Edwards Lifesciences Corporation ($EW)

Next up, we have Edwards Life Sciences. Welcome, Bernard.

Thank you.

Thanks for coming.

How are you doing?

Good.

Excellent. Good to be here. Hi, everyone.

Maybe I'll let you open. I know you want to make some opening remarks to get started. Let's just go and that?

Yes. No, thanks. So look, it is -- we feel good about where we are at as a company. And when I step back and reflect the reason why, I think we have a great deal of strategy. We have a strategic clarity. This is all about structural heart. Everybody in the company is focusing on that. We have a great culture. We -- the employees, about 16,000 are fully engaged, inspired by our patient-focused culture. Execution is amazing across the other company. And sale of Critical Care a couple of years ago help us even further to be very agile, fast execution, and you have seen that. And all of this is resulting in my mind, a very differentiated performance, but also sustainable performance. We had a great year last year. Q1 was the same growing double digit. But also it is less about double digit, more about broad-based across surgical TAVR, mitral and tricuspid. Also broad across regions. So this is what gives us confidence. It is sustainable. People are behind us. Strategic clarity and great execution. So feeling good about the year ahead of us.

Okay. Great. And then coming off Q1 results, obviously, a strong TAVR quarter and beating 2 points and really strong across the board. I don't know if there's anything you'd like to kind of say kind of post Q1?

Yes, no, very pleased about Q1, obviously, better than expected, mainly driven by procedural growth. So basically the market growth. And all of that, I'm sure you heard me saying about it is this renewed focus on TAVR. In the last year or so, we have produced so much evidence on TAVR, early TAVR, long-term durability data, partner 47 years, partner 10 years. So all of this together gave a renewed focus on the community. I'm a clinical community about focusing on these patients. And so basically, mainly market in Q1, but a little bit of share also mainly in Europe from the exit of 1 competitor almost a year ago now, a little bit in the U.S., too. But you know us well. What we care the most about is unlocking the opportunity that we have in TAVR, and we are very pleased with what we see.

Great. We'll dig into a lot of that in a bit. But maybe first, this announced new CFO since last week, I guess. So maybe why did the Board go with that decision? And how should we think about the new CFO announcement?

Yes. So I was looking for a very experienced CFO with comprehensive experience and I'm very pleased that Doretta accepted the job. We have been talking a lot together. She was 2 decades in the banking industry, leading banks, also as CFO of a large pharmaceutical company. And she studied a lot AOL. She knows the kind of strategy we are having differentiated, unique in medtech, where we go early. We have multiple bets. We take risk to create categories and to lead categories. So having on board and CFO is going to help us and help me take this kind of decision to create what we are creating differentiated performance in medtech. So very pleased to have her. She's going to start with us on June 1.

Okay. All right. Good. I'll save most of my margin questions for her. But maybe high level, since you are here. How do you think about margin strategy? Does it kind of stay the same, the 50 to 100 basis points a year? And how do you think about -- like this year is kind of above normal or at the higher end of that range, how should we think about kind of the longer-term margin outlook for Edwards?

Yes. No, we are committed. We are committed, first and foremost, to have a differentiated top line performance. And what we said is, for the year, we increased the guidance to 9% to 11%. So basically, the midpoint at 10%, we said '27 and beyond, growing double digit, about 10% with EPS leverage and 50 to 100 basis points improvement on margin '27 and beyond. So we are still committed to that. This year is more about 150. And this is what you can expect from us, great top line performance, EPS leverage, improving margin. We are very fortunate to be focusing on a space where there is a lot of opportunities. We are the leader. And so yes, pleased about it. When I step back again I don't believe there are many medtech assets with this kind of durable outcome in front of them.

Makes sense. On TAVR, you saw an acceleration over the last year or so. And obviously have a product coming from a competitor. But just even in the U.S., like what do you think is kind of driven that acceleration? And how do you think we should think about TAVR growth against some of the tougher comps in the second half of the year?

