Edwards Lifesciences Corporation
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Item 1. Business
Overview
Edwards Lifesciences Corporation is the leading global structural heart innovation company, driven by a passion to improve patient lives. Through breakthrough technologies, world-class evidence, and meaningful partnerships with clinicians and healthcare stakeholders, our employees are inspired by our patient-focused culture to deliver life-changing innovations to those who need them most. Edwards Lifesciences has been a leader in our field for over six decades. Since our founder, Miles “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.
Our innovative work encompasses both surgical and transcatheter therapies. In addition, our unique portfolio of repair and replacement technologies for aortic, mitral, tricuspid and pulmonic heart valves provides a broad set of treatment options to serve the many diverse and complex patients in need. Edwards remains committed to its strategy of transformative product innovation, high-quality, expansive clinical evidence to support approvals and adoption, as well as comprehensive support to ensure excellent real-world patient outcomes.
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. In the U.S. alone, one cardiovascular patient dies every 34 seconds.1 Cardiovascular disease is progressive in that it tends to worsen over time and often affects the structure of an individual's heart. Our vision is to transform patient care where patients are diagnosed earlier, treated in a routine fashion, live longer, and enjoy a better quality of life. Our future growth opportunities include offering solutions for treating patients with both valvular and non-valvular structural heart disease, such as heart failure, which is an unfortunate natural progression of the disease for many patients suffering from aortic stenosis, mitral and tricuspid regurgitation, and aortic regurgitation.
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 annuloplasty ring. Alternatively, an interventional cardiologist or cardiac surgeon may implant an Edwards 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.
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 groups of products and technologies we offer to treat advanced cardiovascular disease. Our products are categorized into the following groups: Transcatheter Aortic Valve Replacement (“TAVR”), Transcatheter Mitral and Tricuspid Therapies (“TMTT”), and Surgical Structural Heart (“Surgical”). For more information on net sales from these three main groups, 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
The Edwards SAPIEN family of valves remains a best-in-class therapy for lifetime management of patients with severe aortic stenosis. The SAPIEN valves are delivered while the heart is still beating. The majority of these procedures are conducted without the use of general anesthesia and patients are discharged home within one to
1 National Center for Health Statistics. Multiple Cause of Death 2018–2023 on CDC WONDER Database. Accessed February 1, 2025.
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two days. Transcatheter aortic valve replacement with the SAPIEN family of valves enables patients to recover more quickly and return to a better quality of life sooner than patients receiving traditional open heart surgical therapies. Edwards' transcatheter aortic heart valves were first commercialized in Europe in 2007, in the United States in 2011, and in Japan in 2013. Edwards has partnered with the physician community to generate robust data that has expanded access to patients regardless of risk profiles or symptom status. In 2024, EARLY TAVR trial data demonstrated the superiority of early TAVR intervention in severe asymptomatic aortic stenosis patients with the SAPIEN 3 platform versus clinical surveillance.2 The SAPIEN 3 platform was the world’s first transcatheter heart valve with a transcatheter heart valve in the transcatheter heart valve (“THV-in-THV”) indication for patients assessed at high-risk for surgical replacement, offering patients the ability to have a second minimally invasive procedure. SAPIEN is the most studied valve in the world, with more than 15 years of distinguished clinical trials involving over 10,000 patients, 10 New England Journal of Medicine publications and 1.2 million patients treated around the world. Edwards’ leadership strategy of differentiated innovation, world-class evidence generation and indication expansion is driving guideline and policy evolution and improved patient access and long-term adoption of the SAPIEN platform. Additionally, the Edwards SAPIEN 3 system and Alterra system offer a minimally invasive option for pulmonary valve replacement for patients with congenital heart disease. Edwards continues to deliver the most predictable, durable and trusted TAVR therapy.
Sales of our TAVR products represented 74%, 75%, and 77% of our net sales in 2025, 2024, and 2023, respectively.
