Q2 2025 Edwards Lifesciences Corp Earnings Call
Greetings, and welcome to the Edwards Life Sciences. Second quarter to 2025 results conference call.
At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Please note this conference is being recorded.
I will now turn the conference over to your host Mark wilterding, senior vice president, Global Finance. Thank you. You may begin.
Mark Wilterding: Thank you very much Diego and thank you all for joining us. This afternoon with me on today's call is our CEO Bernard zeigen and our CFO Scott. Olm
Speaker Change: Also joining us for the Q&A, portion of the call will be Larry would our Global Group president of tavr. And surgical Devine, Chopra, our Global leader of tmtt Wayne meirowitz, our Global leader of surgical and Dan lipus, corporate vice president.
Speaker Change: Just after the close of regular trading Edwards Life Sciences, released second, quarter 2025 Financial results. During the call today, management will discuss the results included in the press release and accompanying Financial schedules, and 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. 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. Additionally, the statements involve risks and uncertainties that could cause actual results to differ materially, information concerning factors that could cause these differences can be found in today's press release and Edward's other SEC filings. All of which are available on the company's website at edwards.com
Been announced to date and assume such tariffs remain in place for the remainder of 2025.
Speaker Change: Any modifications to such tariffs or any new tariffs could have a material impact on the company's future Financial results and guidance.
Speaker Change: Finally, 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 quarterly and fully your growth rates refer to continuing operations with that. I'd like to turn the call over to Bernard for his comments.
Bernard: Thank you, Mark. And welcome everyone. Thank you for joining us today.
Bernard: Before getting into the numbers, let me highlight, the many significant achievements we have made across the company.
Bernard: When we introduced our sharpened, Focus strategy, we did. So in anticipation of an asymptomatic, as approval,
The expansion of the evok launch.
Bernard: The expected introduction of a CPN M3.
Bernard: And our strategic entry into structural heart, failure and aortic regurgitation. Which represent remarkable synergies to our 65 years of valve leadership.
Bernard: These areas represent, large and growing opportunities and we are just getting started.
Bernard: Our focus on structural heart as position, the company.
For agile execution of our strategy and provide the foundation for sustainable growth.
Bernard: It is supported by our convention, in mid to high single digit. Tha growth over the long term, given the undertreatment globally.
Bernard: The potential of our Market leading surgical valve franchise.
Bernard: Based on compelling ATR, resilia data.
Bernard: And finally, the significant patient benefits of our pioneering tmtt Technologies.
Bernard: While tavr is and will remain an important growth driver for our company.
Bernard: Edwards is increasingly defined by a balanced portfolio of differentiated therapies across aortic, mitral and tricuspid that will position us for leadership for many years to come. As we help even more patients around the world.
During the cold today we will going into more details on the company's strong second quarter performance, across product groups, and geographies.
Bernard: and our confidence in the outlook for Edwards, in the years ahead,
Bernard: We are pleased to report double digit sales growth in the second quarter driven by broad-based growth across. Our unique portfolio of structural heart Therapies.
Total cells.
Bernard: Of 1.53 billion dollars, grew 10.6%, which was better than expected.
Based on our strong First Health performance. And the many catalysts across our portfolio. We are increasingly confident in our full year outlook and are raising our full year 2025 sales growth guidance to 9 to 10%
Bernard: and adjusted EPS guidance to the high end of our original range of 2.40 cents to
Bernard: $2.50.
Now, I will provide some additional detail by product group for Q2.
Bernard: In.
Bernard: Our second quarter Global sales of 1.1 billion dollars increased 7.8% over the prior year.
Bernard: Growth was comparable in the US and us.
Bernard: On the global basis. Edwards competitive position and pricing remains stable
Calves growth in the quarter was better than expected as clinicians continue to adopt our best-in-class Sapient technology.
Bernard: We are encouraged by the renewed focus on Tether across the clinical Community, since the early tether data release last October.
Bernard: We are pleased with the recent approvals that make the sap in free platform. The first and only tavr to receive us and European approvals for the asymptomatic indication.
Bernard: these 2 approvals enable all patient diagnosed with severe as
Bernard: And considered for treatment with ta.
Regardless of symptoms.
Bernard: The evolution of policy and guideline changes together. With the potential of a new USNC will provide, important, Catalyst, resulting in a multi-year growth opportunity for tavr overall.
Bernard: And we remain focused on continuing our deep commitment to advancing evidence for as patient with free important studies.
Bernard: In May at the Europe PCR conference.
Bernard: Results.
Bernard: Of the Optum real world study of more than 24,000 patients.
Bernard: Demonstrated that intervening on aortic stenosis before symptoms. Develop reduces the economic and resource burden on the Health Care system and improves patient outcomes.
Bernard: Additionally compared with asymptomatic saveris delaying treatment until the disease progressed. Resulted in a higher rate of death within 1 year after aortic valve replacement,
Bernard: Along alongside data from the early T trial. These result reinforce the value of early referrals and evaluation by a heart valve team for all patients with severe as
Bernard: Second.
Bernard: At the New York valve conference last month, 10 years outcome from the partner to study were presented.
Bernard: Underscoring, the excellent long-term outcomes and durability of the Edwards tavr platform.
Bernard: This is the first FDA approved, tiver study to report 10 year, follow-up and represent the largest tavr patient cohort studied through 10 years.
Bernard: Finally.
Bernard: New data from the detect are stud were also presented.
Bernard: The sub analysis, demonstrated, that electronic provider notification or Echo, alerts increased, both treatment and survival rates in all patients with severe as
Speaker Change: Looking ahead to TCT in October.
Speaker Change: We expect to be the first company to present, 7 year data, steering studying, a low surgical risk cohort of T patients.
Speaker Change: I am proud of our team's commitment to advancing, robust evidence to improve outcomes for patients with severe aortic stenosis supported by a decade of clinical research.
