EWEdwards Lifesciences

The regulatory approval process for new products and new indications for existing products requires extensive clinical trials and procedures, including early clinical feasibility and regulatory studies. Unfavorable or inconsistent clinical data from current or future clinical trials or procedures conducted by us, our competitors, or third parties, or perceptions regarding these clinical data, could adversely affect our ability to obtain necessary approvals and the market's view of our future prospects. Such clinical trials and procedures are inherently uncertain and there can be no assurance that these trials or procedures will be enrolled or completed in a timely or cost-effective manner or result in a commercially viable product or indication; failure to do so could have a material adverse effect on our prospects. Clinical trials or procedures may experience significant setbacks even after earlier trials have shown promising results. Further, preliminary results from clinical trials or procedures may be contradicted by subsequent analyses. In addition, results from our clinical trials or procedures may not be supported by actual long-term studies or clinical experience. If preliminary clinical results are later contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials or procedures may be delayed, suspended, or terminated by us, the FDA, or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks or any other reasons, and any such delay, suspension, or termination could have a material adverse effect on our prospects or the market's view of our future prospects.

On March 22, 2024, Fortis Advisors, LLC, in its capacity as the designated representative of the former stockholders of Harpoon Medical, Inc. February 16, 2026, Valtech Shareholder Representative LLC (“VT Shareholders”) filed suit a complaint against the Company in the Delaware Court of Chancery of the State of Delaware, alleging breach of the Agreement contract and Plan of Merger, dated December 8, 2015, by and between Harpoon Medical, Inc. and Edwards (the “Agreement”). Fortis seeks acceleration and payment of all contingent seeking accelerated milestone payments set forth in the Agreement. merger agreement in which the Company acquired transcatheter structural heart repair technology from Valtech Cardio Ltd. The trial complaint alleges the Company failed to exercise commercially reasonable efforts in the development and commercialization of such technology causing certain milestone payments to not come due. This suit is scheduled for December 2025. the second suit brought by VT Shareholders. The first, filed in 2023, was dismissed by the Court of Chancery on procedural grounds in July of 2024. The Company is unable to cannot predict the ultimate outcome of this matter the litigation or estimate a range of possible exposure; therefore, no amounts have been accrued. the potential impact on its financial statements. The Company is vigorously defending itself in this litigation.

Many countries are implementing some or all of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting Pillar Two (“Pillar Two”) rules ("Pillar Two") that impose a global minimum tax of 15%. Under Pillar Two, a company is required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. We are continuing to monitor the implementation of 15% on reported profits. Although Pillar Two by individual provides a framework for applying the minimum tax, countries may enact Pillar Two differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar Two. In addition, in January 2025, the United States issued an executive order announcing opposition to aspects of these rules. As countries continue to enact and refine the Pillar Two rules, we will evaluate the potential effects of Pillar Two on our effective tax rate. The In 2025, the Pillar Two provisions may have a material impact on our consolidated financial statements resulted in 2025 and future years, depending on future legislation, regulatory guidance, and business events. additional tax expense of approximately $19.1 million.

In March 2023, November 2024, the FASB issued an amendment ASU 2024-03 on income statement presentation to require disclosure, in the notes to the accounting guidance on investments financial statements, of disaggregated information about certain costs and expenses, including purchases of inventory, employee compensation, and depreciation and amortization included in tax credit structures to allow entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. each relevant expense caption within continuing operations. The guidance was is effective for fiscal years beginning after December 15, 2023, including 2026, and interim periods within those fiscal years. beginning after December 15, 2027. The Company adopted this is currently evaluating the impact the guidance will have on January 1, 2024. The adoption of this guidance did not have a material impact on the Company's its consolidated financial statements.