Transcatheter Mitral and Tricuspid Therapies
We continue to make significant progress addressing the complex unmet needs of patients with mitral and tricuspid disease with a differentiated portfolio comprised of repair and replacement technologies. The company has successfully commercialized a unique portfolio of therapies, including the PASCAL, EVOQUE and SAPIEN M3 systems, transforming care by enabling personalized therapy. The PASCAL transcatheter repair system (in Europe, the United States, and Japan), EVOQUE tricuspid valve replacement system (in Europe and the United States), and SAPIEN M3 mitral valve replacement system (in Europe and the United States) are commercially available. The PASCAL system addresses the needs of patients with mitral or tricuspid regurgitation through leaflet approximation. The EVOQUE system, the world's first transcatheter tricuspid valve replacement therapy to receive regulatory approval, addresses tricuspid valve regurgitation by replacing the native valve with a bioprosthetic valve. The SAPIEN M3 transcatheter mitral valve replacement system is based on the proven SAPIEN valve and is designed specifically for mitral patients. We remain committed to our strategy of transformative product innovation, robust and expanding clinical evidence to support approvals and adoption, as well as comprehensive support to ensure excellent real-world patient outcomes.
Sales of our TMTT products represented 9%, 7%, and 4% of our net sales in 2025, 2024, and 2023, respectively.
Surgical Structural Heart
We continue to advance our leadership in surgical therapies and transforming patients’ lives globally with leading surgical innovations. We are focused on identifying and solving critical unmet needs in cardiac surgery to help patients live longer, healthier and more active lives. Our differentiated RESILIA tissue technology, with published clinical data showing over 99% freedom from structural valve deterioration through eight years,3 has set the new standard for tissue valve durability. Our flagship INSPIRIS RESILIA aortic valve offers RESILIA tissue and VFit technology. INSPIRIS is the leading aortic surgical valve in the world. Our KONECT RESILIA aortic valved conduit, the first pre-assembled, ready to implant, tissue valved conduit for complex combined procedures, continues to gain strong adoption in the United States and was launched in Europe in 2025.
Our MITRIS RESILIA valve is commercially available in the United States, Europe, Japan and China, as well as other geographies, where it has been widely adopted by surgeons as the leading product in our mitral valve portfolio. 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.
2 Généreux, P., A. Schwartz, J.B. Oldemeyer, et al. “Transcatheter Aortic-Valve Replacement for Asymptomatic Severe Aortic Stenosis.” The New England Journal of Medicine, 28 Oct. 2024.
3 Kaneko, T, Johnston D, Bavaria JE, et al. Propensity-matched 8-year Outcomes Following Surgical Aortic Valve Replacement With Novel Calcificationresistant Versus Contemporary Tissue Bioprostheses. Presented at the Heart Valve Society Annual Scientific Meeting, April 2025.
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Sales of our surgical tissue heart valve products represented 17%, 18%, and 19% of our net sales in 2025, 2024, and 2023, respectively.
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 address 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. Our strategy is to develop and produce safe and effective therapies supported by high-quality clinical studies with extensive data and with innovative features that can enhance patient benefits and product performance and reliability, as well as benefit healthcare systems. The benefits associated with our products 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 while improving 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 TAVR, our primary competitors include Medtronic plc (“Medtronic”) and Abbott Laboratories (“Abbott”). In TMTT, our primary competitor is Abbott, and there are a considerable number of large and small companies with development efforts in these fields. In Surgical, our primary competitors include Medtronic and Abbott.
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 that are 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 2025.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Note Regarding Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.
We are the leading global structural heart disease innovation company, driven by a passion to improve patient lives. Through breakthrough technologies, world-class evidence, and partnerships with clinicians and healthcare stakeholders, our employees are inspired by our patient-focused culture to deliver life-changing innovations to those who need them most. 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 groups: Transcatheter Aortic Valve Replacement (“TAVR”), Transcatheter Mitral and Tricuspid Therapies (“TMTT”), and Surgical.
In February 2026, we acquired Autus Valve Technologies, Inc. (“Autus”) for total consideration of $128.9 million with contingent consideration of up to $132.5 million payable based on the achievement of certain regulatory and sales milestones. The results of Autus have been included in our condensed consolidated financial statements from the date of the acquisition.
