Q3 2021 Edwards Lifesciences Corp Earnings Call
Greetings and welcome to the Edwards Lifesciences third quarter 2021 results call. At this time, all participants are in a listen only mode.
<unk> and answer session will follow the formal presentation.
If anyone should require operator assistance. During this conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to our host Mark <unk>, Vice President of Investor Relations and Treasurer. Thank you you may begin.
Thank you very much Diego.
Good afternoon, and thank you all for joining US with me on today's call are Mike <unk>, Chairman and Chief Executive Officer, and Scott all of them Chief Financial Officer.
Just after the close of regular trading Edwards Lifesciences released third quarter 2021 financial results. During today's call management will discuss those results included in the press release and accompanying financial schedules and then use the remaining time for Q&A.
Please note that management will be making forward looking statements that are based on estimates assumptions and projections. These statements include but aren't limited to financial guidance and expectations for longer term growth opportunities regulatory approvals clinical trials litigation reimbursement competitive matters and foreign currency fluctuations. These stay.
<unk> speak only as of the date of which they are made and Edwards does not undertake any obligation to update them. After today. Additionally, the statements involve risks and uncertainties, including but not limited to those associated with the pandemic that could cause actual results to differ materially.
Information concerning factors that could cause these differences and important product safety information can be found in the press release, our 'twenty 'twenty annual report on Form 10-K, and Edwards' other SEC filings all of which are available on the company's website at Edwards dotcom.
Finally, a quick reminder, that when using the terms underlying and adjusted management is referring to non-GAAP financial measures otherwise they are referring to GAAP results reconciliations between GAAP and non-GAAP numbers mentioned during the call are included in today's press release with that I'd like to turn the call over to Mike for his comments Mike.
Thanks Mark.
Let me begin by expressing our appreciation for our global teams, who have been highly engaged throughout the pandemic. We're also pleased that our supply chain remained resilient during these challenging times to meet the needs of the patients we serve.
Turning to results third quarter total company sales of $1.3 billion increased 14% on a constant currency basis versus the year ago period strong mid teens growth was driven by our innovative platforms, although lower than our July expectations due to the significant impact cold.
It had on U S hospitals.
Although we experienced encouraging signs of patient confidence with continued willingness to seek medical care in July the Delta variant had a significant impact on hospital resources. During the last two months of the third quarter, especially in the U S.
Despite the pronounced impact of the Delta variant in the U S. In Q3, we're encouraged by the recent decline in hospital Covid admissions. We believe some procedures were unfortunately deferred in the third quarter and based on what we saw in Q2, we expect many of these patients who deferred treatment in Q3 will be.
Treated in the future.
We continue to expect total company sales growth to be in the high teens for the full year.
In terms of or.
Third quarter Global sales were 508, and $58 million up 14% on an underlying basis versus the year ago period, We estimate global <unk> procedure growth was comparable with our growth in the third quarter.
Globally, our average selling price remained stable.
In the U S. Our tap sales grew 12% on a year over year basis, and we estimate that our share of procedures was stable.
Both was broad based across both high and low volume centers.
As you might expect procedure volumes in Q3 were affected by seasonality and varied by geography and EBIT by hospital.
<unk> and providers turn their focus again to the pandemic our tavern sales in July benefited from encouraging signs of continued recovery from the pandemic. However procedures were negatively impacted in the last two months of Q3 due to the significant impact Delta had on hospital resources.
Outside the U S. In the third quarter, our sales grew approximately 20% on a year over year basis, and we estimate total tap a procedure growth was comparable.
We continue to be encouraged by strong international adoption of <unk> broadly in all regions and despite the impact of Delta the tower market in Europe showed relative resilience with strong growth in procedure volumes.
Growth was broad based across Europe, and driven by continued strong adoption of our SAPIEN three ultra platform. We were pleased with the growth rate considering that in Q3 of 'twenty 'twenty centers in Europe had already recovered from pandemic lows.
Longer term, we see excellent opportunities for continued O U S growth as we believe global adoption of <unk> therapy remains quite low.
It's worth noting that recently published guidelines from the European Association of Cardio thoracic surgery, not definitively recommend havre for patients over the age of 75.
The acknowledgment by the surgical society. The Tapper is preferred for those over 75 is a significant development. We believe these guidelines represent an important long term opportunity and although transcatheter valves have been commercially available for over a decade in Europe. It remains clear that there is still a large.
About need for this therapy.
Strong tower adoption continued in Q3 in Japan as expected we received reimbursement approval in Q3 for treatment of patients at low surgical risk we remain focused on expanding the availability of tap our therapy throughout this country driven by the fact that a S remains a.
Significantly undertreated disease amongst this large elderly population.
At the upcoming TCT meeting, there's a planned late breaking update on the economic outcomes of partner three at two years.
In summary, based on October procedure trends, we expect Q4 growth for tapper to be similar to Q3, we continue to expect underlying tab for sales growth of around 20% in 2020 one.
We remain as confident as ever about the long term potential of <unk> because of its transformational impact on the many patients suffering from suffering from aortic stenosis and because many remained untreated the long term potential reinforces our view that this global tower opportunity will exceed 7 billion.
