Edwards Lifesciences (NYSE:EW) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.

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Summary

Edwards Lifesciences Corp reported strong quarterly performance with notable growth in their TAVR business, driven by market expansion and some share gains.

The company is optimistic about its Sapien X4 pipeline, noting potential enhancements and a confirmatory trial expected to continue through 2026.

Guidance has been raised for TAVR for the year, attributed to better than expected Q1 results and overall market growth.

Management emphasized a focus on realistic and transparent guidance, taking into account previous year's performance and upcoming challenges.

The company highlighted its strategic focus on mitral and tricuspid valve solutions, projecting growth opportunities and aiming to create new treatment categories.

Edwards Lifesciences Corp completed a significant share repurchase, reflecting confidence in long-term investment value.

The healthcare environment was described as favorable, with recent positive regulatory developments for breakthrough therapies.

Management is actively searching for a new CFO, with the process reportedly progressing well.

Full Transcript

OPERATOR

We try not to focus too much on share because share is a lagging indicator. Share is never driving a business. You know, we as a company, we bring data, we bring evidence, we bring, you know, best innovation to bring to physician, best tools, best solutions so they can take care of their patients. And therefore, you know, everybody is benefiting. So that's the way we are thinking about it now. Everything that you have seen in the guide, everything that we talk about is in the guidance today. And what we try to do with our guidance is to give you a realistic guidance based on what we know today. So what you talked about happening in mid February and we gave you the best of what we know today. Providing realistic guidance is very important to us. Larry, thank you for the question. All right.

Larry

Hey, Bernard, just for my follow up, it's been a while since since December, since we heard about Sapien X4. Could you give us a little bit of an update? You talked about confirmatory clinical work. Where does that stand? Thanks for taking the question.

Bernard

No, thank you. Thank you. Thank you, Larry. So I'm going to ask Dan, you know, who is very close to this to give you an update on this platform? Yeah. Hi, Larry.

Dan

Thanks for the question. Clearly, we're pretty excited about our to have a pipeline in general which includes X4. X4 is a potential game changer for us, especially on the concept of personalized valve sizing. You know that we've set a very, very high bar with SAPIEN 3 Ultra Resilia that continues to differentiate. And we see that in the data that we're just talking about, not only our own data, but also relative to competitive data. We talked about in December that when we put X4 in a clinic, we immediately started to see things that we would think like, hey, if we had the opportunity to enhance that product, we should take it. And we are. And that has to go into a confirmatory trial. And so we're going to be collecting that evidence through 2026. And when we've completed that, we'll have more to say about the X4 product and the timelines and all those sorts of things. So that's exactly where we're at.

OPERATOR

Thank you. Your next question comes from Travis Steed with Bank of America. Please state your question.

Travis Steed (Equity Analyst)

Hey, congrats on a good quarter. Maybe ask about capacity. You've had more left atrial appendage closure procedures shifting towards EP. What are you seeing from a capacity standpoint for structural heart doctors when you're in the field? And are you seeing any kind of benefit on the numbers in the market.

Bernard

Thanks for the question. Capacity has not been an acute matter in the last few quarters. What we have seen is health systems in the US have done a great job managing capacity. They look at their processes, they look at their staffing, they look about how to turn the room faster in between patients. So we have been quite impressed by all what we have been doing and obviously we are there also to support them. But maybe I can add Davine and Dan to add some color here if you have seen anything.

Davine

Yeah, this is Davine. I'll just make one comment. I think the agility that you talked about, Bernard, is especially true as you start a new therapy like TMTT right when you start like M3 or Evoke, you start taking up lab space. But what we've seen is, at least from our standpoint is that as they put in new lab time, they've worked across the system to ensure that they're not taking away from a place like TAVR or something else. From what we've seen, they've continued to be agile and figuring out, hey, how do we get an extra shift in, how do we get an extra lab running, how do we do other things like that. So that's been pretty consistent in what we've seen as centers get going in TMTT.

Dan

And if I just added from my side, I think it's the right point. It's different from hospital hospital, you know, but from a TAVR perspective I think what really helps is that it's clearly a priority procedure and that's, you know, based on the evidence. And so there is that ability to navigate some of the acuteness of, of various hospital challenges. We're on the ground every day with the hospitals trying to understand what their specific issues are, if they have them and how, if anything we can help. But it's something that we pay close attention to all the time.

