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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
            For the transition period from                                    to            
Commission file number 1-15525
EDWARDS LIFESCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
36-4316614
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

One Edwards Way
Irvine, California 92614
(Address of principal executive offices and zip code)

(949) 250-2500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareEWNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒
The number of shares outstanding of the registrant's common stock, $1.00 par value, as of April 25, 2024 was 602.6 million.



EDWARDS LIFESCIENCES CORPORATION
FORM 10-Q
For the quarterly period ended March 31, 2024

TABLE OF CONTENTS
  
Page
Number
 
 
 
 
 
 
 
Item 6.



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 safe harbor provisions. These statements can sometimes be identified by the use of the forward-looking words such as "may," "believe," "will," "expect," "project," "estimate," "should," "anticipate," "plan," "goal," "continue," "seek," "pro forma," "forecast," "intend," "guidance," "optimistic," "aspire," "confident," other forms of these words or similar words or expressions or the negatives thereof. Statements regarding past performance, efforts, or results about which inferences or assumptions may be made can also be forward-looking statements and are not indicative of future performance or results; these statements can be identified by the use of words such as "preliminary," "initial," "potential," "possible," "diligence," "industry-leading," "compliant," "indications," or "early feedback" or other forms of these words or similar words or expressions or the negatives thereof. These forward-looking statements are subject to substantial risks and uncertainties that could cause our results or future business, financial condition, results of operations or performance to differ materially from our historical results or experiences or those expressed or implied in any forward-looking statements contained in this report. These risks and uncertainties include, but are not limited to: the spin-off of our critical care product group, our ability to develop new products and avoid manufacturing and quality issues; clinical trial or commercial results or new product approvals and therapy adoption; the impact of domestic and global conditions; competition in the markets in which we operate; our reliance on vendors, suppliers, and other third parties; damage, failure or interruption of our information technology systems; the impact of public health crises; consolidation in the healthcare industry; our ability to protect our intellectual property; our compliance with applicable regulations; our exposure to product liability claims; use of our products in unapproved circumstances; changes to reimbursement for our products; the impact of currency exchange rates; unanticipated actions by the United States Food and Drug Administration and other regulatory agencies; changes to tax laws; unexpected impacts or expenses of litigation or internal or government investigations; and other risks detailed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2023, 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.



Part I. Financial Information
Item 1.    Financial Statements
EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions, except par value; unaudited)
 March 31,
2024		December 31,
2023
ASSETS  
Current assets  
Cash and cash equivalents$1,224.6 $1,144.0 
Short-term investments (Note 5)473.0 500.5 
Accounts receivable, net of allowances of $13.5 and $8.3, respectively
817.6 775.1 
Other receivables59.3 61.8 
Inventories (Note 2)1,207.3 1,168.2 
Prepaid expenses138.1 146.8 
Other current assets250.6 239.3 
Total current assets4,170.5 4,035.7 
Long-term investments (Note 5)455.6 583.9 
Property, plant, and equipment, net1,767.9 1,749.4 
Operating lease right-of-use assets 98.4 94.0 
Goodwill 1,252.8 1,253.5 
Other intangible assets, net446.8 428.4 
Deferred income taxes776.7 754.6 
Other assets (Note 2)767.6 463.7 
Total assets$9,736.3 $9,363.2 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities  
Accounts payable$212.3 $201.4 
Accrued and other liabilities (Note 2)873.7 969.1 
Operating lease liabilities24.8 24.9 
Total current liabilities1,110.8 1,195.4 
Long-term debt 597.2 597.0 
Taxes payable79.6 80.6 
Operating lease liabilities 77.2 73.0 
Uncertain tax positions336.6 339.3 
Litigation settlement accrual82.0 94.2 
Other liabilities266.5 264.3 
Total liabilities2,549.9 2,643.8 
Commitments and contingencies (Note 11)
Stockholders' equity  
Preferred stock, $0.01 par value, authorized 50.0 shares, no shares outstanding          
— — 
Common stock, $1.00 par value, 1,050.0 shares authorized, 651.8 and 650.5 shares issued, and 602.4 and 601.1 shares outstanding, respectively
651.8 650.5 
Additional paid-in capital2,379.8 2,274.4 
Retained earnings9,344.3 8,992.4 
Accumulated other comprehensive loss (Note 12)(233.3)(242.8)
Treasury stock, at cost, 49.4 and 49.4 shares, respectively
(5,024.7)(5,024.5)
Total Edwards Lifesciences Corporation stockholders' equity7,117.9 6,650.0 
Noncontrolling interest68.5 69.4 
Total stockholders' equity7,186.4 6,719.4 
Total liabilities and equity$9,736.3 $9,363.2 
The accompanying notes are an integral part of these
consolidated condensed financial statements.
1

EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in millions, except per share information; unaudited)
 Three Months Ended
March 31,
 20242023
Net sales$1,598.2 $1,459.6 
Cost of sales385.6 329.5 
Gross profit1,212.6 1,130.1 
Selling, general, and administrative expenses489.7 436.3 
Research and development expenses285.2 261.2 
Intellectual property agreement and certain litigation expenses (Note 3)
8.9 43.5 
Change in fair value of contingent consideration liabilities (Note 7)— 0.7 
Separation costs (Note 4)41.3 — 
Operating income, net387.5 388.4 
Interest income, net(16.5)(8.6)
Other income, net(5.4)(1.6)
Income before provision for income taxes409.4 398.6 
Provision for income taxes58.4 58.1 
Net income351.0 340.5 
Net loss attributable to noncontrolling interest(0.9)— 
Net income attributable to Edwards Lifesciences Corporation$351.9 $340.5 
Share information (Note 13)
  
Earnings per share:  
Basic$0.58 $0.56 
Diluted$0.58 $0.56 
Weighted-average number of common shares outstanding:  
Basic601.6 607.5 
Diluted604.1 610.9 
The accompanying notes are an integral part of these
consolidated condensed financial statements.
2

EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
 Three Months Ended
March 31,
 20242023
Net income$351.0 $340.5 
Other comprehensive income (loss), net of tax (Note 12):
Foreign currency translation adjustments(26.1)3.8 
Unrealized gain (loss) on hedges
26.9 (17.2)
Unrealized pension credits (costs)
0.3 (0.1)
Unrealized gain on available-for-sale investments
8.4 13.0 
Other comprehensive income (loss), net of tax
9.5 (0.5)
Comprehensive income360.5 340.0 
Comprehensive loss attributable to noncontrolling interest
(0.9)— 
Comprehensive income attributable to Edwards Lifesciences Corporation$361.4 $340.0 
The accompanying notes are an integral part of these
consolidated condensed financial statements.
3

EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
 Three Months Ended
March 31,
 20242023
Cash flows from operating activities  
Net income$351.0 $340.5 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:  
Depreciation and amortization38.5 35.2 
Non-cash operating lease cost7.7 6.8 
Stock-based compensation (Note 9)44.6 38.9 
Deferred income taxes(35.8)(51.8)
Other(0.5)1.1 
Changes in operating assets and liabilities:  
Accounts and other receivables, net(55.0)(77.5)
Inventories(69.5)(32.8)
Accounts payable and accrued liabilities(89.1)(45.2)
Income taxes(263.1)87.2 
Prepaid expenses and other current assets27.1 (23.8)
Intellectual property agreement accrual(5.2)29.3 
Other(4.2)6.2 
Net cash (used in) provided by operating activities(53.5)314.1 
Cash flows from investing activities  
Capital expenditures(65.3)(61.5)
Purchases of held-to-maturity investments (Note 5)(0.8)(12.5)
Proceeds from held-to-maturity investments (Note 5)9.3 80.5 
Purchases of available-for-sale investments (Note 5)(1.8)(3.2)
Proceeds from available-for-sale investments (Note 5)157.3 183.4 
Investments in intangible assets(20.0)(13.1)
Business combination, net of cash— (141.2)
Payment for acquisition options (Note 6)(10.8)(15.0)
Issuances of notes receivable(2.5)(15.0)
Other(2.3)(1.9)
Net cash provided by investing activities63.1 0.5 
Cash flows from financing activities  
Purchases of treasury stock(0.2)(249.3)
Proceeds from stock plans62.1 41.9 
Other(0.2)0.8 
Net cash provided by (used in) financing activities61.7 (206.6)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash9.7 (4.2)
Net increase in cash, cash equivalents, and restricted cash81.0 103.8 
Cash, cash equivalents, and restricted cash at beginning of period1,148.0 772.6 
Cash, cash equivalents, and restricted cash at end of period (Note 2)$1,229.0 $876.4 
The accompanying notes are an integral part of these
consolidated condensed financial statements.
4

EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions; unaudited)
 Common StockTreasury Stock
 SharesPar ValueSharesAmountAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Edwards Lifesciences Corporation Stockholders' EquityNoncontrolling InterestTotal Stockholders' Equity
Balance at December 31, 2023650.5 $650.5 49.4 $(5,024.5)$2,274.4 $8,992.4 $(242.8)$6,650.0 $69.4 $6,719.4 
Net income     351.9  351.9 (0.9)351.0 
Other comprehensive loss, net of tax      9.5 9.5 9.5 
Common stock issued under stock plans1.3 1.3   60.8   62.1 62.1 
Stock-based compensation expense    44.6   44.6 44.6 
Purchases of treasury stock  — (0.2)  (0.2)(0.2)
Balance at March 31, 2024
651.8 $651.8 49.4 $(5,024.7)$2,379.8 $9,344.3 $(233.3)$7,117.9 $68.5 $7,186.4 
The accompanying notes are an integral part of these
consolidated condensed financial statements.

5

EDWARDS LIFESCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions; unaudited)
 Common StockTreasury Stock
 SharesPar ValueSharesAmountAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Edwards Lifesciences, Inc. Stockholders' EquityNoncontrolling InterestTotal Stockholders' Equity
Balance at December 31, 2022646.3 $646.3 38.0 $(4,144.0)$1,969.3 $7,590.0 $(254.9)$5,806.7 $— $5,806.7 
Net income     340.5  340.5 — 340.5 
Other comprehensive loss, net of tax      (0.5)(0.5)(0.5)
Common stock issued under stock plans0.8 0.8   41.1   41.9 41.9 
Stock-based compensation expense    38.9   38.9 38.9 
Purchases of treasury stock  3.1 (249.5)  (249.5)(249.5)
Changes to noncontrolling interest84.0 84.0 
Balance at March 31, 2023
647.1 $647.1 41.1 $(4,393.5)$2,049.3 $7,930.5 $(255.4)$5,978.0 $84.0 $6,062.0 
The accompanying notes are an integral part of these
consolidated condensed financial statements.
6


1.     BASIS OF PRESENTATION

The accompanying interim consolidated condensed financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in Edwards Lifesciences' Annual Report on Form 10-K for the year ended December 31, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted.

The consolidated condensed financial statements include the accounts of all wholly-owned subsidiaries and variable interest entities for which the Company is the primary beneficiary. The Company attributes the net income or losses of its consolidated variable interest entities to controlling and noncontrolling interests using the hypothetical liquidation at book value method. All intercompany accounts and transactions have been eliminated in consolidation.

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.

In the opinion of management, the unaudited interim consolidated condensed financial statements reflect all adjustments necessary for a fair statement of the results for the interim periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

There have been no material changes to the Company's significant accounting policies from those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Recently Adopted Accounting Standards

In March 2023, the Financial Accounting Standards Board ("FASB") issued an amendment to the accounting guidance on investments in tax credit structures to allow entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2024. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

New Accounting Standards Not Yet Adopted

In March 2024, the SEC issued final climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. The new rules will be effective for annual reporting periods beginning in fiscal year 2025, except for the greenhouse gas emissions disclosures which will be effective for annual reporting periods beginning in fiscal year 2026. Subsequent to issuance, the rules became the subject of litigation, and the SEC has issued a stay to allow the legal process to proceed. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements.

In December 2023, the FASB issued an amendment to the accounting guidance on income taxes which requires entities to provide additional information in the rate reconciliation and additional disaggregated disclosures about income taxes paid. This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of this guidance to impact its financial statements, but the guidance will impact its income tax disclosures.

