The Edwards Lifesciences Second Quarter 2024 Results conference call has begun, with the operator introducing the host, Mark Wilterding, and other executives joining for the Q&A portion. The company has released its financial results for the quarter and management will discuss them, as well as make forward-looking statements about their strategy, acquisitions, and other business matters. These statements are subject to risks and uncertainties and will not be updated after today's call.

The paragraph discusses the information provided in two press releases issued by Edwards, one outlining their Q2 results and the other highlighting their acquisitions of JenaValve and Endotronix. The company saw an 8% increase in sales on a constant currency basis and made advancements in clinical research and new product introductions. TAVR growth was lower than expected, but the company is pleased with the growth of their TMTT division. The acquisitions were announced alongside the earnings report and have been in discussion for some time. Overall, Edwards remains well-positioned for strong and sustainable growth.

In the second quarter, global sales for TAVR increased by 6%, although there was some regional pressure. Edwards maintains confidence in their technology and evidence for AS patients. They presented additional analysis and anticipate more data to be presented at upcoming meetings. They are actively pursuing opportunities to grow TAVR globally and are committed to advancing science for AS patients through early TAVR trials. These trials could potentially change how AS patients are treated and results will be presented at TCT.

In the second quarter, TAVR sales in the US grew slower than expected due to increased competition and hospital workflow challenges. However, the company believes this will stabilize as hospitals adapt to new therapies. They are also working to improve referrals and treatment rates for patients with severe aortic stenosis. Outside of the US, TAVR sales grew slightly above the global rate, with double-digit growth in Japan driven by SAPIEN 3 Ultra RESILIA. The company sees potential for further growth in Japan due to the high prevalence of aortic stenosis in the elderly population.

In Europe, Edwards has seen a slight decrease in share, but is pleased with the momentum driven by the launch of SAPIEN 3 Ultra RESILIA. They anticipate continued growth as more centers gain experience with the valve. TAVR sales growth is expected to be similar to the first half of the year and the company remains confident in their position for sustainable growth. In terms of TMTT, Edwards has a strong portfolio of differentiated technologies and achieved positive sales in Q2. They are excited to bring these therapies to more geographies, physicians, and patients.

The EVOQUE commercial launch is progressing well, with the company focused on achieving outstanding patient outcomes and expanding into new centers. There is strong interest in the therapy, as there is a significant unmet need for treatment in this patient population. The company's early real-world experience has shown positive results, and they are looking forward to presenting more data at an upcoming conference. The company's transcatheter mitral valve replacement therapy, SAPIEN M3, is on track for regulatory approval and launch around the world. The company has also acquired JenaValve, which will add to their pipeline of innovative therapies and enhance their expertise in mitral disease.

The company is increasing its full year sales guidance for TMTT due to strong momentum and global adoption of their technology. They remain confident in their unique portfolio strategy for mitral and tricuspid disease. In surgical structural heart, sales increased due to strong adoption of premium technologies. The company is expanding their evidence for RESILIA and has completed enrollment in a critical trial. They have also been granted reimbursement for a device in France earlier than expected. In Critical Care, sales increased due to demand for pressure monitoring devices and SMART Recovery technologies.

The company Critical Care is focused on driving growth through SMART Recovery and SMART Expansion to help clinicians make better decisions and get patients home faster. The strategic acquisitions of JenaValve and Endotronix provide opportunities in new therapeutic areas to address unmet needs of patients. The company plans to close the sale to Becton Dickinson in late Q3 and is investing in the development of JenaValve Trilogy Heart Valve System to address aortic valve disease. The acquisition of Endotronix expands the company's portfolio into the treatment of heart failure, which is a significant long-term growth opportunity.

Endotronix recently received FDA approval for their implantable pressure sensor, Cordella, and is excited to enter the structural heart therapeutic area. They anticipate this investment will strengthen their leadership in structural heart innovation and bring long-term growth opportunities. Despite below expectations for TAVR sales growth, their overall sales growth, including Critical Care, was nearly 8%. Adjusted EPS was $0.70, while GAAP earnings per share was $0.61 due to one-time separation expenses related to the sale of Critical Care. Critical Care will be presented as a discontinued operation in the 10-Q filing next week.

