Edwards Lifesciences [EW]
Task 2 · EW_Financial_Model.xlsx · six tabs, live formulas · FY2022A–FY2032E
| Tab | Contents |
|---|---|
| Assumptions | Segment actuals (tied to filed tables), growth drivers, margin/cost ratios, tax, D&A, capex, share count, WACC inputs. Input cells shaded amber; filed actuals shaded grey |
| Income_Statement | TAVR / TMTT / Surgical / reconciling → revenue → GAAP P&L → GAAP EPS → adjusted EPS bridge → the filed tie-out block |
| Balance_Sheet | Actual years are the filed figures; forecast rolls from the cash-flow and equity rolls. Balance check row |
| Cash_Flow | NI → D&A → SBC → ΔNWC → CFO → capex → FCF → buyback/equity roll → net change in cash |
| DCF | Unlevered FCF, mid-year discounting, Gordon terminal value, WACC × g sensitivity grid |
| Scenarios | Bear/Base/Bull, 12-month target framing, six-year cross-check, E[R] range, flip-point ladder, base-rate checks |
Formatting follows the standing convention: the top line of each statement block carries the dollar sign; rows
beneath are plain numbers. Per-share and price cells always carry $.
A zero balance check verifies internal consistency, not input accuracy. Every actual-year line is tied back to the filed figure and the tie is stated on the Income_Statement tab itself, not only here:
| FY2025A, continuing operations | Filed | Model | Difference |
|---|---|---|---|
| Net sales | $6,067.6m | $6,067.6m | $0.00m |
| Gross profit | $4,733.4m | $4,733.4m | +$0.04m |
| SG&A | $2,085.2m | $2,085.2m | $0.00m |
| R&D | $1,079.2m | $1,079.2m | −$0.02m |
| Operating income, net | $1,264.2m | $1,264.3m | +$0.07m |
| Pre-tax income | $1,272.9m | $1,273.0m | +$0.07m |
| Net income (cont. ops) | $1,056.0m | $1,056.1m | +$0.06m |
| Diluted EPS (cont. ops) | $1.81 | $1.80 | −$0.01 |
Residuals are sub-$0.10m rounding on six-decimal ratio inputs. Sources: FY2025 10-K figures via EDGAR XBRL company facts (CIK 0001099800) and the 2026-02-10 8-K Ex-99.1, which agree.
Balance check = 0.0000 in all eleven modelled years (FY2022–FY2032).
Guidance reproduction: FY2026E adjusted EPS of $2.99 sits inside the company's $2.95–3.05 guide; the FY2025 adjusted figure of $2.56 reproduces the $2.564 implied by "growing 17% at midpoint." FY2026E revenue of $6,816.2m sits inside the $6.6–6.9bn revenue guide and +0.8% above the $6.76bn consensus.
All four were found by opening the workbook in Excel via AppleScript and reading computed cells back — none would have surfaced from Python writing formula strings without error.
SBC leaked the balance sheet by exactly its own value, every forecast year. Stock-based compensation was added back in operating cash flow but never credited to equity: assets grew by NI + SBC − buybacks while liabilities and equity grew by NI − buybacks. The balance check read −206.1, −433.9, −684.0 … a growing residual. Fixed by adding SBC to the equity roll.
Non-controlling interest broke the FY2023 and FY2024 actual-year balance by $69.4m and $64.5m.
us-gaap:StockholdersEquity excludes NCI while us-gaap:Assets does not; filed assets minus filed liabilities
minus ex-NCI equity is non-zero in exactly those two years. Fixed by using
StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest. A worked example of the EDGAR
tag-priority hazard — the first tag returned data, and the data was wrong for the purpose.
The interest-income line was circular. Interest was driven off same-year cash → free cash flow → net income → interest. Excel silently returned blanks for every forecast year rather than erroring. Fixed by driving interest off prior-year cash at 3.2%.