In November 2023, the FASB issued an amendment to the accounting guidance on segment reporting. The amendments require disclosure of significant segment expenses and other segment items and requires entities to provide in interim periods
all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The amendment also
requires disclosure of the title and position of the chief operating decision maker ("CODM") and an explanation of how the
CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate
7

resources. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years
beginning after December 15, 2024. Retrospective application is required, and early adoption is permitted. The Company is
currently evaluating the impact the guidance will have on its consolidated financial statements.

2.     OTHER CONSOLIDATED FINANCIAL STATEMENT DETAILS

Composition of Certain Financial Statement Captions
(in millions)

Components of selected captions in the consolidated condensed balance sheets consisted of the following:
March 31, 2024December 31, 2023
Inventories
Raw materials$280.0 $252.6 
Work in process258.6 220.1 
Finished products668.7 695.5 
$1,207.3 $1,168.2 

At March 31, 2024 and December 31, 2023, $161.7 million and $164.6 million, respectively, of the Company's finished products inventories were held on consignment.

March 31, 2024December 31, 2023
Other assets
Tax receivable (Note 14)$286.4 $— 
Notes and other receivables159.5 155.1 
Acquisition options172.1 161.3 
Long-term prepaid royalties107.8 109.9 
Fair value of derivatives27.9 23.4 
Other long-term assets13.9 14.0 
$767.6 $463.7 
Accrued and other liabilities 
Employee compensation and withholdings$237.2 $371.2 
Taxes payable85.0 59.3 
Property, payroll, and other taxes71.2 63.0 
Research and development accruals75.7 74.1 
Accrued rebates120.6 131.4 
Fair value of derivatives4.9 15.2 
Accrued marketing expenses14.1 15.0 
Legal and insurance32.9 30.7 
Litigation settlement76.1 69.1 
Accrued relocation costs19.3 19.2 
Accrued professional services15.7 8.8 
Accrued realignment reserves10.2 12.3 
Accrued warranties10.5 10.0 
Other accrued liabilities100.3 89.8 
$873.7 $969.1 
8


Supplemental Cash Flow Information
(in millions)
Three Months Ended
March 31,
20242023
Cash paid during the year for:
Income taxes (Note 14)$349.2 $21.7 
Amounts included in the measurement of operating lease liabilities$8.2 $7.1 
Non-cash investing and financing transactions:  
Right-of-use assets obtained in exchange for new lease liabilities$13.4 $2.2 
Capital expenditures accruals$34.3 $26.5 

Cash, Cash Equivalents, and Restricted Cash
(in millions)
March 31, 2024December 31, 2023
Cash and cash equivalents$1,224.6 $1,144.0 
Restricted cash included in other current assets3.6 3.3 
Restricted cash included in other assets0.8 0.7 
Total cash, cash equivalents, and restricted cash$1,229.0 $1,148.0 

Amounts included in restricted cash primarily represent funds placed in escrow related to litigation.

3.    INTELLECTUAL PROPERTY AGREEMENT AND CERTAIN LITIGATION EXPENSES

On April 12, 2023, Edwards entered into an Intellectual Property Agreement (the "Intellectual Property Agreement") with Medtronic, Inc. ("Medtronic") pursuant to which the parties agreed to a 15-year global covenant not to sue ("CNS") for infringement of certain patents in the structural heart space owned or controlled by each other. In consideration for the global CNS and related mutual access to certain intellectual property rights, Edwards paid to Medtronic a one-time, lump sum payment of $300.0 million and is paying annual royalties tied to net sales of certain Edwards products. Based upon the terms of the Intellectual Property Agreement, the Company identified the relevant elements for accounting purposes and allocated the $300.0 million upfront payment based on their respective fair values. The Company recorded a $37.0 million pre-tax charge in Intellectual Property Agreement and Certain Litigation Expenses in March 2023 related primarily to prior commercial sales incurred through March 31, 2023. The Company recorded a prepaid royalty asset of $124.0 million in April 2023 related to future commercial sales, which will be amortized to expense during the term of the Intellectual Property Agreement. Separately, the Company recorded a $139.0 million pre-tax charge in Intellectual Property Agreement and Certain Litigation Expenses in April 2023 related to products currently in development.

