Q4 2024 Edwards Lifesciences Corp Earnings Call
Speaker Change: Greetings and welcome to the Edwards Life Sciences Corporation fourth quarter 2024 results. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: If you require operator's assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Mark Wilterding.
SVP of Global Finance. Thank you, Mark. You may begin.
Speaker Change: Thank you, Alicia. Good afternoon and thank you all for joining us. With me on today's call is our CEO, Bernard Zovighian, and our CFO, Scott Ullem.
Speaker Change: Also joining us for the Q&A portion of the call will be Larry Wood, our Global Group President of TAVR and Surgical.
Speaker Change: Devine Chopra, our global leader of TMTT, and Wayne Markowitz, our global leader of surgical.
Speaker Change: Just after the close of regular trading, Edwards Life Sciences released fourth quarter 2024 financial results. During today's call, management will discuss the results included in the press release and accompanying financial schedules, and then use the remaining time for Q&A.
Speaker Change: Please note that management will be making forward-looking statements that are based on estimates, assumptions, and projections.
Speaker Change: These statements speak only as of the date on which they were made, and Edwards does not undertake any obligation to update them after today.
Speaker Change: Additionally, the statements involve risks and uncertainties that could cause actual results to differ materially.
Speaker Change: Information concerning factors that could cause these differences can be found in today's press release.
Speaker Change: and on Edwards' other SEC filings, all of which are available on the company's website at Edwards.com.
Speaker Change: Unless otherwise noted, our commentary on sales growth refers to constant currency sales growth, which is defined in the quarterly results press release issued earlier today. Reconciliations between GAAP and non-GAAP numbers mentioned during the call are also included in today's press release.
Speaker Change: Quarterly and full-year growth rates refer to continuing operations and do not include contributions from critical care, which was sold in Q3 of 2024, and a small non-core product group that reduces the sales of surgical.
With that, I'd like
Thank you all over to Bernard for his comments.
Thank you, Bernard.
Speaker Change: Thank you, Mark. Welcome, everyone, and thank you for joining us.
Speaker Change: We have a lot to cover today, including our Q4 and full year 2024 results, as well as our vision for 2025 and beyond.
Speaker Change: You will recall at the December Investor Conference, we talked about Edward's Focus Strategy.
Speaker Change: and our vision to solve a large, complex and growing unmet patient needs in structural heart.
Speaker Change: We have a very unique strategy to create, define, and build new categories.
Speaker Change: and this will position us for extended leadership and sustainable long-term growth.
Now I want to reflect on the full year 2024.
Speaker Change: It was a year of strong growth and meaningful progress for Edwards as our 16,000 employees advanced life-saving structural heart technologies for patients around the world.
Speaker Change: We are pleased with our solid 2024 full-year financial performance, where sales grew 9% to $5.4 billion, in line with our original total company sales growth guidance.
Speaker Change: While we got there in a different way than we originally anticipated, with tavern growth lower than expected, we were pleased that TNTT overachieved expectations.
Speaker Change: We continue to focus on the substantial long-term prospects for TAVR.
Speaker Change: We made a number of strategic decisions to strengthen our company.
Speaker Change: In Q3, we completed the cell of critical care, and we took action to optimize headwalls in order to increase agility and accelerate innovation.
Speaker Change: We also invested significantly in internal research and development to augment our portfolio with new breakthrough technologies.
Speaker Change: In addition, we completed the strategic acquisitions of Jesse Medical, InnoValve, and Endotronics.
These acquisitions
Speaker Change: provide an expanded opportunity in new therapeutic areas to address the unmet needs of aortic regurgitation, mitral disease and heart failure patients.
Speaker Change: Together, these strategic decisions and investments reinforce our confidence in Edward's sustainable long-term growth.
Turning to the fourth quarter.
Speaker Change: Our first full quarter focused solely on structural heart. Total company sales grew 9%.
Speaker Change: We were pleased with our sales performance that was ahead of expectation and drove higher than expected earnings per share.
We exited the year in a strong position.
Speaker Change: with three important growth drivers, Taver, Mitre and TrackerSpeed, and two emerging opportunities.
Structural Heart Failure and AR
Speaker Change: Our foundation, fortified by our patient-focused culture, is more solid than ever, and the strategic decisions we made in 2024 position us well for 2025 and beyond.
Speaker Change: Looking ahead to 2025, the results of the early TAVR trial represent a catalyst for improved patient care that will begin to materialize after FDA approval in mid-2025.
Speaker Change: and set the stage for guideline and policy changes in the U.S. and globally, which present a multi-year growth opportunity.
MTN-TV
Speaker Change: We are transforming care for the millions of patients suffering from mitral and tricuspid valve disease.
We are pleased with the impressive trajectory of a business.
which is now a meaningful contributor to Edouard's growth.
Speaker Change: TMTT is on track to deliver over 500 million in sales in 2025.
Speaker Change: In Surgical, our category-leading business is positioned to grow consistently and expand globally, driven by increasing adoption of our premium Resilience-Based Technology in SPIRIS, MITRES and CONNECT.
Speaker Change: As you can see, 2025 is set to be another meaningful year for Edwards, with multiple catalysts across our businesses that will contribute to our 8-10% total company sales growth guidance this year.
Speaker Change: Beyond 2025, Edwards will be in an even better position to transform care and to have a positive impact on more lives with our pioneering innovations and expanded global leadership and structural heart.