Speaker Change: This body, this sign, this significant body of high quality science, underscores the excellent clinical outcomes delivered by Edwards. Premium Sapient technology which has benefited over 1 million patients around the world since its launch.
Speaker Change: In the US.
Speaker Change: We are pleased that the clinical conversations about the successful early T trial have brought a renewed Focus to streamlining. The management of patient with severe as enabling closer, follow-up and more timely treatment of patients with aortic stenosis.
Speaker Change: Outside of the US.
We continue to focus on the value of our differentiated technology and increasing therapy adoption.
Speaker Change: Especially in areas where many patients go without care.
Speaker Change: In Europe, the exit of competitor resulted in a rebalancing of market share and a modest contribution to ourselves.
Speaker Change: In Japan, tavr sales grew in the mid single digit and Improvement of our last quarter and consistent with the company's total sales growth in the region.
Speaker Change: Rest of the world, growth remains strong.
Speaker Change: In summary, we are raising our full year. Guidance to 6 to 7 Up from previous guidance of 5 to 7%.
Speaker Change: Longer term. We are enthusiastic about the mid to high single-digit growth opportunities in tavr.
Speaker Change: Supported by the recent early tavr indication approvals.
Speaker Change: Future guideline and policy changes.
Speaker Change: Including an updated in CD. And finally, you have a potential to serve patient with moderate as
Speaker Change: I also want to take this opportunity to share with you that Larry Wood was being the leading, the tavr team as made the personal decision to depart Edwards in early September.
Speaker Change: And pursue a leadership opportunity outside of cardiovascular.
Speaker Change: Perfect. Larry for his 40 Years of dedication to Edwards and our patients.
During that time, it was T has helped more than a million year 6, Tent around the world.
Speaker Change: As we heard today.
Speaker Change: Tavr is well positioned for continued growth and success.
And we are pleased to announce that Dan lipis will assume leadership of a t franchise globally.
Speaker Change: We are fortunate to have a very well prepared successor who has more than 15 years of deep tavr experience in the US and Europe. Most recently, Dan has also been a leading of Jac region with a responsibility for full portfolio of Technologies.
Speaker Change: I'm very confident that the T leadership team will build on our momentum and deliver long-term success.
Speaker Change: Dan and Larry will work together on a smooth transition, through early September.
Now, let's turn to our tmtt product group.
Speaker Change: Our unique portfolio of repair and replacement therapies to treat. Mitigate speed diseases drove, another quarter of impressive growth with a meaningful contribution to overall company performance.
Second quarter sales of 133, million grew 57%.
Speaker Change: Reflecting the strength and differentiation of our portfolio of repair and replacement Technologies and demonstrating our team's long-term and steadfast commitment to solving. Large unmet patient needs.
Speaker Change: Pascal invoke. We are both significant contributors to growth as they continue to scale.
Speaker Change: With the addition of CPN and free Edwards is unique, uniquely positioned to meet the broad and diverse needs of patient with mitral and tricuspid.
Speaker Change: Tier procedures continue to grow in the double digits globally.
Speaker Change: And the developing try speed opportunity is growing much faster across both repair and replacement.
Speaker Change: Adoption of our differentiated Pascal technology remains strong in both in both new and existing centers around the world.
Speaker Change: We continue to see growing interest in the therapy reinforcing the significant unmet needs of these patients.
We are also pleased to announce the completion of enrollment in our 1,00 patient European. My class post approval study in patient with both DMR and fmr.
Publications and presentation of data, from the study continued to demonstrate the excellent clinical results delivered by the state-of-the-art Pascal technology.
Speaker Change: The evoke commercial launch is progressing. Well in the US and Europe. With excellent real world confirmation in line with the successful tracing to clinical trial results.
Speaker Change: Consistent with Edward science-based approach, you know, to establishing categories for the many patients in need. We are continuing to generate evidence for evoke
Speaker Change: At the recent New York valve conference result from a real world 176, patient study across 12 centers and 5 countries in Europe. Demonstrated, excellent, clinical outcomes, that were similar or better than the results shown in Trace and 2.
Speaker Change: I shouldn't receiving Evoque.
Speaker Change: And we look forward to a evoke late breaking substudy at next month, European Society of Cardiology conference.
Speaker Change: We have also began enrollment in the large, trace and free clinical trial in Europe.
This prospective multicenter study of up to 500 real world patient.
Speaker Change: We steer disease will try clinical outcomes out to 5 years.
Speaker Change: In summary for evoke there is a great demand for the therapy.
Speaker Change: And we are continuing to develop important evidence.
Speaker Change: To support expansion globally.
Speaker Change: We are pleased.
Speaker Change: With the addition of our latest tmtt technology, the pioneering CPN M3 valve which received CM Mark approval in Q2.
Clinical feedback while early has been positive.
To support for IP expansion with a continued focus on ensuring access and excellent out confirmations.
Speaker Change: We continue to expect that results from the incircle pivotal trials to doing CPN M3 will be presented at the TCT conference later this year.
Speaker Change: And we now expect us approval of sap free to follow in the first half of 2026,
Speaker Change: in closing.
Speaker Change: With Pascal evoke and the recent C Mark of CPN and 3, our vision for tmpt has developed into a growth portfolio of groundbreaking transitory repair and replacement Technologies meeting the complex need of underserved patients with mitral and tracker speed diseases.
Speaker Change: We are committed to bringing this impactful therapies to the many patients in need around the world.
Speaker Change: We are pleased with our year-to-date performance in tmtt and remain on track to achieve our full year self guidance.
Speaker Change: To 530 million to 550 million.
Speaker Change: Enough surgical product group.
Second quarter, Global sales of 267 million increased 6.8% over the prior year.
