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DATE

Thursday, July 24, 2025, at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Bernard Zovighian
  • Chief Financial Officer — Scott Ullem
  • Global Group President, TAVR and Surgical — Larry Wood
  • Corporate Vice President — Mark Wilterding
  • Global Leader, TMTT — Daveen Chopra
  • Global Leader, Surgical — Wayne Markowitz
  • Incoming Global Leader, TAVR — Dan Lipps

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TAKEAWAYS

  • Total Sales-- $1.53 billion total sales for Q2 2025, up 10.6%, driven by broad-based growth across the structural heart portfolio.
  • Adjusted EPS-- $0.67 adjusted earnings per share for Q2 2025, with GAAP EPS at $0.57, the latter reflecting a one-time charge related to external investments in GAAP results.
  • TAVR Global Sales-- $1.1 billion in global TAVR sales for Q2 2025, representing 7.8% constant currency sales growth with stable pricing and competitive position globally.
  • TAVR Guidance-- Full-year 2025 constant currency sales growth guidance increased to 6%-7%, reflecting both US and outside-US strength.
  • TMTT Sales-- $133 million for Q2 2025, up 57%, with PASCAL and EVOQUE cited as primary growth drivers.
  • TMTT Full-Year Guidance-- Sales target reiterated at $530 million to $550 million for full-year 2025.
  • Surgical Sales-- $267 million global sales for Q2 2025, up 6.8%, aided by growth of premium Resilia technologies.
  • Adjusted Gross Profit Margin-- 77.6% adjusted gross profit margin for Q2 2025, compared to 80% in the same period last year, impacted by manufacturing expenses for new therapies and foreign exchange.
  • SG&A Expenses-- $502 million or 32.8% of sales for Q2 2025, versus $448 million in Q2 2024, with expectations of increased spending in the second half.
  • R&D Expense-- $276 million for Q2 2025, equal to 18% of sales, up from $272 million in Q2 2024, supporting expansion of the structural heart portfolio.
  • Adjusted Operating Margin-- 28.2% adjusted operating profit margin for Q2 2025, benefiting from strong sales and delayed expenses, but expected to decline in the second half due to GenaValve acquisition costs.
  • Cash Position-- Approximately $3 billion in cash and cash equivalents as of Q2 2025.
  • Share Repurchase Authorization-- About $1 billion remains available for future buybacks as of June 30, 2025.
  • Average Diluted Shares Outstanding-- 588 million average diluted shares outstanding for Q2 2025, with updated full-year 2025 guidance of 585-590 million shares.
  • Foreign Exchange (FX) Impact-- FX increased reported sales by 130 basis points ($15 million) in Q2 2025 and reduced gross margin by 60 basis points versus prior year.
  • TAVR Leadership Transition-- Larry Wood will depart in early September, with Dan Lipps named as his successor for the global TAVR business.
  • TAVR Platform Milestones-- The company received both US and European approvals for the CPNM3 platform in the asymptomatic indication during Q2 2025.
  • EVOQUE Clinical Update-- Real-world European outcomes from a 176-patient study presented at the New York Valves conference demonstrated clinical results similar to or better than those of the TRISCEND II trial.
  • GenaValve Acquisition Status-- Regulatory review of the GenaValve acquisition is nearing completion, with closure anticipated in Q3 and related expenses expected to impact margins in the second half of 2025.
  • Updated Full-Year Company Guidance-- Sales growth guidance raised to 9%-10% for full-year 2025 with projected sales of $5.9 billion to $6.1 billion for fiscal 2025, and adjusted EPS expected at the high end of $2.40 to $2.50 for full-year 2025.

SUMMARY

Edwards Lifesciences (EW -1.05%) management raised full-year 2025 sales growth guidance to 9% to 10% and adjusted EPS guidance to the high end of the original $2.40 to $2.50 range following stronger-than-expected results, noting an improved growth outlook for both TAVR and total company revenues, with full-year 2025 constant currency sales growth guidance for TAVR increased to 6% to 7% and for total company revenues to 9% to 10%. Multiple product-related milestones were announced in Q2 2025, including approvals for the CPNM3 platform in the asymptomatic TAVR indication and the CE Mark for Sapien M3. Clinical evidence was highlighted to support new therapies, including ten-year durability data for the TAVR platform presented at the New York Valve conference, and favorable real-world data for EVOQUE from a 176-patient study presented at the same event. The GenaValve acquisition remains pending, with financial and margin impact expected in the second half of 2025 upon closure.

  • CFO Ullem noted, "We continue to expect full-year 2025 operating margin of 27% to 28%." with a mid-20% operating margin assumption for the second half of the year due to planned spending and acquisition-related costs.
  • CEO Zovighian stated, "We are increasingly confident in our full-year outlook and are raising our full-year 2025 sales growth guidance to 9% to 10% and adjusted EPS guidance to the high end of our original range of $2.40 to $2.50."
  • The company reported that FX benefits contributed approximately $30 million upside to full-year 2025 sales guidance relative to the prior year.
  • Management expects to achieve annual constant currency operating profit margin expansion in 2026 and beyond, with a target of a 50-100 basis point increase in operating profit margin per year starting in 2026.

