The Edwards Lifesciences Fourth Quarter 2023 Earnings Conference Call has begun with the CEO, CFO, and other company leaders present. The operator introduces the host and reminds participants that the call is being recorded. Management will discuss the recently released financial results and make forward-looking statements, but note that these statements involve risks and uncertainties.

The paragraph discusses the factors that could cause differences in the company's financial performance and mentions important product safety information. It also highlights the company's strong performance in 2023 and their confidence in 2024. The company invested in research and development and achieved key milestones. They have strong momentum and are well-positioned for a new era of structural heart innovation in 2024, with a focus on strengthening their leadership in TAVR and continuing enrollment in their pivotal trial for next-gen TAVR technology.

The company has achieved important milestones in the treatment of aortic stenosis and tricuspid disease, with the completion of enrollment in two pivotal trials and the introduction of a new therapy. They are also on track to enhance their portfolio with the completion of enrollment in another pivotal trial. This positions them for continued growth in the transcatheter therapy market.

Edwards is pleased with the progress of TAVR and TMTT, as well as the success of their innovative RESILIA tissue. The spin-off of Critical Care is on track, allowing the company to focus on structural heart and achieve even more distinguished growth. TAVR sales have increased globally, driven by double-digit growth in the US, Europe, and Japan. The SAPIEN 3 Ultra RESILIA platform has been well-received in the US, and the company is committed to investing in structural heart innovation.

Edwards is experiencing strong growth in their TAVR program, both in the US and internationally. They anticipate continued growth due to low adoption rates in many regions, and are planning for a disciplined launch of a new product. They are also confident in the future of TAVR, driven by increased awareness, patient activation, new technologies, and expansion of indications. In addition, they are focused on unlocking the long-term opportunity for patients through a portfolio of differentiated therapies, positive clinical trial results, and favorable real-world outcomes in their TMTT program.

The company has developed a strategic portfolio of transcatheter technologies for mitral and tricuspid valve repair and replacement. Sales have increased significantly, driven by the adoption of their PASCAL Precision platform and expansion into new countries. The company is also focusing on physician training and generating more evidence to ensure excellent patient outcomes. They are grateful for the collaboration with clinicians to provide treatment options for patients with valve disease.

Edwards continues to make progress in their CLASP II TR pivotal trial with PASCAL for tricuspid repair and is on track to complete enrollment by the end of the year. They are confident in their portfolio of approved catheter-based mitral and tricuspid technologies and remain committed to bringing their differentiated therapy to patients. In the surgical product group, they saw strong growth driven by adoption of their RESILIA technology and continue to expand the evidence for its use. In Critical Care, they saw growth in all product lines and are focused on driving growth through Smart Recovery and Smart Expansion strategies.

The speaker, Bernard, is providing a wrap-up of 2023 and discussing the company's fourth quarter results and guidance for the first quarter and full year 2024. They were pleased with their sales performance and achieved 13% year-over-year growth. They maintained their previous sales guidance ranges for 2024, except for TMTT which is expected to be at the higher end due to early FDA approval for EVOQUE. For the first quarter, they project sales of $1.53 billion to $1.61 billion and adjusted earnings per share of $0.62 to $0.66. The adjusted gross profit margin for the fourth quarter was 76.8%, lower than the previous year due to foreign exchange impacts. They expect their full year 2024 adjusted gross profit margin to be between 76% and 78%. Selling, general, and administrative expenses were $480 million or 31.3% of sales in the quarter.

In the fourth quarter, there was an increase in SG&A expenses and research and development expenses due to investments in field-based personnel and patient activation initiatives. The company expects these expenses to continue to increase as they focus on efficient G&A leverage and developing new technologies. There were also one-time costs associated with the spin-off of Critical Care. The reported tax rate for the quarter was 12.3%, but the company expects it to be between 14% and 17% for the full year 2024. Foreign exchange rates had a negative impact on sales and gross profit margin, but had a minimal impact on earnings per share compared to previous guidance.

The company had a strong fourth quarter with free cash flow of $48 million and adjusted free cash flow of $943 million for the full year. The balance sheet remains strong with $1.6 billion in cash and the company repurchased 6.0 million shares. They expect to continue growing in 2024 and have confidence in their ability to accelerate growth in 2025 and beyond with the launch of new technologies and advancements in clinical trials.

Edwards is excited about the early approval of EVOQUE in the US and has a clear commercialization plan in place. They plan to launch the product immediately, potentially with a price premium, and are considering filing for an NCD to secure reimbursement. They are confident in the potential of EVOQUE and believe it will create value for all stakeholders.

The company is planning a controlled rollout for their new transcatheter technology for tricuspid regurgitation, focusing on physician training, generating evidence, and establishing coverage and payment. They are taking a long-term view, similar to their approach with TAVR, and will start with centers involved in the clinical trial before expanding to new centers. They have a dedicated team for clinical case support and are working with CMS on the national coverage process. The company has a long-term view on this technology.

The speaker is discussing the company's plans to shape a space in a way that everyone will be proud of, similar to what they did with TAVR. They are asked about the likelihood of a statistically significant mortality benefit when the full TRISCEND II data is presented at TCT and the importance of this for adoption and reimbursement. The speaker responds that they have shown favorable trends in all-cause mortality, heart failure hospitalizations, and tricuspid regurgitation, and that their full data set will come at TCT in the fall. They cannot speculate on what the data will show. The next question is about the bottlenecks in the system for tricuspid replacement and what the company can do to help ramp adoption.

