06/23/2025
$EW Q1 2025 AI-Generated Earnings Call Transcript Summary
The paragraph is a transcript from the Edwards Lifesciences First Quarter 2025 financial results conference call. Mark Wilterding, Senior Vice President of Global Finance, introduces the call, mentioning key participants including CEO Bernard Zovighian and CFO Scott Ullem. The call will cover the first quarter 2025 financial results released by the company, followed by a Q&A session. The management will be making forward-looking statements, which may involve risks and uncertainties, and Edwards Lifesciences does not commit to updating these statements. They also provide guidance based on current tariffs anticipated to remain in place for 2025. All relevant information and documentation are accessible on the company's website.
The paragraph discusses the impact of tariff modifications on the company's financial results and provides an overview of the company's sales growth. It highlights an 8% increase in company sales for the first quarter, reaching $1.041 billion, driven by their diverse portfolio of heart disease therapies. Success is attributed to their strategy and innovation, and the company's 16,000 employees are acknowledged for their contributions. Notably, the growth in Transcatheter Aortic Valve Replacement (TAVR) exceeded expectations, with future growth anticipated following an expected indication approval and potential policy changes.
The paragraph highlights advancements and achievements in the field of heart valve therapies by the company. It mentions a groundbreaking trial set for results in 2026, aiming to expand therapy access for moderate aortic stenosis (AS) patients. The company is increasing its 2025 sales forecast for its transcatheter mitral and tricuspid therapies (TMTT) and is on track to release the Evoque transcatheter tricuspid valve in 2024. The SAPIEN M3, a transcatheter mitral valve replacement system, recently received approval in Europe, addressing significant patient needs. The company’s surgical innovations, particularly the Resilia tissue technology, continue to show promising durability, reinforcing its commitment to expanding global access to heart valve therapies.
The paragraph discusses the company's focus on lifetime management for patients seeking better quality of life and their progress in expanding their portfolio, specifically for structural heart failure and aortic regurgitation. The company expresses confidence in achieving an 8% to 10% sales growth for 2025, with measures in place to mitigate tariff impacts and the Yenovale acquisition dilution. They aim to maintain their original EPS guidance and emphasize patient service and global physician support. Looking beyond 2026, the company anticipates transforming structural heart care, leveraging its strategic focus and innovation. In Q1, TAVR global sales reached $1.05 billion, marking a 5.4% year-over-year increase, with stable pricing and strong competitive positioning.
The paragraph highlights the commitment of Edwards to using science to influence physician decision-making, citing a decade of clinical research supporting their SAPIEN technology. Recent data from the American College of Cardiology Conference emphasized the risks of delaying aortic valve replacement in asymptomatic severe aortic stenosis (AS) patients and the unpredictable progression of the disease. The DETECT AS study showed that physician notification of severe AS via echo alerts improved treatment and survival rates. In the US, Edwards' SAPIEN 3 Ultra Resilia platform continues to perform well, and efforts to help hospitals manage increased procedure volumes are underway. There is optimism about the potential approval of the asymptomatic indication in the second quarter and a focus on expanding TAVR adoption globally, particularly in underutilized regions.
In the first quarter, sales growth was bolstered by the expansion of SAPIEN 3 Ultra Resilia in Europe, despite challenges in Japan due to weaker procedure growth and competition. The company remains committed to addressing undertreatment of AS in Japan's elderly population and maintains its full-year sales growth guidance for TAVR at 5% to 7%, with optimism for future growth tied to new approvals and policy changes. For TMTT, a strong and unique portfolio led to impressive 60% growth, driven by Pascal and Evoque's adoption in the US, Europe, and globally. The company notes strong growth in mitral and tricuspid procedures, with Pascal and Evoque demonstrating strong patient outcomes globally. The NCD finalization for transcatheter tricuspid valve replacement was a notable development by the end of March.
The paragraph discusses the expanded access of Evoque to Medicare beneficiaries, emphasizing the recent European approval of the SAPIEN M3 mitral valve replacement system, which is expected to be approved in the U.S. by 2026. The company plans a European post-market follow-up study of the system and aims to launch it by creating a new category for improved patient outcomes. Edwards offers a comprehensive transcatheter portfolio for mitral and tricuspid valve treatments, committed to global access and impact by 2026. Additionally, the surgical product group's global sales have grown, driven by their premium product offerings.