By 2024, which implies a low double digit compound annual growth rate.
Now turning to T. M T T. We've made meaningful progress across all our platforms with over 6000 patients treated to date.
To transform treatment and unlock the significant long term growth opportunity. We remain focused on three key value drivers our portfolio of differentiated therapies.
Positive pivotal trial results to support approvals in adoption and favorable real world clinical outcomes.
This quarter, we progressed on the enrollment of five pivotal trials across our portfolio to support therapies for patients suffering from mitral and tricuspid regurgitation. We are we are gaining experience with the Pascal precision platform as part of our class trials and physician feedback continues to be.
Positive.
We look forward to presenting randomized data from the class two deep pivotal trial next year and remain on track for the U S approval of Pascal for patients with DMR late next year.
This important milestone will mark a transition from large single arm studies, two significant pivotal trial results that support approval and adoption. It will be the first of several key datasets from our class trials.
We continue to treat patients with both of our mitral our transcatheter mitral replacement therapies through the and circle pivotal trial for SAPIEN three and the mice study of Ebola of act of evoke E OS.
We are ramping up enrollment with our novel evoke tricuspid replacement therapy as part of the <unk> two pivotal trial.
These things transpire Merrill therapies are critical for many patients without treatment options today and exemplify the importance of our comprehensive portfolio.
As we continue to expand our body of clinical evidence, we look forward to presenting meaningful data at TCT and PCR London valves next month presentations.
Presentations will include six month outcomes of evoke tricuspid replacement from our clinical trial experience in the <unk> study. In addition, 30 day outcomes for mitral repair with Pascal from our my class post market clinical follow up study of over 250 patients.
We also anticipate several live case demonstrations of our differentiated therapies.
Turning to the financial performance and T. M. T T. Despite the impact of Delta in summer seasonality global sales of $22 million were driven by the continued adoption of Pascal in Europe as we expanded commercially we continue to experience high procedural success rates and extra.
And clinical outcomes for patients and we remain committed to employing our high touch clinical support model. We were pleased with our level of site activation during the quarter.
We continue to expect to achieve our previous full year guidance of $80 million to $100 million and estimate the global T. M. T T opportunity to triple to approximately $3 billion by 2025, and we're pleased with our progress toward advancing our vision to transform the lives of patients.
With mitral and tricuspid valve disease.
In surgical structural heart third quarter global sales were $217 million up 6% on an underlying basis versus the year ago period.
Despite the Q3 resurgence in Covid cases, we were encouraged to see continued salver procedure growth across most regions.
We remain encouraged by the steady global adoption of Edwards resilient tissue valves, including the ENSPIRIT resilient aortic valve.
Connect resilient valves conduit and our mitral resilience mitral valve.
This advanced tissue treatment is increasingly supported by a growing body of real world evidence as demonstrated at the European Association of cardiac three cardiac thoracic surgeons annual meeting earlier this year registry data confirmed excellent real world outcomes within spirits Brasilia and pay.
<unk> under the age of 60.
As patients increase their awareness of surgical valve choices, we believe that they're learning about the durability potential of brasilia and engaging with their positions to choose this technology.
In summary, we have confidence that our full year 2021 underlying sales growth will be in the mid teens for surgical structural heart driven by market growth and adoption of our premium technologies. We continue to believe the surgical structural heart market that we serve will grow mid single digits through 2026.
<unk>.
In critical care third quarter global sales were $213 million up 17% on an underlying basis versus the year ago period.
<unk> was driven by contributions from all product lines led primarily by strong he misfire capital sales in the U S.
Our true wave disposable pressure monitoring devices used in the ICU remained in demand due to the elevated hospitalizations in the U S and demand for products used in high risk surgery also grew year over year. In addition to demand for the clear sight noninvasive finger Cup used in elective procedures.
In summary, we continue to believe the critical care will grow revenue in the low double digit range. In 2021, we remain excited about our pipeline of critical care innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients.
And now I'll turn the call over to Scott.
Thanks, Mike.
Today I'll provide additional perspective on the third quarter, along with how we anticipate the rest of the year may unfold and some color on what to expect at the Investor Conference on December eight.
Total sales in the third quarter grew 14% on an underlying basis over the prior year as indicated earlier. This strong sales growth is lower than we expected in July before the U S Delta search.
Earnings in the quarter of 54 cents met our expectations as COVID-19 related constrained spending more than offset lower than expected sales.
As Mike mentioned based on the improving trends with the Delta variant and our October procedure trends. We are projecting total Q4 sales of between 1.30 billion and 1.38 billion.
As it relates to each product line, we are forecasting fourth quarter caviar sales of 850 million to $910 million and still have the potential to reach underlying sales growth of around 20% for the full year 2021.
We are also maintaining our previous ranges for TMT T surgical structural heart and critical care.
We continue to expect our full year adjusted earnings per share guidance at the high end of $2.07 to $2 27.
With fourth quarter, adjusted EPS of <unk> 53 to 59 cents.
Now I'll cover additional details of our third quarter results.
Our adjusted gross profit margin was 76, 3% up from 75, 5% in the same period last year, when we experienced substantial cost responding to COVID-19.
