Edwards Lifesciences Corporation — 2024 Q1

Thanks, Robbie. This is a good question. So we are obviously very pleased about the early physician feedback, which has been very, very strong on EVOQUE. We were able to achieve an excellent procedural outcome. Now back to your question about our performance in Q1, very little about EVOQUE. We have seen a very clear momentum on PASCAL, PASCAL in Europe, PASCAL in the U.S. And we are very pleased about our expansion and adoption of PASCAL globally basically. But I'm going to ask Daveen to add some details here.

Yes. Thanks so much, Bernard. Thanks for the question, Robbie. Yes. And to follow up with Bernard's comments, obviously, the vast majority of our growth came from PASCAL, [indiscernible]. And overall though, we continue to be really pleased with the initial launch of EVOQUE both in Europe and the U.S. Right now, we're just starting to steadily kind of activate sites. We've had really good clinical outcomes, very consistent with what we saw in the clinical trial. And we see really predictable times and predictable procedure times is something that, obviously, physicians really love to see. We see that both at old sites that [indiscernible] as well as new sites that we've opened up kind of in Europe.

Thanks, Robbie. Let me start, and again, I will ask Larry to add some insights here. So when we put together a guidance for the year, the guidance 8% to 10%, we knew that the growth will ramp throughout the year and that Q1 will be our lowest growth quarter. So we feel we are confident about our 8% to 10%. We feel confident about what's happening in the U.S. Share and price are stable. So we feel good about all of that.

Yes. I don't have a lot to add. We saw good progression throughout the quarter. It's always a little slow in January as we come out of the break, but we are pleased with how the quarter went overall. And we remain excited about the year. We have a lot of activities on patient activation. We have a huge data set coming out of TCT that I think all of us are going to be excited to see what that say, what those data say and how they inform the field. And so I continue to believe we have a long runway long term with TAVR and it is good to see the U.S. kind of out COVID, I think, finally in the rearview mirror, and we can just focus on accelerating patient care.

Yes, thanks. Yes, overall, we felt good about the quarter, and we just talked about the U.S. We saw a lot of strength in Japan, but Europe was -- it grew year-over-year and it grew sequentially, and we lost a couple of billing days. But even with that, we were a little bit disappointed with our overall growth in Europe. We saw some pretty aggressive pricing from competitors that I think led to some trialing. But we're really excited that we're launching S3UR that actually starts this month, and we're excited to bring that technology to Europe, and we expect these to normalize through the course of the year.

I can give a little bit more commentary on the billing days. So outside of the U.S. is where we really felt it. We saw 2 billing days difference in Europe and Japan. Overall, globally, we saw 1 billing day difference. And so it had an impact. To your question about do we see any more impact later in the year? Yes, in Q3, we've got a billing days impact that goes the other direction as well.

Yes. We have a lot of patient activation activities where there's a lot of work that we do. We have multiple fronts, and Egnite is just one part of our strategy there. But we're excited about what these technologies can do. And there are so many patients, if you look at the [indiscernible] publication, and I know he's spoken to you guys before, there's just a lot of patients upstream that aren't moving through the system at the speed in which they should. And I think there's a patient identification aspect, there's a referral aspect.

And maybe in addition, Larry, I'm very proud about what we are doing. We are the only one basically having a deep commitment to advancing science for AS patients through the progress and early TAVR trial. So this is truly our commitment, but we feel that there is a ton of potential. These patients are underdiagnosed [indiscernible], and we are committed to offer treatment for these patients. So as a company, very proud about how we do all of this.

Yes. Yes, we do expect to have procedures to ramp. That's always been a part of our plan, and so we continue to expect that to happen. And I think it's a lot of things, Larry, I think it's a lot of our patient activation work. But it's also just the market continues to improve, and we're very pleased where we finished Q4 last year. We were happy with the ramp in Q1. So I think we do expect to see an increase in Q2 over Q1. But even with that, we expect the second half to have a higher growth rate than the first half. So I think that that's good.

So let me, Larry, let me add something about it. I know that there were plenty of questions about that trial at ACC. I was not at ACC. But our strategy to bring basically groundbreaking science, the highest quality of evidence to help over 1 million of patients who are not being treated today and being able to unlock this large tier market potential, this is what we are doing. This is our strategy.

Yes, that's right. We brought revenue guidance up nearly $150 million, and you're right, we kept our $2.70 to $2.80 range the same. There are a couple of reasons. One was we ended up with a lower tax rate in the first quarter than we expected. Not sure that we're going to be able to maintain that low of a tax rate the rest of this year. The other one is it's just early in the year. And so we'll talk more about how EPS is trending 3 months from now. But we decided at this point early in the year, we just keep it the same. We think the top end of the range can accommodate multiple different scenarios that could play out in the rest of 2024.