INDUSTRY GLOSSARY

  • TAVR: Transcatheter Aortic Valve Replacement, a minimally invasive heart valve procedure.
  • TMTT: Transcatheter Mitral and Tricuspid Therapies, referring to minimally invasive treatments for mitral and tricuspid valve diseases.
  • CPNM3: Edwards Lifesciences Corporation's third-generation transcatheter valve platform, recently approved for asymptomatic indications.
  • Resilia: Edwards Lifesciences Corporation's premium tissue technology for surgical heart valves, designed to improve durability and freedom from reoperation.
  • EVOQUE: A transcatheter tricuspid valve replacement system from Edwards Lifesciences Corporation.
  • CE Mark: A regulatory designation indicating conformity with health, safety, and environmental protection standards in the European Economic Area.
  • NCD: National Coverage Determination, the US Centers for Medicare & Medicaid Services (CMS) policy for coverage of specific medical services.
  • SG&A: Selling, General, and Administrative expenses—a standard accounting category of operating expenses.
  • OUS: Outside the United States.
  • TRISCEND II: A pivotal clinical trial evaluating the safety and effectiveness of the EVOQUE valve system.
  • Adjusted EPS: Earnings per share excluding certain identified items such as non-recurring charges.
  • FX: Foreign exchange impact on reported financial results.

Full Conference Call Transcript

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 Zovighian, our CFO, Scott Ullem. Also joining us for the Q&A portion of the call will be Larry Wood, our Global Group President of TAVR and Surgical, Daveen Chopra, our global leader of TMTT, Wayne Markowitz, our global leader of Surgical, and Dan Lipps, corporate vice president. Just after the close of regular trading, Edwards Lifesciences Corporation 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.

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 Lifesciences Corporation 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 Edwards Lifesciences Corporation's other SEC filings, all of which are available on the company's website at edwards.com.

Edwards Lifesciences' guidance reflects its current estimates of the impact from tariffs that are in effect or have been announced to date, assuming such tariffs remain in place for the remainder of 2025. Any modifications to such tariffs or any new tariffs could have a material impact on the company's future financial results and guidance. 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 full-year growth rates refer to continuing operations.

With that, I'd like to turn the call over to Bernard for his comments.

Bernard Zovighian: Thank you, Mark. And welcome everyone. Thank you for joining us today. Before getting into the numbers, let me highlight the many significant achievements we have made across the company. When we introduced our Sharpen Focus strategy, we did so in anticipation of an asymptomatic AS approval, the expansion of an Evoque launch, the expected introduction of the CPNM3, and our strategic entry into structural heart failure and aortic regurgitation. These areas represent large, and growing opportunities and we are just getting started. Our focus on structural heart has positioned the company for agile execution of our strategy and provides the foundation for sustainable growth.

It is supported by our conviction in mid to high single-digit TAVR growth over the long term given the undertreatment globally. The potential of our market-leading surgical valve franchise based on compelling ATR Resilia data. And finally, the significant patient benefit of our pioneering TMTT technologies. While TAVR is and will remain an important growth driver for our company, Edwards Lifesciences Corporation 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 call today, we will go into more details on the company's strong second-quarter performance, across product groups and geographies, and our confidence in the outlook for Edwards Lifesciences Corporation in the years ahead. 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 sales of $1.53 billion grew 10.6%, which was better than expected.

Based on our strong first-half 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% and adjusted EPS guidance to the high end of our original range of $2.40 to $2.50. Now I will provide some additional detail by product group for Q2. In TAVR, our second quarter of global sales of $1.1 billion increased 7.8% over the prior year. Growth was comparable in the US and OUS. On a global basis, Edwards Lifesciences Corporation's competitive position and pricing remain stable. TAVR growth in the quarter was better than expected as clinicians continue to adopt our best-in-class Sapien technology.

We are encouraged by the renewed focus on TAVR across the clinical community since the early TAVR data release last October. We are pleased with the recent approvals that make the CPNM3 platform the first and only TAVR to receive US and European approvals for the asymptomatic indication. These two approvals enable all patients diagnosed with severe AS to be evaluated and considered for treatment with TAVR, regardless of symptoms. The evolution of policy and guideline changes together with the potential of a new US NCD will provide important catalysts resulting in a multiyear growth opportunity for TAVR overall. And we remain focused on continuing our deep commitment to advancing evidence for AS patients with three important studies.

In May, at the EuroPCR conference, results of the Optum real-world study of more than 24,000 patients demonstrated that intervening on aortic stenosis before symptoms develop reduces the economic and resource burden on the healthcare system and improves patient outcomes. Additionally, compared with asymptomatic severe illness, delaying treatment until the disease progressed resulted in a higher rate of death within one year after aortic valve replacement. Alongside data from the early TAVR trial, these results reinforce the value of early referrals and evaluation by your heart valve team for all patients with severe AS.

Second, at the New York Valve conference last month, ten-year data from the PARTNER 2 study was presented, underscoring the excellent long-term outcomes and durability of Edwards Lifesciences Corporation's TAVR platform. This is the first FDA-approved TAVR study to report ten-year follow-up and represents the largest TAVR patient cohort studied for ten years. Finally, new data from the DETECT AS study was also presented. The subanalysis demonstrated that electronic provider notification or ECHOALERT increased both treatment and survival rates in all patients with severe AS. Looking ahead to TCT in October, we expect to be the first company to present seven-year data studying a low surgical risk cohort of severe patients.