Speaker Change: We continue to see positive procedure growth globally for the many patients. Best treated surgically with our premium resilia Technologies, including asperis mric and connect
Our surgical team is making progress around the world. Advancing important innovation for patients
Speaker Change: We continue to see the impact across the clinical Community from the recent presented resilia, 80 app data.
Speaker Change: Demonstrated, excellent durability and better freedom from the reoperation due to structural valve deterioration.
Speaker Change: Compared to none resilia valves.
Speaker Change: We are also pleased to have. Received CM Mark approval for connect in Europe during the quarter.
Speaker Change: For the full year, we continue to expect mid single digit sales. Growth in our surgical product group,
Scott: And now Scott will cover the details of a company's financial performance.
Speaker Change: Hey, thanks a lot Bernard and good afternoon. Everyone, as Bernard mentioned, we are pleased with our better than expected, Q2 performance. And the progress. We made during the quarter advancing, our strategic initiatives
Speaker Change: Our double-digit sales growth drove adjusted earnings per share of 67 cents.
Our gaap EPS for the quarter was 57 cents which included a 1-time charge related to our portfolio of external Investments.
Speaker Change: A full reconciliation between our Gap and adjusted earnings per share for this. And other line items is included with today's release.
Speaker Change: And now I'll cover additional details of our p&l.
Speaker Change: For the second quarter, our adjusted gross profit margin was 77.6% in line with our expectations compared to 80% in the same period last year.
Speaker Change: This year-over-year change was driven by additional manufacturing expenses related to the expansion of new therapies, as well as foreign exchange.
Speaker Change: We continue to expect our full year 2025 adjusted gross profit margin to be within our original guidance range of 78 and 79%.
Speaker Change: Our guidance continues to assume some pressure from the weakening dollar and the impact of announced tariffs albeit less than initially expected.
Speaker Change: As well as the acquisition of jenavalve, which is not closed yet.
Telling General and administrative expenses in the quarter was 502 million.
Speaker Change: Or.
Speaker Change: 32.8% of sales compared to 448 million in the prior year.
Speaker Change: We expect increased sgna spending in the second half of the year, due to deferral of certain spending year to date, as well as anticipated spending related to jenavalve
Speaker Change: Research and development, expense was 276 million in the second quarter or 18% of sales.
Speaker Change: Compared to 272 million or 19.8% of sales in the same period last year.
Speaker Change: This increase in spending and decrease in R&D as a percentage of sales.
Speaker Change: Reflects our strategic prioritization of investments in our expanding structural heart portfolio.
Speaker Change: Are better than expected sales performance. And the deferral of certain spending to the second half of the year,
Speaker Change: As mentioned on the q1 earnings call, we continue to expect lower. Second half, operating margin levels compared to the first half.
Reflecting expenses associated with the planned acquisition of Geneva valve.
Speaker Change: We continue to expect full year 2025, operating margin of 27 to 28%.
Speaker Change: We remain committed to annual constant currency, operating profit margin expansion in 2026, and Beyond consistent. With our guidance, at our investor conference in December.
Speaker Change: Turning to taxes are reported tax rate. This quarter was 16.1% or 16.8% excluding the impact of special items in line with our expectation for the quarter.
Speaker Change: We continue to expect our 2025 tax rate, excluding special items to be between 15 and 18%.
Speaker Change: Returning to the balance sheet, we continue to maintain a strong and flexible balance sheet with approximately 3 billion dollars in cash and cash equivalents as of June 30th.
Edwards currently has approximately 1 billion dollars remaining under its share of purchase authorization.
Average diluted shares outstanding, during the quarter were 588 million.
Speaker Change: Based on year-to-date, share repurchases. We now expect lower full year, shares outstanding to be between 585 to 590 million
Versus original guidance of 585 to 595 million.
Foreign exchange rates increased second quarter reported sales growth by 130 basis points or 15 million compared to the prior year.
Speaker Change: FX rates negatively impacted our second quarter, gross profit margin by 60 basis points compared to the prior year.
Speaker Change: Relative to our April guidance. FX rates had a nominal impact on second quarter, earnings per share.
At current rates. We now expect FX to have an approximately 30 million upside to full year 2025 sales compared to the prior year.
I'll finish with comments related to the sales and EPS guidance.
Speaker Change: As Bernard mentioned, we are increasing our underlying growth rate guidance, for tavr to 6 to 7 by strong performance and our sales guidance range for tavr to 4.3.
Speaker Change: Billion to 4.5 billion to also reflect stronger, ous currencies.
Speaker Change: We are also increasing our total company sales growth guidance to 9 to 10.
We now expect full year, adjusted earnings per share guidance at the high-end of our original range of $2.40 to $2.50.
Speaker Change: Regarding jenavalve and the potential impact on our p&l this year.
Speaker Change: We are reaching the end of the regulatory review process and expect a decision soon.
Speaker Change: We remain hopeful that we will be able to close the acquisition during the third quarter.
Speaker Change: For the third quarter, we're projecting sales of 1.46 billion to 1.54 billion and adjusted earnings per share of 54 to 60 cents.
And with that I'll pass it back to Bernard. Thank you Scott.
Bernard: We are pleased with our strong performance in the first half of 2025, and our outlook for the full year.
Bernard: The ministers achieved showcase the strength of our Focus strategy to drive break through innovation in pioneering and leading categories.
Bernard: Looking ahead to 26 and Beyond Edward his position to transform care for the many structural heart patient in need.
We are confident that our unique Innovation strategy.
Bernard: Supported by the many important Catalyst across our portfolio.
Bernard: And the exceptional work of our 16,000 employees around the world. Will deliver significant value to patient.
Bernard: The healthcare ecosystem and shareholders.
Mark Wilterding: With that, I turn it back over to mark.
