impairment loss.
Indefinite-lived intangible assets relate to in-process research and development acquired in business
combinations. The estimated fair values of in-process research and development projects acquired in a business
combination which have not reached technological feasibility are capitalized and accounted for as indefinite-
lived intangible assets subject to impairment testing until completion or abandonment of the projects. Upon
successful completion of the project, the capitalized amount is amortized over its estimated useful life. If the
project is abandoned, all remaining capitalized amounts are written off immediately. Indefinite-lived intangible
assets are reviewed for impairment annually in the fourth quarter of each fiscal year, or whenever an event occurs
or circumstances change that would indicate the carrying amount may be impaired. An impairment loss is
recognized when the asset’s carrying value exceeds its fair value. In-process research and development projects
acquired in an asset acquisition are expensed unless the project has an alternative future use.
Management reviews the carrying amounts of other finite-lived intangible assets and long-lived tangible
assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable.
Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in
revenue or operating profit, and adverse legal or regulatory developments. If it is determined that such indicators
are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated
cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair market
value. Estimated fair market value is determined primarily using the anticipated cash flows discounted at a rate
commensurate with the risk involved. For the purposes of identifying and measuring impairment, long-lived
assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely
independent of the cash flows of other assets and liabilities.
In 2022, the Company recorded a $52.7 million impairment of certain developed technology and in-process
research and development assets. For further information, see Note 4. In 2021 and 2020, the Company did not
record any impairment loss related to its in-process research and development assets.
Income Taxes
The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant
judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for
58
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
income taxes. The Company recognizes the financial statement benefit of a tax position only after determining
that a position would more likely than not be sustained based upon its technical merit if challenged by the
relevant taxing authority and taken by management to the court of last resort. For tax positions meeting the more-
likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit
that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. The
Company recognizes interest and penalties related to income tax matters in income tax expense. The Company
has made an accounting policy election to recognize the United States tax effects of global intangible low-taxed
income as a component of income tax expense in the period the tax arises.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that
have been recognized in the Company’s financial statements or tax returns. The Company evaluates quarterly the
realizability of its deferred tax assets by assessing its valuation allowance and adjusting the amount, if necessary.
The factors used to assess the likelihood of realization are both historical experience and the Company’s forecast
of future taxable income and available tax planning strategies that could be implemented to realize the net
deferred tax assets. Failure to achieve forecasted taxable income in the applicable taxing jurisdictions could
affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax
rate on future earnings.
Research and Development Costs
Research and development costs are charged to expense when incurred.
Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted-average common shares
outstanding during the period. Diluted earnings per share is computed based on the weighted-average common
shares outstanding plus the effect of dilutive potential common shares outstanding during the period calculated
using the treasury stock method. Dilutive potential common shares include employee equity share options,
nonvested shares, and similar equity instruments granted by the Company. Potential common share equivalents
have been excluded where their inclusion would be anti-dilutive.
59
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The table below presents the computation of basic and diluted earnings per share (in millions, except for per
share information):
Basic:
Years Ended December 31,
2022
2021
2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Weighted-average shares outstanding . . . . . . . . . . . .
619.0
623.3
622.6
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . .
$
2.46
$
2.41
$ 1.32
Diluted:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Weighted-average shares outstanding . . . . . . . . . . . .
Dilutive effect of stock plans . . . . . . . . . . . . . . . . . . .
Dilutive weighted-average shares outstanding . . . . . .
619.0
5.2
624.2
623.3
7.9
631.2
622.6
9.3
631.9
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . .
$
2.44
$
2.38
$ 1.30
Outstanding stock options, unvested restricted stock units, and unvested market-based restricted stock units
to purchase approximately 3.6 million, 1.8 million, and 2.0 million shares for the years ended December 31,
2022, 2021, and 2020, respectively, were not included in the computation of diluted earnings per share because
the effect would have been anti-dilutive.
Stock-based Compensation
The Company measures and recognizes compensation expense for all stock-based awards based on
estimated fair values. Stock-based awards consist of stock options, restricted stock units (service-based and
market-based), and employee stock purchase subscriptions. Stock-based compensation expense is measured at
the grant date based on the fair value of the award and is recognized as expense over each award’s requisite
service period (vesting period) on a straight-line basis. Forfeitures are estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those estimates. Upon exercise of stock
options or vesting of restricted stock units, the Company issues common stock.
Total stock-based compensation expense was as follows (in millions):
Years Ended December 31,
2022
2021
2020
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general, and administrative expenses . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . .
$ 22.8
75.3
28.7
$ 20.4
65.6
23.3
$ 17.2
56.6
18.8
Total stock-based compensation expense . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126.8
(21.6)
109.3
(18.9)
92.6
(15.4)
Total stock-based compensation expense, net of tax . . . .
$105.2
$ 90.4
$ 77.2
Upon a participant’s retirement, all unvested stock options are immediately forfeited. In addition, upon
retirement, a participant will immediately vest in 25% of service-based restricted stock units for each full year of
60
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
employment with the Company measured from the grant date. All remaining unvested service-based restricted
stock units are immediately forfeited. For market-based restricted stock units, upon retirement and in certain
other specified cases, a participant will receive a pro-rated portion of the shares that would ultimately be issued
based on attainment of the performance goals as determined on the vesting date. The pro-rated portion is based
on the participant’s whole months of service with the Company during the performance period prior to the date
of termination.
Derivatives
The Company uses derivative financial instruments to manage its currency exchange rate risk and its
interest rate risk. It is the Company’s policy not to enter into derivative financial instruments for speculative
purposes.
Derivative financial instruments involve credit risk in the event the counterparty should default. It is the
Company’s policy to execute such instruments with global financial institutions that the Company believes to be
creditworthy. The Company diversifies its derivative financial instruments among counterparties to minimize
exposure to any one of these entities. The Company also uses International Swap Dealers Association master-
netting agreements. The master-netting agreements provide for the net settlement of all contracts through a single
payment in a single currency in the event of default, as defined by the agreements.
The Company uses foreign currency forward exchange contracts and cross currency swap contracts to
manage its exposure to changes in currency exchange rates from (1) future cash flows associated with
intercompany transactions and certain local currency expenses expected to occur within the next 13 months
(designated as cash flow hedges), (2) its net investment in certain foreign subsidiaries (designated as net
investment hedges) and (3) foreign currency denominated assets or liabilities (designated as fair value hedges).
The Company also uses foreign currency forward exchange contracts that are not designated as hedging
instruments to offset the transaction gains and losses associated with the revaluation of certain assets and
liabilities denominated in currencies other than their functional currencies, resulting principally from
intercompany and local currency transactions.
All derivative financial instruments are recognized at fair value in the consolidated balance sheets. For each
derivative instrument that is designated as a fair value hedge, the gain or loss on the derivative included in the
assessment of hedge effectiveness is recognized immediately to earnings, and offsets the loss or gain on the
underlying hedged item. The Company reports in “Accumulated Other Comprehensive Loss” the gain or loss on
derivative financial instruments that are designated, and that qualify, as cash flow hedges. The Company
reclassifies these gains and losses into earnings in the same line item and in the same period in which the
underlying hedged transactions affect earnings. Changes in the fair value of net investment hedges are reported in
“Accumulated Other Comprehensive Loss” as a part of the cumulative translation adjustment and would be
reclassified into earnings if the underlying net investment is sold or substantially liquidated. The portion of the
change in fair value related to components excluded from the hedge effectiveness assessment are amortized into
earnings over the life of the derivative. The gains and losses on derivative financial instruments for which the
Company does not elect hedge accounting treatment are recognized in the consolidated statements of operations
in each period based upon the change in the fair value of the derivative financial instrument. Cash flows from net
investment hedges are reported as investing activities in the consolidated statements of cash flows, and cash
flows from all other derivative financial instruments are reported as operating activities.
61
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Adopted Accounting Standards
In November 2021, the Financial Accounting Standards Board (“FASB”) issued an amendment to the
accounting guidance on government assistance. The guidance requires certain disclosures about transactions with
a government that are accounted for by applying a grant or contribution model. The guidance was effective for
annual periods beginning after December 15, 2021. The adoption of this guidance was applied prospectively and
did not have an impact on the Company’s consolidated financial statements.
3. INTELLECTUAL PROPERTY LITIGATION EXPENSES, NET
The Company incurred intellectual property litigation expenses, including settlements and external legal
costs, of $15.8 million, $20.6 million and $405.4 million during 2022, 2021 and 2020, respectively.
On July 12, 2020, the Company reached an agreement with Abbott Laboratories and its direct and indirect
subsidiaries (“Abbott”) to, among other things, settle all outstanding patent disputes between the companies (the
“Settlement Agreement”) in cases related to transcatheter mitral and tricuspid repair products. The Settlement
Agreement resulted in the Company recording an estimated $367.9 million pre-tax charge and related liability in
June 2020 related to past damages. In addition, the Company will incur royalty expenses through May 2024
totaling an estimated $70 million. The Company made a one-time $100.0 million payment to Abbott in July
2020, and is making quarterly payments in subsequent years. As of December 31, 2022, $53.3 million was
accrued in “Accrued and other liabilities” and $143.0 million was accrued in “Litigation
settlement accrual” on the consolidated balance sheet.
4. SPECIAL CHARGE
In September 2022, the Company decided to exit its HARPOON surgical mitral repair system program. As a
result, the Company recorded a charge to its United States segment of $62.3 million, of which $60.7 million was
included in “Special Charge” and $1.6 million was included in “Cost of Sales” on the consolidated statements of
operations. The charge primarily related to the full impairment of intangible assets associated with the
technology for $52.7 million (see Note 8 and Note 9) and other related exit costs. The Company believes that no
additional contingent consideration is due and, in September 2022, recorded an $11.7 million contingent
consideration gain associated with the exit (see Note 11).
62
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS
Composition of Certain Financial Statement Captions
Components of selected captions in the consolidated balance sheets are as follows:
As of December 31,
2022
2021
(in millions)
Inventories
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 156.4
177.4
541.7
$ 132.8
164.3
429.6
$ 875.5
$ 726.7
Property, plant, and equipment, net
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment with customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 116.3
1,189.2
697.6
37.4
87.5
255.2
$ 116.5
1,010.1
613.4
39.2
88.2
333.8
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,383.2
(750.4)
2,201.2
(654.6)
$1,632.8
$1,546.6
Accrued and other liabilities
Employee compensation and withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, payroll, and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal and insurance (Notes 3 and 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued realignment reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued relocation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 268.7
116.1
45.6
66.9
81.4
50.6
20.7
17.0
6.6
15.6
25.2
80.6
$ 319.7
77.0
68.9
58.2
79.1
30.6
3.9
20.1
11.9
19.1
26.2
87.6
$ 795.0
$ 802.3
63
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS (Continued)
Supplemental Cash Flow Information
(in millions)
Years Ended December 31,
2022
2021
2020
Cash paid during the year for:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts included in the measurement of lease liabilities:
$ 19.3
$504.1
$ 20.2
$182.5
$ 19.9
$197.9
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . .
$ 28.1
$ 31.9
$ 29.7
Non-cash investing and financing transactions:
Right-of-use assets obtained in exchange for new lease liabilities . . . . . . . . . . . .
Capital expenditures accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Conversion of notes receivable to equity investment
$ 28.7
$ 31.9
$ 42.6
$ 54.3
$ — $ 21.5
$ 39.7
$ 80.4
4.5
$
Cash, Cash Equivalents, and Restricted Cash
(in millions)
Years Ended December 31,
2022
2021
2020
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash included in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash included in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$769.0
0.5
3.1
$862.8
1.5
3.1
$1,183.2
16.6
0.4
Total cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . . . . . . .
$772.6
$867.4
$1,200.2
Amounts included in restricted cash primarily represent funds placed in escrow related to litigation and real
estate purchases. Restricted cash as of December 31, 2020 also included funds restricted for construction.
6. LEASES
The Company leases certain office space, manufacturing facilities, land, apartments, warehouses, vehicles,
and equipment with remaining lease terms ranging from less than 1 year to 18 years, some of which include
options to extend or terminate the leases.
Operating lease costs for the years ended December 31, 2022, 2021, and 2020 were $28.8 million,
$29.7 million, and $30.5 million, respectively. Short-term and variable lease costs were not material for the years
ended December 31, 2022, 2021, and 2020.
64
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. LEASES (Continued)
Supplemental balance sheet information related to operating leases was as follows (in millions, except lease
term and discount rate):
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . .
$92.3
$92.1
Operating lease liabilities, current portion . . . . . . . . . . . . . . . . . .
Operating lease liabilities, long-term portion . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . .
$25.5
69.5
$95.0
$25.5
69.1
$94.6
As of December 31,
2022
2021
Maturities of operating lease liabilities at December 31, 2022 were as follows (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 27.0
18.5
12.5
10.5
8.2
26.0
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest
102.7
(7.7)
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 95.0
The following table provides information on the lease terms and discount rates:
Weighted-average remaining lease term (in years) . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2022
6.4
1.8%
2021
6.2
2.5%
As of December 31, 2022, the Company had additional operating lease commitments of $14.1 million for
office spaces that have not yet commenced.
65
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS
Debt Securities
Investments in debt securities at the end of each period were as follows (in millions):
Held-to-maturity
December 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
December 31, 2021
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Bank time deposits . . . . . $
96.0
$—
$ —
$
96.0 $ 162.0
$—
$ —
$ 162.0
Available-for-sale
Bank time deposits . . . . . $ — $—
Commercial paper . . . . .
—
United States
—
$ —
—
$ — $
—
2.5
$—
127.7 —
$ —
—
$
2.5
127.7
government and
agency securities . . . .
Asset-backed
137.7 —
(6.1)
131.6
147.4
securities . . . . . . . . . .
380.6 —
(14.0)
366.6
515.2
Corporate debt
0.6
0.3
(0.7)
147.3
(2.9)
512.6
securities . . . . . . . . . .
Municipal securities . . . .
1,028.1 —
2.7 —
(47.8)
(0.2)
980.3
2.5
1,397.1
2.0
2.8 —
(8.3)
—
1,390.8
2.8
$1,549.1
$—
$(68.1)
$1,481.0 $2,192.7
$ 2.9
$(11.9)
$2,183.7
The cost and fair value of investments in debt securities, by contractual maturity, as of December 31, 2022
were as follows:
Due in 1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 1 year through 5 years . . . . . . . . . . . . . . . . . . .
Due after 5 years through 10 years . . . . . . . . . . . . . . . . .
Instruments not due at a single maturity date (a) . . . . . .
Held-to-Maturity
Available-for-Sale
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
$91.5
4.5
—
—
$96.0
(in millions)
$91.5
4.5
—
—
$96.0
$ 362.0
753.8
6.0
427.3
$ 354.8
710.8
5.7
409.7
$1,549.1
$1,481.0
(a) Consists of mortgage- and asset-backed securities.
Actual maturities may differ from the contractual maturities due to call or prepayment rights.
66
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS (Continued)
The following tables present gross unrealized losses and fair values for those investments that were in an
unrealized loss position as of December 31, 2022 and 2021, aggregated by investment category and the length of
time that individual securities have been in a continuous loss position (in millions):
U.S. government and agency securities . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . .
Less than 12 Months
December 31, 2022
12 Months or
Greater
Total
Fair
Value
$ 61.6
103.3
189.0
—
$353.9
Gross
Unrealized
Losses
$(1.5)
(1.3)
(5.3)
—
$(8.1)
Fair
Value
$
69.5
254.6
784.8
2.5
Gross
Unrealized
Losses
$ (4.6)
(12.7)
(42.5)
(0.2)
Fair
Value
$ 131.1
357.9
973.8
2.5
Gross
Unrealized
Losses
$ (6.1)
(14.0)
(47.8)
(0.2)
$1,111.4
$(60.0)
$1,465.3
$(68.1)
Less than 12 Months
December 31, 2021
12 Months or
Greater
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. government and agency securities . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . .
$
85.1
433.3
1,114.1
$ (0.7)
$—
(2.9) —
(8.3) —
$1,632.5
$(11.9)
$—
$—
—
—
$—
Total
Fair
Value
$
85.1
433.3
1,114.1
Gross
Unrealized
Losses
$ (0.7)
(2.9)
(8.3)
$1,632.5
$(11.9)
The Company reviews its investments in debt securities to determine if there has been an other-than-
temporary decline in fair value. Consideration is given to 1) the length of time and the extent to which the
security’s fair value has been below cost, 2) the financial condition and near-term prospects of the issuer,
including the credit quality of the security’s issuer, 3) the Company’s intent to sell the security, and 4) whether it
is more likely than not the Company will have to sell the security before recovery of its amortized cost. During
2022, the decline in fair value of the debt securities was largely due to changes in interest rates, not credit quality,
and as of December 31, 2022, the Company did not intend to sell the securities, and it was not more likely than
not that it will be required to sell the securities, before recovery of the unrealized losses, and therefore, the
unrealized losses are considered temporary.
67
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS (Continued)
Investments in Unconsolidated Entities
The Company has a number of equity investments in unconsolidated entities. These investments are
recorded in “Long-term Investments” on the consolidated balance sheets, and are as follows:
December 31,
2022
2021
(in millions)
Equity method investments
Carrying value of equity method investments . . . . . . . . . .
$ 21.4
$ 8.4
Equity securities
Carrying value of non-marketable equity securities . . . . . .
86.9
84.1
Total investments in unconsolidated entities . . . . . . . . . . . . .
$108.3
$92.5
During 2022, the Company made $13.2 million of equity investments in limited liability companies that
invest in qualified community development entities (“CDEs”) through the New Markets Tax Credit (“NMTC”)
program. The NMTC program provides federal tax incentives to investors to make investments in distressed
communities and promotes economic improvements through the development of successful businesses in these
communities. The NMTC is equal to 39% of the qualified investment and is taken over seven years. These
limited liability companies are variable interest entities (“VIEs”). The Company determined that it is not the
primary beneficiary of the VIEs because it does not have the power to direct the activities that most significantly
impact the economic performance of the VIEs, and therefore the Company does not consolidate these entities.
Instead, the NMTC investments are accounted for as equity method investments.
Non-marketable equity securities consist of investments in privately held companies without readily
determinable fair values, and are reported at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or similar investment of the same issuer. During
2022, the Company recorded an upward adjustment of $0.8 million based on observable price changes and a
downward adjustment of $0.5 million due to an impairment. During 2021, the Company recorded an upward
adjustment of $4.2 million based on observable price changes. As of December 31, 2022, the Company had
recorded cumulative upward adjustments of $8.8 million based on observable price changes, and cumulative
downward adjustments of $3.1 million due to impairments and observable price changes.
During 2022, 2021, and 2020, the gross realized gains or losses from sales of available-for-sale investments
were not material.
8. ACQUISITIONS AND OTHER ARRANGEMENTS
In-process Research and Development Assets
The Company acquired Harpoon Medical, Inc (“Harpoon”) on December 1, 2017 and CardiAQ Valve
Technologies, Inc. (“CardiAQ”) on July 3, 2015. In-process research and development assets acquired as part of
these transactions were capitalized at fair value, which was determined using the income approach. This
approach determines fair value based on cash flow projections which are discounted to present value using a risk-
adjusted rate of return. Completion of successful design developments, bench testing, pre-clinical studies and
human clinical studies are required prior to selling any product. The risks and uncertainties associated with
completing development within a reasonable period of time include those related to the design, development, and
68
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. ACQUISITIONS AND OTHER ARRANGEMENTS (Continued)
manufacturability of the product, the success of pre-clinical and clinical studies, and the timing of regulatory
approvals.
In September 2022, the Company decided to exit the HARPOON program and recorded a $28.1 million
impairment charge to fully write off the in-process research and development assets. See Note 4 for further
information.
The valuation for CardiAQ assumed $97.7 million of additional research and development expenditures
would be incurred prior to the date of product introduction and that net cash inflows would commence in late
2018. As a result of certain design enhancements to increase the product’s commercial life and applicability to a
broader group of patients, the Company has incurred incremental research and development expenditures;
however, the Company expects an increase in the net cash inflows, commencing in 2024.
Upon completion of development, the underlying research and development intangible assets will be
amortized over their estimated useful lives.
Certain of the Company’s business acquisitions involve contingent consideration arrangements. Payment of
additional consideration in the future may be required, contingent upon the acquired business reaching certain
performance milestones, such as attaining specified sales levels or obtaining regulatory approvals. See Note 11
for further information.
Investments in Variable Interest Entities
Edwards has relationships with various variable interest entities that it does not consolidate as Edwards
lacks the power to direct the activities that significantly impact the economic success of these entities. The
Company’s maximum loss exposure to variable interest entities, prior to the exercise of options to acquire the
entities, is limited to its investments in the variable interest entities, which include equity investments, options to
acquire, and promissory notes.
In August 2022, the Company entered into an option agreement with a medical device company. Under the
option agreement, Edwards paid $47.1 million for an option to acquire the medical device company. The
$47.1 million option is included in “Other Assets” on the consolidated balance sheet.
In June 2022, the Company entered into a convertible promissory note and amended its existing warrant
agreement with a medical device company. Under the convertible promissory note agreement, the Company has
agreed to loan the medical device company up to $47.5 million, of which $32.5 million has been advanced as of
December 31, 2022. In addition, the Company amended its warrant agreement under which the Company had
previously paid $35.0 million for an option to acquire the medical device company. The amendment extends the
warrant right period. The $35.0 million warrant and the $32.5 million note receivable are included in “Other
Assets” on the consolidated balance sheet.
In May 2022, the Company entered into an option agreement with a medical technology company. Under
the option agreement, Edwards paid $60.0 million for an option to acquire the medical technology company, of
which $10 million was paid in 2021. The $60.0 million option is included in “Other Assets” on the consolidated
balance sheet.
In April 2021, the Company recorded $35.9 million, included in “Long-term Investments,” related to its
investment in a privately-held medical device company (the “Investee”), including an initial cash investment in
69
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. ACQUISITIONS AND OTHER ARRANGEMENTS (Continued)
the Investee’s preferred equity securities and other consideration. Also, in April 2021, the Company paid
$5.7 million, included in “Other Assets,” for an option to acquire the Investee. Per the agreement, the Company
may be required to invest up to an additional $9.9 million in the Investee’s preferred equity securities and up to
an additional $21.8 million for the option to acquire the Investee, depending on the achievement of certain
milestones, of which the Company invested $10.8 million in the fourth quarter of 2021 upon achievement of the
first milestone. The Company also agreed to loan the Investee up to $45.0 million under a secured promissory
note. As of December 31, 2022, there had been no borrowings under this secured promissory note.
In addition, Edwards has made equity investments through the NMTC program in limited liability
companies that are considered VIEs. For more information, see Note 7.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and in-process research and development assets resulting from purchase business combinations
are not subject to amortization. Other acquired intangible assets with finite lives are amortized over their
expected useful lives on a straight-line basis, or if reliably determinable, based on the pattern in which the
economic benefit of the asset is expected to be used. The Company expenses costs incurred to renew or extend
the term of acquired intangible assets.
In 2022, the Company recorded a $52.7 million impairment charge related to certain of its developed
technology and in-process research and development assets. See Note 4 for further information.
The changes in the carrying amount of goodwill, by segment, during the years ended December 31, 2022
and 2021 were as follows:
Goodwill at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$773.7
—
$68.3
(5.3)
$331.2
—
$1,173.2
(5.3)
Goodwill at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
773.7
—
63.0
(3.6)
331.2
—
1,167.9
(3.6)
Goodwill at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$773.7
$59.4
$331.2
$1,164.3
United
States
Europe
Rest of
World
Total
(in millions)
70
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
Other intangible assets consist of the following (in millions):
Finite-lived intangible assets
Patents . . . . . . . . . . . . . . . . . .
Developed technology . . . . .
Other . . . . . . . . . . . . . . . . . . .
Indefinite-lived intangible assets
In-process research and
development . . . . . . . . . . .
Weighted-
Average
Useful Life
(in years)
December 31,
2022
2021
Cost
Accumulated
Amortization
Net
Carrying
Value
Cost
Accumulated
Amortization
Net
Carrying
Value
8.8
12.2
10.0
11.3
$205.5
128.1
12.2
345.8
$(185.0)
(57.9)
(7.7)
(250.6)
$ 20.5
70.2
4.5
$185.7
153.9
12.4
$(184.2)
(55.5)
(6.8)
$
1.5
98.4
5.6
95.2
352.0
(246.5)
105.5
190.0
—
190.0
218.1
—
218.1
$535.8
$(250.6)
$285.2
$570.1
$(246.5)
$323.6
Amortization expense related to other intangible assets for the years ended December 31, 2022, 2021, and
2020 was $5.7 million, $7.7 million, and $5.4 million, respectively. Estimated amortization expense for each of
the years ending December 31 is as follows (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5.6
5.3
4.8
5.8
6.2
10. DEBT AND CREDIT FACILITIES
In June 2018, the Company issued $600.0 million of fixed-rate unsecured senior notes (the “Notes”) due
June 15, 2028. Interest is payable semi-annually in arrears, with payments due in June and December of each
year. The Company may redeem the Notes, in whole or in part, at any time and from time to time at specified
redemption prices. In addition, upon the occurrence of certain change of control triggering events, the Company
may be required to repurchase all or a portion of the Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest. The Notes also include covenants that limit the Company’s ability to incur
secured indebtedness, enter into sale and leaseback transactions, and consolidate, merge, or transfer all or
substantially all of its assets.
71
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. DEBT AND CREDIT FACILITIES (Continued)
The following is a summary of the Notes as of December 31, 2022 and 2021:
Fixed-rate 4.3% Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
2021
Amount
(in millions)
$600.0
(0.9)
(2.8)
Effective
Interest
Rate
Amount
(in millions)
4.329% $600.0
(1.0)
(3.3)
Effective
Interest
Rate
4.329%
Total carrying amount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$596.3
$595.7
As of December 31, 2022 and 2021, the fair value of the Notes was $575.2 million and $675.4 million,
respectively, based on observable market prices in less active markets and categorized as Level 2 (Note 11). The
debt issuance costs, as well as the discount, are being amortized to interest expense over the term of the Notes.
In July 2022, the Company and certain of its subsidiaries, as borrowers, entered into a new Five-Year Credit
Agreement (“the New Credit Agreement”) with the lenders thereto, which provides for a $750.0 million multi-
currency unsecured revolving credit facility and replaces the Company’s prior credit agreement and related
revolving credit facility. The New Credit Agreement matures on July 15, 2027. Subject to certain terms and
conditions and the agreement of the lenders, the Company may increase the amount available under the New
Credit Agreement by up to an additional $250.0 million in the aggregate and extend the maturity date for an
additional year. Borrowings under the New Credit Agreement bear interest at a variable rate based on the
Secured Overnight Financing Rate (“SOFR”), plus a spread ranging from 0.785% to 1.3%, depending on the
leverage ratio or credit rating, as defined in the agreement. The Company will also pay a facility fee ranging from
0.09% to 0.20%, depending on the Company’s leverage ratio or credit rating, on the entire credit commitment
available, whether or not drawn. The facility fee is expensed as incurred. During 2022, under the New Credit
Agreement, the spread over SOFR was 0.9% and the facility fee was 0.1%, and under the previous credit
agreement, the spread over the London interbank offered rate was 0.9% and the facility fee was 0.1%. Issuance
costs of $2.1 million are being amortized to interest expense over the term of the New Credit Agreement. As of
December 31, 2022 and 2021, there were no borrowings outstanding. Amounts outstanding under the New Credit
Agreement, if any from time to time, are classified as long-term obligations in accordance with the terms of the
agreement. The New Credit Agreement is unsecured and contains various financial and other covenants,
including a maximum leverage ratio, as defined in the agreement. The Company was in compliance with all
covenants under the New Credit Agreement at December 31, 2022.
The weighted-average interest rate under all debt obligations, including the impact of the cross currency
swap contract (see Note 12), was 3.4% at both December 31, 2022 and 2021, respectively.
11. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. The Company prioritizes the inputs used to determine fair
values in one of the following three categories:
Level 1—Quoted market prices in active markets for identical assets or liabilities.
72
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Level 2—Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.
Level 3—Unobservable inputs that are not corroborated by market data.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its
entirety falls has been determined based on the lowest level input that is significant to the fair value measurement
in its entirety.
The consolidated financial statements include financial instruments for which the fair market value of such
instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company
consist of cash deposits, accounts and other receivables, investments, accounts payable, certain accrued
liabilities, and borrowings under a revolving credit agreement. The carrying value of these financial instruments
generally approximates fair value due to their short-term nature. Financial instruments also include Notes
payable. See Note 10 for further information on the fair value of the Notes payable.
73
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the Company’s financial instruments which are measured at fair value on a
recurring basis as of December 31, 2022 and 2021 (in millions):
December 31, 2022
Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale investments:
Corporate debt securities . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
United States government and agency
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
Investments held for deferred compensation plans . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities . . . . . . . . . . . . . .
Other liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Level 1
Level 2
Level 3
Total
$
0.4
$ —
$ —
$
0.4
—
—
37.1
—
112.1
—
980.3
366.6
94.5
2.5
—
65.5
—
—
—
—
—
—
980.3
366.6
131.6
2.5
112.1
65.5
$149.6
$1,509.4
$ —
$1,659.0
$ —
—
—
$ —
$
$
27.2
—
—
27.2
$ —
26.2
14.0
$40.2
$
$
27.2
26.2
14.0
67.4
December 31, 2021
Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale investments:
Bank time deposits . . . . . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
United States government and agency
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper
. . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
Investments held for deferred compensation plans . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities . . . . . . . . . . . . . .
Other liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15.2
$
30.7
$ —
$
45.9
—
—
—
28.4
—
—
130.7
—
2.5
1,390.8
512.6
118.9
127.7
2.8
—
55.3
—
—
—
—
—
—
—
—
2.5
1,390.8
512.6
147.3
127.7
2.8
130.7
55.3
$174.3
$2,241.3
$ —
$2,415.6
$ —
—
—
$ —
$
$
3.9
—
—
3.9
$ —
62.0
14.0
$76.0
$
$
3.9
62.0
14.0
79.9
74
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Cash Equivalents and Available-for-sale Investments
The Company estimates the fair values of its money market funds based on quoted prices in active markets
for identical assets. The Company estimates the fair values of its time deposits, commercial paper, United States
government and agency securities, municipal securities, asset-backed securities, and corporate debt securities by
taking into consideration valuations obtained from third-party pricing services. The pricing services use industry
standard valuation models, including both income and market-based approaches, for which all significant inputs
are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and
broker-dealer quotes on the same or similar securities, benchmark yields, credit spreads, prepayment and default
projections based on historical data, and other observable inputs.
Deferred Compensation Plans
The Company holds investments in a variety of money market and mutual funds related to its deferred
compensation plans. The fair values of these investments are based on quoted market prices.
Derivative Instruments
The Company uses derivative financial instruments in the form of foreign currency forward exchange
contracts and cross currency swap contracts to manage foreign currency exposures. All derivatives contracts are
recognized on the balance sheet at their fair value. The fair value of the derivative financial instruments was
estimated based on quoted market foreign exchange rates, cross currency swap basis rates, and market discount
rates. Judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the
estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions or valuation methodologies could have a
material effect on the estimated fair value amounts.
Contingent Consideration Liabilities
Certain of the Company’s acquisitions involve contingent consideration arrangements. Payment of
additional consideration is contingent upon the acquired company reaching certain performance milestones, such
as attaining specified sales levels or obtaining regulatory approvals. These contingent consideration liabilities are
measured at estimated fair value using either a probability weighted discounted cash flow analysis or a Monte
Carlo simulation model, both of which consider significant unobservable inputs. These inputs as of December 31,
2022 include (1) the discount rate used to present value the projected cash flows (ranging from 3.8% to 12.8%;
weighted average of 4.1%), (2) the probability of milestone achievement (ranging from 0% to 50%; weighted
average of 39.6%), and (3) the projected payment dates (2026). The weighted average of each of the above inputs
was determined based on the relative fair value of each obligation. The use of different assumptions could have a
material effect on the estimated fair value amounts.
75
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
The following table summarizes the changes in fair value of the contingent consideration and the other
liability for the years ended December 31, 2022 and 2021 (in millions):
Contingent
Consideration
Other
Liability
Fair value, December 31, 2020 . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, December 31, 2021 . . . . . . . . . . . . . . . . . . .
Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 186.1
—
(124.1)
$ 62.0
(35.8)
Fair value, December 31, 2022 . . . . . . . . . . . . . . . . . . .
$ 26.2
$ —
14.0
—
$14.0
—
$14.0
Total
$ 186.1
14.0
(124.1)
$ 76.0
(35.8)
$ 40.2
The contingent consideration liabilities related to certain of the Company’s previous business acquisitions
were reduced in 2022 by $30.9 million due to both the changes in projected probabilities of milestone
achievement and the Company’s decision during the third quarter of 2022 to exit its HARPOON surgical mitral
repair system program (see Note 4). The contingent consideration liabilities were reduced in 2021 by
$123.2 million due to changes in the projected probabilities of milestone achievements and the projected timing
of cash inflows from product sales.
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company uses derivative financial instruments to manage its currency exchange rate risk and its
interest rate risk as summarized below. Notional amounts are stated in United States dollar equivalents at spot
exchange rates at the respective dates. The Company does not enter into these arrangements for trading or
speculation purposes.
Notional Amount
As of December 31,
2022
2021
(in millions)
Foreign currency forward exchange contracts . . . . . . . . . .
Cross currency swap contracts . . . . . . . . . . . . . . . . . . . . . .
$1,678.4
300.0
$1,498.8
300.0
The following table presents the location and fair value amounts of derivative instruments reported in the
consolidated balance sheets (in millions):
Fair Value
As of December 31,
Balance Sheet Location
2022
2021
Derivatives designated as hedging instruments
Assets
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets
Cross currency swap contracts . . . . . . . . . . . . . . . . . . . . . . . Other assets
$24.9
$40.6
Liabilities
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued and other liabilities
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
$20.7
$ 6.5
$36.2
$19.1
$ 3.9
$ —
76
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
The following table presents the effect of master-netting agreements and rights of offset on the consolidated
balance sheets (in millions):
Gross Amounts Not
Offset in the
Consolidated
Balance Sheet
December 31, 2022
Derivative Assets
Foreign currency contracts . . . . . . . . .
Cross currency swap contracts . . . . . .
Derivative Liabilities
Foreign currency contracts . . . . . . . . .
December 31, 2021
Derivative Assets
Foreign currency contracts . . . . . . . . .
Cross currency swap contracts . . . . . .
Derivative Liabilities
Foreign currency contracts . . . . . . . . .
Gross Amounts
Offset in the
Consolidated
Balance Sheet
Net Amounts
Presented in the
Consolidated
Balance Sheet
Gross
Amounts
Financial
Instruments
Cash
Collateral
Received
Net
Amount
$24.9
$40.6
$27.2
$36.2
$19.1
$ 3.9
$—
$—
$—
$—
$—
$—
$24.9
$40.6
$27.2
$36.2
$19.1
$ 3.9
$(12.0)
$ —
$(12.0)
$ (2.8)
$ —
$ (2.8)
$—
$—
$—
$—
$—
$—
$12.9
$40.6
$15.2
$33.4
$19.1
$ 1.1
The following tables present the effect of derivative and non-derivative hedging instruments on the
consolidated statements of operations and consolidated statements of comprehensive income:
Amount of Gain or (Loss)
Recognized in OCI on
Derivative (Effective Portion)
2022
2021
(in millions)
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into
Income
Cash flow hedges
Foreign currency contracts . . . .
$81.7
$56.7
Cost of sales
Selling, general, and
administrative
expenses
Amount of Gain or (Loss)
Recognized in OCI on
Derivative (Effective Portion)
2022
2021
(in millions)
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into
Income
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI into Income
2022
2021
(in millions)
$88.4
$(23.0)
$ —
$ (0.6)
Amount of Gain or (Loss)
Recognized in Income on
Derivative (Amount
Excluded from
Effectiveness Testing)
2022
2021
(in millions)
Net investment hedges
Cross currency swap
contracts . . . . . . . . . . . . . . .
$21.6
$18.4
Interest expense
$7.0
$6.4
The cross currency swap contracts have an expiration date of June 15, 2028. At maturity of the cross
currency swap contracts, the Company will deliver the notional amount of €257.2 million and will receive
77
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
$300.0 million from the counterparties. The Company will receive semi-annual interest payments from the
counterparties based on a fixed interest rate until maturity of the agreements.
Location of Gain or
(Loss) Recognized in
Income on Derivative
Fair value hedges
Foreign currency contracts . . . . . . Other income, net
Location of Gain or
(Loss) Recognized in
Income on Derivative
Amount of Gain or
(Loss) Recognized in
Income on Derivative
2022
2021
2020
(in millions)
$(3.9)
$11.6
$(1.4)
Amount of Gain or
(Loss) Recognized in
Income on Derivative
2022
2021
2020
(in millions)
Derivatives not designated as
hedging instruments
Foreign currency contracts . . . . . . Other income, net
$44.0
$27.4
$(15.1)
The following tables present the effect of fair value and cash flow hedge accounting on the consolidated
statements of operations:
Location and Amount of Gain or (Loss)
Recognized in Income on Fair Value
and Cash Flow Hedging Relationships
Twelve Months Ended December 31, 2022
Selling,
general, and
administrative
expenses
Other
Income,
net
Cost of
sales
Total amounts of income and expense line items shown in the consolidated
statements of operations in which the effects of fair value or cash flow
hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,080.4)
$(1,567.6)
$ 2.6
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . .
Amount excluded from effectiveness testing recognized in
earnings based on an amortization approach . . . . . . . . . . .
—
—
—
—
—
—
5.5
(5.5)
1.6
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI
into income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88.4
—
—
78
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
Location and Amount of Gain or (Loss)
Recognized in Income on Fair Value
and Cash Flow Hedging Relationships
Twelve Months Ended December 31, 2021
Selling,
general, and
administrative
expenses
Other
Income,
net
Cost of
sales
Total amounts of income and expense line items shown in the consolidated
statements of operations in which the effects of fair value or cash flow
hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,248.9)
$(1,493.7)
$12.7
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . .
Amount excluded from effectiveness testing recognized in
earnings based on an amortization approach . . . . . . . . . . .
—
—
—
—
—
—
(9.0)
9.0
2.6
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI
into income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23.0)
(0.6)
—
The Company expects that during 2023 it will reclassify to earnings a $29.2 million gain currently recorded
in “Accumulated Other Comprehensive Loss.” For the years ended December 31, 2022, 2021, and 2020, the
Company did not record any gains or losses due to hedge ineffectiveness.
79
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS
Defined Benefit Plans
The Company maintains defined benefit pension plans in Japan and certain European countries.
Years Ended
December 31,
2022
2021
(in millions)
Change in projected benefit obligation:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements and curtailment gain . . . . . . . . . . . . . . . . . . .
Currency exchange rate changes and other . . . . . . . . . . .
$117.9
5.5
0.5
1.6
(22.6)
(0.6)
(0.3)
(1.8)
(6.1)
$ 126.2
6.5
0.4
1.5
(6.1)
(2.5)
(0.5)
—
(7.6)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 94.1
$ 117.9
Change in fair value of plan assets:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency exchange rate changes and other . . . . . . . . . . .
$ 76.9
(4.9)
3.5
1.6
(1.8)
(0.6)
(4.1)
$ 73.3
5.8
3.1
1.5
—
(2.5)
(4.3)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 70.6
$ 76.9
Funded Status
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . .
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (94.1)
70.6
$(117.9)
76.9
Underfunded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (23.5)
$ (41.0)
Net amounts recognized on the consolidated balance
sheet:
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 23.5
$ 41.0
Accumulated other comprehensive loss, net of tax:
Net actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Net prior service credit
. . . . . . . . . .
Deferred income tax (expense) benefit
$
1.5
5.3
(1.1)
$ (16.4)
6.0
2.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5.7
$
(8.0)
The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $86.7 million and
$113.3 million as of December 31, 2022 and 2021, respectively. The projected benefit obligation and ABO were
in excess of plan assets for all pension plans as of December 31, 2022 and 2021.
80
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
The components of net periodic pension benefit cost are as follows (in millions):
Service cost, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements and curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended
December 31,
2022
2021
2020
$ 5.5
0.5
(1.5)
0.1
0.5
(0.7)
$ 6.5
0.4
(1.1)
—
1.7
(0.7)
$ 6.3
0.5
(1.0)
—
1.6
(0.7)
Net periodic pension benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4.4
$ 6.8
$ 6.7
Expected long-term returns for each of the plans’ strategic asset classes were developed through
consultation with investment advisors. Several factors were considered, including a survey of investment
managers’ expectations, current market data, minimum guaranteed returns in certain insurance contracts, and
historical market returns over long periods. Using policy target allocation percentages and the asset class
expected returns, a weighted-average expected return was calculated.
To select the discount rates for the defined benefit pension plans, the Company uses a modeling process that
involves matching the expected duration of its benefit plans to a yield curve constructed from a portfolio of
AA-rated fixed-income debt instruments, or their equivalent. For each country, the Company uses the implied
yield of this hypothetical portfolio at the appropriate duration as a discount rate benchmark.
The weighted-average assumptions used to determine the benefit obligations are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . .
Social securities increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
2021
2.5% 0.5%
2.9% 2.6%
1.5% 2.5%
1.8% 1.6%
2.2% 1.8%
The weighted-average assumptions used to determine the net periodic pension benefit cost are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social securities increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years ended
December 31,
2022
2021
2020
0.5% 0.3% 0.5%
2.1% 1.5% 1.5%
2.6% 2.6% 2.7%
1.5% 2.5% 1.5%
1.6% 1.6% 1.6%
1.8% 1.8% 1.8%
81
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
Plan Assets
The Company’s investment strategy for plan assets is to seek a competitive rate of return relative to an
appropriate level of risk and to earn performance rates of return in accordance with the benchmarks adopted for
each asset class. Risk management practices include diversification across asset classes and investment styles,
and periodic rebalancing toward asset allocation targets.
The Administrative and Investment Committee decides on the defined benefit plan provider in each location
and that provider decides the target allocation for the Company’s defined benefit plan at that location. The target
asset allocation selected reflects a risk/return profile the Company feels is appropriate relative to the plans’
liability structure and return goals. In certain plans, asset allocations may be governed by local requirements.
Target weighted-average asset allocations at December 31, 2022, by asset category, are as follows:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.7%
41.5%
10.7%
17.1%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0%
The fair values of the Company’s defined benefit plan assets at December 31, 2022 and 2021, by asset
category, are as follows (in millions):
December 31, 2022
Level 1
Level 2
Level 3
Total
Asset Category
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
United States equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
United States government bonds . . . . . . . . . . . . . . . . . . . . .
International government bonds . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3.6
$ —
$—
$ 3.6
1.5
17.5
4.4
25.6
—
—
—
—
—
—
—
7.6
3.5
—
—
—
—
—
—
—
0.8
1.5
17.5
4.4
25.6
7.6
3.5
0.8
Total plan assets measured at fair value . . . . . . . . . . . .
$52.6
$11.1
$ 0.8
$64.5
Alternative investments measured at net asset value (a) . . . . . . .
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1
$70.6
82
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
December 31, 2021
Level 1
Level 2
Level 3
Total
Asset Category
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
United States equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
United States government bonds . . . . . . . . . . . . . . . . . . . . .
