Edwards Lifesciences Corp Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Clinical Advancements: Presentations at TCT on early TAVR, TRISCEND II, and CLASP IID trials. TAVR's RIA trial showed superior outcomes for women; EVOQUE launched in U.S. and Europe with strong demand.
• Acquisitions and Strategy: Acquired JC Medical and JenaValve for aortic regurgitation (AR) treatment; closed Critical Care sale, focusing on structural heart; entered IHFM with Endotronix acquisition.
• Operational Actions: Right-sized the company, optimized costs and resources; repurchased $1 billion of stock in Q3.

Segment Performance

• TAVR: Third quarter global sales of $1 billion, increased 6% in constant currency. U.S. sales growth in line with global; Europe saw improved market position with SAPIEN 3 Ultra RESILIA launch; Japan faced slower market growth. Full-year guidance for TAVR remains 5%-7% unchanged, but Q4 year-over-year sales growth expected lower due to one-time items.
• TMTT: Q3 sales reached $91 million, a 74% increase. Driven by PASCAL growth, EVOQUE launch progressing, and SAPIEN M3 set to launch in Europe next year. Full-year guidance for TMTT is at the high end of 320 million to 340 million.
• Surgical: Third quarter sales from continuing operations were $240 million, up 5% year-over-year. Driven by strong global adoption of INSPIRIS, MITRIS, and KONECT. Full-year guidance for surgical sales growth is 6%-8%.
• Structural Heart Failure: Closed acquisition of Endotronix, entering implantable heart failure management (IHFM). Released 12-month results from the proactive HF pivotal trial, focusing on commercialization of the Cordella system.

Guidance

• Sales Growth: Full-year sales growth guidance remains 8%-10% unchanged. TAVR full-year guidance 5%-7% unchanged, but Q4 growth expected lower due to one-time items (e.g., hurricanes, China distributor rebate adjustment). TMTT guidance is 320 million-340 million; surgical guidance is 6%-8%. Q4 sales expected to be $1.33 billion to $1.39 billion, with EPS $0.53 to $0.57.
• 2025 Guidance: Detailed 2025 financial guidance to be provided at the investor conference on December 4.

Risks

• Competitive Pressures: Regional pressure in TAVR; competition in new therapeutic areas like AR.
• Regulatory and Reimbursement: Uncertainty in regulatory approvals; potential changes in reimbursement.
• External Factors: Foreign currency fluctuations; impact of events like hurricanes and distributor adjustments.

Question and Answer

Q: Bridge Q4 EPS to 2025 EPS A: Scott mentioned 2025 will benefit from top-line growth, actions taken in 2024, and EPS leverage, with details at the investor conference.

Q: TAVR capacity issue A: Larry discussed capacity constraints in TAVR, noting hospitals are investing in workflow but confident healthcare systems can scale.

Q: TMTT tricuspid replacement and repair A: Daveen talked about EVOQUE's launch, the need for a portfolio of repair and replacement technologies, and ongoing clinical support.

Q: EVOQUE NTAP and 56mm valve A: Daveen said NTAP provides a tailwind, and the 56mm valve adds 20%-25% to the patient population.

Q: M3 mitral replacement timeline A: Daveen stated European launch of SAPIEN M3 is expected mid-2025, with U.S. launch after PMA review