Yes, that's a good question. First and foremost, where what gives us confidence is the durability of the SAPIEN platform, now proven at 7 years and 10 years, and we know it is very important for valve. The early TAVR is giving this confidence that yes, treating patients early without symptom makes sense also. So for the year, we have increased the guidance. So think about the new range, and you can model at the midpoint. This is what the way we are thinking about guidance for the year, we are trying always to give you a realistic guidance based on what we know. And longer term, what we said was basically expecting mid- to high single digit. And this is a wider range to be able to accommodate any scenarios. And all of that together for TAVR will give us the opportunity as a company to double grow digit.

When you think about your competitor had 6-year low-risk data, when you -- what are you seeing in the field when you're talking to doctors you're seeing, physicians think differently about TAVR and the valve that you use in low-risk patients?

Look, I'm not going to talk about competitive technologies. We are very pleased, obviously, with our valve performance at 30 days at 6 months and 1 year and at 10 years, and it is the benchmark by far, so we are focusing on that. We are focusing on patient care, and we are focusing on physician having access to the best technology, to the best TAVR technology there.

You've been taking share, I guess, in the TAVR market already, though, right? And so I kind of expect that to continue.

We have said in Q1, we have taken a little bit of share in the U.S. We are not focusing too much on that. You know us well, the big opportunities about the market. I know that many people are talking about share. You know me, I've been saying that all the time, share is a lagging indicator. I'm not looking back. I'm looking about the many patients that today, unfortunately, are undiagnosed, don't have access to care and making sure that they can have access to care. And if we do so, we are going to have a great -- and the next 10 years is going to be an amazing for TAVR, for SAPIEN TAVR.

On the TAVR NCD proposal expected June 15, I believe. I mean the comments supported indication expansion, but there was some debate around the heart team requirements. So any sense for how you expect the TAVR NCD to play out and how it could impact the marketplace?

The TAVR NCD is going to be very important. It has been in place for a long time. Since then, the TAVR procedure has evolved a lot. It is now the standard of care in the U.S. and in many locations around the world. We believe it is time to refresh that. The heart team is very important in evaluating other patients. We are looking forward to a more flexible NCD where the heart team can decide what operator can be in the room, but it is obviously up to CMS to decide. The first draft mid-June, will give us an indication about the new NCD and the new NCD will be in place by the end of the year.

And then an increasing number of centers, how does that help? Is it -- help open up capacity even for TMTT or is it just more about TAVR?

I believe it is going to be about a number of things. Right now, there are a number of patients in the U.S. who don't have access to care of the way we should have access to care. So this is going to help us having greater and easier access to care, and everybody will benefit. The patients, the physicians and the health care systems because TAVR is a very effective procedures.

Okay. Makes sense. On early TAVR, the data presented in 2024, curious how much of that's already helping drive momentum in '25. Is this a new indication expansion for asymptomatic that's going to come through and help the TAVR market or kind of what you're seeing on asymptomatic?

So what we have seen in Europe first is indication has been approved, but also of the guidelines has been updated. Indeed, a dogma of waiting for symptom is -- has been eliminated in Europe with the new guidelines. In the U.S., we don't have the new guidelines. And so we have -- and obviously, it is not yet covered by the NCD. So we have not seen any asymptomatic patient in the U.S. What we have seen though, CMS data is an increased number of echo alerts, an increased number of stress tests. So this is a clear indication that the heart teams across the nation are aware of the latest data and are paying close attention to these patients.

Moderate data. I don't know if you've seen the data or not, if you'd say or not, but when the data comes assuming it's successful, how do you think that impacts the market?

So the moderate patient population is a large patient population. We started a study 4, 5 years ago because we had a belief that treating this patient will be beneficial for them. We know that AS is a progressive disease. So potentially that thing this special is also a good idea here. But we don't know the data. I don't have the data. We are doing high-quality data, high-quality evidence, so with FDA-approved studies, all of that. I'm not going to see the data until over the last few days. It is going to be presented in a high-quality fashion at TCT. And right after that, we are going to do an event with -- for investors to go deep into the data and understand the implication of the data. But as of now, I have no more to add that. Yes, we were having a belief that it is an important disease to steady first and potentially to treat.

Yes. And once the data is out, you had to kind of do what you do with the asymptomatic change guidelines and the same process?