International government bonds . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5.4
$ —
$—
$ 5.4
1.6
16.3
6.2
26.3
—
—
—
—
—
—
—
7.6
3.5
—
—
—
—
—
—
—
0.9
1.6
16.3
6.2
26.3
7.6
3.5
0.9
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$55.8
$11.1
$ 0.9
$67.8
Alternative investments measured at net asset value (a) . . . . . . .
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1
$76.9
(a) Certain investments that were measured at net asset value per share have not been classified in the fair value
hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair
value hierarchy to the total plan assets.
The following table summarizes the changes in fair value of the Company’s defined benefit plan assets that
have been classified as Level 3 for the years ended December 31, 2022 and 2021 (in millions):
Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . .
Currency exchange rate impact . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets: . . . . . . . . . . . . . . . . . . . . . .
Relating to assets still held at December 31, 2022 . . . . .
Purchases, sales and settlements . . . . . . . . . . . . . . . . . . .
Currency exchange rate impact . . . . . . . . . . . . . . . . . . . .
Insurance
Contracts
$ 1.0
(0.1)
0.9
0.2
(0.2)
(0.1)
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.8
Equity and debt securities are valued at fair value based on quoted market prices reported on the active
markets on which the individual securities are traded. Real estate investments are valued by discounting to
present value the cash flows expected to be generated by the specific properties. Investments in mortgages are
valued at cost, which is deemed to approximate its fair value. The insurance contracts are valued at the cash
surrender value of the contracts, which is deemed to approximate its fair value. Alternative investments include
hedge funds, private equity funds and other miscellaneous investments, and are valued using the net asset value
provided by the fund administrator as a practical expedient. The net asset value is based on the fair value of the
underlying assets owned by the fund divided by the number of shares outstanding.
83
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
The following benefit payments, which reflect expected future service, as appropriate, at December 31,
2022, are expected to be paid (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028-2032 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7.1
5.2
5.3
6.4
7.6
36.4
As of December 31, 2022, expected employer contributions for 2023 are $2.4 million.
Defined Contribution Plans
The Company’s employees in the United States and Puerto Rico are eligible to participate in a qualified
defined contribution plan. In the United States, participants may contribute up to 25% of their eligible
compensation (subject to tax code limitation) to the plan. Edwards Lifesciences matches the first 4% of the
participant’s annual eligible compensation contributed to the plan on a dollar-for-dollar basis. Edwards
Lifesciences matches the next 2% of the participant’s annual eligible compensation to the plan on a 50% basis. In
Puerto Rico, participants may contribute up to 25% of their annual compensation (subject to tax code limitation)
to the plan. Edwards Lifesciences matches the first 4% of participant’s annual eligible compensation contributed
to the plan on a 50% basis. The Company also provides a 2% profit sharing contribution calculated on eligible
earnings for each employee. Matching contributions relating to Edwards Lifesciences employees were
$45.1 million, $38.6 million, and $36.6 million in 2022, 2021, and 2020, respectively.
The Company also has nonqualified deferred compensation plans for a select group of employees. The plans
provide eligible participants the opportunity to defer eligible compensation to future dates specified by the
participant with a return based on investment alternatives selected by the participant. The amount accrued under
these nonqualified plans was $112.6 million and $130.9 million at December 31, 2022 and 2021, respectively.
14. COMMON STOCK
Treasury Stock
In May 2021, the Board of Directors approved a stock repurchase program authorizing the Company to
purchase up to $1.0 billion of the Company’s common stock. In July 2022, the Board of Directors approved an
additional $1.5 billion of repurchases of the Company’s common stock under this program, effective July 28,
2022. The repurchase program does not have an expiration date. Stock repurchased under these programs may be
used to offset obligations under the Company’s employee stock-based benefit programs and stock-based business
acquisitions, and will reduce the total shares outstanding.
During 2022, 2021, and 2020, the Company repurchased 20.1 million, 5.8 million, and 3.1 million shares,
respectively, at an aggregate cost of $1,727.1 million, $512.8 million, and $625.4 million, respectively, including
shares purchased under a Rule 10b5-1 trading plan, the accelerated share repurchase (“ASR”) agreements
described below, and shares acquired to satisfy tax withholding obligations in connection with the vesting of
restricted stock units issued to employees. The timing and size of any future stock repurchases are subject to a
variety of factors, including expected dilution from stock plans, cash capacity, and the market price of the
Company’s common stock.
84
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
Accelerated Share Repurchase
During 2022 and 2021, the Company entered into ASR agreements providing for the repurchase of the
Company’s common stock based on the volume-weighted average price (“VWAP”) of the Company’s common
stock during the term of the applicable agreements, less a discount. The following table summarizes the terms of
the ASR agreements (dollars and shares in millions, except per share data):
Initial Delivery
Final Settlement
Agreement Date
Amount
Paid
Shares
Received
Price per
Share
Value of
Shares as %
of Contract
Value
Settlement
Date
Total
Shares
Received
February 2021 . . . . . . . . . . . . .
January 2022 . . . . . . . . . . . . . .
October 2022 . . . . . . . . . . . . . .
$250.0
$250.0
$750.0
2.4
1.9
8.3
$ 83.86
$104.87
$ 72.43
80% March 2021
80%
80%
February 2022
December 2022
3.0
2.3
10.3
Average
Price
per
Share
$ 84.51
$110.31
$ 72.91
The ASR agreements were each accounted for as two separate transactions: (1) the value of the initial
delivery of shares was recorded as shares of common stock acquired in a treasury stock transaction on the
acquisition date and (2) the remaining amount of the purchase price paid was recorded as a forward contract
indexed to the Company’s own common stock and was recorded in “Additional Paid-in Capital” on the
consolidated balance sheets. The initial delivery of shares resulted in an immediate reduction of the outstanding
shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per
share. The Company determined that the forward contracts indexed to the Company’s common stock met all the
applicable criteria for equity classification and, therefore, were not accounted for as a derivative instrument.
Employee and Director Stock Plans
The Edwards Lifesciences Corporation Long-term Stock Incentive Compensation Program (the “Program”)
provides for the grant of incentive and non-qualified stock options, restricted stock, and restricted stock units for
eligible employees of the Company. Under the Program, these grants are awarded at a price equal to the fair
market value at the date of grant based upon the closing price on that date. Options to purchase shares of the
Company’s common stock granted under the Program generally vest over predetermined periods of between
three to four years and expire seven years after the date of grant. Service-based restricted stock units of the
Company’s common stock granted under the Program generally vest over predetermined periods, typically four
years after the date of grant. Market-based restricted stock units of the Company’s common stock granted under
the Program vest over three years based on a combination of certain service and market conditions. The actual
number of shares issued will be determined based on the Company’s total stockholder return relative to a
selected industry peer group. Under the Program, the number of shares of common stock authorized for issuance
under the Program was 327.6 million shares. No more than 33.6 million shares reserved for issuance may be
granted in the form of restricted stock or restricted stock units.
The Company also maintains the Nonemployee Directors Stock Incentive Compensation Program (the
“Nonemployee Directors Program”). Under the Nonemployee Directors Program, annually each nonemployee
director may receive up to 120,000 stock options or 48,000 restricted stock units of the Company’s common
stock, or a combination thereof, provided that in no event may the total value of the combined annual award
exceed $0.3 million. These grants generally vest over one year from the date of grant. Under the Nonemployee
Directors Program, an aggregate of 8.4 million shares of the Company’s common stock has been authorized for
issuance.
85
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
The Company has an employee stock purchase plan for United States employees and a plan for employees
outside of the United States (collectively “ESPP”). Under the ESPP, eligible employees may purchase shares of
the Company’s common stock at 85% of the lower of the fair market value of Edwards Lifesciences common
stock on the effective date of subscription or the date of purchase. Under the ESPP, employees can authorize the
Company to withhold up to 15% of their compensation for common stock purchases, subject to certain
limitations. The ESPP is available to all active employees of the Company paid from the United States payroll
and to eligible employees of the Company outside of the United States, to the extent permitted by local law. The
ESPP for United States employees is qualified under Section 423 of the Internal Revenue Code. The number of
shares of common stock authorized for issuance under the ESPP was 50.4 million shares.
The fair value of each option award and employee stock purchase subscription is estimated on the date of
grant using the Black-Scholes option valuation model that uses the assumptions noted in the following tables.
The risk-free interest rate is estimated using the United States Treasury yield curve and is based on the expected
term of the award. Expected volatility is estimated based on a blend of the weighted-average of the historical
volatility of Edwards Lifesciences’ stock and the implied volatility from traded options on Edwards Lifesciences’
stock. The expected term of awards granted is estimated from the vesting period of the award, as well as
historical exercise behavior, and represents the period of time that awards granted are expected to be outstanding.
The Company uses historical data to estimate forfeitures and has estimated an annual forfeiture rate of 6.4%.
The Black-Scholes option pricing model was used with the following weighted-average assumptions for
options granted during the following periods:
Option Awards
Years Ended December 31,
2022
2021
2020
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0%
0.8%
0.3%
None
31.4%
5.0
$34.59
None
33.5%
5.0
$28.90
None
33.4%
5.0
$21.70
The Black-Scholes option pricing model was used with the following weighted-average assumptions for
ESPP subscriptions granted during the following periods:
ESPP
Years Ended December 31,
2022
2021
2020
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.5%
0.1%
1.3%
None
32.0%
0.6
$28.18
None
36.6%
0.6
$23.07
None
33.1%
0.6
$16.61
The fair value of market-based restricted stock units was determined using a Monte Carlo simulation model,
which uses multiple input variables to determine the probability of satisfying the market condition requirements.
86
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
The weighted-average assumptions used to determine the fair value of the market-based restricted stock units
during the years ended December 31, 2022, 2021, and 2020 included a risk-free interest rate of 2.9%, 0.4%, and
0.2%, respectively, and an expected volatility rate of 33.9%, 34.4%, and 32.7%, respectively.
Stock option activity during the year ended December 31, 2022 under the Program and the Nonemployee
Directors Program was as follows (in millions, except years and per-share amounts):
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . 12.3
1.6
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2.1)
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.2)
Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Weighted-
Average
Exercise
Price
$ 52.84
104.52
30.47
82.81
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . 11.6
63.67
3.4 years
$204.5
Exercisable as of December 31, 2022 . . . . . . . . . . . . . . . . .
7.9
51.28
2.5 years
$197.3
Vested and expected to vest as of December 31, 2022 . . . 11.1
62.43
3.3 years
$203.5
The following table summarizes nonvested restricted stock unit activity during the year ended December 31,
2022 under the Program and the Nonemployee Directors Program (in millions, except per-share amounts):
Nonvested as of December 31, 2021 . . . . . . . . . . . . . . . . . .
Granted (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested as of December 31, 2022 . . . . . . . . . . . . . . . . . .
Weighted-
Average
Grant-Date
Fair Value
$ 73.94
102.26
64.04
83.04
92.30
Shares
2.3
0.9
(1.1)
(0.1)
2.0
(a) The shares granted include 0.1 million shares of market-based restricted stock units granted during 2022,
which represents the target number of shares to be issued, and 0.1 million shares related to a previous year’s
grant of market-based restricted stock units since the payout percentage achieved at the end of the
performance period was in excess of target. As described above, the actual number of shares ultimately
issued is determined based on the Company’s total stockholder return relative to a selected industry peer
group.
The intrinsic value of stock options exercised and restricted stock units vested during the years ended
December 31, 2022, 2021, and 2020 were $264.5 million, $359.8 million, and $323.5 million, respectively. The
intrinsic value of stock options is calculated as the amount by which the market price of the Company’s common
stock exceeds the exercise price of the option. During the years ended December 31, 2022, 2021, and 2020, the
Company received cash from exercises of stock options of $64.8 million, $82.2 million, and $79.2 million,
respectively, and tax benefits from exercises of stock options and vesting of restricted stock units of
$56.9 million, $76.5 million, and $72.1 million, respectively. The total grant-date fair value of stock options
87
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
vested during the years ended December 31, 2022, 2021, and 2020 were $40.4 million, $36.2 million, and
$34.0 million, respectively.
As of December 31, 2022, the total remaining unrecognized compensation expense related to nonvested
stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan
subscription awards amounted to $195.1 million, which will be amortized on a straight-line basis over each
award’s requisite service period. The weighted-average remaining requisite service period is 31 months.
15. ACCUMULATED OTHER COMPREHENSIVE LOSS
Presented below is a summary of activity for each component of “Accumulated Other Comprehensive Loss”
for the years ended December 31, 2022, 2021, and 2020.
Foreign
Currency
Translation
Adjustments
Unrealized
Gain (Loss) on
Hedges
Unrealized
Gain (Loss) on
Available-for-sale
Investments
Unrealized
Pension
(Costs)
Credits (a)
Total
Accumulated
Other
Comprehensive
Loss
December 31, 2019 . . . . . . . . . . . . . . . .
Other comprehensive income (loss)
$(154.8)
$ 12.5
before reclassifications . . . . . . . . .
35.7
(34.8)
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax benefit
(expense) . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . .
Other comprehensive (loss) income
(6.4)
(19.2)
3.1
(122.4)
13.8
(27.7)
(in millions)
$ 1.7
8.0
0.3
(1.4)
8.6
$(15.4)
$(156.0)
(5.5)
3.4
0.9
0.4
(24.4)
15.9
(19.6)
(161.1)
before reclassifications . . . . . . . . .
(39.2)
66.3
(29.2)
12.8
10.7
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (expense)
benefit
. . . . . . . . . . . . . . . . . . . . . .
December 31, 2021 . . . . . . . . . . . . . . . .
Other comprehensive (loss) income
(6.4)
(4.5)
(172.5)
12.0
(20.9)
29.7
8.6
5.1
(6.9)
1.0
(2.2)
(8.0)
15.2
(22.5)
(157.7)
before reclassifications . . . . . . . . .
(33.9)
75.2
(77.9)
17.3
(19.3)
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (expense)
benefit
. . . . . . . . . . . . . . . . . . . . . .
(7.0)
(5.4)
(84.5)
3.4
18.8
0.4
(0.1)
(3.5)
(72.8)
(5.1)
December 31, 2022 . . . . . . . . . . . . . . . .
$(218.8)
$ 23.8
$(65.6)
$ 5.7
$(254.9)
88
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. ACCUMULATED OTHER COMPREHENSIVE LOSS (Continued)
(a) For the years ended December 31, 2022, 2021, and 2020, the change in unrealized pension costs consisted
of the following (in millions):
Pre-Tax
Amount
Tax (Expense)
Benefit
Net of
Tax
Amount
2022
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial gain arising during period . . . . . . . . . . . . .
$ —
(0.7)
(0.7)
17.9
Unrealized pension credits, net . . . . . . . . . . . . . . . . . . . .
$17.2
2021
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial gain arising during period . . . . . . . . . . . . .
$ 0.1
(0.7)
(0.6)
14.4
Unrealized pension credits, net . . . . . . . . . . . . . . . . . . . .
$13.8
2020
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial loss arising during period . . . . . . . . . . . . .
$ 0.6
(0.7)
(0.1)
(4.5)
Unrealized pension costs, net
. . . . . . . . . . . . . . . . . . . . .
$ (4.6)
$(1.1)
0.3
(0.8)
(2.7)
$(3.5)
$—
0.1
0.1
(2.3)
$(2.2)
$(0.2)
0.1
(0.1)
0.5
$ 0.4
$ (1.1)
(0.4)
(1.5)
15.2
$13.7
$ 0.1
(0.6)
(0.5)
12.1
$11.6
$ 0.4
(0.6)
(0.2)
(4.0)
$ (4.2)
89
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. ACCUMULATED OTHER COMPREHENSIVE LOSS (Continued)
The following table provides information about amounts reclassified from “Accumulated Other
Comprehensive Loss” (in millions):
Details about Accumulated Other Comprehensive Loss
Components
Foreign currency translation adjustments . . . . . . . . . .
Years Ended
December 31,
2022
2021
Affected Line on Consolidated
Statements of Operations
$ 7.0
(1.7)
$ 6.4 Other income, net
(1.6) Provision for income taxes
$ 5.3
$ 4.8 Net of tax
Gain (loss) on hedges . . . . . . . . . . . . . . . . . . . . . . . . .
$ 88.4
$(23.0) Cost of sales
Selling, general, and administrative
(0.6)
expenses
11.6 Other income, net
(12.0) Total before tax
4.6 Provision for income taxes
—
(3.9)
84.5
(22.2)
$ 62.3
$ (7.4) Net of tax
Gain (loss) on available-for-sale investments . . . . . .
$(18.8) $ (8.6) Other income, net
Amortization of pension adjustments . . . . . . . . . . . . .
4.6
2.1 Provision for income taxes
$(14.2) $ (6.5) Net of tax
$ 0.1
—
$ (1.0) Other income, net
0.1 Provision for income taxes
$ 0.1
$ (0.9) Net of tax
16. OTHER INCOME, NET
Foreign exchange losses (gains), net . . . . . . . . . . . . . . . . . . . . . .
Gain on insurance settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-service cost components of net periodic pension benefit
Years Ended December 31,
2022
2021
2020
(in millions)
$ (5.0)
—
(5.8)
$(12.3)
—
(0.6)
$ 1.2
(3.8)
1.1
cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.1)
—
0.3
(2.2)
0.4
1.0
Total other income, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(2.6)
$(12.7)
$(11.5)
90
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES
The Company’s income before provision for income taxes was generated from operations in the United
States and outside of the United States as follows (in millions):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . . . .
$ 634.4
1,133.0
$ 610.9
1,091.1
$151.3
765.4
$1,767.4
$1,702.0
$916.7
Years Ended December 31,
2022
2021
2020
The provision for income taxes consists of the following (in millions):
Years Ended December 31,
2022
2021
2020
Current
United States:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . .
$ 369.1
60.6
66.7
$125.2
25.1
92.6
$ 23.4
48.2
73.9
Current income tax expense . . . . . . . . . . . . . . . . . .
$ 496.4
$242.9
$145.5
Deferred
United States:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . .
$(187.7)
(58.9)
(4.3)
$ (9.4)
(25.4)
(9.2)
$ 11.0
(32.9)
(30.3)
Deferred income tax benefit . . . . . . . . . . . . . . . . . .
(250.9)
(44.0)
(52.2)
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 245.5
$198.9
$ 93.3
91
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
The components of deferred tax assets and liabilities are as follows (in millions):
December 31,
2022
2021
Deferred tax assets
Capitalized research and development expenses (a)
. . . .
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . .
Benefits from uncertain tax positions . . . . . . . . . . . . . . .
Net tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow and net investment hedges . . . . . . . . . . . . . .
State income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liability obligations . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 199.7
100.6
42.1
160.8
71.7
93.7
11.9
6.6
0.3
0.6
6.7
1.9
$ —
109.8
33.9
142.0
69.4
108.0
13.5
—
0.4
0.7
6.6
1.3
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . .
696.6
485.6
Deferred tax liabilities
Property, plant, and equipment . . . . . . . . . . . . . . . . . . . .
Cash flow and net investment hedges . . . . . . . . . . . . . .
Deferred tax on foreign earnings . . . . . . . . . . . . . . . . . .
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(80.2)
—
(19.2)
(6.0)
(19.9)
(2.9)
(64.1)
(6.4)
(26.3)
(6.1)
(75.5)
(2.6)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . .
(128.2)
(181.0)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(99.1)
(82.5)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 469.3
$ 222.1
(a) As required by the 2017 Tax Cuts and Jobs Act, effective January 1, 2022, the Company’s research and
development expenditures were capitalized and amortized which resulted in substantially higher cash paid
for taxes in 2022 with an equal amount of deferred tax benefits.
During 2022, net deferred tax assets increased $247.2 million, including items that were recorded to
stockholders’ equity and which did not impact the Company’s income tax provision.
The valuation allowance of $99.1 million as of December 31, 2022 reduces certain deferred tax assets to
amounts that are more likely than not to be realized. This allowance primarily relates to the net operating loss
carryforwards of certain non-United States subsidiaries and certain non-United States credit carryforwards.
92
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
Net operating loss and capital loss carryforwards and the related carryforward periods at December 31, 2022
are summarized as follows (in millions):
Carryforward
Amount
Tax
Benefit
Amount
Valuation
Allowance
Net
Tax
Benefit
Carryforward
Period Ends
United States federal net operating losses . . . . . . . . . .
United States federal net operating losses . . . . . . . . . .
United States state net operating losses . . . . . . . . . . . .
United States state net operating losses . . . . . . . . . . . .
Non-United States net operating losses . . . . . . . . . . . .
United States capital losses . . . . . . . . . . . . . . . . . . . . . .
$
8.6
11.3
35.7
2.6
390.5
33.4
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$482.1
$ 1.8
2.4
1.8
0.1
65.5
0.1
$71.7
$ 1.8
2.4
0.1
$ —
—
(1.7)
(0.1) —
(50.6)
14.9
(0.1) —
$(52.5)
$19.2
2033-2037
Indefinite
2026-2041
Indefinite
Indefinite
2024
Certain tax attributes are subject to an annual limitation as a result of the acquisition of CASMED, which
constitute a change of ownership as defined under Internal Revenue Code Section 382.
The gross tax credit carryforwards and the related carryforward periods at December 31, 2022 are
summarized as follows (in millions):
Carryforward
Amount
Valuation
Allowance
California research expenditure tax credits . . . .
Federal research expenditure tax credits . . . . . . .
Foreign tax and general business credits . . . . . .
Puerto Rico purchases credits . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$189.8
1.3
4.3
26.4
$221.8
$ —
—
(3.8)
(26.4)
$(30.2)
Carryforward
Period Ends
Indefinite
2026-2039
2030-2032
Indefinite
Net Tax
Benefit
$189.8
1.3
0.5
—
$191.6
The Company has $189.8 million of gross California research expenditure tax credits it expects to use in
future periods. The credits may be carried forward indefinitely. Based upon anticipated future taxable income,
the Company expects that it is more likely than not that all California research expenditure tax credits will be
utilized, although the utilization of the full benefit is expected to occur over a number of years into the distant
future. Accordingly, no valuation allowance has been provided. The Company has $26.4 million of Puerto Rico
purchases credits. Throughout its history and into the future, the Company’s Puerto Rico operations generate, or
are expected to generate, credits each year in excess of its ability to utilize credits in those years. As a result, even
though the credits currently have an indefinite life, the Company continues to record a valuation allowance on the
purchases credits carryforwards. The Company recently renegotiated its tax grant under Puerto Rico Act 52-2022
(“Act 52”) effective January 1, 2023. Among other items, Act 52 introduced new requirements and limitations on
the availability and claiming of tax credits. As a result, the Company now expects that its purchases credits may
begin to expire after 2026.
On December 22, 2017, Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “2017
Act”), was signed into law. The 2017 Act a) reduced the United States federal corporate tax rate from 35 percent
to 21 percent for tax years beginning after December 31, 2017, b) required companies to pay a one-time
mandatory deemed repatriation tax on the cumulative earnings of certain foreign subsidiaries that were
previously tax deferred, and c) created new taxes on certain foreign earnings in future years. The Company
elected to pay the repatriation tax in installments over eight years.
93
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
The Company asserts that $1.0 billion of its foreign earnings continue to be indefinitely reinvested and it
intends to repatriate $580.8 million of its foreign earnings as of December 31, 2022. The estimated net tax
liability on the indefinitely reinvested earnings if repatriated is $14.9 million.
The Company has received tax incentives in certain non-United States tax jurisdictions, the primary benefit
for which will expire in 2029. The tax reductions as compared to the local statutory rates were $247.4 million
($0.40 per diluted share), $208.0 million ($0.33 per diluted share), and $189.2 million ($0.30 per diluted share)
for the years ended December 31, 2022, 2021, and 2020, respectively.
A reconciliation of the United States federal statutory income tax rate to the Company’s effective income
tax rate is as follows (in millions):
Years Ended December 31,
2022
2021
2020
Income tax expense at United States federal statutory rate . . . . . $ 371.1
(123.9)
Foreign income taxed at different rates . . . . . . . . . . . . . . . . . . . .
21.1
State and local taxes, net of federal tax benefit . . . . . . . . . . . . . .
(50.0)
Tax credits, federal and state . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.6
Build of reserve for prior years’ uncertain tax positions . . . . . . .
61.4
Tax on global intangible low-taxed income . . . . . . . . . . . . . . . .
(15.0)
Foreign-derived intangible income deduction . . . . . . . . . . . . . . .
(7.5)
Contingent consideration liabilities . . . . . . . . . . . . . . . . . . . . . . .
United States federal deductible employee share-based
$ 357.4 $192.5
(80.5)
5.0
(43.1)
4.2
49.2
(2.6)
2.9
(122.2)
11.9
(48.4)
3.6
56.5
(1.3)
(26.1)
compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible employee share-based compensation . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(31.6)
5.8
2.5
(47.8)
5.3
10.0
(48.3)
4.2
9.8
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 245.5
$ 198.9 $ 93.3
The Company’s effective tax rate for 2022 increased in comparison to 2021 primarily due to the decrease in
the tax benefit from the change in fair value of contingent consideration liabilities and the decrease in the excess
tax benefit from employee share-based compensation. The Company’s effective tax rate for 2021 increased in
comparison to 2020 primarily due to the tax benefit from the Settlement Agreement with Abbott in 2020 (see
Note 3) and the decrease in the excess tax benefit from employee share-based compensation, partially offset by
the tax benefit from the change in fair value of contingent consideration liabilities.
Uncertain Tax Positions
As of December 31, 2022 and 2021, the gross uncertain tax positions were $475.3 million and
$358.4 million, respectively. The Company estimates that these liabilities would be reduced by $182.1 million
and $135.1 million, respectively, from offsetting tax benefits associated with the correlative effects of potential
transfer pricing adjustments, state income taxes, and timing adjustments. The net amounts of $293.2 million and
$223.3 million, respectively, if not required, would favorably affect the Company’s effective tax rate.
94
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest,
penalties, and foreign exchange, is as follows (in millions):
December 31,
2022
2021
2020
Uncertain gross tax positions, January 1 . . . . . . . . . . . . . . . . .
Current year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Increase in prior year tax positions . . . . . . . . . . . . . . . . .
Decrease in prior year tax positions . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statutes of limitations . . . . . . . . . . . . . . . . . . . .
$358.4
120.6
3.8
(0.6)
(0.4)
(6.5)
$281.8
82.1
2.3
(4.8)
(0.3)
(2.7)
$203.1
86.4
6.0
(10.0)
(3.7)
—
Uncertain gross tax positions, December 31 . . . . . . . . . . . . . .
$475.3
$358.4
$281.8
The table above summarizes the gross amounts of uncertain tax positions without regard to reduction in tax
liabilities or additions to deferred tax assets and liabilities if such uncertain tax positions were settled.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in the provision for
income taxes. As of December 31, 2022, the Company had accrued $29.1 million (net of $15.4 million tax
benefit) of interest related to uncertain tax positions, and as of December 31, 2021, the Company had accrued
$19.5 million (net of $8.1 million tax benefit) of interest related to uncertain tax positions. During 2022, 2021,
and 2020, the Company recognized interest expense, net of tax benefit, of $9.6 million, $5.2 million, and
$5.0 million, respectively, in “Provision for Income Taxes” on the consolidated statements of operations.
In the normal course of business, the Internal Revenue Service (“IRS”) and other taxing authorities are in
different stages of examining various years of the Company’s tax filings. During these audits, the Company 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 the Company’s results of operations and financial
condition. The Company strives to resolve open matters with each tax authority at the examination level and
could reach agreement with a tax authority at any time. While the Company has accrued for matters it believes
are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability
that is more or less than that reflected in the consolidated financial statements. Furthermore, the Company may
later decide to challenge any assessments, if made, and may exercise its 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.
Management believes that adequate amounts of tax and related penalty and interest have been provided for any
adjustments that may result from these uncertain tax positions.
At December 31, 2022, all material state, local, and foreign income tax matters have been concluded for
years through 2015. While not material, the Company continues to address matters in India for years from 2010
and on.
The Company 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
95
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
examination for further consideration as part of the respective years’ regular tax audits. In addition, the Company
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. The Company has filed to renew all of the APAs which cover
transactions with Japan for the years 2020 and forward. An APA between Switzerland and Japan covering tax
years 2020 through 2024 was executed in 2021. The execution of the other APA renewals depends on many
variables outside of the Company’s control.
The audits of the Company’s 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 began its examination of the 2018 through 2020 tax years
during the first quarter of 2022.
During 2021, the Company 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 the Company’s United States and Switzerland subsidiaries. The NOPA proposes an
increase to the Company’s United States taxable income, which could result in additional tax expense for this
period of approximately $210 million and represents a significant change to previously agreed upon transfer
pricing methodologies for these types of transactions. The Company has formally disagreed with the NOPA and
submitted a formal protest on the matter during the fourth quarter of 2021. During the second quarter of 2022, the
Company received the IRS’s rebuttal to its protest and was notified that the case has been transferred to the IRS
Independent Office of Appeals. The opening conference is scheduled for the first quarter of 2023. The Company
continues to evaluate all possible remedies available to it, which could take several years to resolve. The
Company believes the amounts previously accrued related to this uncertain tax position are sufficient and,
accordingly, has not accrued any additional amount based on the NOPA received. While no payment of any
amount related to the NOPA is required to be made, if at all, until all applicable proceedings have been
completed, the Company made an advance payment of tax in November 2022 to prevent the further accrual of
interest on any potential deficiency.
Certain Surgical/TAVR intercompany royalty transactions covering tax years 2015 through 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 December 31, 2022. The Company has considered this information, as well as
information regarding the NOPA and rebuttal described above, in its evaluation of its uncertain tax positions. The
impact of these unresolved transfer pricing matters, net of any correlative repatriation tax adjustment, may be
significant to the Company’s consolidated financial statements. Based on the information currently available and
numerous possible outcomes, the Company cannot reasonably estimate what, if any, changes in its existing
uncertain tax positions may occur in the next 12 months and, therefore, has continued to record the uncertain tax
positions as a long-term liability.
18. LEGAL PROCEEDINGS
The Company is reviewing and investigating whether business activities in Japan and other markets violate
certain provisions of the Foreign Corrupt Practices Act (“FCPA”). The Company voluntarily notified the SEC and
the United States Department of Justice (“DOJ”) during 2021 that it has engaged outside counsel to conduct this
review and investigation. The Company has provided status updates to the SEC and DOJ since that time. Any
determination that the Company’s operations or activities are not in compliance with existing laws, including the
FCPA, could result in the imposition of fines, penalties, and equitable remedies. The Company cannot currently
predict the outcome of the review and investigation or the potential impact on its financial statements.
96
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. LEGAL PROCEEDINGS (Continued)
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. The
Company is unable to predict the ultimate outcome of this matter or estimate a range of possible exposure;
therefore, no amounts have been accrued. The Company intends to vigorously defend itself in this litigation.
The Company is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits
including those related to products and services currently or formerly manufactured or performed, as applicable,
by the Company, workplace and employment matters, matters involving real estate, Company operations or
health care regulations, or governmental investigations (the “Lawsuits”). The Lawsuits raise difficult and
complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and
circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in
applicable law. Management does not believe that any loss relating to the Lawsuits would have a material
adverse effect on the Company’s overall financial condition, results of operations or cash flows. However, the
resolution of one or more of the Lawsuits in any reporting period, could have a material adverse impact on the
Company’s financial results for that period. The Company is not able to estimate the amount or range of any loss
for legal contingencies related to the Lawsuits for which there is no reserve or additional loss for matters already
reserved.
The Company is subject to various environmental laws and regulations both within and outside of the
United States. The Company’s 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 the Company’s financial results.
The Company’s threshold of disclosing material environmental legal proceedings involving a governmental
authority where potential monetary sanctions are involved is $1 million.
19. SEGMENT INFORMATION
Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions:
United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat advanced
cardiovascular disease.
The Company’s geographic segments are reported based on the financial information provided to the Chief
Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its
geographic segments based on net sales and operating income. The accounting policies of the segments are the
same as those described in Note 2. Segment net sales and segment operating income are based on internally
derived foreign exchange rates and do not include inter-segment profits. Because of the interdependence of the
reportable segments, the operating profit as presented may not be representative of the geographical distribution
that would occur if the segments were not interdependent. Net sales by geographic area are based on the location
of the customer. There were no customers that represented 10% or more of the Company’s total net sales.
Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated
items include net interest income, global marketing expenses, corporate research and development expenses,
manufacturing variances, corporate headquarters costs, special gains and charges, stock-based compensation,
foreign currency hedging activities, certain litigation costs, changes in the fair value of contingent consideration
liabilities, and most of the Company’s amortization expense. Although most of the Company’s depreciation
expense is included in segment operating income, due to the Company’s methodology for cost build-up, it is
97
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. SEGMENT INFORMATION (Continued)
impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion
is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments,
nor evaluates the operating segments using discrete asset information.
The table below presents information about Edwards Lifesciences’ reportable segments (in millions):
Years Ended December 31,
2022
2021
2020
Segment Net Sales
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
1,213.7
559.3
610.7
$2,963.1
1,099.6
528.0
533.2
$2,516.8
945.2
448.6
451.5
Total segment net sales . . . . . . . . . . . . . . . . . . . . . .
$5,516.3
$5,123.9
$4,362.1
Segment Operating Income
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,130.9
652.2
376.7
247.7
$2,051.0
569.1
348.0
185.2
$1,727.3
479.3
286.4
150.1
Total segment operating income . . . . . . . . . . . . . . .
$3,407.5
$3,153.3
$2,643.1
The table below presents reconciliations of segment net sales to consolidated net sales and segment
operating income to consolidated pre-tax income (in millions):
Years Ended December 31,
2022
2021
2020
Net Sales Reconciliation
Segment net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,516.3
(133.9)
$ 5,123.9
108.6
$ 4,362.1
24.2
Consolidated net sales . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,382.4
$ 5,232.5
$ 4,386.3
Pre-tax Income Reconciliation
Segment operating income . . . . . . . . . . . . . . . . . . . . .
Unallocated amounts:
Corporate items . . . . . . . . . . . . . . . . . . . . . . . . . .
Special charge . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual property litigation expenses, net
. . .
Change in fair value of contingent consideration
liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated operating income . . . . . . . . . . . . . . . . . .
Non-operating income . . . . . . . . . . . . . . . . . . . . .
$ 3,407.5
$ 3,153.3
$ 2,643.1
(1,714.1)
(60.7)
(15.8)
(1,613.8)
(1,358.0)
—
(20.6)
—
(405.4)
35.8
95.8
1,748.5
18.9
124.1
47.3
1,690.3
11.7
(13.6)
31.5
897.6
19.1
Consolidated pre-tax income . . . . . . . . . . . . . . . . . . . .
$ 1,767.4
$ 1,702.0
$
916.7
98
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. SEGMENT INFORMATION (Continued)
Enterprise-Wide Information
(in millions)
Enterprise-wide information is based on actual foreign exchange rates used in the Company’s consolidated
financial statements.
As of or for the Years Ended
December 31,
2022
2021
2020
Net Sales by Geographic Area
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
1,174.8
473.6
601.4
$2,963.1
1,190.3
528.9
550.2
$2,516.8
973.6
460.1
435.8
$5,382.4
$5,232.5
$4,386.3
Net Sales by Major Product Area
Transcatheter Aortic Valve Replacement . . . . . . . .
Transcatheter Mitral and Tricuspid Therapies . . . .
Surgical Structural Heart . . . . . . . . . . . . . . . . . . . . .
Critical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,518.2
116.1
893.1
855.0
$3,422.5
86.0
889.1
834.9
$2,857.3
41.8
761.8
725.4
$5,382.4
$5,232.5
$4,386.3
Long-lived Tangible Assets by Geographic Area
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,188.5
191.8
13.2
331.6
$1,195.8
197.9
19.7
335.5
$1,084.3
192.7
20.4
311.0
$1,725.1
$1,748.9
$1,608.4
20. VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Charged to
Other
Accounts
(in millions)
Deductions
Balance at
End of
Period
Year ended December 31, 2022
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
Year ended December 31, 2021
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
Year ended December 31, 2020
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
$15.7
82.5
$16.4
71.6
$14.7
65.8
$ 0.9
3.0
$ 1.2
12.4
$ 3.1
6.3
$ 0.1
14.2
$ 0.6
—
$ —
0.6
$(5.0)
(0.6)
$(2.5)
(1.5)
$(1.4)
(1.1)
$11.7
99.1
$15.7
82.5
$16.4
71.6
(a) The deductions related to allowances for credit losses represent accounts receivable which are written off.
99
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. VALUATION AND QUALIFYING ACCOUNTS (Continued)
(b) The tax valuation allowances are provided for other-than-temporary impairments and unrealized losses
related to certain investments that may not be recognized due to the uncertainty of the ready marketability of
certain impaired investments, and net operating loss and credit carryforwards that may not be recognized
due to insufficient taxable income.
100
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Company’s management, including the Chief
Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and
operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under
the Securities Exchange Act of 1934, as amended) as of December 31, 2022.
Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of
December 31, 2022 that the Company’s disclosure controls and procedures are designed at a reasonable
assurance level and are effective in providing reasonable assurance that the information required to be disclosed
by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to the Company’s management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
Management’s Report on Internal Control Over Financial Reporting. The Company’s management,
including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the
participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer,
the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on
the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that evaluation, the Company’s management
concluded that its internal control over financial reporting was effective as of December 31, 2022. The
effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been
audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the
financial statements included in this Annual Report on Form 10-K, as stated in their report which appears herein.
Changes in Internal Control Over Financial Reporting. There have been no changes in the Company’s
internal control over financial reporting that occurred during the Company’s fourth fiscal quarter of 2022 that
have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Item 9B. Other Information
None.
Item 9C. Information Regarding Foreign Jurisdictions That Prevent Inspections
None.
101
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Certain information required by this Item will be set forth under the headings “Board of Directors Matters—
Proposal 1—Election of Directors—Board of Director Nominees,” “Board of Directors Matters—Corporate
Governance Policies and Practices,” and “Executive Compensation and Other Information—Executive Officers”
in the definitive proxy statement to be filed in connection with the Company’s 2023 Annual Meeting of
Stockholders (the “Proxy Statement”) (which Proxy Statement will be filed with the SEC within 120 days of
December 31, 2022). The information required by this Item to be contained in the Proxy Statement is
incorporated herein by reference. The Company has adopted a code of ethics that applies to all directors and
employees, including the Company’s principal executive officer, principal financial officer, and principal
accounting officer, or persons performing similar functions. The code of ethics (business practice standards) is
posted on the Company’s website, which is found at https://ir.edwards.com under “Governance &
Sustainability—Corporate Responsibility & Sustainability—Corporate Responsibility—Global Integrity
Program.” To the extent required by applicable rules of the SEC and the New York Stock Exchange, the
Company intends to disclose on its website any amendments to, or waivers from, any provision of its code of
ethics that apply to the Company’s directors and executive officers, including the principal executive officer,
principal financial officer or controller or persons performing similar functions.
Item 11. Executive Compensation
The information contained under the heading “Executive Compensation and Other Information” in the
Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information contained under the headings “Security Ownership of Certain Beneficial Owners and
Management” and “Equity Compensation Plan Information” in the Proxy Statement is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information contained under the heading “Other Matters and Business—Related Persons Transactions”
and under the heading “Board of Directors Matters—Corporate Governance Policies and Practices—Director
Independence” in the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information contained under the headings “Audit Matters—Fees Paid to Principal Accountants” and
“Audit Matters—Pre-Approval of Services” in the Proxy Statement is incorporated herein by reference.
102
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this report:
PART IV
1. Consolidated Financial Statements. See “Index to Consolidated Financial Statements” in Part II, Item 8
herein.
2. Financial Statement Schedules. Other schedules are not applicable and have not been included herein.
3. Exhibits.
Exhibit No.
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
10.1
#10.2
*10.3
Description
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)
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)
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)
Specimen form of certificate representing Edwards Lifesciences Corporation common stock
(incorporated by reference to Exhibit 4.1 in Edwards Lifesciences’ Registration Statement on
Form 10 (File No. 001-15525) filed on March 15, 2000)
Description of Edwards Lifesciences Corporation’s Capital Stock (incorporated by reference to
Exhibit 4.2 in Edwards Lifesciences’ report on Form 10-K for the fiscal year ended
December 31, 2022)
Indenture, dated as of September 6, 2013, between Edwards Lifesciences Corporation and Wells
Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.5 in
Edwards Lifesciences’ Registration Statement on Form S-3 (File No. 333-191022) filed on
September 6, 2013) (the “Indenture”)
Second Supplemental Indenture, dated as of June 15, 2018, to the Indenture (incorporated by
reference to Exhibit 4.2 in Edwards Lifesciences’ report on Form 8-K filed on June 15, 2018)
(“Second Supplemental Indenture”)
Form of Global Note for the 4.300% Senior Notes due 2028 (incorporated by reference to
Exhibit A in the Second Supplemental Indenture filed as Exhibit 4.2 in Edwards Lifesciences’
report on Form 8-K filed on June 15, 2018)
Five-Year Credit Agreement, dated as of July 15, 2022, among Edwards Lifesciences
Corporation and certain of its subsidiaries, as Borrowers, the lenders signatory thereto, Bank of
America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 in Edwards
Lifesciences’ report on Form 8-K filed on July 21, 2022)
Settlement Agreement, dated May 19, 2014, between Edwards Lifesciences Corporation and
Medtronic, Inc. (incorporated by reference to Exhibit 10.2 in Edwards Lifesciences’ report on
Form 10-Q for the quarterly period ended June 30, 2014)
Edwards Lifesciences Corporation Form of Employment Agreement (incorporated by reference
to Exhibit 10.8 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
March 31, 2003)
103
Exhibit No.
*10.4
*10.5
*10.6
*10.7
*10.8
*10.9
*10.10
*10.11
*10.12
*10.13
*10.14
*10.15
*10.16
Description
Edwards Lifesciences Corporation Amended and Restated Employment Agreement for
Michael A. Mussallem, dated March 30, 2009 (incorporated by reference to Exhibit 10.2 in
Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended March 31, 2009)
Edwards Lifesciences Corporation Amended and Restated Chief Executive Officer
Change-in-Control Severance Agreement, dated October 9, 2012 (incorporated by reference to
Exhibit 10.1 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
September 30, 2012)
Edwards Lifesciences Corporation Form of Change-in-Control Severance Agreement
(incorporated by reference to Exhibit 10.2 in Edwards Lifesciences’ report on Form 10-Q for the
quarterly period ended September 30, 2012)
Description of Severance Benefits for Mr. Jean-Luc Lemercier (incorporated by reference to
Exhibit 10.1 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
March 31, 2021)
Edwards Lifesciences Corporation 2018 Edwards Incentive Plan (incorporated by reference to
Exhibit 10.7 in Edwards Lifesciences’ report on Form 10-K for the fiscal year ended
December 31, 2018)
Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program, as
amended and restated as of May 7, 2020 (incorporated by reference to Exhibit 10.1 in Edwards
Lifesciences’ report on Form 10-Q for the quarterly period ended June 30, 2020)
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related
Long-Term Stock Program Global Nonqualified Stock Option Award Agreement for awards
granted prior to May 2015 (incorporated by reference to Exhibit 10.1 in Edwards Lifesciences’
report on Form 10-Q for the quarterly period ended March 31, 2011)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Nonqualified Stock Option Award Agreement for awards granted beginning May 2015
(incorporated by reference to Exhibit 10.11 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Restricted Stock Unit Award Agreement for awards granted beginning May 2015
(incorporated by reference to Exhibit 10.12 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Performance-Based Restricted Stock Unit Award Agreement for awards granted
beginning May 2015 (incorporated by reference to Exhibit 10.13 in Edwards Lifesciences’
report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Nonemployee Directors Stock Incentive Program, as
amended and restated as of February 25, 2016 (incorporated by reference to Exhibit 10.1 in
Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended March 31, 2016)
Edwards Lifesciences Corporation 2020 Nonemployee Directors Stock Incentive Program
(incorporated by reference to Exhibit 10.15 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related
Nonemployee Directors Stock Incentive Program Nonqualified Stock Option Award Agreement
(incorporated by reference to Exhibit 10.16 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
104
Exhibit No.