Yes, this is Daveen. I'll answer that. No, honestly, if you look at quarter 1, no, I don't really think there was any significant kind of direct pull-through from EVOQUE versus PASCAL. But if you pull back up, I think us having our portfolio product to treat the maximum number of patients by having repair and replacement technologies for both mitral and tricuspid help show our leadership and that physicians would then want to continue to work with us as leaders in the space.

Katie, do you want to take that question?

Yes. Thanks, Joanne, for the question. So for Critical Care, as you know, we have capital sales as part of the mix. And so we just see high variability of demand really every quarter across all our product lines. We also have distributor sales that can come up and down. So it was a great quarter for us overall. It's still early in the year. So you saw us raise guidance to 8% to 10%, and we're very confident in that 8% to 10% range. But we don't want to bring it up too much more at this point just because of that variability in demand.

Profitability for the company, Joanne?

Let's hold off on product line profitability. Suffice it to say, it was a good top line quarter, and that's helping our bottom line as well.

Just one question on sort of TAVR and transcatheter valve growth, and I'll just keep it to one. If you could maybe talk a little bit about the launch of EVOQUE and the activity that, that drives in some of your major centers. And I guess how you're -- you and the team in the field is kind of managing those activity levels [indiscernible] centers versus the continuing volumes that they perform in TAVR. Just maybe any color or thoughts on how that might play into the total transcatheter business?

Yes. So I'll start, Matt, and then I'll hand it over to Daveen. This is kind of like what Daveen and I do every day. We partner very closely on these sorts of things. And clearly, as we roll out these new therapies, we want to make sure that people do it with the right volume. And so it's a key part of when we start centers, maybe that they have a whole program that encompasses their entire structural heart patient population. And so our teams work closely together. We have this unique environment where we have very dedicated teams because we want to bring that detailed procedural knowledge and the knowledge of all things related to it. But it still requires a lot of coordination between Daveen and I and we've been doing this for a while. This is true with PASCAL and the launch is there, and it remains [indiscernible]. Daveen?

Yes. I mean I'll just add maybe some comments about the -- maybe the capacity question that you kind of asked, right? [indiscernible] in mitral repair [indiscernible] technology that's been around for several years and continues to grow with more and more patients being treated. The number of patients being treated and kind of EVOQUE, is relatively small in quarter 1 and for the future just based on these very large, more established numbers of procedures. So for us, overall, I don't necessarily believe that the EVOQUE procedures for any time in the near future are going to affect overall capacity. But I do also -- and to carry on to Larry's point, we collaborate very well together to ensure that when we're opening up a center or working with center for the first time, we're working with that center to ensure that they do have the capacity to then add in these incremental procedures.

It is fair to say that so far, we have not faced a big challenge in terms of center, having a lack of capacity to be able to treat the patients, whether TAVR patients or EVOQUE patients.

And Matt, it's Scott, your question about SG&A. You heard us say in the opening remarks that we're expecting SG&A as a percentage of sales to be around the top end of our original range of 29% to 30%. And that move up a little bit was largely based upon the increased investments that we're making in field resources and patient access initiatives.

Sorry about earlier. It just sounds like U.S. TAVR growth was high single digits. Is that fair? Was it about 10%? And other drivers that can get you to consistent double-digit growth in the foreseeable future? Just what's your confidence there?

Yes. I'll take the first part of that about U.S. TAVR growth. We try not to be too specific about breaking down every region. But what we can say is that TAVR in the U.S. grew faster than our global underlying growth rate for TAVR in the first quarter. Larry, do you want to talk about the other pieces?

Sure. So the AHA program, we're very excited to partner with the AHA on this. And you're looking for an analog years and years ago, the whole door-to-balloon drive where they created a quality metric that was based on time. And because we know the faster when a patient is having an MI, they get a balloon across that lesion, the survival rate rises dramatically, and it's critical that they do that.

Yes. Thanks for the question, Chris. Appreciate it. Yes. So first, just a couple of comments. We really believe that EVOQUE offers exceptional clinical and economic benefit to both patients and health care systems. We think that's a key factor. And we've seen a great increasing interest in demand from physicians to help have this technology to treat their patients. So the results, I think we're going to see continued centers opening up and continued kind of patient growth each quarter.

Probably fair to say that NTAP will have a big impact next year and after, but not necessarily this year.

Yes. This is Daveen again. I'll make a couple of comments on this one. Generally, yes, we are believers that both repair and replacement technology for each valve really helps treat the maximum number of patients. These patients and these disease states are heterogeneous. There's no one magic bullet. There are a lot of patients that continue to need different types of technologies.