Potentially, it will depend on how the new NCD is written, so we will have to wait for that. But -- so let's wait, the guidelines and NCD. They know that all of the people in charge and leading societies, they know that this is a study coming. So let's see what's coming out from NCD.

Okay. Fair. And then TMTT, you're still talking about $2 billion in revenue by 2030, which is about $300 million a year of revenue growth. The midpoint this year, I think, around $210 million. How are you thinking about the acceleration in the TMTT line to get to that $2 billion in 2030 and the drivers there?

Yes. We feel good about it. Let me first bring some context here about -- we started TMTT about 8, 9 years ago with the vision of having a portfolio to be able to realize this large market potentially, mitral and tricuspid. And today, 8 years later, we have this unique portfolio that nobody has, which is helping physicians select the right technology for their patients. This year, we are on track to achieve $0.75 billion in revenue, growing 40% at the midpoint. So doing well at the right pace. And we have a number of catalysts coming in TMTT. We have a next-gen Pascal coming end of the year. We have a new indication, Pascal tricuspid speed in the U.S. coming end of the year. You have a new geography for Pascal also that we are expanding, new centers. For EVOQUE, we have now a growing body of evidence with mortality [ beliefing ] eliminating a crossover patient. We presented that at ACC. So all of that together, together with me, is going to be additional catalysts to move from $0.75 billion this year to $2 billion in 2030. The true vision though is not 2030. We believe that mitral and tricuspid are going to be probably as big as aortic stenosis 10 years from now. So that's the opportunity there. And adding this kind of portfolio is going to be very important to grow TMTT to this kind of big numbers.

On SAPIEN M3 CE mark in April '25, FDA approval December 2025. How do you see the rollout of that going kind of feedback from physicians and any differences between U.S. and Europe launches?

It's going very well. It's still early granted. Very well, patient love the technology. Again, it is not impacting Pascal or any kind of tier devices. It's fully about non-eligible tier patients. So it is expanding the patient population can be treated. And this is why our patients like it. It's effective. It is safe and it is expanding in the patient that can impact. So it is doing very well, still early, but we got great feedback.

And on Pascal, you've been taking share there. Even your competitor was expecting share to stabilize and now they're saying it's going to continue to be sure loss for them, sure gain for you. What -- how much opportunity do you see on the Pascal side to continue that growth?

Yes. I will make the same comment on share, a lagging indicator, let's don't talk about that. Let's talk about the potential, many patients, mitral intricacy patient need a treatment. We believe that Pascal is a great technology, highly differentiated, and physicians love it. They achieved a great outcome for their patients. So important. We have seen that the mitral tier procedure now is increasing double digits quarter-over-quarter, which is great to see, and it is the same playbook. When you bring best technology, great evidence, you support physicians. Automatically, you are growing the category. That's an important playbook for us to remember. What I love about this playbook, it is a sustainable playbook. It is not like in a few quarters, it is very sustainable long term.

How do you think about replacement versus repair in the mitral and tricuspid market?

We see different patient population. So they complement each other, and it help us grow the pie and grow over potential.

Okay. And then kind of catalysts and TMTT, some of the new products like next-gen EVOQUE plan introduced second half '27. How meaningful is that? Kind of what are the big changes there?

Yes. All of the next gen are important. You will see the next gen Pascal this year, end of the year, the next gen EVOQUE by the second half of next year. We have also in the plan of the next gen M3 that we didn't talk too much about it. All of them are going to be meaningful improvement for obvious competitive reasons. I don't want to get into the detail before we launch it. But yes, I'm very pleased. So that's like not only we are the only 1 with this kind of comprehensive portfolio, but also we are bringing in the next gen. So this portfolio is evolving too to better technology.

And then Class 2 tricuspid regurgitation data later this year as well, right?

At TCT, yes. Yes. Yes, we'll be present at TCT, and we expect an approval in the U.S. thereafter.

That probably expand -- I mean that expands the market quite a bit for Pascal, right? And I don't -- I assume there's not been a lot of like off-label use there in those regard.

No, I don't think so, because there is an approved device in the U.S. So it is all incremental. It is an upside to the kind of revenue you see from TMTT today.