We sold (i) our Critical Care product group (“Critical Care”) to Becton, Dickinson and Company (“BD”) in September 2024 and (ii) a business that was not focused on implantable medical innovations for structural heart diseases (the “non-core product group”) in December 2025 (collectively, the “discontinued product groups”). We determined that the conditions for the discontinued operations presentation had been met with respect to the discontinued product groups for the periods presented prior to their sale. As such, the historical financial condition and results of the discontinued product groups have been reflected as discontinued operations in our Condensed Consolidated Financial Statements for the applicable periods presented. Our discussion and analysis of our results of operations is reflective of our continuing operations. See Note 4 to the Condensed Consolidated Financial Statements for further information.
Due to changes to U.S. trade policy, such as increased tariffs on imports and including non-U.S. retaliatory tariffs, we have and will continue to assess potential impacts on our business. As needed, we will pursue options to mitigate the impact of tariffs, including through our supply chain and potential exemptions and exclusions. Failure to sufficiently mitigate the impact of tariffs, including significant inflation and other impacts on our customers, could also reduce demand for our products and adversely affect our business, financial condition and results of operations. Given the uncertainties around U.S. trade policy and future tariff rates, we are unable to predict the nature of the tariffs and whether we will be able to successfully mitigate their impact.
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Financial Highlights
Our net sales for the first three months of 2026 were $1.6 billion, representing an increase of $235.9 million compared to the first three months of 2025, driven primarily by sales of our TAVR and TMTT products.
Our gross profit increased in the three months ended March 31, 2026, driven primarily by our sales growth. Gross profit as a percentage of sales decreased primarily due to the impact from foreign currency rate fluctuations and additional manufacturing expenses related to expansion of new therapies. The increase in our diluted earnings per share in the three months ended March 31, 2026, was driven by our aforementioned operational performance.
Healthcare Environment, Opportunities, and Challenges
The medical technology industry is highly competitive and continues to evolve. We measure our success both by the development of innovative products and the value we bring to our stakeholders. We are committed to developing new technologies and innovations, and we are committed to defending our intellectual property in support of those developments. Our vision for growth is to treat patients with both valvular and non-valvular structural heart disease, such as heart failure, which is a natural progression of the disease for many patients suffering from aortic stenosis and mitral and tricuspid regurgitation.
We are dedicated to generating robust clinical, economic, and quality-of-life evidence that is 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.
New Accounting Standards
Information on new accounting standards is included in Note 1 to the Condensed Consolidated Financial Statements.
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Results of Operations
Net Sales by Region
(dollars in millions)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||
| Percent Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||
| United States | $ | 937.6 | $ | 838.9 | $ | 98.7 | 11.8 | % | |||||||||||||||||||||||||||||
| Europe | 442.6 | 341.8 | 100.8 | 29.5 | % | ||||||||||||||||||||||||||||||||
| Japan | 90.6 | 81.8 | 8.8 | 10.8 | % | ||||||||||||||||||||||||||||||||
| Rest of World | 177.8 | 150.2 | 27.6 | 18.4 | % | ||||||||||||||||||||||||||||||||
| Outside of the United States | 711.0 | 573.8 | 137.2 | 23.9 | % | ||||||||||||||||||||||||||||||||
| Total net sales | $ | 1,648.6 | $ | 1,412.7 | $ | 235.9 | 16.7 | % | |||||||||||||||||||||||||||||
Net sales outside of the United States include the impact of foreign currency exchange rate fluctuations, as further detailed in the discussion below. 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.
Net Sales by Product Group
(dollars in millions)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||
| Percent Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||
| Transcatheter Aortic Valve Replacement | $ | 1,197.3 | $ | 1,046.6 | $ | 150.7 | 14.4 | % | |||||||||||||||||||||||||||||
| Transcatheter Mitral and Tricuspid Therapies | 175.1 | 115.2 | 59.9 | 51.9 | % | ||||||||||||||||||||||||||||||||
Surgical | 276.2 | 250.9 | 25.3 | 10.1 | % | ||||||||||||||||||||||||||||||||
| Total net sales | $ | 1,648.6 | $ | 1,412.7 | $ | 235.9 | 16.7 | % | |||||||||||||||||||||||||||||
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Transcatheter Aortic Valve Replacement Sales
Net sales of TAVR products increased for the three months ended March 31, 2026, driven by higher sales of the Edwards SAPIEN platform in 2026, primarily due to higher sales of the Edwards SAPIEN 3 Ultra RESILIA valve in the United States, Europe, and Japan. In addition, during the three months ended March 31, 2026, foreign currency exchange rate fluctuations increased net sales outside of the United States by $32.0 million, primarily due to the strengthening of the Euro against the United States dollar.
