EW - Earnings call transcript Q2 2018 | Edwards Lifesciences Corporation

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Operator

Greetings, and welcome to the Edwards Lifesciences Second Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, David Erickson, Vice President-Investor Relations. you. Thank begin. Please

David K. Erickson

you thank us today. Welcome, for and joining

included trading, after and second our schedules. close And that during accompanying use release regular for the of we Q&A. are results quarter these remaining call then be released the financial we'll press and Just today's discussing in the XXXX time we'll financial results,

Our CFO. Ullem, CEO; and presenters on Scott today's call are Mike Mussallem, Chairman and

and are making financial trials, based new aren't that begin, estimates, any during obligation do remind today's forward-looking I'd update currency statements as will we foreign limited for speak not we them projections. clinical and that to only after Before approvals, made, product of and opportunities, you the competitive which be we on but assumptions matters These guidance, like call These on statements include product and to undertake fluctuations. statements date today. expectations to reimbursement are they

which Also, our organic when are actual and and Additionally, differ to important all risks on differences filings, financial Otherwise, XXXX of at found non-GAAP the information concerning we statements measures. product these Form materially. are Edwards.com. adjusted, our results. in available involve we and referring other could safety use website the a uncertainties SEC on our that reminder underlying, release, and may XX-K results GAAP that cause annual our quick are press Information be to factors could our we cause report terms referring that to

Mussallem. website. non-GAAP call turn And press our in and Additional over Mike? our today's the of use included I'll is about information to Mike measures now, release

Michael A. Mussallem

$XXX underdiagnosed forecast. by Bigger underlying Underlying and digit up life-saving growth picture, our to performance million structural XX% growth XX% second We can million. XX% which with pleased grew and quarter reflects an our to basis, increasing of and on to Total that the consistent strong royalty committed year quarter therapies undertreated strong lower line $XXX our driven portfolio. delivered broad-based by of and full organic were therapies, benefit. double underlying compared innovative offset more in across to Thank Edwards In valve remain awareness sales therapies. revenues. growth we were sales expectations with sales even sales innovative you, XX% adjusted David. We're global sales experienced robust patients so over the prior heart disease is transcatheter growth, heart second largely organic providing partially year, report

increased continue In growth country continued slightly total result spectrum year, centers of global the a mix. in our TAVR XXX due globally approximately adoption favorable was the quarter the outside decline fuel network lower U.S., while the grew versus and of mid-teens the estimate U.S. comparable. the our global average a procedure as therapy TAVR prior in selling across growth hospitals. growth to Strong of bit price procedures in share We for procedures second was a broad Our to to grow mid-teens the

a large show of aortic are As for being physicians not number treated to month, evidence patients last presented diagnosed TVT continues at who stenosis.

for expect new enable Protocol, We to management an we meeting consider inputs followed other as identify will listened take and wide pathway Trial convened efficient introducing ACC This the to be National and presentations requirements presented a PARTNER from Medicare X PARTNER it Yesterday, the Trial a to CMS streamline Access for the begin March range panel the of Coverage Determination, the by are stakeholders care continue shapes We late process. of to data to the U.S. CAP, X hospitals patients NCD. to or anticipate in XXXX, along year. including help or with panel's U.S. our and of to third capabilities Services consideration Edwards. into still from comments quarter, receipt patient panel updated programs. for a the risk that indication limited in volume Centers procedural low properly TAVR Medicaid the Continued at the

this to We be sometime over expect year. finalized next the

We have outlook be estimated thoughtful our continued the confidence opportunity TAVR process, on positive the is showed impressive the U.S., growth mid-teens. and unchanged. Outside in to long-term procedures in

adoption see to believe we TAVR for relatively international excellent low. opportunities continue is of growth as We still therapy long-term

this years quarter XX introduction. to in impressed we're growth TAVR Our after therapy Europe, underlying more country In the even that grow procedures XX%. nearly since digits every was the continue sales double than around across

systems, the low quarter. decline which of was platform TA our With in this profile expected advances we've the seen significant

share competitors We this to aggressively ceded have price in have discipline price to chosen region. who and maintained

While strong SAPIEN see highest our growth continue performance, demonstrate we adoption to with we added. to reinforcing our region, forward In new continues CENTERA being several the SAPIEN Ultra of to our X position X TAVR best-in-class leadership introduction year. look valves centers later our this Japan, valve with therapy clinical and

We remain in continue supplement receive Ultra XXXX. small track trial gain our to on to SAPIEN of X our to also on late track European to CE U.S. Mark valve regulatory a this is This enroll this patients regulatory clinical year. system later System in approval same submission and

the procedure drove to rate were system second are today, We Heart Surgical sales our to valve and Therapy, growth. continue we're commence third growth up U.S. and We the confident impact by who This TAVR fourth of the to on underlying from who adoption TAVR completed underlying plan remains INSPIRIS our expect our opportunity in the excluding new Once THVT and leadership our products diagnosed option In accelerate experience. have faster position active growth patients the And new of quarter. RESILIA ability a X% observed sales continue our is again, summary, modification robust. aided commercial be an strong late our to second treating patients, basis, over adjusted maintain the TAVR benefit sales the would our an underlying million to at grows aortic than self-expanding for minor pleased Valve XXXX. introduction for to not delivery designed as valve this we of attractive premium or conversion. of end see consignment to XX% patients the valve trial younger to $XXX treated during were the There of are platforms we've total XXXX CENTERA of opportunity we're the quarter. billion by $X be pivotal aortic to a in higher the encouraged In that quarter trend physicians valve. early XX%, We in a many TMTT and quarter. in

this this We to our growth again year, in to tissue continue quarter. introduce of valve pending expect class reimbursement adoption INTUITY valves and approval, second system in contributed Elite in the of Japan our resilient the to new U.S.