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, this significant body of high-quality science underscores the excellent clinical outcomes delivered by Edwards Lifesciences Corporation's premium Sapien technology which has benefited over one million patients around the world since its launch. In the US, we are pleased that the clinical conversations about the successful early TAVR trial have brought a renewed focus to streamlining the management of patients with severe AS, enabling closer follow-up and more timely treatment of patients with aortic stenosis.

Outside of the US, we continue to focus on the value of our differentiated technology and increasing therapy adoption, especially in areas where many patients go without care. In Europe, the exit of a competitor resulted in a rebalancing of market share and a modest contribution to our sales. In Japan, sales grew in the mid-single digits, an improvement over last quarter and consistent with the company's total sales growth in the region. Rest of the world, growth remains strong. In summary, we are raising our full-year guidance to 6% to 7%, up from previous guidance of 5% to 7%.

Longer term, we are enthusiastic about the mid to high single-digit growth opportunities in TAVR supported by the recent early TAVR indication approvals, future guideline and policy changes, including an updated NCD, and finally, the potential to serve patients with moderate AS. I also want to take this opportunity to share with you that Larry Wood, who has been leading the TAVR team, has made the personal decision to depart Edwards Lifesciences Corporation in early September and pursue a leadership opportunity outside of cardiovascular. We sincerely thank Larry for his forty years of dedication to Edwards Lifesciences Corporation and our patients. During that time, Edwards Lifesciences Corporation's TAVR has helped more than a million aortic stenosis patients around the world.

As we heard today, TAVR is well-positioned for continued growth and success. And we are pleased to announce that Dan Lipps will assume leadership of the TAVR franchise globally. We are fortunate to have a very well-prepared successor who has more than fifteen years of deep TAVR experience in the US and Europe. Most recently, Dan has been leading the APAC region with responsibility for our full portfolio of technologies. So we are very confident that the TAVR leadership team will build on our momentum and deliver long-term success. Dan and Larry will work together on a smooth transition through early September. Now let's turn to our TMTT product group.

Our unique portfolio of repair and replacement therapies to treat mitral and tricuspid diseases drove another quarter of impressive growth, with a meaningful contribution to overall company performance. Second-quarter sales of $133 million grew 57%, 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. PASCAL and EVOQUE were both significant contributors to growth as they continue to scale. With the addition of CPNM3, Edwards Lifesciences Corporation is uniquely positioned to meet the broad and diverse needs of patients with mitral and tricuspid valve diseases.

Mitral TEER procedures continue to grow in the double digits globally, and the developing tricuspid opportunity is growing much faster across both repair and replacement. Adoption of our differentiated PASCAL technology remains strong in both new and existing centers around the world. 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 1,000-patient European MISCAL post-approval study in patients with both DMR and FMR. Publications and presentation of data from this study continue to demonstrate the excellent clinical results delivered by the state-of-the-art PASCAL technology.

The EVOQUE commercial launch is progressing well in the US and Europe, with excellent real-world outcomes for patients in line with the successful TRISCEND II clinical trial results. Consistent with our science-based approach to establishing categories for the many patients in need, we are continuing to generate evidence for EVOQUE. At the recent New York Valves conference, results from a real-world 176-patient study across twelve centers and five countries in Europe demonstrated excellent clinical outcomes that were similar or better than the results shown in TRISCEND II. We look forward to an EVOQUE late-breaking sub-study at next month's European Society of Cardiology Conference. We have also begun enrollment in the large TRISCEND III clinical trial in Europe.

This prospective multicenter study of up to 500 real-world patients with TR disease will track clinical outcomes out to five years. In summary, for EVOQUE, there is a great demand for the therapy, and we are continuing to develop important evidence to support expansion globally. We are pleased with the addition of our latest TMTT technology, the pioneering Sapien M3 valve, which received CE Mark approval in Q2. Clinical feedback, while early, has been positive. We will deploy a differentiated high-value model to support therapy expansion with a continued focus on ensuring access and excellent outcomes. We continue to expect that results from the ENCIRCLE pivotal trial studying Sapien M3 will be presented at the TCT conference later this year.

And we now expect US approval of Sapien M3 to follow in the first half of 2026. In closing, with PASCAL, EVOQUE, and the recent CE Mark recipient M3, our vision for TMTT has developed into a growth portfolio of groundbreaking, fast, catalytic repair and replacement technologies meeting the complex needs of underserved patients with mitral and tricuspid diseases. We are committed to bringing these impactful therapies to the many patients in need around the world. We are pleased with our year-to-date performance in TMTT and remain on track to achieve our full-year sales guidance of $530 million to $550 million. In our surgical product group, second-quarter global sales of $267 million increased 6.8% over the prior year.

We continue to see positive procedure growth globally for the many patients best treated surgically with our premium Resilia technologies, including INSPIRIS, MITRIS, and KONECT. Our surgical team is making progress around the world, advancing important innovation for patients. We continue to see the impact across the clinical community from the recently presented Resilia ATR data demonstrating excellent durability and better freedom from reoperation due to structural valve deterioration compared to non-Resilia valves. We are also pleased to have received CE Mark approval for KONECT in Europe during the quarter. For the full year, we continue to expect mid-single-digit sales growth in our surgical product group. And now Scott will cover the details of the company's financial performance.