FY2022 and FY2023 product-group tables predate the Critical Care restatement. The quarterly 8-K product-group figures for those years sum to $4,527.4m and $5,076.7m against filed continuing-operations revenue of $4,464.0m and $5,010.0m — differences of $63.4m and $66.7m arising from the September-2024 reclassification of Critical Care to discontinued operations. Rather than silently using the wrong total, the model carries an explicit "Reconciling items" line so revenue ties to the filed figure exactly in all four actual years, and it is zero from FY2024 onward.
FY2021 was dropped from the model entirely. No restated continuing-operations revenue figure exists for it (the filed FY2021 figure of $5,232.5m includes Critical Care), and only 2021Q4 was in the quarterly corpus. A reconstructed FY2021 would have been an unsourced number sitting in a model whose entire discipline is tie-out.
| Driver | FY2026E | FY2027E | FY2032E | Basis |
|---|---|---|---|---|
| TAVR growth | 10.3% | 7.5% | 5.3% | FY2026 sits inside the raised 8–9% cc guide plus ~2pp FX. Decelerating thereafter as the Boston Scientific ACURATE-exit benefit laps (management named Q2-2025 as the exit quarter) and share gain exhausts in a two-player market |
| TMTT growth | 39.85% | 33.0% | 13.0% | FY2026 set to the guidance midpoint of $770m ($760–780m). Decays toward the category base rate; SAPIEN M3's second-line "unsuitable for surgery or TEER" label caps the mitral pool |
| Surgical growth | 6.5% | 4.5% | 3.0% | Mature category; FY2022–25 CAGR was 4.8% |
| Gross margin | 77.7% | 77.9% | 78.6% | FY2025A 78.01% filed. Mild recovery as TMTT scales past its launch cost base |
| SG&A % revenue | 32.2% | 31.8% | 30.4% | H1-2026 actual 32.0%. Gradual operating leverage |
| R&D % revenue | 16.2% | 16.2% | 16.0% | H1-2026 actual 16.0%, down from 18.0%. Held near the current rate rather than reverting to the 17.8% FY2025 level — consistent with the thinning trial-start cohort (17 in 2021 → 6 in 2025) |
| Other operating items | 1.40% | 1.20% | 1.00% | Deliberately not zeroed. FY2025 carried $325.4m of IP/litigation; H1-2026 another $43.4m plus $163.6m of impairment. These "non-recurring" items have recurred every year in the window |
| GAAP tax rate | 24.0% | 19.0% | 19.0% | Q2-2026 reported ETR was 53.6% and H1 36.4% on an enacted R&D-credit law change |
| Normalised tax (adjusted EPS) | 23.0% | 21.5% | 21.5% | FY2026 calibrated so adjusted EPS lands inside the company guide; disclosed as a calibrating input on the Assumptions tab. The FY2027 step from 23.0% to 21.5% is worth ~1.9% of EPS and is the largest single driver of the apparent variant versus Street — flagged in Task 3, not claimed as an insight |
| Amortisation add-back | $113m | $112m | $100m | Net intangibles of $1,128.2m at FY2025 amortising over ~10 years |
| Capex % revenue | 4.50% | 4.50% | 4.00% | FY2025A 4.29% |
| Diluted shares | 578.0m | 571.0m | 536.0m | ~1.2%/yr net shrink; FY2022–25 actual averaged −2.1%/yr |
| WACC | 7.9% | Risk-free 4.69%, measured beta 0.56 (251 daily returns vs SPY, Alpaca), ERP 5.5% assumption | ||
| Terminal growth | 3.0% |
The decision basis is a 12-month horizon, valued by applying a forward P/E to FY2028E adjusted EPS — the forward year as at July 2027, mirroring how the stock is priced today (26.4x forward).
| Bear (25%) | Base (50%) | Bull (25%) | |
|---|---|---|---|
| FY2028E adjusted EPS | $3.35 | $3.89 | $4.32 |
| Forward P/E in 12 months | 18.0x | 24.0x | 28.0x |
| 12-month target | $60.30 | $93.36 | $120.96 |
| Return vs spot $83.68 | −27.9% | +11.6% | +44.6% |
The base case assumes a de-rate from 26.4x to 24.0x, not a re-rating. Holding today's multiple flat would put the base target at $102.7 (+22.7%).