Mark Wilterding: Thank you very much, Bernard ready to take your questions. Now, as a reminder, please limit the number of questions to 1 plus 1 follow-up to allow for broad participation. If you have additional questions please reenter the queue. And management will answer as many questions and participants as possible during the remainder of the call Diego.
Thank you and to ask your question. Please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in a question queue. You may press star 2. If you would like to remove your question from the queue,
Mark Wilterding: Using a speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And once again, please let me yourself to 1 question plus 1, follow-up.
Speaker Change: Our first question comes from, Robbie Marcus with JP Morgan. Please State your question.
Oh great. Um, good afternoon and uh, congrats on a very nice quarter.
Speaker Change: Maybe to start 2 for me. Uh first 1 US tavr.
Speaker Change: Looks like when I try and back in based on the uh, the color you gave. It was a little better than uh, the street expected. Uh, so so what really drove that was their asymptomatic already coming into play or or any other Trends or color you could add would be helpful. Thanks. Yeah. Hey, hi Robbie, you know, thanks. You know, thanks for the question. Yes. You know, the, the came, you know, better than expected, you know forever.
Speaker Change: um,
Speaker Change: and um, you know, we are very pleased about, you know, what we have seen. You know, if you um, big picture, you know, we we have a leader in t. We have been, you know, focusing on a lot, a lot on bringing, you know, evidence and this early tavr study
Speaker Change: drove a lot of conversation among the clinical community.
Speaker Change: so what we have experienced, you know, since you know the approval is the only focus on tha A Renewed focus on how to better better manage, you know these patients
Speaker Change: How to, you know, make sure that this patient are timely um, you know, taking care of. So all of that together, you know, basically we created, you know, Catalyst in the t space.
And the good news about that. It is just, you know, starting, you know, we are waiting for, you know, the big Catalyst, you know, we are waiting for guidelines. We are waiting, you know, for NCD which are yet, you know, to come. So that's great to see, you know, this kind of, you know, positivity in the space, the reaction of the clinical community and at the end of the day, you know, for a leader like us, you know, to be leading, you know, this conversation, I'm going to ask, you know, Larry you know to provide additional details here also. Yeah. Thanks Bernard and thanks. Robbie for the question. Yeah I I don't think we've we're seeing a lot of asymptomatic patients come in. I think in centers that participated in the early Tavern trial you know we probably see a little bit of it so there might be some in there but I think you know as Bernard kind of alluded to I think what we're seeing is just a renewed attention on the management of patients with severe aortic stenosis and I think you know this data set was very powerful and you know we know in the system from a lot of the work that Sammy. Alright was done that. Even patients with mild symptoms. Often get held in the in the process and don't move forward.
For referral, for therapy and and I think people are paying a lot more attention to these patients. And I think this new new data set is just reprioritize these patients within the structural heart programs. And so I think that's a little bit of what we're seeing. And uh, you know, obviously we're very pleased with the quarter.
Speaker Change: Great. Um maybe uh uh follow-up from a um, USA gets a lot of attention. Um, and we hear less about outside US Trends so maybe you could talk about what you saw outside, the US in um, in Japan and particularly um, Europe with the exit of your competitor. Thanks.
Speaker Change: No, thanks. You know, Rob again and maybe you know, uh, I'm going to take you this opportunity to uh, to ask you that, you know, to answer any of this question. We are very fortunate, you know, to have, you know, an amazing talent that it was and uh that lip is going to uh, come here in the US and leave, you know, the franchise, or maybe, you know, Dan you want to uh and service this question.
Speaker Change: Sure, thanks Bernard hopefully you can hear me well. Um first of all, it's been a real privilege working alongside Larry so closely for the last 15 years.
Speaker Change: First in the US and in Europe and our most recently in Asia and given that I led the TA team in Europe. Maybe I'll start. I'll start with with Europe the the roll out of our S3. Platform is progressing really nicely and the feedback from Physicians continues to be very positive.
Speaker Change: But I guess what we're most optimistic about is the recent asymptomatic indication and we think that's going to be a real game changer for the longer term.
Speaker Change: Switching to Japan. This is an important market for us. Uh we remain very dedicated to expanding our therapy there.
Speaker Change: The under treatment is significant and the elderly population, there is very substantial.
Speaker Change: And while we're Market leaders, there we are working really hard to regain some of the ground. We've lost as new competitors have entered the market.
Speaker Change: And beyond that, we can continue to grow in a very nice manner, internationally Beyond, Europe and Japan. So hopefully that answers your question.
Thanks, Dad. And thanks for all the questions Robbie.
Speaker Change: Thank you. And your next question comes from Travis Steed with Bank of America, please State your question.
Travis Steed: Maybe raise EPS, even more uh at this point uh in a tariffs are probably what a couple cents better and you beat the street by 5 cents. Um and then kind of longer term. When you think about EPS leverage, do you think you can grow EPS faster rather than the the 10% Revenue growth that you kind of laid out going forward?
Scott: Yeah. Travis it's Scott. Thanks a lot for the question. Yeah, you know, we had a nice second quarter and we saw the benefits of that drop through to the bottom line. We ended up coming in above the top end of our guidance range which was not expected. Um, at the same time, you know, we've got some headwinds that we talked about last quarter and those have not necessarily all abated. And so, especially things like, Jen of valve where we expected to have a a a negative effect on our earnings per share. Uh, when it closes that gives us some uh, cause for pause. Um,
Scott: But overall, you know, we're feeling good about the trends in earnings per share this year. That's why we raised our guidance from 2 240 to 250 all the way to the high end of 240 to 250
Scott: Um, in terms of longer term, EPS expectations, you know, our, you know, our plan which is to on average grow the Top Line, uh, double digits and to get some leverage on the bottom line, uh, beyond that. So our, our expectations and our intentions have not changed and we're going to stay focused on, not just delivering
Scott: Short-term in 2025, strong earnings per share. But longer term, consistent sustainable growing, EPS as well.
