IRVINE, CA - Edwards Lifesciences Corp (NYSE: NYSE:EW) has agreed to sell its Critical Care division to medical technology company BD (Becton, Dickinson and Company) (NYSE: BDX) for $4.2 billion in cash, abandoning a previously planned spin-off of the unit. The transaction is anticipated to close by the end of 2024, pending regulatory and antitrust approvals.
The sale is part of Edwards' strategy to concentrate on structural heart disease innovations. The proceeds from the deal will be reinvested into strategic growth initiatives, particularly in technologies aimed at treating aortic, mitral, tricuspid, and pulmonic valve diseases, as well as interventional heart failure therapies.
Bernard Zovighian, CEO of Edwards, stated that the decision to divest the Critical Care business aligns with the company's focus on addressing significant unmet patient needs through differentiated innovations. He expressed confidence that the sale will benefit Edwards, Critical Care, and BD by allowing each entity to provide greater value to patients.
Katie Szyman, currently the corporate vice president of Critical Care for Edwards, will lead the Critical Care unit, which will continue to operate out of Irvine, CA. Edwards expects the deal to have an immaterial impact on its adjusted earnings per share for 2024.
Financial advisory services for the transaction were provided to Edwards by Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC, with Skadden Arps acting as legal counsel.
Edwards Lifesciences is recognized as a global leader in patient-focused innovations for structural heart disease and critical care monitoring. The company emphasizes its commitment to improving lives through partnerships with healthcare professionals and stakeholders worldwide.
InvestingPro Insights
Edwards Lifesciences Corp (NYSE: EW), in the wake of its recent agreement to sell its Critical Care division, remains a compelling entity in the medical technology landscape. With a market capitalization of $52.36 billion and a robust gross profit margin of 76.63% over the last twelve months as of Q1 2024, the company is financially positioned to further its strategic initiatives in structural heart disease innovations. Edwards' commitment to reinvesting the proceeds from the deal into growth initiatives is underpinned by its solid financial performance, including an impressive revenue growth of 11.68% over the same period.
InvestingPro data indicates that Edwards is trading at a high earnings multiple, with a P/E ratio of 36.76, reflecting the market's optimism about its future earnings potential. Analysts predict the company will be profitable this year, which is substantiated by a profitable track record over the last twelve months. Additionally, the company's cash flows can sufficiently cover interest payments, which is a testament to its financial health and ability to sustain investments in innovation.
Investors looking for stable investments might find reassurance in Edwards' low price volatility, as noted in an InvestingPro Tip. Moreover, the company operates with a moderate level of debt, suggesting a balanced approach to leveraging and financial prudence. For those interested in deeper insights, InvestingPro offers additional tips and metrics for Edwards Lifesciences, accessible through the tailored portal: https://www.investing.com/pro/EW. To enhance your investment strategy with these insights, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 13 additional InvestingPro Tips available that can provide further guidance on Edwards Lifesciences' investment profile.
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