Edwards Lifesciences Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Bernard Zovighian highlighted strong year-to-date performance, with Q3 showing double-digit sales growth. Sales in Q3 were $1.55 billion, a 12.6% increase. Full-year sales growth guidance was raised to the high end of the 9%-10% range, and EPS guidance was raised to $2.56-$2.62.
• Discussed clinical trial results from TCT, including 7-year data from the PARTNER III pivotal trial for TAVR, real-world data on EVOQUE, and 1-year results of the ENCIRCLE pivotal trial for SAPIEN M3. These trials showcased long-term durability and clinical outcomes for various valve therapies.
• Mentioned guideline updates for valvular heart disease, which establish simplified care pathways for severe aortic stenosis patients, underscoring the importance of timely intervention. TAVR growth was bolstered by renewed clinician focus on aortic stenosis treatment, while TMTT saw growth from new evidence supporting tricuspid and mitral replacement therapies.

Segment Performance

• TAVR: Third quarter global sales were $1.15 billion, a 10.6% increase year-over-year. Revenue contribution from TAVR was significant due to strong performance in multiple regions supported by new evidence and guideline updates.
• TMTT: Third quarter sales were $144 million, a 53% year-over-year increase, driven by strong performance of PASCAL and EVOQUE. The portfolio of mitral and tricuspid replacement therapies showed robust growth with new clinical evidence supporting their use.
• Surgical: Third quarter global sales were $258 million, a 5.6% increase year-over-year, driven by continued adoption of the RESILIA therapy and positive procedure growth for surgically treatable patients.

Guidance

• Raised full-year sales growth guidance to the high end of the 9%-10% range and TAVR guidance to 7%-8% with sales expected to be $4.4 billion to $4.5 billion.
• Projected fourth quarter total company sales to be $1.51 billion to $1.59 billion and adjusted earnings per share to be $0.58 to $0.64.
• CFO Scott Ullem announced his transition out of the CFO role by mid-2026, with the company initiating a succession process.

Risks

• Regulatory risks related to obtaining approvals for new therapies, such as the JenaValve deal and potential FTC challenges.
• Litigation risks, as medical technology companies often face ongoing litigation activities.
• Foreign exchange risks, which can impact reported sales growth and gross profit margin.

Question and Answer

• Q: Travis Steed with Bank of America asked about TAVR growth trends and sustainable growth excluding Boston exit. A: Bernard Zovighian and Daniel Lippis discussed that TAVR growth was driven by new evidence, guideline updates, and reduced summer seasonality impact. They emphasized that the strong Q3 performance was not the new normal but highlighted long-term multiyear opportunities.
• Q: Larry Biegelsen with Wells Fargo asked about confidence in 10%+ organic growth and FX impact on margins. A: Bernard Zovighian reiterated confidence in the company's growth strategy based on science-based evidence and long-term performance of the SAPIEN platform. Scott Ullem stated FX impact on margins would be discussed in detail at the December investor conference.
• Q: David Roman with Goldman Sachs asked about TAVR diagnostic rates and TMTT M3 launch comparison to EVOQUE. A: Bernard Zovighian and Daniel Lippis discussed the PREVUE-VALVE study validating AS market potential. Daveen Chopra explained the M3 launch is focused on high-value model with physician training, contrasting with EVOQUE's real-world adoption.
• Q: Vijay Kumar with Evercore ISI asked about TAVR performance and litigation charge. A: Daniel Lippis clarified TAVR performance wasn't solely driven by asymptomatic approval due to lack of coverage, and Scott Ullem explained litigation charges reflect periodic reserves for ongoing medical technology litigation activities.
• Q: Matthew Taylor with Jefferies asked about TCT real-world tricuspid data and mitral adoption acceleration. A: Daveen Chopra discussed the positive real-world data for EVOQUE and the compounding effect of TMTT portfolio growth, while Daniel Lippis detailed TAVR's efficiency initiatives including AI partnerships and field team programs.
• Q: Robert Marcus with JPMorgan asked about TAVR efficiency initiatives and R&D spend. A: Daniel Lippis outlined TAVR's efficiency programs like Benchmark and partnerships with AI companies for echo screening and workflow solutions. Scott Ullem discussed R&D as an investment in top-line growth, with R&D spend prioritized to drive sustainable sales growth.