Okay. That's helpful. And then next gen Pascal, anything you'd call out on that product?

No, the same competitive reason. Now all of this, this is already contemplated into the current guidance that we are for TAVR, for TMTT and for the company. And with regards to 2027, we will provide a guidance at investor conference in December.

Okay. Helpful. And then the pipeline, maybe Innovalve, do you have anything and say on Innovalve or the aortic regurgitation opportunity?

Yes. Innovalve, mitral -- transcatheter mitral valve is a very complex to do. You have seen the space for 20 years. Companies, including ourselves, have tried to bring but transcatheter mitral valve, many have failed. Finally, we had a great 1 with M3. And we are already thinking about the next gen. And not just the next gen M3, but the next gen mitral replacement, and it is why we have Innovalve here. The thinking is, can we further expand the patient population that physicians can treat with a mitral replacement. So it is all about incremental. It is not about impacting each other. So that's on Innovalve. On AR, our technology, [ SOJON ], that's the name of it, is doing well. We are doing a pivotal study, and we are enrolling a study well. And we will talk more when we know more about when we are going to finish enrollment, when we are going to present the data. Our vision for AR is very simple, the same that what we discussed in the past. We believe that there are many patients who need a treatment, solutions. The only solution available today is surgical. There is 1 just approved transcatheter AR technology. And our vision is to bring the best technology, innovate with the best valve for these patients.

And then lateral appendage where you've talked about a product there. What can you update us on the timing and process there? And what's the unmet need in that space?

Yes. We still believe this is a big unmet need. There are transcatheter solutions. There is some surgical solutions. We are looking at this 1 as a nice opportunity in surgical, and this is why the team has developed a very competitive technology. We believe we are going to bring it by the end of the year. As soon as we will bring it, you will see a little more in the feature of this technology.

And then I do want to touch on international, just a bit and improved a lot this past quarter. It grew 12%, if I remember correctly. And you've always been taking share internationally from your competitor that left the market, but just underlying the outlook in the international market?

Yes. We -- as a mater of fact, international in Q1 grew faster in the U.S. So even faster. The U.S. did very well and Europe did even better than the U.S. In Japan, we did very well also. Now to temper a little bit of the Japanese results, Q1 2025 was a very low Q1, so the comp was favorable. But nevertheless, we see Japan as an important market for us. We know that AS is the disease of the aging. And there is 1 country where the aging is very prevalent in Japan. So we are spending a lot in terms of awareness, training the team, hiring the best people to make sure that Japan is going to be very successful. So pleased about Q1, double digit. I don't believe you should expect Japan being double digit in the next few quarters, but nevertheless, good performance expecting from Japan.

Okay. And then on heart failure, like you've been making a big push into heart failure, just -- how do you see that space kind of developing over the next few years?

Yes. So before I answer directly your question, Travis, let me offer a little bit about how do I see our core businesses, TAVR, surgical mitral and tricuspid. Over the next 4 to 5 years, we are in a leading position with best technology, world-class evidence, many catalysts like we discussed. And I feel very good about having sustained performance. What I mean by that is growing the top line around 10% with EPS leverage. We are also thinking about long term, beyond that, beyond 4, 5 years and expanding into field close to us, which is a natural progression. And heart failure is a good one, where many of these patients, we see them already. Many of them have mitral disease, tricuspid disease. So which is why we are investing in many of the different modalities to treat heart failure patients. They are more for long term than short term. But yes, we are bullish also here. The same way we did it in TAVR. The same way we did it in TMTT 10 years ago.

Okay. That's helpful. And I don't know if there's anything else you wanted to touch on, those are kind of list of questions. And I think you have some closing remarks you wanted to make too, so I left some room for that.

Thanks. So look, you have seen -- again, back to my introduction, strategic clarity, great execution, we have an amazing culture in the company. Everybody is dedicated. Everybody wants to win, and you have seen that in 2025. You have seen that in Q1. We increased our guidance for the year, and we have a great outlook for the years to come. So thank you so much for your interest in the Edwards.

Thank you. Thanks for [ coming ] with us.

Thank you.