surgical root Valve cause growth mitral the in expect underlying regurgitation. about year We heart examining this to valve remain we specific Harpoon of novel Heart Therapy sales the our degenerative to material therapy patients treat and are this XXXX full valve will plans quarter continue expect We Surgical have In once to summary, XXXX of do optimistic in a that completed. discovered last update X% sales X%. not impact complications and our introduction will on

extend by surgical HemoSphere. technologies. excited driven This patients to an for basis. provide heart surgical was by leadership to treatment we million performance and options adoption TAVR our expands, XX% Even were Critical Care, primarily strong grew the ability for more underlying product and about lines, innovative sales in quarter In across our our are as valve led on growth $XXX

the expected in U.S. platform, to and XXXX this quarter in receive be beyond. driver contracts. by next HemoSphere, new to feedback from excellent aided all-in-one our an important monitoring is and sales uniquely Additionally, GPO strong were clinicians generation growth continues

As clinicians intuitive, provides simple-to-use a a reminder, patient's status. offers HemoSphere touchscreen that platform an hemodynamic

or this to limited plan introduce later to a HemoSphere Prediction Acumen year. current becomes our Hypotension it to continue our available Index, utilizing on hospitals of platform until number We HPI,

Care in blood peer-reviewed minutes cases, occurred. pressure algorithm in potential we It journal, summary, we it to of to HPI full in XX growth our innovation line. strategy to XXXX at sales surgical higher expect and in predicted product concluded before in the X% acknowledged Critical dangerously was confident end Our HPI low XX% market-leading continue be that year remain of X%, recently this In underlying the Anesthesiology.

mitral as high we in be the that for believe treatment second limited therapies, positioned first-line and Turning level integration TMTT, as constrain with good our by by the advances encouraged quarter each to this mitral an platform without of continue Edwards' of progress many millions are patients. can continues the I invest treated in making will the which the in is The interest to We're tricuspid sales repair, supply aggressively $X being transcatheter we're therapy patients this of address from Beginning potential. Cardioband to progress programs portfolio some this platform supply We its Cardioband, reduction patients ongoing or but and approximately chain effective mitral with annular well mitral select and programs, and clinicians million. updates. cover – on are important options. transcatheter tricuspid encouraged commercially advances that today provided our we opportunity are to to believe into both by we there believe this and

and Valve early about Overall, at we're positive Enrollment in to remain SAPIEN to a a therapies, valve by million reach track opportunities expect in We're our for transcatheter our years. optimistic disease patients at mitral the full the Edwards' to transcatheter for achieving feasibility to study to good launching and We System, treating clinical of XXXX receipt repair, with of still least the our CardiAQ the enthusiastic sales $X billion tricuspid we're clinical more continue programs, XXXX. early Tricuspid on we and CE patients. pleased last PASCAL tricuspid scientific Reconstruction announce on encouraged we're and continue in clinicians Mark the each limited milestones goal with treat $XX remains the new MX, to In than we platform study. in the but we're XXXX. repair U.S., begin valve continuing track, in therapy and of replacement, both by CE begun XXXX. U.S. to the and launch treat year be CLASP presentations several this our continue target may the patients in to TMTT by transseptal have and from global TVT Cardioband next suffering to to In our of mitral year therapy of And the feasibility one In in progress a month. trial Mark for mitral see our supply. ramp second we we approximately half significant realizing expect in be opportunity

at updates Valve and turn now upcoming clinical the incremental hear I'll to Scott. the PCR over expect meetings. can And You call PCT to medical London

Scott B. Ullem

Thank you, Mike.

basis. provide adjusted million. We continued of performance the in been million sales At $XX $XX consignment we on for with million to in back XX% have sales foreign return reserve to strong this model our sales April, rates sales the higher. $XXX adjusted approximately an used quarter guidance would in conversion exchange inventory a U.S. Adjusted a Adjusted the grew sales surgical year's to exclude valves second underlying related

reminder, initiated introduction inventory quarter premium this streamline the hospitals. new the of to consignment model a As first management products we at complement and in our

conversion by year. impact by sales estimate conversion $XX XXXX to of million will complete end the the and to million expect $XX We this the

growth non-GAAP our rates. in conversions results sales these underlying excluding and are We

In GAAP is our valve per share just benefits XX.X% full strong mentioned. and earnings was several GAAP addition earnings and $X.XX. an with with of a adjusted XXXX. tax to on quarter which share conversion today's guidance tax grew our per performance, update results further in and A surgical second moment. includes included $X.XX, and I'll consignment I to cover earnings reconciliation provide our for between the on will per sales benefits adjusted now the share details I release, the details close

from impact quarter, continued same a compared year. driven was profitable by partially period exchange reduction XXX-basis investments XX.X% product in our XX.X%, to the by last adjusted This offset the margin gross foreign a profit operations, and in mix. our more For point was

of This SG&A and expenses the the lower and percentage euro of been strengthening ratio impact XX compared exclude dollar. consignment We the XXXX the of our prior million $XXX XX%. and or XX% between expenses increase basis if administrative continue was XX.X% the adjusted driven in a personnel-related year. of points you would special excluding have of to were profit Selling, sales, gross $XXX margin, The items, to by million quarter general expect against the as in the conversion. sales to be

year. continue the expect for the XXXX XX% $XXX primarily to in increase the sales our items, in Research trials. programs, million. development was valve year of to prior SG&A, heart quarter XX% including to transcatheter the special clinical We investments full XX% continued of grew over expenses between This spending excluding and be therapy and on result

year to full first second XX% be sales. be to higher XXXX, and the items, half is For expect of spending we continue half, than expected special and excluding XX% R&D, to between the

to taxes, to guidance expect year Turning our of special tax at items, range now full to XX%. XXXX the we end of rate, be our XX% excluding previous low

quarter's percentage in benefited nearly points share which with earnings from guidance. and benefited several employee our was line Accounting items. rate X compensation for $X.XX, This stock-based our rate per by tax

tax Most quarter a benefit to the settled excluded share. significantly, that provision. our Additionally, that benefited tax resulted million adjusted our per reported tax during this special items we earnings we audits quarter, in $XX from rate from

realized planning. U.S. stemming year-to-date million a from reform we tax Additionally, benefit nonrecurring $X updated