Speaker Change: Great. Thank you, maybe just a a question on the international competitor. That's actually the market when you think about the share your captioning. There is it kind of in line with your International share above or below just kind of get a sense for kind of the that opportunity.
When uh, our competitor exited the market was to make sure we reached out to the centers that we knew were heavy users of their technology and make sure that we had inventory there that we had people there that we were able to train folks and make sure that they were, you know, the patients didn't get delayed or denied, you know, access to high-quality care. So that was sort of sort of, really our focus and that's what drove a little bit of the, the benefit that we saw there. I think longer term, you know, they sold at a different price point than we did. So I think it's, you know, it's on us to, to speak to the value of our technology and and why it's worth, um, you know, our price point. And that's what the teams focused on right now. And so, we'll see how that plays out over the longer term. But certainly we're optimistic that our platform has showed really well and we can continue to put data on the board that I think highlights the advantages and why our our our platforms worth worth what we charge for it.
Speaker Change: It makes sense. Thanks a lot, congrats.
Speaker Change: Your next question comes from, Larry biegelsen with Wells Fargo, please State your question.
Uh, good afternoon. Thanks for taking the question, and congrats on the nice quarter. Uh, Larry, uh, congratulations on all your success at Edwards. Uh, you're going out on a high note, uh, and it's hard to imagine, uh, Edwards without you, uh, it was a pleasure working with you, and I, I wish you the best of luck in your new role. Um, so I'll start start with a question for you. Um, Larry, when do you expect CMS to reopen the NCD and you know, what's the likelihood of moving to a single operator and and if that happens, what do you, what do you think the implications are? And I had 1 follow up.
Speaker Change: Yeah. Thank thanks Larry. Thanks for your kind words and thanks for your question. You know? We, we think the time to open the NCD is now, um, you know, the ball's really in, in cms's court. But but, you know, we're, we're going to continue to work with them and provide information to them. And, you know, hopefully it opens sooner rather than than later because there's a number of changes that need to be made. You know, the first 1 is making sure that asymptomatic gets covered so that all asymptomatic patients are eligible for therapy across the country. And so that's really important. But you know, this technology is Advanced so far at this point that I think everybody agrees we could, we could streamline the operator requirements and the facility requirements and that's going to open up access for patients and, you know, improve care for patients because we know there's waiting lists and there's other challenges and that will relieve a lot of the capacity in the system.
Speaker Change: Challenges that we have now, I think the big advantage to, if we go to um 1 specialty doing, the procedure is in essence, you would have 2 teams. Now that could do procedures, you could have a surgeon lead to have her team and you could have a Cardiology lead ta team, which would allow people to optimize their patient flow through. So I think that'd be a big benefit. And when we look at the data, the conversion now, from from Tavern to surgery is the same rate as the conversion rate between PCI and surgery and obviously, we don't have all these restrictions and requirements. So we think the time is now, um, we just need to continue to work with them and, uh, you know, and make the case for it and hopefully they open it sooner rather than later.
Speaker Change: Follow up to an earlier question. You set a goal of 10%, annual top plan growth. I think 50 to 100 basis points of margin Improvement. Um, and double digit EPS growth in 2026 and Beyond. Um, you have a lot of momentum. Now you have Catalyst coming, like M3 and, and hopefully Geneva. Is there anything. You're aware of today that would cause you to be below those goals next year. Thanks for taking the question. Oh, I can
Speaker Change: Larry. Um, let me start and I'm sure you know, Scott, you know, can add, you know, any details here? No, we are confident Larry. Yeah. Yeah, like you said, you know, we are we posted on a great, uh, quarter. We are on track to have a, to have a great year, you know, better than expected.
Speaker Change: You know, we have so many Catalyst across, you have a company.
Speaker Change: In in t.
Speaker Change: In tntt in surgical, you know, we have some new businesses also, you know, coming our way there are so many things to do in the US outside of the US. So I feel very confident. Yeah. And it's very much aligned to what I share with you as an investor conference in our last year. You know, we we saw that coming, you know, we knew it was coming and we are making all of this happen. I I am super proud of the team we have
Speaker Change: You know, this team is amazing. You know we we have you know, a very bold, you know strategy all together. We have the only company I think this kind of bold strategy, a very unique Innovation process.
Speaker Change: And we are executing in a very Flawless fashion. We make things happen.
Speaker Change: And that's totally, you know who we are as a company. And so I'm very confident about our commitment here in our for 2025 26 and Beyond you know, Scott anything to add. I I share that view. Uh we feel positive about not just the top line but uh what contributes to the bottom line, as well, you know, at the same time there are all kinds of different scenarios that can unfold. And so part of this has to do with um uncertainties like tariff exposure, that none of us can predict part of. This is just what happens to the Baseline against which we're comparing, uh, 2026. But you know, we're just based upon all the different scenarios. We're feeling pretty good at this point in July of 25 as we look ahead to the full year 2026 and the ability to meet those annual average targets that we laid out in December.
Speaker Change: Thank you, and your next question comes from David Roman. With Goldman Sachs, please stay your questions.