4.    SEPARATION COSTS

On December 7, 2023, the Company announced its intention to complete a spin-off of its Critical Care product group as a separate publicly-traded company to Edwards Lifesciences' shareholders. The proposed spin-off is intended to be a tax-free transaction for U.S. federal income tax purposes and is expected to be completed near the end of 2024, subject to the satisfaction of customary conditions including final approval by the Company's board of directors, receipt of a favorable opinion and Internal Revenue Service ruling with respect to the tax-free nature of the transaction, and the effectiveness of a registration statement on Form 10. The Company incurred separation costs of $41.3 million during the three months ended March 31, 2024, related primarily to consulting, legal, tax, and other professional advisory services associated with the planned spin-off. The costs related primarily to the Company's United States segment.

9

5.     INVESTMENTS

Debt Securities

Investments in debt securities at the end of each period were as follows (in millions):
 March 31, 2024December 31, 2023
Held-to-maturityAmortized CostGross Unrealized GainsGross Unrealized LossesFair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Bank time deposits$56.0 $— $— $56.0 $64.5 $— $— $64.5 
Available-for-sale
U.S. government and agency securities63.8 — (2.4)61.4 72.7 0.1 (2.8)70.0 
Asset-backed securities148.0 — (3.8)144.2 192.1 — (7.8)184.3 
Corporate debt securities553.1 0.1 (11.7)541.5 658.5 — (16.7)641.8 
Municipal securities2.8 — (0.1)2.7 2.8 — (0.2)2.6 
Total$767.7 $0.1 $(18.0)$749.8 $926.1 $0.1 $(27.5)$898.7 
The cost and fair value of investments in debt securities, by contractual maturity, as of March 31, 2024, were as follows:
Held-to-MaturityAvailable-for-Sale
 Amortized CostFair ValueAmortized CostFair Value
 (in millions)
Due in 1 year or less$56.0 $56.0 $422.8 $417.0 
Due after 1 year through 5 years— — 181.6 174.8 
Instruments not due at a single maturity date (a)
— — 163.3 158.0 
$56.0 $56.0 $767.7 $749.8 
_______________________________________
(a)     Consists of mortgage-backed and asset-backed securities.
Actual maturities may differ from the contractual maturities due to call or prepayment rights.
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of March 31, 2024 and December 31, 2023, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):

March 31, 2024
Less than 12 Months12 Months or GreaterTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. government and agency securities$— $— $58.5 $(2.4)$58.5 $(2.4)
Asset-backed securities12.2 (0.1)130.7 (3.7)142.9 (3.8)
Corporate debt securities— — 430.3 (11.7)430.3 (11.7)
Municipal securities— — 2.6 (0.1)2.6 (0.1)
$12.2 $(0.1)$622.1 $(17.9)$634.3 $(18.0)
10

December 31, 2023
Less than 12 Months12 Months or GreaterTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. government and agency securities$— $— $67.1 $(2.8)$67.1 $(2.8)
Asset-backed securities10.2 (1.8)172.7 (6.0)182.9 (7.8)
Corporate debt securities25.0 (0.1)601.3 (16.6)626.3 (16.7)
Municipal securities— — 2.6 (0.2)2.6 (0.2)
$35.2 $(1.9)$843.7 $(25.6)$878.9 $(27.5)

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 financial condition and near-term prospects of the issuer, including the credit quality of the security's issuer, 2) the Company's intent to sell the security, and 3) whether it is more likely than not the Company will have to sell the security before recovery of its amortized cost. The unrealized losses on the debt securities were largely due to changes in interest rates, not credit quality, and as of March 31, 2024, 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.

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 condensed balance sheets, and are as follows:
 March 31,
2024		December 31,
2023
 (in millions)
Equity method investments  
Carrying value of equity method investments$34.1 $33.6 
Equity securities  
Carrying value of non-marketable equity securities88.7 87.6 
Total investments in unconsolidated entities$122.8 $121.2 

The Company makes 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. The Company recorded a downward adjustment of $2.4 million during the three months ended March 31, 2024 based on observable price changes. As of March 31, 2024, the Company had recorded cumulative upward adjustments of $8.8 million based on observable price changes, and cumulative downward adjustments of $5.5 million due to impairments and observable price changes.

During the three months ended March 31, 2024, the gross realized gains or losses from sales of available-for-sale investments were not material.