*10.17
*10.18
*10.19
*10.20
*10.21
21.1
23
31.1
31.2
+32
Description
Edwards Lifesciences Corporation Form of Nonemployee Directors Stock Incentive Program
Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.17 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Nonemployee Directors Stock Incentive Program
Restricted Stock Agreement (incorporated by reference to Exhibit 10.18 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Executive Deferred Compensation Plan, as amended and
restated effective as of November 9, 2011 (incorporated by reference to Exhibit 10.7 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2011)
Edwards Lifesciences Corporation Officer Perquisite Program Guidelines, as of February 20,
2013 (incorporated by reference to Exhibit 10.25 in Edwards Lifesciences’ report on Form 10-K
for the fiscal year ended December 31, 2012)
Edwards Lifesciences Corporation Form of Indemnification Agreement (incorporated by
reference to Exhibit 10.20 in Edwards Lifesciences’ report on Form 10-K for the fiscal year
ended December 31, 2011)
Subsidiaries of Edwards Lifesciences Corporation
Consent of Independent Registered Public Accounting Firm
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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 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)
# Pursuant to a request for confidential treatment, confidential portions of this exhibit have been redacted and
have been filed separately with the Securities and Exchange Commission
* Represents management contract or compensatory plan
+ Furnished herewith
Item 16. Form 10-K Summary
None.
105
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
February 13, 2023
By:
/s/ MICHAEL A. MUSSALLEM
EDWARDS LIFESCIENCES CORPORATION
Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ MICHAEL A. MUSSALLEM
Chairman of the Board and Chief
February 13, 2023
Michael A. Mussallem
Executive Officer
(Principal Executive Officer)
/s/ SCOTT B. ULLEM
Corporate Vice President, Chief
February 13, 2023
Scott B. Ullem
Financial Officer
(Principal Financial Officer)
/s/ ROBERT W.A. SELLERS
Senior Vice President, Corporate
February 13, 2023
Robert W.A. Sellers
Controller
(Principal Accounting Officer)
/s/ KIERAN T. GALLAHUE
Director
February 13, 2023
Kieran T. Gallahue
/s/ LESLIE S. HEISZ
Leslie S. Heisz
/s/ PAUL A. LAVIOLETTE
Paul A. LaViolette
Director
Director
February 13, 2023
February 13, 2023
/s/ STEVEN R. LORANGER
Director
February 13, 2023
Steven R. Loranger
/s/ MARTHA H. MARSH
Martha H. Marsh
Director
February 13, 2023
/s/ RAMONA SEQUEIRA
Director
February 13, 2023
Ramona Sequeira
/s/ NICHOLAS J. VALERIANI
Nicholas J. Valeriani
Director
106
February 13, 2023
Exhibit 21.1
The following is a list of subsidiaries of Edwards Lifesciences Corporation, omitting subsidiaries which,
considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of
December 31, 2022:
Legal Entity
State of
Incorporation/
Formation
Country of
Incorporation/
Formation
Edwards Lifesciences LLC . . . . . . . . . . . . . . . . . . . .
Edwards Lifesciences (U.S.) Inc.
. . . . . . . . . . . . . . .
Edwards Lifesciences (Japan) Limited . . . . . . . . . . .
Delaware
Delaware
U.S.
U.S.
Japan
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos.
333-33054, 333-33056, 333-40434, 333-52334, 333-52346, 333-60670, 333-98219, 333-105961, 333-127260,
333-150810, 333-154242, 333-168462, 333-183106, 333-192229, 333-195853, 333-204180, 333-211333,
333-217909, 333-255853, and 333-255854) and Form S-3 (No. 333-266272) of Edwards Lifesciences
Corporation of our report dated February 13, 2023 relating to the financial statements and the effectiveness of
internal control over financial reporting, which appears in this Form 10-K.
Exhibit 23
/s/ PricewaterhouseCoopers LLP
Irvine, California
February 13, 2023
Exhibit 31.1
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Michael A. Mussallem, certify that:
1.
I have reviewed this annual report on Form 10-K of Edwards Lifesciences Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
February 13, 2023
By:
/s/ MICHAEL A. MUSSALLEM
Michael A. Mussallem
Chairman of the Board and Chief Executive Officer
Exhibit 31.2
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Scott B. Ullem, certify that:
1.
I have reviewed this annual report on Form 10-K of Edwards Lifesciences Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
February 13, 2023
By:
/s/ SCOTT B. ULLEM
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the Annual Report of Edwards Lifesciences Corporation (the “Company”) on Form 10-K
for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), we, Michael A. Mussallem, Chairman of the Board and Chief Executive Officer of the Company,
and Scott B. Ullem, Corporate Vice President, Chief Financial Officer, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
February 13, 2023
February 13, 2023
/s/ MICHAEL A. MUSSALLEM
Michael A. Mussallem
Chairman of the Board and Chief Executive Officer
/s/ SCOTT B. ULLEM
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
ation
CorpCorporaoratete IInformnformation
Corporate
ters
Corporate HeadHeadququararters
Edwards Lifesciences Corporation
One Edwards Way, Irvine, California 92614
1-800-4-A-HEART or (949) 250-2500
Board of Directors
Board of Directors
Michael A. Mussallem
Chairman & Chief Executive Officer,
Edwards Lifesciences Corporation
AnnuAnnuaall Meeting
Meeting
The Annual Meeting of Stockholders will be
held on May 11, 2023 at 10:00 am (Pacific) at
the offices of Edwards Lifesciences Corporation.
Stock SySymbmbooll
Stock
Edwards Lifesciences’ stock is traded
on The New York Stock Exchange
(NYSE) under the symbol EW.
Information on the Internet
Information on the Internet
Edwards Lifesciences’ “Investor Relations”
section of our website – ir.edwards.com –
provides access to a wide range of information
including our press releases, SEC filings and
other company information.
Investor Information
Investor Information
Members of the investing public should
contact Investor Relations at (949) 250-2806
or investor_relations@edwards.com.
Corporate Public Relations
Corporate Public Relations
Members of the news media should call
(949) 250-5070.
Transfer Agent
Transfer Agent
Correspondence about shares, stock certificates
and account information may be directed to:
Computershare Investor Services
P.O. Box 30170
College Station, TX 77842-3170
(800) 446-2617
(781) 575-3120/outside U.S.
computershare.com/investor
Independent Registered Public
Independent Registered Public
Accounting Firm
Accounting Firm
PricewaterhouseCoopers LLP
Orange County, CA
Edwards Lifesciences is an affirmative
action, equal opportunity employer.
Kieran T. Gallahue
Former Chairman &
Chief Executive Officer,
CareFusion Corporation
Leslie S. Heisz
Former Managing Director,
Lazard Frères & Co.
Paul A. LaViolette
Managing Partner &
Chief Operating Officer,
SV Health Investors LLC
Executive Management
Executive Management
Michael A. Mussallem
Chairman & Chief Executive Officer
Donald E. Bobo, Jr.
Corporate Vice President,
Strategy & Corporate Development
Todd J. Brinton, M.D., F.A.C.C.
Corporate Vice President,
Advanced Technology
Chief Scientific Officer
Daveen Chopra
Corporate Vice President,
Transcatheter Mitral
& Tricuspid Therapies
es
Dirksen J. Lehman
Corporate Vice President,
Public Affairs
Jean-Luc Lemercier
Corporate Vice President,
EMEA, Canada, Latin America
& JAPAC
C
Christine Z. McCauley
Corporate Vice President,
Human Resources
Steven R. Loranger
Former Chairman, President
& Chief Executive Officer,
ITT Corporation
Martha H. Marsh
Former President &
Chief Executive Officer,
Stanford Hospital & Clinics
Ramona Sequeira
President,
Global Portfolio Division,
Takeda Pharmaceutical USA, Inc.
.S. Business
da
a
ac u c l S
Inc.
Nicholas J. Valeriani
Former Chief Executive Officer,
e Officer,
West Health Institute
Gary and Mary West Health Institute
Joseph Nuzzolese
Corporate Vice President,
Global Supply Chain & Quality
Arnold A. Pinkston
Corporate Vice President,
General Counsel
Gary I. Sorsher
Senior Vice President
Quality & Regulatory Compliance
ent,
Katie M. Szyman
Corporate Vice President,
Critical Care
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
Larry L. Wood
Corporate Vice President &
Group President, Transcatheter
d
Aortic Valve Replacement &
Surgical Structural Heart
d
Bernard J. Zovighian
nt
President
E
d
w
a
r
d
s
L
i
f
e
s
c
i
e
n
c
e
s
n
2
0
2
2
A
n
n
u
a
l
R
e
p
o
r
t
Intended for Investor audience only. Patients and caregivers should talk to their physician about any of the procedures
or devices discussed herein. For patient-focused information, please see www.newheartvalve.com or www.edwards.com.
For the full important safety information, please see www.ir.edwards.com/annuals-and-proxies
CAUTION: Federal (United States) law restricts these devices to sale by or on the order of a physician. See instructions
for use for the important safety information, including indications, contraindications, warnings, precautions, and
adverse events.
Edwards devices placed on the European market meeting the essential requirements referred to in Article 3 of the Medical
Device Directive 93/42/EEC bear the CE marking of conformity.
Edwards EVOQUE Tricuspid Valve Replacement / Edwards Cardioband System / PASCAL System
CAUTION: Investigational devices. Limited by Federal (United States) law to investigational use. These devices are not
available for marketing or commercial sale in the United States. The PASCAL system bear the CE marking of conformity.
The Edwards SAPIEN 3 transcatheter heart valve and Edwards Alterra
CAUTION: Investigational devices. The Edwards SAPIEN 3 transcatheter heart valve and Edwards Alterra adaptive prestent
are investigational devices when used in patients with a dysfunctional right ventricular outflow tract/pulmonary valve (RVOT/PV)
who are indicated for treatment of pulmonary regurgitation (PR). Limited by Federal (USA) law to investigational use only.
Edwards SAPIEN M3 System
CAUTION: Investigational devices. The Edwards SAPIEN M3 System consists of investigational devices, limited by Federal
(United States) law to investigational use. These devices are not available for marketing or commercial sale in the United States.
Trademarks
Edwards, Edwards Lifesciences, the stylized E logo, 1-800-4-A-HEART, Acumen, Acumen IQ, Alterra, Cardioband,
Edwards SAPIEN, Edwards SAPIEN 3, Edwards SAPIEN 3 Ultra, Edwards SAPIEN M3, Every Heartbeat Matters, EVOQUE,
EVOQUE EOS FloTrac, ForeSight, HemoSphere, Hypotension Prediction Index, INSPIRIS, INSPIRIS RESILIA, KONECT,
KONECT RESILIA, MITRIS RESILIA, Life is Now, PARTNER, PARTNER 3, PASCAL, PASCAL Ace, RESILIA, SAPIEN, SAPIEN 3,
SAPIEN 3 Ultra, and SAPIEN M3 are all trademarks of Edwards Lifesciences Corporation or its affiliates. All other
trademarks are the property of their respective owners.
© 2023 Edwards Lifesciences Corporation. All rights reserved.
Edwards Lifesciences • One Edwards Way, Irvine CA 92614 USA • edwards.com
Edwards Lifesciences
2022 Annual Report
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erie. Just one month later,
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she played in her first volleyball match wearing scarlet
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she played in her first volleyball match wearing scarlet
she played in her first volleyball match wearing scar
she played in her first volleyball match we
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and grey. After two s
and grey. After two
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an athletic scholarship at Ohio S
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an athletic scholarship at Ohio State
Ohhio State..
o State.
an athletic schola
“I always stepped on the court with a lot of heart and passion,
but after I got my valve, it meant even more.”
A Letter to Our Shareholders
Leading Edwards Lifesciences has been the greatest privilege of my life.
As I look back on the past two decades, I reflect on many of Edwards’
extraordinary accomplishments – the development of our life-saving
innovations, the strong patient-focused culture we live every day,
and most importantly, the impact we have had on so many patients
around the world. I am proud of our talented and dedicated leadership
team and our employees who have made all this possible.
The day Edwards became an independent company on April 3, 2000, was exciting, but
our future was still uncharted. We were in the very early stages of creating our company
and the technologies that would go on to change the lives of so many. Now, 23 years later,
I am confident as ever that our future is extremely bright.
While the company and our world have grown and changed since that first day at Edwards,
we have never lost sight of why we are here. True to our Credo, which concludes with,
“Helping patients is our life’s work, and life is now,” we have stayed focused on our long-term,
strategic goals and fostered a patient-focused culture that drives all we do. Impressively, our
most recent internal survey found that 93% of our employees consider what is important to
patients when making decisions.
Edwards Lifesciences I 2022 Annual Report
1
Innovation
Pioneer breakthrough
technologies with
compelling evidence
Leadership
Lead groundbreaking
standards of care through
trusted relationships
Focus
Singular focus on the large
unmet needs of structural
heart and critically ill patients
We have continued to partner with clinicians,
regulators, hospitals and health systems to bring
lifesaving therapies to patients around the world.
For example, we have been involved in more than
800,000 transcatheter aortic valve replacement
(TAVR) procedures since we pioneered the
technology more than a decade ago. We have
stayed true to our innovation strategy, even during
the pandemic, and have strategically invested in
research and development. Our global supply
chain has proven resilient, enabling us to meet
physician and patient needs. We have also continued
to grow our talented and dedicated employees –
now stronger than 17,000 worldwide, including
more than 2,000 engineers.
It is gratifying to reflect on all we have achieved
together, but I also know Edwards is just getting
started. We have a leadership team with unmatched
experience who shares my commitment to patients.
We have worked cohesively for many years,
collaborating on Edwards’ strategy, and I am certain
the company will continue to build on our legacy of
patient impact, innovation and growth.
It is this confidence that underpins my decision to
retire in May of this year and step into a different role
at Edwards. I feel proud of the planful transition that
the Board and I have mapped out. I know that my
successor, Bernard Zovighian, is as right for this new
role as he was to lead our successful Transcatheter
Mitral and Tricuspid Therapies (TMTT) business and,
before that, Surgical Structural Heart (where it all
began for Edwards). He cares deeply about patients,
our employees and our company. He brings to the
job a strong strategic mindset, deep experience in
innovation and passion for establishing trusted
partnerships.
Culture and Strategy Led
The strong culture and patient-focused strategy
we have at Edwards requires establishing critical
partnerships based on mutual trust. It requires an
emphasis on quality, integrity and transparency.
It requires talented employees who are committed
to patients, who think creatively and who are
dedicated to lifelong learning. This in turn requires
a workplace where our employees feel they belong,
where they enjoy and value their work, and where
they can be their best.
Through the commitment to our strategy, we are
continuing to generate high-quality scientific evidence
to demonstrate that our life-saving technologies lead
to substantial health and economic benefits.
Innovation Prioritized
Our leading therapies continue to transform patient
care around the world. To help more patients and
further strengthen our long-term leadership position,
we continue to invest in research and development
at a significant rate of 17-18% of sales.
While many companies in our industry try to grow
through diversification and acquisitions, we have stayed
committed to organic growth through innovation in
structural heart and critical care.
We have considerable research underway to demon-
strate the value of our innovative technologies and
hopefully expand the number and type of patients who
benefit from those technologies. As an example, under
current rules, most people receive treatment when they
are diagnosed with a disease, but many patients with
heart valve failure are not eligible to receive treatment
until they display symptoms. Our pivotal trial, EARLY
TAVR, is studying the treatment of severe aortic stenosis
(AS) patients before debilitating symptoms appear and
may help us to determine if there are dangers associ-
ated with waiting to treat these patients. In addition,
enrollment is continuing in PROGRESS, a pivotal trial
studying the treatment of patients with moderate AS.
The global TAVR market will continue to be driven by
greater awareness and advances in new technologies,
as well as indication expansions and increased global
adoption. We expect to help twice as many TAVR
patients by 2028.
2
Edwards Lifesciences I 2022 Annual Report
In the face of systemic tensions that delay or deny
treatment to older patients alongside hospital staffing
challenges and patients reluctant to seek care, we have
also taken on several initiatives to ensure that heart
patients get the care they need. And we are encouraged
by how organizations like the American Heart
Association are engaging to help improve the quality
of care delivery for patients who need it.
In TMTT, we are transforming treatment for patients
with severe mitral and tricuspid valve disease. To do this,
we need differentiated therapies, positive clinical trial
results to support approvals and adoption, and a strong
partnership with clinicians to produce real-world
clinical outcomes.
Clinical experience with our therapies is showing
important progress in addressing the unmet needs
of these patients. We recently shared positive results
from the TRISCEND study of our EVOQUE transcatheter
tricuspid valve replacement system. We aim to achieve
approvals for the EVOQUE system in Europe this year
and in the U.S. by the end of 2024. We are pleased to
see continued adoption of the PASCAL repair system
in Europe and the U.S. with more than 10,000 patients
who have now been treated with PASCAL.
In our Surgical business, we are advancing our leader-
ship by identifying and solving critical unmet patient
needs in cardiac surgery. In 2022, we received FDA
approval to introduce our MITRIS RESILIA valve. We will
also continue to broaden the adoption of our flagship
surgical aortic heart valve, INSPIRIS RESILIA, which is
changing the standard of tissue durability in cardiac
surgery.
In Critical Care, we have improved the quality of care
for more than 16 million patients by creating new
technologies, expanding clinical evidence and driving
adoption. We continue to evolve our hemodynamic
monitoring platform, which uses machine learning to
help clinicians predict and prevent hypotension. We
recently introduced connectivity to this monitoring
platform to allow clinicians to access their patients’
continuous blood pressure data on their smartphones.
We believe our opportunity to serve structural heart
and critical care patients will nearly double to
$20 billion by 2028.
Committed Corporate Citizens
The Edwards Lifesciences Foundation has focused on
supporting programs designed to treat underserved
people to reduce heart valve disease, to strengthen the
communities where Edwards’ employees live and work
and to promote employee volunteerism. We also aspire
to have all our employees engage in charitable efforts
that are meaningful to them, and I am proud to share
that the great majority did so in 2022. Our signature
initiative, Every Heartbeat Matters, is focused on
improving the lives of an additional 2.5 million under-
served structural heart and critical care patients by
the end of 2025.
Sustainability, ethical behavior, supporting community
health, and fair and inclusive practices are part of
everything we do at Edwards. Our commitment to
environmental, social and governance (ESG) practices
continue to lead to numerous awards and recognitions,
including the Dow Jones Sustainability World Index for
the third year in a row. While we are honored to receive
accolades, this is not the reason we embrace ESG
practices. We do so because it’s core to our credo and
behaving as a trusted partner is part of our values.
Strong Global Performance
During a Challenging 2022
Though 2022 was still a challenging year for hospitals
and health systems—which had an impact on our
business—the lingering effects of the pandemic are
dissipating, as hospitals rebuild staffing capacity, and
more heart patients seek care. We have also partnered
with clinicians and hospitals to optimize TAVR programs,
leading to significant reductions in the length of
procedures and hospital stays, as well as the number
of staff needed for the procedure.
In 2022, our company grew eight percent on a constant
currency basis versus 2021. Our 2022 adjusted earnings
per share grew 12 percent. Our results fell short of our
expectations and were primarily impacted by hospital
staffing shortages around the globe, and foreign
currency rates that moved significantly during the year.
We received regulatory approvals to introduce our
industry-leading SAPIEN 3 Ultra RESILIA valve in the
U.S., Japan and other key geographies around the world,
and we are proud we have seen strong adoption of this
valve in both countries. RESILIA tissue now serves as the
platform for Edwards’ new class of valves. A recent study
showed positive results for RESILIA tissue at five years
and provides the potential to extend the durability of
all of our valves.
Our next generation PASCAL Precision mitral repair
system received approval in Europe and early approval
in the U.S. to treat patients suffering from degenerative
mitral regurgitation.
Edwards Lifesciences I 2022 Annual Report
3
Our innovative therapies and development will
continue to drive strong organic growth in the years
to come, as will our initiatives to improve patient
access to life-saving care.
Looking to the Future
I feel strongly that Edwards’ best days are ahead, and
the company will thrive and grow with Bernard as
CEO. Aside from his already impressive skills and
decades of medtech experience, including eight years
here at Edwards, he will be supported by our expert,
highly engaged board of directors, as well as our stellar
executive team. At the annual meeting in May, I will
stand for election as non-executive chairman of
Edwards’ Board, and I look forward to my continued
engagement in this role.
To our employees, I want to thank you, again,
for everything that you do for our company and
for patients around the world. It has truly been
my greatest honor to be Edwards’ CEO and I look
forward to supporting Edwards for years to come.
Sincerely,
Sincerely,
Michael A Mussallem
Michael A. Mussallem
Michael A. Mussallem
Chairman & Chief Executive Officer
Chairman & Chief Executive Officer
More About Bernard
Bernard J. Zovighian is president
of Edwards Lifesciences, and will
become CEO of the company in
May 2023. In his time as president,
he is working closely alongside
Mike Mussallem in engagement
with Edwards’ board of directors,
executive leadership team,
worldwide employees and other
stakeholders to further Edwards’ patient-focused
innovation strategy. Prior to this leadership transition,
Zovighian served since January 2018 as corporate vice
president responsible for the company’s Transcatheter
Mitral and Tricuspid Therapies (TMTT) business. As
the leader for TMTT, Zovighian established a global
organization focused on developing and delivering
a portfolio of therapies designed to change the
standard of care for mitral and tricuspid patients.
Zovighian joined Edwards Lifesciences in January
2015 as vice president and general manager of the
Surgical Structural Heart business, later serving as
corporate vice president of the surgical business
from 2016 until he began leading TMTT. Prior to
joining Edwards, Zovighian held a variety of roles
with increasing levels of responsibility at Johnson
& Johnson (J&J) for nearly 20 years, in roles such
as regional leadership outside of the United States
and worldwide president of one of the company’s
divisions. He has dual master’s degrees in science
and business from Universities of Marseille, France.
This Annual 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. 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 statements made by the Company’s executives, the Company’s future financial and
strategic goals for 2023 and beyond as well as its expectations for the results of research and development and clinical evidence, the timing and impact of new
product introductions, expected patient benefits of new products, and opportunities for growth and stockholder value, and any statements of assumptions
underlying any of the foregoing. 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. Investors are cautioned not to unduly rely on such forward-looking statements. 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 success in developing new products and avoiding manufacturing and quality issues;
clinical trial or commercial results or new product approvals and therapy adoption; the impact of public health crises, including the COVID-19 pandemic; the
impact of domestic and global economic conditions; competitive dynamics 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; 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 Part I, Item 1A in the Form 10-K attached hereto for a discussion of these risks, 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 that 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. “Adjusted” or “underlying” amounts are non-GAAP. Refer to “Non-GAAP Financial
Information” starting on page 11 as well as our IR website under “Historical financial information” for the most directly comparable GAAP financial measure.
Caution: In the U.S., EVOQUE and SAPIEN M3 are investigational devices and are not commercially available.
4
Edwards Lifesciences I 2022 Annual Report
2022 Highlights
202
2022 Sales by Geographic Region
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6
Edwar
Edwards Lifesciences
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Edwardds Lifesci
I 2022 Annual Report
Surgical Structural Heart
ral heart solutions,
Edwards Lifesciences has a proven commitment to ongoing innovation in surgical structural heart solutio ,ns,
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88
Edw
Edwards Lifesciences
ciences
ences
dwards LLifescienciences
ifescie
ards L
I 2022 Annual Report
Edwards Lifesciences is the global leader of
patient-focused medical innovations for structural heart
disease and critical care monitoring. Driven by a passion
for patients, the company is dedicated to improving and
enhancing lives through partnerships with clinicians and
stakeholders across the global healthcare landscape.
101010101010011
Non-GAAP Financial Information
To supplement the consolidated financial results prepared in
accordance with Generally Accepted Accounting Principles
(“GAAP”), the Company uses non-GAAP historical financial
measures. Management makes adjustments to the GAAP
measures for items (both charges and gains) that (a) do not
reflect the core operational activities of the Company, (b) are
commonly adjusted within the Company’s industry to enhance
comparability of the Company’s financial results with those of
its peer group, or (c) are inconsistent in amount or frequency
between periods (albeit such items are monitored and controlled
with equal diligence relative to core operations). The Company
uses the term “adjusted sales” or “underlying growth rate”when
referring to non-GAAP sales and sales growth information, which
excludes currency exchange rate fluctuations, the conversion
to a consignment inventory system for surgical structural heart
(“Surgical”), and the positive impact of transcatheter aortic
valve replacement (“TAVR”) stocking sales in Germany and
the negative impact of de-stocking. The Company uses the
term “adjusted” to also exclude intellectual property litigation
expenses, fair value adjustments to contingent consideration
liabilitites arising from acquisitions, amortization of intangible
assets, a significant program discontinuation, significant
charges associated with TAVR inventory write offs, the
conversion to a consignment inventory for Surgical, the positive
impact of TAVR stocking sales in Germany and the negative
impact of de-stocking, impairment of long-lived assets, pension
curtailment gains, the purchase of intellectual property, and the
impact from implementation of tax law changes and settlements.
Management uses non-GAAP financial measures internally
for strategic decision making, forecasting future results, and
evaluating current performance. These non-GAAP financial
measures are used in addition to, and in conjunction with,
results presented in accordance with GAAP and reflect an
additional way of viewing aspects of the Company’s operations
by investors that, when viewed with its GAAP results, provide a
more complete understanding of factors and trends affecting the
Company’s business and facilitate comparability to historical
periods.
Non-GAAP financial measures are not prepared in accordance
with GAAP; therefore, the information is not necessarily
comparable to other companies and should be considered as
a supplement to, and not as a substitute for, or superior to,
the corresponding measures calculated in accordance with
GAAP. A reconciliation of non-GAAP historical financial
measures to the most comparable GAAP measure is provided
in the tables below.
Fluctuations in currency exchange rates impact the comparative
results and sales growth rates of the Company’s underlying
business. Management believes that excluding the impact of
foreign exchange rate fluctuations from its sales growth provides
investors a more useful comparison to historical financial results.
Guidance for sales and sales growth rates is provided on an
“underlying basis,” and projections for diluted earnings per
share, net income and growth, gross profit margin, taxes, and
free cash flow are also provided on a non-GAAP basis, as adjusted,
for the items identified above due to the inherent difficulty in
forecasting such items without unreasonable effort. The
Company is not able to provide a reconciliation of the non-GAAP
guidance to comparable GAAP measures due to the unknown
effect, timing, and potential significance of special charges or
gains, and management’s inability to forecast charges associated
with future transactions and initiatives.
Management considers free cash flow to be a liquidity measure
which provides useful information to management and investors
about the amount of cash generated by business operations,
after deducting payments for capital expenditures, which can
then be used for strategic opportunities or other business
purposes including, among others, investing in the Company’s
business, making strategic acquisitions, strengthening the
balance sheet, and repurchasing stock.
Adjusted Net Sales
Twelve months ended December 31 (in millions)
GAAP Net Sales
Impact of Surgical consignment
Impact of Germany stocking
Adjusted Net Sales
Note: Numbers may not calculate due to rounding.
2022
2021
2020
2019
2018
$5,382.4
–
–
$5,232.5
–
–
$4,386.3
–
–
$4,348.0
–
–
$3,722.8
82.5
8.0
$5,382.4
$5,232.5
$4,386.3
$4,348.0
$3,813.3
Edwards Lifesciences I 2022 Annual Report
11
Reconciliation of GAAP to Adjusted Net Income
Twelve months ended December 31 (in millions, except per share data)
GAAP Net Income
Non-GAAP adjustments:
Intellectual property litigation expenses, net
Change in fair value of contingent consideration liabilities, net
Amortization of intangible assets
Program discontinuation
Litigation settlement
TAVR inventory write off
Surgical consignment conversion
TAVR Germany stocking sales
Impairment of long-lived assets
Pension curtailment gain
Purchased in-process research and development
Impact from U.S. tax legislation
Tax audit settlements
2022
2021
2020
2019
2018
$1,521.9
$1,503.1
$823.4
$1,046.9
$722.2
11.9
(35.0)
4.8
47.0
–
–
–
–
–
–
–
–
–
15.5
(121.6)
6.9
–
–
–
–
–
–
–
–
–
–
28.5
12.3
4.6
–
305.1
–
–
–
–
–
–
–
–
25.2
(7.1)
4.0
–
–
55.2
–
–
40.6
–
18.1
–
–
26.4
(8.0)
2.4
–
137.5
–
54.7
4.7
109.3
(6.3)
–
(2.5)
(36.1)
Adjusted Net Income
$1,550.6
$1,403.9
$1,173.9
$1,182.9
$1,004.3
Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
GAAP Diluted Earnings Per Share
$2.44
$2.38
$1.30
$1.64
$1.13
Non-GAAP adjustments:
Intellectual property litigation expenses, net
Change in fair value of contingent consideration liabilities
Amortization of intellectual property
Program discontinuation
Litigation settlement
TAVR inventory write off
Surgical consignment conversion
TAVR Germany stocking sales
Impairment of long-lived assets
Pension curtailment gain
Purchased in-process research and development
Tax audit settlements
Adjusted Diluted Earnings Per Share
Adjusted Free Cash Flow
Twelve months ended December 31 (in millions)
Net cash provided by operating activities
Capital expenditures
Litigation settlements
Tax audit settlement
Repatriation tax payments
Adjusted Free Cash Flow
Adjusted Net Sales Growth
Twelve months ended December 31
GAAP Net Sales Growth Rate
Impact of Surgical consignment
Impact of Germany stocking
Impact of CASMED acquisition
Impact of foreign exchange
Adjusted Net Sales Growth Rate
Note: Numbers may not calculate due to rounding.
0.03
(0.06)
–
0.07
–
–
–
–
–
–
–
–
0.02
(0.19)
0.01
–
–
–
–
–
–
–
–
–
0.05
0.02
0.01
–
0.48
–
–
–
–
–
–
–
0.04
(0.01)
0.01
–
–
0.09
–
–
0.06
–
0.03
–
0.04
(0.01)
–
–
0.21
–
0.09
0.01
0.17
(0.01)
–
(0.06)
$2.48
$2.22
$1.86
$1.86
$1.57
2022
2021
2020
2019
2018
$1,218.2
(244.6)
–
–
–
$1,732.1
(325.8)
–
–
–
$1,054.3
(407.0)
86.4
–
–
$1,182.9
(254.4)
138.3
–
–
$926.7
(238.7)
–
56.7
41.0
$973.6
$1,406.3
$733.7
$1,066.8
$785.7
2022
2.9%
0.0%
0.0%
0.0%
4.8%
7.7%
2021
19.3%
0.0%
0.0%
0.0%
(1.5%)
17.8%
2020
0.9%
0.0%
0.0%
0.0%
(0.3%)
0.6%
2019
16.8%
(2.5%)
(0.3%)
(0.5%)
1.8%
15.3%
2018
8.4%
2.4%
0.3%
0.0%
(1.1%)
10.0%
12
Edwards Lifesciences I 2022 Annual Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
For the Fiscal Year Ended December 31, 2022
OR
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
(State or other jurisdiction of
incorporation or organization)
36-4316614
(I.R.S. Employer
Identification No.)
One Edwards Way Irvine California 92614
(Address of Principal Executive Offices) (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 Symbols(s)
Common Stock, par value $1.00 per share
EW
Name of each exchange on which
registered:
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act. Yes ‘ No È
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 È 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 È 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 È
Non-accelerated filer ‘
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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report È.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recover analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2022 (the last trading day of the
registrant’s most recently completed second quarter): $58,453,646,002 based on the closing price of the registrant’s common stock on the
New York Stock Exchange. This calculation does not reflect a determination that persons are affiliates for any other purpose.
The number of shares outstanding of the registrant’s common stock, $1.00 par value, as of January 31, 2023, was 608,313,396.
Documents Incorporated by Reference
Portions of the registrant’s proxy statement for the 2023 Annual Meeting of Stockholders (to be filed within 120 days of December 31,
2022) are incorporated by reference into Part III, as indicated herein.
[THIS PAGE INTENTIONALLY LEFT BLANK]
EDWARDS LIFESCIENCES CORPORATION
Form 10-K Annual Report—2022
Table of Contents
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
13
23
24
24
24
25
26
26
41
44
101
101
101
101
102
102
102
102
102
103
105
106
[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
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. 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 sections. These statements include, among other things, the expected
impact of COVID-19 on our business, the expected impact of macroeconomic conditions on our business, any
predictions, opinions, expectations, plans, strategies, objectives and any statements of assumptions underlying
any of the foregoing relating to the our 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: our success in
developing new products and avoiding manufacturing and quality issues; clinical trial or commercial results or
new product approvals and therapy adoption; the impact of public health crises, including the COVID-19
pandemic; the impact of domestic and global economic conditions; competitive dynamics 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; 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 Part I, Item 1A below, 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 United States 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.
WEBSITE REFERENCES
In this Annual Report on Form 10-K, we make references to our website at www.edwards.com. References to our
website through this Form 10-K are provided for convenience only and the content of our website does not
constitute a part of, and shall not be deemed incorporated by reference into, this Annual Report on Form 10-K.
1
Item 1.
Business
Overview
Edwards Lifesciences Corporation is 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. Edwards
Lifesciences has been a leader in our field for over six decades. Since our founder, Lowell Edwards, first
dreamed of using engineering to address diseases of the human heart, we have steadily built a company on the
premise of imagining, building, and realizing a better future for patients.
A pioneer in the development of heart valve therapies, we are the world’s leading manufacturer of heart
valve systems and repair products used to replace or repair a patient’s diseased or defective heart valve. Our
innovative work in heart valves encompasses both surgical and transcatheter therapies for heart valve
replacement and repair. In addition, our robust pipeline of future technologies is focused on the less invasive
repair or replacement of the mitral and tricuspid valves of the heart, which are more complex and more
challenging to treat than the aortic valve that is currently the focus of many of our commercially approved valve
technologies. We are also a global leader in hemodynamic and noninvasive brain and tissue oxygenation
monitoring systems used to measure a patient’s cardiovascular function in the hospital setting.
Cardiovascular disease is the number-one cause of death in the world and is the top disease in terms of
health care spending in nearly every country. Cardiovascular disease is progressive in that it tends to worsen over
time and often affects the structure of an individual’s heart.
Patients undergoing treatment for cardiovascular disease can be treated with a number of our medical
technologies, which are designed to address individual patient needs with respect to disease process,
comorbidities, and health status. For example, an individual with a heart valve disorder may have a faulty valve
that is affecting the function of his or her heart or blood flow throughout his or her body. A cardiac surgeon may
elect to remove the valve and replace it with one of our bioprosthetic surgical tissue heart valves or surgically
re-shape and repair the faulty valve with an Edwards Lifesciences annuloplasty ring. Alternatively, a clinician
(typically an interventional cardiologist) may implant an Edwards Lifesciences transcatheter valve or repair
system via a catheter-based approach that does not require traditional open-heart surgery and can be done while
the heart continues to beat. Patients in the hospital setting, including high-risk patients in the operating room or
intensive care unit, are candidates for having their cardiac function or fluid levels monitored by our Critical Care
products through multiple monitoring options, including noninvasive and minimally-invasive technologies.
These technologies enable proactive clinical decisions while also providing the opportunity for improving
diagnoses and developing individualized therapeutic management plans for patients.
Corporate Background
Our principal executive offices are located at One Edwards Way, Irvine, California 92614. The telephone
number at that address is (949) 250-2500. We make available, free of charge on our website located at
www.edwards.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and any amendments to those reports, as soon as reasonably practicable after filing such reports with
the Securities and Exchange Commission (“SEC”). The contents of our website are not incorporated by reference
into this report.
Edwards Lifesciences’ Product and Technology Offerings
The following discussion summarizes the main areas of products and technologies we offer to treat
advanced cardiovascular disease. Our products and technologies are categorized into four main areas:
Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical Structural
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Heart, and Critical Care. For more information on net sales from these four main areas, see “Net Sales by
Product Group” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
Transcatheter Aortic Valve Replacement
We are the global leader in transcatheter heart valve replacement technologies designed for the minimally-
invasive replacement of aortic heart valves. The Edwards SAPIEN family of valves, including Edwards SAPIEN
XT, the Edwards SAPIEN 3, the Edwards SAPIEN 3 Ultra, and the Edwards SAPIEN 3 Ultra RESILIA
transcatheter heart valves, and their respective delivery systems, are used to treat heart valve disease using
catheter-based approaches for patients who have severe symptomatic aortic stenosis and certain patients with
congenital heart disease. Delivered while the heart is beating, these valves can enable patients to experience a
better quality of life sooner than patients receiving traditional surgical therapies. We began offering our
transcatheter aortic heart valves to patients commercially in Europe in 2007, in the United States in 2011, and in
Japan in 2013. Supported by extensive customer training and service, and a growing body of compelling clinical
evidence, our SAPIEN family of transcatheter aortic heart valves are the most widely prescribed transcatheter
heart valves in the world.
Sales of our transcatheter aortic valve replacement products represented 65% of our net sales in each of
2022, 2021, and 2020, respectively.
Transcatheter Mitral and Tricuspid Therapies
We continue to make significant investments in the development of transcatheter heart valve repair and
replacement technologies designed to treat mitral and tricuspid valve diseases. While many of these technologies
are in development and clinical phases, the PASCAL PRECISION and Cardioband transcatheter valve repair
systems are commercially available in Europe for mitral and tricuspid valve repair. As of 2022, the PASCAL
PRECISION system is also commercially available in the U.S. for degenerative mitral regurgitation patients. The
PASCAL PRECISION system addresses the needs of patients with mitral or tricuspid regurgitation through leaflet
approximation, while the Cardioband system enables clinicians to reduce the valve’s annulus and lower
regurgitation. In addition to transcatheter repair, we believe transcatheter replacement is key to unlocking the full
mitral and tricuspid opportunity. We believe our two-platform mitral replacement strategy positions us for
leadership in the mid-to-long term. SAPIEN M3 is based on the proven SAPIEN valve while EVOQUE Eos is
designed specifically for mitral patients. For tricuspid valve replacement, our EVOQUE system is also sub
30-French, and available in a variety of valve sizes to enable treatment in a wide range of patient anatomies.
Surgical Structural Heart
We are innovating in the field of cardiac surgical therapies to improve the quality of life for patients. Our
RESILIA tissue, with published clinical data showing 0% structural valve deterioration through five years1, is
helping us redefine tissue durability standards. Our latest innovation, the INSPIRIS RESILIA aortic valve, is built
on our PERIMOUNT platform, offering RESILIA tissue and VFit technology. INSPIRIS is the leading aortic
surgical valve in the world. Sales of our surgical therapies in the United States also continue to gain traction with
KONECT RESILIA, the first pre-assembled, aortic tissue valved conduit.
The MITRIS RESILIA valve, our newest mitral valve incorporating our latest tissue technology, is now
commercially available in both the U.S. and Japan. We believe the demand for surgical structural heart therapies
is growing worldwide, and that our innovation strategy will continue to strengthen our leadership and positive
impact on patients.
1 Bavaria, et al. Five-year Outcomes of the COMMENCE trial investigating Aortic Valve Replacement with a
Bioprosthetic Valve with a Novel Tissue. The Society of Thoracic Surgeons 2021 Annual Meeting; Bartus, et
al. Final 5-year outcomes following aortic valve replacement with RESILIA tissue bio prosthesis. European
Journal of Cardio-Thoracic Surgery, 2020.
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Sales of our surgical tissue heart valve products represented 15%, 15%, and 16% of our net sales in 2022,
2021, and 2020, respectively.
Critical Care
We are the world leader in advanced hemodynamic monitoring systems used to measure a patient’s heart
function and fluid status in surgical and intensive care settings. Edwards’ complete hemodynamic portfolio helps
clinicians make proactive clinical decisions that can improve patient recovery. The portfolio includes the
minimally-invasive FloTrac and Acumen IQ sensors, the noninvasive ClearSight and Acumen IQ cuffs, and the
ForeSight noninvasive tissue oximetry sensor. We also support clinical needs with our well-established
Swan-Ganz pulmonary artery catheters and arterial pressure monitoring products. Compatible with our portfolio
of sensors and catheters, the HemoSphere monitoring platform displays valuable physiological information. Our
first predictive algorithm, Acumen Hypotension Prediction Index software, alerts clinicians in advance of a
patient developing dangerously low blood pressure. Our latest algorithm, Acumen Assisted Fluid Management
software, provides patient-specific fluid suggestions to help keep patients in an optimal range during surgery.
Competition
The medical technology industry is highly competitive. We compete with divisions of larger companies as
well as smaller companies that offer competitive product lines in certain geographies in which we operate. We
also compete with both established and newer technologies that target the patients served by our products. New
product development and technological change characterize the areas in which we compete. Our present or future
products could be rendered obsolete or uneconomical as a result of technological advances by one or more of our
present or future competitors or by other therapies, including drug therapies. We believe we hold leadership
positions because we develop and produce safe and effective therapies supported by rigorous clinical studies with
extensive data and with innovative features that enhance patient benefit, product performance, and reliability;
these superior clinical outcomes are in part due to the level of customer and clinical support we provide.
The cardiovascular segment of the medical technology industry is dynamic and subject to significant change
due to cost-of-care considerations, regulatory reform, industry and customer consolidation, and evolving patient
needs. The ability to provide products and technologies that demonstrate value and improve clinical outcomes is
becoming increasingly important for medical technology manufacturers.
We believe that we are a leading global competitor in each of our product lines. In Transcatheter Aortic
Valve Replacement, our primary competitors include Medtronic PLC and Abbott Laboratories (“Abbott”). In
Transcatheter Mitral and Tricuspid Therapies, our primary competitor is Abbott, and there are a considerable
number of large and small companies with development efforts in these fields. In Surgical Structural Heart, our
primary competitors include Medtronic PLC, Abbott, and Artivion, Inc (formerly CryoLife). In Critical Care, we
compete primarily with a variety of companies in specific product lines including ICU Medical, Inc., PULSION
Medical Systems SE, a subsidiary of Getinge AB, Cheetah Medical, Inc., a subsidiary of Baxter International,
and LiDCO Group PLC, a subsidiary of Masimo Corporation.
Sales and Marketing
Our portfolio includes some of the most recognizable cardiovascular device product brands in treating
structural heart disease today. We have a number of product lines that require sales and marketing strategies
tailored to deliver high-quality, cost-effective products and technologies to customers worldwide. Because of the
diverse global needs of the population that we serve, our distribution system consists of several direct sales forces
as well as independent distributors. We are not dependent on any single customer and no single customer
accounted for 10% or more of our net sales in 2022.
To ensure optimal outcomes for patients, we conduct educational symposia and best practices training for
our physician, hospital executive, service line leadership, nursing, and clinical-based customers. We rely
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extensively on our sales and field clinical specialist personnel who work closely with our customers in hospitals.