This tax combined per to quarter, benefit GAAP total items earnings share $X.XX. special by

during April estimate to Foreign full a million estimate foreign as $XX quarter define this exchange flow $XX rates year. our to less second million. compared our of have capital sales lift, the X%, Compared XXXX exchange increased or At This about per year impacted share by quarter, million. flow spending program place. lower to cash million, currency in sales year. current the the was We reflecting effective year. quarter earnings hedging prior to million less than now activities from current $XX compared million we rates, guidance, last prior $X.XX $XX $XX estimate than operating about second of this Free generated we cash rates $XXX by the is

billion. short-term Total Turning had of and billion. the debt to of equivalents $X.X At cash, $X.X we the our balance quarter, cash end sheet. investments was

of we into a refinanced advance we issued swap maturity in June, of During credit of bonds the to $XXX October facility XX-year our extended entered the strengthen this our and million quarter, In structure. and bonds capital outstanding our related bonds agreement.

a the during to we we As approximately income for for accelerated be XXXX of into the million. repurchase quarter million. now interest agreement for forecasted Average an expect our shares and debt expense $XXX April, revised position share year, interest net XXX our to entered result higher declined outstanding million. $X diluted In

XXX outstanding to XXXX expect We continue for shares XXX and average million. diluted between to be million

we As of approximately had share quarter, the of of million end our $XXX authorization. remaining the repurchase

the guidance, of billion Care. $XXX Heart $X.X billion $XXX therapy, and $X.X valve to heart $XXX $X.X million for to Turning our half Valve Therapy are ranges million to Those ranges for our first XXXX Edwards, we guidance rates shared sales the of given achieving billion exchange at our for strong in performance current confident each Surgical higher $XXX during for million total year, Investor the Conference billion. December. at transcatheter to in to remain of Critical the end million $X.X And

guidance our and first to year driven to $X.XX, earnings we up improvement of $X.XX This per a tax previous to performance guidance adjusted rate. our $X.XX For half are is share, raising from range lower our by full strong XXXX projected $X.XX.

Lastly, year continue of higher be of XXXX flow cash to we $XXX will full to original million at expect guidance million. $XXX our the free range to end

total project between earnings sales $X.XX. million adjusted to XXXX, quarter I'll of to it we $XXX share For that, $XXX million and and And back to the current rates, exchange with hand of at $X.XX foreign third be Mike. per

Michael A. Mussallem

and for continued in confident We the sales world. remain more passionate around Scott. helping growth, remain patients we our about strong Thanks, outlook

our focus while aggressively with future. technologies driving to leading innovative on organic We in growth investing continue

leadership well it of positions and with us that, product for And longer with Our we a David. over greater shareholder foundation continued to value robust turn as success opportunities. market pipeline pursue term dollar coupled back I'll multi-billion

David K. Erickson

Thank you, Mike.

we information and Before it updates on Irvine. number for I'd next Look will we months. headquarters limit that broad we at to as X, our the now. December corporate outlook you take the please for in and encourage include allow In well XXXX mark questions order our of calendars our event questions. ask up This X open to Investor participation, We're more latest questions, Conference few Wednesday, technologies our for host to in XXXX. for your when as ready you here will Tuesday

If additional call. we'll you have ahead. go queue, questions, remainder re-enter can and we please as during many the please the answer the as Operator, of

Operator

you. Thank

you. conducting be thank We And question-and-answer a will now session.

line of with comes Our from the Please Hopkins Bank first proceed. of Bob question America.

Bob Hopkins

if just questions, Great. the Oh. and taking to related thanks much, TAVR wanted Thank for I okay. very two ask questions. you

is the on in on pipeline, Europe this is question a First second numbers TAVR quarter. question TAVR the and a

So with for back this. missed what and update launch you. the in just But in apologize when be outside the outside full and the us both And are can your pipeline, I United Ultra, United Thank please I'll United on the you CENTERA States? will States on start expectations latest is States. update if also us

Michael A. Mussallem

Sure.

So minor was that what delivery Bob, had the commercial completed the we system third indicated, introduction quarter. and the pivotal in late planned the CENTERA trial we on to we that our and modifications U.S.

the commercial to pivotal going and third have of start the a introduction ready go we're quarter. by in So end the the to U.S.

and As we continuing submission. it to are to to supplement patients European we're Ultra, the in clinical relates using enroll small trial, regulatory our that

to CE year, we're regulatory XXXX. U.S., expect gain Mark track U.S. the on in this late and to So in the later receive approval we

Bob Hopkins

what real you no were changes from basically, there So previously. articulating

Michael A. Mussallem

right. Exactly

Bob Hopkins

that due slower the to here sounds, the wanted question all the like the a the Europe in color then volume? Was Is is got the United Edwards on ask second comments digits grew Just your this Or European today said outside was particular maybe you pricing? read? more what's in right worse to one that a competition. little TAVR pressures quarter, Last from that market quarter. growth. was I on maybe, on going that Okay. little competitive And and other double quarter. States It

Michael A. Mussallem

– like share from decision. a strategic change maintain short willing while to our to don't the on to and observed to way chose it's to – We've regional on cede we're careful our pricing, a We've of a and a competitors they're behavior, kind We quite – we price term not basis. be appears maintained made behavior Yeah. aggressively. aggressive this they control have in saw global operating some competitors kind some of who more We pricing. recent felt this pricing been over for we

see same behavior time So our we don't the from that all competitors.