11

6.     INVESTMENTS IN VARIABLE INTEREST ENTITIES

The Company reviews its investments in other entities to determine whether the Company is the primary beneficiary of a 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. The Company's maximum loss exposure to variable interest entities, prior to the exercise of options to acquire the entities, is limited to its investment in the variable interest entities, which include equity investments, options to acquire, and promissory notes.

Consolidated VIEs

In February 2023, the Company acquired a majority equity interest in a medical technology company pursuant to a preferred stock purchase agreement, and amended and restated a previous option agreement to acquire the remaining equity interest. Edwards concluded that it is the primary beneficiary and consolidated the VIE. The total assets and liabilities of the Company's consolidated VIE was $266.9 million and $28.5 million, respectively, as of March 31, 2024, and were $272.1 million and $31.5 million, respectively, as of December 31, 2023. The assets of the VIE can only be used to settle obligations of the VIE and general creditors have no recourse to the Company.
Unconsolidated VIEs

Edwards has relationships with various VIEs that it does not consolidate as Edwards lacks the power to direct the activities that significantly impact the economic success of these entities.

In April 2021, the Company entered into a promissory note agreement, a preferred stock purchase agreement, and an option agreement with a privately-held medical device company (the "Investee"). The secured promissory note provides for borrowings up to $45.0 million. At both March 31, 2024 and December 31, 2023, the Company had advanced $30.0 million under the promissory note (included in Other Assets). As of March 31, 2024 and December 31, 2023, the Company had invested $42.8 million and $39.3 million, respectively, in the Investee's preferred equity securities (included in Long-term Investments) and had paid $20.9 million and $13.1 million, respectively, for an option to acquire the Investee (included in Other Assets). Pursuant to the agreements, the Company may be required to invest up to an additional $3.0 million in the Investee's preferred equity securities and up to an additional $6.6 million for the option to acquire the Investee.

In March 2023, the Company agreed to pay a medical device company up to $45.0 million as consideration for an option
to acquire that medical device company, of which $30.0 million had been paid as of March 31, 2024. Also, in March 2023, Edwards advanced $5.0 million to the medical device company under a convertible promissory note. The option and the note
are included in Other Assets on the consolidated balance sheets.

In addition, Edwards has made equity investments through the NMTC program in limited liability companies that are considered VIEs. For more information, see Note 5.

7.     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.
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 condensed 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
12

short-term nature. Financial instruments also include notes payable. As of March 31, 2024, the fair value of the notes payable, based on Level 2 inputs, was $584.6 million.

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 (in millions):
March 31, 2024Level 1Level 2Level 3Total
Assets    
Cash equivalents$430.0 $— $— $430.0 
Available-for-sale investments:
Corporate debt securities
— 541.5 — 541.5 
Asset-backed securities
— 144.2 — 144.2 
United States government and agency securities— 61.4 — 61.4 
Municipal securities
— 2.7 — 2.7 
Investments held for deferred compensation plans130.7 — — 130.7 
Derivatives— 57.5 — 57.5 
$560.7 $807.3 $— $1,368.0 
Liabilities    
Derivatives$— $4.9 $— $4.9 
Other— — 5.0 5.0 
$— $4.9 $5.0 $9.9 
December 31, 2023    
Assets    
Cash equivalents$579.2 $— $— $579.2 
Available-for-sale investments:
Corporate debt securities
— 641.8 — 641.8 
Asset-backed securities
— 184.3 — 184.3 
United States government and agency securities— 70.0 — 70.0 
Municipal securities
— 2.6 — 2.6 
Investments held for deferred compensation plans125.8 — — 125.8 
Derivatives— 47.1 — 47.1 
$705.0 $945.8 $— $1,650.8 
Liabilities    
Derivatives$— $15.2 $— $15.2 
Other— — 10.3 10.3 
$— $15.2 $10.3 $25.5 

Cash Equivalents and Available-for-sale Investments

Cash equivalents included money market funds for the periods presented above. 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 corporate debt securities, asset-backed securities, United States and foreign government and agency securities, and municipal 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. The Company independently reviews and validates the pricing received from the third-party pricing service by comparing the prices to prices reported by a secondary pricing source. The Company’s validation procedures have not resulted in an adjustment to the pricing received from the pricing service.