Field clinical specialists routinely attend procedures where Edwards’ products are being used in order to provide
guidance on the use of our devices, thereby enabling physicians and staff to reach expert proficiency and deliver
positive patient outcomes. Our customers include physicians, nurses, and other clinical personnel, but can also
include decision makers such as service line leaders, material managers, biomedical staff, hospital administrators
and executives, purchasing managers, and ministries of health. Also, for certain of our product lines and where
appropriate, our corporate sales team actively pursues approval of Edwards Lifesciences as a qualified supplier
for hospital group purchasing organizations (“GPOs”) that negotiate contracts with suppliers of medical products.
Additionally, we have contracts with a number of United States and European national and regional buying
groups, including healthcare systems and Integrated Delivery Networks. Where we choose to market our
products is also influenced by the existence of, or potential for, adequate reimbursement to hospitals and other
providers by national healthcare systems.
United States. In the United States, we sell substantially all of our products through our direct sales forces.
In 2022, 58% of our net sales were derived from sales to customers in the United States.
Outside of the United States. In 2022, 42% of our net sales were derived outside of the United States
through our direct sales forces and independent distributors. Of the total sales outside of the United States, 52%
were in Europe, 21% were in Japan, and 27% were in Rest of World. We sell our products in approximately 100
countries, including Japan, Germany, France, United Kingdom, Italy, China, and Canada. A majority of the sales
and marketing approach outside of the United States is direct sales, although it varies depending on each
country’s size and state of development.
Raw Materials and Manufacturing
We operate manufacturing facilities in various geographies around the world. We manufacture our
Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid technologies, and Structural
Surgical Heart products primarily in the United States (California and Utah), Singapore, Costa Rica, and Ireland.
We manufacture our Critical Care products primarily in the Dominican Republic and Puerto Rico.
We use a diverse and broad range of raw and organic materials in the design, development, and manufacture
of our products. We manufacture our non-implantable products from fabricated raw materials including resins,
chemicals, electronics, and metals. Most of our replacement heart valves are manufactured from natural tissues
harvested from animal tissue as well as fabricated materials. We purchase certain materials and components used
in manufacturing our products from external suppliers. In addition, we purchase certain supplies from single
sources for reasons of sole source availability or constraints resulting from regulatory requirements.
We work with our suppliers to mitigate risk and seek continuity of supply while maintaining quality and
reliability. Alternative supplier options are generally considered, identified, and approved for materials deemed
critical to our products, although we do not typically pursue immediate regulatory qualification of alternative
sources due to the strength of our existing supplier relationships and the time and expense associated with the
regulatory validation process.
We comply with all current global guidelines regarding risks for products incorporating animal tissue
intended to be implanted in humans. We follow rigorous sourcing and manufacturing procedures intended to
safeguard humans from potential risks associated with diseases such as bovine spongiform encephalopathy
(“BSE”). We obtain bovine tissue used in our pericardial tissue valve products only from sources within the
United States and Australia, where strong control measures and surveillance programs exist. In addition, bovine
tissue used in our pericardial tissue valve products is from tissue types considered by global health and regulatory
organizations to have shown no risk of infectibility. Our manufacturing and sterilization processes are designed
to render tissue biologically safe from all known infectious agents and viruses.
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Quality Assurance
We are committed to providing quality products to our patients and have implemented modern quality
systems and concepts throughout the organization. The quality system starts with the initial design concept, risk
management, and product specification, and continues through the design of the product, packaging and labeling,
and the manufacturing, sales, support, and servicing of the product. The quality system is intended to design
quality into the products and uses continuous improvement concepts, including Lean/Six Sigma principles,
throughout the product lifecycle.
Our operations are frequently inspected by the many regulators that oversee medical device manufacturing,
including the United States Food and Drug Administration (“FDA”), European Notified Bodies, and other
regulatory entities. The medical technology industry is highly regulated and our facilities and operations are
designed to comply with all applicable quality systems standards, including the International Organization for
Standardization (“ISO”) 13485. These standards require, among other items, quality system controls that are
applied to product design, component material, suppliers, and manufacturing operations. These regulatory
approvals and ISO certifications can be obtained only after a successful audit of a company’s quality system has
been conducted by regulatory or independent outside auditors. Periodic reexamination by an independent outside
auditor is required to maintain these certifications.
Environmental, Health, and Safety
We are committed to providing a safe and healthy workplace and complying with all relevant regulations
and medical technology industry standards. Through our corporate and site level Environmental, Health, and
Safety functions, we establish and monitor programs to reduce pollution, prevent injuries, and maintain
compliance with applicable regulations. In order to measure performance, we monitor and report on a number of
metrics, including regulated and non-regulated waste disposal, energy usage, water consumption, air toxic
emissions, and injuries from our production activities. Each of our manufacturing sites is evaluated regularly
with respect to a broad range of Environmental, Health, and Safety criteria.
Research and Development
In 2022, we made significant investments in research and development as we worked to develop therapies
that we believe have the potential to change the practice of medicine. Research and development spending
increased 5% year over year, representing 18% of 2022 sales. This increase was primarily the result of significant
investments in our transcatheter structural heart programs, including an increase in clinical research for our
mitral and tricuspid therapies. We are engaged in ongoing research and development to deliver clinically
advanced new products, to enhance the effectiveness, ease of use, safety, and reliability of our current leading
products, and to expand the applications of our products as appropriate. We focus on opportunities within
specific areas of structural heart disease and critical care monitoring.
A considerable portion of our research and development investment includes clinical trials and the
collection of evidence that provide data for use in regulatory submissions, and required post-market approval
studies involving applications of our products. Our investment in clinical studies also includes outcomes and
cost-effectiveness data for payers, clinicians, and healthcare systems.
In Transcatheter Aortic Valve Replacement, we are developing new products to further improve and
streamline transcatheter aortic heart valve replacement procedures.
In Transcatheter Mitral and Tricuspid Therapies, we are making significant investments in innovation and
clinical evidence to develop technologies designed to treat mitral and tricuspid valve diseases. In addition to our
internally developed programs, we have made investments in several companies that are independently
developing minimally-invasive technologies to treat structural heart diseases.
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Our Surgical Structural Heart development programs include innovative platforms for patients who are best
treated surgically, specifically active patients and patients with more complex combined procedures.
In our Critical Care product line, we are pursuing the development of a variety of decision support solutions
for our clinicians. This includes next-generation noninvasive and minimally-invasive hemodynamic monitoring
systems, and a next-generation monitor platform. We are also developing a decision support software suite with
advanced algorithms for proactive hemodynamic management, including a semi-closed loop system for
standardized management of patient fluid levels. Lastly, we are developing a connectivity platform that will offer
clinicians additional clinical support, remote monitoring capability, analytics, and insights for their patients’
hemodynamic status.
Our research and development activities are conducted primarily in facilities located in the United States
and Israel. Our experienced research and development staff are focused on product design and development,
quality, clinical research, and regulatory compliance. To pursue primary research efforts, we have developed
alliances with several leading research institutions and universities, and also work with leading clinicians around
the world in conducting scientific studies on our existing and developing products.
Proprietary Technology
Patents, trademarks, and other proprietary rights are important to the success of our business. We also rely
upon trade secrets, know-how, continuing innovations, licensing opportunities, and non-disclosure agreements to
develop and maintain our competitive position.
We own or have rights to a substantial number of patents and have patent applications pending both in the
United States and in foreign countries. We continue to innovate and file new patent applications to protect our
new products and technologies.
Additionally, we are a party to license agreements with various third parties pursuant to which we have
obtained, for varying terms, the exclusive or non-exclusive rights to certain patents held by such third parties in
consideration for cross-licensing rights and/or royalty payments. We have also licensed certain patent rights to
others.
We undertake reasonable measures to protect our patent rights, including monitoring the products of our
competitors for possible infringement of our patents. Litigation has been necessary to enforce certain patent
rights held by us, and we plan to continue to defend and prosecute our rights with respect to such patents.
Moreover, we own certain United States registered trademarks used in our business. Many of our
trademarks have also been registered for use in certain foreign countries where registration is available and where
we have determined it is commercially advantageous to do so.
Government Regulation and Other Matters
Our products and facilities are subject to regulation by numerous government agencies, including the FDA,
European Union member states competent authorities, and the Japanese Pharmaceuticals and Medical Devices
Agency, to confirm compliance with the various laws and regulations governing the development, testing,
manufacturing, labeling, marketing, and distribution of our products.
We are also governed by federal, state, local, and international laws of general applicability, including, but
not limited to, those regulating employee health and safety, labor, competition, trade secret, and the protection of
the environment. Overall, the amount and scope of domestic and foreign laws and regulations applicable to our
business has increased over time. Compliance with these regulations has not had a material effect on our capital
expenditures, earnings, or competitive position to date, but new regulations or amendments to existing
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regulations to make them more stringent could have such an effect in the future. We cannot estimate the expenses
we may incur to comply with potential new laws or changes to existing laws, or the other potential effects these
laws may have on our business.
United States Regulation. In the United States, the FDA has responsibility for regulating medical devices.
The FDA regulates design, development, testing, clinical studies, manufacturing, labeling, promotion, and record
keeping for medical devices, and reporting of adverse events, recalls, or other field actions by manufacturers and
users to identify potential problems with marketed medical devices. Many of the devices that we develop and
market are in a category for which the FDA has implemented stringent clinical investigation and pre-market
clearance or approval requirements. The process of obtaining FDA clearance or approval to market a product is
resource intensive, lengthy, and costly. FDA review may involve substantial delays that adversely affect the
marketing and sale of our products. A number of our products are pending regulatory clearance or approval to
begin commercial sales in various markets. Ultimately, the FDA may not authorize the commercial release of a
medical device if it determines the device is not safe and effective or does not meet other regulatory standards.
Additionally, even if a product is cleared or approved, the FDA may impose restrictions or require testing and
surveillance programs to monitor the effects of these products once commercialized.
The FDA has the authority to halt the distribution of certain medical devices, detain or seize adulterated or
misbranded medical devices, order the repair, replacement, or refund of the costs of such devices, or preclude the
importation of devices that are or appear violative. The FDA also conducts inspections to determine compliance
with the quality system regulations concerning the manufacturing and design of devices and current medical
device reporting regulations, recall regulations, clinical testing regulations, and other requirements. The FDA
may withdraw product clearances or approvals due to failure to comply with regulatory standards, or the
occurrence of unforeseen problems following initial approval, and require notification of health professionals and
others with regard to medical devices that present unreasonable risks of substantial harm to the public health.
Additionally, the failure to comply with FDA or comparable regulatory standards or the discovery of previously
unknown product problems could result in fines, delays, suspensions or withdrawals of regulatory clearances or
approvals, seizures, injunctions, recalls, refunds, civil money penalties, or criminal prosecution. Our compliance
with applicable regulatory requirements is subject to continual review. Moreover, the FDA and several other
United States agencies administer controls over the export of medical devices from the United States and the
import of medical devices into the United States, which could also subject us to sanctions for noncompliance.
We are also subject to additional laws and regulations that govern our business operations, products, and
technologies, including:
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federal, state, and foreign anti-kickback laws and regulations, which generally prohibit payments to
anyone, including physicians as an inducement to purchase or recommend a product;
the Stark law, which prohibits physicians from referring Medicare or Medicaid patients to a provider
that bills these programs for the provision of certain designated health services if the physician (or a
member of the physician’s immediate family) has a financial relationship with that provider;
federal and state laws and regulations that protect the confidentiality of certain patient health
information, including patient records, and restrict the use and disclosure of such information, in
particular, the Health Insurance Portability and Accountability Act of 1996;
the Physician Payments Sunshine Act, which requires public disclosure of the financial relationships of
United States physicians and teaching hospitals with applicable manufacturers, including medical
device, pharmaceutical, and biologics companies;
the False Claims Act, which prohibits the submission of false or otherwise improper claims for
payment to a federally funded health care program, and health care fraud statutes that prohibit false
statements and improper claims to any third-party payor; and
the United States Foreign Corrupt Practices Act, which can be used to prosecute United States
companies for arrangements with foreign government officials or other parties, or for not keeping
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accurate financial records or maintaining adequate internal controls to prevent and detect arrangements
with foreign government officials or other parties.
Failure to comply with these laws and regulations could result in criminal liability, significant fines or
penalties, negative publicity, and substantial costs and expenses associated with investigation and enforcement
activities. To assist in our compliance efforts, we work to adhere to many codes of ethics and conduct regarding
our business activities in the United States and other countries in which we operate. In addition, we have in place
a dedicated team to improve our internal business compliance programs and policies.
Regulation Outside of the United States. Outside of the United States, the regulation of medical devices is
complex. In Europe, our products are subject to extensive regulatory requirements. The regulatory regime in the
European Union (“EU”) for medical devices became mandatory in June 1998. It requires that medical devices
may only be placed on the market if they do not compromise safety and health when properly installed,
maintained, and used in accordance with their intended purpose. National laws conforming to the EU’s
legislation regulate our products under the medical devices regulatory system. Although the more variable
national requirements under which medical devices were formerly regulated have been substantially replaced by
the European Union Medical Devices Directive, individual nations can still impose unique requirements that may
require supplemental submissions. The EU medical device laws require manufacturers to declare that their
products conform to the essential regulatory requirements after which the products may be placed on the market
bearing the CE Mark. Manufacturers’ quality systems for products in all but the lowest risk classification are also
subject to certification and audit by an independent notified body. In Europe, particular emphasis is being placed
on more sophisticated and faster procedures for the reporting of adverse events to the competent authorities.
In May 2017, the EU implemented a new regulatory scheme for medical devices under the Medical Device
Regulation (“MDR”). The MDR became effective on May 26, 2021 and brought significant new requirements for
many medical devices, including enhanced requirements for clinical evidence and documentation, increased
focus on device identification and traceability, new definitions and registration of economic operators throughout
the distribution chain, and additional post-market surveillance and vigilance. Compliance with the MDR requires
re-certification of many of our products to the enhanced standards, and has resulted in and will continue to result
in substantial additional expense. In addition, in the EU, we import some of our devices through our offices in
Switzerland. Switzerland is not a member state of the EU, but is linked to the EU through bilateral treaties;
therefore, the free movement of goods, including medical devices, between the EU and Switzerland after
implementation of the MDR requires a revised Mutual Recognition Agreement (“MRA”). If an MRA covering
the MDR is not put in place, then non-EU manufacturers may be required to make significant changes, including
replacement of Swiss economic operators with operators based in EU member states, and changes will need to be
made to our device labeling and/or packaging to satisfy MDR requirements. If these measures are unable to be
taken, it may no longer be possible to place such devices on the EU market.
In Japan, pre-market approval and clinical studies are required as is governmental pricing approval for
medical devices. Clinical studies are subject to a stringent Japanese “Good Clinical Practices” standard. Approval
time frames from the Japanese Ministry of Health, Labour and Welfare vary from simple notifications to review
periods of one or more years, depending on the complexity and risk level of the device. In addition, importation
of medical devices into Japan is subject to the “Good Import Practices” regulations. As with any highly regulated
market, significant changes in the regulatory environment could adversely affect future sales.
In many of the other foreign countries in which we market our products, we may be subject to regulations
affecting, among other things:
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product standards and specifications;
packaging requirements;
labeling requirements;
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product collection and disposal requirements;
quality system requirements;
import restrictions;
tariffs;
duties; and
tax requirements.
Many of the regulations applicable to our devices and products in these countries are similar to those of the
FDA. In some regions, the level of government regulation of medical devices is increasing, which can lengthen
time to market and increase registration and approval costs. In many countries, the national health or social
security organizations require our products to be qualified before they can be marketed and considered eligible
for reimbursement.
Health Care Initiatives. Government and private sector initiatives to limit the growth of health care costs,
including price regulation and competitive pricing, coverage and payment policies, comparative effectiveness
reviews, technology assessments, increasing evidentiary demands, and managed-care arrangements, are
continuing in many countries where we do business, including the United States, Europe, and Japan. As a result
of these changes, the marketplace has placed increased emphasis on the delivery of more cost-effective medical
therapies. For example, government programs, private health care insurance, and managed-care plans have
attempted to control costs by restricting coverage and limiting the level of reimbursement for procedures or
treatments, and some third-party payors require their pre-approval before new or innovative devices or therapies
are utilized by patients. These various initiatives have created increased price sensitivity over medical products
generally and may impact demand for our products and technologies.
The delivery of our products is subject to regulation by the United States Department of Health and Human
Services (“HHS”) and comparable state and foreign agencies responsible for reimbursement and regulation of
health care items and services. Foreign governments also impose regulations in connection with their health care
reimbursement programs and the delivery of health care items and services. Reimbursement schedules regulate
the amount the United States government will reimburse hospitals and doctors for the inpatient care of persons
covered by Medicare. HHS’ Centers for Medicare & Medicaid Services (“CMS”) may also review whether and/
or under what circumstances a procedure or technology is reimbursable for Medicare beneficiaries. Changes in
current coverage and reimbursement levels could have an adverse effect on market demand and our pricing
flexibility. The CMS National Coverage Determination for Transcatheter Aortic Valve Replacement was issued
in June 2019. The modernized requirements and more streamlined patient evaluation process are meaningful
enhancements that may help ensure equitable access for more patients suffering from severe aortic stenosis.
Health care cost containment efforts have also prompted domestic hospitals and other customers of medical
device manufacturers to consolidate into larger purchasing groups to enhance purchasing power. The medical
technology industry has also experienced some consolidation, partly in order to offer a broader range of products
to large purchasers. As a result, transactions with customers are larger, more complex, and tend to involve more
long-term contracts than in the past. These larger customers, due to their enhanced purchasing power, may have a
material impact on product pricing.
These laws or any future legislation, including deficit reduction legislation, could impact medical procedure
volumes, reimbursement for our products, and demand for our products or the prices at which we sell our
products.
Seasonality
Our quarterly net sales are influenced by many factors, including new product introductions, acquisitions,
regulatory approvals, patient and physician holiday schedules, and other factors. Net sales in the third quarter are
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typically lower than other quarters of the year due to the seasonality of the United States and European markets,
where summer vacation schedules normally result in fewer medical procedures.
Human Capital Management Strategy
Human Capital Management (“HCM”) Governance
The primary goals of our talent management strategy are to attract and maintain a motivated, professional
workforce and to ensure alignment on our patient-focused innovation strategy.
Our Board of Directors routinely engages with leadership to review and discuss our human capital
management (“HCM”), with time dedicated at each regularly scheduled meeting to discuss talent management,
which include topics such as talent strategy, diversity, succession planning, employee development, employee
health, safety, and welfare, results of employee surveys, and compensation. Our Board of Directors also annually
approves the strategic talent imperatives that are tied to our Key Operating Drivers (“KODs”). Our KODs are
tracked using a point system across our entire organization that focus the Company and management toward
short-, medium-, and long-term goals. The strategic talent imperatives are developed to identify talent related
initiatives that support achievement of the KODs.
In addition, the Chief Executive Officer (“CEO”) and his leadership team have talent management related
performance goals tied to their compensation; these Performance Management Objectives are reviewed on an
annual basis, tracked, and then reported to and evaluated by our Board of Directors.
As we scale to reach more patients around the world, we have integrated our Talent & Organization
(“T&O”) Strategy with our Edwards Strategic Planning process. The purpose of our T&O Strategy is to
anticipate dynamic global trends related to our workforce, develop our talent to meet future organizational needs,
and enable us to be well-poised to meet these needs. Our T&O Strategy enables us to explore external workforce
signals, share insights, and identify and build emerging capabilities across our organization. This has enabled us
to build a comprehensive succession planning process that allows us to build strong talent from within while we
pursue an aggressive recruiting process to fill any gaps with highly qualified external talent. This consistent and
scalable approach looks across all our product groups, regions, and significant functions to align and elevate
priorities, critical capabilities, and organizational evolutions in line with our strategic plan. This integrated
approach informs our yearly objectives and fuels our talent roadmap across the strategic horizon.
Our HCM governance includes a global talent development review (“TDR”) process to align our business
strategy with talent strategies, assess talent against future organizational needs, evaluate critical talent
populations, and enhance the strength of our succession planning. We track our performance regularly.
Culture
Investing in our workforce means our employees can stay focused on our patient-focused innovation
strategy and the development of life-saving therapies for the patients we serve. We are committed to maintaining
an ethical culture where we celebrate diversity, promote good health and safety, empower employees to speak up,
and ensure that employees’ voices are heard. We strive to offer competitive employee well-being packages and
are committed to fair and equitable pay practices. We track compensation patterns in all geographies where we
operate, and we regularly look for ways to ensure fair and equitable pay.
Diversity, Inclusion, and Belonging
We are committed to fostering an environment where all employees can grow and thrive. A diverse
workforce results in a broader range of perspectives, helping drive our commitment to innovation. We have
established a Diversity, Inclusion, and Belonging strategy that includes our four focus areas of Business, People,
Communication, and Community, and whose overriding priority is “The Patient.” As a practice, all employees
receive unconscious bias training as a foundational aspect of our culture.
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Employee Listening
We believe in empowering our employees and providing avenues that enable their voices to be heard. We
conduct a multilingual global employee survey, called myVoice, to gain employees’ feedback in a confidential
manner. The CEO and Executive Leadership Team hold themselves accountable to act on the results of the
survey, and these results are reviewed by management with our Board of Directors. This initiative helps us gain
insights on various topics including patient focus, diversity, inclusion and belonging, quality, innovation,
engagement, as well as a sense of support at all levels of the organization. Speak-Up is a resource available to all
employees to bring forth compliance related concerns; a key element of our compliance program is that each
employee is accountable for maintaining ethical business practices. In addition, during each quarterly townhall
meeting, our CEO answers questions that have been submitted to him by employees. Answers to questions that
are not covered in the townhall meeting are posted online internally.
Total Well-being
We understand that good health leads to better performance. We offer competitive employee well-being
packages that include, among other things, health and wellness insurance, health savings accounts, family
support services, and a variety of site-specific programs. We regularly evaluate our well-being package to make
modifications that are aligned with the competitive landscape, legislative changes, and the unique needs of our
population. We also provide robust well-being programs that address prevention, nutrition, mental health,
physical activity, financial fitness, and community service. In recent years, mental well-being has become a
central topic for organizations worldwide. As part of our regular evaluation and commitment to putting
employees first, we launched a new program, Mind+, which offers a wide variety of mental well-being programs
for our employees. This commitment extends to creating a work environment where employees can feel
confident speaking about mental well-being with their managers and know how best to access the tools and
resources available to support them. We believe there are strong benefits when employees are feeling their best.
Employees who are mentally healthy are more innovative, resilient, better decision-makers, and able to build
stronger relationships. We also believe that prioritizing and promoting Mind+ allows us to help patients around
the world to live longer, healthier, and more productive lives and supports employees to be their best self at home
and at work.
Talent Development
Edwards has established a long-term aspiration to grow and develop talent significantly, centering our
efforts around critical leadership and technical skills for the present and future needs of the business. Our
learning and development structure and processes strive to meet the internal demand to develop our talent in such
a way that demonstrates impact at scale and delivered to our workforce through optimized learning modalities.
This includes leadership training programs, including our ethical decision making training program for managers.
Headcount and Labor Representation
As of December 31, 2022, we had approximately 17,300 employees worldwide, the majority of whom were
located in the United States, Singapore, the Dominican Republic, and Costa Rica. None of our North American
employees are represented by a labor union. In various countries outside of North America, we interact with trade
unions and work councils that represent employees.
Additional details regarding diversity, talent development, compensation, and employee health and safety
can be found in our Sustainability Report posted on our website at www.edwards.com under “About Us —
Corporate Responsibility.”
References to our website in this Annual Report on Form 10-K are provided for convenience only and the
content on our website does not constitute a part of this Report.
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Item 1A. Risk Factors
Our business and assets are subject to varying degrees of risk and uncertainty. An investor should carefully
consider the risks described below, as well as other information contained in this Annual Report on Form 10-K
and in our other filings with the SEC. Additional risks not presently known to us or that we currently deem
immaterial may also adversely affect our business. If any of these events or circumstances occurs, our business,
financial condition, results of operations, or prospects could be materially harmed. In that case, the value of our
securities could decline and an investor could lose part or all of his or her investment. In addition, forward-
looking statements within the meaning of the federal securities laws that are contained in this Annual Report on
Form 10-K or in our other filings or statements may be subject to the risks described below as well as other risks
and uncertainties. Please read the cautionary notice regarding forward-looking statements in Part I above.
Please note that the headers and summary provided below are only intended to assist the reader in navigating
the risk factors; some risks, present or future, may implicate multiple types of risks. Please read all risk factors in
their entirety.
Summary of Risk Factors
We group our risk factors into three principal sections: (1) Business and Operating Risks; (2) Market and
Other External Risks and (3) Legal, Compliance and Regulatory Risks. The following summarizes the principal
risks and uncertainties affecting our business, financial condition, and results of operations. This summary should
not be relied upon as an exhaustive summary of the material risks facing our business and you should read this
summary together with the more detailed description of risks and uncertainties discussed below.
Business and Operating Risks
•
Failure to successfully innovate and market products
• Unsuccessful clinical trials or procedures
• Manufacturing, logistics, or quality problems
•
Public health crises, including pandemics and epidemics
• Competition
• Dependence on key physicians and research institutions
• Reliance on vendors, suppliers, and other third parties
• Damage, failure, or interruption of our information technology systems, including due to cyber-based
attacks and breaches
•
Failure to recruit and retain qualified talent or execute management succession plans
• Underperforming operations or unsuccessful business acquisitions or strategic alliances
Market and Other External Risks
• Risks associated with international sales and operations
•
•
Inability to obtain government reimbursement or reductions in reimbursement levels
Industry consolidation
Legal, Compliance and Regulatory Risks
•
•
Inability to protect our intellectual property
Inability to defend against intellectual property claims from third parties
• Compliance with government regulations
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• Losses from product liability claims
• Use of products in unapproved circumstances
•
Substantial costs from environmental, health and safety regulations
• Climate change
• Regulatory actions relating to animal borne illnesses
Business and Operating Risks
Failure to successfully innovate and develop new and differentiated products in a timely manner and
effectively market these products could have a material effect on our prospects.
Our continued growth and success depend on our ability to innovate and develop new and differentiated
products in a timely manner and effectively market these products. Without the timely innovation and
development of products, our products could be rendered obsolete or less competitive because of the introduction
of a competitor’s newer technologies or changing customer preferences. Innovating products requires the
devotion of significant financial and other resources to research and development activities; however, there is no
certainty that the products we are currently developing will complete the development process, or that we will
obtain the regulatory or other approvals required to market such products in a timely manner or at all. Even if we
timely innovate and develop products, our ability to successfully market them could be constrained by a number
of different factors, including competitive products and pricing, barriers in patients’ treatment pathway
(including disease awareness, detection, and diagnosis), the need for regulatory clearance, restrictions imposed
on approved indications, and uncertainty over third-party reimbursement. Failure in any of these areas could have
a material effect on our prospects.
Unsuccessful clinical trials or procedures relating to products could have a material adverse effect on our
prospects.
The regulatory approval process for new products and new indications for existing products requires
extensive clinical trials and procedures, including early clinical feasibility and regulatory studies. Unfavorable or
inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or
third parties, or perceptions regarding this clinical data, could adversely affect our ability to obtain necessary
approvals and the market’s view of our future prospects. Such clinical trials and procedures are inherently
uncertain and there can be no assurance that these trials or procedures will be enrolled or completed in a timely
or cost-effective manner or result in a commercially viable product or indication; failure to do so could have a
material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even
after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures
may be contradicted by subsequent analyses. In addition, results from our clinical trials or procedures may not be
supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted,
or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be
adversely affected. Clinical trials or procedures may be delayed, suspended, or terminated by us, the FDA, or
other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks or
any other reasons, and any such delay, suspension, or termination could have a material adverse effect on our
prospects or the market’s view of our future prospects.
If we or one of our suppliers or logistics partners encounters manufacturing, logistics, or quality problems,
our business could be materially adversely affected.
The manufacture and sterilization of many of our products is highly complex due in part to rigorous
regulatory requirements. Quality is extremely important due to the serious and costly consequences of a product
failure. Problems can arise for a number of reasons, including disruption of facility utilities, equipment
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malfunction, failure to follow protocols and procedures, raw material problems, software problems, cyber
incidents, or human error. Disruptions can occur at any time, including during production line transfers and
expansions. Disruptions can also occur if our manufacturing and warehousing facilities are damaged by
earthquakes, hurricanes, volcanoes, fires, and other natural disasters or catastrophic circumstances. As we expand
into new markets and scale new products for commercial production, we may face unanticipated delays or surges
in demand which could strain our production capacity and lead to other types of disruption. If any of these
manufacturing, logistics, or quality problems arise or if we or one of our suppliers or logistics partners otherwise
fail to meet internal quality standards or those of the FDA or other applicable regulatory body, our reputation
could be damaged, we could become subject to a safety alert or a recall, we could incur product liability and
other costs, product approvals and production could be delayed, and our business could otherwise be materially
adversely affected.
We are subject to risks associated with public health crises, including the COVID-19 pandemic and other
pandemics or epidemics.
We are subject to risks associated with public health crises, including the global health concerns related to
the COVID-19 pandemic. The COVID-19 pandemic has adversely impacted and is likely to further adversely
impact nearly all aspects of our business and markets, including our workforce and operations and the operations
of our customers, suppliers, and business partners. Other public health crises, including any future epidemics or
pandemics, could result in similar adverse impacts on our business and markets. Financial or operational impacts
that we have experienced in connection with the COVID-19 pandemic and may experience as a result of future
COVID-19 outbreaks or other public health crises include:
•
•
Staffing shortages at hospitals which can add to the barriers along the patient treatment pathway;
Impacts and delays to clinical trials, our pipeline milestones, or regulatory clearances and approvals;
• The inability to meet our customers’ needs or other obligations due to disruptions to our operations or
the operations of our third-party partners, suppliers, contractors, logistics partners, or customers
including disruptions to production, development, manufacturing, administrative, and supply
operations and arrangements; or
•
Significant volatility or reductions in demand for our products.
Depending on the severity of the financial and operational impacts, our business, financial condition, and
results of operations may be materially adversely impacted. The extent to which the COVID-19 pandemic or
other future public health crises may impact our business, results of operations, and financial condition depends
on many factors which are highly uncertain and are difficult to predict. These factors include, but are not limited
to, the duration and spread of any outbreak, its severity, the actions to contain or address the impact of the
outbreak, the timing, distribution, and efficacy of vaccines and other treatments, United States and foreign
government actions to respond to possible reductions in global economic activity, and how quickly and to what
extent normal economic and operating conditions can resume.
We operate in highly competitive markets, and if we do not compete effectively, our business will be harmed.
We face substantial competition and compete with technologies of many types and companies of all sizes on
the basis of cost-effectiveness, technological innovations, product performance, brand name recognition, breadth
of product offerings, real or perceived product advantages, pricing and availability and rate of reimbursement. In
addition, given the trend toward value-based healthcare, if we are not able to continue to demonstrate the full
value of our differentiated products to healthcare providers and payors, our competitive position could be
adversely affected. See “Competition” under “Business” in Part I, Item 1 included herein.
The success of many of our products depends upon certain key physicians and research institutions.
We work with leading global physicians and research institutions who provide considerable knowledge and
experience. These physicians may assist us as researchers, marketing consultants, product trainers and
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consultants, inventors, and as public speakers. If new laws, regulations, or other developments limit our ability to
appropriately engage these professionals or with the research institutions of which they are a part or to continue
to receive their advice and input or we are otherwise unsuccessful in maintaining strong working relationships
with these physicians or their research institutions, the development, marketing, and successful use of our
products could suffer, which could have a material adverse effect on our business, financial condition, and results
of operations.
We rely on third parties in the design, manufacture, and sterilization of our products. Any failure by or loss of
a vendor could result in delays and increased costs, which may adversely affect our business.
We rely on third parties for a broad range of raw and organic materials and other items in the design,
manufacture, and sterilization of our products, and we purchase certain supplies and services from single sources
for reasons of quality assurance, cost-effectiveness, availability, constraints resulting from regulatory
requirements, and other reasons. We experience from time to time, and may continue to experience, supply
interruptions due to a variety of factors, including:
• General economic conditions that could adversely affect the financial viability of our vendors;
• Vendors’ election to no longer service or supply medical technology companies, including due to the
burdens of applicable quality requirements and regulations or for no reason at all;
• The limitation or ban of certain chemicals or other materials used in the manufacture of our products;
and
• Delays or shortages due to trade or regulatory embargoes.
Additionally, any significant increases in the cost of raw materials, whether due to inflationary pressure,
supply constraints, regulatory changes, or otherwise, could adversely impact our operating results. A change or
addition to our vendors could require significant effort due to the rigorous regulations and requirements of the
FDA and other regulatory authorities; it could be difficult to establish additional or replacement sources on a
timely basis or at all, which could have a material adverse effect on our business.
Failure to protect our information technology infrastructure and our products against cyber-based attacks,
network security breaches, service interruptions, or data corruption could materially disrupt our operations
and adversely affect our business and operating results.
The operation of our business depends on our information technology systems. We rely on our information
technology systems to, among other things, effectively manage sales and marketing data, accounting and
financial functions, inventory management, product development tasks, clinical data, customer service and
technical support functions. Our information technology systems are vulnerable to damage or interruption from
earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data
network failures, security breaches, and data corruption.
In addition, our information technology infrastructure and products are vulnerable to cyber-based attacks.
Cyber-based attacks can include, but are not limited to, computer viruses, denial-of-service attacks, phishing
attacks, ransomware attacks, and other introduction of malware to computers and networks; unauthorized access
through the use of compromised credentials; exploitation of design flaws, bugs, or security vulnerabilities;
intentional or unintentional acts by employees or other insiders with access privileges; and intentional acts of
vandalism by third parties and sabotage. In addition, United States federal and state laws and regulations, and the
laws and regulations of jurisdictions outside of the United States, such as the General Data Protection Regulation
(“GDPR”) adopted by the European Union and the California Privacy Rights Act (“CRPA”) and the California
Consumer Privacy Act, as amended by the CRPA (the “CCPA”), can expose us to investigations and
enforcement actions by regulatory authorities and claims from individuals potentially resulting in penalties and
significant legal liability, if our information technology security efforts are inadequate. In addition, we rely upon
16
technology suppliers, including cloud-based data management applications hosted by third-party service
providers, whose security and information technology systems are subject to similar risks.
Significant disruption in either our or our service providers’ or suppliers’ information technology or the
security of our products could impede our operations or result in decreased sales, result in liability claims or
regulatory penalties, or lead to increased overhead costs, product shortages, loss or misuse of proprietary or
confidential information, intellectual property, or sensitive or personal information, all of which could have a
material adverse effect on our reputation, business, financial condition, and operating results.
Our business and results of operations may be adversely affected if we are unable to recruit and retain
qualified talent or are otherwise unsuccessful in the execution of our management succession plans.
Our continued success depends, in large part, on our ability to hire and retain qualified people and execute
on our talent management and succession plans, and if we are unable to do so, our business and operations may
be impaired or disrupted. See “Human Capital Management Strategy” under “Business” in Part I, Item 1
included herein. Competition for highly qualified people is intense, and there is no assurance that we will be
successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or
employees moving to new positions, or other highly qualified personnel.
If we identify underperforming operations or products or if there are unforeseen operating difficulties and
expenditures in connection with business acquisitions or strategic alliances, we may be required, from time to
time, to recognize charges, which could be substantial and which could adversely affect our results of
operations.
We actively manage a portfolio of research and development products, and we regularly explore potential
acquisitions of complementary businesses, technologies, services, or products, as well as potential strategic
alliances. From time to time, we identify operations and products that are underperforming, do not fit with our
longer-term business strategy or there may be unforeseen operating difficulties and significant expenditures
during the integration of an acquired business, technology, service, or product into our existing operations. We
may seek to dispose of these underperforming operations or products, and we may also seek to dispose of other
operations or products for strategic or other business reasons. If we cannot dispose of an operation or product on
acceptable terms, we may voluntarily cease operations related to that product. In addition, we may be required to
take charges or write-downs in connection with acquisitions and divestitures. In particular, acquisitions of
businesses engaged in the development of new products may give rise to developed technology and/or in-process
research and development assets. To the extent that the value of these assets decline, we may be required to write
down the value of the assets. Also, in connection with certain asset acquisitions, we may be required to take an
immediate charge related to acquired in-process research and development assets. Any of these events could
result in charges, which could be substantial and which could adversely affect our results of operations.
Market and Other External Risks
Because we operate globally, our business is subject to a variety of risks associated with international sales
and operations.
Our extensive global operations and business activity as well as the fact that many of our manufacturing
facilities and suppliers are outside of the United States exposes us to certain financial, economic, political, and
other risks, including those listed below.
Domestic and Global Economic Conditions. We have been impacted and may continue to be negatively
impacted by general domestic and global economic conditions, although we cannot predict the extent to which
such conditions may negatively impact our business. These include, but are not limited to, conditions impacting
inflation, credit and capital markets, interest rates, tax law, including tax rate and policy changes, factors
17
affecting global economic stability, and the political environment relating to health care. These and other
conditions could also adversely affect our customers, payers, vendors and other stakeholders and may impact
their ability or decision to purchase our products or make payments on a timely basis.
Health Care Legislation and Other Regulations. We are subject to various federal and foreign laws that
govern our domestic and international business practices. For example, in the United States, the Affordable Care
Act, the Medicare Access and CHIP Reauthorization Act of 2015, and the 21st Century Cures Act, or any future
legislation, including deficit reduction legislation, could impact medical procedure volumes, reimbursement for
our products, and demand for our products or the prices at which we sell our products. In addition, a Mutual
Recognition Agreement still under negotiation for the Medical Device Regulation can result in a lack of free
movement of medical devices between the European Union and Switzerland, can impact our access in the
European Union and can, ultimately, have a material effect on our business, financial condition, and results of
operations. For more information about these laws as they relate to our business, see the section entitled
“Government Regulation and Other Matters” in Part I, Item 1, “Business.”
In addition, the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act, and similar
laws in other jurisdictions contain prohibitions against bribery and other illegal payments, and make it an offense
to fail to have procedures in place that prevent such payments. Penalties resulting from any violation of these
laws could adversely affect us and our business.
Taxes. We are subject to income taxes in the United States as well as other jurisdictions.
• Provision for Income Taxes. Our provision for income taxes and our effective tax rate could fluctuate
due to changes in the mix of earnings and losses in countries with differing statutory tax rates. Our
income tax provision could also be impacted by changes in excess tax benefits of stock-based
compensation, federal and state tax credits, non-deductible expenses, changes in the valuation of
deferred tax assets and liabilities and our ability to utilize them, the applicability and creditability of
withholding taxes, and effects from acquisitions.
•
•
•
Tax Reform. Our provision for income taxes could be materially impacted by changes in accounting
principles or evolving tax laws, including, but not limited to, global corporate tax reform and base-
erosion and tax transparency efforts. For example, many countries are aligning their international tax
rules with the Organisation for Economic Co-operation and Development’s Base Erosion and Profit
Shifting recommendations and action plans that aim to standardize and modernize international
corporate tax policy, including changes to cross-border taxes, transfer pricing documentation rules,
nexus-based tax practices, and taxation of digital activities. The effective dates of implementation, the
interactions of tax reforms in multiple jurisdictions, and uncertainty related to dispute resolution
mechanisms could impact our provision for income taxes.
Tax Audits. We are subject to ongoing tax audits in the various jurisdictions in which we operate. Tax
authorities may disagree with certain positions we have taken and assess additional taxes. Although we
regularly assess the likely outcomes of the audits and record reserves for potential tax payments, the
calculation of tax liabilities involves the application of complex tax laws, and our estimates could be
different than the amounts for which we are ultimately liable.
Tax Incentives. We benefit from various global tax incentives extended to encourage investment or
employment. Several foreign jurisdictions have granted us tax incentives which require renewal at
various times in the future. If our incentives are not renewed or we cannot or do not wish to satisfy all
or part of the tax incentive conditions, we may lose the tax incentives and could be required to refund
tax incentives previously realized. As a result, our provision for income taxes could be higher than it
would have been had we maintained the benefits of the tax incentives.
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Other economic, political, and social risks. In addition to the factors enumerated above, we are from time
to time impacted by a variety of other factors associated with doing business internationally that can harm our
future results, including the following:
•
•
•
trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or
surcharges;
cultural or other local factors affecting financial terms with customers;
differing labor regulations;
• military conflict, political unrest, or wars; and
•
currency exchange rate fluctuations; that is, decreases in the value of the United States dollar to the
Euro or the Japanese yen, as well as other currencies in which we transact business, have the effect of
increasing our reported revenues even when the volume of sales outside of the United States has
remained constant. Increases in the value of the United States dollar relative to the Euro or the Japanese
yen, as well as other currencies, have the opposite effect. Significant increases or decreases in the value
of the United States dollar could have a material adverse effect on our revenues, cost of sales, or results
of operations.
If government and other third-party payors decline to reimburse our customers for our products or impose
other cost containment measures to reduce reimbursement levels, our ability to profitably sell our products
will be harmed.
We sell our products and technologies to hospitals and other health care providers, nearly all of which
receive reimbursement for the health care services provided to patients from third-party payors, such as
government programs (both domestic and outside of the United States), private insurance plans, and managed
care programs. The ability of customers to obtain appropriate reimbursement for their products from private and
governmental third-party payors is critical to our success. The availability of reimbursement affects which
products customers purchase and the prices they are willing to pay. Reimbursement varies from country to
country and can significantly impact acceptance of new products.
Government and other third-party payors are increasingly attempting to contain health care costs by limiting
both coverage and the level of reimbursement for medical products and services. Reimbursement levels may be
decreased in the future. Additionally, future legislation, regulation, or reimbursement policies of third-party
payors may otherwise adversely affect the demand for and price levels of our products. The introduction of cost
containment incentives, combined with closer scrutiny of health care expenditures by both private health insurers
and employers, has resulted in increased discounts and contractual adjustments to hospital charges for services
performed. Hospitals or physicians may respond to such cost-containment pressures by substituting lower cost
products or other therapies.
Third-party payors may deny reimbursement if they determine that a device used in a procedure was not
used in accordance with cost-effective treatment methods as determined by such third-party payors or was used
for an unapproved indication. Third-party payors may also deny reimbursement for experimental procedures and
devices. We believe that many of our existing products are cost-effective, even though the one-time cost may be
significant, because they are intended to improve quality of life and reduce overall health care costs over a long
period of time. We cannot be certain that these third-party payors will recognize these cost savings and quality of
life benefits instead of merely focusing on the lower initial costs associated with competing therapies. If our
products are not considered cost-effective by third-party payors, our customers may not be reimbursed for them,
resulting in lower sales of our products.
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Continued consolidation in the health care industry could have an adverse effect on our sales and results of
operations.
The health care industry has been consolidating, and organizations such as GPOs, independent delivery
networks, and large single accounts, such as the United States Veterans Administration, continue to consolidate
purchasing decisions for many of our health care provider customers. As a result, transactions with customers are
larger and more complex, and tend to involve more long-term contracts. The purchasing power of these larger
customers has increased, and may continue to increase, causing downward pressure on product pricing. If we are
not one of the providers selected by one of these organizations, we may be precluded from making sales to its
members or participants. Even if we are one of the selected providers, we may be at a disadvantage relative to
other selected providers that are able to offer volume discounts based on purchases of a broader range of medical
equipment and supplies. Further, we may be required to commit to pricing that has a material adverse effect on
our revenues, profit margins, business, financial condition, and results of operations. We expect that market
demand, governmental regulation, third-party reimbursement policies, and societal pressures will continue to
drive consolidation and increase pricing pressure.
