Edwards Lifesciences (EW) Q3 2026 earnings review
Edwards Lifesciences raises its outlook, but deal write-offs cut profit
Edwards Lifesciences, the maker of replacement heart valves, beat its own third-quarter plan and raised its full-year targets across the board. Sales rose 11% in constant currency to $1.72 billion, while profit per share excluding one-offs climbed 19% on delayed research spending. Chief executive Bernard Zovighian lifted the full-year sales outlook for a third time this year, though by our math the fourth-quarter plan has reported revenue growth slowing to 9%.
| Constant currency sales growth | +11.2% reported sales $1.72B (+10.5% from a year ago) |
|---|---|
| Mitral and tricuspid (TMTT) sales | $207M +44% from a year ago (+45.6% in constant currency) |
| Profit per share, excluding one-offs | $0.80 +19% from a year ago (reported EPS $0.53, +6%) |
| Full-year sales growth outlook | Raised to ~11.5% from 10%–11% in constant currency |
⚖️ Verdict: 🟢 Bullish
The story got better because the company cleared the clinical and regulatory hurdles needed to keep growing in 2027. US regulators approved its PASCAL tricuspid valve repair device, Medicare finalized broader coverage for aortic valves, and dedicated reimbursement revived sales in Japan. One caution: Edwards booked a $220 million write-off on acquired technology, marking a fourth straight quarter of deal impairments that cut reported profit.
The question now is whether the raised mitral and tricuspid outlook reflects management's usual caution or a real pause in hospital adoption. By our math, the full-year plan leaves fourth-quarter sales for the unit almost unchanged from the third quarter after five straight quarters of double-digit million-dollar additions. Fourth-quarter results and the December investor conference will settle it.
🐂 Bull Case
Mitral and Tricuspid Devices Cleared Key Approvals
Edwards relies on transcatheter mitral and tricuspid therapies (TMTT), which repair or replace two smaller heart valves without open-heart surgery, to drive its next phase of growth. Sales in the unit rose 44% from a year ago to $207 million, or $209.5 million including heart-failure implants. The group also cleared two major regulatory hurdles in the United States ahead of schedule.
- Sequential addition: up $10.9 million from the second quarter to $209.5 million
- New US approvals: PASCAL Precision for tricuspid repair and PASCAL Ace with Capture Clarity for mitral repair
- Full-year TMTT outlook: raised to $780–790 million from $760–780 million
Winning US approval for PASCAL tricuspid repair in October removes a major execution risk for 2027, because doctors now have four distinct devices in the division. Still, the raised full-year target points to $204–214 million in the fourth quarter by our math, which means almost no change from the third quarter.
What to watch: fourth-quarter TMTT sales against the implied $209 million middle of the range. Another double-digit sequential gain would prove the outlook is cautious rather than a sign that hospital adoption is slowing.
New Trial Data and Medicare Rules Back Aortic Valves
Transcatheter aortic valve replacement (TAVR), the flagship business that replaces narrowed heart valves through a catheter, makes up over 70% of total sales. Chief executive Bernard Zovighian said the company "delivered strong third-quarter growth of 11.2% which exceeded expectations" in constant currency. TAVR sales rose 8.0% to $1.24 billion, or 8.8% in constant currency, and management raised its full-year TAVR growth plan to 9.0–9.5%.
Policy and clinical updates backed the long-term case this quarter. Medicare released its final coverage rule, which Edwards called an "important step toward improving and expanding timely, high-quality access to care", while the PROGRESS clinical trial marked a "turning point in the management of moderate AS" by testing patients before their valve disease becomes severe. In Japan, sales jumped 12.2% in constant currency after stalling in the second quarter because the government granted "new and dedicated reimbursement for the SAPIEN 3 Ultra RESILIA platform".
What to watch: initial 2027 TAVR growth targets at the December investor conference. Management already warned that fourth-quarter growth will come from procedure volumes rather than market share gains, so the 2027 plan will show how fast the new Medicare rule brings in patients.