Scott Ullem: 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. Our double-digit sales growth drove adjusted earnings per share of $0.67. Our GAAP EPS for the quarter was $0.57, which included a one-time charge related to our portfolio of external investments. A full reconciliation between our GAAP and adjusted earnings per share for this and other line items is included with today's release. And now I'll cover additional details of our P&L. 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.

This year-over-year change was driven by additional manufacturing expenses related to the expansion of new therapies as well as foreign exchange. We continue to expect our full-year 2025 adjusted gross profit margin to be within our original guidance range of 78% and 79%. Our guidance continues to assume some pressure from the weakening dollar and the impact of announced tariffs, albeit less than initially expected, as well as the acquisition of GenaValve, which has not closed yet. Selling, general, and administrative expenses in the quarter were $502 million or 32.8% of sales compared to $448 million in the prior year.

We expect increased SG&A spending in the second half of the year due to deferral of certain spending year-to-date as well as anticipated spending related to GenaValve. Research and development expense was $276 million in the second quarter, or 18% of sales, compared to $272 million or 19.8% of sales in the same period last year. This increase in spending and decrease in R&D as a percentage of sales reflects our strategic prioritization of investments in our expanding structural heart portfolio. The year-over-year improvement in second-quarter adjusted operating profit margin of 28.2% benefited from our better-than-expected sales performance and the deferral of certain spending to the second half of the year.

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 GenaValve. We continue to expect full-year 2025 operating margin of 27% to 28%. 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. Turning to taxes, our 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. We continue to expect our 2025 tax rate excluding special items to be between 15% and 18%.

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 June 30th. Edwards Lifesciences Corporation currently has approximately $1 billion remaining under its share repurchase authorization. Average diluted shares outstanding during the quarter were 588 million. 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. FX rates negatively impacted our second-quarter gross profit margin by 60 basis points compared to the prior year.

Relative to our April guidance, FX rates had a nominal impact on second-quarter earnings per share. Approximately $30 million upside to full-year 2025 sales compared to the prior year. I'll finish with comments related to their sales and EPS guidance. As Bernard mentioned, we are increasing our underlying growth rate guidance for TAVR to 6% to 7% driven by strong performance, and our sales guidance range for TAVR to $4.3 billion to $4.5 billion to also reflect stronger OUS currencies. We are also increasing our total company sales growth guidance to 9% to 10% with sales of $5.9 billion to $6.1 billion.

We now expect full-year adjusted earnings per share guidance at the high end of our original range of $2.40 to $2.50. Regarding GenaValve and the potential impact on our P&L this year, we are reaching the end of the regulatory review process and expect a decision soon. We remain hopeful that we will be able to close the acquisition during the third quarter. For the third quarter, we're projecting sales of $1.46 billion to $1.54 billion and adjusted earnings per share of $0.54 to $0.60. And with that, I'll pass it back to Bernard.

Bernard Zovighian: Thank you, Scott. We are pleased with our strong performance in the first half of 2025, and our outlook for the full year. The milestones achieved showcase the strength of our focused strategy to drive breakthrough innovation in pioneering and leading categories. Looking ahead to 2026 and beyond, Edwards Lifesciences Corporation is positioned to transform care for the many structural heart patients in need. We are confident that our unique innovation strategy supported by the many important catalysts across our portfolio and the exceptional work of our sixteen thousand employees around the world will deliver significant value to patients, the healthcare ecosystem, and shareholders. 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 one plus one follow-up to allow for broad participation. If you have additional questions, please reenter the queue and management will answer as many questions and participants as possible during the remainder of the call. Diego?

Operator: Thank you. And to ask your question, please press a confirmation before pressing the star keys. And once again, please limit yourself to one question plus one follow-up. Our first question comes from Robbie Marcus with JPMorgan. Please state your question.

Robbie Marcus: Oh, great. Good afternoon and congrats on a very nice quarter. Maybe to start, two for me. First one, US TAVR. Looks like when I try and back in based on the color you gave, it was a little better than the street expected. So what really drove that? Was there asymptomatic already coming into play or any other trends or color you could add? Would be helpful. Thanks.

Bernard Zovighian: Well, hey. Hey. Hi, Robbie. You know, thanks, you know, thanks for the question. Yes. You know, the quarter, you know, came, you know, better than expected, you know, for TAVR. And, you know, we are very pleased about, you know, what we have seen. You know? If you big picture, you know, we are a leader in TAVR. We have been, you know, focusing on lot a lot on bringing, you know, evidence. And this early TAVR study drove a lot of conversation among the clinical community. So what we have experienced, you know, since, you know, the approval is, I only focused. On TAVR. A renewed focus on how to better manage, you know, these patients.

How to, you know, make sure that these patients are timely, you know, taken care of. So all of that together you know, basically, we created, you know, catalyst in the TAVR 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, positive 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.

Larry Wood: Thanks, Bernard, and thanks, Robbie, for the question. Yeah. I don't think we've we're seeing a lot of asymptomatic patients come in. I think in centers that participated in the TAVR 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 dataset was very powerful and you know, we know in the system from a lot of the work that Samuel Lai 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 I think people are paying a lot more attention to these patients, and I think this 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, you know, obviously, we're very pleased with the quarter.