In January 2026, we received United States Food and Drug Administration approval for the SAPIEN 3 transcatheter pulmonic valve delivery system, an advancement designed specifically to support pediatric and adult patients living with congenital heart disease.
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Transcatheter Mitral and Tricuspid Therapies Sales
Net sales of TMTT products increased for the three months ended March 31, 2026, primarily due to higher sales of our PASCAL transcatheter edge-to-edge repair system and EVOQUE tricuspid valve replacement system in the United States and Europe.
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Surgical
Net sales of Surgical products increased for the three months ended March 31, 2026, primarily due to higher sales of the INSPIRIS RESILIA aortic valve, the MITRIS RESILIA valve, and KONECT RESILIA tissue valved conduit in the United States and Europe.
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Gross Profit
Our gross profit increased in the three months ended March 31, 2026, primarily driven by our sales growth discussed above. Gross profit as a percentage of net sales decreased for the three months ended March 31, 2026, primarily driven by a 0.3 percentage point negative impact from foreign currency rate fluctuations, including the settlement of foreign currency hedging contracts, and additional manufacturing expenses related to expansion of new therapies.
Selling, General, and Administrative (“SG&A”) Expenses
SG&A expenses increased for the three months ended March 31, 2026, primarily due to higher headcount related expenses to support patient care. Foreign currency exchange rate fluctuations increased expenses by $14.6 million during the three months ended March 31, 2026, primarily due to the weakening of United States dollar against the Euro.
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Research and Development (“R&D”) Expenses
R&D expenses increased for the three months ended March 31, 2026, primarily due to increased investments in implantable heart failure management and advanced technology innovation.
Certain Litigation Expenses
We incurred certain litigation expenses related to legal proceedings, intellectual property litigation and tax litigation of $37.1 million and $10.9 million during the three months ended March 31, 2026 and 2025, respectively (see Note 12 to the Condensed Consolidated Financial Statements).
Other Operating Income
Other operating income of $14.2 million and $19.1 million in the three months ended March 31, 2026 and 2025, included income from transition services agreements of $13.2 million and $17.9 million, respectively (see Note 4 to the Condensed Consolidated Financial Statements).
Interest Income, net
Interest income was $33.5 million and $36.5 million for the three months ended March 31, 2026 and 2025, respectively. The decrease in interest income was primarily due to a lower average investment balance and lower yield during the three months ended March 31, 2026.
Loss on Impairment
Loss on impairment of $123.6 million in the three months ended March 31, 2026 was due to the carrying amount of one of our VIE investments not being recoverable (see Note 6 to the Condensed Consolidated Financial Statements).
Other non-operating income, net
Other non-operating income, net was $71.5 million and $2.6 million for the three months ended March 31, 2026 and 2025, respectively. The increase in other non-operating income was driven primarily by a gain from the remeasurement of our previously held interest upon acquisition of Autus (see Note 7 to the Condensed Consolidated Financial Statements).
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Provision for Income Taxes
The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside the United States which have statutory tax rates typically lower than the United States tax rate. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.
Our effective income tax rate attributable to continuing operations was 17.1% and 16.2% for the three months ended March 31, 2026 and 2025, respectively. The increase in the effective rate between the three months ended March 31, 2026 and 2025 was primarily due to a decrease in the benefit from foreign earnings taxed at a lower rate, an increase in global minimum tax (“Pillar Two,” as noted below), and a decrease in the tax benefit from employee share-based compensation. In addition, the effective rates for the three months ended March 31, 2026 and 2025 were lower than the federal statutory rate of 21.0% primarily due to (1) foreign earnings taxed at lower rates, (2) United States federal and California research and development credits, and (3) the tax benefit from foreign-derived deduction eligible income.