Deferred Compensation Plans

The Company holds investments related to its deferred compensation plans. The investments are in a variety of stock, bond and money market mutual funds. The fair values of these investments are based on quoted market prices.

13

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 measured using quoted foreign exchange rates, interest rates, yield curves, and cross-currency swap basis rates. The estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

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. As of March 31, 2024, the probability of milestone achievement was determined to be 0% and, accordingly, the contingent consideration liability was zero.

The following tables summarize the changes in fair value of Level 3 financial instruments measured at fair value on a recurring basis (in millions):
 Contingent ConsiderationOtherTotal
Balance at December 31, 2023
$— $10.3 $10.3 
Changes in fair value— (5.3)(5.3)
Balance at March 31, 2024$— $5.0 $5.0 
Contingent ConsiderationOtherTotal
Balance at December 31, 2022
$26.2 $14.0 $40.2 
Changes in fair value0.7 — 0.7 
Balance at March 31, 2023$26.9 $14.0 $40.9 


8.    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
 March 31, 2024December 31, 2023
 (in millions)
Foreign currency forward exchange contracts$1,772.3 $1,786.2 
Cross-currency swap contracts300.0 300.0 

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 (a) future cash flows associated with intercompany transactions and certain local currency expenses expected to occur within approximately 1 year (designated as cash flow hedges), (b) its net investment in certain foreign subsidiaries (designated as net investment hedges) and (c) foreign currency denominated assets or liabilities (designated as fair value hedges). The Company also uses foreign currency forward exchange contracts that are not
14

designated as hedging instruments to offset the transaction gains and losses associated with 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 condensed 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.

The following table presents the location and fair value amounts of derivative instruments reported in the consolidated condensed balance sheets (in millions):
  Fair Value
Derivatives designated as hedging instrumentsBalance Sheet
Location		March 31, 2024December 31, 2023
Assets   
Foreign currency contractsOther current assets$29.6 $23.7 
Cross-currency swap contractsOther assets$27.9 $23.4 
Liabilities   
Foreign currency contractsAccrued and other liabilities$4.9 $15.2 

The following table presents the effect of master-netting agreements and rights of offset on the consolidated condensed balance sheets (in millions):
    Gross Amounts
Not Offset in
the Consolidated
Balance Sheet		 
  Gross Amounts
Offset in the
Consolidated
Balance Sheet		 
  Net Amounts
Presented in the
Consolidated
Balance Sheet
March 31, 2024Gross
Amounts		Financial
Instruments		Cash
Collateral
Received		Net
Amount
Derivative assets      
Foreign currency contracts$29.6 $— $29.6 $(4.9)$— $24.7 
Cross-currency swap contracts$27.9 $— $27.9 $— $— $27.9 
Derivative liabilities      
Foreign currency contracts$4.9 $— $4.9 $(4.9)$— $— 
December 31, 2023      
Derivative assets      
Foreign currency contracts$23.7 $— $23.7 $(9.4)$— $14.3 
Cross-currency swap contracts$23.4 $— $23.4 $— $— $23.4 
Derivative liabilities   
Foreign currency contracts$15.2 $— $15.2 $(9.4)$— $5.8 
The following tables present the effect of derivative and non-derivative hedging instruments on the consolidated condensed statements of operations and consolidated condensed statements of comprehensive income (in millions):
15

 Amount of Gain or (Loss)
Recognized in OCI
on Derivative
(Effective Portion)		 Amount of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
 Three Months Ended
March 31,		 Location of Gain or
(Loss) Reclassified from
Accumulated OCI
into Income		Three Months Ended
March 31,
 
2024202320242023
Cash flow hedges
Foreign currency contracts$36.2 $3.7 Cost of sales$2.4 $29.8 

 Amount of Gain or (Loss)
Recognized in OCI
on Derivative
(Effective Portion)		 Amount of Gain or (Loss)
Recognized in Income on Derivative (Amount Excluded from
Effectiveness Testing)
 Three Months Ended
March 31,		 Location of Gain or
(Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)		Three Months Ended
March 31,
 