Speaker Change: Our plan is to grow total company sales 10% annually, on average, with some variability based on the timing of key catalysts.
while strengthening profit margins.
to drive long-term value for shareholders.
Speaker Change: We expect that the actions our employees around the world have taken to advance our strategy will deliver significant value to patients and the healthcare ecosystem.
Speaker Change: Now, I provide some additional details by product group for Q4 and 2024.
Speaker Change: In total, our full year 2024 global sales of $4.1 billion increased 6% year-over-year.
Our U.S. and all U.S. sales growth rates were similar.
Speaker Change: In the fourth quarter, our global sales of $1.04 billion increased 5.3% over the prior year.
Speaker Change: Growth was driven by the U.S. and Europe. Edward's strong competitive position and pricing remained stable globally.
Although, we experienced a few instances of regional pressure.
Speaker Change: We remain confident in our differentiated technology, high quality evidence, and the value we demonstrate to patients, clinicians, and healthcare systems.
Speaker Change: Our commitment to advancing clinical evidence and expanding education for patients was highlighted by results from the early TAVR trial, which were presented at the annual TCT conference in October.
Speaker Change: Early TAVR is the first and largest randomized controlled trial to date studying asymptomatic severe AS patients and the impact of early intervention with sapiens.
Speaker Change: The trial results demonstrated superior outcome for asymptomatic CVRAS patients receiving the SAPIEN platform compared with guideline recommended clinical surveillance or simply watchful waiting.
Speaker Change: Even patients without symptoms of severe aortic stenosis have a deadly disease that can progress rapidly.
and in an unpredictable way, and it requires urgent treatment.
and reduce costs to the system.
Thank you.
in the U.S.
Speaker Change: We continue to be pleased with the performance of our market-leading, sapient-free, ultra-resilient platform.
Speaker Change: Capacity remains the focus as we continue to see rapid growth in structural health procedures.
Speaker Change: In the near term, new technologies and education put pressure on the system, but in the longer term, it provides hospitals the clarity and incentive to make investments to expand their ability to treat structural heart patients.
and some of the U.S. in the fourth quarter.
Speaker Change: We are pleased with the exceptional patient outcomes delivered with this best-in-class platform and we expect this momentum to continue as more centers adopt the technology.
Speaker Change: Sales in Japan grew at a slower pace than in other major regions, but still increased sequentially an year over year.
will remain dedicated.
Speaker Change: to expanding this therapy to address significant under-treatment of aortic stenosis among the substantial elderly population in Japan.
Long term, outside of the U.S., we foresee excellent opportunities.
Turning to TNTT.
Speaker Change: Our unique portfolio of repair and replacement technologies for both mitral and tricuspid valves continues to deliver strong growth with an increasing contribution to overall company performance.
The Pascal repair system, the Evoque tricuspid replacement system.
with varying mitral and tricuspid valve disease.
Speaker Change: We are pleased with both our fourth quarter and full year sales results.
In Q4, we reported 105 million in sales.
Full-year sales of $352 million increased 77% year-over-year.
Speaker Change: Cells of the Pascal repair system and the evoked Tricuspid replacement system both contributed meaningfully to growth.
Speaker Change: Pascal adoption is strong in both the U.S. and globally, and the Evoque launch is expanding in the U.S. and Europe.
Speaker Change: Pascal continues to demonstrate his value for patient care. Its differentiated features are driving excellent clinical outcomes, leading to increased adoption at existing centers and encouraging new centers to use the technology.
Speaker Change: The base of compelling clinical evidence is strengthening, with longer-term follow-up data from randomized trials as well as new real-world evidence.
Speaker Change: which improve the efficiency of planning and performing procedures while ensuring optimal outcomes for patients.
Speaker Change: The Evoque commercial launch continues to progress well in the U.S. and Europe.
Speaker Change: We are investing in our field-based teams to have deep expertise and remain committed to our disciplined approach to launching the therapy.
prioritizing excellent patient outcomes.
Speaker Change: We are observing strong growing interest in EVOC from both providers and patients.
which reinforces the significant unmet needs of these patients.
Speaker Change: We are pleased that CMS continues to develop a Final National Coverage Determination, or NCD, for transcatheter tricuspid valve replacement.
Speaker Change: We believe the policy, as proposed, provides a pathway for Medicare patient access to EVO.
Thank you.
Speaker Change: We look forward to the final NCD, which we expect by the end of Q1 2025.
in Mitral Replacement.
Speaker Change: We continue to look forward to European approval of CPNM3 by mid-year 2025, with U.S. approval expected to follow in 2026.
Speaker Change: We expect the result of an in-circle study, our US Pivotal Trial Studying Sapien M3, to be presented at this year's TCT conference in October.
In summary,
Our bold vision for TMTT has become a reality.
Speaker Change: We are confident in our unique portfolio strategy with repair and replacement options to treat patients suffering from mitral and fracaspic disease.
Our full year 2025 TNTT guidance remains consistent.
Speaker Change: With the expectation we laid out at our analysis day, with sales between $500 and $530 million
driven by our two differentiated commercial technologies, Pascal and Yvonque.
Speaker Change: In our surgical product group, full year 2024 global sales of 981 million increased 6% versus the prior year.
Speaker Change: Fourth quarter global sales of $244 million increased 5% over the prior year with healthy global adoption of Edward's premium Resilia portfolio with Mitress, Inspiris and Connect.
Speaker Change: We continue to expect positive procedural growth globally for the many patients best treated surgically, including complex and concomitant procedures.