Speaker Change: Uh, thank you and good afternoon everybody. I, I wanted to start on the tmtt business and and maybe very specifically around evoke there have been a variety of uh, Publications. I want to call them studies necessarily questioning some of the safety and real world outcomes around evoke. But but I think when when we last engaged with you you talked about the impact that learning curve has had on centers and those centers that had greater experience we're seeing uh better outcomes. Can you maybe just elaborate a little bit on what you're seeing uh from a real world evidence standpoint as it relates to Adverse Events uh surrounding evoke and and when we might be able to see some of that data in a more public setting,
Speaker Change: Yeah, no, sure David. I really appreciate the question, you know, I think for a VOC, we continue to see a lot of excitement around evoke. We see a lot of physician excitement and we see see a lot of patient excitement, how the technology is changing their life? Um, I think we saw in Tyson too, uh, that there's a that the, the that's the Baseline clinical data, we have for this product and what we've seen in the real world is actually results that are similar or better than tricon 2. So, for instance, even at the the very recent New York valve conference, we saw coming out of our European, almost, you know, almost 200 patients. We saw initial results coming from that study at 12 centers across 5 European countries results that were equal to, or better than than tric uh, than tricon 2. Um, beyond that. We also in New York, valves had
A 1-year study on Echo, gradients that continue to show how, uh, the right ventricle and the Heart gets so much better with a VOC. And you'll see, I think coming up both at ESC, um, you know, some, uh, some more sub analysis on evoke and going in future, you'll see tvt registry analysis. But I think for us, it's a continued. Um, continued data set after data, set showing similar, real world outcomes that we've seen uh, from Tristan too.
Speaker Change: To create, you know, this amazing category for so many patients it needs. But right now,
Speaker Change: The men like the VIN said is very high. We can barely, you know, fulfill the men.
Okay. Uh very helpful and and and then maybe Scott appreciate the continued uh emphasis on on on the p&l and and and maybe just kind of summarizing things longer term. I think if you look back over Edward's the past several years, at 1 point in the in time the company was generating 10% plus Topline growth with with low 30s. Operating margins is is it realistic to think that that is the direction you aim to to take the business now and and that the company did operate at 30% Plus at 1 point and 10% and given the the totality of drivers you have here that that's a reasonable uh profile to think about longer term.
Speaker Change: Yeah, I think um, at this point we're not going to set a specific Target. You know 30% is a nice round number but we're not really focused on hitting. Um, a 3 handle so much as we are focused on increasing our operating part profit margin by 50 to 100 basis points annually. Uh going forward, starting in 2026.
Thank you. And your next question comes from Matt Taylor with Jeffrey's police state your question.
Matt Taylor: Hi. Thanks for taking the the question. Um,
Matt Taylor: I just wanted to ask a couple follow-ups on, uh, some of the Nuance table or dynamics that were asked about before. Um, 1 is, you know, would you venture a guess at What proportion of the, the Boston Scientific exited sales, you, you could get, you know, what, kind of your fair share of that and then, um, there was asking before about the NCD and I understand the motivations to open that up. But what what actual impact do? You think that could have on capacity and volumes if it were to change to 1, operator, and, and to reduce the volume requirements, Etc.
Matt Taylor: Yeah, thanks Matt. Thanks for the question. You know. It's it's really too early to comment on both but I'll try to give you some directional comments. I think as it relates to to Boston you know the biggest thing is that that there's a difference in price point here. And I think this has been 1 of the things that we've been talking about for a while that I'm sure everybody's aware of, you know.
Matt Taylor: We?
Matt Taylor: Our, our platform is backed by the most evidence by long-term data by our long-term clinical trials. I mean, we just put out 10 year data from our partner 2 trial that shows, you know, the incredible durability of our of our platform and low reintervention rates. And you know what, we really need is people to value that long-term data and and value all the things that our platform brings to the table rather than making their decisions based on price. But, you know, we're going to have to see how the market plays itself out if they say price focused. Then they'll just move to another similarly price product. If they you know if they if there's a lesson to be learned from this uh you know, hopefully it's that evidence matters and these long-term trials matter and so we'll see what our fair share is when when we get to the end of that.
Matt Taylor: You know, as it relates to the NCD, you know, it's impossible to know what they're going to do with operator requirements, and it's impossible to know what they're going to do with facility requirements. But given where this procedure is has come and how safe it is and the long-term data. And we, we've already proven that we can roll it out to more than 850 centers, really successfully and drive high-quality outcomes. You know, there really is a time to open up a lot more centers that would be able to do this procedure that had the expertise. How many they allow us to open? Well, determine how much it will impact capacity and we'll see how that goes. But if we look at the other ncds that have been done recently, there seems to be directionally taking a lot of these operator requirements away and taking a lot of these facility requirements away. And so you know, given the evidence we have on tavr well over you know, a million, you know, 1.2 million patients treated with our platform alone.
We seem to have a lot of data in a compelling case to make for reducing a lot of these restrictions, but we'll just have to see how that plays out when it opens.
Speaker Change: Thanks Larry. Congratulations.
Your next question comes from Anthony Patron with mizuho group, please State your question.
Thanks and I'll, I'll Echo Larry. Uh, congratulations. Great working with you and good luck on, on the any, the next, uh, chapter year.
Speaker Change: Maybe, uh, a little bit on the US tavr, backlog it it typically sits at around.
Speaker Change: Somewhere in, in the 3 to 6 month range in in with asymptomatic, not being in there in this quarter. It seems like at least something changed that the backlog.
Speaker Change: You know, was able to be mined a little bit more efficiently so maybe just a little bit on on tabber, backlog in the US and and maybe, you know, did you see any workflow improvements? And I'll have 1 quick follow-up on on my troll.
Speaker Change: Use that terminology, I think, you know as patients move through the system, there's just a lot of steps they have to go through. They have to see 2 specialty, they have to be scheduled for multiple visits. They have to get a CT, and there's all those things that, that they have to go through the process and depending on the center and depending on what their image capacity is, and the waiting times to get Imaging, it can easily take a patient 3 to 6 months to work through that system. And that's just what it takes to do. I think, what, you know, I referenced earlier and what? You know I think we are seeing now is just a renewed focus on these patients. I don't think we've we've seen a marked reduction in the time that patients are moving through the system. I think we're probably, you know, hopefully seeing an uptick in referrals, and just a renewed focus on making sure these patients get timely referral and time we treatment. So I think that's what we're seeing now. But it's going to take a couple of quarters to really quantify this and, you know, that's where we're waiting for. But clearly we've seen, you know, some momentum here and a lot of attention. If you were at the New York valve meeting, you know, they open the meeting with the early table data, there was a huge
Speaker Change: Debate about how patients should be referred and then Sammy. Alright talked about the tech as and that that completely normalized. The gender biases that we see in treatment rates. So there's just a tremendous amount of attention on this and I think that's what's what's really driving things from a mind share standpoint.