Many countries are implementing some or all of the Organisation for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting Pillar Two (“Pillar Two”) rules that impose a global minimum tax of 15.0% on reported profits. Although Pillar Two provides a framework for applying the minimum tax, countries may enact Pillar Two slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar Two. In January 2026, the OECD released its Side-by-Side Safe Harbour package, intended to reduce double taxation and compliance burdens by deeming Pillar Two top-up tax to be zero under the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”) for groups headquartered in the United States while preserving application of local Qualified Domestic Minimum Top-up Taxes (“QDMTT”). As countries continue to enact and refine the Pillar Two rules, including jurisdictional enactment of the Side-by-Side Safe Harbour through the course of 2026, we will evaluate the potential effects of Pillar Two on our effective tax rate. In 2026, we expect the Pillar Two provisions to result in additional tax expense of approximately $70.0 million prior to offsets under current law. As countries enact the Side-by-Side Safe Harbour, the Pillar Two UTPR tax expense will be reduced accordingly.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA is not expected to have a material impact on 2026 and future periods.
In the first quarter of 2022, we executed an Advance Pricing Agreement (“APA”) between Japan and Switzerland covering distribution transactions for tax years 2020 through 2024, and in 2023, we executed an APA between Japan and the United States covering tax years 2020 through 2024. We also executed an APA in the fourth quarter of 2024 between Japan and Singapore covering tax years 2022 through 2026 with roll-back terms to cover the distribution of TAVR products beginning in 2020 and the distribution of Surgical products beginning in 2018.
At March 31, 2026, all material state, local, and foreign income tax matters have been concluded for years through 2015.
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 financial condition and results of operations. We strive to resolve open matters with each tax authority at the examination level and could reach an 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 final outcome with a tax authority may result in a tax liability that is materially different from 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.
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The audits of our 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 is currently examining the 2018 through 2020 tax years.
During 2021, we received a Notice of Proposed Adjustment (“NOPA”) from the IRS for the 2015 through 2017 tax years relating to transfer pricing involving Surgical/TAVR intercompany royalty transactions between our United States and Switzerland subsidiaries. The NOPA proposed a substantial increase to our United States taxable income, which could result in additional tax expense for the 2015 through 2017 period of approximately $260.0 million and reflects a departure from a transfer pricing method we had previously agreed upon with the IRS. We disagreed with the NOPA and pursued an administrative appeal with the IRS Independent Office of Appeals (“Appeals”). The Appeals process culminated in the third quarter of 2023 when we and Appeals concluded that a satisfactory resolution of the matter at the administrative level was not possible.
During the fourth quarter of 2023, Appeals issued a notice of deficiency (“NOD”) increasing our 2015 through 2017 United States federal income tax in amounts resulting from the income adjustments previously reflected in the NOPA. The additional tax sought in excess of our filing position is $269.3 million before consideration of interest and a repatriation tax offset.
We plan to vigorously contest the additional tax claimed by the IRS through the judicial process. Final resolution of this matter is not likely within the next 12 months. We believe the amounts previously accrued related to this uncertain tax position are appropriate for a number of reasons, including the interpretation and application of relevant tax laws and accounting standards to our facts and, accordingly, have not accrued any additional amount based on the NOD and other proceedings to date. Nonetheless, the outcome of the judicial process cannot be predicted with certainty, and it is possible that the outcome of that process could have a material impact on our consolidated financial statements. As noted below, similar material tax disputes may arise for the 2018 through 2026 tax years. We made deposits with the IRS of $75.0 million in November 2022, and $305.1 million in March 2024, to prevent the further accrual of interest on that portion of any additional tax and interest we may ultimately be found to owe while we prepare to contest through the judicial process the IRS's entitlement to any of the additional tax claimed by the IRS. The IRS converted those deposits to advance payments, and, on December 20, 2024, we filed administrative claims for refunds of those payments with the IRS for the 2015 through 2017 tax years. We are now able to sue for refunds in the appropriate judicial forum.
Surgical/TAVR intercompany royalty transactions covering tax years 2018 through 2026 remain subject to IRS examination, and those transactions and related tax positions remain uncertain as of March 31, 2026. We have considered this information, as well as information regarding the NOD and other proceedings described above, in our evaluation of our uncertain tax positions. The impact of these unresolved transfer pricing matters, net of any correlative tax adjustments, could have a material impact on 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.