Robbie Marcus: Great. Maybe a follow-up from me. US TAVR obviously gets a lot of attention. And we hear less about outside US trends. So maybe you could talk about what you saw outside the US in Japan and particularly Europe with the exit of your competitor. Thanks.

Bernard Zovighian: Yeah. Thanks, you know, Robbie. You know, maybe, you know, I'm going to take you this opportunity to ask, you know, Dan, you know, to answer this question. We are very fortunate, you know, to have, you know, amazing talent at Edwards Lifesciences Corporation, and Dan Lipps is going to come here in the US and lead you to a better franchise. So maybe, you know, Dan, you want to answer this question? Sure. Thanks.

Dan Lipps: Bernard. Hopefully, you can hear me well. First of all, it's been a real privilege working alongside Larry so closely for the last fifteen years. Firstly in the US, then in Europe, and now most recently in Asia. And given that I led the TAVR team in Europe, maybe I'll start I'll start with Europe. The rollout of our S3 UR platform is progressing really nicely, and the feedback from physicians continues to be very positive. But I guess what we're most optimistic about is the recent asymptomatic indication, and we think that's gonna be a real game changer for the longer term. Switching to Japan, is an important market for us.

We remain very dedicated to expanding our therapy there The under treatment is significant, and the elderly population there is very substantial I 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. And beyond that, we continue to grow in a very nice manner internationally beyond Europe and Japan. So hopefully that answers your question.

Bernard Zovighian: Thanks, Dan, and thanks for the question, Robbie. Thank you.

Operator: Your next question comes from Travis Steed with Bank of America. Please state your question.

Travis Steed: Hey. Thanks for the question and congrats on a good quarter. I wanted to ask about EPS both more kinda shorter term. Why not maybe raise the EPS even more at this point? Tariffs are probably what? A couple cents better and you beat the street by five cents. And then kinda longer term, when you think about EPS leverage, do you think you can grow EPS faster other than the ten percent revenue growth that you kinda laid out going forward?

Scott Ullem: Yeah, Travis. It's Scott. Thanks a lot for the question. 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. 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 GenaValve where we expected to have a negative effect on earnings per share. When it closes, that gives us some cause for pause. 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 $2.40 to $2.50 all the way to the high end of $2.40 to $2.50. In terms of longer-term EPS expectations, you know our you know our plan. Which is to, on average, grow the top line double digits and to get some leverage on the bottom line beyond that. So our expectations and our intentions have not changed, and we're gonna stay focused on not just delivering short term in 2025, strong earnings per share, but longer-term consistent sustainable, growing EPS as well.

Travis Steed: Great. Thank you. Maybe just a question on the international competitor that's actually in the market. When you think about the share you're capturing there, is it in line with your international share above or below just kinda get a sense for kinda the that opportunity. First order of business when 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 was sort of sort of really our focus, and that's what drove a little bit of the of the benefit that we saw there. 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 speak to the value of our technology and why it's worth, you know, our price point. And that's what the team's 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 continue to put data on the board that I think highlights the advantages and why our platform's worth what we charge for it.

Travis Steed: Makes sense. Thanks a lot. Congrats.

Operator: Your next question comes from Larry Biegelsen with Wells Fargo. Please state your question.

Larry Biegelsen: Good afternoon. Thanks for taking the question and congrats on the nice quarter. Larry, congratulations on all your success at Edwards Lifesciences Corporation. You're going out on a high note. And it's hard to imagine, Edwards Lifesciences Corporation without you. It was a pleasure working with you, and I wish you the best of luck in your new role. So I'll start with a question for you. Larry, when do you expect CMS to reopen the NCD and you know, what's the likelihood of moving to a single operator and if that happens, what do you what do you think the implications are? And I had one follow-up.

Larry Wood: Yeah. Thank thanks, Larry. Thanks for your kind words, and thanks for your question. You know, we think the time to open the NCD is now. You know, the ball's really in CMS's court, but, you know, we're we're gonna continue to work with them and provide information to them and, you know, hopefully, it opens sooner rather than later because there's a number of changes that need to be made. You know, the first one is making sure that asymptomatic gets covered. So that all asymptomatic patients are eligible for therapy across the country. So that's really important. But know, this technology has 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 gonna 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 challenges that we have now. I think the big advantage too if we go to one specialty doing the procedure is in essence, you would have two teams now that could do procedures. Could have a surgeon lead TAVR team and you could have a cardiology lead TAVR team. Which would allow people to optimize their patient flow through.

So think that'd be a big benefit and when we look at the data, the conversion now from TAVR to surgery 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. We just need to continue to work with them and, you know, and make the case for it. And hopefully, they open it sooner rather than later.

Larry Biegelsen: That's helpful. And Bernard or Scott, you said a goal of ten percent. It's a follow-up to an earlier request You set a goal of ten percent annual top line growth. Think fifty to a hundred basis points of margin improvement. And double digit EPS growth in twenty six and beyond. You have a lot of momentum now. You have Catalyst coming like m three and hopefully Genavout. Is there anything you're aware of today that would cause you to be below those goals next year? Thanks for taking the question.