Legal, Compliance, and Regulatory Risks
Our inability to protect our intellectual property or failure to maintain the confidentiality and integrity of data
or other sensitive company information, by cyber-attack or other event, could have a material adverse effect
on our business.
Our success and competitive position are dependent in part upon our ability to protect our proprietary
intellectual property through a combination of patents and trade secrets. We cannot guarantee that the protective
steps we take are adequate to protect these rights:
•
Patents issued to or licensed by us in the past or in the future may be challenged and held invalid.
• As our patents expire, we may be unsuccessful in extending their protection through patent term
extensions.
• Confidentiality agreements with certain employees, consultants, and other third parties intended to
protect, in part, trade secrets and other proprietary information could be breached, and we may not have
adequate remedies.
• Others could independently develop substantially equivalent proprietary information or gain access to
our trade secrets or proprietary information, design around our technology, or develop competing
technologies.
• Our intellectual property, other proprietary technology, and other sensitive company information is
dependent on sophisticated information technology systems and is potentially vulnerable to cyber-
attacks, loss, theft, damage, destruction from system malfunction, computer viruses, loss of data
privacy, or misappropriation or misuse of it by those with permitted access, and other events.
• We may not detect infringement.
•
Intellectual property protection may also be unavailable or limited in some foreign countries.
We spend significant resources to protect and enforce our intellectual property rights, sometimes resulting in
expensive and time-consuming litigation that is complex and may ultimately be unsuccessful. Our inability to
protect our intellectual property could have a material adverse effect on our business or prospects.
Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation
or licensing expenses or be prevented from selling products.
During recent years, we and our competitors have been involved in substantial litigation regarding patent
and other intellectual property rights which is typically costly and time-consuming. We may be forced to defend
20
against claims and legal actions alleging infringement of the intellectual property rights of others, and, if our
defense is unsuccessful, we could have significant liabilities to third parties or face injunctions that bar the sale of
our products, or could require us to seek licenses from third parties. Such licenses may not be available on
commercially reasonable terms, may prevent us from manufacturing, selling, or using certain products, or may be
non-exclusive, which could provide our competitors access to the same technologies.
In addition, third parties could also obtain patents that may require us to either redesign products, negotiate
licenses from such third parties, which may be costly, unavailable or require us to exit a particular product
offering.
We and our customers are subject to rigorous governmental regulations and we may incur significant
expenses to comply with these regulations and develop products that are compatible with these regulations. In
addition, failure to comply with these regulations could subject us to substantial sanctions which could
adversely affect our business, results of operations, and financial condition.
The medical technologies we create, study, manufacture, and market globally are subject to rigorous
regulation and scrutiny by the FDA and various other federal, state, and foreign governmental authorities,
including the European Union’s European Commission who promulgated the European Medical Device
Regulation (“EU MDR”). Government regulation applies to nearly all aspects of our products’ lifecycles,
including testing, clinical study, manufacturing, transporting, sourcing, safety, labeling, storing, packaging,
recordkeeping, reporting, advertising, promoting, distributing, marketing, and importing or exporting of medical
devices and products. In general, unless an exemption applies, a medical device or product must receive
regulatory approval or clearance before it can be marketed or sold. Modifications to existing products or the
marketing of new uses for existing products also may require regulatory approvals, approval supplements, or
clearances. If we are unable to obtain these required approvals, we may be required to cease manufacturing and
sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as
appropriate clearance or approval is obtained. More specifically relating to the EU MDR which came into effect
in May 2017 and became applicable in May 2021 with a staggered transition period, all regulated products must
be assessed by notified bodies (organizations designated by EU member states) as to whether they meet the
technical requirements of the EU MDR before entering the market in Europe. During the transition period, with
the influx of submissions to the notified bodies, any delay on obtaining approvals may result in a disruption of
device supply or a further delay in getting a device to market. In addition, in the EU, we import some of our
devices through our offices in Switzerland. Switzerland is not a member state of the EU, but is linked to the EU
through bilateral treaties; therefore, the free movement of goods, including medical devices, between the EU and
Switzerland after implementation of the EU MDR requires a revised MRA. If an MRA covering the EU MDR is
not put in place, then non-EU manufacturers may be required to make significant changes, including replacement
of Swiss economic operators with operators based in EU member states, and changes will need to be made to our
device labeling and/or packaging to satisfy EU MDR requirements. If these measures are unable to be taken, it
may no longer be possible to place such devices on the EU market.
Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our
interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been
maintained. Regulatory submissions may require the provision of additional data and may be time consuming
and costly, and their outcome is uncertain. Regulatory agencies may also change policies, adopt additional
regulations, or revise existing regulations, each of which could prevent or delay approval or clearance of devices,
or could impact our ability to market a previously cleared, approved, or unregulated device. Our failure to
comply with these regulatory requirements of the FDA, the European Commission, or other applicable regulatory
requirements in the United States or elsewhere might subject us to administratively or judicially imposed
sanctions. These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties,
injunctions, debarment, product seizure or detention, product recalls and total or partial suspension of production,
sale and/or promotion. Any of the foregoing actions could result in decreased sales including as a result of
negative publicity and product liability claims, and could have a material adverse effect on our financial
21
condition, results of operations, and prospects. In addition to the sanctions for noncompliance described above,
commencement of an enforcement proceeding, inspection, or investigation could divert substantial management
attention from the operation of our business and have an adverse effect on our business, results of operations, and
financial condition.
We are also subject to various United States and foreign laws pertaining to health care pricing, anti-
corruption, and fraud and abuse, including prohibitions on kickbacks and the submission of false claims laws and
restrictions on relationships with physicians and other referral sources. These laws are broad in scope and are
subject to evolving interpretation, which could require us to incur substantial costs to monitor compliance. If we
are found not to be in compliance, we may be required to alter our practices or have sanctions imposed against us
and our officers and employees, including substantial fines, imprisonment, and exclusion from participation in
governmental health care programs.
In addition, as a global company, we are subject to global data privacy and security laws, regulations and
codes of conduct that apply to our businesses. We are required to comply with increasingly complex and
changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure
and other processing of personal data in the United States and in other countries, which may include, but are not
limited to, The Health Insurance Portability and Accountability Act, as amended (“HIPAA”), The Health
Information Technology for Economic and Clinical Health Act, the CCPA, the CRPA, and the GDPR. The
GDPR imposes stringent European Union data protection requirements and provides for significant penalties for
noncompliance. HIPAA also imposes stringent data privacy and security requirements and the regulatory
authority has imposed significant fines and penalties on organizations found to be out of compliance. The CCPA
and the CRPA provides consumers with a private right of action against companies who have a security breach
due to lack of appropriate security measures. We or our third-party providers and business partners may also be
subjected to audits or investigations by one or more domestic or foreign government agencies relating to
compliance with information security and privacy laws and regulations, and noncompliance with the laws and
regulations could result in substantial and material fines or class action litigation.
Additional risks related to government regulation are also described under “Health Care Legislation and
Other Regulations” in the risk factor above titled “Because we operate globally, our business is subject to a
variety of risks associated with international sales and operations.”
We may incur losses from product liability or other claims that could adversely affect our operating results.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and
marketing of medical technologies. Our products are often used in surgical and intensive care settings with
seriously ill patients. In addition, many of the devices we manufacture and sell are designed to be implanted in
the human body for long periods of time. Component failures, manufacturing and assembly flaws, design defects,
software defects, medical procedure errors, or inadequate disclosure of product-related risks or information could
result in an unsafe condition, injury to, or death of, patients. Such problems could result in product liability,
medical malpractice or other lawsuits and claims, safety alerts, or product recalls in the future. We establish
reserves and may incur charges in excess of those reserves. Although we maintain product liability and other
insurance with coverages we believe are adequate, product liability or other claims may exceed insurance
coverage limits, fines, and penalties. In addition, regulatory sanctions may not be covered by insurance, or
insurance may not continue to be available or available on commercially reasonable terms. These litigation
matters and regulatory actions, recalls or other actions, regardless of outcome, could have a material adverse
effect on our business, reputation, and ability to attract and retain customers.
Use of our products in unapproved circumstances could expose us to liabilities.
The marketing approval from the FDA and other regulators of certain of our products are, or are expected to
be, limited to specific indications. We are prohibited from marketing or promoting any unapproved use of our
22
products. Physicians, however, can use these products in ways or circumstances other than those strictly within
the scope of the regulatory approval. Although the product training we provide to physicians and other health
care professionals is conducted in compliance with applicable laws, and therefore, is mainly limited to approved
uses or for clinical trials, no assurance can be given that claims might not be asserted against us if our products
are used in ways or for procedures that are not approved.
Our operations are subject to environmental, health, and safety regulations that could result in substantial
costs.
Our operations are subject to environmental, health, and safety laws, and regulations concerning, among
other things, the generation, handling, transportation, and disposal of hazardous substances or wastes, the cleanup
of hazardous substance releases, and emissions or discharges into the air or water. We have incurred and may
incur in the future expenditures in connection with environmental, health and safety laws, and regulations. New
laws and regulations, violations of these laws or regulations, stricter enforcement of existing requirements, or the
discovery of previously unknown contamination could require us to incur costs or could become the basis for
new or increased liabilities that could be material.
Climate change, or legal, regulatory or market measures to address climate change, may materially adversely
affect our financial condition and business operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the
atmosphere could present risks to our future operations from natural disasters and extreme weather conditions,
such as hurricanes, tornadoes, seismic events, wildfires, or flooding. Such extreme weather conditions could pose
physical risks to our facilities and disrupt operation of our supply chain and may impact operational costs.
Concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects
of climate change on the environment. If such laws or regulations are more stringent than current legal or
regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory
obligations, and it may adversely affect our raw material sourcing, manufacturing operations, and the distribution
of our products.
We are subject to risks arising from concerns and/or regulatory actions relating to animal borne illnesses,
including “mad cow disease.”
Certain of our products, including pericardial tissue valves, are manufactured using bovine tissue. Concerns
relating to the potential transmission of animal borne illnesses, including BSE, commonly known as “mad cow
disease,” from cows to humans may result in reduced acceptance of products containing bovine materials.
Certain medical device regulatory agencies have considered whether to continue to permit the sale of medical
devices that incorporate bovine material. We obtain bovine tissue only from closely controlled sources within the
United States and Australia. The bovine tissue used in our pericardial tissue valves is from tissue types
considered by global health and regulatory organizations to have shown no risk of infectibility for the suspected
BSE infectious agent. We have not experienced any significant adverse impact on our sales as a result of
concerns regarding BSE, but no assurance can be given that such an impact may not occur in the future.
Item 1B. Unresolved Staff Comments
None.
23
Item 2.
Properties
The locations and uses of our major properties are as follows:
North America
Irvine, California
Draper, Utah
Haina, Dominican Republic
Añasco, Puerto Rico
Central America
Cartago, Costa Rica
Europe
Nyon, Switzerland
Prague, Czech Republic
Shannon, Limerick, Ireland
Asia
Singapore
Tokyo, Japan
Shanghai, China
Caesarea, Israel
(1) Owned property.
(2) Leased property.
(1)
Corporate Headquarters, Research and Development, Regulatory
and Clinical Affairs, Manufacturing, Marketing, Administration
(1),(2) Manufacturing, Administration
(1),(2) Manufacturing
(2) Manufacturing
(1),(2) Manufacturing
(1)
(2)
Administration, Marketing
Administration
(1),(2) Manufacturing
(1),(2) Manufacturing, Distribution, Administration
(2)
(2)
(2)
Administration, Marketing, Distribution
Administration, Marketing
Research and Development
We believe our properties have been well maintained, are in good operating condition, and are adequate for
current needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative
facilities.
Item 3.
Legal Proceedings
For a description of our material pending legal proceedings, please see Note 18 to the “Consolidated
Financial Statements” of this Annual Report on Form 10-K, which is incorporated by reference.
Item 4. Mine Safety Disclosures
Not applicable.
24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information
Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “EW.”
Number of Stockholders
On January 31, 2023, there were 8,019 stockholders of record of our common stock.
Dividends
We have never paid any cash dividends on our capital stock and have no current plans to pay any cash
dividends. Our current policy is to retain any future earnings for use in our business.
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
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs
(in millions) (b)
October 1, 2022 through October 31, 2022 . . . . . .
November 1, 2022 through November 30, 2022 . .
December 1, 2022 through December 31, 2022 . .
1,381,903
8,284,153
2,003,416
$83.66
72.91
72.91
1,381,903
8,283,860
2,003,416
$1,666.0
1,061.6
915.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,669,472
74.18
11,669,179
(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 4, 2021, the Board of Directors approved a stock repurchase program providing for up to
$1.0 billion of repurchases of our common stock. In July 2022, the Board of Directors approved an
additional $1.5 billion of repurchases of our common stock under this program, effective July 28, 2022.
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.
25
Performance Graph
The following graph compares the performance of our common stock with that of the S&P 500 Index and
the S&P 500 Health Care Equipment Index. The cumulative total return listed below assumes an initial
investment of $100 at the market close on December 31, 2017 and reinvestment of dividends. Stockholder
returns over the indicated period should not be considered indicative of future stockholder returns.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
400
300
s
r
a
l
l
o
D
200
100
0
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
Edwards Lifesciences
S&P 500
S&P 500 Health Care Equipment
Total Cumulative Return
2018
2019
2020
2021
2022
Edwards Lifesciences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Health Care Equipment . . . . . . . . . . . . . . . . . . . .
$135.90
95.62
116.24
$206.98
125.72
150.32
$242.83
148.85
176.83
$344.82
191.58
211.05
$198.59
156.89
171.25
Item 6.
[Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents the factors that had a material effect on our results of operations
during the two years ended December 31, 2022. Also discussed is our financial position as of December 31, 2022.
You should read this discussion in conjunction with the historical consolidated financial statements and related
notes included elsewhere in this Form 10-K. For a discussion related to the results of operations for 2021 compared
to 2020 and a discussion related to our consolidated cash flows for 2021 compared to 2020, refer to Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual
Report on Form 10–K filed with the Securities and Exchange Commission on February 14, 2022.
Overview
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
26
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 Market Update
s
n
o
i
l
l
i
m
n
i
$
6,000
5,000
4,000
3,000
2,000
1,000
2021
2022
Net Sales
Gross profit
Diluted Earnings per Share
2.38
2.44
e
r
a
h
s
r
e
p
$
2.8
2.4
2.0
1.6
1.2
0.8
0.4
0.0
Net Income
2021
2022
COVID-19 and Macroeconomic Uncertainties
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 to address potential
supply constraints.
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. However, the Delta variant had a significant impact on hospital
resources during the last two months of the third quarter of 2021, and the Omicron variant had a significant
impact during December 2021, especially in the United States.
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. Our 2022 sales were also
impacted by slower than expected improvement in United States hospital staffing shortages and foreign currency
headwinds. In the second half of 2022, we faced COVID-19 headwinds in Japan, which created significant strain
on hospital capacity.
In addition to the impacts described above, the global economy, including the financial and credit markets,
has recently experienced extreme volatility and disruptions, including increases to inflation rates, rising interest
27
rates, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability.
The severity and duration of the impact of these conditions on our business cannot be predicted. See Item 1A,
“Risk Factors,” for additional information.
2022 Financial Highlights
Despite the challenges to our business in 2022 due to COVID-19 and macroeconomic factors, our net sales
for 2022 were $5.4 billion, representing an increase of $149.9 million over 2021, driven by sales growth of our
TAVR products.
Our gross profit increase in 2022 was driven by our sales growth and the positive impact of our foreign
currency hedging program.
The increase in our diluted earnings per share in 2022 was driven by a) the aforementioned increase in our
gross profit and b) a decrease in our diluted weighted-average shares outstanding, driven by our increased share
repurchase activity. This increase was partially offset by a) changes in the fair value of our contingent
consideration liabilities, which resulted in a $121.6 million after tax gain in 2021 compared to a $35.0 million
after tax gain in 2022, b) an after-tax charge of $47.0 million in 2022, primarily related to the impairment of
intangible assets resulting from our decision to exit our HARPOON surgical mitral repair system program, and c)
increased sales and marketing and research and development expenses in 2022.
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 2022, we invested 17.6%
of our net sales in research and development. The following is a summary of important developments during
2022:
• we received United States Food and Drug Administration (“FDA”) approval for the MITRIS RESILIA
valve, a tissue valve replacement specifically designed for the heart’s mitral position;
• we received CE Mark approval for the PASCAL Precision transcatheter valve repair system for patients
suffering from mitral and tricuspid regurgitation, and FDA approval for PASCAL Precision for patients
with degenerative mitral regurgitation; and
• we launched the SAPIEN 3 Ultra RESILIA valve following FDA approval.
We are dedicated to generating robust clinical, economic, and quality-of-life evidence 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.
28
Results of Operations
Net Sales by Major Regions
(dollars in millions)
Years Ended December 31,
Change
2022
2021
$
%
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
$2,963.1
$169.5
5.7%
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,174.8
473.6
601.4
Outside of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,249.8
1,190.3
528.9
550.2
2,269.4
(15.5)
(55.3)
51.2
(19.6)
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
$5,232.5
$149.9
(1.3)%
(10.4)%
9.3%
(0.9)%
2.9%
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. For more information, see “Quantitative and
Qualitative Disclosures About Market Risk.”
Net Sales by Product Group
(dollars in millions)
Transcatheter Aortic Valve Replacement . . . . . . . . . . . . . . . . . . . . . . .
Transcatheter Mitral and Tricuspid Therapies . . . . . . . . . . . . . . . . . . .
Surgical Heart Valve Therapy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,518.2
116.1
893.1
855.0
$3,422.5
86.0
889.1
834.9
$ 95.7
30.1
4.0
20.1
Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
$5,232.5
$149.9
2.8%
35.1%
0.4%
2.4%
2.9%
Years Ended December 31,
Change
2022
2021
$
%
Transcatheter Aortic Valve Replacement
For the years ended December 31, 2022 and 2021:
)
s
n
o
i
l
l
i
M
(
$
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
$3,422.5
$3,518.2
2021
2022
29
The increase in net sales of TAVR products was driven by:
•
higher sales of the Edwards SAPIEN platform in 2022, primarily the Edwards SAPIEN 3 Ultra valve in
the United States, Europe, and Rest of World, the Edwards SAPIEN 3 Ultra RESILIA valve in the
United States, and the Edwards SAPIEN 3 in Japan;
partially offset by:
•
foreign currency exchange rate fluctuations, which decreased net sales outside of the United States by
$140.2 million primarily due to the weakening of the Euro and the Japanese yen against the United
States dollar.
During 2022, we continued to advance our EARLY TAVR pivotal trial, studying the treatment of severe
aortic stenosis patients before their symptoms develop, and our PROGRESS pivotal trial, studying moderate
aortic stenosis patients. During the second quarter of 2022, we began treating patients in our ALLIANCE pivotal
trial, studying our next-generation TAVR technology, SAPIEN X4, and during the fourth quarter of 2022, we
began the introduction of the SAPIEN 3 Ultra Resilia valve in the United States.
Transcatheter Mitral and Tricuspid Therapies
For the years ended December 31, 2022 and 2021:
$116.1
$86.0
)
s
n
o
i
l
l
i
M
(
$
140
120
100
80
60
40
20
0
2021
2022
The increase in net sales of TMTT products was due primarily to continued adoption of our PASCAL system
in Europe.
During August 2022, we received European regulatory approval for PASCAL Precision for patients
suffering from mitral and tricuspid regurgitation, and in September 2022, we received FDA approval for
PASCAL Precision for patients with degenerative mitral regurgitation. In mitral replacement, we continued to
treat patients through the ENCIRCLE pivotal trial for SAPIEN M3 and completed enrollment in the MISCEND
early feasibility study for EVOQUE Eos. We also continued to make progress in enrolling the TRISCEND II
pivotal trial of the EVOQUE replacement system and the CLASP IITR pivotal trial with the PASCAL repair
system in patients with symptomatic, severe tricuspid regurgitation.
30
Surgical Structural Heart
For the years ended December 31, 2022 and 2021:
$889.1
$893.1
)
s
n
o
i
l
l
i
M
(
$
1,000
800
600
400
200
0
2021
2022
The increase in net sales of Surgical products was due primarily to strong adoption of the INSPIRIS
RESILIA aortic valve, primarily in the United States and Europe, and the MITRIS RESILIA valve, primarily in the
United States. These increases were partially offset by the impact of foreign currency exchange rate fluctuations,
which decreased net sales outside of the United States by $46.5 million primarily due to the weakening of the
Euro and the Japanese yen against the United States dollar.
In March 2022, we received FDA approval for the MITRIS RESILIA valve and initiated the product launch
in the United States in April 2022. MITRIS RESILIA is a tissue valve replacement specifically designed for the
heart’s mitral position and incorporates our advanced RESILIA technology. In early 2023, we began enrolling
patients in our MOMENTS clinical study to demonstrate the durability of RESILIA tissue in the mitral position.
Critical Care
For the years ended December 31, 2022 and 2021:
)
s
n
o
i
l
l
i
M
(
$
1,000
800
600
400
200
0
$834.9
$855.0
2021
2022
31
The increase in net sales of Critical Care products was driven by:
•
•
•
increased demand for our capital products, primarily the HemoSphere monitoring platform in the
United States and Japan;
increased demand for our pressure monitoring products, primarily in the United States; and
increased demand for our 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
$39.5 million primarily due to the weakening of the Japanese yen and the Euro against the United
States dollar.
Gross Profit
s
n
o
i
l
l
i
m
n
i
$
5,000
4,000
3,000
2,000
1,000
0
For the years ended December 31, 2022 and 2021:
$3,983.6
76.1%
$4,302.0
79.9%
2021
2022
Gross profit
Percent of net sales
85
80
75
70
e
g
a
t
n
e
c
r
e
P
The increase in gross profit as a percentage of net sales in 2022 compared to 2021 was driven primarily by a
3.6 percentage point increase from the impact of our foreign currency hedging program, which includes hedge
contract gains and natural hedges (primarily the strengthening of the United States dollar against the Euro and the
Japanese yen).
Selling, General, and Administrative (“SG&A”) Expenses
For the years ended December 31, 2022 and 2021:
s
n
o
i
l
l
i
m
n
i
$
1,800
1,500
1,200
900
600
300
0
$1,493.7
28.5%
$1,567.6
29.1%
40
35
30
25
20
e
g
a
t
n
e
c
r
e
P
2021
2022
SG&A
Percent of net sales
32
SG&A expenses increased in 2022 compared to 2021 due primarily to a resumption of in-person
commercial activities following COVID-19 and higher field-based personnel-related costs, primarily TAVR and
TMTT in the United States. Foreign currency exchange rate fluctuations decreased expenses by $63.1 million
due primarily to the strengthening of the United States dollar against the Euro and the Japanese yen.
Research and Development (“R&D”) Expenses
For the years ended December 31, 2022 and 2021:
s
n
o
i
l
l
i
m
n
i
$
1200
900
600
300
0
$903.1
17.3%
$945.2
17.6%
2021
2022
R&D
Percent of net sales
30
25
20
15
10
e
g
a
t
n
e
c
r
e
P
R&D expenses increased marginally in 2022 compared to 2021 due primarily to continued investments in
our transcatheter innovations, including increased clinical trial activity.
Change in Fair Value of Contingent Consideration Liabilities, net
The change in fair value of contingent consideration liabilities resulted in income of $35.8 million and
$124.1 million in in 2022 and 2021, respectively. The income in 2022 was due to changes in projected
probabilities of milestone achievement and our decision in the third quarter of 2022 to exit our HARPOON
surgical mitral repair system program. The income in 2021 was attributable to changes in the projected
probabilities of milestone achievements and the projected timing of cash inflows from product sales.
Special Charge
For information on special charge, see Note 4 to the “Consolidated Financial Statements.”
Interest Expense
Interest expense was $19.2 million and $18.4 million in 2022 and 2021, respectively. The increase in
interest expense resulted primarily from lower capitalized interest due to decreased facilities construction.
Interest Income
Interest income was $35.5 million and $17.4 million in 2022 and 2021, respectively. The increase in interest
income resulted primarily from a higher average yield on our investments.
33
Other Income, net
(in millions)
Foreign exchange losses (gains), net . . . . . . . . . . . . . . . .
Gain on insurance settlement . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments . . . . . . . . . . . . . . . . . . . . . . .
Non-service cost components of net periodic pension
benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2022
$ 1.2
(3.8)
1.1
(1.1)
—
2021
$ (5.0)
—
(5.8)
0.3
(2.2)
Total other income, net
. . . . . . . . . . . . . . . . . . . . . .
$(2.6)
$(12.7)
The net foreign exchange losses (gains) relate to the foreign currency fluctuations primarily in our global
trade and intercompany receivable and payable balances, partially offset by the gains and losses on foreign
currency derivative instruments.
The gain on insurance settlement relates to an insurance recovery for damaged cargo shipments of heart
valves.
The loss (gain) on investments primarily represents our net share of gains and losses in investments
accounted for under the equity method, and realized gains and losses on investments in equity securities.
The non-service cost components of net periodic pension benefit cost includes the costs or gains of our
defined benefit plans that are not attributed to services rendered by eligible employees during the year, such as
interest costs, expected return on plan assets, and amortization of actuarial gains or losses.
Provision for Income Taxes
($ in millions)
Years Ended December 31,
Change
2022
2021
$
%
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$245.5
13.9%
$198.9
$46.6
23.4%
11.7%
Our effective income tax rate in 2022 and 2021 was 13.9% and 11.7%, respectively. Our effective tax rate
for 2022 increased in comparison to 2021 primarily due to the decrease in the tax benefit from the change in fair
value of contingent consideration liabilities and the decrease in the excess tax benefit from employee share-based
compensation.
In 2022, the difference between our 13.9% effective tax rate and the Federal statutory rate of 21% was
primarily due to (1) foreign earnings taxed at lower rates, (2) Federal and California research and development
credits, (3) the excess tax benefit from employee share-based compensation and (4) the tax benefit from the
change in fair value of contingent consideration liabilities.
As of December 31, 2022, we had $189.8 million of gross California research expenditure tax credits that
we expect to use in future periods. The credits may be carried forward indefinitely. Based upon anticipated future
taxable income, we expect that it is more likely than not that all California research expenditure tax credits will
be utilized, although the utilization of the full benefit is expected to occur over a number of years into the distant
future.
34
As of December 31, 2022, our gross uncertain tax positions were $475.3 million. We estimate that these
liabilities would be reduced by $182.1 million from offsetting tax benefits associated with the correlative effects
of potential transfer pricing adjustments, state income taxes, and timing adjustments. The net amount of
$293.2 million, if not required, would favorably affect our effective tax rate.
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 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.
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. An APA between Switzerland and Japan covering tax years 2020 through 2024 was executed in 2021.
The execution of the other APA renewals depends on many variables outside of our control.
At December 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 and on.
The audits of our United States federal income tax returns through 2014 have been closed. The IRS
fieldwork for the 2015 through 2017 tax years was completed during the second quarter of 2021, except for
transfer pricing and related matters. The IRS began its examination of the 2018 through 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 $210 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 during the fourth quarter of
2021. During the second quarter of 2022, we received the IRS’s rebuttal to our protest and were notified that the
case had been transferred to the IRS Independent Office of Appeals. The opening conference is scheduled for the
first quarter of 2023. We continue to evaluate all possible remedies available to us, which could take several
years to resolve. 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. While 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 made an advance payment of tax in November 2022 to prevent the further accrual of interest on
any potential deficiency.
35
Certain Surgical/TAVR intercompany royalty transactions covering tax years 2015 through 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 December 31, 2022. We have considered this information, as well as
information regarding the NOPA and rebuttal 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 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.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes,
among other provisions, changes to the U.S. corporate income tax system, including (1) a 15% minimum tax
based on “adjusted financial statement income,” which is effective for tax years beginning after December 31,
2022, and (2) a one percent excise tax on net repurchases of stock after December 31, 2022. While we continue
to evaluate the IRA and its application to our business, we do not expect the IRA will have a material impact on
our consolidated financial statements.
We have received tax incentives in certain non-United States tax jurisdictions, the primary benefit for which
will expire in 2029. The tax reductions as compared to the local statutory rates were $247.4 million ($0.40 per
diluted share) and $208.0 million ($0.33 per diluted share) for the years ended December 31, 2022 and 2021,
respectively.
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.
The Tax Cuts and Jobs Act of 2017 (the “2017 Act”) included extensive changes to the international tax
regime. The 2017 Act required a deemed repatriation of post-1986 undistributed foreign earnings and profits. The
one-time transition tax liability, as adjusted, is payable in three remaining annual installments, as outlined in the
contractual obligations table presented under “Material Cash Requirements” below. As of December 31, 2022,
we had a remaining tax obligation of $188.5 million related to the deemed repatriation. See Note 17 to the
“Consolidated Financial Statements” for additional information about the one-time transition tax.
As of December 31, 2022, cash and cash equivalents and short-term investments held in the United States
and outside of the United States were $731.8 million and $483.5 million, respectively. During 2022, we
repatriated cash of $934.0 million. We assert that $1.0 billion of our foreign earnings continue to be permanently
reinvested and our intent is to repatriate $580.8 million of our foreign earnings as of December 31, 2022. The
estimated net tax liability on the indefinitely reinvested earnings if repatriated is $14.9 million.
We had a Five-Year Credit Agreement (the “Prior Credit Agreement”) which was scheduled to mature on
April 28, 2023 and provided up to an aggregate of $750.0 million in borrowings in multiple currencies. In July
2022, we entered into a new Five-Year Credit Agreement (the “New Credit Agreement”) which provides for a
$750.0 million multi-currency unsecured revolving credit facility and replaced the Prior Credit Agreement. The
New Credit Agreement matures on July 15, 2027. We may increase the amount available under the New 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. The New Credit Agreement contains various financial and other
covenants, including a maximum leverage ratio, as defined in the agreement. As of December 31, 2022, no
amounts were outstanding, and we were in compliance with all covenants under the New Credit Agreement.
36
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 December 31, 2022, we have not elected to redeem any of the 2018 Notes. As
of December 31, 2022, the carrying value of the 2018 Notes was $596.3 million. For further information on our
debt, see Note 10 to the “Consolidated Financial Statements.”
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 2022, under the Board authorized repurchase program, we repurchased a total of
20.0 million shares at an aggregate cost of $1.7 billion. As of December 31, 2022, we had remaining authority to
purchase $915.6 million of our common stock under the share repurchase program.
Certain of our business acquisitions involve contingent consideration arrangements. Payment of additional
consideration in the future may be required, contingent upon the acquired business reaching certain performance
milestones, such as attaining specified revenue levels or obtaining regulatory approvals. For further information,
see Note 11 to the “Consolidated Financial Statements.”
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. For further information, see Note 8 to the “Consolidated
Financial Statements.”
On July 12, 2020, we reached the Settlement Agreement with Abbott to settle all outstanding patent disputes
between the companies in cases related to transcatheter mitral and tricuspid repair products. The Settlement
Agreement resulted in us recording an estimated $367.9 million pretax charge in June 2020 related to past
damages. In addition, we will incur royalty expenses through May 2024 totaling an estimated $70 million. We
made a one-time $100.0 million payment to Abbott in July 2020, and are making quarterly payments in
subsequent years. For further information, see Note 3 to the “Consolidated Financial Statements.”
Consolidated Cash Flows—For the twelve months ended December 31, 2022 and 2021
Operating Cash Flows
Investing Cash Flows
Financing Cash Flows
s
n
o
i
l
l
i
) 2,000
1,500
1,000
500
0
M
$
(
s
n
o
i
l
l
i
) 500
0
-500
-1,000
-1,500
-2,000
M
$
(
)
s
n
o
i
l
l
i
M
(
$
0
-500
-1,000
-1,500
-2,000
2021
2022
2021
2022
2021
2022
Net cash flows provided by operating activities of $1.2 billion for 2022 decreased $513.9 million from
2021 due to an increase in tax payments, an increase in inventory builds compared to the prior year, and a higher
bonus payout in 2022 associated with 2021 performance.
Net cash provided by investing activities of $252.3 million in 2022 consisted primarily of net proceeds
from investments of $661.0 million, partially offset by capital expenditures of $244.6 million and payments of
$109.6 million for options to acquire other companies. For further information, see Note 8 to the “Consolidated
Financial Statements.”
Net cash used in investing activities of $1.7 billion in 2021 consisted primarily of net purchases of
investments of $1.4 billion and capital expenditures of $325.8 million.
37
We currently anticipate making capital expenditures of approximately $300.0 million in 2023 as we
continue to invest in our operations.
Net cash used in financing activities of $1.6 billion in 2022 consisted primarily of purchases of treasury
stock of $1.7 billion, partially offset by proceeds from stock plans of $146.4 million.
Net cash used in financing activities of $356.3 million in 2021 consisted primarily of purchases of treasury
stock of $512.8 million, partially offset by proceeds from stock plans of $158.6 million.
Material Cash Requirements
A summary of our material cash requirements as of December 31, 2022 is as follows (in millions):
Contractual Obligations
Payments Due by Period
Total
Year 1
Years
2-3
Years
4-5
After 5
Years
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on debt
Transition tax on unremitted foreign earnings and profits (a)
. . . .
Litigation settlement obligation (minimum payments) . . . . . . . . . .
Pension obligations (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and other commitments (c) . . . . . . . . . . . . . . . . . . . . . . .
$ 600.0
102.7
106.4
188.5
162.5
2.4
34.3
$ — $ — $ — $600.0
26.0
8.6
—
—
—
1.0
18.7
31.0
39.3
38.9
141.4 —
12.5
100.0
—
—
2.8
12.0
27.0
19.6
47.1
50.0
2.4
18.5
Total contractual cash obligations (d), (e) . . . . . . . . . . . . . . . . . . . .
$1,196.8
$164.6
$323.7
$72.9
$635.6
(a) As of December 31, 2022, we had recorded $188.5 million of income tax liabilities related to the one-time
transition tax that resulted from the enactment of the 2017 Act. The transition tax is due in eight annual
installments, with the first five installments paid in 2018 through 2022. The remaining installment amounts
will be equal to 15% of the total liability payable in 2023, 20% in 2024, and 25% in 2025. See Note 17 to
the “Consolidated Financial Statements” for additional information about the one-time transition tax.
(b) The amount included in “Less Than 1 Year” reflects anticipated contributions to our various pension plans.
Anticipated contributions beyond one year are not determinable. The total accrued benefit liability for our
pension plans recognized as of December 31, 2022 was $23.5 million. This amount is impacted by, among
other items, pension expense funding levels, changes in plan demographics and assumptions, and
investment returns on plan assets. Therefore, we are unable to make a reasonably reliable estimate of the
amount and period in which the liability might be paid, and did not include this amount in the contractual
obligations table. See Note 13 to the “Consolidated Financial Statements” for further information.
(c) Purchase and other commitments consists primarily of open purchase orders for the acquisition of goods and
services in the normal course of business. We have excluded open purchase orders with a remaining term of
less than one year. For certain purchase and other commitments, such as commitments to fund equity
method or other investments, the timing of the payment is not certain. In these cases, the maturity dates in
the table reflect our best estimates.
(d) As of December 31, 2022, the gross liability for uncertain tax positions, including interest, was
$519.8 million and relates primarily to transfer pricing matters which are discussed in detail in Note 17 to
the “Consolidated Financial Statements.” Based upon the information currently available and numerous
possible outcomes, we cannot reasonably estimate the amount and period in which the liability might be
paid, and did not include this amount in the contractual obligations table.
(e) We acquire assets still in development, enter into research and development arrangements, acquire
businesses, and sponsor certain clinical trials that often require milestone, royalty, or other future payments
to third-parties, contingent upon the occurrence of certain future events. In situations where we have no
ability to influence the achievement of the milestone or otherwise avoid the payment, we have included
those payments in the table above. However, we have excluded from the table contingent milestone
38
payments and other contingent liabilities for which we cannot reasonably predict future payments or for
which we can avoid making payment by unilaterally deciding to stop development of a product or cease
progress of a clinical trial. We estimate that these contingent payments could be up to $810.0 million if all
milestones or other contingent obligations are met. This amount includes certain milestone-based contingent
obligations that may be paid through a combination of cash and issuance of common stock, and certain
sales-based royalties in excess of minimum payment thresholds related to litigation settlements.
Critical Accounting Policies and Estimates
Our results of operations and financial position are determined based upon the application of our accounting
policies, as discussed in the notes to the “Consolidated Financial Statements.” Certain of our accounting policies
represent a selection among acceptable alternatives under GAAP. In evaluating our transactions, management
assesses all relevant GAAP and chooses the accounting policy that most accurately reflects the nature of the
transactions.
The application of accounting policies requires the use of judgments and estimates. These matters that are
subject to judgments and estimates are inherently uncertain, and different amounts could be reported using
different assumptions and estimates. Management uses its best estimates and judgments in determining the
appropriate amount to reflect in the consolidated financial statements, using historical experience and all
available information. We also use outside experts where appropriate. We apply estimation methodologies
consistently from year to year.
We believe the following are the critical accounting policies which could have the most significant effect on
our reported results and require subjective or complex judgments by management.
Revenue Recognition
When we recognize revenue from the sale of our products, the amount of consideration we ultimately
receive varies depending upon the return terms, sales rebates, discounts, and other incentives that we may offer,
which are accounted for as variable consideration when estimating the amount of revenue to recognize. The
estimate of variable consideration requires significant judgment. We include estimated amounts in the transaction
price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when
the uncertainty associated with the variable consideration is resolved. The estimates of variable consideration and
determination of whether to include estimated amounts in the transaction price are based largely upon an
assessment of historical payment experience, historical relationship to revenues, estimated customer inventory
levels, and current contract sales terms with direct and indirect customers. Product returns are typically not
significant because returns are generally not allowed unless the product is damaged at time of receipt. If the
historical data and inventory estimates used to calculate the variable consideration do not approximate future
activity, our financial position, results of operations, and cash flows could be impacted.
In addition, in limited circumstances, we may allow customers to return previously purchased products,
such as for next-generation product offerings. For these transactions, we defer recognition of revenue on the sale
of the earlier generation product based upon an estimate of the amount of product to be returned when the next-
generation products are shipped to the customer. Uncertain timing of next-generation product approvals,
variability in product launch strategies, product recalls, and variation in product utilization all affect the estimates
related to sales returns and could cause actual returns to differ from these estimates.
Our sales adjustment related to distributor rebates given to our United States distributors represents the
difference between our sales price to the distributor and the negotiated price to be paid by the end-customer. We
validate the distributor rebate accrual quarterly through either a review of the inventory reports obtained from our
distributors or an estimate of the distributor’s inventory. This distributor inventory information is used to verify
the estimated liability for future distributor rebate claims based on historical rebates and contract rates. We
periodically monitor current pricing trends and distributor inventory levels to ensure the credit for future
distributor rebates is fairly stated.
39
Intangible Assets and Long-lived Assets
We acquire intangible assets in connection with business combinations and asset purchases. The acquired
intangible assets are recorded at fair value, which is determined based on a discounted cash flow analysis. The
determination of fair value requires significant estimates, including, but not limited to, the amount and timing of
projected future cash flows, the discount rate used to discount those cash flows, the assessment of the asset’s life
cycle, including the timing and expected costs to complete in-process projects, and the consideration of legal,
technical, regulatory, economic, and competitive risks.
In-process research and development assets acquired in business combinations is reviewed for impairment
annually, or whenever an event occurs or circumstances change that would indicate the carrying amount may be
impaired. Additionally, management reviews the carrying amounts of other intangible and long-lived assets
whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. The
impairment reviews require significant estimates about fair value, including estimation of future cash flows,
selection of an appropriate discount rate, and estimates of long-term growth rates.
Contingent Consideration
We record contingent consideration resulting from a business combination at its fair value on the acquisition
date. We determine the fair value of the contingent consideration based primarily on the following factors:
•
•
•
discount rates used to present value the projected cash flows;
the probability of success of clinical events and regulatory approvals, and/or meeting commercial
milestones; and
projected payment dates.
On a quarterly basis, we revalue these obligations and record changes in their fair value as an adjustment to
earnings. Changes to contingent consideration obligations can result from adjustments to discount rates, accretion
of the discount rates due to the passage of time, changes in our estimates of the likelihood or timing of achieving
development or commercial milestones, changes in the probability of certain clinical events, or changes in the
assumed probability associated with regulatory approval.
The assumptions related to determining the value of contingent consideration include a significant amount
of judgment, and any changes in the underlying estimates could have a material impact on the amount of
contingent consideration expense recorded in any given period.
Income Taxes
The determination of our provision for income taxes requires significant judgment, the use of estimates, and
the interpretation and application of complex tax laws. Realization of certain deferred tax assets, primarily tax
credits, net operating loss and other carryforwards, is dependent upon generating sufficient taxable income in the
appropriate jurisdiction prior to the expiration of the carryforward periods. Failure to achieve forecasted taxable
income in the applicable taxing jurisdictions could affect the ultimate realization of deferred tax assets and could
result in an increase in our effective tax rate on future earnings.
We have made an accounting policy election to recognize the United States tax effects of global intangible
low-taxed income as a component of income tax expense in the period the tax arises.
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our income tax
returns are periodically audited by domestic and foreign tax authorities. These audits include questions regarding
our tax filing positions, including the timing and amount of deductions and the allocation of income amongst
various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable
40
accounting guidance on uncertainty in income taxes. Significant judgment is required in evaluating our uncertain
tax positions, including estimating the ultimate resolution to intercompany pricing controversies between
countries when there are numerous possible outcomes. We review these tax uncertainties quarterly and adjust the
liability as events occur that affect potential liabilities for additional taxes, such as the progress of tax audits,
lapsing of applicable statutes of limitations, negotiations between tax authorities, identification of new issues,
and issuance of new legislation, regulations, or case law.
For additional details on our income taxes, see Note 2 and Note 17 to the “Consolidated Financial
Statements.”
Stock-based Compensation
We measure and recognize compensation expense for all stock-based awards based on estimated fair values.
Stock-based awards consist of stock options, service-based restricted stock units, market-based restricted stock
units, and employee stock purchase subscriptions. The fair value of each option award and employee stock
purchase subscription is estimated on the date of grant using the Black-Scholes option valuation model. The fair
value of market-based restricted stock units is determined using a Monte Carlo simulation model, which uses
multiple input variables to determine the probability of satisfying the market condition requirements. The Black-
Scholes and Monte Carlo models require various highly judgmental assumptions, including stock price volatility,
risk-free interest rate, and expected option term. Stock-based compensation expense is recorded net of estimated
forfeitures. Judgment is required in estimating the stock awards that will ultimately be forfeited. If actual results
differ significantly from these estimates, stock-based compensation expense and our results of operations would
be impacted.
Legal Contingencies
We are or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits, including
those related to products and services currently or formerly manufactured or performed by us, workplace and
employment matters, matters involving real estate, our operations or health care regulations, or governmental
investigations. We accrue for loss contingencies to the extent that we conclude that it is probable that a loss will
be incurred and the amount of the loss can be reasonably estimated. If a reasonable estimate of a known or
probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses
is recognized if no amount within the range is a better estimate than any other. If we determine that a loss is
possible, but not probable, and the range of the loss can be reasonably determined, then we disclose the range of
the possible loss. These matters raise difficult and complex factual and legal issues and are subject to many
uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the
jurisdiction in which each suit is brought, and differences in applicable law. As such, significant judgment is
required in determining our legal accruals. We describe our legal proceedings in Note 18 to the “Consolidated
Financial Statements.”