The improvement was also driven by a more profitable product mix, partially offset by a negative impact from foreign exchange.
Like most companies, we are seeing signs of inflation generally and things like some of the raw materials, we use in production as well as shipping and logistics with that said some of the extra ordinary cost we incurred when COVID-19 hit last year has lessened and the net result is no material impact to our gross profit margin.
Performance or guidance for 2021.
More broadly we're continuing our investments to ensure that our supply chain is strong and resilient and capable of delivering life saving products for our patients.
We continue to expect our 2021 adjusted gross profit margin to be between 76 and 77%.
Selling general and administrative expenses in the third quarter were $364 million or 27, 8% of sales compared to $307 million in the prior year.
This increase was primarily driven by personnel related costs and increased commercial activities compared to the COVID-19 impacted prior year.
We are planning a sequential ramp up of expenses in the fourth quarter as Covid related restrictions continue to subside, we still expect full year 2021, SG&A expenses as a percentage of sales excluding special items to be 28% to 29%.
Research and development expenses in the quarter grew 22% over the prior year to $238 million or 18, 2% of sales.
This increase was primarily the result of continued investments in our transcatheter renovations, including increased clinical trial activity.
We are planning to increase these expenses in the fourth quarter as we invest in developing new technologies and generating evidence to expand indications for <unk> and T. M T T.
For the full year 2021, we continue to expect R&D expenses as a percentage of sales to be 17% to 18%.
Turning to taxes, our reported tax rate this quarter was 13% or 13, 9%, excluding the impact of special items.
This rate included a 320 basis point benefit from the accounting for stock based compensation.
We continue to expect our full year rate in 2021, excluding special items to be between 11% and 15%, including an estimated benefit of four percentage points from stock based compensation accounting.
Foreign exchange rates increased third quarter reported sales growth by 70 basis points or $8 million compared to the prior year.
At current rates, we continue to expect an approximate $70 million positive impact or about one 5% to full year 2021 sales compared to 2020.
Foreign exchange rates negatively impacted our third quarter gross profit margin by 30 basis points compared to the prior year.
And relative to our July guidance FX rates positively impacted our third quarter earnings per share by less than a penny.
Free cash flow for the third quarter was $471 million defined as cash flow from operating activities of $532 million less capital spending of $61 million.
Our year to date free cash flow was $1 $1 billion.
The strong cash flows are a reflection of our exceptional portfolio of patient focused technologies that are generating returns from previous investments, which allows us to fund future internal and external opportunities.
We continue to maintain a strong and flexible balance sheet with approximately $3 billion in cash and investments as of September 30th.
Average shares outstanding during the third quarter were $632 million and we continue to expect our average diluted shares outstanding for 2021 to be at the lower end of our $630 million to $635 million guidance range. We have approximately $1 2 billion remaining under the share repurchase program.
Before turning the call back over to Mike I'll make a quick comment about our outlook for 2022.
It's premature to offer detailed guidance today, but we will provide 2022 financial guidance at our Investor Conference on December eight in general in 2022, we're planning on less disruption from Covid as we assume the resumption of more normalized sales and earnings growth, we will provide guidance for gross profit and operating.
Margins as well as more visibility into any potential impact from changes in corporate tax rates.
With that I'll pass it back to Mike.
Thanks Scott.
So we are very pleased with our strong year to date performance. Despite the headwinds associated with the pandemic.
<unk> and clinicians increasingly choose transcatheter valve therapy, we remain optimistic about the long term growth opportunity. We are committed to aggressively investing in our focused innovation strategy, because we believe theres a broad group of patients still suffering from structural heart disease, and the Pandemics impact will wane.
We remain confident that the innovative therapies, resulting from our investments will continue to drive strong organic growth in the years to come and with that I'll turn it back over to Mark.
Hey, Thanks, a lot Mike and as you heard from Scott earlier, our 2021 Investor Conference will take place on Wednesday December 8th here at our headquarters in Irvine, California for those of you able to join US on campus. The conference will be hosted with appropriate safety precautions and there will also be available via webcast either way, we really hope you can be a part of it.
In addition to our 2022 financial guidance, you'll hear more about Edwards focused innovation strategy and our comprehensive and exciting product pipeline for more information. Please visit the Investor Relations section of the Edwards website at IR Dot Edwards Dot com.
So with that we're ready to take your questions. As a reminder, please limit the number of questions to one plus one follow up to allow for broad participation. If you have additional questions. Please reenter the queue and management will answer as many participants as possible during the remainder of the call Diego.
Thank you.
And if you'd like to ask a question at this time simply press star one on your telephone keypad.
A confirmation tone will indicate that your line is in the question queue.
You May press the Star key followed by the number two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star King Starkey.
Our first question comes from Vijay Kumar with Evercore ISI. Please state your question.
Hey, guys. Thanks for taking my question, maybe if we were at the first one Mike.
Clarke, perhaps the Q4 guidance here.
What is the underlying assumptions here in terms of any.
Any further disruptions from.
You know a huge future base or perhaps even the flu season, where it might be perhaps hard to differentiate respiratory symptoms between a traditional flu.
Colby.
Some commentary on Q4 assumptions will be helpful.