In the second quarter, Edwards' gross profit margin was in line with the previous quarter, driven by high-value technologies. Selling, general, and administrative expenses increased due to expansion of field-based personnel. Research and development expenses also increased due to investments in transcatheter valve innovations. The reported tax rate was unusually favorable due to positive one-time items, benefiting earnings per share. Foreign exchange rates had a negative impact on sales and gross profit margin. Free cash flow was reduced due to payments related to the separation of Critical Care, but adjusted free cash flow was $333 million. Cash from the sale of Critical Care is expected in the third quarter.

Edwards has a strong balance sheet with $2 billion in cash and short-term investments. They plan to close the sale of Critical Care in the third quarter and have incurred $80 million in one-time costs. They expect sales and earnings per share for the third quarter, and will provide guidance for the fourth quarter and 2025 in October and December respectively. They expect minimal revenue from recent acquisitions in 2025, but plan for long-term profit growth. They will maintain a strong balance sheet for investments and share repurchases, and are confident in their focus on structural heart technologies.

The sale of Critical Care has provided management bandwidth and liquidity for external growth investments, while the original vision for TMTT is becoming a reality. The company's investments in other companies like JenaValve and Endotronix position them to acquire high-quality businesses. They see an exciting future with opportunities for sustainable growth in a large and growing market. In TAVR, they are committed to advancing science and early trials could change how AS patients are treated. In TMTT, their expertise has allowed them to advance their portfolio of innovation and position them for strong growth. In surgical structural heart, they see strong global adoption and the JenaValve and Endotronix acquisitions provide expanded opportunities. They remain confident in their innovative therapies and optimistic about the long-term growth opportunity.

The speaker is addressing a question about early TAVR and what would make it compelling. They mention the need for a strong argument against watchful waiting and the primary endpoint of the trial being death, stroke, and rehospitalization. They also mention the potential impact on TAVR growth if the study is positive.

The speaker discusses the importance of considering the patient journey and potential negative outcomes when evaluating the success of a medical trial. They mention that death, stroke, and rehospitalization have become standard endpoints in many trials due to their significance. Another speaker adds that while asymptomatic improvement is important, there are many other factors that contribute to the overall success of a treatment. The company remains confident in the potential of their TAVR opportunity and sees many catalysts for growth in the coming years. The CFO provides initial insight into the company's 2025 goals, stating that the press release mentions "strong sustainable growth" but does not specify a 10% operational growth target as previously mentioned in a previous analyst meeting.

During a Q&A session, Scott Ullem addresses questions about the estimated dilution from the Critical Care spin, the incremental spending from recent acquisitions, and the use of proceeds from the spin. He mentions that the company is not providing an update on their long-term top line growth and that they will do so at their December investor conference. The exact figures for dilution and incremental spending are not available at this time, as they depend on various factors. Ullem also states that the first priority for cash is to invest in the company, but they are also open to buying back stock and other opportunities.

The company is planning on making external investments and allocating capital to share buybacks. They are not planning on giving guidance for 2025 but are confident in sustainable growth over the long-term. TAVR has come in below initial expectations and the market growth rate has slowed, but the company is still optimistic about the future.

The sudden increase in demand for structural heart procedures has come as a surprise and hospitals may have underestimated the burden of starting new programs. The company can offer some assistance, but ultimately it is up to the hospitals to add additional teams or days to handle the workload. The increase in time from CT to procedure and the rise in emergent cases suggest that patients are waiting longer for treatment.

The speaker reflects on the challenges hospitals are facing in implementing new technologies and adapting their workflows, causing delays for patients. However, they believe this is a temporary issue and have faith in hospitals' ability to overcome it. The company is also contributing to this pressure but also benefiting from it. The guidance for TAVR in the second half of the year is conservative, taking into account similar market conditions and a tougher fourth quarter comparison. The expected growth is between 5% and 7%.