Travis Steed (Equity Analyst)

Helpful and then maybe a follow up on the ncd. There's a lot of stuff in the proposed NCD Centers for Heart Team. Just curious if you think it'll all go through as proposed and how important are you each of those things in the NCD proposal? And I had a lot of questions on is the US TAVR, was it high single digits or double digits, if you'd answer that too.

Bernard

It is very tough to predict what the final NCD will be. You know that we are very pleased CMS opened the process. The first phase is over. So basically now we are waiting for, you know, I think in a mid June, you know, to get what the draft NCD will be our position, I believe is, you know, fact based in the interest of a patient to make sure they have, you know, a fast access to care. But again, you know, the decision we rely on CMS, that's on the NCD. What's the second part of your question?

Travis Steed (Equity Analyst)

Did US TAVR, was it high single digits or double digits this quarter and reviewed titrate between the two?

Bernard

Yeah, we don't like to give this kind of specifics. So globally TAVR grew 11%. What we said is that TAVR in the US was healthy and at the ous TAVR grew even faster. So I'm sure she can do some math here.

Travis Steed (Equity Analyst)

Fair. Thank you.

OPERATOR

Your next question comes from Robby Marcus with JPMorgan. Please state your question.

Robby Marcus

Great. Thanks for taking the questions and congrats on a nice quarter, maybe one on guidance. Really strong quarter here. Beat on tavr, TMTT across the board margins. Just wanted to ask sort of the philosophy and the rationale. You took TAVR up a percent for the year, had a big beat in TMTT and left that unchanged. I realize there's a pretty wide guide to start with. And then eps beat by 5 cents and raised the low end by 5 cents. Maybe just give us the rationale. And I realize it's still first quarter so I imagine conservatism is a big chunk of it.

Bernard

Thanks, Robbie. So I would say let me maybe start with the philosophy here on the guidance. I want to be always transparent with you guys and with everyone here to provide a very realistic guidance based on what we do at the time. We are providing the guidance and this is what we are doing here by providing this range. Now if you look at Q1, yes indeed, Q1 came strong, stronger than expected. And it is why, you know, we raised the guidance for the year for TAVR and for the company. Now there are a couple of things that you need to be aware of is the comp. So if you look at Q1 in 2024, so last year it was a lower growth rate for us as a company and for TAVR. And so that's one, two is we had a great year last year in 2024, especially in the second part of the year. So Q3 and Q4. So this is setting a higher bar for us in 2025 in Q3 and Q4. So we took all of that into consideration. Q1, 2024 being low, 2024, H2 being high, a strong beat in Q1. And based on what we know today, we give you the best Guidance we can being a realistic guidance. We feel confident about us delivering on this new guidance for TAVR and for the company. I hope it is helping. Robbie. Great.

Robby Marcus

Maybe just one follow up and I realize this is a follow on to a follow on, but we did see your main TMTT competitor talk about healthy market growth, but them losing share to you in both Mitral and Tricuspid. And we did hear yesterday, I guess from another one of your competitors talk about their left atrial appendage closure was being utilized a bit less standalone by interventional cardiologists as they're shifting focus over to Mitral and Tricuspid. Your question clearly benefiting from all of those trends and commentary. So I was wondering if you agree with those comments. Are you seeing it in the market and how you're helping to drive that?

Bernard

Thanks, that's a very interesting question, Robbie. And what I try to do here is maybe again, you know, look at the big picture here. So for some of our competitor it is about share. We look at this one as we are creating a category when 10 years ago we had the vision, and I should say the bold vision to go deep into the two disease states, Mitral and Tricuspid and decided to invest in a big way in building a portfolio of therapy to be able to solve these unmet patient needs. At the time, 10 years ago, five years ago and even today, it was not about share, it was about the patient, it was about the opportunity. So Fast forward in 2026, guess what? We have a portfolio. We committed, we have made the investment and now we are benefiting from it. So now physician, what do they have? They have multiple solutions and they can choose which one is best for what patient. And that's the difference. This is what's happening. So that's our view of what's happening here. But I'm going to add Devine here, you are close to the action here. So what do you think?