Yeah. Thanks, Vijay yeah like like so many others, we really struggled with precisely for projecting the pandemic Edwards businesses strong all the fundamentals are in a great place and we know that there are many patients with structural heart disease in particular that are in need and so we.
Feel great about it from that perspective, but the pandemic.
Ends up having impact on hospitals and their ability to be able to handle it.
The volumes and we find it's very spotty.
It's regional in nature and you know the good news is we're watching the delta variant come down in the U S and that's where we felt most of the impact and so that's very good of course, there is concern of will there be some kind of a a winter surge that is not apparent at this point.
So those things are always possible.
We have by and large model. The fact that we think things are going to get gradually better we have taken into account where we are in October and in October we saw run rates that were similar to what we saw in the last couple of months of Q3, and so that has also gone into our thinking so I don't know if that answers your.
Question P J.
No.
Hello, Mike and just on that last commentary around hospital capacity to hany volumes.
I guess that you know labor shortage has been spoken about.
On the one hand, you know when I think about the limited number of camera sensors.
And the issue of labor shortage.
Or just.
Feels like.
Any backlog or around <unk>.
Cases might be a challenge, but then on the flip side Mike.
Conscious sedation.
Patients are in and out pretty quickly. These are highly profitable procedures, they shouldn't be perhaps be making case around hospitals are incentivized, perhaps drive volumes I'm curious.
How do you balance those two.
Yep.
It's a it's a it's a great point Vijay and you know it is one of the pluses that's associated with <unk> that often there isn't an ICU stay but when we we watch what happens with various hospitals and sometimes whether it's for staffing reasons or just the fact that they're swamped with COVID-19 patients. They will just put up the stop sign and decide that there.
Just not going to do procedures, and you know whether they are elective or resource consuming or not well were probably more impacted by the ice ICU capability, but it's not always the case, sometimes it's just broadly across the hospital. So.
I don't have one answer for all because it tends to be a little bit more snowflakes with each hospital being a bit different but hopefully that provides you with a little bit of color.
Understood. Thanks, guys.
Our next question comes from Bob Hopkins with Bank of America. Please state your question.
Oh, great. Thanks, Cindy and good afternoon.
Like I realize it's a challenging time to make forecasts and so I won't ask you about forecast I'm just what I'm.
Curious about and would love your views on is just you know what we know now like what are you. What are you seeing out there now how much better and the environment and it was a month ago, just kind of curious to see your kind of your net views on and I'm asking specifically from a tower perspective.
Kind of how much improvement you're seeing.
Are we right now relative to where we were just a few months ago. Thank you yeah. Thanks, Bob It's a really good question.
Probably stay close to our team that.
<unk> daily sales, each day and adjust their own feelings based on how things change almost on a daily basis, and you know things you know it gets tough and I hate to get too granular about things are a little better today than they were even earlier in the month, but I hate to get too granular on that.
Bob.
In General we've tried to give you some information to let you know that October was not so dissimilar than the end of Q3. So it's not we didn't want to send a signal that all of a sudden.
October was back to the kind of thing that we were experiencing in Q2, so where we are we're not experiencing that kind of an environment, yet, but we're overall optimistic I mean, we talked to a lot of folks.
Anecdotally, obviously these trends that I mentioned of Delta improving is something we think is going to pay off we think often that maybe <unk> is a bit of a a trailing indicator of what's happening with COVID-19 that.
The cases, ultimately turn into ICU stays and it probably affects our case load a little bit later, but that's a bit speculative on our part.
Okay. Thank you for that.
Bob It's Scott I'll, just echo something that Mike said, which is okay.
You just roll forward, what things have been trending like in October the growth rate for Q4, and <unk> looks a lot like it did for Q3, which is call. It 14%. So like Mike said, it's moving around watching it carefully and try not to overreact or under react to what the daily sales trends looks like but if you had to call. It right now.
Sort of what the trend looks like and then for the full year. It gets you to something nearer the 20% underlying growth rate that we've talked about for all of 2021.
Okay. Thank you Scott that's very helpful. And then last quick question is just on the <unk>.
U S trial for Pascal and when we'll see those data there at that time for that yet or just sometime early in 2022.
Yeah, we.
We don't have a we don't have clarity on when the timing for that'll be we say it'll be next year.
We're sticking with our data and our belief that we will have approval by the end of next year, but we really don't have clarity on what it's going to be presented that'll be one that we hopefully will have a little bit more visibility when we get to the Investor Conference, Bob and try and give you a sense for it at that.
Time.
Thanks very much.
Thank you. Our next question comes from Robbie Marcus with Jpmorgan. Please state your question.
Oh, great. Thanks for taking the questions.
First one for me.
Earlier this year, we saw some competitive data that maybe it looked a little more competitive with SAPIEN three I know, it's still early days and the.
The European numbers look good this quarter, but are you starting to see any.
Shift in trends or reception to some of the newer valves in Europe recently.
The short answer is no.
It's been very.
Similar.
Selling that we've had throughout the year that was the case in the past we continue to think that the top two competitors make up about 85% of the sales in Europe, and all the rest and that which is a full complement of competitors make up the other 15%. So we really haven't seen any significant shifts.