Speaker Change: And then the quick follow-up on my troll is just, you know, you think about mitro following tavr severe. Symptomatic is kind of the on label indication, the penetration and severe asymptomatic is is marked in the low single digits, and Abbotts out there with the repair Mr. Uh, study, which I think reads out early next year and so, you know, where do you see severe asymptomatic from mitrol for minimally invasive in terms of penetration? And what do you think can happen when we get more data uh, potentially from competition here? Early next year? Thanks.
Speaker Change: No, sure, appreciate the question. Um, if you look at the treatment of mitral disease, we see that the there's a huge number of patients with mitral disease. Very similar to what we see in the uh, severe symptomatic aortic stenosis numbers in the US but the actual number of treatments are much much smaller.
As a result, we're much much earlier than tavr as we think about. Hey, how do we just penetrate? How do we penetrate or how do we help more patients with this technology and you spoke about it from a little bit of a tear angle, but I think we look at about a little bit more, broadly. Meaning that mitral disease. Today, there are so many different patient anatomies, where we actually really believe having multiple modalities both here. And mitral replacement will help us help treat the most number of patients. And again, probably a little bit differently than aortic stenosis. We have both degenerative and functional ideology.
Speaker Change: Where different Technologies like repair and replacement can help these Technologies a little bit more differently.
Speaker Change: And so what we starting to see in Europe and we just got M3 now into our European market is that M3 is really adding treatment to patients who didn't have treatment before and I know you're speaking a little bit about it from an asymptomatic or or other kind of things I guess. I'll just speak about it from a severe symptomatic group, where there are tons of patients out there who tear, unfortunately is not a great solution for and is on the eligible and with M3 now we have can treat a larger number of of people and we're excited that with M3. Now in Europe we'll eventually be bringing it to the US now in the first half of next year. So the US can fulfill that next part of having both a repair and a replacement technology to help treat mitro. So for us, I I understand how you you took it from a different angle, I guess. I'll put it on the we have so many patients coming through the pool right now, there's such under treatment that people today. With mitro disease, don't have a treatment that as we get repair and replacement, we have a, a whole great number of patients.
Speaker Change: To just help with these new Solutions.
Thank you. And your next question comes from Vijay Kumar with evercore, isi, please State your question.
Vijay Kumar: Hey guys, thanks for taking my question and Larry, um, wish you all the best and your our transition. Maybe my my first question Scott, uh, for you on on, um, the back half of margins here.
Vijay Kumar: Uh is um I I know that we're moving Parts between FX tariff. Can you just walk us through on what the implied back half gross margin is and I think the EPS guidance for TQ implies, maybe a 25, uh, kind of operating margins. Am I am I looking at the right way on margins. Um, and if 25 is the right number, are you assuming a full quarter of 10 of Al impact?
Speaker Change: In Q4.
Uh that's in that that's in the Assumption for uh 2025 in terms of margins. Um you know FX is hurt, our gross profit margin rate. It's actually benefited earnings per share because we're getting more sales and profit from outside of the US translated into the weaker US dollar. So it's it's sort of a um 2-headed sword. Lower gross margin uh rate but higher EPS dollars.
Vijay Kumar: And um I think what was the rest of your question Vijay?
Vijay Kumar: Sorry uh tariff. What was what is a tariff impact, essentially CQ? Yeah.
Vijay Kumar: And and operating margin. So for tariffs. Yeah. You know we we said think a nickel for the full year back last quarter, it's probably less than half that now is our current expectation which is similar to what you've probably heard from other companies. Um, in terms of of operating, yeah, mid 20% operating margins. For the second half of this year is the right modeling assumption. It's lower than the first half of this year, both because of some deferred expenses that we expect to incur going forward, as well as the jenavalve impact. Uh, that you'd see this is not changed from last quarter. Last quarter, the same math for the second half around 25% and same expectation. Now at this point,
Speaker Change: Let's help with Scott. And if I may 1 more, you said double digit revenues and EPS for 26, do you expect operating leverage for rock 2026.
Scott: Well, first of all, we did not say double digit revenue for 2026. Um, we said that uh we feel good about uh the prospects as we look ahead to 2026, certainly our Target as you know because that's our annual average revenue Target, but don't assume that 10% is going to be the bottom of our guidance range when we get to the December investor conference. Um, in terms of operating leverage, as we've said, we're we're targeting 50 to 100 basis points of, um, of ebit margin on a constant currency basis, increase starting in 2026.
Thank you.
Matt Taylor: Thank you and your next question comes from Matt, mix with Barclays. Please, stay your questions.
Speaker Change: Hey uh thanks so much for taking the questions and you guys I really strong quarter. Um Echo, everyone's comments Larry, it's been great working with you hope.
Speaker Change: Hope hope. Uh, we could continue to connect um in your in your new adventures. Um, so maybe following up with some of the questions on average strength in the in the quarter. Um, you know, how should we think about that Q2 strength as we move into, what's kind of a typical, uh, seasonal Q3 and, and also just any comments on. Um, you know, Japan is bounced back next to Europe and strong, but rest of the world really look.