Bob Hopkins

All right. questions more I'll others that. leave you. sure thank little on on I'm be follow-up pricing, to there'll but a

Michael A. Mussallem

Bob. Thanks,

Operator

you. Thank

Our next Goldman of question Isaac line Sachs. comes proceed. from with the Please Ro

Isaac Ro

Good Thank afternoon. All right. you.

year the Just a your with same Thank for the such why Can rest that of worse of you importance of topic share CENTERA to still talk Is this regards and that having confident? what the trend dynamic And range? about you're behavior and higher perhaps big a was throughout that a follow-up you're end available? the doesn't hit the Ultra little of to year the get competitive European surprise? about to confident that on a you you're you. course you that, extent of a can able this part as are part talk assuming bit Why of just a pricing. little change in that the of

Michael A. Mussallem

Isaac. Well, thanks,

us is finger for that have that CENTERA, fact be comfort well. to in We're your terrific then believe We And SAPIEN as going it. CENTERA's one. we position. and put that Ultra along expect Ultra that valve things coming launch the and our coming. really prepared strong it's quite Yeah, one we Europe, that to reinforce X the a You gives two on leadership systems, of

going Europe platform, touch is a best-in-class a so to when, the it's for And been place the think, be and, chance this now. time across SAPIEN we though of our valve change in years couple many in X for a to us is even customers dynamic

Isaac Ro

from question call us a the guidance that big does Thank key it, part as And Scott, rest product the And seem into to of the XQ. on pretty launches year, to that'll for you new little a updated give be a XQ just Mike. helpful that? a this cadence Can EPS maybe the your of Thanks, pickup sequential to you. addition. more extent are detail assumptions underpin the that for

Scott B. Ullem

beat recording to a guidance expect quarter, the the second midpoint $X.XX was couple expenses now from EPS in – increase we some is the of reflects $X.XX, the year. in that which Sure. half it or second and the really The in record the things. resulted One delay

second to in be contributing to in of so half is in part some R&D higher is going going up first catching – the on investment part in it half is to second go EPS spending. to to half EPS And going beat or that contributing beat to be more the and and of the

Isaac Ro

Okay. Got you. it. Thank

Operator

Thank you.

line of Wells with next Our the Larry Fargo. question comes Biegelsen from Please proceed.

Lawrence Biegelsen

Hi. you the Good two taking Mike, me question. afternoon. questions. big-picture let ask for Thanks Hey,

if MEDCAC the will and a your NCD, yesterday So NCD MEDCAC reopening if think you why. And thoughts question. follow-up you us the so, TAVR? positive net for had and be the the a And could I of give just the on

Michael A. Mussallem

a to of And we'd the about consensus. issues. us. but say, into That yesterday. believe lot, mixed key volume was – access Larry. take We a them about to look came surprising understands a think think that Yeah, the CMS that that deeply out and to Thanks correlations underserved. of consideration, There they'll lack was MEDCAC saw, they'll obviously, reactions and the also They're also at panel We those quality. not relates yeah. how they'll going deeply

believe we this long-term is So to really ultimately, a not thinking. our change that

and we're in by $X grow, plus adoption therapy continue the confident TAVR XXXX. expect billion to We opportunity of the to

Lawrence Biegelsen

to you the If out MITRA.fr there's nervousness this about XXXX, which no potential of ongoing of outcome that Mike, medical mitral will begin among your expected at talk notably but clinicians, to of in show only then life most and press. as reading group September. lot field? ESC benefits a reported impact and for a that'll Can how studies these know in questions. field benefit in And mortality Thanks and studies, (XX:XX) is several taking obviously for the the lot quality Thanks. you the at be COAPT hospitalizations, to the been example, There's expectations? impact TCT

Michael A. Mussallem

very to that, believe but XXXX TMTT more of continue be to a issue, be Negative from people could that design. are the aside perhaps will we beneficial, is the to than We believe by trial more result. opportunity successful going endpoint but regardless billion COAPT likely likely COAPT reach $X an point to the

something to of So – work to quality when I endpoints, rare closely it's pretty that design successful we an you deeply. you're very FDA that's a we life. impact on our have have think but very that products own with We impact going think it's have mortality, technology some when going

If a get that beyond today. what were actually probably impact, think above you to people I and is mortality anticipating are

Lawrence Biegelsen

for Thanks taking the questions.

Operator

you. Thank

next with Please Stanley. proceed. from comes Lewis the line Our Morgan David of question

David Ryan Lewis

a question maybe financial and a for strategic Mike. you, then just one Scott, for afternoon. Good

do Scott, look $X.XX if Just of guide, historical on your implies three upper the tier third your midpoint end range, you at quarter. kind of it I the earnings around in the the at cycling

So your of bottom for the range end gets of I'm Because curious, kind that you put outside cycling. would historical of you the just of of quarter? the earnings to what third sort sort

Scott B. Ullem

most influence tied really of just That's our expenses earnings the David, probably, That's when sequencing per share. during probably we going and to record third phasing to what's quarter.

from third CENTERA the those get events, and CAP some really from EPS quarter quarter U.S., but question. are to your events, introduction contributions in will We the to not fourth the

David Ryan Lewis

Mike, then, questions. two of thoughts, strategic clinical And Okay. just kind

made Have views at And appreciate first be some like protection. The your you're changed issues sounds We to detachment on your I ex-U.S. it comments move sort perhaps things embolic about of embolic track. market. around protection that one would Obviously your a PASCAL, all? of build competitors heard on

the to much. sort ask very PASCAL. in remain for those Thanks so Just you still why issues outlook and about of confident want

Michael A. Mussallem

Sure. Yeah.

any On valves the show used it that studied, Edwards it was system didn't the was with when benefit. acquisition,

X the data the low XX with And at in seen that very stroke so there's X% days. SAPIEN recall you've at rates past,

adding another it catheter, as that is as much adds belief our system, So delivery another erases. risk potentially

it. additional So not worth it's cost, for the

of important we So, be going an to don't therapy. the part think it's

relates it question, – As that that to PASCAL answer David? does

David Ryan Lewis

sir. Yes, Yeah.