New Accounting Standards
Information regarding new accounting standards is included in Note 2 to the “Consolidated Financial
Statements.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our business and financial results are affected by fluctuations in world financial markets, including changes
in currency exchange rates and interest rates. We manage these risks through a combination of normal operating
and financing activities and derivative financial instruments. We do not use derivative financial instruments for
trading or speculative purposes.
41
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and
our long-term debt. Our investment strategy is focused on preserving capital and supporting our liquidity
requirements, while earning a reasonable market return. We invest in a variety of debt securities, primarily time
deposits, commercial paper, United States and foreign government and agency securities, asset-backed securities,
corporate debt securities, and municipal debt securities. The market value of our investments may decline if
current market interest rates rise. As of December 31, 2022, we had $1.6 billion of investments in debt securities
which had an average remaining term to maturity of 0.98 years. Taking into consideration the average maturity
of our debt securities, a hypothetical 0.5% to 1.0% absolute increase in interest rates at December 31, 2022
would have resulted in a $7.8 million to $15.5 million decrease in the fair value of these investments. Such a
decrease would only result in a realized loss if we choose or are forced to sell the investments before the
scheduled maturity, which we currently do not anticipate.
For more information related to investments, see Note 7 to the “Consolidated Financial Statements.”
We are also exposed to interest rate risk on our debt obligations. As of December 31, 2022, we had
$600.0 million of 2018 Notes outstanding that carry a fixed rate, and also had available a $750.0 million Credit
Agreement that carries a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”). As of
December 31, 2022, there were no borrowings outstanding under the Credit Agreement. Based on our
December 31, 2022 variable debt levels, a hypothetical 1.0% absolute increase in floating market interest rates
would not have impacted our interest expense since we had no variable debt outstanding during the year. As of
December 31, 2022, a hypothetical 1.0% absolute increase in market interest rates would decrease the fair value
of the fixed-rate debt by approximately $26.7 million. This hypothetical change in interest rates would not impact
the interest expense on the fixed-rate debt.
For more information related to outstanding debt obligations, see Note 10 to the “Consolidated Financial
Statements.”
Currency Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include the
translation of local currency balances and results of our non-United States subsidiaries into United States dollars,
currency gains and losses related to intercompany and third-party transactions denominated in currencies other
than a subsidiary’s functional currency, and currency gains and losses associated with intercompany loans. Our
principal currency exposures relate to the Euro and the Japanese yen. Our objective is to minimize the volatility
of our exposure to these risks through a combination of normal operating and financing activities and the use of
derivative financial instruments in the form of foreign currency forward exchange contracts and cross currency
swap contracts. The total notional amount of our derivative financial instruments entered into for foreign
currency management purposes at December 31, 2022 was $2.0 billion. A hypothetical 10% increase (or
decrease) in the value of the United States dollar against all hedged currencies would increase (or decrease) the
fair value of these derivative contracts by $158.2 million. Any gains or losses on the fair value of derivative
contracts would generally be offset by gains and losses on the underlying transactions, so the net impact would
not be significant to our financial condition or results of operations.
For more information related to outstanding foreign exchange contracts, see Note 2 and Note 12 to the
“Consolidated Financial Statements.”
Credit Risk
Derivative financial instruments involve credit risk in the event the financial institution counterparty should
default. It is our policy to execute such instruments with major financial institutions that we believe to be
creditworthy. At December 31, 2022, all derivative financial instruments were with bank counterparties assigned
42
investment grade ratings by national rating agencies. We further diversify our derivative financial instruments
among counterparties to minimize exposure to any one of these entities. We have not experienced a counterparty
default and do not anticipate any non-performance by our current derivative counterparties.
Concentrations of Risk
We invest excess cash in a variety of debt securities, and diversify the investments between financial
institutions. Our investment policy limits the amount of credit exposure to any one issuer.
In the normal course of business, we provide credit to customers in the health care industry, perform credit
evaluations of these customers, and maintain allowances for potential credit losses, which have historically been
adequate compared to actual losses. In 2022, we had no customers that represented 10% or more of our total net
sales or accounts receivable, net.
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 December 31, 2022, we had $1.6 billion of investments in debt
securities of various companies, of which $1.1 billion were long-term. In addition, we had $108.3 million of
investments in equity instruments. 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.
43
Item 8.
Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . .
45
Financial Statements:
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For the Years Ended December 31, 2022, 2021, and 2020:
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
49
50
51
52
53
All other schedules are omitted as they are not applicable or the required information is furnished in the
Consolidated Financial Statements or notes thereto.
44
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Edwards Lifesciences Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Edwards Lifesciences Corporation and its
subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of
operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the
period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated
financial statements”). We also have audited the Company’s internal control over financial reporting as of
December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing
under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and
on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
45
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and
(ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Uncertain Tax Positions Related to Intercompany Transfer Pricing
As described in Note 17 to the consolidated financial statements, the Company had an uncertain gross tax
position liability balance of $475.3 million as of December 31, 2022, of which a majority is related to
intercompany transfer pricing. As disclosed by management, the Company is subject to income taxes in the
United States and numerous foreign jurisdictions. The Company’s income tax returns in these jurisdictions are
periodically audited by domestic and foreign tax authorities. These audits include questions regarding the
Company’s tax filing positions, including the timing and amount of deductions and the allocation of income
amongst various tax jurisdictions. Significant judgment is required by management in evaluating uncertain tax
positions, including estimating the ultimate resolution to intercompany pricing controversies between countries
when there are numerous possible outcomes.
The principal considerations for our determination that performing procedures relating to uncertain tax positions
related to intercompany transfer pricing is a critical audit matter are the significant judgment by management
when determining uncertain tax positions related to intercompany transfer pricing, including a high degree of
estimation uncertainty in estimating the ultimate resolution to intercompany pricing controversies between
countries when there are numerous possible outcomes. This in turn led to a high degree of auditor judgment,
effort, and subjectivity in performing procedures to evaluate the accurate measurement of uncertain tax positions
related to intercompany transfer pricing. In addition, the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to intercompany transfer pricing, and controls over measurement of the liability. These
procedures also included, among others, (i) testing the information used in the calculation of the liability for
uncertain tax positions related to intercompany transfer pricing, including US federal filing positions, and the
related final income tax returns; (ii) testing the calculation of the liability for uncertain tax positions related to
intercompany transfer pricing, by jurisdiction, including management’s assessment of the technical merits of tax
positions and estimates of the amount of tax benefit expected to be sustained; (iii) testing management’s
46
assessment of possible outcomes of uncertain tax positions related to intercompany transfer pricing controversies
between countries; and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.
Professionals with specialized skill and knowledge were used to assist in the evaluation of the accurate
measurement of the Company’s uncertain tax positions related to intercompany transfer pricing, including
evaluating the reasonableness of management’s assessment of whether tax positions are more-likely-than not to
be sustained and the amount of potential tax benefit to be realized, and the application of relevant tax laws.
/s/ PricewaterhouseCoopers LLP
Irvine, California
February 13, 2023
We have served as the Company’s auditor since 1999.
47
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
Current assets
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments (Note 7)
Accounts receivable, net of allowances of $7.9 and $9.3, respectively . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments (Note 7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant, and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets (Note 6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net (Note 9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued and other liabilities (Note 5)
Operating lease liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities (Notes 8 and 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation settlement accrual (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Notes 6, 10, and 18)
Stockholders’ equity (Note 14)
December 31,
2022
2021
$
769.0
446.3
643.0
56.1
875.5
110.0
195.9
3,095.8
1,239.0
1,632.8
92.3
1,164.3
285.2
484.0
299.1
$ 8,292.5
$
201.9
795.0
25.5
1,022.4
596.3
26.2
143.4
69.5
267.5
143.0
217.5
2,485.8
$
862.8
604.0
582.2
82.7
726.7
85.2
237.1
3,180.7
1,834.2
1,546.6
92.1
1,167.9
323.6
246.7
110.8
$ 8,502.6
$
204.5
802.3
25.5
1,032.3
595.7
62.0
190.0
69.1
259.0
191.3
267.3
2,666.7
Preferred stock, $0.01 par value, authorized 50.0 shares, no shares outstanding . . . .
Common stock, $1.00 par value, 1,050.0 shares authorized, 646.3 and 642.0 shares
issued, and 608.3 and 624.1 shares outstanding, respectively . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 38.0 and 17.9 shares, respectively . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
646.3
1,969.3
7,590.0
(254.9)
(4,144.0)
5,806.7
$ 8,292.5
642.0
1,700.4
6,068.1
(157.7)
(2,416.9)
5,835.9
$ 8,502.6
The accompanying notes are an integral part of these consolidated financial statements.
48
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share information)
Years Ended December 31,
2022
2021
2020
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,382.4
1,080.4
$5,232.5
1,248.9
$4,386.3
1,080.6
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general, and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual property litigation expenses, net (Note 3) . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration liabilities, net
(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special charge (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,302.0
1,567.6
945.2
15.8
(35.8)
60.7
1,748.5
19.2
(35.5)
(2.6)
1,767.4
245.5
3,983.6
1,493.7
903.1
20.6
(124.1)
—
1,690.3
18.4
(17.4)
(12.7)
1,702.0
198.9
3,305.7
1,228.4
760.7
405.4
13.6
—
897.6
15.8
(23.4)
(11.5)
916.7
93.3
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$ 823.4
Share information (Note 2):
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2.46
2.44
$
$
2.41
2.38
$
$
1.32
1.30
Weighted-average number of common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
619.0
624.2
623.3
631.2
622.6
631.9
The accompanying notes are an integral part of these consolidated financial statements.
49
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Years Ended December 31,
2022
2021
2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Other comprehensive (loss) income, net of tax (Note 15):
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized pension credits (costs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on available-for-sale investments . . . . . . . . . . . . . . . .
Reclassification of net realized investment loss to earnings . . . . . . . . . . . . . .
Other comprehensive (loss) income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46.3)
(5.9)
13.7
(77.5)
18.8
(97.2)
(50.1)
57.4
11.6
(24.1)
8.6
3.4
32.4
(40.2)
(4.2)
6.6
0.3
(5.1)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,424.7
$1,506.5
$818.3
The accompanying notes are an integral part of these consolidated financial statements.
50
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended December 31,
2022
2021
2020
$ 1,521.9
$ 1,503.1
$ 823.4
Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation (Notes 2 and 14) . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration liabilities, net
(Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities: . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Litigation settlement accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .
Accounts and other receivables, net
Cash flows from investing activities
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of held-to-maturity investments (Note 7) . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of held-to-maturity investments
(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of available-for-sale investments (Note 7) . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales and maturities of available-for-sale investments
(Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for acquisition option (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuances of notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collections of notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . .
139.6
27.2
126.8
55.1
(35.8)
51.5
(254.5)
7.8
(84.1)
(213.4)
0.1
(21.4)
(45.0)
(5.6)
(52.0)
1,218.2
134.8
28.5
109.3
4.0
(124.1)
(36.8)
(41.4)
9.4
(91.1)
19.0
7.9
195.2
(29.2)
62.0
(18.5)
1,732.1
(244.6)
(353.5)
(325.8)
(250.0)
419.5
(315.8)
138.0
(1,629.3)
939.6
(109.6)
(52.3)
18.0
(20.2)
(28.8)
252.3
391.2
(13.1)
(5.1)
20.0
(4.0)
(44.4)
(1,722.5)
Cash flows from financing activities
Proceeds from issuance of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on debt and finance lease obligations . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(0.2)
(1,727.1)
146.4
(3.6)
(1,584.5)
5.2
(7.0)
(512.8)
158.6
(0.3)
(356.3)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in cash, cash equivalents, and restricted
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash, cash equivalents, and restricted cash at beginning of year . . . . . . . . . . . . . . . .
Cash, cash equivalents, and restricted cash at end of year . . . . . . . . . . . . . . . . . . . . .
19.2
13.9
(20.5)
(94.8)
867.4
772.6
(332.8)
1,200.2
867.4
$
15.8
1,184.4
$1,200.2
$
The accompanying notes are an integral part of these consolidated financial statements.
51
107.2
28.2
92.6
—
13.6
(21.2)
(49.4)
17.7
41.9
(120.6)
(28.5)
(84.5)
270.5
(52.9)
16.3
1,054.3
(407.0)
(162.0)
212.2
(689.7)
564.8
(10.0)
(27.0)
—
(0.3)
(12.1)
(531.1)
16.2
(17.0)
(625.4)
140.5
(1.2)
(486.9)
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
Common Stock
Treasury Stock
Shares
Par
Value Shares Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
$(1,278.7) $1,623.3 $3,741.6
823.4
$(156.0)
$ 4,148.3
823.4
(5.1)
(5.1)
BALANCE AT DECEMBER 31,
2019 . . . . . . . . . . . . . . . . . . . . . . . 218.1 $218.1
9.0
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
4.5
4.5
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
Stock issued to effect stock split . . . . 413.8
413.8
BALANCE AT DECEMBER 31,
3.1
(625.4)
136.0
92.6
(413.8)
2020 . . . . . . . . . . . . . . . . . . . . . . . 636.4
636.4
12.1
(1,904.1)
1,438.1
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
5.6
5.6
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
BALANCE AT DECEMBER 31,
153.0
109.3
5.8
(512.8)
2021 . . . . . . . . . . . . . . . . . . . . . . . 642.0
642.0
17.9
(2,416.9)
1,700.4
140.5
92.6
(625.4)
—
4,574.3
1,503.1
3.4
158.6
109.3
(512.8)
5,835.9
1,521.9
4,565.0
1,503.1
(161.1)
3.4
6,068.1
1,521.9
(157.7)
Net income . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock issued under equity
plans . . . . . . . . . . . . . . . . . . . . . . .
4.3
4.3
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . .
BALANCE AT DECEMBER 31,
142.1
126.8
20.1
(1,727.1)
(97.2)
(97.2)
146.4
126.8
(1,727.1)
2022 . . . . . . . . . . . . . . . . . . . . . . . 646.3 $646.3
38.0
$(4,144.0) $1,969.3 $7,590.0
$(254.9)
$ 5,806.7
The accompanying notes are an integral part of these consolidated financial statements.
52
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Edwards Lifesciences Corporation (“Edwards Lifesciences” or the “Company”) conducts operations
worldwide and is managed in the following geographical regions: United States, Europe, Japan, and Rest of
World. Edwards Lifesciences is focused on technologies that treat structural heart disease and critically ill
patients. The products and technologies provided by Edwards Lifesciences are categorized into the following
main areas: Transcatheter Aortic Valve Replacement, Transcatheter Mitral and Tricuspid Therapies, Surgical
Structural Heart, and Critical Care.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Edwards Lifesciences and its
majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Company reviews its investments in other entities to determine whether the Company is the primary
beneficiary of a variable interest entity (“VIE”). The Company would be the primary beneficiary of the VIE, and
would be required to consolidate the VIE, if it has the power to direct the significant activities of the entity and
the obligation to absorb losses or receive benefits from the entity that may be significant to the VIE. Based on the
Company’s analysis, it determined it is not the primary beneficiary of any material VIEs; however, future events
may require VIEs to be consolidated if the Company becomes the primary beneficiary.
Use of Estimates
The consolidated financial statements of Edwards Lifesciences have been prepared in accordance with
generally accepted accounting principles in the United States of America (“GAAP”) which have been applied
consistently in all material respects. The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in the financial statements.
Actual results could differ from those estimates.
Foreign Currency Translation
When the local currency of the Company’s foreign entities is the functional currency, all assets and
liabilities are translated into United States dollars at the rate of exchange in effect at the balance sheet date.
Income and expense items are translated at the weighted-average exchange rate prevailing during the period. The
effects of foreign currency translation adjustments for these entities are deferred and reported in stockholders’
equity as a component of “Accumulated Other Comprehensive Loss.” The effects of foreign currency transactions
denominated in a currency other than an entity’s functional currency are included in “Other Income, net.”
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to the customer in an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those
products or services.
The Company generates nearly all of its revenue from direct product sales and sales of products under
consignment arrangements. Revenue from direct product sales is recognized at a point in time when the
performance obligation is satisfied upon delivery of the product. Revenue from sales of consigned inventory is
recognized at a point in time when the performance obligation is satisfied once the product has been implanted or
53
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
used by the customer. The Company periodically reviews consignment inventories to confirm the accuracy of
customer reporting. The Company also generates a small portion of its revenue from service contracts, and
recognizes revenue from service contracts ratably over the term of the contracts. Sales taxes and other similar
taxes that the Company collects concurrent with revenue-producing activities are excluded from revenue. The
Company does not typically have any significant unusual payment terms beyond 90 days in its contracts with
customers. In addition, the Company receives royalty payments for the licensing of certain intellectual property
and recognizes the royalty when the subsequent sale of product using the intellectual property occurs.
The amount of consideration the Company ultimately receives varies depending upon the return terms, sales
rebates, discounts, and other incentives that the Company may offer, which are accounted for as variable
consideration when estimating the amount of revenue to recognize. The Company includes estimated amounts in
the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is resolved. The estimates of variable
consideration and determination of whether to include estimated amounts in the transaction price are based
largely upon an assessment of historical payment experience, historical relationship to revenues, estimated
customer inventory levels, and current contract sales terms with direct and indirect customers.
The Company’s sales adjustment related to distributor rebates given to the Company’s United States
distributors represents the difference between the Company’s sales price to the distributor and the negotiated
price to be paid by the end-customer. This distributor rebate is recorded as a reduction to sales and a reduction to
the distributor’s accounts receivable at the time of sale to a distributor. The Company periodically monitors
current pricing trends and distributor inventory levels to ensure the credit for future distributor rebates is fairly
stated.
The Company offers volume rebates to certain group purchasing organizations (“GPOs”) and customers
based upon targeted sales levels. Volume rebates offered to GPOs are recorded as a reduction to sales and an
obligation to the GPOs, as the Company expects to pay in cash. Volume rebates offered to customers are
recorded as a reduction to sales and either a reduction to accounts receivable if the Company expects a net
payment from the customer, or as an obligation to the customer if the Company expects to pay in cash. The
provision for volume rebates is estimated based upon customers’ contracted rebate programs, projected sales
levels, and historical experience of rebates paid. The Company periodically monitors its customer rebate
programs to ensure that the allowance and liability for accrued rebates is fairly stated.
Product returns are typically not significant because returns are generally not allowed unless the product is
damaged at time of receipt. In limited circumstances, the Company may allow customers to return previously
purchased products, such as for next-generation product offerings. For these transactions, the Company defers
recognition of revenue on the sale of the earlier generation product based upon an estimate of the amount of
product to be returned when the next-generation products are shipped to the customer.
The Company sells separately priced service contracts, which range from 12 to 36 months, to owners of its
hemodynamic monitors. The Company invoices the customer the total amount of consideration at the inception
of the contract and recognizes revenue ratably over the term of the contract. As of December 31, 2022 and 2021,
$10.6 million and $10.2 million, respectively, of deferred revenue associated with outstanding service contracts
was recorded in “Accrued and Other Liabilities” and “Other Liabilities.” During 2022, the Company recognized
as revenue $7.2 million that was included in the balance of deferred revenue as of December 31, 2021, and
during 2021, the Company recognized as revenue $7.3 million that was included in the balance of deferred
revenue as of December 31, 2020.
54
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A limited number of the Company’s contracts with customers contain multiple performance obligations. For
these contracts, the transaction price is allocated to each performance obligation based on its relative standalone
selling price charged to other customers.
The Company applies the optional exemption of not disclosing the amount of the transaction price allocated
to unsatisfied performance obligations for contracts with an original expected duration of one year or less.
Shipping and Handling Costs
Shipping costs, which are costs incurred to physically move product from the Company’s premises or third
party distribution centers, including storage, to the customer’s premises, are included in “Selling, General, and
Administrative Expenses.” Handling costs, which are costs incurred to store at the Company’s premises, move,
and prepare products for shipment, are included in “Cost of Sales.” For the years ended December 31, 2022,
2021, and 2020, shipping costs of $87.4 million, $85.3 million, and $74.0 million, respectively, were included in
“Selling, General, and Administrative Expenses.”
Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less at the
time of purchase to be cash equivalents. These investments are valued at cost, which approximates fair value.
Investments
The Company invests its excess cash in debt securities, including time deposits, commercial paper, United
States government and agency securities, asset-backed securities, corporate debt securities, and municipal debt
securities. Investments with maturities of one year or less are classified as short-term, and investments with
maturities greater than one year are classified as long-term. Investments that the Company has the ability and
intent to hold until maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt
securities that are classified as available-for-sale are carried at fair value with unrealized gains and losses
included in “Accumulated Other Comprehensive Loss.” The Company determines the appropriate classification
of its investments in debt securities at the time of purchase and reevaluates such designation at each balance sheet
date.
The Company also has long-term equity investments in companies that are in various stages of
development. These investments are reported at fair value or under the equity method of accounting, as
appropriate. Equity investments that do not have readily determinable fair values are recorded at cost minus
impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the
identical or similar investment of the same issuer. The Company accounts for investments in limited partnerships
and limited liability corporations, whereby the Company owns a minimum of 3% of the investee’s outstanding
voting stock, under the equity method of accounting. These investments are recorded at the amount of the
Company’s investment and adjusted each period for the Company’s share of the investee’s income or loss, and
dividends paid.
Realized gains and losses on investments that are sold are determined using the specific identification
method, or the first-in, first-out method, depending on the investment type, and recorded to “Other Income, net.”
Income relating to investments in debt securities is recorded to “Interest Income.”
55
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equity investments without readily determinable fair value are considered impaired when there is an
indication that the fair value of the Company’s interest is less than the carrying amount. Equity method
investments are considered impaired when there is an indication of an other-than-temporary decline in value
below the carrying amount. Impairments of equity investments are recorded in “Other Income, net.”
Debt securities in an unrealized loss position are written down to fair value through “Other Income, net” if
the Company intends to sell the security or it is more likely than not that the Company will be required to sell the
security before recovery of its amortized cost basis. For debt securities in an unrealized loss position that do not
meet the aforementioned criteria, the Company assesses whether the decline in fair value has resulted from credit
losses or other factors. In making this assessment, the Company considers the length of time and the extent to
which the security’s fair value has been below cost, changes to the rating of the security by a rating agency, and
any adverse conditions specifically related to the security, among other factors. When a credit loss exists, the
Company compares the present value of cash flows expected to be collected from the debt security to the
amortized cost basis of the security to determine the allowance amount that should be recorded, if any.
Accounts Receivable
The majority of the Company’s accounts receivable arise from direct product sales and sales of products
under consignment arrangements, and have payment terms that generally require payment within 30 to 90 days.
The Company does not adjust its receivables for the effects of a significant financing component at contract
inception if collection of the receivable is expected within one year or less from the time of sale. In countries
where the Company has experienced a pattern of payments extending beyond the stated terms and collection of
the receivable is expected beyond one year from the time of sale, the Company assesses whether the customer
has a significant financing component and discounts the receivable and reduces the related revenues over the
period of time that the Company estimates those amounts will be paid using the country’s market-based
borrowing rate for such period.
The Company provides reserves against accounts receivable for estimated losses that may result from a
customer’s inability to pay based on customer-specific analysis and general matters such as current assessments
of past due balances, economic conditions and forecasts, and historical credit loss activity. Amounts determined
to be uncollectible are charged or written-off against the reserve.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Market value for
raw materials is based on replacement costs, and for other inventory classifications is based on net realizable
value.
A write-down for excess or slow moving inventory is recorded for inventory which is obsolete, damaged,
nearing its expiration date (generally triggered at six months prior to expiration), or slow moving (generally
defined as quantities in excess of a two-year supply).
The Company allocates to inventory general and administrative costs that are related to the production
process. These costs include insurance, manufacturing accounting and human resources personnel, and
information technology. During the years ended December 31, 2022, 2021, and 2020, the Company allocated
$88.1 million, $77.9 million, and $63.1 million, respectively, of general and administrative costs to inventory.
General and administrative costs included in inventory at December 31, 2022 and 2021 were $43.7 million and
$33.7 million, respectively.
56
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
At December 31, 2022 and 2021, $128.6 million and $125.8 million, respectively, of the Company’s
finished goods inventories were held on consignment.
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Depreciation is principally calculated for financial
reporting purposes on the straight-line method over the estimated useful lives of the related assets, which range
from 10 to 40 years for buildings and improvements, from 3 to 15 years for machinery and equipment, and from
3 to 5 years for software. Leasehold improvements are amortized over the life of the related facility leases or the
asset, whichever is shorter. Straight-line and accelerated methods of depreciation are used for income tax
purposes. Construction in progress is not depreciated until the asset is ready for its intended use.
Depreciation expense for property, plant, and equipment was $133.9 million, $127.0 million, and
$101.8 million for the years ended December 31, 2022, 2021, and 2020, respectively.
Leases
The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets
represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are
recognized at lease commencement based upon the estimated present value of unpaid lease payments over the
lease term. The Company uses its incremental borrowing rate based on the information available at lease
commencement in determining the present value of unpaid lease payments. The Company’s incremental
borrowing rate is determined based on the estimated rate of interest for collateralized borrowing over a similar
term as the associated lease. Right-of-use assets also include any lease payments made at or before lease
commencement and any initial direct costs incurred, and exclude any lease incentives received.
The Company determines the lease term as the noncancellable period of the lease, and may include options
to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases
with a term of 12 months or less are not recognized on the balance sheet. Certain of the Company’s leases
include variable lease payments that are based on costs incurred or actual usage, or adjusted periodically based
on an index or a rate. The Company’s leases do not contain any residual value guarantees.
The Company accounts for the lease and non-lease components as a single lease component for all of its
leases except vehicle leases, for which the lease and non-lease components are accounted for separately.
Operating leases are included in “Operating Lease Right-of-Use Assets” and “Operating Lease Liabilities”
on the Company’s consolidated balance sheets. See Note 6 for further information.
Acquisitions
Businesses that the Company acquires are included in its results of operations as of the acquisition date. The
purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. The
excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill.
Acquisition-related expenses are recognized separately from the business combination and are expensed as
incurred. Contingent consideration obligations incurred in connection with a business combination are recorded
at their fair values on the acquisition date and remeasured on a quarterly basis, with changes in their fair value
57
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
recorded as an adjustment to earnings, until the related contingencies have been resolved. When the assets
acquired do not meet the definition of a business combination, the transactions is accounted for as an asset
acquisition. In an asset acquisition, the cost of the acquisition is allocated to the assets acquired and liabilities
assumed based on their relative fair values. Upfront payments related to in-process research and development
projects with no alternative future use are expensed upon acquisition.
Impairment of Goodwill and Long-lived Assets
Goodwill is reviewed for impairment annually in the fourth quarter of each fiscal year, or whenever an event
occurs or circumstances change that would indicate that the carrying amount may be impaired. Goodwill is tested
for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is
more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit
does not pass the qualitative assessment, then the Company performs a quantitative impairment test. The
Company determined, after performing a qualitative review of each reporting unit, that it is more likely than not
that the fair value of each of its reporting units substantially exceeds the respective carrying amounts.
Accordingly, in 2022, 2021, and 2020, the Company did not record any goodwill impairment loss.
Indefinite-lived intangible assets relate to in-process research and development acquired in business
combinations. The estimated fair values of in-process research and development projects acquired in a business
combination which have not reached technological feasibility are capitalized and accounted for as indefinite-
lived intangible assets subject to impairment testing until completion or abandonment of the projects. Upon
successful completion of the project, the capitalized amount is amortized over its estimated useful life. If the
project is abandoned, all remaining capitalized amounts are written off immediately. Indefinite-lived intangible
assets are reviewed for impairment annually in the fourth quarter of each fiscal year, or whenever an event occurs
or circumstances change that would indicate the carrying amount may be impaired. An impairment loss is
recognized when the asset’s carrying value exceeds its fair value. In-process research and development projects
acquired in an asset acquisition are expensed unless the project has an alternative future use.
Management reviews the carrying amounts of other finite-lived intangible assets and long-lived tangible
assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable.
Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in
revenue or operating profit, and adverse legal or regulatory developments. If it is determined that such indicators
are present and the review indicates that the assets will not be fully recoverable, based on undiscounted estimated
cash flows over the remaining amortization periods, their carrying values are reduced to estimated fair market
value. Estimated fair market value is determined primarily using the anticipated cash flows discounted at a rate
commensurate with the risk involved. For the purposes of identifying and measuring impairment, long-lived
assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely
independent of the cash flows of other assets and liabilities.
In 2022, the Company recorded a $52.7 million impairment of certain developed technology and in-process
research and development assets. For further information, see Note 4. In 2021 and 2020, the Company did not
record any impairment loss related to its in-process research and development assets.
Income Taxes
The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant
judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for
58
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
income taxes. The Company recognizes the financial statement benefit of a tax position only after determining
that a position would more likely than not be sustained based upon its technical merit if challenged by the
relevant taxing authority and taken by management to the court of last resort. For tax positions meeting the more-
likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit
that has a greater than 50% likelihood of being realized upon settlement with the relevant tax authority. The
Company recognizes interest and penalties related to income tax matters in income tax expense. The Company
has made an accounting policy election to recognize the United States tax effects of global intangible low-taxed
income as a component of income tax expense in the period the tax arises.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that
have been recognized in the Company’s financial statements or tax returns. The Company evaluates quarterly the
realizability of its deferred tax assets by assessing its valuation allowance and adjusting the amount, if necessary.
The factors used to assess the likelihood of realization are both historical experience and the Company’s forecast
of future taxable income and available tax planning strategies that could be implemented to realize the net
deferred tax assets. Failure to achieve forecasted taxable income in the applicable taxing jurisdictions could
affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax
rate on future earnings.
Research and Development Costs
Research and development costs are charged to expense when incurred.
Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted-average common shares
outstanding during the period. Diluted earnings per share is computed based on the weighted-average common
shares outstanding plus the effect of dilutive potential common shares outstanding during the period calculated
using the treasury stock method. Dilutive potential common shares include employee equity share options,
nonvested shares, and similar equity instruments granted by the Company. Potential common share equivalents
have been excluded where their inclusion would be anti-dilutive.
59
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The table below presents the computation of basic and diluted earnings per share (in millions, except for per
share information):
Basic:
Years Ended December 31,
2022
2021
2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Weighted-average shares outstanding . . . . . . . . . . . .
619.0
623.3
622.6
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . .
$
2.46
$
2.41
$ 1.32
Diluted:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,521.9
$1,503.1
$823.4
Weighted-average shares outstanding . . . . . . . . . . . .
Dilutive effect of stock plans . . . . . . . . . . . . . . . . . . .
Dilutive weighted-average shares outstanding . . . . . .
619.0
5.2
624.2
623.3
7.9
631.2
622.6
9.3
631.9
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . .
$
2.44
$
2.38
$ 1.30
Outstanding stock options, unvested restricted stock units, and unvested market-based restricted stock units
to purchase approximately 3.6 million, 1.8 million, and 2.0 million shares for the years ended December 31,
2022, 2021, and 2020, respectively, were not included in the computation of diluted earnings per share because
the effect would have been anti-dilutive.
Stock-based Compensation
The Company measures and recognizes compensation expense for all stock-based awards based on
estimated fair values. Stock-based awards consist of stock options, restricted stock units (service-based and
market-based), and employee stock purchase subscriptions. Stock-based compensation expense is measured at
the grant date based on the fair value of the award and is recognized as expense over each award’s requisite
service period (vesting period) on a straight-line basis. Forfeitures are estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those estimates. Upon exercise of stock
options or vesting of restricted stock units, the Company issues common stock.
Total stock-based compensation expense was as follows (in millions):
Years Ended December 31,
2022
2021
2020
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general, and administrative expenses . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . .
$ 22.8
75.3
28.7
$ 20.4
65.6
23.3
$ 17.2
56.6
18.8
Total stock-based compensation expense . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126.8
(21.6)
109.3
(18.9)
92.6
(15.4)
Total stock-based compensation expense, net of tax . . . .
$105.2
$ 90.4
$ 77.2
Upon a participant’s retirement, all unvested stock options are immediately forfeited. In addition, upon
retirement, a participant will immediately vest in 25% of service-based restricted stock units for each full year of
60
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
employment with the Company measured from the grant date. All remaining unvested service-based restricted
stock units are immediately forfeited. For market-based restricted stock units, upon retirement and in certain
other specified cases, a participant will receive a pro-rated portion of the shares that would ultimately be issued
based on attainment of the performance goals as determined on the vesting date. The pro-rated portion is based
on the participant’s whole months of service with the Company during the performance period prior to the date
of termination.
Derivatives
The Company uses derivative financial instruments to manage its currency exchange rate risk and its
interest rate risk. It is the Company’s policy not to enter into derivative financial instruments for speculative
purposes.
Derivative financial instruments involve credit risk in the event the counterparty should default. It is the
Company’s policy to execute such instruments with global financial institutions that the Company believes to be
creditworthy. The Company diversifies its derivative financial instruments among counterparties to minimize
exposure to any one of these entities. The Company also uses International Swap Dealers Association master-
netting agreements. The master-netting agreements provide for the net settlement of all contracts through a single
payment in a single currency in the event of default, as defined by the agreements.
The Company uses foreign currency forward exchange contracts and cross currency swap contracts to
manage its exposure to changes in currency exchange rates from (1) future cash flows associated with
intercompany transactions and certain local currency expenses expected to occur within the next 13 months
(designated as cash flow hedges), (2) its net investment in certain foreign subsidiaries (designated as net
investment hedges) and (3) foreign currency denominated assets or liabilities (designated as fair value hedges).
The Company also uses foreign currency forward exchange contracts that are not designated as hedging
instruments to offset the transaction gains and losses associated with the revaluation of certain assets and
liabilities denominated in currencies other than their functional currencies, resulting principally from
intercompany and local currency transactions.
All derivative financial instruments are recognized at fair value in the consolidated balance sheets. For each
derivative instrument that is designated as a fair value hedge, the gain or loss on the derivative included in the
assessment of hedge effectiveness is recognized immediately to earnings, and offsets the loss or gain on the
underlying hedged item. The Company reports in “Accumulated Other Comprehensive Loss” the gain or loss on
derivative financial instruments that are designated, and that qualify, as cash flow hedges. The Company
reclassifies these gains and losses into earnings in the same line item and in the same period in which the
underlying hedged transactions affect earnings. Changes in the fair value of net investment hedges are reported in
“Accumulated Other Comprehensive Loss” as a part of the cumulative translation adjustment and would be
reclassified into earnings if the underlying net investment is sold or substantially liquidated. The portion of the
change in fair value related to components excluded from the hedge effectiveness assessment are amortized into
earnings over the life of the derivative. The gains and losses on derivative financial instruments for which the
Company does not elect hedge accounting treatment are recognized in the consolidated statements of operations
in each period based upon the change in the fair value of the derivative financial instrument. Cash flows from net
investment hedges are reported as investing activities in the consolidated statements of cash flows, and cash
flows from all other derivative financial instruments are reported as operating activities.
61
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Adopted Accounting Standards
In November 2021, the Financial Accounting Standards Board (“FASB”) issued an amendment to the
accounting guidance on government assistance. The guidance requires certain disclosures about transactions with
a government that are accounted for by applying a grant or contribution model. The guidance was effective for
annual periods beginning after December 15, 2021. The adoption of this guidance was applied prospectively and
did not have an impact on the Company’s consolidated financial statements.
3. INTELLECTUAL PROPERTY LITIGATION EXPENSES, NET
The Company incurred intellectual property litigation expenses, including settlements and external legal
costs, of $15.8 million, $20.6 million and $405.4 million during 2022, 2021 and 2020, respectively.
On July 12, 2020, the Company reached an agreement with Abbott Laboratories and its direct and indirect
subsidiaries (“Abbott”) to, among other things, settle all outstanding patent disputes between the companies (the
“Settlement Agreement”) in cases related to transcatheter mitral and tricuspid repair products. The Settlement
Agreement resulted in the Company recording an estimated $367.9 million pre-tax charge and related liability in
June 2020 related to past damages. In addition, the Company will incur royalty expenses through May 2024
totaling an estimated $70 million. The Company made a one-time $100.0 million payment to Abbott in July
2020, and is making quarterly payments in subsequent years. As of December 31, 2022, $53.3 million was
accrued in “Accrued and other liabilities” and $143.0 million was accrued in “Litigation
settlement accrual” on the consolidated balance sheet.
4. SPECIAL CHARGE
In September 2022, the Company decided to exit its HARPOON surgical mitral repair system program. As a
result, the Company recorded a charge to its United States segment of $62.3 million, of which $60.7 million was
included in “Special Charge” and $1.6 million was included in “Cost of Sales” on the consolidated statements of
operations. The charge primarily related to the full impairment of intangible assets associated with the
technology for $52.7 million (see Note 8 and Note 9) and other related exit costs. The Company believes that no
additional contingent consideration is due and, in September 2022, recorded an $11.7 million contingent
consideration gain associated with the exit (see Note 11).
62
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS
Composition of Certain Financial Statement Captions
Components of selected captions in the consolidated balance sheets are as follows:
As of December 31,
2022
2021
(in millions)
Inventories
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 156.4
177.4
541.7
$ 132.8
164.3
429.6
$ 875.5
$ 726.7
Property, plant, and equipment, net
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment with customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 116.3
1,189.2
697.6
37.4
87.5
255.2
$ 116.5
1,010.1
613.4
39.2
88.2
333.8
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,383.2
(750.4)
2,201.2
(654.6)
$1,632.8
$1,546.6
Accrued and other liabilities
Employee compensation and withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, payroll, and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal and insurance (Notes 3 and 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued realignment reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued relocation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 268.7
116.1
45.6
66.9
81.4
50.6
20.7
17.0
6.6
15.6
25.2
80.6
$ 319.7
77.0
68.9
58.2
79.1
30.6
3.9
20.1
11.9
19.1
26.2
87.6
$ 795.0
$ 802.3
63
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS (Continued)
Supplemental Cash Flow Information
(in millions)
Years Ended December 31,
2022
2021
2020
Cash paid during the year for:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts included in the measurement of lease liabilities:
$ 19.3
$504.1
$ 20.2
$182.5
$ 19.9
$197.9
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . .
$ 28.1
$ 31.9
$ 29.7
Non-cash investing and financing transactions:
Right-of-use assets obtained in exchange for new lease liabilities . . . . . . . . . . . .
Capital expenditures accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Conversion of notes receivable to equity investment
$ 28.7
$ 31.9
$ 42.6
$ 54.3
$ — $ 21.5
$ 39.7
$ 80.4
4.5
$
Cash, Cash Equivalents, and Restricted Cash
(in millions)
Years Ended December 31,
2022
2021
2020
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash included in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash included in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$769.0
0.5
3.1
$862.8
1.5
3.1
$1,183.2
16.6
0.4
Total cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . . . . . . .
$772.6
$867.4
$1,200.2
Amounts included in restricted cash primarily represent funds placed in escrow related to litigation and real
estate purchases. Restricted cash as of December 31, 2020 also included funds restricted for construction.
6. LEASES
The Company leases certain office space, manufacturing facilities, land, apartments, warehouses, vehicles,
and equipment with remaining lease terms ranging from less than 1 year to 18 years, some of which include
options to extend or terminate the leases.
Operating lease costs for the years ended December 31, 2022, 2021, and 2020 were $28.8 million,
$29.7 million, and $30.5 million, respectively. Short-term and variable lease costs were not material for the years
ended December 31, 2022, 2021, and 2020.
64
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. LEASES (Continued)
Supplemental balance sheet information related to operating leases was as follows (in millions, except lease
term and discount rate):
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . .
$92.3
$92.1
Operating lease liabilities, current portion . . . . . . . . . . . . . . . . . .
Operating lease liabilities, long-term portion . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . .
$25.5
69.5
$95.0
$25.5
69.1
$94.6
As of December 31,
2022
2021
Maturities of operating lease liabilities at December 31, 2022 were as follows (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 27.0
18.5
12.5
10.5
8.2
26.0
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: imputed interest
102.7
(7.7)
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 95.0
The following table provides information on the lease terms and discount rates:
Weighted-average remaining lease term (in years) . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . .
Years Ended December 31,
2022
6.4
1.8%
2021
6.2
2.5%
As of December 31, 2022, the Company had additional operating lease commitments of $14.1 million for
office spaces that have not yet commenced.
65
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS
Debt Securities
Investments in debt securities at the end of each period were as follows (in millions):
Held-to-maturity
December 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
December 31, 2021
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Bank time deposits . . . . . $
96.0
$—
$ —
$
96.0 $ 162.0
$—
$ —
$ 162.0
Available-for-sale
Bank time deposits . . . . . $ — $—
Commercial paper . . . . .
—
United States
—
$ —
—
$ — $
—
2.5
$—
127.7 —
$ —
—
$
2.5
127.7
government and
agency securities . . . .
Asset-backed
137.7 —
(6.1)
131.6
147.4
securities . . . . . . . . . .
380.6 —
(14.0)
366.6
515.2
Corporate debt
0.6
0.3
(0.7)
147.3
(2.9)
512.6
securities . . . . . . . . . .
Municipal securities . . . .
1,028.1 —
2.7 —
(47.8)
(0.2)
980.3
2.5
1,397.1
2.0
2.8 —
(8.3)
—
1,390.8
2.8
$1,549.1
$—
$(68.1)
$1,481.0 $2,192.7
$ 2.9
$(11.9)
$2,183.7
The cost and fair value of investments in debt securities, by contractual maturity, as of December 31, 2022
were as follows:
Due in 1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after 1 year through 5 years . . . . . . . . . . . . . . . . . . .
Due after 5 years through 10 years . . . . . . . . . . . . . . . . .
Instruments not due at a single maturity date (a) . . . . . .
Held-to-Maturity
Available-for-Sale
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
$91.5
4.5
—
—
$96.0
(in millions)
$91.5
4.5
—
—
$96.0
$ 362.0
753.8
6.0
427.3
$ 354.8
710.8
5.7
409.7
$1,549.1
$1,481.0
(a) Consists of mortgage- and asset-backed securities.
Actual maturities may differ from the contractual maturities due to call or prepayment rights.
66
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS (Continued)
The following tables present gross unrealized losses and fair values for those investments that were in an
unrealized loss position as of December 31, 2022 and 2021, aggregated by investment category and the length of
time that individual securities have been in a continuous loss position (in millions):
U.S. government and agency securities . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . .
Less than 12 Months
December 31, 2022
12 Months or
Greater
Total
Fair
Value
$ 61.6
103.3
189.0
—
$353.9
Gross
Unrealized
Losses
$(1.5)
(1.3)
(5.3)
—
$(8.1)
Fair
Value
$
69.5
254.6
784.8
2.5
Gross
Unrealized
Losses
$ (4.6)
(12.7)
(42.5)
(0.2)
Fair
Value
$ 131.1
357.9
973.8
2.5
Gross
Unrealized
Losses
$ (6.1)
(14.0)
(47.8)
(0.2)
$1,111.4
$(60.0)
$1,465.3
$(68.1)
Less than 12 Months
December 31, 2021
12 Months or
Greater
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. government and agency securities . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . .
$
85.1
433.3
1,114.1
$ (0.7)
$—
(2.9) —
(8.3) —
$1,632.5
$(11.9)
$—
$—
—
—
$—
Total
Fair
Value
$
85.1
433.3
1,114.1
Gross
Unrealized
Losses
$ (0.7)
(2.9)
(8.3)
$1,632.5
$(11.9)
The Company reviews its investments in debt securities to determine if there has been an other-than-
temporary decline in fair value. Consideration is given to 1) the length of time and the extent to which the
security’s fair value has been below cost, 2) the financial condition and near-term prospects of the issuer,
including the credit quality of the security’s issuer, 3) the Company’s intent to sell the security, and 4) whether it
is more likely than not the Company will have to sell the security before recovery of its amortized cost. During
2022, the decline in fair value of the debt securities was largely due to changes in interest rates, not credit quality,
and as of December 31, 2022, the Company did not intend to sell the securities, and it was not more likely than
not that it will be required to sell the securities, before recovery of the unrealized losses, and therefore, the
unrealized losses are considered temporary.
67
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. INVESTMENTS (Continued)
Investments in Unconsolidated Entities
The Company has a number of equity investments in unconsolidated entities. These investments are
recorded in “Long-term Investments” on the consolidated balance sheets, and are as follows:
December 31,
2022
2021
(in millions)
Equity method investments
Carrying value of equity method investments . . . . . . . . . .
$ 21.4
$ 8.4
Equity securities
Carrying value of non-marketable equity securities . . . . . .
86.9
84.1
Total investments in unconsolidated entities . . . . . . . . . . . . .
$108.3
$92.5
During 2022, the Company made $13.2 million of equity investments in limited liability companies that
invest in qualified community development entities (“CDEs”) through the New Markets Tax Credit (“NMTC”)
program. The NMTC program provides federal tax incentives to investors to make investments in distressed
communities and promotes economic improvements through the development of successful businesses in these
communities. The NMTC is equal to 39% of the qualified investment and is taken over seven years. These
limited liability companies are variable interest entities (“VIEs”). The Company determined that it is not the
primary beneficiary of the VIEs because it does not have the power to direct the activities that most significantly
impact the economic performance of the VIEs, and therefore the Company does not consolidate these entities.
Instead, the NMTC investments are accounted for as equity method investments.
Non-marketable equity securities consist of investments in privately held companies without readily
determinable fair values, and are reported at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or similar investment of the same issuer. During
2022, the Company recorded an upward adjustment of $0.8 million based on observable price changes and a
downward adjustment of $0.5 million due to an impairment. During 2021, the Company recorded an upward
adjustment of $4.2 million based on observable price changes. As of December 31, 2022, the Company had
recorded cumulative upward adjustments of $8.8 million based on observable price changes, and cumulative
downward adjustments of $3.1 million due to impairments and observable price changes.
During 2022, 2021, and 2020, the gross realized gains or losses from sales of available-for-sale investments
were not material.
8. ACQUISITIONS AND OTHER ARRANGEMENTS
In-process Research and Development Assets
The Company acquired Harpoon Medical, Inc (“Harpoon”) on December 1, 2017 and CardiAQ Valve
Technologies, Inc. (“CardiAQ”) on July 3, 2015. In-process research and development assets acquired as part of
these transactions were capitalized at fair value, which was determined using the income approach. This
approach determines fair value based on cash flow projections which are discounted to present value using a risk-
adjusted rate of return. Completion of successful design developments, bench testing, pre-clinical studies and
human clinical studies are required prior to selling any product. The risks and uncertainties associated with
completing development within a reasonable period of time include those related to the design, development, and
68
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. ACQUISITIONS AND OTHER ARRANGEMENTS (Continued)
manufacturability of the product, the success of pre-clinical and clinical studies, and the timing of regulatory
approvals.
In September 2022, the Company decided to exit the HARPOON program and recorded a $28.1 million
impairment charge to fully write off the in-process research and development assets. See Note 4 for further
information.
The valuation for CardiAQ assumed $97.7 million of additional research and development expenditures
would be incurred prior to the date of product introduction and that net cash inflows would commence in late
2018. As a result of certain design enhancements to increase the product’s commercial life and applicability to a
broader group of patients, the Company has incurred incremental research and development expenditures;
however, the Company expects an increase in the net cash inflows, commencing in 2024.
Upon completion of development, the underlying research and development intangible assets will be
amortized over their estimated useful lives.
Certain of the Company’s business acquisitions involve contingent consideration arrangements. Payment of
additional consideration in the future may be required, contingent upon the acquired business reaching certain
performance milestones, such as attaining specified sales levels or obtaining regulatory approvals. See Note 11
for further information.
Investments in Variable Interest Entities
Edwards has relationships with various variable interest entities that it does not consolidate as Edwards
lacks the power to direct the activities that significantly impact the economic success of these entities. The
Company’s maximum loss exposure to variable interest entities, prior to the exercise of options to acquire the
entities, is limited to its investments in the variable interest entities, which include equity investments, options to
acquire, and promissory notes.
In August 2022, the Company entered into an option agreement with a medical device company. Under the
option agreement, Edwards paid $47.1 million for an option to acquire the medical device company. The
$47.1 million option is included in “Other Assets” on the consolidated balance sheet.
In June 2022, the Company entered into a convertible promissory note and amended its existing warrant
agreement with a medical device company. Under the convertible promissory note agreement, the Company has
agreed to loan the medical device company up to $47.5 million, of which $32.5 million has been advanced as of
December 31, 2022. In addition, the Company amended its warrant agreement under which the Company had
previously paid $35.0 million for an option to acquire the medical device company. The amendment extends the
warrant right period. The $35.0 million warrant and the $32.5 million note receivable are included in “Other
Assets” on the consolidated balance sheet.
In May 2022, the Company entered into an option agreement with a medical technology company. Under
the option agreement, Edwards paid $60.0 million for an option to acquire the medical technology company, of
which $10 million was paid in 2021. The $60.0 million option is included in “Other Assets” on the consolidated
balance sheet.
In April 2021, the Company recorded $35.9 million, included in “Long-term Investments,” related to its
investment in a privately-held medical device company (the “Investee”), including an initial cash investment in
69
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. ACQUISITIONS AND OTHER ARRANGEMENTS (Continued)
the Investee’s preferred equity securities and other consideration. Also, in April 2021, the Company paid
$5.7 million, included in “Other Assets,” for an option to acquire the Investee. Per the agreement, the Company
may be required to invest up to an additional $9.9 million in the Investee’s preferred equity securities and up to
an additional $21.8 million for the option to acquire the Investee, depending on the achievement of certain
milestones, of which the Company invested $10.8 million in the fourth quarter of 2021 upon achievement of the
first milestone. The Company also agreed to loan the Investee up to $45.0 million under a secured promissory
note. As of December 31, 2022, there had been no borrowings under this secured promissory note.
In addition, Edwards has made equity investments through the NMTC program in limited liability
companies that are considered VIEs. For more information, see Note 7.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and in-process research and development assets resulting from purchase business combinations
are not subject to amortization. Other acquired intangible assets with finite lives are amortized over their
expected useful lives on a straight-line basis, or if reliably determinable, based on the pattern in which the
economic benefit of the asset is expected to be used. The Company expenses costs incurred to renew or extend
the term of acquired intangible assets.
In 2022, the Company recorded a $52.7 million impairment charge related to certain of its developed
technology and in-process research and development assets. See Note 4 for further information.
The changes in the carrying amount of goodwill, by segment, during the years ended December 31, 2022
and 2021 were as follows:
Goodwill at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$773.7
—
$68.3
(5.3)
$331.2
—
$1,173.2
(5.3)
Goodwill at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
773.7
—
63.0
(3.6)
331.2
—
1,167.9
(3.6)
Goodwill at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$773.7
$59.4
$331.2
$1,164.3
United
States
Europe
Rest of
World
Total
(in millions)
70
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
Other intangible assets consist of the following (in millions):
Finite-lived intangible assets
Patents . . . . . . . . . . . . . . . . . .
Developed technology . . . . .
Other . . . . . . . . . . . . . . . . . . .
Indefinite-lived intangible assets
In-process research and
development . . . . . . . . . . .
Weighted-
Average
Useful Life
(in years)
December 31,
2022
2021
Cost
Accumulated
Amortization
Net
Carrying
Value
Cost
Accumulated
Amortization
Net
Carrying
Value
8.8
12.2
10.0
11.3
$205.5
128.1
12.2
345.8
$(185.0)
(57.9)
(7.7)
(250.6)
$ 20.5
70.2
4.5
$185.7
153.9
12.4
$(184.2)
(55.5)
(6.8)
$
1.5
98.4
5.6
95.2
352.0
(246.5)
105.5
190.0
—
190.0
218.1
—
218.1
$535.8
$(250.6)
$285.2
$570.1
$(246.5)
$323.6
Amortization expense related to other intangible assets for the years ended December 31, 2022, 2021, and
2020 was $5.7 million, $7.7 million, and $5.4 million, respectively. Estimated amortization expense for each of
the years ending December 31 is as follows (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5.6
5.3
4.8
5.8
6.2
10. DEBT AND CREDIT FACILITIES
In June 2018, the Company issued $600.0 million of fixed-rate unsecured senior notes (the “Notes”) due
June 15, 2028. Interest is payable semi-annually in arrears, with payments due in June and December of each
year. The Company may redeem the Notes, in whole or in part, at any time and from time to time at specified
redemption prices. In addition, upon the occurrence of certain change of control triggering events, the Company
may be required to repurchase all or a portion of the Notes at a price equal to 101% of their principal amount,
plus accrued and unpaid interest. The Notes also include covenants that limit the Company’s ability to incur
secured indebtedness, enter into sale and leaseback transactions, and consolidate, merge, or transfer all or
substantially all of its assets.
71
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. DEBT AND CREDIT FACILITIES (Continued)
The following is a summary of the Notes as of December 31, 2022 and 2021:
Fixed-rate 4.3% Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
2021
Amount
(in millions)
$600.0
(0.9)
(2.8)
Effective
Interest
Rate
Amount
(in millions)
4.329% $600.0
(1.0)
(3.3)
Effective
Interest
Rate
4.329%
Total carrying amount
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$596.3
$595.7
As of December 31, 2022 and 2021, the fair value of the Notes was $575.2 million and $675.4 million,
respectively, based on observable market prices in less active markets and categorized as Level 2 (Note 11). The
debt issuance costs, as well as the discount, are being amortized to interest expense over the term of the Notes.
In July 2022, the Company and certain of its subsidiaries, as borrowers, entered into a new Five-Year Credit
Agreement (“the New Credit Agreement”) with the lenders thereto, which provides for a $750.0 million multi-
currency unsecured revolving credit facility and replaces the Company’s prior credit agreement and related
revolving credit facility. The New Credit Agreement matures on July 15, 2027. Subject to certain terms and
conditions and the agreement of the lenders, the Company may increase the amount available under the New
Credit Agreement by up to an additional $250.0 million in the aggregate and extend the maturity date for an
additional year. Borrowings under the New Credit Agreement bear interest at a variable rate based on the
Secured Overnight Financing Rate (“SOFR”), plus a spread ranging from 0.785% to 1.3%, depending on the
leverage ratio or credit rating, as defined in the agreement. The Company will also pay a facility fee ranging from
0.09% to 0.20%, depending on the Company’s leverage ratio or credit rating, on the entire credit commitment
available, whether or not drawn. The facility fee is expensed as incurred. During 2022, under the New Credit
Agreement, the spread over SOFR was 0.9% and the facility fee was 0.1%, and under the previous credit
agreement, the spread over the London interbank offered rate was 0.9% and the facility fee was 0.1%. Issuance
costs of $2.1 million are being amortized to interest expense over the term of the New Credit Agreement. As of
December 31, 2022 and 2021, there were no borrowings outstanding. Amounts outstanding under the New Credit
Agreement, if any from time to time, are classified as long-term obligations in accordance with the terms of the
agreement. The New Credit Agreement is unsecured and contains various financial and other covenants,
including a maximum leverage ratio, as defined in the agreement. The Company was in compliance with all
covenants under the New Credit Agreement at December 31, 2022.
The weighted-average interest rate under all debt obligations, including the impact of the cross currency
swap contract (see Note 12), was 3.4% at both December 31, 2022 and 2021, respectively.
11. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. The Company prioritizes the inputs used to determine fair
values in one of the following three categories:
Level 1—Quoted market prices in active markets for identical assets or liabilities.
72
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Level 2—Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.
Level 3—Unobservable inputs that are not corroborated by market data.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its
entirety falls has been determined based on the lowest level input that is significant to the fair value measurement
in its entirety.
The consolidated financial statements include financial instruments for which the fair market value of such
instruments may differ from amounts reflected on a historical cost basis. Financial instruments of the Company
consist of cash deposits, accounts and other receivables, investments, accounts payable, certain accrued
liabilities, and borrowings under a revolving credit agreement. The carrying value of these financial instruments
generally approximates fair value due to their short-term nature. Financial instruments also include Notes
payable. See Note 10 for further information on the fair value of the Notes payable.
73
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the Company’s financial instruments which are measured at fair value on a
recurring basis as of December 31, 2022 and 2021 (in millions):
December 31, 2022
Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale investments:
Corporate debt securities . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
United States government and agency
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
Investments held for deferred compensation plans . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities . . . . . . . . . . . . . .
Other liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Level 1
Level 2
Level 3
Total
$
0.4
$ —
$ —
$
0.4
—
—
37.1
—
112.1
—
980.3
366.6
94.5
2.5
—
65.5
—
—
—
—
—
—
980.3
366.6
131.6
2.5
112.1
65.5
$149.6
$1,509.4
$ —
$1,659.0
$ —
—
—
$ —
$
$
27.2
—
—
27.2
$ —
26.2
14.0
$40.2
$
$
27.2
26.2
14.0
67.4
December 31, 2021
Assets
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale investments:
Bank time deposits . . . . . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . .
United States government and agency
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper
. . . . . . . . . . . . . . . . . . . . . . .
Municipal securities . . . . . . . . . . . . . . . . . . . . . .
Investments held for deferred compensation plans . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities . . . . . . . . . . . . . .
Other liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15.2
$
30.7
$ —
$
45.9
—
—
—
28.4
—
—
130.7
—
2.5
1,390.8
512.6
118.9
127.7
2.8
—
55.3
—
—
—
—
—
—
—
—
2.5
1,390.8
512.6
147.3
127.7
2.8
130.7
55.3
$174.3
$2,241.3
$ —
$2,415.6
$ —
—
—
$ —
$
$
3.9
—
—
3.9
$ —
62.0
14.0
$76.0
$
$
3.9
62.0
14.0
79.9
74
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
Cash Equivalents and Available-for-sale Investments
The Company estimates the fair values of its money market funds based on quoted prices in active markets
for identical assets. The Company estimates the fair values of its time deposits, commercial paper, United States
government and agency securities, municipal securities, asset-backed securities, and corporate debt securities by
taking into consideration valuations obtained from third-party pricing services. The pricing services use industry
standard valuation models, including both income and market-based approaches, for which all significant inputs
are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades and
broker-dealer quotes on the same or similar securities, benchmark yields, credit spreads, prepayment and default
projections based on historical data, and other observable inputs.
Deferred Compensation Plans
The Company holds investments in a variety of money market and mutual funds related to its deferred
compensation plans. The fair values of these investments are based on quoted market prices.
Derivative Instruments
The Company uses derivative financial instruments in the form of foreign currency forward exchange
contracts and cross currency swap contracts to manage foreign currency exposures. All derivatives contracts are
recognized on the balance sheet at their fair value. The fair value of the derivative financial instruments was
estimated based on quoted market foreign exchange rates, cross currency swap basis rates, and market discount
rates. Judgment was employed in interpreting market data to develop estimates of fair value; accordingly, the
estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions or valuation methodologies could have a
material effect on the estimated fair value amounts.
Contingent Consideration Liabilities
Certain of the Company’s acquisitions involve contingent consideration arrangements. Payment of
additional consideration is contingent upon the acquired company reaching certain performance milestones, such
as attaining specified sales levels or obtaining regulatory approvals. These contingent consideration liabilities are
measured at estimated fair value using either a probability weighted discounted cash flow analysis or a Monte
Carlo simulation model, both of which consider significant unobservable inputs. These inputs as of December 31,
2022 include (1) the discount rate used to present value the projected cash flows (ranging from 3.8% to 12.8%;
weighted average of 4.1%), (2) the probability of milestone achievement (ranging from 0% to 50%; weighted
average of 39.6%), and (3) the projected payment dates (2026). The weighted average of each of the above inputs
was determined based on the relative fair value of each obligation. The use of different assumptions could have a
material effect on the estimated fair value amounts.
75
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. FAIR VALUE MEASUREMENTS (Continued)
The following table summarizes the changes in fair value of the contingent consideration and the other
liability for the years ended December 31, 2022 and 2021 (in millions):
Contingent
Consideration
Other
Liability
Fair value, December 31, 2020 . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, December 31, 2021 . . . . . . . . . . . . . . . . . . .
Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 186.1
—
(124.1)
$ 62.0
(35.8)
Fair value, December 31, 2022 . . . . . . . . . . . . . . . . . . .
$ 26.2
$ —
14.0
—
$14.0
—
$14.0
Total
$ 186.1
14.0
(124.1)
$ 76.0
(35.8)
$ 40.2
The contingent consideration liabilities related to certain of the Company’s previous business acquisitions
were reduced in 2022 by $30.9 million due to both the changes in projected probabilities of milestone
achievement and the Company’s decision during the third quarter of 2022 to exit its HARPOON surgical mitral
repair system program (see Note 4). The contingent consideration liabilities were reduced in 2021 by
$123.2 million due to changes in the projected probabilities of milestone achievements and the projected timing
of cash inflows from product sales.
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company uses derivative financial instruments to manage its currency exchange rate risk and its
interest rate risk as summarized below. Notional amounts are stated in United States dollar equivalents at spot
exchange rates at the respective dates. The Company does not enter into these arrangements for trading or
speculation purposes.
Notional Amount
As of December 31,
2022
2021
(in millions)
Foreign currency forward exchange contracts . . . . . . . . . .
Cross currency swap contracts . . . . . . . . . . . . . . . . . . . . . .
$1,678.4
300.0
$1,498.8
300.0
The following table presents the location and fair value amounts of derivative instruments reported in the
consolidated balance sheets (in millions):
Fair Value
As of December 31,
Balance Sheet Location
2022
2021
Derivatives designated as hedging instruments
Assets
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets
Cross currency swap contracts . . . . . . . . . . . . . . . . . . . . . . . Other assets
$24.9
$40.6
Liabilities
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued and other liabilities
Foreign currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
$20.7
$ 6.5
$36.2
$19.1
$ 3.9
$ —
76
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
The following table presents the effect of master-netting agreements and rights of offset on the consolidated
balance sheets (in millions):
Gross Amounts Not
Offset in the
Consolidated
Balance Sheet
December 31, 2022
Derivative Assets
Foreign currency contracts . . . . . . . . .
Cross currency swap contracts . . . . . .
Derivative Liabilities
Foreign currency contracts . . . . . . . . .
December 31, 2021
Derivative Assets
Foreign currency contracts . . . . . . . . .
Cross currency swap contracts . . . . . .
Derivative Liabilities
Foreign currency contracts . . . . . . . . .
Gross Amounts
Offset in the
Consolidated
Balance Sheet
Net Amounts
Presented in the
Consolidated
Balance Sheet
Gross
Amounts
Financial
Instruments
Cash
Collateral
Received
Net
Amount
$24.9
$40.6
$27.2
$36.2
$19.1
$ 3.9
$—
$—
$—
$—
$—
$—
$24.9
$40.6
$27.2
$36.2
$19.1
$ 3.9
$(12.0)
$ —
$(12.0)
$ (2.8)
$ —
$ (2.8)
$—
$—
$—
$—
$—
$—
$12.9
$40.6
$15.2
$33.4
$19.1
$ 1.1
The following tables present the effect of derivative and non-derivative hedging instruments on the
consolidated statements of operations and consolidated statements of comprehensive income:
Amount of Gain or (Loss)
Recognized in OCI on
Derivative (Effective Portion)
2022
2021
(in millions)
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into
Income
Cash flow hedges
Foreign currency contracts . . . .
$81.7
$56.7
Cost of sales
Selling, general, and
administrative
expenses
Amount of Gain or (Loss)
Recognized in OCI on
Derivative (Effective Portion)
2022
2021
(in millions)
Location of Gain or (Loss)
Reclassified from
Accumulated OCI into
Income
Amount of Gain or (Loss)
Reclassified from
Accumulated OCI into Income
2022
2021
(in millions)
$88.4
$(23.0)
$ —
$ (0.6)
Amount of Gain or (Loss)
Recognized in Income on
Derivative (Amount
Excluded from
Effectiveness Testing)
2022
2021
(in millions)
Net investment hedges
Cross currency swap
contracts . . . . . . . . . . . . . . .
$21.6
$18.4
Interest expense
$7.0
$6.4
The cross currency swap contracts have an expiration date of June 15, 2028. At maturity of the cross
currency swap contracts, the Company will deliver the notional amount of €257.2 million and will receive
77
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
$300.0 million from the counterparties. The Company will receive semi-annual interest payments from the
counterparties based on a fixed interest rate until maturity of the agreements.
Location of Gain or
(Loss) Recognized in
Income on Derivative
Fair value hedges
Foreign currency contracts . . . . . . Other income, net
Location of Gain or
(Loss) Recognized in
Income on Derivative
Amount of Gain or
(Loss) Recognized in
Income on Derivative
2022
2021
2020
(in millions)
$(3.9)
$11.6
$(1.4)
Amount of Gain or
(Loss) Recognized in
Income on Derivative
2022
2021
2020
(in millions)
Derivatives not designated as
hedging instruments
Foreign currency contracts . . . . . . Other income, net
$44.0
$27.4
$(15.1)
The following tables present the effect of fair value and cash flow hedge accounting on the consolidated
statements of operations:
Location and Amount of Gain or (Loss)
Recognized in Income on Fair Value
and Cash Flow Hedging Relationships
Twelve Months Ended December 31, 2022
Selling,
general, and
administrative
expenses
Other
Income,
net
Cost of
sales
Total amounts of income and expense line items shown in the consolidated
statements of operations in which the effects of fair value or cash flow
hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,080.4)
$(1,567.6)
$ 2.6
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . .
Amount excluded from effectiveness testing recognized in
earnings based on an amortization approach . . . . . . . . . . .
—
—
—
—
—
—
5.5
(5.5)
1.6
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI
into income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88.4
—
—
78
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)
Location and Amount of Gain or (Loss)
Recognized in Income on Fair Value
and Cash Flow Hedging Relationships
Twelve Months Ended December 31, 2021
Selling,
general, and
administrative
expenses
Other
Income,
net
Cost of
sales
Total amounts of income and expense line items shown in the consolidated
statements of operations in which the effects of fair value or cash flow
hedges are recorded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,248.9)
$(1,493.7)
$12.7
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives designated as hedging instruments . . . . . . . . . . .
Amount excluded from effectiveness testing recognized in
earnings based on an amortization approach . . . . . . . . . . .
—
—
—
—
—
—
(9.0)
9.0
2.6
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI
into income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23.0)
(0.6)
—
The Company expects that during 2023 it will reclassify to earnings a $29.2 million gain currently recorded
in “Accumulated Other Comprehensive Loss.” For the years ended December 31, 2022, 2021, and 2020, the
Company did not record any gains or losses due to hedge ineffectiveness.
79
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS
Defined Benefit Plans
The Company maintains defined benefit pension plans in Japan and certain European countries.
Years Ended
December 31,
2022
2021
(in millions)
Change in projected benefit obligation:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements and curtailment gain . . . . . . . . . . . . . . . . . . .
Currency exchange rate changes and other . . . . . . . . . . .
$117.9
5.5
0.5
1.6
(22.6)
(0.6)
(0.3)
(1.8)
(6.1)
$ 126.2
6.5
0.4
1.5
(6.1)
(2.5)
(0.5)
—
(7.6)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 94.1
$ 117.9
Change in fair value of plan assets:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . .
Participant contributions . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency exchange rate changes and other . . . . . . . . . . .
$ 76.9
(4.9)
3.5
1.6
(1.8)
(0.6)
(4.1)
$ 73.3
5.8
3.1
1.5
—
(2.5)
(4.3)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 70.6
$ 76.9
Funded Status
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . .
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (94.1)
70.6
$(117.9)
76.9
Underfunded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (23.5)
$ (41.0)
Net amounts recognized on the consolidated balance
sheet:
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 23.5
$ 41.0
Accumulated other comprehensive loss, net of tax:
Net actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Net prior service credit
. . . . . . . . . .
Deferred income tax (expense) benefit
$
1.5
5.3
(1.1)
$ (16.4)
6.0
2.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5.7
$
(8.0)
The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $86.7 million and
$113.3 million as of December 31, 2022 and 2021, respectively. The projected benefit obligation and ABO were
in excess of plan assets for all pension plans as of December 31, 2022 and 2021.
80
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
The components of net periodic pension benefit cost are as follows (in millions):
Service cost, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements and curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service credit . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended
December 31,
2022
2021
2020
$ 5.5
0.5
(1.5)
0.1
0.5
(0.7)
$ 6.5
0.4
(1.1)
—
1.7
(0.7)
$ 6.3
0.5
(1.0)
—
1.6
(0.7)
Net periodic pension benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4.4
$ 6.8
$ 6.7
Expected long-term returns for each of the plans’ strategic asset classes were developed through
consultation with investment advisors. Several factors were considered, including a survey of investment
managers’ expectations, current market data, minimum guaranteed returns in certain insurance contracts, and
historical market returns over long periods. Using policy target allocation percentages and the asset class
expected returns, a weighted-average expected return was calculated.
To select the discount rates for the defined benefit pension plans, the Company uses a modeling process that
involves matching the expected duration of its benefit plans to a yield curve constructed from a portfolio of
AA-rated fixed-income debt instruments, or their equivalent. For each country, the Company uses the implied
yield of this hypothetical portfolio at the appropriate duration as a discount rate benchmark.
The weighted-average assumptions used to determine the benefit obligations are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . .
Social securities increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
2021
2.5% 0.5%
2.9% 2.6%
1.5% 2.5%
1.8% 1.6%
2.2% 1.8%
The weighted-average assumptions used to determine the net periodic pension benefit cost are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash balance interest crediting rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social securities increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years ended
December 31,
2022
2021
2020
0.5% 0.3% 0.5%
2.1% 1.5% 1.5%
2.6% 2.6% 2.7%
1.5% 2.5% 1.5%
1.6% 1.6% 1.6%
1.8% 1.8% 1.8%
81
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
Plan Assets
The Company’s investment strategy for plan assets is to seek a competitive rate of return relative to an
appropriate level of risk and to earn performance rates of return in accordance with the benchmarks adopted for
each asset class. Risk management practices include diversification across asset classes and investment styles,
and periodic rebalancing toward asset allocation targets.
The Administrative and Investment Committee decides on the defined benefit plan provider in each location
and that provider decides the target allocation for the Company’s defined benefit plan at that location. The target
asset allocation selected reflects a risk/return profile the Company feels is appropriate relative to the plans’
liability structure and return goals. In certain plans, asset allocations may be governed by local requirements.
Target weighted-average asset allocations at December 31, 2022, by asset category, are as follows:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.7%
41.5%
10.7%
17.1%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0%
The fair values of the Company’s defined benefit plan assets at December 31, 2022 and 2021, by asset
category, are as follows (in millions):
December 31, 2022
Level 1
Level 2
Level 3
Total
Asset Category
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
United States equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
United States government bonds . . . . . . . . . . . . . . . . . . . . .
International government bonds . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3.6
$ —
$—
$ 3.6
1.5
17.5
4.4
25.6
—
—
—
—
—
—
—
7.6
3.5
—
—
—
—
—
—
—
0.8
1.5
17.5
4.4
25.6
7.6
3.5
0.8
Total plan assets measured at fair value . . . . . . . . . . . .
$52.6
$11.1
$ 0.8
$64.5
Alternative investments measured at net asset value (a) . . . . . . .
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1
$70.6
82
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
December 31, 2021
Level 1
Level 2
Level 3
Total
Asset Category
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
United States equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
United States government bonds . . . . . . . . . . . . . . . . . . . . .
International government bonds . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5.4
$ —
$—
$ 5.4
1.6
16.3
6.2
26.3
—
—
—
—
—
—
—
7.6
3.5
—
—
—
—
—
—
—
0.9
1.6
16.3
6.2
26.3
7.6
3.5
0.9
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$55.8
$11.1
$ 0.9
$67.8
Alternative investments measured at net asset value (a) . . . . . . .
Total plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1
$76.9
(a) Certain investments that were measured at net asset value per share have not been classified in the fair value
hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair
value hierarchy to the total plan assets.
The following table summarizes the changes in fair value of the Company’s defined benefit plan assets that
have been classified as Level 3 for the years ended December 31, 2022 and 2021 (in millions):
Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . .
Currency exchange rate impact . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets: . . . . . . . . . . . . . . . . . . . . . .
Relating to assets still held at December 31, 2022 . . . . .
Purchases, sales and settlements . . . . . . . . . . . . . . . . . . .
Currency exchange rate impact . . . . . . . . . . . . . . . . . . . .
Insurance
Contracts
$ 1.0
(0.1)
0.9
0.2
(0.2)
(0.1)
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.8
Equity and debt securities are valued at fair value based on quoted market prices reported on the active
markets on which the individual securities are traded. Real estate investments are valued by discounting to
present value the cash flows expected to be generated by the specific properties. Investments in mortgages are
valued at cost, which is deemed to approximate its fair value. The insurance contracts are valued at the cash
surrender value of the contracts, which is deemed to approximate its fair value. Alternative investments include
hedge funds, private equity funds and other miscellaneous investments, and are valued using the net asset value
provided by the fund administrator as a practical expedient. The net asset value is based on the fair value of the
underlying assets owned by the fund divided by the number of shares outstanding.
83
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. EMPLOYEE BENEFIT PLANS (Continued)
The following benefit payments, which reflect expected future service, as appropriate, at December 31,
2022, are expected to be paid (in millions):
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028-2032 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7.1
5.2
5.3
6.4
7.6
36.4
As of December 31, 2022, expected employer contributions for 2023 are $2.4 million.
Defined Contribution Plans
The Company’s employees in the United States and Puerto Rico are eligible to participate in a qualified
defined contribution plan. In the United States, participants may contribute up to 25% of their eligible
compensation (subject to tax code limitation) to the plan. Edwards Lifesciences matches the first 4% of the
participant’s annual eligible compensation contributed to the plan on a dollar-for-dollar basis. Edwards
Lifesciences matches the next 2% of the participant’s annual eligible compensation to the plan on a 50% basis. In
Puerto Rico, participants may contribute up to 25% of their annual compensation (subject to tax code limitation)
to the plan. Edwards Lifesciences matches the first 4% of participant’s annual eligible compensation contributed
to the plan on a 50% basis. The Company also provides a 2% profit sharing contribution calculated on eligible
earnings for each employee. Matching contributions relating to Edwards Lifesciences employees were
$45.1 million, $38.6 million, and $36.6 million in 2022, 2021, and 2020, respectively.
The Company also has nonqualified deferred compensation plans for a select group of employees. The plans
provide eligible participants the opportunity to defer eligible compensation to future dates specified by the
participant with a return based on investment alternatives selected by the participant. The amount accrued under
these nonqualified plans was $112.6 million and $130.9 million at December 31, 2022 and 2021, respectively.
14. COMMON STOCK
Treasury Stock
In May 2021, the Board of Directors approved a stock repurchase program authorizing the Company to
purchase up to $1.0 billion of the Company’s common stock. In July 2022, the Board of Directors approved an
additional $1.5 billion of repurchases of the Company’s common stock under this program, effective July 28,
2022. The repurchase program does not have an expiration date. Stock repurchased under these programs may be
used to offset obligations under the Company’s employee stock-based benefit programs and stock-based business
acquisitions, and will reduce the total shares outstanding.
During 2022, 2021, and 2020, the Company repurchased 20.1 million, 5.8 million, and 3.1 million shares,
respectively, at an aggregate cost of $1,727.1 million, $512.8 million, and $625.4 million, respectively, including
shares purchased under a Rule 10b5-1 trading plan, the accelerated share repurchase (“ASR”) agreements
described below, and shares acquired to satisfy tax withholding obligations in connection with the vesting of
restricted stock units issued to employees. The timing and size of any future stock repurchases are subject to a
variety of factors, including expected dilution from stock plans, cash capacity, and the market price of the
Company’s common stock.
84
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
Accelerated Share Repurchase
During 2022 and 2021, the Company entered into ASR agreements providing for the repurchase of the
Company’s common stock based on the volume-weighted average price (“VWAP”) of the Company’s common
stock during the term of the applicable agreements, less a discount. The following table summarizes the terms of
the ASR agreements (dollars and shares in millions, except per share data):
Initial Delivery
Final Settlement
Agreement Date
Amount
Paid
Shares
Received
Price per
Share
Value of
Shares as %
of Contract
Value
Settlement
Date
Total
Shares
Received
February 2021 . . . . . . . . . . . . .
January 2022 . . . . . . . . . . . . . .
October 2022 . . . . . . . . . . . . . .
$250.0
$250.0
$750.0
2.4
1.9
8.3
$ 83.86
$104.87
$ 72.43
80% March 2021
80%
80%
February 2022
December 2022
3.0
2.3
10.3
Average
Price
per
Share
$ 84.51
$110.31
$ 72.91
The ASR agreements were each accounted for as two separate transactions: (1) the value of the initial
delivery of shares was recorded as shares of common stock acquired in a treasury stock transaction on the
acquisition date and (2) the remaining amount of the purchase price paid was recorded as a forward contract
indexed to the Company’s own common stock and was recorded in “Additional Paid-in Capital” on the
consolidated balance sheets. The initial delivery of shares resulted in an immediate reduction of the outstanding
shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per
share. The Company determined that the forward contracts indexed to the Company’s common stock met all the
applicable criteria for equity classification and, therefore, were not accounted for as a derivative instrument.
Employee and Director Stock Plans
The Edwards Lifesciences Corporation Long-term Stock Incentive Compensation Program (the “Program”)
provides for the grant of incentive and non-qualified stock options, restricted stock, and restricted stock units for
eligible employees of the Company. Under the Program, these grants are awarded at a price equal to the fair
market value at the date of grant based upon the closing price on that date. Options to purchase shares of the
Company’s common stock granted under the Program generally vest over predetermined periods of between
three to four years and expire seven years after the date of grant. Service-based restricted stock units of the
Company’s common stock granted under the Program generally vest over predetermined periods, typically four
years after the date of grant. Market-based restricted stock units of the Company’s common stock granted under
the Program vest over three years based on a combination of certain service and market conditions. The actual
number of shares issued will be determined based on the Company’s total stockholder return relative to a
selected industry peer group. Under the Program, the number of shares of common stock authorized for issuance
under the Program was 327.6 million shares. No more than 33.6 million shares reserved for issuance may be
granted in the form of restricted stock or restricted stock units.
The Company also maintains the Nonemployee Directors Stock Incentive Compensation Program (the
“Nonemployee Directors Program”). Under the Nonemployee Directors Program, annually each nonemployee
director may receive up to 120,000 stock options or 48,000 restricted stock units of the Company’s common
stock, or a combination thereof, provided that in no event may the total value of the combined annual award
exceed $0.3 million. These grants generally vest over one year from the date of grant. Under the Nonemployee
Directors Program, an aggregate of 8.4 million shares of the Company’s common stock has been authorized for
issuance.
85
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
The Company has an employee stock purchase plan for United States employees and a plan for employees
outside of the United States (collectively “ESPP”). Under the ESPP, eligible employees may purchase shares of
the Company’s common stock at 85% of the lower of the fair market value of Edwards Lifesciences common
stock on the effective date of subscription or the date of purchase. Under the ESPP, employees can authorize the
Company to withhold up to 15% of their compensation for common stock purchases, subject to certain
limitations. The ESPP is available to all active employees of the Company paid from the United States payroll
and to eligible employees of the Company outside of the United States, to the extent permitted by local law. The
ESPP for United States employees is qualified under Section 423 of the Internal Revenue Code. The number of
shares of common stock authorized for issuance under the ESPP was 50.4 million shares.
The fair value of each option award and employee stock purchase subscription is estimated on the date of
grant using the Black-Scholes option valuation model that uses the assumptions noted in the following tables.
The risk-free interest rate is estimated using the United States Treasury yield curve and is based on the expected
term of the award. Expected volatility is estimated based on a blend of the weighted-average of the historical
volatility of Edwards Lifesciences’ stock and the implied volatility from traded options on Edwards Lifesciences’
stock. The expected term of awards granted is estimated from the vesting period of the award, as well as
historical exercise behavior, and represents the period of time that awards granted are expected to be outstanding.
The Company uses historical data to estimate forfeitures and has estimated an annual forfeiture rate of 6.4%.
The Black-Scholes option pricing model was used with the following weighted-average assumptions for
options granted during the following periods:
Option Awards
Years Ended December 31,
2022
2021
2020
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0%
0.8%
0.3%
None
31.4%
5.0
$34.59
None
33.5%
5.0
$28.90
None
33.4%
5.0
$21.70
The Black-Scholes option pricing model was used with the following weighted-average assumptions for
ESPP subscriptions granted during the following periods:
ESPP
Years Ended December 31,
2022
2021
2020
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected term (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value, per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.5%
0.1%
1.3%
None
32.0%
0.6
$28.18
None
36.6%
0.6
$23.07
None
33.1%
0.6
$16.61
The fair value of market-based restricted stock units was determined using a Monte Carlo simulation model,
which uses multiple input variables to determine the probability of satisfying the market condition requirements.
86
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
The weighted-average assumptions used to determine the fair value of the market-based restricted stock units
during the years ended December 31, 2022, 2021, and 2020 included a risk-free interest rate of 2.9%, 0.4%, and
0.2%, respectively, and an expected volatility rate of 33.9%, 34.4%, and 32.7%, respectively.
Stock option activity during the year ended December 31, 2022 under the Program and the Nonemployee
Directors Program was as follows (in millions, except years and per-share amounts):
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . 12.3
1.6
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2.1)
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.2)
Options forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Weighted-
Average
Exercise
Price
$ 52.84
104.52
30.47
82.81
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . 11.6
63.67
3.4 years
$204.5
Exercisable as of December 31, 2022 . . . . . . . . . . . . . . . . .
7.9
51.28
2.5 years
$197.3
Vested and expected to vest as of December 31, 2022 . . . 11.1
62.43
3.3 years
$203.5
The following table summarizes nonvested restricted stock unit activity during the year ended December 31,
2022 under the Program and the Nonemployee Directors Program (in millions, except per-share amounts):
Nonvested as of December 31, 2021 . . . . . . . . . . . . . . . . . .
Granted (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonvested as of December 31, 2022 . . . . . . . . . . . . . . . . . .
Weighted-
Average
Grant-Date
Fair Value
$ 73.94
102.26
64.04
83.04
92.30
Shares
2.3
0.9
(1.1)
(0.1)
2.0
(a) The shares granted include 0.1 million shares of market-based restricted stock units granted during 2022,
which represents the target number of shares to be issued, and 0.1 million shares related to a previous year’s
grant of market-based restricted stock units since the payout percentage achieved at the end of the
performance period was in excess of target. As described above, the actual number of shares ultimately
issued is determined based on the Company’s total stockholder return relative to a selected industry peer
group.
The intrinsic value of stock options exercised and restricted stock units vested during the years ended
December 31, 2022, 2021, and 2020 were $264.5 million, $359.8 million, and $323.5 million, respectively. The
intrinsic value of stock options is calculated as the amount by which the market price of the Company’s common
stock exceeds the exercise price of the option. During the years ended December 31, 2022, 2021, and 2020, the
Company received cash from exercises of stock options of $64.8 million, $82.2 million, and $79.2 million,
respectively, and tax benefits from exercises of stock options and vesting of restricted stock units of
$56.9 million, $76.5 million, and $72.1 million, respectively. The total grant-date fair value of stock options
87
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMON STOCK (Continued)
vested during the years ended December 31, 2022, 2021, and 2020 were $40.4 million, $36.2 million, and
$34.0 million, respectively.
As of December 31, 2022, the total remaining unrecognized compensation expense related to nonvested
stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan
subscription awards amounted to $195.1 million, which will be amortized on a straight-line basis over each
award’s requisite service period. The weighted-average remaining requisite service period is 31 months.
15. ACCUMULATED OTHER COMPREHENSIVE LOSS
Presented below is a summary of activity for each component of “Accumulated Other Comprehensive Loss”
for the years ended December 31, 2022, 2021, and 2020.
Foreign
Currency
Translation
Adjustments
Unrealized
Gain (Loss) on
Hedges
Unrealized
Gain (Loss) on
Available-for-sale
Investments
Unrealized
Pension
(Costs)
Credits (a)
Total
Accumulated
Other
Comprehensive
Loss
December 31, 2019 . . . . . . . . . . . . . . . .
Other comprehensive income (loss)
$(154.8)
$ 12.5
before reclassifications . . . . . . . . .
35.7
(34.8)
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax benefit
(expense) . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . .
Other comprehensive (loss) income
(6.4)
(19.2)
3.1
(122.4)
13.8
(27.7)
(in millions)
$ 1.7
8.0
0.3
(1.4)
8.6
$(15.4)
$(156.0)
(5.5)
3.4
0.9
0.4
(24.4)
15.9
(19.6)
(161.1)
before reclassifications . . . . . . . . .
(39.2)
66.3
(29.2)
12.8
10.7
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (expense)
benefit
. . . . . . . . . . . . . . . . . . . . . .
December 31, 2021 . . . . . . . . . . . . . . . .
Other comprehensive (loss) income
(6.4)
(4.5)
(172.5)
12.0
(20.9)
29.7
8.6
5.1
(6.9)
1.0
(2.2)
(8.0)
15.2
(22.5)
(157.7)
before reclassifications . . . . . . . . .
(33.9)
75.2
(77.9)
17.3
(19.3)
Amounts reclassified from
accumulated other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax (expense)
benefit
. . . . . . . . . . . . . . . . . . . . . .
(7.0)
(5.4)
(84.5)
3.4
18.8
0.4
(0.1)
(3.5)
(72.8)
(5.1)
December 31, 2022 . . . . . . . . . . . . . . . .
$(218.8)
$ 23.8
$(65.6)
$ 5.7
$(254.9)
88
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. ACCUMULATED OTHER COMPREHENSIVE LOSS (Continued)
(a) For the years ended December 31, 2022, 2021, and 2020, the change in unrealized pension costs consisted
of the following (in millions):
Pre-Tax
Amount
Tax (Expense)
Benefit
Net of
Tax
Amount
2022
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial gain arising during period . . . . . . . . . . . . .
$ —
(0.7)
(0.7)
17.9
Unrealized pension credits, net . . . . . . . . . . . . . . . . . . . .
$17.2
2021
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial gain arising during period . . . . . . . . . . . . .
$ 0.1
(0.7)
(0.6)
14.4
Unrealized pension credits, net . . . . . . . . . . . . . . . . . . . .
$13.8
2020
Prior service credit arising during period . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Amortization of prior service credit
Net prior service cost arising during period . . . . . . . . . .