And that if that's helpful.
Yes. It is.
Maybe one for Scott This was another quarter, where we saw the financial leverage potential of the business.
And where do you think you talked about spending more in fourth quarter, but where do you think we are maybe fran.
Gross margin and operating expense perspective versus.
And I know Covid environment. So maybe said another way if you fast forward and there is no more COVID-19.
This gross margin have room to improve from here and.
Maybe how much impaired is the SG&A and R&D versus what you would like to spend in an unconstrained environment, yes.
So we do think gross margin has room to improve from here as to as does operating margin keep in mind, we're already starting from relatively strong margins compared to our industry.
So our priority has been investing aggressively on internal growth more so than on trying to expand margins, but I do think there's going to be opportunity for those margins to gradually incrementally slowly expand over time and it's something that we do we try to think carefully about short term, though to your question about COVID-19, it's been <unk>.
<unk> our margins have remained pretty stable. Despite the fact that sales are down relative relative to pre COVID-19 levels, because expenses are down as well largely driven by things that are happening out in the field so travel.
Meetings attendance at various different societies and events and so it's been kind of a natural hedge against the sales headwinds that we've seen from Covid and we're benefiting from that to be honest, though we'd like to see expenses go back up along with sales because it's an indication that the environment is more normalized.
We're able to invest aggressively that we can enroll or clinical trials at.
At the higher rates that we saw pre COVID-19 and so.
That's that's sort of the way, we're thinking about margins overall.
Great. Thanks for taking the question.
Our next question comes from Josh Jennings with Cowen. Please go ahead with your question.
Hi, good evening. Thanks, so much for taking the questions I wanted to start Mike I was hoping to just.
We're in a little bit about your updated thoughts on the backlog that you mentioned in the second quarter earnings call.
With just the environment.
Peel back a little bit, but one just any.
Any kind of review the referral channels and patients coming off the sideline and three Q and should investors be thinking of that <unk> phenomenon could could reemerge in 2022 as we move through.
This COVID-19 surge.
Yeah, Thanks, Josh you're at a key point and we do talk about it quite a bit inside it.
We don't have perfect visibility perfect data so much of what we rely on our anecdotal reports are we spent a lot of time with our customers and frontline clinical specialists to try and gain some kind of perspective.
It's tough for us to nail the timing and magnitude of this but clearly we feel like we got a small lift in Q2 from patients that came into the system that it probably deferred care.
If we reflect back on the total pandemic when when things first stopped back in 2020 are back in the March April timeframe.
It's difficult for us to say that we saw those patients come back into the system, but differently. It felt like the last Winter's patients did indeed salt Lake some of those some small quantity showed up and supplemented Q2. So it's not a that's not a giant number but it's it's additive.
We we speculate the civil or kind of thing might happen.
As a result of the patients that have deferred care during the Delta variant.
You know during the Delta variant.
We're we're speculating again, we we may indeed have had these patients that actually saw their physician.
And got diagnosed but that the actual treaters are.
Regional hotspots weren't there too.
Provide the therapy. So we think Theres. Some reason why this might come back exactly when it might come back it was very difficult, but as Covid wanes, we're hoping that indeed, we see a similar phenomena as we saw in Q2.
Thanks, Thanks for that and then just one follow up and we get a lot of questions just on low risk penetration I think the TVT registry update we presented a couple of weeks ago and I think for 2020 update was at 28% of patients received however, with.
With low risk it seems pretty low it seems like we're still in early innings of lowest penetration, but just would love to get your thoughts in terms of where the tablet market is in terms of penetrating that low risk opportunity. Thanks a lot.
Thanks, Josh I wish I could tell you the problem was low risk.
We think there's an under treatment problem across all of the risk spectrums, whether it's high risk intermediate risk or low risk for surgery.
We're still.
Early innings is a good way to characterize it we still think that there are many patients that should be receiving therapy that don't.
It's for a variety of reasons and in many cases, they're just not aware of the option of travel being available to do for them and being an appropriate for them and so it's a it's a key initiative for us we've been making progress, but the progress has been slow and steady.
And we're not close I I don't know if.
If I would put tremendous stock in that penetration number in general we think penetration rates across the border are even worse than that.
Thanks again.
Thank you. Our next question comes from Matt <unk> with Credit Suisse. Please state your question.
Alright, thanks, so much for taking the question. So just one on <unk>.
Europe.
Overseas Tavern, and then one follow up if I could just on general market trends.
The European or overseas numbers.
Seem to be you know I guess less sequentially impacted by the U S and I've just.
There's been an awful lot of focus on staffing and challenges around the U S. Obviously the surge but.
Do you see I'm curious, if you see staffing and other regions being as much of an issue. It is in the U S.
And whether you can sort of tease out the areas of strength that drove what was pretty good Q3 performance outside the U S. A.
Despite the surge in everything that went on and I just one follow up.
Yeah. Thanks, Matt No Europe. Your observation was correct we saw far more.
The impact in the U S than we saw in Europe, our colleagues in Europe by comparison were pretty healthy growth rate growth rates and you'll notice in my comment that if you go back to Q3 of last year, it's not as though Europe was really doing poorly they actually had a growth quarter versus 2019, I think I'll have to say high single digit growth or something last.