Michael A. Mussallem

Okay.

So is PASCAL track, and PASCAL, to medical CE meetings. XXXX with as at the in product we Mark going. trial to results the and forward presented pleased that's expect it on having in the We plan launch we're way to relates to complete the Enrollment look XXXX. future

David Ryan Lewis

Thanks so Okay. much.

Michael A. Mussallem

Sure.

Operator

Thank you.

next question Raj with line proceed. Please of Our comes from the Jefferies. Denhoy

Anthony Petrone

Hi. for to to Anthony in MEDCAC. just This is go NCD, back Raj. Maybe

Just a quick the of comments bend than on would those the where situation sort do curve And the to the requirements should follow-up public two upward? a positive decision? they you more into situation be And we do get seem actually notably just – second . compare be are volume as when then the you you eased, comments, weight out final possibly of could half. just you Cardioband MEDCAC see a I'm wondering, where how into growth that perhaps go

$XX still is for guide the million think I full year.

think about Thanks. we the how QX, Just ramp QX? should into

Michael A. Mussallem

Yeah.

lot So, different through. of panel, a that came were watched voices I if you mean that there MEDCAC yeah,

sometime that MEDCAC the in understands consideration themselves comment NCD well written. going the full The come issues panel us coming take solely It's that's equitable in the the and belief volume matters, CMS early comments happen next going based range. to It's think by probably for that whether too ensure on is probably pretty in priority – been are our and over those that to or to on panel it's how be Our all be and CMS. to is public I total, have them it's that key its all go. new year. access. qualification believe going to how going continue gets of into are the to requirements that considered comments their shouldn't We not And to the ultimately

Scott B. Ullem

And I so you impact, now in sales and be on we're expect to QX and the QX. should Cardioband second half more between should that in ramping expect year-end think you going than

Anthony Petrone

Thanks. helpful. That's

Michael A. Mussallem

indicated, continue throughout be in Cardioband previously integrating might chain and XXXX Edwards the quality we're the into the as we we as process. system inventory process So constrained the of supply that

in to we're approximately So full second expect $XX half where reach the to sales we in still year. ramp position TMTT for million the

Anthony Petrone

Thanks.

Operator

Thank you.

proceed. Our Genuity. from comes next of Jason with line Canaccord the question Please Mills

Jason Richard Mills

Hi, Mike. them. Two More of to related TAVR And you. taking for sort specific question. for one then of business. questions view, Thanks XX,XXX-foot your one my

the you the half somewhere top So around expectation business you'll I at you've in XX% that first underlying and be the reiterated exit believe growth end.

then everyone next low second about we I in you're data then risk for with the the and in approval guidance your set-up the TAVR and the year, next mentioned you're as are of TAVR embark is growth profile the in half. So you've but give of accelerates year, like where half obviously the first XXXX ready a And for risk looking second certainly possibly five accelerate CENTERA four calendarized on to not to the to half little launches for the know coming in bit? low business, perhaps the or it that Ultra quarters market, a looks

Michael A. Mussallem

Yeah.

Let if answer. can I me see

end And The us do that big will not gets XX% sales the I in at a and Cardioband, the for going also that's and believe in First, Remember, which we've XX% to coming year. be XX%, more CENTERA fact leap. maybe nonrandomized XX.X% we we so that higher continue that a be contributor. got expect Ultra it's What later the to not got was But category. to half the quite a as have trial. in we've TMTT, CAP the reported range first XX%. is the of

to the rate quarter you So, all help growth contribute will. in fourth if the those

rates share to forward, ready next we're growth year. for not any Looking

As in opportunity where plus mid-teens billion going. we expect the going clinical is you confident positive Jason, non-inferiority reach broad the XXXX we're to we feel not that the that's prove with $X you're CAGR this to – know, the trial a to of superiority, like if average really expecting market by going We're output. for and we're and bit

very we're the continue well conference So for projection that to positioned. feel going at to to investor but we think you're wait for point, get to I this strategically, XXXX, a have

we're to group we that We pipeline rich untreated patients in a reach there's have a and future. aggressive continue know the of can investors we this in large that and space

Jason Richard Mills

up Okay. following That's just on helpful, Mike. that. And

that's the next will And estimates, years, Your don't you a market? you trending indeed going the get superiority. get market to show that mark And growth similarly, as to that probably positive the versus if a then to you're billion respect data Do a you would impact still XX% you'd do on CAGR about your there that the low superior that $X – data is that? either comment have expect even do expected, two front, think if earlier at towards it you market than or the lastly over reaction with on risk non-inferiority market different XXXX. get year

to sure wanted So XXXX you I you heard just that when make I right, by say that... that

Michael A. Mussallem

Yeah.

Jason Richard Mills

You're not expecting slowing growth. Thanks.

Michael A. Mussallem

a Jason, it drive much, that is on think So pretty know would this larger superiority. market's much point, trial take the non-inferiority, to I your powered smart. for first mean, trial we They that

So really I expecting anybody is think seriously don't superiority.

we from supported think prove talking a technology clinicians which because of to an going that when non-inferiority, will approval, it I procedure you to life. their – we Separate by is that it's though, FDA be then that Length stay treatment. to patients. a continuing about It's will think of see of that's expand impact give opportunity we reimbursement, net we're think improving, a positive quality how were lot by preferred has the So and this legs.

by plus billion when there's we we that $X And XXXX, so said upside. realize

course, there we little dangerous. in upside when I think that we years, five a continue bit which to of out made think that an prediction, always feel out is there's what or it was number, but that said. confident there four But So, marker in I we

Jason Richard Mills

Thanks, Mike.