2024202320242023
Net investment hedges
Cross-currency swap contracts$4.4 $(2.5)Interest income, net$1.7 $1.7 

The cross-currency swap contracts have an expiration date of June 15, 2028. At the maturity of the cross-currency swap contracts, the Company will deliver the notional amount of €257.2 million and will receive $300.0 million from the counterparties. The Company receives semi-annual interest payments from the counterparties based on a fixed interest rate until maturity of the agreements.
  Amount of Gain or (Loss)
Recognized in Income on
Derivative
  Three Months Ended
March 31,
 Location of Gain or (Loss)
Recognized in Income on
Derivative
20242023
Fair value hedges
Foreign currency contractsOther income, net$4.8 $— 
  Amount of Gain or (Loss)
Recognized in Income on
Derivative
  Three Months Ended
March 31,
 Location of Gain or (Loss)
Recognized in Income on
Derivative
20242023
Derivatives not designated as hedging instruments
Foreign currency contractsOther income, net$12.4 $(5.4)
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The following tables present the effect of fair value and cash flow hedge accounting on the consolidated condensed statements of operations (in millions):
 Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
 Three Months Ended
March 31, 2024
 Cost of salesOther income, net
Total amounts of income and expense line items presented in the consolidated condensed statements of operations in which the effects of fair value or cash flow hedges are recorded$(385.6)$5.4 
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items
$— $(4.0)
Derivatives designated as hedging instruments
$— $4.0 
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach
$— $0.8 
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI into income
$2.4 $— 
 Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
 Three Months Ended
March 31, 2023
 Cost of salesOther income, net
Total amounts of income and expense line items presented in the consolidated condensed statements of operations in which the effects of fair value or cash flow hedges are recorded$(329.5)$1.6 
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships:
Foreign currency contracts:
Hedged items
$— $1.2 
Derivatives designated as hedging instruments
$— $(1.2)
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach
$— $1.2 
Gain (loss) on cash flow hedging relationships:
Foreign currency contracts:
Amount of gain (loss) reclassified from accumulated OCI into income
$29.8 $— 

The Company expects that during the next twelve months it will reclassify to earnings a $12.7 million gain currently recorded in Accumulated Other Comprehensive Loss.

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9.    STOCK-BASED COMPENSATION

Stock-based compensation expense related to awards issued under the Company's incentive compensation plans for the three months ended March 31, 2024 and 2023 was as follows (in millions):
 Three Months Ended
March 31,
 20242023
Cost of sales$8.2 $7.0 
Selling, general, and administrative expenses24.6 22.3 
Research and development expenses11.2 9.6 
Separation costs0.6 — 
Total stock-based compensation expense44.6 38.9 
Income tax benefit(6.2)(4.7)
Total stock-based compensation expense, net of tax$38.4 $34.2 

At March 31, 2024, the total remaining compensation cost related to nonvested stock options, restricted stock units, market-based restricted stock units, and employee stock purchase plan ("ESPP") subscription awards amounted to $242.6 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 30 months.

Fair Value Disclosures

The following table includes the weighted-average grant-date fair values of stock options granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:
 Option Awards
Three Months Ended
March 31,
 20242023
Risk-free interest rate4.3%4.1%
Expected dividend yieldNoneNone
Expected volatility32.7%31.3%
Expected term (years)5.35.3
Fair value, per option$32.91 $27.77 
The following table includes the weighted-average grant-date fair values for ESPP subscriptions granted during the periods indicated and the related weighted-average assumptions used in the Black-Scholes option pricing model:
 ESPP
Three Months Ended
March 31,
 20242023
Risk-free interest rate5.1%4.6%
Expected dividend yieldNoneNone
Expected volatility34.8%31.5%
Expected term (years)0.60.6
Fair value, per share$25.52$21.10 

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10.    ACCELERATED SHARE REPURCHASE

During 2023, the Company entered into an accelerated share repurchase ("ASR") agreement 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 agreement, less a discount. The following table summarizes the terms of the ASR agreement (dollars and shares in millions, except per share data):
  Initial DeliveryFinal Settlement
Agreement DateAmount
Paid		Shares
Received		Price per
Share		Value of
Shares as %
of Contract
Value		Settlement
Date		Total Shares
Received		Average Price
per Share
February 2023$200.0 2.0 $