Bernard Zovighian: Oh, okay. Thanks, Laurie. Let me start, and I'm sure 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 a great quarter. We are on track to have a have a great year, you know, better than expected. Know, we have so many catalysts across, you know, the company. In TAVR, in TMTT, in surgical, You know, we have some new businesses also, you know, coming our way. We have 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 at investor conference, you know, last year. You know, we saw that coming. You know, we knew it was coming. And we are making all of this happen. I am super proud of the team we have. You know, this team is amazing. You know, we have, you know, a very bold, you know, strategy. Altogether. We have the only company think this kind of bold strategy, a very unique innovation process, and we are executing in a very flawless fashion. With make things happen.

And that's truly, you know, who we are as a company, and so I'm very confident about our commitment here, you know, for twenty five. Twenty six, and beyond. You know, Scott, if to add? I share that view. We feel positive about not just the top line, but 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 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 twenty six. But, you know, we're just based upon all the different scenarios.

We're feeling pretty good at this point in July of twenty five as we look ahead to the full year twenty six and the ability to meet those annual average targets that we laid out in December.

Bernard Zovighian: Thank you.

Operator: And your next question comes from David Roman with Goldman Sachs. Please state your question.

David Roman: Thank you, and good afternoon, everybody. I wanted to start on the TMTT business and maybe very specifically around Evoque. Have been a variety of publications. I wouldn't call them studies necessarily. Questioning some of the safety and real world outcomes around Evoque. But I think 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 were seeing better outcomes. Can you maybe just elaborate a little bit on what you're seeing from a real world evidence standpoint as it relates to adverse events surrounding Evoque and when we might be able to see some of that data in a more public setting.

Bernard Zovighian: Yeah. No. Sure, David. I really appreciate the question. You know, I think for Evoque, we continue to see a lot of excitement around Evoque. We see a lot of physician excitement. And we still see a lot of patient excitement, how the technology is changing their life. I think we saw in Trison too, that there's a that 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 Trison two.

So for instance, even at the very recent New York Valve's conference, we saw coming out of our European almost, you know, almost two hundred patients We saw initial results coming from that study at twelve centers across five European countries, results that were equal to or better than trice than Tricent two. Beyond that, we also in New York, the health had a one year study on echo gradients that continue to show how the right ventricle and the heart gets so much better with Evoque. And you'll see, I think, coming up both at ESC, you know, some more sub analysis on Evoque, and going in future, you'll see TVT registry analysis.

But I think for us, it's a continued data set after data set showing similar real world outcomes that we've seen from Trison too.

David Roman: And maybe you don't may maybe David, you know, to add something on what, you know, David just said, you know, in a in a in a typical, you know, Eduardo fashion. You know, the VIN team is continuing to innovate. So you we have a gen one today. We are very pleased with gen one. But the same way we did with Sapient. We are Gen five today. You know, you can expect, you know, you've got Gen two, Gen three, Gen four. And each platform will be better. The physicians, will have, you know, more experienced. We will bring, you know, more evidence. We will have, you know, more innovation.

So you can expect, you know, the same kind of trajectory where you know, we are going to create, you know, this amazing category for so many patients in need. But right now, the demand, like Devin said, is very high. We can barely know, fulfill the demand.

David Roman: Okay. Very helpful. And then maybe, Scott, appreciate the continued emphasis on the P and L. And maybe just kind of summarizing things longer term. I think if you look back over Edwards Lifesciences Corporation the past several years, at one point in the in time, the company was generating ten percent plus top line growth with low 30s operating margins. Is it realistic to think that is the direction you aim to take the business now and that the company did operate a thirty percent plus at one point and ten percent. And given the totality of drivers you have here, that's a reasonable profile to think about longer term?

Scott Ullem: Yeah. I think at this point, we're not gonna set a specific target. You know, thirty percent is a nice round number, but we're not really focused on hitting a three handle so much as we are focused on increasing our operating part profit margin by fifty to a hundred basis points annually going forward starting in twenty six.

Bernard Zovighian: Thank you.

Operator: And your next question comes from Matt Taylor with Jefferies. Please state your question.

Matt Taylor: Hi. Thanks for taking the question. I just wanted to ask a couple follow ups on some of the Nuance TAVR dynamics that were asked about before. One is, you know, would you venture a guess at what proportion of the Boston Scientific exited sales you could get you know, what's kind of your fair share of that And then Larry was asking before about the NCD, and I understand the motivation is to open that up. But what actual impact do you think that could have on capacity and volumes if it were to change to one operator and to reduce the volume requirements, etcetera.

Larry Wood: 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 Boston, you know, the biggest thing is that there's a difference in price point here, and I think this has been one of the things that we've been talking about for a while that I'm sure everybody's aware of. You know, we our platform is backed by the most evidence by long term data, by our long term clinical trials.

I mean, we just put out ten year data from our partner True trial that shows, you know, the incredible durability of our of our platform and low reinvention rates. And, you know, what we really need is people to value that long term data and value all the things that our platform brings to the table rather than making their decisions based on price. You know, we're gonna have to see how the market plays itself out. If they say price focused, then they'll just move to another similarly priced product. If they you know, if they if there's a lesson to be learned from this, 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 we get to the end of that. You know, as it relates to the NCD, you know, it's impossible to know what they're gonna do with operator requirements and it's impossible to know what they're going to do. With facility requirements. But given where this procedure has come and how safe it is and the term data and we've already proven that we can roll it out to than eight hundred and fifty 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 have the expertise.