Michael A. Mussallem

Sure.

Operator

you. Thank

next Our the line Kumar of question comes with Please from Evercore. proceed. Vijay

Vijay Kumar

my Thanks Hey, taking for guys. question.

the by the So want the guidance. now last back maybe, question implied right, start I half to on off guidance, the Mike, on acceleration

in bps so first in which to north get north of in right? implies going half, back about XX% or which of close half, If going the accelerate to back half, half you the us XX.X% right, is look growth to of of has at in XX.X% XXX bps, XX%, the that's north about the that's improve another contribute done to So XXX back TAVR that Cardioband going guidance, the XX%. by somewhere still TAVR to

growth competition lot is it priced, and going the and this being they around premium given to and of match why if optimism – product pricing heard half? back accelerate trying Europe baked these because aggressively like in select Ultra, why launch price going and curious a they're are are seems regions on being premium to just Ultra in I'm be for it, CENTERA in we've Now, CENTERA I'm to just commentary that the

Michael A. Mussallem

Yeah.

to properly terrific think those going attention interested are One on are lift. buy valve have it's those they're going give And based going be some to we those. and pretty introduced, to of heart share valves. going that's by the happens a shortly what to shaken a that we to given really with in be that proven give Cardioband us heart products quarter But some on in as CAP what So things. we're outcomes any us that are on like based are happens think some will CENTERA do doubt fundamental These kind to heart going to market. is couple and us not change When of in scientific and Ultra lift. get people's products, they'll is, market they're valves note, we studies, lift People and no coming and going continue to quality, that study also that. TMTT, a you also give

gives the range. XX% of combination the end lot confidence high be going XX% we're to a us of that that So to at

Vijay Kumar

CAP run-rate that XQ, that what's year? Mike. Does for quarter it singles that Because comment – forgot Is run-rate right? we that's implied Because normalized the on on study. is demand, – should some million normalized constrained. let's that number, supply or there quarterly of is – we're of fourth that's a a catch-up $XX if call right? helpful, this $XX for next million Or last the that about Mike? annualize high number, there number I north Maybe Cardioband TMTT, a now Cardioband That's right number?

Michael A. Mussallem

us and projected that Yeah, that Investor Conference, the we there's and to at how for how be able that try But that you XXXX ask out plan numbers our plans beyond. I'll we'll to think in time. to have hit some We the be fourth field till during we lay the quarter. it's soon lot patience what and wait end are longer-term and the early projecting this the little we'll a and do a I think of there year demand Vijay, and

Vijay Kumar

Thank you, guys.

Michael A. Mussallem

Sure.

Operator

Thank you.

question next the Our line Chris from Please Guggenheim. of comes Pasquale with proceed.

Christopher Pasquale

Thanks. trial start today. Mike, the earlier of Abbott announced U.S. their Tendyne

to clinical more You give mentioned Can there or until progress transseptal you products? be good in making is when you your could trial? replacement go think And you're U.S. both us up with own position you color you have system ready fully start programs. before any on mitral ramp your activity your to those a it one still of to with wait plan you a own

Michael A. Mussallem

strategy platforms, with think I is of those the both here continue we unchanged. Yeah, see Yes. our to that progress and we call on clinical good reported

drive think and that be to chance We to the efficacy drive are that transseptal focused on to the the is very opportunity. the safety transseptal. solution and really going necessary We

that by system might be the we're the that's transapical not so meaningful think We really don't And going to fact long-term. comes that a sooner. there be in just deterred

Christopher Pasquale

performer That XX% running a of then wanted at the the real you're Care growth. and And at this in point to about Okay. Critical business has underlying I been here. question ask first year, standout half a rare

X%. You momentum and there? reason the to that lower And necessarily expect about guided Can is there down talk level? come that we drivers you off to should to fall any

Michael A. Mussallem

Yeah.

they see things having growth, is the the of we in Our one contracts. strong and new sure here, Critical that HemoSphere. thing GPO team the I'll that is But not but it note that is did welcome some Care really the I'm by used underpins to other spotlight had help the it. We U.S.

at the we're high nonetheless, be we're rate So you this that a X% strong expecting X% Care same count on of for say not throughout Critical the ready should growth be and rate. but the end year to growth to to this year, to

Christopher Pasquale

Thanks.

Operator

you. Thank

Wuensch Please line with comes of the proceed. question Joanne BMO Markets. Capital next from Our

Joanne Karen Wuensch

Good with lower who some pricing? had just for back thank products for on And for afternoon, a Can be much compressing we of moment and is newer have is the there. a it prices? time market of or taking products how long now you revert may in their to coming companies it dynamics Europe? How Trying much question. understand the better into my companies in

Michael A. Mussallem

Yeah.

know, bit it's little both. You a of actually

some aggressive to we in and but Symetis also now have before past. larger the they of that So competitor term product been places some continuing does sort the that going of haven't longer that the a pricing, that's still we of see also of the pricing company, aggressive the hands

Joanne Karen Wuensch

some expect? should do to start that flow-through the in what of by sort you'll FDA? risk intermediate think year the And I similar assume we level do as a ramp risk before investors And follow-up, see the to of just stage think next kind to you approval approval, because for approval presentation after you get set the you XXXX, low think and most data

Michael A. Mussallem

spend Joanne. good It's going that time lay We're question, to out to some in detail. a trying Yeah. really

performance, does FDA actual the yeah, itself of drive reimbursement history by it. the but that, does data level along also bring with Our is some approval

It's But smoothes case not that. both those this time. So the our to get to a factors. at over step in to are and experience, we be not XXXX. able In that much of function, expect it prepared kind than deeper would probably point be

Joanne Karen Wuensch

you. Okay. helpful. Very Thank

Michael A. Mussallem

Sure.

