Edwards Lifesciences (EW)

Analysts at Canaccord Genuity weighed in on Edwards Lifesciences (NYSE: EW), after the company announced deal to sell its Critical Care business to Becton, Dickinson (NYSE: BDX) for $4.2B.

They commented: "This morning, Edwards and Becton, Dickinson and Company (BDX | NYSE | Not Rated) issued press releases announcing that EW had entered into a definitive agreement to sell its Critical Care business to BD in an all-cash transaction valued at $4.2B. This transaction represents a ~4.4x multiple to the segment’s TTM sales. Edwards had previously communicated to investors during its annual investor day last December that it was going to pursue a spin-off of Critical Care (which it now is no longer pursuing). Timing wise, the transaction is expected to close by the end of 2024 (which aligns with the previous spin-off timing), and EW says it expects the impact to adjusted EPS in 2024 to be immaterial, if this timeline holds. Further, Edwards says that it will use the after-tax proceeds to fund strategic growth investments – noting that it would continue disciplined investments in technology for treatment of aortic, mitral, tricuspid, and pulmonic patients – and the company also highlighted that it expects to use the cash on new therapeutic areas for interventional heart failure. We believe that the transaction will also strengthen EW’s margin profile for 2025 – with the BD press release noting that it expects adjusted GM of at least 60% and adjusted operating margins of at least 25%; this compares to EW’s full corporate average GM of 77.1% and OM of 28.9% in FY23."

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