Lower Research Spending Lifted Operating Margin
Edwards has promised to expand its operating profit margin, excluding one-offs, by keeping cost growth below revenue growth. In the third quarter, that margin rose 2.8 percentage points from a year ago to 30.3%, helping profit per share excluding one-offs grow 19% to $0.80. Gross margin excluding one-offs also rose 0.8 percentage points to 78.7% on factory efficiencies.
Most of the operating margin gain came from research and development (R&D), the cost of designing new devices and running clinical trials, which fell 1.7 percentage points of sales to 16.4%. Selling, general and administrative expenses (SG&A), which cover sales reps and overhead, edged down 0.4 percentage points to 32.7%. The heart-valve maker also trimmed its full-year R&D target to about 16.5% of sales from 17%.
What to watch: fourth-quarter operating margin excluding one-offs. Management credited the third-quarter beat to the "planned phasing of strategic investments in R&D and SG&A throughout the year", which leaves a sharp margin drop for the fourth quarter if that spending catches up.
🐻 Bear Case
Acquisition Write-Offs Cut Reported Profit Again
Zovighian credited "disciplined execution" and "long-term investments in category-creating innovation" for the quarter's results. While profit excluding one-offs rose 19%, reported diluted earnings per share grew just 6% from a year ago to $0.53, and reported operating profit margin fell 2.4 percentage points to 17.4%.
The gap came from a $220.2 million charge for the "impairment of a certain in-process research and development asset and fixed assets acquired as part of an acquisition", alongside $8.7 million in acquisition contract termination costs. This marks the fourth straight quarter in which the medical-device maker has written down acquired assets or investments, following $163.6 million of investment write-offs in the first half of 2026 and $99.8 million in the fourth quarter of 2025.
Edwards strips these charges out of its headline profit figures, but they represent real cash spent on deals that failed to pay off. Writing off $383.8 million across operating and non-operating lines in nine months shows that buying early-stage heart technologies carries high failure costs.
What to watch: the acquisition footnote in the third-quarter 10-Q filing. It will identify which acquired program failed and how much unamortized value from similar deals remains on the balance sheet.
Hard Comparisons and Delayed Costs Weigh on Fourth Quarter
Edwards faces tougher year-over-year comparisons in the second half of 2026 as last year's benefit from a rival exiting Europe fades. Reported revenue growth slowed from 16.7% in the first quarter and 13.6% in the second to 10.5% in the third, and the fourth-quarter outlook of $1.67–1.75 billion points to 8.9% growth at the middle of the range.
Currency and taxes are also squeezing fourth-quarter profit. Management still expects full-year gross margin excluding one-offs at the bottom of its 78–79% plan due to the "impacts of currency fluctuations through the company’s hedging program", and its tax rate excluding one-offs at the top of its 16–19% range because of California tax rules and global minimum taxes. Combined with delayed R&D spending, the full-year margin plan leaves fourth-quarter operating margin excluding one-offs at about 24.3% by our math, down six points from the third quarter.
What to watch: fourth-quarter gross margin and tax rate excluding one-offs when full-year results arrive in February. A gross margin below 78% would show that currency hedging costs are eating into factory savings heading into 2027.
Risks This Quarter Didn't Answer
Four standing concerns from prior filings and calls received no update in the third-quarter earnings release and remain open until the 10-Q filing or conference call.
- US tax dispute: management previously expected the Internal Revenue Service to propose 40% transfer-pricing penalties in the third quarter on $2.07 billion of disputed 2018–2020 income; the 10-Q tax footnote will show if the notice arrived.
- Next-generation aortic valve: the release did not mention SAPIEN X4S or a completion date for its ALLIANCE clinical trial.
- Mitral and tricuspid revenue split: Edwards again withheld individual sales for PASCAL, EVOQUE, and SAPIEN M3, as well as the US versus international breakdown.
- Tariff and patent litigation exposure: the release gave no figures on supply-chain tariff costs or the Valtech milestone lawsuit; the 10-Q legal and risk disclosures will carry any update.