Net actuarial loss arising during period . . . . . . . . . . . . .
$ 0.6
(0.7)
(0.1)
(4.5)
Unrealized pension costs, net
. . . . . . . . . . . . . . . . . . . . .
$ (4.6)
$(1.1)
0.3
(0.8)
(2.7)
$(3.5)
$—
0.1
0.1
(2.3)
$(2.2)
$(0.2)
0.1
(0.1)
0.5
$ 0.4
$ (1.1)
(0.4)
(1.5)
15.2
$13.7
$ 0.1
(0.6)
(0.5)
12.1
$11.6
$ 0.4
(0.6)
(0.2)
(4.0)
$ (4.2)
89
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. ACCUMULATED OTHER COMPREHENSIVE LOSS (Continued)
The following table provides information about amounts reclassified from “Accumulated Other
Comprehensive Loss” (in millions):
Details about Accumulated Other Comprehensive Loss
Components
Foreign currency translation adjustments . . . . . . . . . .
Years Ended
December 31,
2022
2021
Affected Line on Consolidated
Statements of Operations
$ 7.0
(1.7)
$ 6.4 Other income, net
(1.6) Provision for income taxes
$ 5.3
$ 4.8 Net of tax
Gain (loss) on hedges . . . . . . . . . . . . . . . . . . . . . . . . .
$ 88.4
$(23.0) Cost of sales
Selling, general, and administrative
(0.6)
expenses
11.6 Other income, net
(12.0) Total before tax
4.6 Provision for income taxes
—
(3.9)
84.5
(22.2)
$ 62.3
$ (7.4) Net of tax
Gain (loss) on available-for-sale investments . . . . . .
$(18.8) $ (8.6) Other income, net
Amortization of pension adjustments . . . . . . . . . . . . .
4.6
2.1 Provision for income taxes
$(14.2) $ (6.5) Net of tax
$ 0.1
—
$ (1.0) Other income, net
0.1 Provision for income taxes
$ 0.1
$ (0.9) Net of tax
16. OTHER INCOME, NET
Foreign exchange losses (gains), net . . . . . . . . . . . . . . . . . . . . . .
Gain on insurance settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-service cost components of net periodic pension benefit
Years Ended December 31,
2022
2021
2020
(in millions)
$ (5.0)
—
(5.8)
$(12.3)
—
(0.6)
$ 1.2
(3.8)
1.1
cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.1)
—
0.3
(2.2)
0.4
1.0
Total other income, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(2.6)
$(12.7)
$(11.5)
90
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES
The Company’s income before provision for income taxes was generated from operations in the United
States and outside of the United States as follows (in millions):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . . . .
$ 634.4
1,133.0
$ 610.9
1,091.1
$151.3
765.4
$1,767.4
$1,702.0
$916.7
Years Ended December 31,
2022
2021
2020
The provision for income taxes consists of the following (in millions):
Years Ended December 31,
2022
2021
2020
Current
United States:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . .
$ 369.1
60.6
66.7
$125.2
25.1
92.6
$ 23.4
48.2
73.9
Current income tax expense . . . . . . . . . . . . . . . . . .
$ 496.4
$242.9
$145.5
Deferred
United States:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside of the United States, including Puerto Rico . . .
$(187.7)
(58.9)
(4.3)
$ (9.4)
(25.4)
(9.2)
$ 11.0
(32.9)
(30.3)
Deferred income tax benefit . . . . . . . . . . . . . . . . . .
(250.9)
(44.0)
(52.2)
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 245.5
$198.9
$ 93.3
91
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
The components of deferred tax assets and liabilities are as follows (in millions):
December 31,
2022
2021
Deferred tax assets
Capitalized research and development expenses (a)
. . . .
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . .
Benefits from uncertain tax positions . . . . . . . . . . . . . . .
Net tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow and net investment hedges . . . . . . . . . . . . . .
State income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liability obligations . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 199.7
100.6
42.1
160.8
71.7
93.7
11.9
6.6
0.3
0.6
6.7
1.9
$ —
109.8
33.9
142.0
69.4
108.0
13.5
—
0.4
0.7
6.6
1.3
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . .
696.6
485.6
Deferred tax liabilities
Property, plant, and equipment . . . . . . . . . . . . . . . . . . . .
Cash flow and net investment hedges . . . . . . . . . . . . . .
Deferred tax on foreign earnings . . . . . . . . . . . . . . . . . .
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(80.2)
—
(19.2)
(6.0)
(19.9)
(2.9)
(64.1)
(6.4)
(26.3)
(6.1)
(75.5)
(2.6)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . .
(128.2)
(181.0)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(99.1)
(82.5)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 469.3
$ 222.1
(a) As required by the 2017 Tax Cuts and Jobs Act, effective January 1, 2022, the Company’s research and
development expenditures were capitalized and amortized which resulted in substantially higher cash paid
for taxes in 2022 with an equal amount of deferred tax benefits.
During 2022, net deferred tax assets increased $247.2 million, including items that were recorded to
stockholders’ equity and which did not impact the Company’s income tax provision.
The valuation allowance of $99.1 million as of December 31, 2022 reduces certain deferred tax assets to
amounts that are more likely than not to be realized. This allowance primarily relates to the net operating loss
carryforwards of certain non-United States subsidiaries and certain non-United States credit carryforwards.
92
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
Net operating loss and capital loss carryforwards and the related carryforward periods at December 31, 2022
are summarized as follows (in millions):
Carryforward
Amount
Tax
Benefit
Amount
Valuation
Allowance
Net
Tax
Benefit
Carryforward
Period Ends
United States federal net operating losses . . . . . . . . . .
United States federal net operating losses . . . . . . . . . .
United States state net operating losses . . . . . . . . . . . .
United States state net operating losses . . . . . . . . . . . .
Non-United States net operating losses . . . . . . . . . . . .
United States capital losses . . . . . . . . . . . . . . . . . . . . . .
$
8.6
11.3
35.7
2.6
390.5
33.4
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$482.1
$ 1.8
2.4
1.8
0.1
65.5
0.1
$71.7
$ 1.8
2.4
0.1
$ —
—
(1.7)
(0.1) —
(50.6)
14.9
(0.1) —
$(52.5)
$19.2
2033-2037
Indefinite
2026-2041
Indefinite
Indefinite
2024
Certain tax attributes are subject to an annual limitation as a result of the acquisition of CASMED, which
constitute a change of ownership as defined under Internal Revenue Code Section 382.
The gross tax credit carryforwards and the related carryforward periods at December 31, 2022 are
summarized as follows (in millions):
Carryforward
Amount
Valuation
Allowance
California research expenditure tax credits . . . .
Federal research expenditure tax credits . . . . . . .
Foreign tax and general business credits . . . . . .
Puerto Rico purchases credits . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$189.8
1.3
4.3
26.4
$221.8
$ —
—
(3.8)
(26.4)
$(30.2)
Carryforward
Period Ends
Indefinite
2026-2039
2030-2032
Indefinite
Net Tax
Benefit
$189.8
1.3
0.5
—
$191.6
The Company has $189.8 million of gross California research expenditure tax credits it expects to use in
future periods. The credits may be carried forward indefinitely. Based upon anticipated future taxable income,
the Company expects that it is more likely than not that all California research expenditure tax credits will be
utilized, although the utilization of the full benefit is expected to occur over a number of years into the distant
future. Accordingly, no valuation allowance has been provided. The Company has $26.4 million of Puerto Rico
purchases credits. Throughout its history and into the future, the Company’s Puerto Rico operations generate, or
are expected to generate, credits each year in excess of its ability to utilize credits in those years. As a result, even
though the credits currently have an indefinite life, the Company continues to record a valuation allowance on the
purchases credits carryforwards. The Company recently renegotiated its tax grant under Puerto Rico Act 52-2022
(“Act 52”) effective January 1, 2023. Among other items, Act 52 introduced new requirements and limitations on
the availability and claiming of tax credits. As a result, the Company now expects that its purchases credits may
begin to expire after 2026.
On December 22, 2017, Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (the “2017
Act”), was signed into law. The 2017 Act a) reduced the United States federal corporate tax rate from 35 percent
to 21 percent for tax years beginning after December 31, 2017, b) required companies to pay a one-time
mandatory deemed repatriation tax on the cumulative earnings of certain foreign subsidiaries that were
previously tax deferred, and c) created new taxes on certain foreign earnings in future years. The Company
elected to pay the repatriation tax in installments over eight years.
93
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
The Company asserts that $1.0 billion of its foreign earnings continue to be indefinitely reinvested and it
intends to repatriate $580.8 million of its foreign earnings as of December 31, 2022. The estimated net tax
liability on the indefinitely reinvested earnings if repatriated is $14.9 million.
The Company has received tax incentives in certain non-United States tax jurisdictions, the primary benefit
for which will expire in 2029. The tax reductions as compared to the local statutory rates were $247.4 million
($0.40 per diluted share), $208.0 million ($0.33 per diluted share), and $189.2 million ($0.30 per diluted share)
for the years ended December 31, 2022, 2021, and 2020, respectively.
A reconciliation of the United States federal statutory income tax rate to the Company’s effective income
tax rate is as follows (in millions):
Years Ended December 31,
2022
2021
2020
Income tax expense at United States federal statutory rate . . . . . $ 371.1
(123.9)
Foreign income taxed at different rates . . . . . . . . . . . . . . . . . . . .
21.1
State and local taxes, net of federal tax benefit . . . . . . . . . . . . . .
(50.0)
Tax credits, federal and state . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.6
Build of reserve for prior years’ uncertain tax positions . . . . . . .
61.4
Tax on global intangible low-taxed income . . . . . . . . . . . . . . . .
(15.0)
Foreign-derived intangible income deduction . . . . . . . . . . . . . . .
(7.5)
Contingent consideration liabilities . . . . . . . . . . . . . . . . . . . . . . .
United States federal deductible employee share-based
$ 357.4 $192.5
(80.5)
5.0
(43.1)
4.2
49.2
(2.6)
2.9
(122.2)
11.9
(48.4)
3.6
56.5
(1.3)
(26.1)
compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible employee share-based compensation . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(31.6)
5.8
2.5
(47.8)
5.3
10.0
(48.3)
4.2
9.8
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 245.5
$ 198.9 $ 93.3
The Company’s effective tax rate for 2022 increased in comparison to 2021 primarily due to the decrease in
the tax benefit from the change in fair value of contingent consideration liabilities and the decrease in the excess
tax benefit from employee share-based compensation. The Company’s effective tax rate for 2021 increased in
comparison to 2020 primarily due to the tax benefit from the Settlement Agreement with Abbott in 2020 (see
Note 3) and the decrease in the excess tax benefit from employee share-based compensation, partially offset by
the tax benefit from the change in fair value of contingent consideration liabilities.
Uncertain Tax Positions
As of December 31, 2022 and 2021, the gross uncertain tax positions were $475.3 million and
$358.4 million, respectively. The Company estimates that these liabilities would be reduced by $182.1 million
and $135.1 million, respectively, from offsetting tax benefits associated with the correlative effects of potential
transfer pricing adjustments, state income taxes, and timing adjustments. The net amounts of $293.2 million and
$223.3 million, respectively, if not required, would favorably affect the Company’s effective tax rate.
94
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest,
penalties, and foreign exchange, is as follows (in millions):
December 31,
2022
2021
2020
Uncertain gross tax positions, January 1 . . . . . . . . . . . . . . . . .
Current year tax positions . . . . . . . . . . . . . . . . . . . . . . . .
Increase in prior year tax positions . . . . . . . . . . . . . . . . .
Decrease in prior year tax positions . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statutes of limitations . . . . . . . . . . . . . . . . . . . .
$358.4
120.6
3.8
(0.6)
(0.4)
(6.5)
$281.8
82.1
2.3
(4.8)
(0.3)
(2.7)
$203.1
86.4
6.0
(10.0)
(3.7)
—
Uncertain gross tax positions, December 31 . . . . . . . . . . . . . .
$475.3
$358.4
$281.8
The table above summarizes the gross amounts of uncertain tax positions without regard to reduction in tax
liabilities or additions to deferred tax assets and liabilities if such uncertain tax positions were settled.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in the provision for
income taxes. As of December 31, 2022, the Company had accrued $29.1 million (net of $15.4 million tax
benefit) of interest related to uncertain tax positions, and as of December 31, 2021, the Company had accrued
$19.5 million (net of $8.1 million tax benefit) of interest related to uncertain tax positions. During 2022, 2021,
and 2020, the Company recognized interest expense, net of tax benefit, of $9.6 million, $5.2 million, and
$5.0 million, respectively, in “Provision for Income Taxes” on the consolidated statements of operations.
In the normal course of business, the Internal Revenue Service (“IRS”) and other taxing authorities are in
different stages of examining various years of the Company’s tax filings. During these audits, the Company 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 the Company’s results of operations and financial
condition. The Company strives to resolve open matters with each tax authority at the examination level and
could reach agreement with a tax authority at any time. While the Company has accrued for matters it believes
are more likely than not to require settlement, the final outcome with a tax authority may result in a tax liability
that is more or less than that reflected in the consolidated financial statements. Furthermore, the Company may
later decide to challenge any assessments, if made, and may exercise its 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.
Management believes that adequate amounts of tax and related penalty and interest have been provided for any
adjustments that may result from these uncertain tax positions.
At December 31, 2022, all material state, local, and foreign income tax matters have been concluded for
years through 2015. While not material, the Company continues to address matters in India for years from 2010
and on.
The Company 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
95
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. INCOME TAXES (Continued)
examination for further consideration as part of the respective years’ regular tax audits. In addition, the Company
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. The Company has filed to renew all of the APAs which cover
transactions with Japan for the years 2020 and forward. An APA between Switzerland and Japan covering tax
years 2020 through 2024 was executed in 2021. The execution of the other APA renewals depends on many
variables outside of the Company’s control.
The audits of the Company’s 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 began its examination of the 2018 through 2020 tax years
during the first quarter of 2022.
During 2021, the Company 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 the Company’s United States and Switzerland subsidiaries. The NOPA proposes an
increase to the Company’s United States taxable income, which could result in additional tax expense for this
period of approximately $210 million and represents a significant change to previously agreed upon transfer
pricing methodologies for these types of transactions. The Company has formally disagreed with the NOPA and
submitted a formal protest on the matter during the fourth quarter of 2021. During the second quarter of 2022, the
Company received the IRS’s rebuttal to its protest and was notified that the case has been transferred to the IRS
Independent Office of Appeals. The opening conference is scheduled for the first quarter of 2023. The Company
continues to evaluate all possible remedies available to it, which could take several years to resolve. The
Company believes the amounts previously accrued related to this uncertain tax position are sufficient and,
accordingly, has not accrued any additional amount based on the NOPA received. While no payment of any
amount related to the NOPA is required to be made, if at all, until all applicable proceedings have been
completed, the Company made an advance payment of tax in November 2022 to prevent the further accrual of
interest on any potential deficiency.
Certain Surgical/TAVR intercompany royalty transactions covering tax years 2015 through 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 December 31, 2022. The Company has considered this information, as well as
information regarding the NOPA and rebuttal described above, in its evaluation of its uncertain tax positions. The
impact of these unresolved transfer pricing matters, net of any correlative repatriation tax adjustment, may be
significant to the Company’s consolidated financial statements. Based on the information currently available and
numerous possible outcomes, the Company cannot reasonably estimate what, if any, changes in its existing
uncertain tax positions may occur in the next 12 months and, therefore, has continued to record the uncertain tax
positions as a long-term liability.
18. LEGAL PROCEEDINGS
The Company is reviewing and investigating whether business activities in Japan and other markets violate
certain provisions of the Foreign Corrupt Practices Act (“FCPA”). The Company voluntarily notified the SEC and
the United States Department of Justice (“DOJ”) during 2021 that it has engaged outside counsel to conduct this
review and investigation. The Company has provided status updates to the SEC and DOJ since that time. Any
determination that the Company’s operations or activities are not in compliance with existing laws, including the
FCPA, could result in the imposition of fines, penalties, and equitable remedies. The Company cannot currently
predict the outcome of the review and investigation or the potential impact on its financial statements.
96
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. LEGAL PROCEEDINGS (Continued)
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. The
Company is unable to predict the ultimate outcome of this matter or estimate a range of possible exposure;
therefore, no amounts have been accrued. The Company intends to vigorously defend itself in this litigation.
The Company is or may be a party to, or may otherwise be responsible for, pending or threatened lawsuits
including those related to products and services currently or formerly manufactured or performed, as applicable,
by the Company, workplace and employment matters, matters involving real estate, Company operations or
health care regulations, or governmental investigations (the “Lawsuits”). The Lawsuits raise difficult and
complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and
circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in
applicable law. Management does not believe that any loss relating to the Lawsuits would have a material
adverse effect on the Company’s overall financial condition, results of operations or cash flows. However, the
resolution of one or more of the Lawsuits in any reporting period, could have a material adverse impact on the
Company’s financial results for that period. The Company is not able to estimate the amount or range of any loss
for legal contingencies related to the Lawsuits for which there is no reserve or additional loss for matters already
reserved.
The Company is subject to various environmental laws and regulations both within and outside of the
United States. The Company’s 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 the Company’s financial results.
The Company’s threshold of disclosing material environmental legal proceedings involving a governmental
authority where potential monetary sanctions are involved is $1 million.
19. SEGMENT INFORMATION
Edwards Lifesciences conducts operations worldwide and is managed in the following geographical regions:
United States, Europe, Japan, and Rest of World. All regions sell products that are used to treat advanced
cardiovascular disease.
The Company’s geographic segments are reported based on the financial information provided to the Chief
Operating Decision Maker (the Chief Executive Officer). The Company evaluates the performance of its
geographic segments based on net sales and operating income. The accounting policies of the segments are the
same as those described in Note 2. Segment net sales and segment operating income are based on internally
derived foreign exchange rates and do not include inter-segment profits. Because of the interdependence of the
reportable segments, the operating profit as presented may not be representative of the geographical distribution
that would occur if the segments were not interdependent. Net sales by geographic area are based on the location
of the customer. There were no customers that represented 10% or more of the Company’s total net sales.
Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated
items include net interest income, global marketing expenses, corporate research and development expenses,
manufacturing variances, corporate headquarters costs, special gains and charges, stock-based compensation,
foreign currency hedging activities, certain litigation costs, changes in the fair value of contingent consideration
liabilities, and most of the Company’s amortization expense. Although most of the Company’s depreciation
expense is included in segment operating income, due to the Company’s methodology for cost build-up, it is
97
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. SEGMENT INFORMATION (Continued)
impractical to determine the amount of depreciation expense included in each segment, and, therefore, a portion
is maintained at the corporate level. The Company neither discretely allocates assets to its operating segments,
nor evaluates the operating segments using discrete asset information.
The table below presents information about Edwards Lifesciences’ reportable segments (in millions):
Years Ended December 31,
2022
2021
2020
Segment Net Sales
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
1,213.7
559.3
610.7
$2,963.1
1,099.6
528.0
533.2
$2,516.8
945.2
448.6
451.5
Total segment net sales . . . . . . . . . . . . . . . . . . . . . .
$5,516.3
$5,123.9
$4,362.1
Segment Operating Income
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,130.9
652.2
376.7
247.7
$2,051.0
569.1
348.0
185.2
$1,727.3
479.3
286.4
150.1
Total segment operating income . . . . . . . . . . . . . . .
$3,407.5
$3,153.3
$2,643.1
The table below presents reconciliations of segment net sales to consolidated net sales and segment
operating income to consolidated pre-tax income (in millions):
Years Ended December 31,
2022
2021
2020
Net Sales Reconciliation
Segment net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,516.3
(133.9)
$ 5,123.9
108.6
$ 4,362.1
24.2
Consolidated net sales . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,382.4
$ 5,232.5
$ 4,386.3
Pre-tax Income Reconciliation
Segment operating income . . . . . . . . . . . . . . . . . . . . .
Unallocated amounts:
Corporate items . . . . . . . . . . . . . . . . . . . . . . . . . .
Special charge . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual property litigation expenses, net
. . .
Change in fair value of contingent consideration
liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated operating income . . . . . . . . . . . . . . . . . .
Non-operating income . . . . . . . . . . . . . . . . . . . . .
$ 3,407.5
$ 3,153.3
$ 2,643.1
(1,714.1)
(60.7)
(15.8)
(1,613.8)
(1,358.0)
—
(20.6)
—
(405.4)
35.8
95.8
1,748.5
18.9
124.1
47.3
1,690.3
11.7
(13.6)
31.5
897.6
19.1
Consolidated pre-tax income . . . . . . . . . . . . . . . . . . . .
$ 1,767.4
$ 1,702.0
$
916.7
98
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. SEGMENT INFORMATION (Continued)
Enterprise-Wide Information
(in millions)
Enterprise-wide information is based on actual foreign exchange rates used in the Company’s consolidated
financial statements.
As of or for the Years Ended
December 31,
2022
2021
2020
Net Sales by Geographic Area
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,132.6
1,174.8
473.6
601.4
$2,963.1
1,190.3
528.9
550.2
$2,516.8
973.6
460.1
435.8
$5,382.4
$5,232.5
$4,386.3
Net Sales by Major Product Area
Transcatheter Aortic Valve Replacement . . . . . . . .
Transcatheter Mitral and Tricuspid Therapies . . . .
Surgical Structural Heart . . . . . . . . . . . . . . . . . . . . .
Critical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,518.2
116.1
893.1
855.0
$3,422.5
86.0
889.1
834.9
$2,857.3
41.8
761.8
725.4
$5,382.4
$5,232.5
$4,386.3
Long-lived Tangible Assets by Geographic Area
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,188.5
191.8
13.2
331.6
$1,195.8
197.9
19.7
335.5
$1,084.3
192.7
20.4
311.0
$1,725.1
$1,748.9
$1,608.4
20. VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Charged to
Other
Accounts
(in millions)
Deductions
Balance at
End of
Period
Year ended December 31, 2022
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
Year ended December 31, 2021
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
Year ended December 31, 2020
Allowance for credit losses (a) . . . . . . . . . . . . . . .
Tax valuation allowance (b) . . . . . . . . . . . . . . . . .
$15.7
82.5
$16.4
71.6
$14.7
65.8
$ 0.9
3.0
$ 1.2
12.4
$ 3.1
6.3
$ 0.1
14.2
$ 0.6
—
$ —
0.6
$(5.0)
(0.6)
$(2.5)
(1.5)
$(1.4)
(1.1)
$11.7
99.1
$15.7
82.5
$16.4
71.6
(a) The deductions related to allowances for credit losses represent accounts receivable which are written off.
99
EDWARDS LIFESCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. VALUATION AND QUALIFYING ACCOUNTS (Continued)
(b) The tax valuation allowances are provided for other-than-temporary impairments and unrealized losses
related to certain investments that may not be recognized due to the uncertainty of the ready marketability of
certain impaired investments, and net operating loss and credit carryforwards that may not be recognized
due to insufficient taxable income.
100
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Company’s management, including the Chief
Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and
operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under
the Securities Exchange Act of 1934, as amended) as of December 31, 2022.
Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of
December 31, 2022 that the Company’s disclosure controls and procedures are designed at a reasonable
assurance level and are effective in providing reasonable assurance that the information required to be disclosed
by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to the Company’s management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
Management’s Report on Internal Control Over Financial Reporting. The Company’s management,
including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the
participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer,
the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on
the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that evaluation, the Company’s management
concluded that its internal control over financial reporting was effective as of December 31, 2022. The
effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been
audited by PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the
financial statements included in this Annual Report on Form 10-K, as stated in their report which appears herein.
Changes in Internal Control Over Financial Reporting. There have been no changes in the Company’s
internal control over financial reporting that occurred during the Company’s fourth fiscal quarter of 2022 that
have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Item 9B. Other Information
None.
Item 9C. Information Regarding Foreign Jurisdictions That Prevent Inspections
None.
101
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Certain information required by this Item will be set forth under the headings “Board of Directors Matters—
Proposal 1—Election of Directors—Board of Director Nominees,” “Board of Directors Matters—Corporate
Governance Policies and Practices,” and “Executive Compensation and Other Information—Executive Officers”
in the definitive proxy statement to be filed in connection with the Company’s 2023 Annual Meeting of
Stockholders (the “Proxy Statement”) (which Proxy Statement will be filed with the SEC within 120 days of
December 31, 2022). The information required by this Item to be contained in the Proxy Statement is
incorporated herein by reference. The Company has adopted a code of ethics that applies to all directors and
employees, including the Company’s principal executive officer, principal financial officer, and principal
accounting officer, or persons performing similar functions. The code of ethics (business practice standards) is
posted on the Company’s website, which is found at https://ir.edwards.com under “Governance &
Sustainability—Corporate Responsibility & Sustainability—Corporate Responsibility—Global Integrity
Program.” To the extent required by applicable rules of the SEC and the New York Stock Exchange, the
Company intends to disclose on its website any amendments to, or waivers from, any provision of its code of
ethics that apply to the Company’s directors and executive officers, including the principal executive officer,
principal financial officer or controller or persons performing similar functions.
Item 11. Executive Compensation
The information contained under the heading “Executive Compensation and Other Information” in the
Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information contained under the headings “Security Ownership of Certain Beneficial Owners and
Management” and “Equity Compensation Plan Information” in the Proxy Statement is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information contained under the heading “Other Matters and Business—Related Persons Transactions”
and under the heading “Board of Directors Matters—Corporate Governance Policies and Practices—Director
Independence” in the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information contained under the headings “Audit Matters—Fees Paid to Principal Accountants” and
“Audit Matters—Pre-Approval of Services” in the Proxy Statement is incorporated herein by reference.
102
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this report:
PART IV
1. Consolidated Financial Statements. See “Index to Consolidated Financial Statements” in Part II, Item 8
herein.
2. Financial Statement Schedules. Other schedules are not applicable and have not been included herein.
3. Exhibits.
Exhibit No.
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
10.1
#10.2
*10.3
Description
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)
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)
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)
Specimen form of certificate representing Edwards Lifesciences Corporation common stock
(incorporated by reference to Exhibit 4.1 in Edwards Lifesciences’ Registration Statement on
Form 10 (File No. 001-15525) filed on March 15, 2000)
Description of Edwards Lifesciences Corporation’s Capital Stock (incorporated by reference to
Exhibit 4.2 in Edwards Lifesciences’ report on Form 10-K for the fiscal year ended
December 31, 2022)
Indenture, dated as of September 6, 2013, between Edwards Lifesciences Corporation and Wells
Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.5 in
Edwards Lifesciences’ Registration Statement on Form S-3 (File No. 333-191022) filed on
September 6, 2013) (the “Indenture”)
Second Supplemental Indenture, dated as of June 15, 2018, to the Indenture (incorporated by
reference to Exhibit 4.2 in Edwards Lifesciences’ report on Form 8-K filed on June 15, 2018)
(“Second Supplemental Indenture”)
Form of Global Note for the 4.300% Senior Notes due 2028 (incorporated by reference to
Exhibit A in the Second Supplemental Indenture filed as Exhibit 4.2 in Edwards Lifesciences’
report on Form 8-K filed on June 15, 2018)
Five-Year Credit Agreement, dated as of July 15, 2022, among Edwards Lifesciences
Corporation and certain of its subsidiaries, as Borrowers, the lenders signatory thereto, Bank of
America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 in Edwards
Lifesciences’ report on Form 8-K filed on July 21, 2022)
Settlement Agreement, dated May 19, 2014, between Edwards Lifesciences Corporation and
Medtronic, Inc. (incorporated by reference to Exhibit 10.2 in Edwards Lifesciences’ report on
Form 10-Q for the quarterly period ended June 30, 2014)
Edwards Lifesciences Corporation Form of Employment Agreement (incorporated by reference
to Exhibit 10.8 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
March 31, 2003)
103
Exhibit No.
*10.4
*10.5
*10.6
*10.7
*10.8
*10.9
*10.10
*10.11
*10.12
*10.13
*10.14
*10.15
*10.16
Description
Edwards Lifesciences Corporation Amended and Restated Employment Agreement for
Michael A. Mussallem, dated March 30, 2009 (incorporated by reference to Exhibit 10.2 in
Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended March 31, 2009)
Edwards Lifesciences Corporation Amended and Restated Chief Executive Officer
Change-in-Control Severance Agreement, dated October 9, 2012 (incorporated by reference to
Exhibit 10.1 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
September 30, 2012)
Edwards Lifesciences Corporation Form of Change-in-Control Severance Agreement
(incorporated by reference to Exhibit 10.2 in Edwards Lifesciences’ report on Form 10-Q for the
quarterly period ended September 30, 2012)
Description of Severance Benefits for Mr. Jean-Luc Lemercier (incorporated by reference to
Exhibit 10.1 in Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended
March 31, 2021)
Edwards Lifesciences Corporation 2018 Edwards Incentive Plan (incorporated by reference to
Exhibit 10.7 in Edwards Lifesciences’ report on Form 10-K for the fiscal year ended
December 31, 2018)
Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program, as
amended and restated as of May 7, 2020 (incorporated by reference to Exhibit 10.1 in Edwards
Lifesciences’ report on Form 10-Q for the quarterly period ended June 30, 2020)
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related
Long-Term Stock Program Global Nonqualified Stock Option Award Agreement for awards
granted prior to May 2015 (incorporated by reference to Exhibit 10.1 in Edwards Lifesciences’
report on Form 10-Q for the quarterly period ended March 31, 2011)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Nonqualified Stock Option Award Agreement for awards granted beginning May 2015
(incorporated by reference to Exhibit 10.11 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Restricted Stock Unit Award Agreement for awards granted beginning May 2015
(incorporated by reference to Exhibit 10.12 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Long-Term Stock Incentive Compensation Program
Global Performance-Based Restricted Stock Unit Award Agreement for awards granted
beginning May 2015 (incorporated by reference to Exhibit 10.13 in Edwards Lifesciences’
report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Nonemployee Directors Stock Incentive Program, as
amended and restated as of February 25, 2016 (incorporated by reference to Exhibit 10.1 in
Edwards Lifesciences’ report on Form 10-Q for the quarterly period ended March 31, 2016)
Edwards Lifesciences Corporation 2020 Nonemployee Directors Stock Incentive Program
(incorporated by reference to Exhibit 10.15 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Participant Stock Option Statement and related
Nonemployee Directors Stock Incentive Program Nonqualified Stock Option Award Agreement
(incorporated by reference to Exhibit 10.16 in Edwards Lifesciences’ report on Form 10-K for
the fiscal year ended December 31, 2022)
104
Exhibit No.
*10.17
*10.18
*10.19
*10.20
*10.21
21.1
23
31.1
31.2
+32
Description
Edwards Lifesciences Corporation Form of Nonemployee Directors Stock Incentive Program
Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.17 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Form of Nonemployee Directors Stock Incentive Program
Restricted Stock Agreement (incorporated by reference to Exhibit 10.18 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2022)
Edwards Lifesciences Corporation Executive Deferred Compensation Plan, as amended and
restated effective as of November 9, 2011 (incorporated by reference to Exhibit 10.7 in Edwards
Lifesciences’ report on Form 10-K for the fiscal year ended December 31, 2011)
Edwards Lifesciences Corporation Officer Perquisite Program Guidelines, as of February 20,
2013 (incorporated by reference to Exhibit 10.25 in Edwards Lifesciences’ report on Form 10-K
for the fiscal year ended December 31, 2012)
Edwards Lifesciences Corporation Form of Indemnification Agreement (incorporated by
reference to Exhibit 10.20 in Edwards Lifesciences’ report on Form 10-K for the fiscal year
ended December 31, 2011)
Subsidiaries of Edwards Lifesciences Corporation
Consent of Independent Registered Public Accounting Firm
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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 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)
# Pursuant to a request for confidential treatment, confidential portions of this exhibit have been redacted and
have been filed separately with the Securities and Exchange Commission
* Represents management contract or compensatory plan
+ Furnished herewith
Item 16. Form 10-K Summary
None.
105
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
February 13, 2023
By:
/s/ MICHAEL A. MUSSALLEM
EDWARDS LIFESCIENCES CORPORATION
Michael A. Mussallem
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ MICHAEL A. MUSSALLEM
Chairman of the Board and Chief
February 13, 2023
Michael A. Mussallem
Executive Officer
(Principal Executive Officer)
/s/ SCOTT B. ULLEM
Corporate Vice President, Chief
February 13, 2023
Scott B. Ullem
Financial Officer
(Principal Financial Officer)
/s/ ROBERT W.A. SELLERS
Senior Vice President, Corporate
February 13, 2023
Robert W.A. Sellers
Controller
(Principal Accounting Officer)
/s/ KIERAN T. GALLAHUE
Director
February 13, 2023
Kieran T. Gallahue
/s/ LESLIE S. HEISZ
Leslie S. Heisz
Director
February 13, 2023
/s/ PAUL A. LAVIOLETTE
Director
February 13, 2023
Paul A. LaViolette
/s/ STEVEN R. LORANGER
Director
February 13, 2023
Steven R. Loranger
/s/ MARTHA H. MARSH
Martha H. Marsh
Director
February 13, 2023
/s/ RAMONA SEQUEIRA
Director
February 13, 2023
Ramona Sequeira
/s/ NICHOLAS J. VALERIANI
Director
February 13, 2023
Nicholas J. Valeriani
106
Exhibit 21.1
The following is a list of subsidiaries of Edwards Lifesciences Corporation, omitting subsidiaries which,
considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of
December 31, 2022:
Legal Entity
State of
Incorporation/
Formation
Country of
Incorporation/
Formation
Edwards Lifesciences LLC . . . . . . . . . . . . . . . . . . . .
Edwards Lifesciences (U.S.) Inc.
. . . . . . . . . . . . . . .
Edwards Lifesciences (Japan) Limited . . . . . . . . . . .
Delaware
Delaware
U.S.
U.S.
Japan
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos.
333-33054, 333-33056, 333-40434, 333-52334, 333-52346, 333-60670, 333-98219, 333-105961, 333-127260,
333-150810, 333-154242, 333-168462, 333-183106, 333-192229, 333-195853, 333-204180, 333-211333,
333-217909, 333-255853, and 333-255854) and Form S-3 (No. 333-266272) of Edwards Lifesciences
Corporation of our report dated February 13, 2023 relating to the financial statements and the effectiveness of
internal control over financial reporting, which appears in this Form 10-K.
Exhibit 23
/s/ PricewaterhouseCoopers LLP
Irvine, California
February 13, 2023
Exhibit 31.1
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Michael A. Mussallem, certify that:
1.
I have reviewed this annual report on Form 10-K of Edwards Lifesciences Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
February 13, 2023
By:
/s/ MICHAEL A. MUSSALLEM
Michael A. Mussallem
Chairman of the Board and Chief Executive Officer
Exhibit 31.2
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Scott B. Ullem, certify that:
1.
I have reviewed this annual report on Form 10-K of Edwards Lifesciences Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
February 13, 2023
By:
/s/ SCOTT B. ULLEM
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
EDWARDS LIFESCIENCES CORPORATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the Annual Report of Edwards Lifesciences Corporation (the “Company”) on Form 10-K
for the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), we, Michael A. Mussallem, Chairman of the Board and Chief Executive Officer of the Company,
and Scott B. Ullem, Corporate Vice President, Chief Financial Officer, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
February 13, 2023
February 13, 2023
/s/ MICHAEL A. MUSSALLEM
Michael A. Mussallem
Chairman of the Board and Chief Executive Officer
/s/ SCOTT B. ULLEM
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
ation
CorpCorporaoratete(cid:2)IInformnformation
Corporate
ters
Corporate(cid:2)HeadHeadququararters
Edwards(cid:2)Lifesciences(cid:2)Corporation
One(cid:2)Edwards(cid:2)Way,(cid:2)Irvine,(cid:2)California(cid:2)92614(cid:2)
1-800-4-A-HEART(cid:2)or(cid:2)(949)(cid:2)250-2500
Board of Directors
Board of Directors
Michael A. Mussallem
Chairman & Chief Executive Officer,
Edwards Lifesciences Corporation
AnnuAnnuaall(cid:2)Meeting
Meeting
(cid:54)(cid:74)(cid:71)(cid:2)(cid:35)(cid:80)(cid:80)(cid:87)(cid:67)(cid:78)(cid:2)(cid:47)(cid:71)(cid:71)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:81)(cid:72)(cid:2)(cid:53)(cid:86)(cid:81)(cid:69)(cid:77)(cid:74)(cid:81)(cid:78)(cid:70)(cid:71)(cid:84)(cid:85)(cid:2)(cid:89)(cid:75)(cid:78)(cid:78)(cid:2)(cid:68)(cid:71)(cid:2)
(cid:74)(cid:71)(cid:78)(cid:70)(cid:2)(cid:81)(cid:80)(cid:2)(cid:47)(cid:67)(cid:91)(cid:2)(cid:19)(cid:19)(cid:14)(cid:2)(cid:20)(cid:18)(cid:20)(cid:21)(cid:2)(cid:67)(cid:86)(cid:2)(cid:19)(cid:18)(cid:28)(cid:18)(cid:18)(cid:2)(cid:67)(cid:79)(cid:2)(cid:10)(cid:50)(cid:67)(cid:69)(cid:75)(cid:72)(cid:75)(cid:69)(cid:11)(cid:2)(cid:67)(cid:86)(cid:2)
(cid:86)(cid:74)(cid:71)(cid:2)(cid:81)(cid:72)(cid:72)(cid:75)(cid:69)(cid:71)(cid:85)(cid:2)(cid:81)(cid:72)(cid:2)(cid:39)(cid:70)(cid:89)(cid:67)(cid:84)(cid:70)(cid:85)(cid:2)(cid:46)(cid:75)(cid:72)(cid:71)(cid:85)(cid:69)(cid:75)(cid:71)(cid:80)(cid:69)(cid:71)(cid:85)(cid:2)(cid:37)(cid:81)(cid:84)(cid:82)(cid:81)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:16)
Stock(cid:2)SySymbmbooll
Stock
Edwards Lifesciences’ stock is traded
on The New York Stock Exchange
(NYSE) under the symbol EW.
Information on the Internet
Information on the Internet
Edwards Lifesciences’ “Investor Relations”
section of our website – ir.edwards.com –
provides access to a wide range of information
including our press releases, SEC filings and
other company information.
Investor Information
Investor Information
Members of the investing public should
contact Investor Relations at (949) 250-2806
or investor_relations@edwards.com.
Corporate Public Relations
Corporate Public Relations
Members of the news media should call
(949) 250-5070.
Transfer Agent
Transfer Agent
Correspondence about shares, stock certificates
and account information may be directed to:
Computershare Investor Services
P.O. Box 30170
College Station, TX 77842-3170
(800) 446-2617
(781) 575-3120/outside U.S.
computershare.com/investor
Independent Registered Public
Independent Registered Public
Accounting Firm
Accounting Firm
PricewaterhouseCoopers LLP
Orange County, CA
Edwards Lifesciences is an affirmative
action, equal opportunity employer.
Kieran T. Gallahue
Former Chairman &
Chief Executive Officer,
CareFusion Corporation
Leslie S. Heisz
Former Managing Director,
Lazard Frères & Co.
Paul A. LaViolette
Managing Partner &
Chief Operating Officer,
SV Health Investors LLC
Executive Management
Executive Management
Michael A. Mussallem
Chairman & Chief Executive Officer
Donald E. Bobo, Jr.
Corporate Vice President,
Strategy & Corporate Development
Todd J. Brinton, M.D., F.A.C.C.
Corporate Vice President,
Advanced Technology
Chief Scientific Officer
Daveen Chopra
Corporate Vice President,
Transcatheter Mitral
& Tricuspid Therapies
es
Dirksen J. Lehman
Corporate Vice President,
Public Affairs
Jean-Luc Lemercier
Corporate Vice President,
EMEA, Canada, Latin America
& JAPAC
C
Christine Z. McCauley
Corporate Vice President,
Human Resources
Steven R. Loranger
Former Chairman, President
& Chief Executive Officer,
ITT Corporation
Martha H. Marsh
Former President &
Chief Executive Officer,
Stanford Hospital & Clinics
Ramona Sequeira
President,(cid:2)
(cid:41)(cid:78)(cid:81)(cid:68)(cid:67)(cid:78)(cid:2)Portfolio(cid:2)Division,(cid:2)
Takeda(cid:2)Pharmaceutical(cid:2)USA,(cid:2)Inc.
.S. Business
da
a
ac u c l S
Inc.
Nicholas J. Valeriani
Former Chief Executive Officer,
e Officer,
West Health Institute
Gary and Mary West Health Institute
Joseph Nuzzolese
Corporate Vice President,
Global Supply Chain & Quality
Arnold A. Pinkston
Corporate Vice President,
General Counsel
Gary I. Sorsher
Senior Vice President
Quality & Regulatory Compliance
ent,
Katie M. Szyman
Corporate Vice President,
Critical Care
Scott B. Ullem
Corporate Vice President,
Chief Financial Officer
Larry L. Wood
Corporate Vice President &
Group President, Transcatheter
d
Aortic Valve Replacement &
Surgical Structural Heart
d
Bernard J. Zovighian
nt
President
Intended for Investor audience only. Patients and caregivers should talk to their physician about any of the procedures
or devices discussed herein. For patient-focused information, please see www.newheartvalve.com or www.edwards.com.
For the full important safety information, please see www.ir.edwards.com/annuals-and-proxies
CAUTION: Federal (United States) law restricts these devices to sale by or on the order of a physician. See instructions
for use for the important safety information, including indications, contraindications, warnings, precautions, and
adverse events.
Edwards devices placed on the European market meeting the essential requirements referred to in Article 3 of the Medical
Device Directive 93/42/EEC bear the CE marking of conformity.
Edwards EVOQUE Tricuspid Valve Replacement / Edwards Cardioband System / PASCAL System
CAUTION: Investigational devices. Limited by Federal (United States) law to investigational use. These devices are not
available for marketing or commercial sale in the United States. The PASCAL system bear the CE marking of conformity.
The Edwards SAPIEN 3 transcatheter heart valve and Edwards Alterra
CAUTION: Investigational devices. The Edwards SAPIEN 3 transcatheter heart valve and Edwards Alterra adaptive prestent
are investigational devices when used in patients with a dysfunctional right ventricular outflow tract/pulmonary valve (RVOT/PV)
who are indicated for treatment of pulmonary regurgitation (PR). Limited by Federal (USA) law to investigational use only.
Edwards SAPIEN M3 System
CAUTION: Investigational devices. The Edwards SAPIEN M3 System consists of investigational devices, limited by Federal
(United States) law to investigational use. These devices are not available for marketing or commercial sale in the United States.
Trademarks
Edwards, Edwards Lifesciences, the stylized E logo, 1-800-4-A-HEART, Acumen, Acumen IQ, Alterra, Cardioband,
Edwards SAPIEN, Edwards SAPIEN 3, Edwards SAPIEN 3 Ultra, Edwards SAPIEN M3, Every Heartbeat Matters, EVOQUE,
EVOQUE EOS FloTrac, ForeSight, HemoSphere, Hypotension Prediction Index, INSPIRIS, INSPIRIS RESILIA, KONECT,
KONECT RESILIA, MITRIS RESILIA, Life is Now, PARTNER, PARTNER 3, PASCAL, PASCAL Ace, RESILIA, SAPIEN, SAPIEN 3,
SAPIEN 3 Ultra, and SAPIEN M3 are all trademarks of Edwards Lifesciences Corporation or its affiliates. All other
trademarks are the property of their respective owners.
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