The paragraph discusses the progress and financial performance of a company focusing on medical technologies. Their Resilia Tissue technology shows promising results in preventing structural valve deterioration and reoperation, as presented in an eight-year study. The company's surgical innovations are advancing, with successful product launches and pending approvals. Financially, the company is experiencing favorable outcomes, prompting an increase in their sales guidance for the year, with anticipated total sales between $5.7 and $6.1 billion by 2025. The company reported a Q1 adjusted earnings per share (EPS) of $0.64, and a GAAP EPS of $0.62. The gross profit margin slightly improved compared to the previous year, and they maintain their full-year guidance for gross margins.
In the first quarter, the company experienced favorable financial metrics, with selling, general, and administrative expenses at $466 million (33% of sales) and research and development expenses reduced to 18% of sales. Adjusted operating profit margin was 29.1%, benefiting from strong sales and cost deferrals. The company anticipates pressure on operating margins due to a weakening dollar, tariffs, and the Yenovale acquisition but has measures to mitigate these. They maintain their full-year operating margin guidance of 27% to 28% and EPS guidance of $2.40 to $2.50. FX rates negatively impacted sales growth by 170 basis points but improved the gross profit margin by 40 basis points. The company expects no FX impact on 2025 reported sales.
The paragraph discusses Edwards Lifesciences' financial strategy and milestones. The company maintains a strong balance sheet with $3 billion in cash and cash equivalents and has repurchased $300 million in stock. There is $1 billion left under their share repurchase authorization. The average diluted shares outstanding are expected to remain relatively stable through 2025. The company projects second-quarter sales between $1.45 and $1.53 billion and adjusted earnings per share of $0.59 to $0.65. Bernard Zovighian highlights the company's 25th anniversary of being publicly listed, noting significant contributions to structural heart patient care. Mark Wilterding invites questions, encouraging broad participation.
In this paragraph, Larry Biegelsen from Wells Fargo asks Scott Ullem about maintaining EPS guidance despite challenges such as tariffs, the Yenovale acquisition, and currency changes. Scott explains that their hedging program mitigates foreign exchange impacts, with tariffs having a $0.05 impact on EPS for 2025 due to existing tariffs. He notes that their production setup minimizes tariff complexity. The impact of the Yenovale acquisition is estimated between $0.05 and $0.10, although details are still uncertain as the deal hasn't closed yet. He also mentions that the larger tariff impact will be felt in 2026, as it will be reflected in the P&L as inventory is sold.
The paragraph features a discussion between Larry Biegelsen and Daveen Chopra about the impact of the National Coverage Determination (NCD) on Evoque, a new transcatheter tricuspid valve replacement product. Daveen expresses excitement about Evoque, noting that the NCD, which becomes effective in March 2025, will facilitate access to the product for both standard Medicare and Medicare Advantage patient groups. This policy aligns with the company's expectations, is included in their guidance for the year, and highlights the FDA-approved indication and coverage with evidence development. Daveen sees 2025 as a year of significant growth for Evoque, with more patient treatments and new site activations. After this, the operator introduces David Roman from Goldman Sachs, who shifts the focus to another topic related to the TAVR business and seeks insights into referral patterns and physician engagement.
The paragraph discusses the plan for supporting market development once an indication expansion for treating asymptomatic aortic stenosis is approved. Bernard Zovighian highlights that although recent data presented at TCT and ACC was strong, it showed that biomarkers are not predictive for determining which asymptomatic patients might experience serious events. This underscores the need for referring these patients to heart teams for assessment. Currently, the focus is on educating physicians about the data, as promoting treatment for truly asymptomatic patients is not possible until the indication is approved. The approval is expected before midyear, at which point a detailed education plan will be implemented.
The paragraph discusses the future plans and market segmentation for tricuspid and mitral valve repair and replacement technologies. David Roman asks about the mix between repair and replacement, as well as whether these procedures are more of a "toolbox approach" or a "one size fits all" solution. Bernard Zovighian responds by describing the company's journey, highlighting their initial realization that existing technologies were insufficient. They introduced differentiated tools like Pascal and Evoque to treat a broader range of patients. Although it's early to fully define market segmentation, they recognize it will take years to train physicians and expand their usage.