After the first quarter of 2026, we received two draft Notices of Proposed Adjustment (the “Draft NOPAs”) from the IRS for the 2018 through 2020 tax years. The first of the Draft NOPAs relates to certain tax elections made in 2018 and proposes an increase to our U.S. taxable income in the amount of approximately $233.5 million for 2018. The second of the Draft NOPAs relates to the transfer pricing of certain intercompany royalty transactions related to our Surgical and TAVR product groups and proposes increases to our U.S. taxable income for 2018, 2019, and 2020 in the amounts of $625.3 million, $530.7 million, and $683.6 million, respectively. The proposed increases in the second of the Draft NOPAs will reduce the adjustment in the first of the Draft NOPAs as the two adjustments relate to overlapping income. We are evaluating the Draft NOPAs and intend to engage with the IRS examination function regarding the factual and legal matters described therein. If we and the IRS examination function are unable to agree on a resolution, then we expect to receive final NOPAs by end of the second quarter of 2026 and the related Revenue Agent’s Report by end of the third quarter of 2026. If we receive a Revenue Agent’s Report, we intend to pursue available remedies, including administrative appeals and litigation, which could extend over several years. We believe that the amounts previously accrued related to these uncertain tax positions are adequate and, accordingly, no additional amounts have been recorded.
During the first quarter of 2024, we received a notice of assessment from the Israel Tax Authority (the “ITA”) wherein the ITA claimed that we owe approximately $110.0 million of tax excluding interest and penalties in connection with a claimed 2017 transfer of intellectual property. On July 31, 2025, the ITA formally informed us that
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it was withdrawing its 2017 assessment but reserves the right to evaluate whether intellectual property was transferred in later years. We maintain that we did not transfer intellectual property outside of Israel and would vigorously defend that position through administrative proceedings including with appeals if the issue is raised in later years. If necessary, we expect to defend that position through judicial proceedings. During the fourth quarter of 2024, we received a notice of assessment from the ITA claiming that we owe additional tax of approximately $16.0 million excluding interest and penalties for the 2018 through 2022 tax years based entirely on the collateral impacts of the 2017 assessment. We filed a formal appeal in the first quarter of 2025. In the third quarter of 2025, the ITA agreed that intellectual property was not transferred in 2017 and withdrew its assessment. In the first quarter of 2026, we were notified that the ITA had withdrawn its assessment for the 2018 and 2019 taxable years. For taxable years 2020-2022, the ITA has until the expiration of each year’s respective statute of limitations to respond to our appeal. If the 2020 through 2022 assessments are not withdrawn, we will defend our position through judicial proceedings.
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.
As of March 31, 2026, cash and cash equivalents, and short-term investments held in the United States and outside of the United States were $3.2 billion and $436.7 million, respectively.
We have a five-year Credit Agreement (the “Credit Agreement”) which provides for a $750.0 million multi-currency unsecured revolving credit facility and matures on July 15, 2027. We may increase the amount available under the Credit Agreement by up to an additional $250.0 million in the aggregate and extend the maturity date for an additional year, subject to the agreement of the lenders. As of March 31, 2026, no amounts were outstanding under the Credit Agreement.
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 March 31, 2026, we have not elected to redeem any of the 2018 Notes. As of March 31, 2026, the carrying value of the 2018 Notes was $598.5 million.
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 the three months ended March 31, 2026, under the Board-authorized repurchase program, we repurchased a total of 4.9 million shares at an aggregate cost of $520.1 million, including pursuant to a $500.0 million accelerated share repurchase agreements executed during the period (see Note 11 to the Condensed Consolidated Financial Statements). As of March 31, 2026, we had remaining authority to purchase $1.5 billion of our common stock under the share repurchase program.
In February 2026, we completed the acquisition of Autus for total consideration of $128.9 million, which included cash consideration of $35.1 million and was funded using our existing cash. As of March 31, 2026, the potential future payments upon achievement of certain regulatory, performance, and sales milestones pursuant to our business acquisition agreements could aggregate up to a total of $332.5 million.