Operator

Thank you.

comes with Capital question next Novarro RBC Markets. Glenn line of Our proceed. Please from the

Glenn John Novarro

U.S. questions on Mike, the market. Good two Hi. afternoon.

line coming out volumes your And centers. stronger in the with and were your past U.S. the was would So always better, out in with come it you expectations, when but sales you new like sounds the quarters always at U.S. called – in your the market centers. Mike, line market called in in new

still can started to you the strong I'm And as second some centers? us had centers So color give up are how I these the And getting you in quarter? demand then new from you a many follow-up. wondering,

Michael A. Mussallem

centers And it that lift very we XXX number, new around commentary centers. do think get in did, in we're a closing not from at I We new U.S. because was broad-based. to didn't Yeah. to we I what this to say did don't Glenn. we time the my Thanks, know Yeah. intended saw centers, but but get was the

in a around centers have that been around very large for also a We for saw the while. lift had that centers been –

it this broad-based So was particularly quarter.

Glenn John Novarro

going then centers more as NCD And up? has Thanks. that next follow-up, over think near-term opening you a on to XX that's Do just impact the the any months. be considered

Michael A. Mussallem

change. NCD, be I Well, have it there's in going any the some term to near think what's impact. we could When written mean, don't the see I in actually

us to changed little difficult if Now, us ask to strategically is the we were outlook, but going a It's our happen? for what you future, predict to if we do think no.

think so outlook. our changed expand. TAVR haven't We favorable and provide continue We climate, that NCD is the going technology to will a to

Glenn John Novarro

Great. Mike. Okay. Thanks,

Michael A. Mussallem

Sure.

Operator

Thank you.

from of the Wise question Please line comes next Stifel. proceed. Our with Rick

Frederick Wise

in than with mitral hanging challenging enroll seem you you the that? concerned clinic large yet hard of all? usual? MX it How touched predict Mike. we years about just at thinking that afternoon, it's on devices Good trials. – Do to couple with mitral, be in doing? replacement It's at the reflect more I worry or would difficult you've on going like to in Should very be you or clinic to and I of know be going to How all CardiAQ there's various a ways. you're but are next turning it as not something the couple to

Michael A. Mussallem

on better to patterns right chest Well, big convinced treatment be we surgery, open what change the transseptal surgery for to basis. as frankly, think the mitral We we're, might really we're that's one is it attracted take We might of the know a why would difficult this enough leap today rate incrementally it's trial. a be And and is its enroll to and is not don't longer-term a an TA of the reasons TA option. why attractive. TF patients approach offering to although than imagine

Frederick Wise

it Just way And market Ultra make think price sure it? the – it share reframe stem procedure tide all. seen at right up if Is that your we've you. Is follow Is or Ultra, offset viewpoint. sustaining? saying might just understand understand EU that how way expanding? to to I I'm Got there Maybe to help driving, about me it. wanted loss of on share the the

Michael A. Mussallem

a as help hadn't an it has look maintain share opportunity gainer. and greatly initially as said having pegged one our at it it's But out to us leadership. features We Yeah, go we and that there like enhanced spend center. we each training through with It's us and going time us process for for think they to a they're the to go see. chance that, what

Frederick Wise

Japan. one And a on quick last just

strong. there much. Thanks be do it might expected? Is that so of you – that You every color would quarter passes, be any a sense you running said welcome. it was have that as Are greater you – some there? market that now upside Again,

Michael A. Mussallem

about We Japan just still say. what expected tracking Yeah, to incredible lot very but to think an opportunity we it's be It's significant. opportunity. we've is a the found always

TAVR as again As this quarter. growing is fastest is our region growing, it fast

continue being We added adoptions see several strong new and there. were to centers TAVR

an So, sign. that's encouraging

Frederick Wise

you. Thank

Operator

Thank you.

SunTrust. Nudell Our next the of Please proceed. with question line Bruce comes from

Bruce M. Nudell

with procedure which done guys non-treatment, volume if by you of point. on almost ultimate the pales of chance little might poor lack afternoon. taking you you that the that with the to fit real relationship and in fact both regarding yesterday Medtronic Could discussion for things properly. that outcomes lot probably makes? for SAVR, experience about more if what is comment outcome was a decision aren't CMS greater have exactly SAVR. which how invasive into and is, much is There no I a in the watched struck the my comparison was total Good even Mike, interest I question. Thanks that to there's forward a it question your variability But that data MEDCAC for unfortunately center the and and put bit, is

Michael A. Mussallem

Yes. observation Yeah, I because wish yesterday you were your panel good is on a one. the

that on going asked The into focus of nine that to number a that are questions reconsidering to was the delve panel there of really think considerations specific and wasn't NCD. one asked were the they questions to I go be into.

fascinating important think it's I really it's one and one. think a a we

surgical replacement programs to outcomes. We valve but TAVR continue to and restricted high expanded be deliver be that should they that should quality believe both procedures

mind, a So, perspective CMS we is and to broad going we that take think are that reconsider of they the NCD. when

Bruce M. Nudell

a follow-up. very And brief

– uplift very that about counting was I ex-U.S. XX% growth Just that. want not ASP slight procedures? mentioned when the just to on you referring the TAVR, you're be in underlying clear to

Michael A. Mussallem

global So were uplift we – about what on slight basis. the a was talking in ASP

right? regions that's have trying to basis, by like saw stronger was you and And so U.S., faster, so and on ASPs indicate ASP, Japan the I grow the global what which

Bruce M. Nudell

Okay.