So this is growth on top of that growth, which is pretty significant considering I was entered this therapy was introduced in Europe, a backend O seven so it's pretty mature.
That's great.
Then if I could I know Scott you had.
Laid out some some basic sort of bullet points of what we can expect that at the analyst meeting and Investor meeting in December but.
In past years.
One thing that seems to have come up year over year, which is great.
Great growth in say, a given year per tower, and then sort of.
Nishu comps becomes kind of a conversation for the following year.
And I guess you know.
One of the things heading into <unk> into 'twenty. Two I think you mentioned decreasing impact of COVID-19 or something like that and back to sort of normalized growth I'd just be curious to hear whether you expect comps to be.
<unk> potentially a little bit less of the conversation.
When you sort of frame out your expectations to start 'twenty two given given the way. This year has played out.
Well you know I guess by definition the comps are important just as we think about growth rates, but it sort of ties back to V. Jays question earlier on about when do we start seeing COVID-19 more in the rear view mirror and lessen the windshield and to the extent that that lessons.
You know as we get to the end of the fourth quarter beginning the first quarter for example than prospects for 2022 growth theyre going to be higher if COVID-19 is playing a more meaningful role in certain regions or there are hotspots that are more noticeable then that's going to impact our growth overall, that's probably the biggest uncertainty.
That we have going into 2022, because overall, we feel really positive about the growth prospects for <unk> in the U S and Europe, and Japan and in the rest of the world one of the things that we were talking about earlier with the low risk penetration, while it's difficult to calculate the actual penetration remember the timing on low risk, where we have the data for la.
Risks with partner three at ACC in 2019, we got approval in the third quarter of 2019, and shortly thereafter, Covid became a factor and interrupted our growth for tavern. So we haven't really had this period that's uninterrupted from from Covid for any extended time since we got the low risk approval in its one.
The reasons, why we think they're just great growth opportunities longer term for whatever.
That's helpful color. Thank you Scott.
Our next question comes from Danielle <unk> with SVP Leerink. Please state your question.
Hey, good afternoon, everyone. Thanks, so much for taking the question.
Pascal.
I will now.
I was just wondering Mike if you could talk a little bit about the U S launch strategy I know, it's early but you guys when I said premium right.
Curious about whether that's the brand for the U S. If you can disclose that.
Yes.
From the data that's going to be next.
Next year.
Yeah, well thanks, Yeah, no as we indicated we're looking forward to having Pascal approved and again it would be approved for DMR by the end of 'twenty two in our views.
Where.
Already taking some of your initial steps to build some capabilities and we will assemble a dedicated field team and we'll be implementing our high touch model.
Really we're going to focus on just getting excellent real world outcomes, we're going to take advantage of all the learnings that we've had from launching.
<unk> around the globe and launching T. M T T in Europe in General, we do consider Pascal our premium therapy or would also implement our premium pricing plan that would be consistent with what we've done elsewhere in the world. So hopefully that gives you a little color on how we would approach us.
Yeah.
And then the follow up question.
Alright.
Initially I mean is the plan.
The target.
Rich.
However.
Superior market share.
Sure.
Specifically to mitral center sort of how do we think about the initial target. Thanks, so much.
Thanks, Danielle Yeah, it's a little early to say you know this is gonna be an interesting evolution and in some cases the same people that do <unk>, what might do mitral cases, and others. There's dedicated teams. It's a little too early for us to say Oh, we're going to get into it we'll have more to talk about when we're together at the Investor Conference but.
Right now I really don't have any specific color for you.
Understood. Thanks.
Thank you.
And our next question comes from city, they're furlong with Morgan Stanley. Please go ahead with your question.
Great. Thank you for taking the question I wanted to ask about Japan, and what you've seen just throughout this year in terms of the centers over there that are certified to pick one in terms of how that's trended and then as you think about.
Reimbursement maybe outlook given the landscape as Tanger centers.
In the near term and then flowing into 2022 as well.
Yeah. Thanks, So we were very pleased.
To get the the low risk reimbursement approval that happened mid quarter I want to say sometime in the August timeframe.
The there are indeed, new centers that get added those get added on a regular pretty deliberate basis and those new centers tend to be kind of slow to ramp up there are significant regulatory requirements.
That are necessary to fire up new centers.
But having said that it's a dramatically undertreated disease in Japan, there they have a very large elderly population and when we think about it in terms of for example, tab or per million, we say boy Theres still a long way to go. So we're very pleased that the growth rate the growth rate in Japan was even higher.
Then our international growth and the reimbursement is important it.
It's an important T. It's exciting to be able to get that and hopefully that begins.
Hoping Japanese clinicians redefine the importance of <unk> for their patients.
And I think.
We've got to take it for granted that low risk is already present in other places around the world and it just hasn't been in Japan until this last quarter.
Okay, Great and I wanted to ask as well just what youre seeing on the clinical enrollment landscape given COVID-19 and if you could provide any updates either on early <unk>.
Or explain when you expect to.
And ramp in enrollment there. Thank you.