Davine

Yeah, no, I'll just add a little bit on to what you said, Bernard. Clearly we think that the patient treatment for mitral and tricuspid disease, two diseases that are massively under diagnosed, under awareness, under referral, lots of opportunity for so many more people to get these treatments to help their lives. Right? They're still growing, the procedure growth is still growing at double digits across both mitral and tricuspid. And so for us, clearly if you look across the board at our therapies, whether you're talking about PASCAL Repair or EVOQUE or Sapien M3, which is brand, brand new. We're growing at a higher rate than we think the market and that there's tons of opportunity to create massive new categories to treat people, whether you think about it from a mitral side or a tricuspid side or from a repair side or a replacement side. And we think that all this, when you add this together and as Bernard talked about having the portfolio to best treat patients, to give them the best possible solution, really will help us drive to that, you know, $2 billion in 2030 that we've talked about and continued growth beyond that. So we are continuing to be very excited about how our portfolios come together to help treat more patients overall.

Robby Marcus

Perfect. Appreciate the thoughts. Thanks a lot.

OPERATOR

Your next question comes from Vijay Kumar with Evercore isi. Please state your question. Hey guys, congrats on a nice friend and thank you for taking my question. I guess one on maybe a guidance kind of question. Scott, you did the ASR. Can you just talk about how you think about share counter for second quarter and whether there was any weather impact here in Q1, how Q1 played out?

Scott

Sure. So yeah, we completed the accelerated share repurchase. We also did a little bit more repurchase, so something like $520 million total in the quarter. So that brings down the share count a bit. You see the weighted average for the full year is coming down 5 million shares. From our original guidance, the accretion dilution is kind of a push. It doesn't have a big impact on the bottom line short term, but obviously we're buying back shares because we think longer term it's the right investment. Weather impact in Q1 really nominal. That was a question back in February when there was some weather that hit the northeast. And we said back then, a lot of times you just don't know whether procedures are going to get rescheduled during the quarter or after the quarter, into the next quarter or whether they go away. In this case, we didn't really see a big impact by the time we got to March 31st. Great.

Vijay Kumar (Equity Analyst)

And then maybe Bernard, one for you on progress trial. I think last call there was some concerns on maybe you're less bullish on progress. So can you just maybe talk about express your bullishness on progress and how are you handling crossovers? Are crossovers allowed in this trial? If so, when are crossovers being allowed in progress?

Bernard

Thanks, Vijay. You know, we tend in general, and you know us well, we tend not to talk about trial before we can talk about trial results. So most of our trials are FDA approved trial, third party adjudicated and we treat them very seriously because it does matter to our long term strategy. They are not marketing trial or so on. So right now the only thing I can tell you about moderate is what I said in the past, which is we are looking forward the presentation at Transcatheter Cardiovascular Therapeutics (TCT) this year. And as a matter of fact we are going to have other trial at Transcatheter Cardiovascular Therapeutics (TCT) this year, but this one is going to be at Transcatheter Cardiovascular Therapeutics (TCT) this year. We were very pleased at the time of enrollment a couple of years ago where this trial enrolled very fast and usually it is a good proxy when physicians, treating physicians, they are enrolling the trial so they see the benefit. But again I don't know anything about the results and we usually keep it like it is until the end. So every one of us are going to discover the trial at Transcatheter Cardiovascular Therapeutics (TCT) and believe me, we are going to go deep with a PI, with the investigators, with all of you at tct. So you will have a full analysis. We will understand all of the learning and all of this. But as of now, yes, we started the trial for a reason. But I don't know more than that. I hope it is helping Vijay.

Vijay Kumar (Equity Analyst)

That's helpful, Bernard. Thank you. Your next question comes from Joanne Wench with Citibank. Please state your question.

Joanne Wench (Equity Analyst)

Good afternoon and thank you for taking the question. And may I also say very nice quarter. Two questions. I'll just ask them up front. The expense management particularly as I looked at research and development, little less so SGA was really strong in the quarter. How should we think about your maybe new view towards expense management or continued view and then forgive me Scott, for asking this, but where are you in the progress towards finding a new cfo? Thank you.

Bernard

Thank you. Well, let me start with, you know, R and D. We are very much committed into our R and D investment, you know, organic innovations. And we are, you know the guidance for the year is around, you know, 17%. So clearly, you know, we are committed to A couple of things is happening is one is we want to have the right priorities. So you have seen the ratio going down from what it was a few years ago, around 19% to 16 in Q1, but 17 for the full year 2026. And we are going to continue looking at making sure we have big investment because structural heart disease have many opportunities at the same time managing the priorities. And I think the ratio continuing to go down. We are also helped by the top line increasing. So the top line increasing us managing priority. So this is what we are doing in a very intentional manner and strategic manner with regards to the cfo. The process is going and I should say is going well. But as soon as I have news to report, I will, I will send a press release obviously because it is an important hire. The good news is, you know, Scott is very committed to make sure it is a very successful transition. He has been a very successful CFO for the company over the last 12, you know, 13 years and he has been a great, you know, partner to me and to many of the executive team. So I feel good about the process here and as soon as I know more, you will hear from me.