A six-year cross-check to FY2032E is carried on the same tab, and it disagrees with the twelve-month view:
the base case annualises to +4.5% against +11.6% over twelve months. (v1.6.0: the 4.7% cash hurdle this
was originally compared against is retired. The Valuation Criteria is now the implied-path test — required
21.1% vs 10.8% demonstrated, margin −10.3pp — see EW_Valuation_Analysis.md §0.1.)
This is not an inconsistency — near-term adjusted EPS growth of 13–15% is faster than the six-year average, so a
one-year holder captures the fast part — but it is a material caveat and it is disclosed rather than suppressed.
| Probability-weighted 12-month target | $92.00 (+10.0%) |
| Net scenario-weighted E[R] (after 0.3% slippage) | +9.6% |
| Cash hurdle | 4.7% |
| Margin | +4.94pp |
| Range (bear 40/45/15 → bear 12/48/40) | +0.4% to +19.7% |
| Hurdle position | INSIDE THE RANGE — item C4 applies |
| Flip point | bear weight ~37.5% vs the 25% used |
Flip-point ladder as computed on the Scenarios tab:
| Bear weight | 0% | 10% | 15% | 20% | 25% | 30% | 40% | 50% | 60% |
|---|---|---|---|---|---|---|---|---|---|
| Net E[R] | +19.5% | +15.6% | +13.6% | +11.6% | +9.6% | +7.7% | +3.7% | −0.2% | −4.2% |
| vs hurdle (pp) | +14.81 | +10.86 | +8.89 | +6.91 | +4.94 | +2.96 | −0.99 | −4.94 | −8.89 |
Unlevered FCF, mid-year convention, seven explicit forecast years.
| US$m | |
|---|---|
| Sum PV of FY2026–32E UFCF | 9,445.1 |
| Terminal value (Gordon, g = 3.0%) | 51,615.6 |
| PV of terminal value | 31,487.7 |
| TV as % of EV | 76.9% |
| Enterprise value | 40,932.8 |
| Net cash (2026-03-31: $2,445.5m cash less $598.5m LT debt) | 1,847.0 |
| Equity value | 42,779.8 |
| Diluted shares (FY2027E) | 571.0m |
| DCF value per share | $74.92 (−10.5% vs spot) |
Terminal value at 76.9% of EV is high but normal for a profitable mature compounder, and far healthier than GH's 98.8% or TWST's negative enterprise value. The DCF carries real weight in this memo rather than being a decoration.
Today's price of $83.68 is reached at a 7.4% WACC with 3.0% terminal growth, or a 7.9% WACC with ~3.6% terminal growth. Neither is unreasonable — the honest conclusion is fairly priced to modestly expensive, not cheap and not dear.
| Excluded | Why |
|---|---|
| SAPIEN X4 | Zero mentions across 19 quarters of earnings releases; three registered trials (ALLIANCE n=1,234, PC 2027-07; ALLIANCE AVIV n=200; ALLIANCE Mitral starting 2027-01). No disclosed ASP, no placement plan, no regulatory timetable, no revenue before 2028–29. Sizing it would be narrative dressed as analysis |
| APTURE transcatheter shunt | ALT-FLOW II, n=100, primary completion 2026-11-01. Pre-revenue |
| J-Valve transfemoral / JOURNEY LVAD | Pivotal primary completion 2028-02 |
| Implantable Heart Failure Management beyond its run-rate | $2.7m in Q2-2026 — 0.16% of revenue. Grown with TMTT, not separately projected |
| ECLIPTIS | US approval Q2-2026, "measured rollout later this year." Immaterial in the forecast window |
| The NCD as a separate revenue line | Sized in the Task 1 TAM at ~$497m of incremental annual revenue at maturity (≈1.44pp/yr) and absorbed into the TAVR growth path, not added on top. Adding it separately would double-count |
| M&A | No pipeline assumed, despite $2.4bn of cash and a demonstrated appetite (Endotronix, Innovalve, JenaValve, JC Medical) |
end date, never by fy; duration facts filtered to 350–380-day
windows; on duplicate period-ends, the latest filed date wins.