Speaker Change: We are generating evidence on the Resilia portfolio to expand access globally.
Speaker Change: The excellent outcome of our one-year multi-center, real-world connect study was shared at the recent STS conference.
In summary,
Speaker Change: Before I turn the call over to Scott, we continue to expect that our full year 2025 surgical sales growth
will be in the mid-single digits.
Speaker Change: And now, Scott will cover the details of a company's financial performance.
Scott Ullem: All right. Thanks a lot, Bernard. Today, I'm going to provide a wrap-up of 2024, including detailed results of our fourth quarter and guidance for the first quarter and full year of 2025.
Scott Ullem: We were pleased with our better-than-expected Q4 sales performance, with strength across all product groups. Total sales of $1.39 billion grew 9% on a year-over-year basis.
Scott Ullem: Adjusted Earnings Per Share was $0.59, led by strong top-line performance. Gap Earnings Per Share was $0.58.
Scott Ullem: A full reconciliation between our GAAP and adjusted earnings per share is included with today's press release. I'll now cover additional details of our P&L.
Scott Ullem: For the fourth quarter, our adjusted gross profit margin was 79%, compared to 80% in the same period last year.
Scott Ullem: We continue to expect our full year 2025 adjusted gross profit margin to be between 78 and 79 percent.
Scott Ullem: Selling, general, and administrative expenses in the quarter were $492 million, or 35.5% of sales, compared to $417 million in the prior year.
Scott Ullem: This increase in spending reflects growth in our TMTT field-based teams, transition expenses following the sale of critical care, and strategic growth acquisitions.
Scott Ullem: We plan to hold operational SG&A spending approximately flat at these levels throughout 2025 and expect a lower SG&A ratio over time.
Scott Ullem: Research and development expenses in the fourth quarter grew 12% over the prior year to $271 million, or 19.6% of sales.
Scott Ullem: We expect to maintain R&D spending at these levels during 2025 and to moderate R&D as a percentage of sales over time.
Scott Ullem: Adjusted operating profit margin in Q4 of 25.6% was in line with our expectation for the quarter.
Scott Ullem: Our guidance for 2025 operating margins continues to be 27-28% with annual operating profit margin expansion thereafter, as we outlined at the Companies Investor Conference back in December.
Scott Ullem: Turning to taxes, our reported tax rate this quarter was 11.6%, or 13.3% excluding the impact of special items, in line with our expectation for the quarter.
Scott Ullem: For the full year 2024, our reported tax rate was 9.8% or 11.0% excluding the impact of special items.
Scott Ullem: As a reminder, our original 2024 Adjusted Tax Rate Guidance range was 14 to 17 percent.
Scott Ullem: And we benefited last year from several one-time tax events resulting in a lower than originally expected rate.
Scott Ullem: We continue to expect our 2025 tax rate, excluding special items, to be between 15 and 18 percent.
Scott Ullem: Regarding tariffs, based on what we know today, our guidance ranges could accommodate any potential impact of tariffs, which we expect to be immaterial for Edwards.
Scott Ullem: Foreign exchange rates increased fourth quarter reported sales growth by 60 basis points or seven million dollars compared to the prior year.
Scott Ullem: FX rates negatively impacted our fourth quarter gross profit margin by 30 basis points compared to the prior year.
Scott Ullem: Relative to our October guidance, FX rates had a nominal impact on fourth quarter earnings per share.
Scott Ullem: At current rates, we now expect FX to have an approximately $130 million, or 2.5 percentage points downside to sales in 2025 compared to the prior year.
Scott Ullem: Turning to the balance sheet, we continue to maintain a strong and flexible balance sheet with approximately $3 billion in cash and cash equivalents as of December 31st, 2024.
Average diluted shares outstanding during the quarter were $591 million.
Scott Ullem: We continue to expect average diluted shares outstanding for 2025 to be between 585 and 595 million.
Scott Ullem: We have approximately 1.4 billion dollars remaining under our current sharer purchase authorization.
Scott Ullem: Our healthy balance sheet gives us the flexibility to advance our growth strategy, and we look forward to a year of robust financial performance in 2025.
Scott Ullem: I'll finish with comments related to guidance. We are maintaining the financial guidance for 2025 that we provided at our December Investor Conference.
Scott Ullem: Absent additional moves in foreign exchange, we expect total company sales of $5.6 to $6 billion.
Scott Ullem: TAVR sales of $4.1 to $4.4 billion, TMTT sales of $500 to $530 million, and surgical sales of $970 to $1.05 billion.
We expect a sequential increase in first quarter sales.
Scott Ullem: We also expect Q1 total company and TAVR year over year growth rates to be below the low end of our full year guidance ranges of 8-10% and 5-7% respectively.
Scott Ullem: We expect some benefit from the asymptomatic TAVR approval in the U.S. and even more support for growth when guidelines and policy change in the future.
Scott Ullem: For the first quarter, we're projecting sales of $1.35 to $1.43 billion.
and Adjusted Earnings Per Share.
of 58 to 64 seconds.
And with that, back to you, Bernard.
Bernard Zovighian: Thank you Scott. In conclusion, we are proud of our employees and their significant achievement in transforming care for structural heart patients around the world.
Bernard Zovighian: As we enter 2025 solely focused on structural heart disease, we are stronger than ever before, with significant growth drivers in TAVR and TMTT, and emerging opportunities in other areas of structural heart.
Bernard Zovighian: I am optimistic about the tremendous opportunities in front of us.