💲 Other KPIs
Sales of surgical heart valves for open-heart procedures rose 2.5% from a year ago, or 2.8% in constant currency, slowing from 6.5% growth in the second quarter and 10.1% in the first. Despite the slower quarter, the company kept its full-year plan for mid-single-digit growth and won US approval for AUTUS, an expandable valve for children.
Cash and cash equivalents rose to about $3.1 billion from $2.9 billion last quarter against $600 million of debt, leaving $2.5 billion in net cash by our math. The device maker has spent about $700 million on share buybacks so far this year, reducing its diluted share count by 1.4% from a year ago to 577.6 million.
🔮 Guidance
Raised. Management lifted its full-year constant-currency sales growth plan by one percentage point at the middle of the range to about 11.5%. This is the third raise in three quarters, moving up from 8–10% at the start of the year, 9–11% in the first quarter, and 10–11% in the second.
Raised. The company increased its full-year constant-currency growth target for aortic valves by 0.75 percentage points at the middle of the range. It is the third consecutive quarterly raise from the initial 6–8% plan, though management noted fourth-quarter growth will rely on procedure volumes rather than market share gains.
Raised. The middle of the range moved up $15 million after a $10 million raise last quarter. By our math, subtracting $575.6 million of nine-month sales excluding heart-failure implants leaves $204.4–214.4 million for the fourth quarter, or about $209 million at the middle, just $2 million above the third quarter.
Raised. Edwards lifted the bottom of its full-year profit per share range by two cents, putting the middle of the range at $3.01, up 18% from last year. The higher floor absorbs a tax rate near 19% and currency hedging pressure on gross margin.
New. The fourth-quarter plan calls for $1.71 billion at the middle of the range, which is 8.9% above a year ago and 0.3% below the third quarter by our math. Edwards has beaten the middle of its quarterly sales plan for six straight quarters by an average of 2.7%; if the pattern holds, sales would land near $1.76 billion.
New. The plan points to $0.65 at the middle of the range, up 12% from a year ago but down 19% from the third quarter's $0.80 by our math. The sequential drop reflects delayed research and administrative spending catching up in the final quarter.
Unchanged. Edwards still expects full-year operating margin near 29%, which represents 1.5 percentage points of constant-currency expansion. Because the margin ran at 30.6% for the first nine months, hitting 29% for the year leaves fourth-quarter operating margin at 24.3% at the middle of the sales plan by our math.
Unchanged. The company kept its target at the bottom of the 78–79% range because currency hedging contracts offset factory efficiencies. Nine-month gross margin excluding one-offs sits at 78.2% after reaching 78.7% in the third quarter.
Cut. Management lowered expected full-year research spending by 0.5 percentage points of sales to 16.5%. Because R&D took 16.1% of sales over the first nine months, the new full-year figure still leaves fourth-quarter R&D stepping up to 17.6% of sales by our math.
Unchanged. The full-year tax rate excluding one-offs remains near 19% because California restricted research tax credits and global minimum tax safe-harbor rules have not passed. The rate ran at 19.8% in the third quarter and 18.9% for the first nine months.
Unchanged. Management kept its mid-single-digit growth plan for surgical valves. Nine-month constant-currency growth sits at 4.6% after slowing to 2.8% in the third quarter.
❓ Key Questions
Which acquired program caused the $220 million write-off?
Edwards has now booked impairments in four consecutive quarters totaling $484 million over twelve months. Investors need to know which research asset failed this quarter and how much unamortized value from similar deals remains on the balance sheet.
Did the IRS issue the 40% transfer-pricing penalty notice?
Last quarter's filing warned that the Internal Revenue Service would propose 40% penalties in the third quarter on $2.07 billion of disputed 2018–2020 taxable income. The earnings release did not mention the dispute.
How much does each mitral and tricuspid device bring in?
The TMTT division now sells PASCAL, EVOQUE, and SAPIEN M3, but management still reports only one combined revenue figure. Disclosing sales by product and region would show whether growth comes from all three devices or just one launch.
When will the SAPIEN X4S aortic valve trial finish?
After renaming its next-generation aortic valve to SAPIEN X4S last quarter without giving a launch date, management omitted the program entirely from the third-quarter release.