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SEC filingRevenue grew 16.7% to $1.6B with gross margins at 78.0%, driving 21.0% operating income growth to $478M, though net income rose modestly 6.3% to $381M amid non-operating dynamics and operating cash flow declined to $44M due to working capital needs.
Edwards Lifesciences delivered robust top-line growth with Q1 2026 revenue of $1.6 billion, up 16.7% from $1.4 billion in the prior year quarter. This performance underscores the company's operational strength in its core structural heart business, enabling gross profit to reach $1.3 billion, a 15.7% increase that sustained a healthy 78.0% gross margin. The margin reflects effective cost management despite potential pressures from foreign exchange fluctuations and investments in new therapy manufacturing capacity, as sales leverage supported profitability.
Operating income advanced 21.0% to $477.6 million, expanding the operating margin to 29.0%. This outperformance stemmed from revenue growth exceeding increases in selling, general, and administrative expenses as well as research and development, allowing sustained investments in patient support and innovation without eroding margins significantly. Management attributes the EPS increase to 8.2% at $0.66 directly to this operational momentum, highlighting efficient execution across the portfolio.
Net income grew more modestly by 6.3% to $380.7 million. The tempered pace reflects non-operating dynamics, including a boost from other non-operating income primarily due to a gain on remeasurement of the previously held interest in Autus upon its acquisition, which partially offset other items like decreased interest income from lower average investment balances and yields. The consolidated effective tax rate, a composite reflecting global earnings mix and applicable rates, also influenced the bottom line.
Cash generation presented a mixed picture. Net cash provided by operating activities declined sharply to $44 million from $280 million, primarily driven by working capital needs amid the revenue ramp. Capital expenditures rose to $65 million from $56 million to support ongoing capacity expansion, resulting in negative free cash flow of -$21.1 million. Despite this, liquidity remains solid with sources including cash equivalents, short-term investments, operations, and credit facilities. Share repurchases are executed based on factors like expected stock plan dilution, cash capacity, and market pricing, prioritizing long-term shareholder value.