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.
At March 31, 2026, there had been no material changes in our cash requirements from known contractual and other obligations, including commitments for capital expenditures, as disclosed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2025.
40
Consolidated Cash Flows - For the three months ended March 31, 2026 and 2025:
Net cash flows provided by operating activities of $43.8 million for the three months ended March 31, 2026, decreased $236.6 million over the same period last year primarily due to higher working capital needs, partially offset by improved operating performance.
Net cash used in investing activities of $92.8 million for the three months ended March 31, 2026, consisted primarily of capital expenditures of $64.9 million, issuance of notes receivables of $55.2 million, and a payment of $35.1 million to acquire a company, partially offset by net proceeds from investments of $62.7 million.
Net cash provided by investing activities of $85.3 million for the three months ended March 31, 2025, consisted primarily of net proceeds from investments of $198.4 million, partially offset by capital expenditures of $56.0 million and a payment for a net working capital adjustment of $36.3 million related to the sale of Critical Care.
Net cash used in financing activities of $451.2 million for the three months ended March 31, 2026, consisted primarily of purchases of treasury stock of $521.8 million, partially offset by proceeds from stock plans of $68.9 million.
Net cash used in financing activities of $258.0 million for the three months ended March 31, 2025, consisted primarily of purchases of treasury stock of $308.6 million, partially offset by proceeds from stock plans of $49.9 million.
Critical Accounting Policies and Estimates
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and sales and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies and estimates which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes from the information discussed therein.
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-07-10 | Lippis Daniel J. | CVP, TAVR | Sell | -619 | $91.70 | -$56,762 |
| 2026-06-30 | Lippis Daniel J. | CVP, TAVR | Sell | -619 | $91.40 | -$56,577 |
| 2026-06-17 | Zovighian Bernard J indirect | CEO | Sell | -523 | $87.92 | -$45,982 |
| 2026-05-29 | Dahl Andrew M. | SVP, Corporate Controller | Sell | -568 | $86.08 | -$48,853 |
| 2026-05-27 | BOBO DONALD E JR indirect | CVP,Strategy/Corp Development | Sell | -23,145 | $86.42 | -$2,000,193 |
| 2026-05-22 | Chopra Daveen | CVP, TMTT & Surgical | Sell | -1,500 | $84.60 | -$126,905 |
| 2026-05-18 | Lippis Daniel J. | CVP, TAVR | Sell | -620 | $81.14 | -$50,307 |
| 2026-05-15 | BOBO DONALD E JR indirect | CVP,Strategy/Corp Development | Sell | -8,000 | $81.82 | -$654,573 |
| 2026-05-15 | BOBO DONALD E JR | CVP,Strategy/Corp Development | Sell | -9,968 | $82.07 | -$818,106 |
| 2026-05-12 | Zovighian Bernard J indirect | CEO | Sell | -36,351 ×2 | $77.93 | -$2,833,013 |
| 2026-05-11 | Markowitz Wayne | CVP, JAPAC | Sell | -593 | $79.73 | -$47,280 |
| 2026-05-04 | Lippis Daniel J. | CVP, TAVR | Sell | -1,019 | $83.98 | -$85,576 |
| 2026-05-01 | Lippis Daniel J. | CVP, TAVR | Sell | -1,019 ×2 | $83.01 | -$84,585 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-08 10-Q expected by 2026-08-18 (in 25 days)
- ~2026-11-07 10-Q expected by 2026-11-17 (in 116 days)
- ~2027-02-24 10-K expected by 2027-03-13 (in 225 days)
- ~2027-05-08 10-Q expected by 2027-05-18 (in 298 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-08 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2026-05-06 10-Q Quarterly Report
- 2026-05-04 8-K Officer/Director Change; Regulation FD Disclosure
- 2026-04-23 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-25 10-K Annual Report
- 2026-02-10 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-05 10-Q Quarterly Report
- 2025-10-30 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-19 8-K Other Events; Financial Statements and Exhibits
- 2025-08-06 10-Q Quarterly Report
- 2025-07-25 8-K Officer/Director Change
- 2025-07-24 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-08 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-05-06 10-Q Quarterly Report