With that, I turn it back to Mark.
Mark Wilterding: Thank you very much, Bernard. 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.
Speaker Change: If you have additional questions, please re-enter the queue and management will answer as many participants as possible during the remainder of the call. Alicia, I'll turn it back over to you.
Speaker Change: Thank you! We will now be conducting a question and answer session. Just a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 keys.
One moment, please, while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of David Roman with Goldman Sachs. Please proceed.
Speaker Change: Help us reflect a little bit on some of the dynamics that drove the performance year in 2024, that ended above your expectations, and then
Speaker Change: What needs to unfold operationally still to see an acceleration from kind of the 4.20 where you're annualizing in Q4 up to the 500 million plus over the, that's reflected in your guidance here?
Speaker Change: Thank you, David. You know, good question. So I'm going to start, you know, if you remember, you know, we started, you know, the year in 2024 where it was, you know, mainly, you know, Pascal and Europe was a big contributor.
Speaker Change: But as you can see, we are very excited, we are very pleased. You remember, we had the vision a long time ago.
Speaker Change: And, you know, we were, you know, the only company having this vision.
Speaker Change: and this vision has become a reality. But I'm going to ask David, you know, to add some color commentary here. Yeah, I'll add a little bit to that. Thanks, David, for the question.
David Roman: As Bernard said, over the course of 2024, I think we saw the creation of a new therapy with Evoque, and we started treating patients, and we're starting to see that start is journey.
Speaker Change: where we're still in launch mode and we're still growing. So as you can imagine, in...
2025, Evoque will continue to grow.
Speaker Change: Additionally, on the Pascal side of things, the U.S., as Bernardo said, was probably only in its second full year of launch.
and for Pascal, we continue to open new centers.
Speaker Change: both U.S. and Europe and throughout the world and grow, as physicians see the differentiation of Pascal, they continue to use it more in their existing practice.
Speaker Change: So for us, throughout 2025, Pascal will also grow. So we see both Pascal and Evoque as two key growth drivers for us, and growth also continue to come with a huge emphasis both on Europe and the U.S.
Speaker Change: And then maybe just for my follow-up here, I'm trying to piece some of this together between how you exited Q4.
Speaker Change: and then the Q1 guidance calling for revenue growth both in TAVR and Total Company below.
Speaker Change: below in the ranges here, because when I just reflect on Q4, you had the hurricane dynamic early in the quarter.
Speaker Change: But you also had the exit of Boston Scientific's pressures in Europe, not their exit, but the pressure on their business that they described.
Speaker Change: you're seeing Evoque and Pascal launch. So just as I think about the business here, Q4 versus the dynamics that you're calling here in Q1, maybe you could just help us piece together the sequential deceleration and then correspondingly the acceleration reflected in the full-year outlook.
Speaker Change: Thank you, David. So let me try maybe high level, at the company level, and then we can ask you, Devine and Larry, to add some comments here.
Speaker Change: So, we expect, you know, so first, you know, we finish the year strong in Q4 and we are very pleased about it across, you know, the board, across, you know, the company.
We see, we expect a sequential increase in Q1 cells.
Speaker Change: But, you know, from a growth rate standpoint, you know, for TAVR and for the full company, to be, you know, maybe, you know, below, you know, the low end of our full year ranges.
Speaker Change: There are a few things we know in 2025. The first one is that TMTT, so Pascal and Evoque, are going to continue to scale throughout the year.
The second one is that, you know, asymptomatic.
Speaker Change: Approval, you know, mid-year, you know, we'll represent, you know, a catalyst, you know, later. But I'm going to add, you know, maybe Devin to start, you know, first about TMT-T scaling and then, you know, Larry.
Speaker Change: Yeah, sure. Thanks, Bernard, on that. As you can imagine, over the course of 2024, you saw TMTT almost...
Speaker Change: sequentially grow in a linear rate, right? We continue to add in growth each time as we got that increased adoption and entered new markets. And for us, we see that continuing in 2025, where we expect over the course of the year, our revenue growth to just kind of linearly continue up and that'll kind of lead us to our guidance.
Speaker Change: Yeah, thanks, David. On TAVR, you know, I think we had a good Q4 and we felt good about it, and I think it was
David Roman: Indicative that perhaps we're starting to see a little bit of improvement in some of the capacity stuff.
although it's still very much a work in progress.
David Roman: I think what typically happens is, you know, the last couple weeks in December tend to really slow down for patient screening.
David Roman: and those things, and that usually gives us a slow start to January. But all of that is factored into our guidance, and I think as Bernard described the year, I think that's how we planned it.
Great. Thanks for all the call out.
Thank you.
Thank you. Thank you.
Speaker Change: Our next question comes from the line of Robbie Marcus with JP Morgan. Please proceed.
Thank you.
Speaker Change: The mix of operating expense came in a bit different than The Street was thinking. Any color you could give us now with the three base business X critical care, how we should be thinking about SG&A and R&D each separately to get to the guidance you provided.
Speaker Change: Thanks for the question. You know, we provided guidance at the investor conference for operating profit, and we didn't really break out SG&A and R&D as a percentage of sales, but I can give you a little bit of color on...
Speaker Change: We think the improvement of about 200 basis points in Operating Profit versus Q4 will be about half R&D improvement as a percentage of sales, so about 100 basis points, and half SG&A as a percentage of sales.
Speaker Change: which is a combination of the actual spending that we run through that line.
