INVESTMENTS IN VARIABLE INTEREST ENTITIES

9 Months Ended

Sep. 30, 2024

Variable Interest Entities [Abstract]

INVESTMENTS IN VARIABLE INTEREST ENTITIES

INVESTMENTS IN VARIABLE INTEREST ENTITIES

The Company reviews its investments in other entities to determine whether the Company is the primary beneficiary of a VIE. The Company would be the primary beneficiary of the VIE, and would be required to consolidate the VIE, if it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant to the VIE. The Company's maximum loss exposure to variable interest entities, prior to the exercise of options to acquire the entities, is limited to its investment in the variable interest entities, which include equity investments, options to acquire, and promissory notes.

Consolidated VIEs

In February 2023, the Company acquired a majority equity interest in a medical technology company pursuant to a preferred stock purchase agreement, and amended and restated a previous option agreement to acquire the remaining equity interest. Edwards concluded that it is the primary beneficiary and consolidated the VIE. The total assets and liabilities of the Company's consolidated VIE was $258.1 million and $26.7 million, respectively, as of September 30, 2024, and were $272.1 million and $31.5 million, respectively, as of December 31, 2023. The assets of the VIE can only be used to settle obligations of the VIE and general creditors have no recourse to the Company.

Unconsolidated VIEs

Edwards has relationships with various VIEs that it does not consolidate as Edwards lacks the power to direct the activities that significantly impact the economic success of these entities.

In June 2022, the Company entered into a convertible promissory note and amended its existing warrant agreement with a medical device company. Under the convertible promissory note agreement, the Company agreed to loan the medical device company up to $47.5 million, of which $42.5 million had been advanced as of September 30, 2024. The remaining $5.0 million was advanced in October 2024. In addition, in 2019, the Company paid $35.0 million for an option to acquire the medical device company. The option and the note receivable are included in Other Assets on the consolidated balance sheets.

In April 2021, the Company entered into a promissory note agreement, a preferred stock purchase agreement, and an option agreement with a privately-held medical device company (the "Investee"). The secured promissory note provides for borrowings up to $45.0 million. At both September 30, 2024 and December 31, 2023, the Company had advanced $30.0 million under the promissory note (included in Other Assets). As of September 30, 2024 and December 31, 2023, the Company had invested $42.8 million and $39.3 million, respectively, in the Investee's preferred equity securities (included in Long-term Investments) and had paid $20.9 million and $13.1 million, respectively, for an option to acquire the Investee (included in Other Assets). Pursuant to the agreements, the Company may be required to invest up to an additional $3.0 million in the Investee's preferred equity securities and up to an additional $6.6 million for the option to acquire the Investee.

In March 2023, the Company agreed to pay a medical device company up to $45.0 million as consideration for an option

to acquire that medical device company, of which $30.0 million had been paid as of September 30, 2024. Also, in March 2023, Edwards advanced $5.0 million to the medical device company under a convertible promissory note. In addition, as of September 30, 2024 and December 31, 2023, the Company had invested $3.5 million and $3.3 million, respectively, in the medical device company's preferred equity securities. The option and the note are included in Other Assets on the consolidated balance sheets, and the equity investment is included in Long-term Investments. In July 2024, the Company exercised its option to acquire the medical device company and the transaction closed in October 2024. For more information, see Note 18.

In addition, Edwards has made equity investments through the NMTC program in limited liability companies that are considered VIEs. For more information, see Note 6.