In the European market, advances in mitral and tricuspid valve treatments are expanding patient options. The recent approval of the SAPIEN M3 device for mitral valve patients unsuitable for TIR or surgery is expected to grow this treatment area over time. Tricuspid valve treatments are also evolving with the new Evoque category, which now includes patients ineligible for tricuspid surgery or TIR, thereby expanding the treatable patient pool. The U.S. market displays different dynamics; with the established mitral TIR treatment, mitral replacements offer additional options for patients. In the tricuspid space, both repair and replacement options have been introduced simultaneously, influencing market dynamics differently compared to Europe.
The paragraph discusses the current state of the clinical community regarding the treatment of patients needing repair or replacement solutions, emphasizing the importance of having both options available. David Roman and Travis Steed engage in a conversation regarding TAVR (transcatheter aortic valve replacement), focusing on capacity constraints and the potential for the TAVR National Coverage Determination (NCD) to be updated. Bernard Zovighian highlights the need to include asymptomatic patients in the NCD to ensure standardized national coverage and suggests adding more hospitals to improve access to care. He mentions that while the worst of capacity issues may be over, there is ongoing work to increase centers' capabilities, including offering training courses for valve clinic coordinators.
The paragraph discusses the implementation of conscious sedation in places focused on anesthesia to enable more procedures within the same timeframe and space. The author mentions the hospital's investment in new technologies and upcoming medical indications such as Evoque and M3 while highlighting the anticipation of progress data that may expand indications further. The need for policy, guidelines, and investment is emphasized as long-term solutions to capacity issues. Travis Steed inquires about modeling for Q2 TAVR, mentioning a 5.8% growth, while Scott Ullem reports a 5.4% growth in the first quarter and emphasizes the need for approximately 6% growth in the subsequent quarters to meet the annual growth rate guidance of 5% to 7%. Differences are expected in the quarter to quarter performance.
The paragraph discusses the efforts of a company, led by Scott Ullem, to offset the financial impact of certain challenges, including tariffs and potential dilution from a new product, Yenovale. The company had not factored Yenovale's impact into its annual guidance but has prepared scenarios for its approval. Adjustments in spending, particularly in discretionary investments planned for 2025, are being considered to maintain earnings per share (EPS) performance. The focus remains on prioritizing research and development investments that drive long-term organic growth and profitability. The company is not providing detailed specifics about these financial strategies.
In the paragraph, Bernard Zovighian expresses satisfaction with the company's strong start to the year, highlighting that Q1 sales slightly exceeded expectations and EPS was at the top end of the range. They are achieving milestones and see a multiyear growth opportunity with new medicines. The company is confident in its full-year outlook, expecting 8% to 10% growth, raising TMTT guidance, and offsetting challenges like Yenovale's dilution and tariff impacts. Robbie Marcus inquires about the TMTT guidance range split between foreign exchange (FX) impacts and underlying performance. Scott Ullem explains that approximately half of the TMTT guidance increase is due to FX benefits, with the remainder from operational improvements, and the $100 million FX benefit will also support other business areas, particularly TAVR.
In the given paragraph, Daveen Chopra discusses the positive momentum in the operational side of their business with key drivers being Pascal and Evoque, particularly in the US and Europe, leading to more treatments for patients. This growth trend is also expected to continue. Vijay Kumar from Evercore ISI asks about guidance clarifications, specifically on EPS guidance amid tariff headwinds and the Yenovale acquisition. Scott Ullem responds that it's too early to determine precisely where within their projected EPS range of $2.40 to $2.50 they will fall, as this depends on the timing of the Yenovale acquisition closure and the integration plan. Lastly, Vijay Kumar inquires about trends in Japan, which were noted to be weaker.
The paragraph discusses the company's optimism about the Japanese market despite recent disappointing quarterly results due to a weaker procedure growth environment and competitive pressures. The company is working to enhance its capabilities in Japan, aiming to accelerate market growth and better position its technology. They believe their technology, which improves patient outcomes and quality of life, will be well-received by Japanese physicians. Additionally, the company sees significant long-term potential in Japan, particularly due to the aging population and the prevalence of certain heart conditions. Vijay Kumar acknowledges the response, and Matt Taylor from Jefferies asks a follow-up question about how the company's guidance and product launches, specifically the mitral replacement, compare to the Evoque and tricuspid launches.
In the paragraph, Daveen Chopra discusses the launch strategy for the SAPIEN M3 therapy in Europe and the US. The initial focus is on a controlled launch in Europe, drawing from existing therapy models and experiences. This involves gradually building the market by supporting physicians and patients, addressing country-specific coverage and payment issues, and training. Mitral replacement in Europe is for patients unsuitable for mitral surgery or TIR, similar to Evoque's European implementation but different from the US application, which targets patients who can't undergo TIR or mitral surgery. The approach in both regions emphasizes a careful, long-term strategy to treat new patients with mitral disease.