Speaker Change: netted with the benefit that we get from the amortization of our unfavorable contract liability that shows up in the new line in our income statement called other income.
Speaker Change: and we're also confident about our ability to continue to grow margins in 2026 and beyond.
Just as reference, you know, we're spending in 2025.
Speaker Change: will be a lower growth rate than our revenue growth rate and that's one of the reasons why the ratio is coming down.
Speaker Change: So to add on what Scott said, if you think about the big picture here from a P&L standpoint, our number one commitment is to invest for sustainable and profitable growth.
Speaker Change: So, what you can expect, you know, beyond 2025 is our, you know, EPS, you know, growing faster than our top-line growth.
Speaker Change: Great, and maybe a follow-up. Bernard, you mentioned in the script there were a few instances of regional pressure. You still came in above the street on Taver. Maybe you could just speak to the regional pressures and how transient or permanent they are, and also highlight some of the areas of strength. Thanks.
Thanks.
Speaker Change: Yeah, you know, I was talking about a few small pockets around the globe. One is, for instance, Japan.
Speaker Change: the disease of the aging and if there is one country where it is a perfect match between where is the unmet patient need and what we do is Japan.
Speaker Change: We were not satisfied with our growth in Q4 in Japan, but we are very committed to enhance our capability in the region, to bring our innovation there faster, to make sure Japan can represent a growth opportunity in the years to come.
Thank you very much.
Speaker Change: Thank you. Our next question comes from Larry Bilgeson with Wells Fargo. Please proceed.
Larry Bilgeson: Good afternoon, thanks for taking the question and Devine, congrats on a really nice quarter in TMTT and Edwards overall. I wanted to start with you Devine, that's why I pointed that out, on Evoque, what have you seen since the NTAP started on October 1st and how are you thinking about the impact?
Speaker Change: from the NCD which should be finalized in March, and I had one follow-up.
Speaker Change: No, thanks so much, Larry, for the question and the nice comments you said. I'll just make one comment before I dive into the end tap as we talk about Evoque. You know, it's interesting. I've got a chance over the last couple of weeks to actually meet a handful of different Evoque patients and spend some time with them, and it's amazing to hear their stories.
Speaker Change: One person was a 62-year-old CEO of a technology staffing company who was a biker, a wake surfer, and now suddenly could barely walk up the stairs. And a vote got him back to do the things that he wanted to do.
Speaker Change: The other person was a 79-year-old lady who was in hospice care.
Hospice care.
Speaker Change: and now you would never know anything is wrong with her and she's excited and happy to be alive and is actually a patient advocate for tricuspid disease now, started that recently.
Speaker Change: And why I'm telling these stories is that these kinds of stories are what's spreading, I think, among the community, spreading among both physicians, among patients.
Speaker Change: As a result, we see a really strong demand for Evoque.
Speaker Change: a lot of desire from both physicians and patients because they see these you know these excellent results for the patients or really changes their life and it's a procedure as we know it's very predictable it's very uh and it gets we're getting clinical results in the market today or today that were similar to a clinical trial
Speaker Change: So for us, NTAP or the coming NCD allow more patients access, or allow to continue the access we're seeing. So built into our guidance this year, we assume a positive NCD coming at the end of Q1. And I see things like the NCD as potential opportunities to slow us down if they don't go as we planned, but really we see them as
Speaker Change: continuing the growth and the opportunity for patients to get access to this product that they want. So for us it's definitely built in, it's definitely a part of the growth we're seeing and it's a part of, you know, the interest we see from both physicians and patients.
Speaker Change: That's helpful. And one for Larry, you know, it would be great to hear you talk about what you're seeing and hearing in the field following early TAVR. You know, when do you expect the data to positively impact procedures? Is it the indication? Is it guidelines? You know, what do you need? Or is it just kind of everything, you know, kind of contributing? Thank you.
Speaker Change: Yeah, Larry, I think you're probably right on the second comment there, it's going to be a little bit of everything. I think...
Speaker Change: Amplify the message and make sure, you know, the referring community
Speaker Change: really understands the data and they understand the significance of the data. I think the message has moved through the implant community, but we need to move upstream.
Speaker Change: to the referral community, and so we'll be working hard to...
to amplify that.
Speaker Change: Clear the Indication is a big thing, you know, once it's on label, that certainly is helpful because it gives us ability to promote directly.
Speaker Change: where, until that happens, we're not allowed to promote directly. But then, longer term...
Speaker Change: It's going to be guideline changes, it's going to be updates to policies and all those things. And that's why I think we really tried to highlight this in the investor conference. We see this as going to be a multi-year catalyst. This isn't going to be a short-term or just one immediate bolus of patients. We see this as a long-term catalyst for us.
Speaker Change: hospitals improve their capacity, and as hospitals look to invest in their capacity, I think the confidence of this data and a continual stream of additional AS patients is what's gonna really motivate them to make those investments.
Thanks, Larry.
Speaker Change: Thank you. Our next question comes from Pito Ciccarine with Deutsche Bank. Please proceed.
Speaker Change: during the trials have been trained, and I guess how many are signed up at this point to be trained going forward.
Speaker Change: Yeah, so this is Devine. I'll answer that. Thanks for the question. Yeah, as you mentioned, we started off with our rollout of Evoque by focusing on those Tricin-2 hospitals, which is about 50 or so in the U.S.
