Edwards Lifesciences makes money every time a doctor implants one of its heart valves into a patient. The company's main product is the SAPIEN family of valves, which can be placed inside a beating heart through a thin tube called a catheter, without cracking open the chest. That approach is called transcatheter aortic valve replacement, or TAVR for short. On top of TAVR, Edwards sells devices to fix leaky mitral and tricuspid valves, plus traditional surgical valves for patients who go through open-heart surgery. Each procedure that uses an Edwards device generates a sale. The diagram below traces where the money goes.
Five years of financial data tell a clear story about which parts of this business are growing and which are under pressure. Revenue climbed from $5.2 billion in 2021 to $6.1 billion in 2025, a steady upward line. TAVR alone accounted for 74% of net sales in 2025, making it the engine that drives almost everything else.
Gross margins have stayed high throughout this period, hovering near 78% to 84%. That means for every dollar of revenue, Edwards keeps most of it after paying the direct cost of making its devices. High gross margins are typical for companies that make specialized medical implants, because the devices are hard to replicate and doctors are trained on specific products. But the cash actually flowing out of the business after all spending tells a more complicated story.
Free cash flow fell sharply from $1.4 billion in 2021 to just $0.3 billion in 2024. Most of that drop came from large one-time cash payments, including a $300 million lump sum paid to Medtronic in 2023 for a 15-year patent agreement, and tax deposits exceeding $380 million tied to an ongoing IRS dispute. In 2025, free cash flow bounced back to $1.3 billion as those large payments faded. The underlying business was not broken during those low-cash years, but the dip is worth understanding.
The newer mitral and tricuspid product line, called TMTT, is the fastest-growing part of the business right now. It went from 4% of net sales in 2023 to 9% in 2025, with revenue rising from roughly $217 million to $551 million in two years. The PASCAL repair system, the EVOQUE tricuspid replacement, and the SAPIEN M3 mitral replacement are all now approved and selling in the United States and Europe. This segment is still small compared to TAVR, but its growth rate is the highest in the company.
With that refocusing complete, Edwards now carries a net cash position rather than net debt. As of the end of 2025, the company held more cash than debt, with a net debt figure of negative $2.3 billion, meaning cash exceeds what it owes. That is a meaningful cushion for a company that spends roughly 18% of its revenue every year on research and development.
The risks facing this business are specific and documented. First, almost three-quarters of revenue comes from TAVR. If a competitor produces a clearly better valve, or if clinical trial results disappoint, that single product line would feel the pressure immediately. Medtronic and Abbott both compete directly in TAVR, TMTT, and surgical valves. Second, the company relies on hospitals and insurance programs to pay for its procedures. If reimbursement rates fall, or if large hospital purchasing groups squeeze prices, Edwards cannot simply raise prices to compensate. Third, some of the materials used to make valves, including bovine tissue sourced only from the United States and Australia, come from a limited number of suppliers. A supply disruption could halt production.
Intellectual property is a live risk at Edwards right now, not a theoretical one. The company paid Medtronic $300 million in 2023 for a 15-year agreement not to sue each other over structural heart patents, and it still owes annual royalties tied to sales of certain products. Separately, the IRS is claiming Edwards owes $269.3 million in additional tax from 2015 through 2017, related to how the company priced internal transactions between its US and Swiss subsidiaries. Edwards is contesting this through the courts. The outcome is uncertain.
Beyond the existing disputes, Edwards faces a broader regulatory risk. Its products must be approved by the FDA in the United States, by European regulators for CE Mark status, and by Japan's health ministry. Each approval takes years and money. A clinical trial that fails, or a product that gets flagged for safety concerns after approval, can reverse years of investment quickly. The EU's Medical Device Regulation has made the European approval process more demanding than it used to be, adding time and cost for new products seeking the CE Mark.