Edwards(EW) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first quarter sales growth of 10% to $1.6 billion compared to the previous year, prompting an increase in 2024 sales guidance to the high end of 8% to 10% [45][59] - Adjusted earnings per share for the quarter were $0.66, with a GAAP earnings per share of $0.58, which included one-time expenses related to the planned spin-off of Critical Care [65][59] - The adjusted gross profit margin was 76%, down from 77.5% in the prior year, primarily due to favorable foreign exchange impacts in the previous year [66] Business Line Data and Key Metrics Changes - TAVR sales reached $1 billion in the first quarter, marking an 8% year-over-year increase when adjusted for billing days, with strong growth driven by the U.S. and Japan [49] - TMTT sales were $73 million, representing a 72% increase year-over-year, primarily due to the adoption of the PASCAL system and strong feedback for the EVOQUE system [41][43] - Surgical sales increased by 8% to $266 million, driven by the adoption of premium surgical technologies [55] Market Data and Key Metrics Changes - In the U.S., TAVR sales growth was higher than the global constant currency growth rate, with procedure volumes increasing as the quarter progressed [40] - European TAVR growth was softer than expected, attributed to aggressive pricing from competitors, but is anticipated to normalize throughout the year [52][115] - The company expects to see strong TAVR adoption in Japan, driven by the SAPIEN 3 Ultra RESILIA technology [25] Company Strategy and Development Direction - The company is focused on expanding its TAVR and TMTT platforms, with a commitment to advancing tissue technology and improving patient care [38][45] - The launch of EVOQUE for tricuspid regurgitation is seen as a significant growth opportunity, with expectations for continued adoption and expansion of the product portfolio [46][43] - The company is actively preparing for the launch of SAPIEN 3 Ultra RESILIA in Europe, expected in Q2 2024, to enhance its competitive position [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of TAVR and TMTT, citing strong physician demand and the need for innovative therapies to address untreated patient populations [17][45] - The company anticipates a higher growth rate in TAVR sales in the second half of the year compared to the first half, driven by ongoing patient activation efforts and clinical evidence [54][118] - Management highlighted the importance of addressing barriers to access for underserved communities, reinforcing their commitment to advancing patient care [48] Other Important Information - The company raised its full-year TMTT guidance to $320 million to $340 million, up from a previous range of $280 million to $320 million [43] - The first quarter saw a $305 million deposit related to a tax dispute, impacting free cash flow, which was adjusted to $206 million excluding this item [70] - The company incurred $41 million in one-time costs associated with the spin-off of Critical Care during the first quarter [61] Q&A Session Summary Question: What drove the strong quarter for TMTT? - Management indicated that the majority of growth came from PASCAL, with EVOQUE still in early stages of adoption [85] Question: Why was European growth lower than expected? - Management attributed the lower growth to aggressive pricing from competitors and a few lost billing days, but expects normalization throughout the year [115] Question: How does the company view TAVR growth for the rest of the year? - Management expressed confidence in TAVR growth, noting that Q1 would be the lowest growth quarter and anticipating stronger performance in Q2 and beyond [88][118] Question: What is the impact of the AHA's aortic stenosis initiatives? - Management is excited about the partnership with AHA, aiming to implement quality metrics that could enhance patient flow through the system [135] Question: How does EVOQUE's pricing impact its commercialization? - Management believes EVOQUE offers exceptional clinical benefits and anticipates continued interest from physicians, despite the premium pricing [137]