Speaker Change: But from there, there are many other high-volume tricuspid centers. And now we've been focusing on those centers, and they continue to grow. So each month, we have training programs here in Irvine and around the U.S. where more and more centers get grown. So it's almost just a continuous kind of linear growth, but we still feel like that we're pretty early in the number of centers that are going to be trained in the book. We are very early in that.
Speaker Change: and so for us it's just a linear growth and we'll definitely continue from there.
Speaker Change: Alright, as TMZT is becoming a bigger part of the revenue engine for you guys, can you give us a U.S. vs. O.U.S. split for TMZT in the fourth quarter so we can use that as a launchpad for modeling 2025? Thanks.
Bernard Zovighian: Yes, Zovighian again. Yeah, we don't break out the exact numbers, but I think as I mentioned before, right, we originally started in Europe So Europe, you know outside the US is still our our largest market But the US is coming on line as we go forward though We still expect Europe to be larger, but the US will be our second kind of big driver as we move forward in 2025
Speaker Change: Thank you. Our next question comes from the line of Travis Steed with Bank of America. Please proceed.
Travis Steed: Hey, congrats on the good quarter. I just wanted to follow up on the Q1 guidance. You said TAVR growth below 5 to 7. I just want to confirm first that that 5 to 7 is constant currency, and I know there's a selling day headwind. If you could just quantify that, I don't know if it's around 150 basis points.
Travis Steed: and excluding Thelande, are you kind of back into that kind of 5% TAVR guide range?
Travis Steed: Travis, you said it well. You got it exactly right. So, 5 to 7 percent full year guidance for TAVR sales growth is on an underlying constant currency basis.
globally.
Speaker Change: Great, that's helpful. And then the second question, this will get an update on class 2F and class 2TR, the functional module repair and tricuspid repair products. I'm just kind of curious how those trials are going and timelines for that opportunity.
Yeah, no, I'll definitely call that the Zovighian again.
as we mentioned in the investor conference back in December.
Speaker Change: the Class 2F Pivotal Trial will continue to enroll throughout 2025. So for that, we don't have any other timelines, but the continued enrollment. I would like to note though, especially at London Valves this year, actually just not that long ago, we actually showed in our MyClass study some great results for Pascal in these FMR patients.
Speaker Change: We had over 300 patients, a two-year follow-up that showed an 81% MR-01, which is a great message and we see great results from Europe.
Speaker Change: Moving over to Class II-TR, so this is the tricuspid indication for Pascal. I think, as you remember, we announced that in Q4 we did finish the enrollment.
Speaker Change: So there is a 12-month follow-up on the trial, so one-year follow-up. From there, it usually takes a couple quarters to put together your PMA submission and then submit it, and you know, it's at least six months for FDA approval, so you can kind of run the timelines from there, but that was finished enrollment in Q4 2024.
Thank you. Bye.
Great, thanks a lot.
Speaker Change: Thank you. Our next question comes to the line of Vijay Kumar with Evercore ISI. Please proceed.
Speaker Change: I think we have some China noise. Despite all of that, I think Q4 came in above expectations at 5.
Speaker Change: given some of those items won't repeat, why shouldn't Q1 be better? Is there any one-offs outside of the extra data, one lesser data we should be thinking of?
Speaker Change: So, Vijay, Scott, I'll start and then maybe turn it over to Larry if he has any additional color.
Speaker Change: We talked about the early signals from China and the hurricanes, but at that point said we didn't know what the impact was going to be. It turned out that was not a big influence on our results for Q4. It just had something to do with it, but I wouldn't call that exceptionally noteworthy.
Speaker Change: Really, in Q1, we're feeling good about TAVR's growth, and like I said, with the exception of that one-day difference in selling days versus Q4, there's not a whole lot to report.
Speaker Change: Yeah, just to add on to that, you know, as I mentioned earlier, we typically see a slowdown at the end of the year, and this is very typical, we've seen this for many years now, and it just...
Speaker Change: empties the funnel a little bit from the patients that are screened and having their CTs and everything. So we just typically see a little bit of a slow start to January and so that that factors into into our guidance, but we do expect the growth rates to be higher in the subsequent quarters.
Crosby was in line with expectations.
Speaker Change: I think there is a CED criteria when I look at the physician criteria.
Speaker Change: There is a cross-pollination, collaboration between a variety of physicians, right? It seems a little bit more onerous versus when you look at the TAVR guidelines. So I'm curious how you're thinking about the NTD proposals and do you expect any changes to the proposed language?
Speaker Change: to a Medicare patient to evoke, which is going to be a catalyst for the many years to come. But maybe, you know, Devin, do you want to add anything here? Yeah, I have a couple of small comments. Just, obviously, when a patient, as you read in the NCD, is under the care of a multispecialty heart team, and there are different kinds of members of the heart team, and that's under the care of. So that's a group of people who are not necessarily individually evaluating it.
Speaker Change: They're not necessarily part of the procedure. They're people who, as needed, are part of the care program of the patient. So for us, we feel like that's very normal and expected and actually a good thing for patients.
Speaker Change: But back to maybe Bernard's comments and the overall, we generally feel very positive about where the NCD is.
Speaker Change: We love that. We appreciate that there's coverage with Evidence Determination, or CED, which enables this timely access.
Speaker Change: and we're actually quite happy or quite proud of the responsibility we have to kind of lead the CED process to gather more data and roll out this therapy.
Speaker Change: And we don't believe CED or any other parts of kind of the NCD draft that we all see online will actually affect our kind of rollout plans. It's right on line with where we had hoped the NCD would come up, so we're pretty positive on it.