Joanne Wench (Equity Analyst)

Thank you very much.

OPERATOR

Your next question comes from Matt Taylor with Jefferies. Please state your question.

Matt Taylor (Equity Analyst)

Hi. Thank you for taking the question. So I just wanted to follow up on the thread before and get some clarity from you on the guidance. When you're increasing the TAVR guidance this year, are you assuming any increase in your competitive position or share gains? Could you characterize that or is that mostly market growth and your stability within it?

Bernard

Thanks, Matt. So the main reason for having increased the guidance was Based on our Q1 outperformance based on our earlier expectation. That's the main reason. Now if you look at our Q1 performance, this was led by market globally given our renewed focus on tavr, led by all of the clinical evidence we have produced in Tavr with Sapien 3 and you know, all of them and also a little bit of share in Europe from the exit of a competitor and also you know, some slight gain in the US So this is the way we build, you know, the guidance based on what we know today, you know Matt. And obviously as we know more, you know, for the Q2 earning call we will provide, you know, more, you know, more analytics if we have to. Thank you.

Matt Taylor (Equity Analyst)

And maybe as a follow up could you comment on just the health care environment in general. There's been some chatter about concerns with changes in the macro environment and coverage. I think that would impact you less because you're levered to Medicare and these very necessary procedures. But I'd love any thoughts that you have on the overall environment.

Bernard

Yes, we, I would say we don't see an intense environment. And again what you need to realize as a company, all of our technologies are technologies helping to extend life of patients or improve the quality of life of patients. So they are, most of them are life saving technologies and they are technologies that patient needs urgently. So we don't feel maybe what you are talking about. And we got some good news also this morning from the new administration. I don't know if you did follow, but together CMS and FDA basically partner to bring a new policy for breakthrough therapies. And it is exactly what we are doing as a company. And the goal here for this new policy, the name of it is Rapid, is basically to make sure that patients have an early and timely access to care in the US So we look at it, the environment for breakthrough therapy is positive and the news from this morning, we look at it as even more positive. We have been working with FDA and CMS for decades and it is great to see that they want to enhance a process which was already working. And I'm sure you know this process is going to be even better. So we are fully behind it. So very positive about it.

Matt Taylor (Equity Analyst)

Great. Thank you so much. Thank you.

OPERATOR

And our final question comes from Matt Miksik with Barclays. Please state your. Hi. Thanks so much for taking the question. So one follow up on Mitchell and one quick follow up on Tricuspid kind

Matt Miksik (Equity Analyst)

of in review forward. So I think, you know, one of the competitors in Mitool talked a little bit about the share activity, share pressure, you know, which of course been in Mitil for some time taking share repair with Pascal, which has been great. But some step up of that activity. Maybe you could talk a little bit about like what the rollout of M3 looks like in terms of training, in terms of adoption and how if at all that is either expanding the accounts that you're in or enhancing engagement with those accounts. Any kind of color like that. And I mentioned just one quick follow up on Tricuspid.

Davine

Sure. Matt, this is Davine. So some quick background I think we see in the treatment of Mitral patients that as I mentioned before, Pascal really offers differentiated technology which we see physicians are seeing and that's why they want to use Pascal for their patients. As you look about Sapien M3, this product is one for where you may get suboptimal results for either tear or surgery. So this is offering a potentially solution for patients who don't necessarily have a great surgical or transcatheter solution today, as you can imagine with any new technology. Again, only a quarter into the launch, you start off by really working closely with the centers that were part of your clinical trial. And those are usually our first wave that we start working on. And then eventually you start building onto other kind of large mitral centers. But we are so early in the rollout because you're only a quarter in that you're just kind of starting that process with a limited number of centers overall.

OPERATOR

Matt, do you have a follow? Thank you. We'll move on as that was our last question. I'll hand the floor back to management for closing remarks. Thank you.

Bernard

Thank you, everyone, for your continued interest in Edwards, Scott, Jerry and the team. I obviously welcome any additional question by telephone. And I wish you a great rest of your day. Thank you, everyone.

OPERATOR

Thank you. This concludes today's call. All parties may disconnect. Have a good evening.

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