Edwards(EW) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total sales of $1,530 million for Q2 2025, reflecting a growth of 10.6% compared to the previous year, which was better than expected [8][9] - Adjusted earnings per share (EPS) for the quarter was $0.67, while GAAP EPS was $0.57, which included a one-time charge related to external investments [23][24] - The adjusted gross profit margin was 77.6%, down from 80% in the same period last year, attributed to increased manufacturing expenses and foreign exchange impacts [25][26] Business Line Data and Key Metrics Changes - TAVR sales reached $1,100 million, increasing by 7.8% year-over-year, with stable competitive positioning and pricing [9][10] - TMTT product group sales were $133 million, growing by 57%, driven by the success of PASCAL and EVOQUE technologies [16][17] - Surgical Products Group sales were $267 million, reflecting a 6.8% increase compared to the prior year, supported by positive procedure growth globally [21][22] Market Data and Key Metrics Changes - In the U.S., TAVR growth was bolstered by renewed clinical focus and recent approvals for asymptomatic indications, while international markets, particularly Japan and Europe, showed strong growth despite competitive challenges [10][13][42] - The exit of a competitor in Europe contributed to a modest market share rebalancing, positively impacting sales [13][40] Company Strategy and Development Direction - The company is focused on its "Sharpen Focus" strategy, targeting structural heart failure and aortic regurgitation, which are seen as significant growth opportunities [7][8] - The company is raising its full-year sales growth guidance to 9% to 10%, reflecting confidence in its product portfolio and market position [9][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about mid to high single-digit growth in TAVR, supported by recent approvals and evolving clinical guidelines [14][30] - The company is committed to advancing evidence for aortic stenosis patients and is confident in its ability to deliver significant value to patients and shareholders [31][62] Other Important Information - The company announced the departure of Larry Wood, the leader of the TAVR team, and Dan Lippis will assume leadership, ensuring continuity in the TAVR franchise [14][15] - The company is in the final stages of acquiring GenaValve, with expectations to close the deal in Q3 2025 [30][98] Q&A Session Summary Question: What drove better-than-expected U.S. TAVR performance? - Management noted a renewed focus on TAVR management and timely treatment of patients, driven by recent clinical data and approvals [34][36][39] Question: What are the trends outside the U.S.? - Management highlighted positive feedback from the rollout of the S3UR platform in Europe and ongoing efforts to expand therapy in Japan [40][42] Question: Why not raise EPS guidance further? - Management cited ongoing headwinds, particularly related to GenaValve, as a reason for cautious EPS guidance despite strong performance [45][46] Question: What is the impact of the competitor's exit on market share? - Management emphasized the importance of demonstrating the value of their technology and ensuring patient access to high-quality care following the competitor's exit [48][50] Question: When do you expect CMS to reopen the NCD? - Management expressed hope for a timely reopening of the NCD, emphasizing the need for coverage of asymptomatic patients and streamlined operator requirements [55][58] Question: What is the outlook for the TMTT business, particularly EVOQUE? - Management reported strong physician and patient excitement around EVOQUE, with real-world outcomes showing promise [67][70][72] Question: What are the long-term margin expectations? - Management indicated a focus on annual operating profit margin expansion rather than setting specific targets, aiming for consistent growth [75][76]