Thanks for clarifying
Speaker Change: Thank you. Our next question comes to the line of Rick Wise with Stiefel. Please proceed.
Rick Wise: Good afternoon, everybody. I'm sorry I'm in an airport. It might be a little noisy.
I want to follow up one more time.
Speaker Change: on the first quarter TAVR guidance and early TAVR. Scott, I just want to be clear of my own mind. When you gave us guidance at the analyst day, obviously, you were thinking about the quarters of 25. Is your... Have you shaded your...
Speaker Change: Taver, expectations in some way with your comments and guide in the first quarter, is it any different than it was or is the year set up?
Speaker Change: as you thought it would be back in December when we talked. And then I'll follow up on Early Chabber.
Speaker Change: Thanks for the question, Rick. No, our guidance expectations haven't really changed at all. We were pleased with the fourth quarter results, but for the reasons that Larry indicated, we still think the guidance for 2025 is the right guidance.
Speaker Change: Q1, we knew about the one selling day back when we gave the guidance, so that's no new information. And as Larry just said, we're expecting higher growth rates in the quarters after Q1 in 2025. But really, Rick, no change in our expectations.
Speaker Change: Okay, and Larry, just not to go over it, you've been very clear, but...
Perhaps you saw the work I did on early TAVR.
Speaker Change: didn't try to force it, but a bunch of docs said that they're already starting to see an increase in referral volumes. And just to ask you, even though it might be early, are you seeing, are you hearing the same thing?
Speaker Change: that I heard. I mean, obviously, as the year unfolds and as education expands, there's going to be more. But are you seeing that same impact that that small sample that I wrote about articulated? Thank you so much.
Speaker Change: Thanks, Rick. You know, we hear anecdotally, you know, we hear about a patient there, a patient here or there, and some physicians certainly are talking more about it. Again, the implant community
Speaker Change: is probably much more up to speed on the early TAVR data than the referral community is.
Speaker Change: and so it's going to take a little bit of time to get this out. I don't think there's any question...
Speaker Change: that the early TAVR data is compelling and that it's going to lead to more patients coming into the system. I don't think there's any doubt about that.
I think the
Speaker Change: The thing that balances that is how fast can hospitals continue to address these capacity challenges to be able to treat this additional inflow of patients.
Speaker Change: We're working on this from a number of different angles, because the other thing that comes into play is we're working on quality metrics, things like target AS. Right now, waiting lists can kind of grow in the U.S., and it's not really measured. But in the...
Speaker Change: In the future, people are going to have quality metrics such as 90 days from diagnosis to treatment and I think that's going to make a big difference in terms of how patients flow through the system.
Thanks, Larry. Thanks, Scott.
Thank you.
Speaker Change: Our next question comes from the line of Matt Misik with Barclays. Please proceed.
Speaker Change: Hey, thanks so much for taking the question. I just have one follow-up on an earlier question. First, just around centers. I know you're growing out of the...
Speaker Change: in the office of clinical trial centers for ECO. I'm just wondering if you have like a round number that you think this can go to, Taverson is like 850, is this.
Speaker Change: Over time, half of that is a third of that, any actual number that we should just think about getting to. Then I have one quick follow-up, if I could.
Speaker Change: Yeah, no, this is Devine again. Thanks for the question. You know, it's hard to fully judge because we know it's, you know, the structural heart world of centers is kind of the TAVR world of numbers now, right, which is over, you know, 800 centers are the exact number. But we think obviously that it's going to be some portion of that and it's going to have a kind of a track that gets up there. It's hard to figure out now how each center is going to be prepared and work together to start a tricuspid program. So it's hard to put an exact number on it.
the
Speaker Change: probably the structural programs of 850, but I think for us, we're gonna work with centers one at a time to help to get them ready, to help give them the imaging, and to work with them to how to get the best treatment of tricuspid disease. But yeah, it's gonna be a continual linear thing that we'll kind of figure out together.
Speaker Change: Got it. And then the follow-up, just very closely related, you know, some of the feedback we had in our conversations with clinicians last year, early days of the launch.
is obviously excited about having Sal, but then, you know.
Speaker Change: And we identify these patients how many you know can get in you know the time to do the procedure the reimbursement for the procedure
Speaker Change: time for training all these kinds of early sort of startup factors maybe if you could talk a little bit about
how you see this year.
Speaker Change: you know, your ability to sort of start mitigating some of those early, you know, kind of startup challenges and getting volumes going and adoption going, etc. Thanks so much.
Speaker Change: Yeah, and I think what the pathway have evoked to be treating more patients is
Speaker Change: similar to the start of any new therapy, right? We see early on that it's a reproducible, it's a predictable procedure. Please imagine the first couple of times you do it, it takes a little bit longer.
Larry Bilgeson: Well, then as you do a little bit more, you start getting a little better and a little bit faster at it. And it's similar to the pre-case planning or the referrals. As Larry said, like even with asymptomatic patients, initially, hey, referring physicians, they've been holding onto these tricuspid patients. They're not necessarily looking for them.
Larry Bilgeson: But then they start seeing that tricuspid patients can be treated.
Larry Bilgeson: and are getting fantastic results. Then they start referring them. And then initially almost stenographers and ecosystems of hospitals, you maybe got the planning right, but you need to practice and get better. So take something that may be a little bit efficient and gets more efficient.