Speaker Change: like it accelerated this year, um, from last year, maybe any any comments on that may have 1 follow up on TMG if I could
Speaker Change: Yeah, thank thanks, Matt. Thanks for your kind words. I think, um,
Speaker Change: you know, we we adjust our guidance accordingly. So we tried to account for for all of the, all of the things that we know right now and where our confidence is. And so we do typically see seasonality in Q3 probably more pronounced in Europe than it is in the us. But we, we tend to see the little bit globally, but all of that is factored into our guidance. And, you know, I think we feel great about the momentum and and where we're going. And so, you know, hopefully that uh, that continues and that's what we expect. Um, you know, Japan, we we remain focused on, you know, a little bit of share recapture their and re accelerating that market and um, you know, that's really where we are there and we continue to work on that. And I think we're all committed to to to driving that in that manner.
Speaker Change: Sure. Yeah. And rest of the world. That was the part that I saw really popped up here this year.
Yeah, you know, you know that t is a, is a global business, you know, Matt, you know, we are very pleased about that, you know, we are present, you know, you know, almost, you know, in every country which is a global business. It's growing everywhere. It's do going well.
Speaker Change: uh, so yes, you know, we mentioned the rest of the world because it is not just about the US, even though, you know, the largest
Speaker Change: Region for us, are the US, Europe and Japan, but rest of the world matter and he's doing very well.
Is it, uh, Imaging and you know, Radiology, you know, support, uh, you know, training, maybe help us understand. What are the gating factors to, to growth as you kind of, as you say, work as fast as you can, to meet that demand, thanks.
Speaker Change: Yeah, Matt, you know, let let let me start, you know, I love your comments, you know, indeed, you know, we are going to be the only provider of repair and replacement technology for for many years and and this is the result of who we are as a company and our unique Innovation strategy.
Speaker Change: You know, we are bold.
We are long-term Focus.
And you know we invest, you know, we are nobody else is investing.
Speaker Change: So, take 8 years ago, we believe in this portfolio.
Speaker Change: And and today, you know, indeed, you know, we have, you know, this portfolio and we are the only 1 who is going to have, you know, this kind of portfolio for for many years. So thanks we are going to take care of patients. We are going to help, you know, train, you know, Physicians to make sure they can take care of, you know, these patients. But dein you know you want to talk about where are you, spending your time? And all of this, you know, I'll add a little bit more to it. Um, clearly there are a lot of angles to therapy development and that's what we're doing here. We're taking new therapies and bringing it to patients and so forth, right? Yeah. There's a part about Technologies. We've been talking about how do we launched these new technologies for the first time and get them to patients to add? Add new treatment? And then yes, there's new geographies around the world. We're launching our Paschal in the for the first time in countries around the world.
Speaker Change: World and eventually evoke and eventually M3 will then follow up and then there's new clinical data that's coming out. We look forward to the incircle clinical data at TCT Etc. And to do all this, you've got to, you know, have that great Market access. Making sure you have not only regulatory approval reimbursement. And your point is great physician training Etc. To ensure that our our Field Force is trained well and Physicians are trained. Well, so it's it's hard to pinpoint just 1 area. But I think, uh, the hope I give you is that we're added. We're putting these different layers on top of each other and they're going to lead to layer or Catalyst, after Catalyst, of growth, as we keep moving forward, across therapies geographies Etc.
Speaker Change: Thank you. And ladies and gentlemen, we have time for 1, final question. And that question comes from Chris Pasquale. With nefron research, please State your question.
Chris Pasquale: Great. Thanks for squeezing. Me, and I wanted to Circle back to the NCD and how that could change things from a practical perspective when it does come. I'm curious what you're seeing so far from the local Max. When asymptomatic cases do get submitted, are they getting paid for smoothly? Or is that a meaningful friction point in certain regions and then maybe help frame the situation over in Europe for us? Does having the indication over there ensure broad access or are there other states uh steps that need to take place? Um and if it's a ladder, what's the timeline? We should think about for those.
Speaker Change: Yeah, thanks for your. Thanks for your question, Chris. Um, in terms of, you know, how things could change from a practical perspective, you know, I think it's a lot of things we talked about before in terms of operator requirements and terms of, you know the patient flow in terms of uh the facility requirements. And so, I don't know. I have a lot more to add to that in terms of how the local Max cover this. Um, when something's not covered in a national coverage, decision people submit on a case-by-case basis and those get evaluated individually by local Max. I will say, you know, in the early table clinical trial, I'm not aware of anybody having difficulty getting their patients covered. So I don't know how much of a headwind it is, but that being said, you know, we do know that there are some big Hospital systems that are saying we're going to wait until the NCD is updated because we simply don't want to take the risk of having cases rejected by a local Mac. And so this is why we've always said that asymptomatic is going to be a little bit of a slow burn, you know, of course you're going to get the indication. You know, the next thing that we need to do is the NCD and guidelines and we'll see which of those go first. But each 1 of these things, I think is
Speaker Change: Incrementally going to change how patients, get managed. And that's why we've always said that we think this has, you know, it's it's going to be a step function, but it's going to be a long time. Contributor to what we're doing is we as we streamline these things in terms of Europe, uh, you know, they, you know, talking about Europe, it's not a homogeneous place, every country has their own different reimbursement systems. I think much like the US getting the indication. First is the number 1 thing and so we do have the C Mark. We just recently received that and so that really is what starts?
Speaker Change: The process. And so having those approvals, you know, both FDA and C, Mark, give us a unique opportunity to engage on guidelines. It gives us the opportunity to engage with the reimbursement groups and, you know, make sure this gets covered for patients, but, you know, we just got this approval literally you know, uh like a week ago. So it's probably a little early in the process for us to be very definitive but it gives us a license to go. Um start having those conversations because it's now on label.
Thank you. And we have reached the end of the Q&A session. I'll now hand the floor back to Bernard zigan for closing remarks.
Okay everyone, you know, thanks for your continued interest in the world, you know, Scott Scott Mark senior and I welcome any additional question by telephone. Thank you so much and have a great day.
Speaker Change: Thank you. And this concludes today's call all parties, May disconnect