Yeah. Thanks, Yeah, you might recall us so severe that early on we said that.
There was an impact on our trial enrollments, where we're not experiencing that the same way during this flare up of Delta.
It doesn't make it easier, but hospitals have done a nice job of adjusting and adapt they are very committed teams and so whether it's our trials are in tower our trials in T. M. T T. It feels like we've we've done well, we basically feel that our trials are timing have not been impacted by this late.
The search.
Thank you.
And our next question comes from Larry <unk> with Wells Fargo. Please go ahead with your question.
Hey, good afternoon, guys. Thanks for taking the question just one for me on Pascal Mike in Europe. It looks like your share has kind of been inching up and by our math you've reached about 20% share.
In Europe after about three years. So my question is what gets you higher I know that your goal is to be market leader. So do you need the rent the RCT data and and how are physicians using Pascal in Europe are they mostly using it for DMR or are they using it for both DMR and FMR I believe the label.
Is broad so you know kind of what what gets your share what what do you think you need to.
To get that share up thanks for taking your Austin, Yeah. Thanks, Larry and you know as you might imagine it it's it's difficult to estimate shares, but frankly, we haven't really gone into this thinking that that's our focus our focus has been to get outstanding clinical results and we focus on that both within our trials.
And within our commercial experience and that's what we've pushed our team and when you ask me, what's it going to take to get your share up it's gonna be impressive clinical results and so that'll show up two ways. One in the day to day experiences of clinicians and patients and the other is when they actually get a chance to see some of our results and use.
See more and more more and more data that is going to become available over time as you see clinical information so even at the upcoming <unk>.
TV or T. C. T I think you'll see more information on some of our early clinical experience.
At this point, we're not even in every country in Europe, but our focus just to underline the point again is not unfair.
This is a this is a really big opportunity there. So many patients with mitral regurgitation and there's many that are just not indicated not being well served today that that's where our focus is.
Thanks, Mike.
Our next question comes from Adam Maeder with Piper Sandler. Please go ahead with your question.
Hey, guys. Good afternoon. Thanks for taking the questions just one from me on the U S tablet market in competition specifically.
A new tablet competitor that recently entered the market I know, it's early here, but have you seen any impact in the marketplace and can you comment on how that your competitor is approaching the market anything from a pricing standpoint, and then maybe just more broadly how do you see the potential impact of this third player going forward. Thanks, so much.
Yeah. Thanks, Adam Yeah, when we talked about our results whether it was our global resort salts or our U S results. While we said it was you know it was broad based but the procedure volume growth.
And the Edwards growth were comparable so we really didn't see anything that was noteworthy here in terms of talking about share. So you know we've mentioned before that we have a full complement of competitors in Europe, and so that may be some kind of a leading indicator, but we just haven't seen anything in the data in the U S.
Yeah.
Okay understood. Thanks, Mike sure.
Our next question comes from Anthony Petrone with Jefferies. Please go ahead.
Thanks, So one quick follow up for Scott just on expectations on the analyst day.
Just wanted to make sure as the company issuing topline guidance or is it just P&L guidance and then a question on low risk we are seeing DTC advertising and.
In other areas of Med tech, albeit it's in more in consumer health facing.
Markets, but does does DTC in low risk makes sense here to open up that opportunity as we move into a period of higher vaccination and eventually anti virals. Thanks.
Yeah, Thanks, Anthony relating to the Investor Conference, we're expecting to provide guidance for the top line and the rest of the income statements. You know typically we talk about sales dollar ranges and underlying growth rates based upon our forecast for how the year is going to end up when we get to December.
So talk about margins gross margin operating margins and whatever other financial metrics, we've got clarity enough on to guide too as it relates to DTC I'll start and then Mike can.
Can offer perspective, as well you know, we think that market activation and inspiring more patients to come in to get treated as a really important part of the future and our long term growth of Teva and so we are already.
<unk> some resources around getting directly to patients to primary care physicians to referring physicians and we will be doing more of that in the future. It's not aimed specifically at a patient and a particular risk category. We're trying to get to all patients who have severe symptomatic aortic stenosis and we expect.
That's going to be an important driver of growth yes.
Yes, I'll just pile on there Anthony Thanks, It's a it's a good question.
If you go back historically are in the early days of Tamara, we really counted on the physicians that did tap or to educate the referring base and that's the way that we counted on the word getting out and I don't know we were we were under the impression that that actually would be sufficient but we we've learned over the years that that's dramatically.
Insufficient and so as Scott said, we've gone down a number of roads here to make sure that the referral base is indeed educated we've made some good progress there, although we're far from satisfied in terms of where we are right now but to be really specific going all the way upstream to consumer we do believe that that.
Could be a valuable lever, we are where were specifically doing some experimenting in that regard and maybe have some more specific things to share with you when you come to the Investor Conference.
Thank you.
Our next question comes from Joanne Wuensch with Citi. Please state your question.
Good afternoon. Thank you for taking the question.
Can we spend a lot on critical care.
The last couple of quarters have been particularly strong is it possible to tease out how much of that strength is just underlying.
Continue into 'twenty, and 'twenty, two and 'twenty three or its just sort of.