The speaker discusses the company's vision for treating patients with mitral and tricuspid conditions and their understanding of the complexity and diversity of this patient population. They emphasize the need for a portfolio of different therapies, including repair technology and replacement technology, to effectively treat a large number of patients. They also mention an expected acceleration in the next 10 years as more technologies become available and awareness of the disease grows.

The company is looking to expand its diagnosis referral to heart teams and leverage patient activation strategies from the TAVR market to grow the TMTT market for mitral and tricuspid. The upcoming data from the EARLY TAVR trial will provide valuable insights and potentially accelerate growth in the TAVR market, especially with the addition of asymptomatic patients. The long time it takes for patients to get diagnosed and treated is a major obstacle, and many patients do not receive treatment due to the complexity of guidelines and symptoms.

The speaker discusses the potential impact of the EARLY TAVR trial on the treatment of aortic stenosis and the commitment of the company to continue bringing new evidence and expanding indications for TAVR. Another speaker mentions the potential for exciting developments in the next 10 years in the TAVR space. The next question asks about the development of the EVOQUE market compared to the mitral market and the success of replacement over clipping in tricuspid treatment.

The speaker discusses the potential of tricuspid valve replacement technology to improve the lives of patients with tricuspid regurgitation. They also mention the possibility of other modalities being used for certain patients. They believe the tricuspid market will continue to grow at a strong rate, potentially exceeding the mitral market. They also mention the upcoming SMART trial and the impact of competition in the market, but state that it is too early to determine the results of the trial or the effect of competition on long-term guidance.

The speaker discusses the multi-factorial decision process for physicians when selecting TAVR valves for patients, with factors such as mortality rates, stroke, and future interventions being more important than hemodynamics. They also mention the impact of the EVOQUE approval and the company's long-term commitment and leadership in the space. A question is asked about the approval timing and the CEO reflects on the company's experience and investment in the market.

The speaker discusses the company's growth in the Japanese market and mentions that they have taken back some share post-trialing. They also mention that the market is lower penetrated and a long-term growth driver. The speaker then talks about the faster-than-expected approval of their product EVOQUE and credits it to the breakthrough pathway and providing additional data to the FDA.

The results of the EVOQUE trial showed favorable trends in all-cause mortality, heart failure hospitalizations, and tricuspid reinterventions in the larger cohort of patients. This may have led the FDA to approve the therapy without the need for an advisory panel. The full one-year cohort data will be presented at TCT, and the company plans to continue building evidence for the therapy through trials and training. There is a need for a significant impact on mortality to drive adoption of the EVOQUE valve, as it is currently considered a "forgotten valve." The adoption curve for this therapy may be slower compared to TAVR.

Daveen Chopra discusses the importance of data and patient quality of life in relation to EVOQUE technology. He mentions that the technology has shown positive results in clinical trials and has the potential to improve the lives of patients. While other data points such as mortality and heart failure hospitalization also matter, the breakthrough cohort has shown significant improvement in quality of life. Chopra also mentions the company's plans to continue gathering data and expanding the market for EVOQUE. He expresses excitement for the potential of the technology and its growth in the market.

Bernard Zovighian and Larry Wood discuss the potential for TAVR and TMTT EVOQUE to continue growing and improving patient outcomes for the next 10-20 years. They also emphasize the importance of quality of life improvements for patients, not just mortality benefits. The Q1 EPS guidance is slightly below street expectations due to increased expenses in SG&A and R&D.

The speaker discusses the company's expected bottom-line growth to exceed top-line growth for the year, and a question is asked about potential delays in the US market affecting international markets. The speaker does not believe there will be a significant impact and mentions the importance of factors other than clinical data in purchasing decisions. The speaker also mentions ongoing efforts to activate patients and address skepticism about under-treatment rates.

The company has applied AI to echo reports in major health systems and has found that there are many patients who are not being treated for various reasons. They are continually working to optimize programs to activate these patients and move them through the system. The company is confident in the potential of EVOQUE and its expected run rate for the year, despite its early launch.

The company has made investments in new technology and hiring field personnel, which will continue to grow and expand. They are seeing benefits from these investments and plan to continue investing in the field team, as well as looking for opportunities to achieve leverage from scale.

The company is closely monitoring its efficiency and profitability, with a focus on patient activation initiatives. These efforts have been ongoing for several years and are now being scaled up and expanded. The company has seen growth in the fourth quarter, but it is difficult to isolate the exact impact of patient activation efforts. The company is committed to continuing these efforts in the future.

The company believes that there are many patients in need of treatment who are not receiving it. They are focusing on patient activation for both TAVR and the EVOQUE rollout. While there are currently patients waiting for treatment, the company is also working on building capabilities to get more centers up and running. The TRISCEND II trial enrolled quickly, showing that there are groups of patients who are looking for treatment options.

The company is focused on building off their recent success and leveraging their efforts in patient activation for TAVR. They also have new products rolling out in Europe, with different price premiums than in the US. Adoption of their RESILIA-based therapies is growing in Europe, but more rapidly in the US. They are also seeing strong growth in emerging markets. The PROGRESS trial for moderate aortic stenosis was mentioned.

The speaker is discussing the speed of enrollment in a clinical trial and its potential implications for the market. He mentions that rapid enrollment is a positive sign and may indicate a larger opportunity. The trial is focused on treating moderate aortic stenosis, which could have benefits for both moderate and severe patients. The speaker also notes that there are twice as many moderate patients as severe patients.

The speaker, Bernard Zovighian, is reflecting on the success of the company in the previous year and is excited about the upcoming year. He mentions the potential impact of new technologies and clinical trials in the TAVR and TMTT spaces, and believes they will help accelerate growth in the future. He also mentions the company's focus on critical care and invites further questions from listeners.

This summary was generated with AI and may contain some inaccuracies.