How many they allow us to open will determine how much it'll 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 know, a million know, one point two million patients treated, with our platform alone. We seem to have a lot of data and 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.

Matt Taylor: Thanks, Larry. Congratulations.

Operator: Your next question comes from Anthony Petrone with Mizuho Group.

Anthony Petrone: Thanks. And I'll I'll echo Larry Congratulations. Great working with you, and good luck on the net. The next chapter here. May maybe a little bit on the US tab or backlog. It typically sits at around somewhere in the three to six month range in and with asymptomatic not being in there in this quarter, it seems like at least something changed at the backlog you know, was able to be mined a little bit more efficiently. So maybe just a little bit on TAVR backlog in the US and maybe did you see any workflow improvements And I'll have one quick follow-up on Mitra.

Larry Wood: Well, thanks, Anthony, and thanks for your kind words. You know, I think what you're calling a little bit of backlog there. I don't know the we would necessarily 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 two specialties. They have to be scheduled for multiple visits. They have to get a CT. And there's all those things that they have to go through the process.

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 three to six 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 know, I think we are seeing now is just a really 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. 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 timely treatment.

So think that's what we're seeing now, but it's gonna take a couple of quarters to really quantify this. And, you know, that's what 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 opened the meeting with the early TAVR data. There was a huge debate about how patients should be referred, and then Samuel Herrera talked about tech AS and 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 mindshare standpoint.

Anthony Petrone: And then a quick follow-up on Mitra, is just, you know, you think about Mitral following TAVR severe symptomatic is kind of the on label indication. The penetration in severe asymptomatic is marked in the low single digits. And Abbott's out there with the repair MR study, which I think reads out early next year. And so yeah, where do you see severe asymptomatic for mitral for minimally invasive in terms of penetration? And what do you think can happen when we get more data potentially from competition here early next year. Thanks. No. Sure. Appreciate the question.

Daveen Chopra: If you look at the treatment of vital disease, we see that the there's a huge number of patients with mitral disease. Very similar to what we see in the severe symptomatic aortic stenosis numbers in the US. But the actual number of treatments are much smaller. As a result, we're 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 of a tier angle, but I think we look about it 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, unfunctional etiologies where different technologies like repair and replace can help these technologies a little bit more differently. And so what we're starting to see in Europe, and we just got m three now, into our European market, is that m three is really adding treatment to patients who didn't have treatment before. I know you're speaking a little bit about it from an asymptomatic or other kind of thing.

I guess I'll just speak about it from a severe symptomatic group where there are tons of patients out there who, tier, unfortunately, is not a great solution for and is uneligible. And with m three now, we have can treat a larger number of people. And we're excited that with m three 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 mitral. So for us, I understand how you took it from your angle.

I guess I'll put it on the we have so many patients coming through the pool right now. They're such under treatment that people today with Michael disease don't have treatment that as we get repair, and replacement, we have a whole great number of patients to just help with these new solutions.

Operator: 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, Larry. Wish you all the best in your our transition. Maybe my first question, Scott, for you on the back half margins here. Is I know they're removing parts between FX, tariff, Can you just walk us through on what the implied back half gross margin is, nothing? The EPS guidance for CQ implies maybe a twenty five ish kind of operating margins. Am I am I looking at the right way on margins And if twenty five is the right number, are you assuming a full quarter of general impact

Scott Ullem: Yeah. There were there were several questions in there. Let me try to hit them I'll start with the last one. So for GenaValve, you know, our hope is that we get it closed in August. So we'd see some impact in Q3, full quarter of impact in Q4. That's in that's in the assumption for twenty five. In terms of margins, you know, FX has 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 two edged sword, lower gross margin rate, but higher EPS dollars.

And I think what was the rest of your question, Vijay?

Vijay Kumar: Sorry. Tariff. What is what is the tariff impact Essentially, I'm pretty sure I'm yeah.

Scott Ullem: And operating margins. So for tariffs, yeah, you know, 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 probably heard from other companies. In terms of op of operating margins, yeah, mid twenty percent operating margins for the second half of this year is the right modeling assumption. 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 GenaValve impact that you'd see. This has not changed from last quarter.

Last quarter, the same math for the second half around twenty five ish percent and same expectation now at this point.

Vijay Kumar: That's helpful, Scott. And if I may one more, You said double digit revenues and EPS for twenty six. Do you expect operating leverage for twenty six?

Scott Ullem: Well, first of all, we did not say double digit revenue for twenty six. We said that we feel good about the prospects as look ahead to twenty six. It's certainly our target, as you know, because that's our annual average revenue target, but don't assume that ten percent is gonna be the bottom of our guidance range when we get to the December investor conference. In terms of operating leverage, yes, we've said, we're we're targeting fifty to a hundred basis points of EBIT margin on a constant currency basis increase starting in twenty six.

Vijay Kumar: Thank you.

Operator: Thank you. And your next question comes from Matt Miksic with Barclays. Please state your question.

Matt Miksic: Hey. Thanks so much for taking the questions. I guess, on a really strong quarter. Echo everyone's comments. Larry, it's and Greg working with you on Hope we could continue to connect in your in your new adventures. So maybe following up with some of the questions on average strength in the in the quarter. How should we think about that Q2 strength as we move into what's kind of a typical seasonal Q3 and then also just any comments on, you know, Japan is down, so I think Europe is strong. But rest of world, really looked like it accelerated. This year. From last year. Maybe any comments on that?