During a Q&A session, Bernard Zovighian states that they believe early TAVR (transcatheter aortic valve replacement) and TCT (transcatheter cardiovascular therapies) will have minimal impact on Q4 due to their timing in late October. David Roman then asks about the impact of economics on decision making around pricing for TAVR and EVOQUE (a new therapy), to which Larry Wood responds that it is not an economically driven decision, but rather driven by hospitals wanting to offer competitive options for their patients. He also mentions that centers must demonstrate competence before bringing in new technologies, and that this issue will likely be corrected with time.

Daveen Chopra from the TMTT division of the company discusses the challenges of implementing new therapies, such as EVOQUE, which can take up a lot of time and effort. However, over time, these therapies become more efficient and contribute to overall capacity for procedures. The company's TMTT line saw $83 million in revenue in quarter two, with PASCAL accelerating and minimal contribution from EVOQUE. It is expected that the implementation of multiple therapies will continue to contribute to the company's growth.

In the second quarter, the company saw growth in sales led by PASCAL, a premium technology. The company also introduced EVOQUE in the US and Europe, which will require training and case cadence. The company has a larger base in Europe, leading to stronger growth, but the US is catching up quickly. It may take some time for centers to adjust to the added workload of new therapies, but they will eventually add resources to accommodate the growth.

The speaker, Bernard Zovighian, expresses confidence in the hospital system's ability to adjust and recover from high workloads. He believes that patients staying home is not a sustainable solution and that everyone is committed to finding a resolution. During a Q&A session, the speaker also addresses questions about the TAVR market, stating that they are confident in its potential but will provide updates in December at an investor conference.

The company had initially predicted a conservative 8% to 10% growth for TAVR centers at the beginning of the year, but this did not play out as expected in the second quarter. The CEO acknowledged that this was not solely due to one factor, but rather the cumulative impact of various challenges faced by structural heart teams, such as starting new programs and training. The slowdown was seen more prominently in larger centers, which are more likely to be competitive about starting new programs.

The speaker is discussing a spike in emerging cases over routine cases, and how this will not be sustainable for people. They mention that emerging cases have more complications and longer length of stay, which will negatively impact patients and hospitals. They also mention that people will have to adjust over time and the company will work closely with them. The speaker then addresses a question about Q3 TAVR and dilution from acquisitions, stating that they have factored in extra selling days in Q3 and will have more information on the dilution after the acquisitions have been closed and integrated. They will provide full guidance for EPS in 2025 at their investor conference.

Larry Wood, the CEO of a medical company, was asked about the impact of the company's new TAVR technology on hospital workflows. He explained that the sudden increase in demand for the product has put a strain on hospitals, as they have to adjust to the additional workload. This strain is a result of the cumulative growth of procedures in the last three years, and it will take time for hospitals to adapt. The company has reflected this in their guidance and is working closely with hospitals to address the issue. However, they are not happy with the current growth rate.

The company is not happy about having to adjust guidance and is working hard to restore growth. The CEO, Bernard Zovighian, acknowledges that the company and its stakeholders are not satisfied with the current situation and are fully committed to finding a solution. When asked about competition, the company's response is that they have not seen any significant impact from them. The company is not providing an updated EPS guidance as the Critical Care acquisition will close in the third quarter and will not be included in the fourth quarter.

The initial rollout of EVOQUE has been successful, with strong demand from physicians and similar clinical results to the clinical trials. The company is pleased with the progress and has seen predictable outcome times and similar rates of clinical outcomes. PASCAL is now approved for EVOQUE in Europe.

The company is excited about the launch of EVOQUE and believes it will treat a large number of patients. They also see potential in the acquisition of Endotronix, which has a unique technology and broad FDA label. The company plans to discuss their strategy for Endotronix in December and believes it will expand their reach in the heart failure patient population.

The speaker thanks the participants for their interest in Edwards and invites them to ask any additional questions by phone. The teleconference and webcast have now ended.

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