Larry Bilgeson: So what we'll see is that the centers who have started Evoque
Larry Bilgeson: or any tricuspid programs will continue to get more efficient. And we'll see that new centers that will come on, you know, new centers that will start online will take a little bit longer and do a little bit fewer cases. Maybe they'll do one or two the first day. But now we see centers that do three to five in a day and continue in one room and continue to create that efficiency.
Larry Bilgeson: So, I don't see this as especially unusual for a new structural heart therapy. It's in line and we see that there, we know that there are a lot of tricuspid patients out there.
Larry Bilgeson: and this long-term work of continuing to create awareness for disease, diagnosis at the cardiologist, referrals to the heart teams. That's a process that the world did for TAVR, the world did for Mitral, and we think the world will do appropriately with our support in Tricuspid as well.
Very helpful. Thanks.
Speaker Change: Thank you. Our next question comes from the line of Matt Taylor with Jeffries. Please proceed.
Thank you. Thank you.
Matt Taylor: Hi, thanks for taking the question and congrats on a nice quarter. I wanted to ask a follow-up question on growth.
in TMTT in 2025.
Matt Taylor: I know you don't give all the details, USOUS or Mitral-Tracuspid, but I was wondering if you could give us any framework or guideposts to help us understand.
Matt Taylor: how much growth is coming from those different sources, or are they growing similarly? Maybe if you could talk about, you know, share expectations in those different markets, anything like that would be helpful to think about modeling.
So, maybe, you know, let me start, you know, Ahmad.
Matt Taylor: have a very few options a few years ago, and now with our portfolio, they have many options.
and more to come.
Matt Taylor: with the forthcoming, you know, M3, you know, mitral replacement technology.
Matt Taylor: So, we are not thinking about share, we are thinking about patient outcome, we are thinking about training physicians to make sure they can scale their practice.
Matt Taylor: We are thinking about, you know, how to create, you know, a large category, defining, you know, the category, and truly this is the way we are thinking about it.
Matt Taylor: at investor conference, I think we gave you some vision for 2030.
Matt Taylor: We believe our TMTT business could be a 2 billion business, from 300 million or so last year to 500 million or so this year. So clearly, clearly an amazing trajectory.
Matt Taylor: based on all of these. But I'm going to ask David to talk more about this here. Yeah, just to give a couple more details, but I'll first add in to that, I completely agree with Bernard that, for us, we know that there are just millions of patients with tricuspid mitral disease who...
Matt Taylor: just can't live the quality of life that they want, and we feel like we have an opportunity to help them.
Matt Taylor: And so as we move more directly in 2025, right, there are multiple drivers. Both Europe and the U.S. will be both large growth drivers for TMTT in 2025 versus 2024.
Matt Taylor: both Pascal and Evoque will be large growth drivers for TMPT in 2025 versus 2024. And to Bernard's comment just about M3, M3 will just be starting in Europe, so it will be much smaller, just an initial starting.
Matt Taylor: So for that, I hope that gives a little bit of help on just how we look at the two geographies and the two products, and to Bernard's point, it's not about share. It's about how do we discover, find, and treat just more patients and grow the overall number of procedures that can help patients.
Great, thank you guys.
Speaker Change: Thank you. Our last question comes from the line of Joanne Wuntz with Citibank. Please proceed.
Good evening and thank you for taking the question.
Speaker Change: Can we pause for a second on M3? It sounds like it's on track for CE Mark approval near the end of the year with some revenue contribution.
Speaker Change: and then you're going to have data at TCT 2025. Can you remind us what that market opportunity is and why that's an important product in the portfolio?
Speaker Change: Sure, yeah, this is Daveen as well. So just a reminder, C mark for M3 we expect in mid-2025 in Europe, with approval in the U.S. in 2026.
Speaker Change: and the pivotal study, the ENCIRCLE study, of 300 patients who were unsuitable for TIER, the one-year follow-up we expect to release at TCT this fall.
Speaker Change: and I pressed on unsuitable for tears. I think that's really the indication of where we see M3 fitting in the treatment of patients.
Speaker Change: We know that TIER is an amazing technology, and there are many patients who get fantastic results.
Speaker Change: But when you talk to physicians and you talk to patients, there are many patients who are suboptimal for TIR.
Speaker Change: either anatomically or for other clinical reasons. And it's a pretty large group of patients. There's ranges out there that we hear from many different doctors. I don't want to quote because it is pretty large ranges. And we think for that, M3 really offers an opportunity for these patients to get a treatment where before they wouldn't have had one.
Speaker Change: But when we start off a new procedure, a new therapy, like we did with Evoke or like we did with any other therapy, we are going to start off by really focusing on physician training, having a great team of Edwards people supporting each case.
Speaker Change: ensuring top-notch clinical outcomes and building up a new therapy in a way that this will hopefully become a new leg to the stool of TMTD growth in the years in the future and provide multiple years of growth to get to as Bernard said that two billion dollars of revenue in 2030.
Thank you.
Joanne, did you have a follow-up or are you?
have a great night.
with, you know, total company sales growth at 9%.
Speaker Change: We are confident in our 2025. We are positioned for strong financial performance.
Speaker Change: led by diversified source of growth, TAVR, MITRE and TrackerSpeed. And beyond 2025, we see an exciting future. We tackle large growing markets and all of this will result in sustainable revenue, EPS growth and shareholder value creation.
Speaker Change: So, thank you for your continued interest in Edwards, Scott, Mark, Sidney, and I. Welcome any additional questions by telephone. Thank you, everyone. Have a good afternoon.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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