I may have one follow-up on team if I could.

Larry Wood: Yeah. Thank thanks, Matt. Thanks for your kind words. I think you know, we adjust our guidance accordingly, so we try to account for all of the all 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 tend to see it a little bit globally. But all of that is factored into our guidance, and, you know, I think we feel great about the momentum and where we're going. And so know, hopefully, that continues, and that's what we expect.

You know, Japan, we remain focused on know, a little bit of share recapture there and reaccelerating that market and you know, that's really where we are there, and we're continuing to work on that. And I think we're all committed to driving that in that manner.

Matt Miksic: Sure. Yeah. And rest of world. That was the part that I saw that really popped up here. This year.

Bernard Zovighian: Yeah. You know, yep. That TAVR is a global business, you know, Matt. You know, we are very pleased about that. You know, we are present, you know, in almost, you know, in every country. It's a global business. It's growing everywhere. It's doing going well. So, yes, you know, we mentioned the rest of the world because it is not just about the US. Even Vogue, you know, the largest region for us are the US, Europe, and Japan. But rest of the world matter, and it's doing very well.

Matt Miksic: Quick. And then just I cut on TMTC. Know, there's a lot of enthusiasm coming out of New York valves. It's obvious that you have a lot of Broadway here as what you know, you'll be the only provider. I think for some time, a repair and replacement in tricuspid and mitral. I know you're getting a lot of attention to those accounts. Maybe talk about you know, what it is not competition at the moment anyway. Across all of those indications. You know, what were are some of the places you're spending your time Is it new centers?

Is it imaging and you know, radiology, you know, support, you know, training, maybe help us understand what are the gating factors to growth as you kind of as you say work as fast as you can to meet that demand? Thanks.

Bernard Zovighian: Yeah. Matt, you know, 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 replace replacement technology for many years. And this is the result. Of who we are as a company. And our unique innovation strategy. You know, we are bold, We are long term focused. And, you know, we invest, you know, where nobody else is investing. So eight years ago, we believe in this portfolio. And today, you know, indeed, you know, we have, you know, this portfolio, and we are the only one who's going to have, you know, this kind of portfolio 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, Daveen, you know, you want to talk about where are you spending your time in auto Visa? No. I'll add a little bit more to it.

Daveen Chopra: 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 for us, right, yeah, there's a part about technologies we've been talking about. How do we launch these new technologies for the first time and get them to patients to add pay add new treatment? And then, yes, there's new geographies around the world. We're launching Pascal in the for the first time in countries around the world and eventually Evoqua and eventually three. Will then follow-up. And then there's new clinical data that's coming out. We look forward to the clinical data at TCT, etcetera.

And to do all this, you've gotta, you know, have that great market access, making sure you have not only regulatory approval, reimbursement, your point is great physician training, etcetera, to ensure that our field force is trained well and physicians are trained well. So it's it's hard to pinpoint just one area, but I think the hope what I give you is that we're added we're putting these different layers on top of each other. And they're gonna lead to layer or catalyst after catalyst of growth as we keep moving forward. Across therapies, geographies, etcetera.

Bernard Zovighian: Thank you.

Operator: And ladies and gentlemen, we have time for one final question, and that question comes from Chris Pasquale with Nephron Research. Please state your question.

Chris Pasquale: Great. Thanks for squeezing me in. I wanted to circle back to the MCD. 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? 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 steps that need to take place? And if it's the latter, what's the timeline we should think about for those?

Larry Wood: Yeah. Thanks for your thanks for your question, Chris. In terms of, you know, how things have changed from a practical perspective, 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 the facility requirements. And so don't know. I have a lot more to add to that. In terms of how the local max cover this, 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 cab or clinical trial, I'm not aware of anybody having difficulty getting their patients covered. So don't know how much of a headwind it is, but that being said, know, we do know that there's some big hospital systems that are saying we're gonna wait till the NCD is updated because we simply don't wanna take the risk of having cases rejected by a local MAC. And so this is why we've always said, that asymptomatic is gonna be a little bit of a slow burn. First, you're gonna 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 one of these things, I think, is incrementally going to change how patients get managed and why we've always said that we think this has you know, it's it's not gonna be a step function, but it's gonna be a long time contributor to what we're doing as we as we streamline these things. In terms of Europe, 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 one thing.

And so we do have the CE Mark. We just recently received that. So that really is what starts the process. And so having those approvals, you know, both FDA and CE Mark, us a unique opportunity to engage on guidelines It gives us the opportunity to engage with the reimbursement groups and know, make sure this is covered for patients. But know, we just got this approval literally, you know, like a week ago. It's probably a little early in the process for us to be very definitive. But it gives us a license to go start having those conversations because it's now on label.

Chris Pasquale: Great. Thanks, Larry, and best of luck with your next adventure.

Operator: Thank you. And we have reached the end of the Q&A session. I'll now hand the floor back to Bernard Zovighian for closing remarks.

Bernard Zovighian: Okay, everyone. Thanks for your continued interest in Edwards Lifesciences Corporation. You know, Scott, Mark, Cindy, and I, welcome any additional question by telephone. Thank you so much, and have a great day.

Operator: Thank you. And this concludes today's call. All parties may disconnect.