The paragraph discusses advancements and expectations related to cardiac treatments, specifically focusing on the launch of the M3 technology as an option for patients who are not suitable for surgery or TIR (Transcatheter Interventional Repair). This technology is expected to complement existing treatments like TIR, providing growth opportunities by expanding the patient base. Additionally, there is an ongoing discussion regarding the early TAVR (Transcatheter Aortic Valve Replacement) label expansion and National Coverage Determination (NCD), which could broaden treatment options and potentially impact operational procedures, such as reducing the need for a cardiac surgery team in the OR. The label expansion is anticipated to occur in the second quarter, under FDA guidance.
The paragraph discusses the decision-making process around the national coverage for TAVR (Transcatheter Aortic Valve Replacement), which is overseen by CMS. There's an expectation of expanding the number of centers offering TAVR due to its demonstrated safety and successful outcomes in a national registry. The paragraph also addresses the role of medical societies in updating guidelines based on patient data, particularly for patients with severe aortic stenosis. It clarifies misconceptions about patient demographics, noting that the average age of patients in trials is in the mid-70s, indicating they are not necessarily younger. The approval from the FDA is crucial for advancing education and promotion efforts, but currently, activities are limited to what physicians and investigators can do in medical meetings.
In the paragraph, Pito Chickering from Deutsche Bank inquires about potential changes to a national coverage determination (NCD) by CMS, suggesting it might happen in May or June. Bernard Zovighian responds, stating that there's no confirmed timeline for when CMS will reopen the policy, as it's entirely under CMS's control. He believes that a new policy will eventually reflect the demonstrated safety of the technology and expects the policy to reopen. Zovighian notes that the approval process for asymptomatic cases could be a catalyst for CMS's decision. He recalls that previous approval for the SAPIEN technology under local coverage led to inconsistencies, prompting CMS to issue a national policy to ensure consistent patient treatment. Zovighian anticipates a similar outcome with the new policy, aiming to improve patient access to life-saving therapy.
The paragraph features a discussion between Pito Chickering and Daveen Chopra regarding the demand and training progress for Evoque, a medical technology for treating tricuspid disease. Daveen explains that they initially started with 50 to 60 clinical trial sites and are expanding to more sites due to high demand from physicians and patients who see the benefits of Evoque. They are booking trial sites months in advance, and the demand for training exceeds their current capacity to open new sites. They aim to continue expanding and training more centers, similar to the growth of TAVR centers. The paragraph ends with Chris Pasquale pointing out the slowest surgical growth rate for the business, noting that selling days affected this figure.
In the paragraph, Scott Ullem expresses confidence in sustaining mid-single-digit growth in a segment despite challenging comparisons to previous high single-digit growth rates. He mentions launching Mitris in China and potential tailwinds from Connect's approval in Europe as reasons for confidence in 2025 guidance. Chris Pasquale inquires about the regulatory pathway and approval timing for the AlignAR product, noting promising data from an ongoing trial. Bernard Zovighian responds that they can't discuss details until a deal closes, as they are not involved in current conversations. Patrick Wood asks about the utilization and reach of Pascal, indicating mixed focus on account breadth versus depth.
In the paragraph, Daveen Chopra discusses the growth strategy for the Pascal product, emphasizing its positive patient outcomes and increasing use in medical centers. Currently, Pascal is used in less than 50% of the approximately 850 TAVR centers in the US, highlighting significant growth potential both in existing accounts and new centers. Patrick Wood asks about potential impacts on FDA approval timelines due to changes within the agency. Bernard Zovighian responds, stating that despite the fluid situation, they have observed no changes in approval timelines, and they believe the FDA remains professional and committed to their work.
The paragraph features closing remarks from Bernard Zovighian, expressing satisfaction with the company's strong performance in Q1 and confidence in achieving future goals. He highlights milestones like the anticipated early TAVR indication approval, the NCD for Evoque, and the SAPIEN M3 CE mark. These developments support the company's commitment to transforming care for structural heart patients and aiming for 10% annual sales growth. Zovighian appreciates the hard work of the 16,000 employees and invites further questions, thanking participants for their interest before concluding the call.
This summary was generated with AI and may contain some inaccuracies.