Maybe I will add something. About 6, 7 years ago, we believed that having repair and replacement for both mitral and tricuspid was going to be important. Today, we are confident that indeed it is the case. And this will provide physician options to treat many patients and to best select what therapy for what patient. So if you're asking what exactly the technology for that patient, I think it is still early. We still -- we need probably more time, more research to do that. But for sure, I think this portfolio puts basically a physician in a driver seat to make the best decision for their patient, which is what we wanted initially. And as a result, this is going to unlock this very large opportunity and we are going to see a sustainable growth from TMTT in the years to come.

And I'll leave it up on your comment about kind of the clinical data, right? And that's why it's so important that we continue to enroll in trials like CLASP II TR. So that's our tricuspid trial, right? It's a randomized study where getting more data and understanding how these different technologies can really help patients. It's super important for ourselves. So not only post-market studies for EVOQUE but also these other randomized studies, pre-market studies that are so important to collect this data to continue to understand where these technologies can work best for patients.

So this is Daveen. On the NTAP comment, we believe right now, each quarter, we continue to open up new centers. We continue to train physicians on it, and it's a steady state, nice growth and providing the technology to more patients. And we've seen a lot of demand from physicians for this technology for these patients.

I mean, I think the question was how many centers do you think we'll be ready to do procedures once the NTAP is active. And I think what we can say is, certainly, the sites that have been involved in clinical trialing are going to be ready to activate beyond that. We're just going to be strategic and deliberate about where we activate.

And we're going to focus on centers that are already the higher-volume tricuspid centers that have their infrastructure set up, have their right side imaging set up. So it's going to be just a steady kind of growth [indiscernible] moving to other high-volume tricuspid centers.

Yes, thanks. Well, none of us know the trial results as yet. That won't happen until later this year. So if the trial is positive and obviously, the more positive trial is, the more benefit that you get from it. But I think it's really about how patients get referred for therapy. And I think that, that's going to be the key thing. So I think it speaks to the treatment in referral for aortic stenosis and the time frame we should do that more than a specific therapy.

Yes. We had a good Q4 in Europe. And so this does feel like it's probably more temporary, and it's something that we're going to put a little bit more focus on. We do sell at a premium in Europe and some people were pretty aggressive with discounting. And I think we have to beat that with our value proposition and with new technology. And we're super excited [indiscernible] the U.S. at this point and Japan, it's a brand-new product for Europe. They have no experience with it. So we're excited because it's the only platform in anywhere that has the RESILIA technology. And again, this is something that's been on our market-leading surgical valves for -- we're probably approaching a decade now.

Sure. In the third quarter, order of magnitude, same thing. It's about a day globally and geographically, very similar. Europe or Eastern Europe a day or 2 days, everywhere else a day. So it's really a day across the board in the third quarter.

Yes, most of the regions are one day in the third quarter, whereas in the first quarter, we had Europe and Japan at 2 days, but I'm not sure that level of precision is that important. Suffice it to say, in aggregate, in total, it's a day in the first quarter, and the day in the third quarter.

Yes. I appreciate the question, Danielle. It's a little hard to quantify. We're still putting some of these systems in place. And remember, it's not just identifying the patients. People have to start [indiscernible] the way patients get referred and the way they come in. And so I think we're really, really pleased with the pilots that we've run in the places that we've gone. We very clearly identify that there's an upstream population that many of the centers didn't even know existed. And now how we tap into those, how we move those patients through the system, how they add capacity to address these patients. That's where the pilot centers are kind of in that phase now. But we -- when I spoke of this in the investor conference, we have, in our minds, 100% validated the undertreatment of aortic stenosis. We've done it in enough centers with enough different people. It's been backed by enough publications, really even leading academic programs. Now it's a matter of going through all of the steps to get these patients off the sidelines and get the proper therapy.

Yes. I'm not going to get into guidance, and I really want to be cautious not to speculate on trials that are in flight. We'll see the data at TCT. And after we see that data, then I'll be happy to talk about what I think the repercussions are and how I think it plays out.

Yes. That's a great question, Josh. And clearly, you're deep on our platform and the details. I think the concept of this variable sizing is really being able to tailor our valve to the patient, rather than driving the patient to a nominal, we can adjust our valve and make it different.

The -- our platform with its frame design and its coronary access is really the ideal platform for that second procedure but it's also the ideal platform to use in that second procedure. I think a valve needs to be a good host but it needs to be a good guest, and that's, I think going to be critically important.

For sure. I think our surgical platform plays well into that as well.

Thank you so much. Thanks, everyone. I want to close with offering some big-picture comment about the quarter. Obviously, we are very pleased about the strong performance for the company growing 10%. And when you think about it, this is the result of the strategy we put in place years ago. What we have today is a diversified portfolio with TAVR, mitral tricuspid and surgical, all of them contributing to the performance of the company.