I wanted to call. It one time in nature associated with the pandemic.
Yeah.
Thanks, It's a good question Joanne I mean, if you were to ask our teams here you're going to keep growing at 17% I think they'd say no. That's not realistic that we got we got some help with this quarter by some large U S capital orders that really helped out.
And that made a difference now overall are we pleased with what's going on in critical care or is there more innovation than ever are they sustaining a pretty healthy growth rate.
That are better than I think med tech averages I think all of those are true and we're very proud of that and we're going to continue hitting it hard in that regard, but in terms of being able to maintain these kind of growth rates that we did in this quarter that's not likely.
And then as a follow up question use of cash.
Can you remind us of your thinking.
Thank you.
Sure I'll tackle that one Julian thanks for the question on use of cash are really our priorities have not changed our first priority is to fund.
Prospects for long term organic growth that are generated internally and we want to make sure that we're fully funding those platforms, we supplement that with external investments and so we'll we'll buy small sized early stage companies usually pre revenue.
Sometimes we invest in options to acquire companies based upon certain milestones or targets being met.
And so beyond growth internally and externally then we looked at the balance sheet and we've been a consistent repurchase of shares as you know we're going to continue to do that Opportunistically and we think that's going to be an important way that we can give capital back to shareholders over time.
Thank you so much.
Thank you. Our next question comes from Peter Chickering with Deutsche Bank. Please state your question.
Good afternoon, guys. Thanks for taking my questions a follow up on Josh is a low risk penetration question I think if you look specifically at the low risk patients where do you see from those patients in the third quarter versus the second quarter and what do you assume for the patients in the fourth quarter. Just curious how much that funnel is impacted in the back half of the year forget of Covid.
Yeah. Thanks Pedro.
You know we've said this before so I apologize for taking you through it again, but remember this character this characterization of patients by high risk intermediate risk and low risk was the characterization done by F. D. A N a as a regulatory pathway for <unk> to help make sure that the.
The oldest sickest patients were treated first at the highest risk to try and minimize the risks associated with a new therapy.
If you were to actually you know when you actually look at any patient there. Their key concern is that whether there are risks surviving surgery. It's what is the risk for survival. What is it like the live with tavern versus live with aortic stenosis and that's the real question. So we spend less time, and frankly clinicians and patients.
And less time talking about whether they're low risk or intermediate. So we really don't differentiate in that regard. So having said that what do we think how did patients behave in the third quarter, we whereas I've tried to infer before we don't have perfect visibility there, but we think they were indeed seeing their doctor.
We are indeed getting diagnosed they were indeed getting screened.
But there were a number of cases, where the trading hospitals themselves just stopped taking patients and that was the primary impact in the quarter.
Okay Fair enough and then Scott a follow question for you you weren't changing the TMT TMT guidance, it's a pretty wide range. Just curious you know what what would have to occurred at the high end versus low end of the range. Thanks. So much.
Yeah. It's a good question and like tavern in other businesses a lot of this is going to depend upon.
How much of a factor the Delta Varian plays in the fourth quarter.
You know there are a couple of different elements to our TMT tea business right. Now one is our commercial position in Europe, where we're selling Pascal primarily and then the other is clinical trial enrollment where there is reimbursement in the U S. We're really looking for is for there to be a normalization of patient.
Flow in both.
Europe, and the U S and that's really going to be an important determinant for where things go in the fourth quarter, we're expecting sequential growth in Q4 and that will contribute to where we ended up in that range of $80 million to $100 million in expected full year sales.
Great. Thanks, so much.
Thanks, Diego I think we have time for one more question maybe.
Thank you and our final question comes from Chris Pasquale with Guggenheim. Please state with your question.
Thanks for squeezing me in one quick one on TNT T. And then one on Fiverr Mike in your script, you said you've made progress enrolling the five T MTT pivotal trials in the quarter.
The site includes class two D. Because he just clarify.
As class two D actually finished enrolling any details there would be great.
Yeah.
We really haven't gotten specific on that so.
So we we really don't have specific comments, but as you might imagine.
We're we're committed to when we say that we believe that we're gonna have to be approved by late 2002 that naturally infers that we're close to having our enrollment completed and then that will allow us to prepare for the PMA and go through that process. So a lot of that has to.
Happen, we'll get into a little more granularity when we're together at the Investor Conference.
Okay.
And then there's a late breaker at H, a that's looking at asymptomatic patients. It's not your trial, so I understand it.
Really in the weeds, there, but curious if you know anything about it and to what extent that data could be instructive as we think about when we might see in future from early tavern.
Yeah. It's a good question I don't have personal knowledge of that trial, and so I can't really comment about it the H E R.
Wrong organization and good partners and I think they really care about patients with a us but I'm not sure precisely what trial that you're referring to but you know how we feel about asymptomatic patients. We feel like these are patients that should be treated with this idea of differing treatment and waiting for symptoms as an <unk>.
Outdated thought process and we're very committed to change that through rigorous clinical trials.
Thanks, Mike.
Okay well. Thanks, all for your continued interest in Edwards, Scott, Mark and I will welcome any additional questions by telephone.
Thank you. This concludes today's conference all parties may disconnect have a good evening.