So your growth ex-U.S. was XX%? TAVR revenue around

Michael A. Mussallem

Yes. Correct.

Bruce M. Nudell

you much. Thank so

Michael A. Mussallem

Yeah.

Operator

you. Thank

comes proceed. and next with Our Company. of the Jennings Please from line Josh Cowen question

Joshua Jennings

year data hoping, the or or experience Hi. your behavior, Good particularly they're their last last just on gasp questions. defending just in I or here view to occurred. evening. risk Thanks for I next whether efforts any was taking territory, over MEDCAC the surgeons' half year. the low get of meeting not front Mike, of the mean,

whether consensus that but the expert kind document on societies terms out turf some aggressively was surgical just You you're had of what experiencing primarily, they're their there surgeons' by more in at defending the centers. these of hear wanted to of run side

Michael A. Mussallem

Yeah.

documents, good have and that there's set other the but other depart. being prevail of going those were we side consensus to that like of we so a with us I going common views evidence aside. the can involved where the there's accuse that to they is places as we to be self-interested, think lot sense. just And I think I that with accuse

have very and world, procedure be and going actually, debilitating at around proficiency, addresses a we the remarkable that's that's performed with disease a effective level be that safe don't very of to TAVR and You really high think procedure this lost. in serious a can and

I So totally its medicine on merits. will that. and by frustratingly think surprised practice technology changes always not to we ultimately slow, of ultimately through. The stand come so the But it's own we're going think

Joshua Jennings

understanding guys through you were first CAP help in that at half? the that. my you And just program trial the to half for enrolling tailwind calling clinical facing pace up the full Can the just out faced revenue of in was – headwind enrolling the first clinical that's be on, headwinds of are CAP modest revenue mean, in wanted follow in as year, trials. I great. of Thanks year. just risk the with half I kind low we us going think a you is program last TAVR second the to coming be of UNLOAD But early it terms the by I in believe and half type any slower again. Thanks TAVR and would the now first color resolved

Michael A. Mussallem

Yeah. think I helpful don't it know. I mean, it's possibly way. to about this

low the the Our you the a but trial. of low a gotten half end therapy. program, would so of risk have CAP finished risk X, SAPIEN a trial randomized them half year, implement of trial, up last When no it's randomized patients at remember was not

think you So Are have at as twice would you surgery. you Hello? of you almost would as half gotten have can pace don't in had of because that the clinical, the it there? terms have

Operator

Thank you.

Please proceed. with Antalffy Danielle line next question of Leerink Partners. Our come the will from

Danielle Antalffy

Hey. keeps about in that Thank I at so wanted just look market that It much taking CENTERA and guys and well. you improvement, sorry. half I Good talked share we afternoon, the to but question. on definitely the up as call, for you as back appreciate I'm guys. – Europe, coming follow Ultra's up the an the loss just and

about I'm do a Portico it Evolut restarting relative You'll some premium a Evolut PRO, discount. European to accounts at of their I am be getting the for of receptivity also of re-launching launch think the XX% to hearing price that the uplift? is how R Medtronic CENTERA. you or but But hearing is pricing

the sense paying what just even I'm So relates more of aggressive to get as how it SAPIEN and players are of doing trying other of some centers to relative some of these X. to that's a these to mindset

Michael A. Mussallem

heart that are think We very Yeah. valves important.

that and technology We We have heart buying value. and market you lot think push with history to alive this that and best of price. and a very up back a up it a we really we – back mean, that's as our offer evidence. to that should something it long expected and try be is lot not to on valves, term keep with we approach surgical I continue try of and for a choose years,

to – technology long-term bit to be we pricing. little to compromise have surprising competitors a lumpy. and leadership price, that not going a so the maintain and best at so expect always on is lower just we But basis, a a And prevail going It's on not unexpected. this it's don't position. we And is strong

Danielle Antalffy

you I expecting ex-U.S.? just highlighted These a so, in you regain essence you the products, price quarters though to do are are two the sort And it premium, them of new think you you they mix share? for saying loss some think guess, Edwards? at improves last help you Or even share

Michael A. Mussallem

Yeah.

I think maintain Danielle. help It a we proud very and leader, that leadership. the we're from does be to be able expect share to perspective, to probably

Danielle Antalffy

so you much. Thank Okay.

Michael A. Mussallem

Sure.

Operator

you. Thank

line the Morgan. Marcus next Our question come with Please Robbie proceed. will JP from of

Robert J. Marcus

a ask And wanted I to question thanks the question. for Great. financial Scott, taking you here.

understand XX% year Analyst pay-down, the lower you has XX% share With this of us been guidance, debt EPS at now, come from much tax, and tax financial before much from to the end how Day how to buyback reform, has versus gains? low of can the leverage, XX% help tax like the operational XX% of revision it

Scott B. Ullem

Sure.

about contributed probably effective percentage X%, reduction our in legislation rate. tax tax X the points So to

some legislation. got from benefit tax refined the Before we interpretation some about

points. got excess compensation. well than as we stock-based from for tax X expected So it's then was the of more And percentage probably bit benefit we that in benefit excess what some a

together two rate original Investor pretty reduced the those the Conference. So from significantly guidance the at

Robert J. Marcus

think XXXX much Okay. ongoing this sustainable? we an How in is of about basis do it on what rate And tax and beyond? be how should

Scott B. Ullem

Sure.

of and would end directionally the I that guidance XX% year, that you give XX% the term, tax of more Investor this would to at get as around we're to realize the the mid-teens probably Conference. we'll some So processing we'll still so the be this to But at more how give legislation, and range. Longer think provide low and Conference. Investor benefits we you we going true-up guidance point, think definition we're

Robert J. Marcus

earlier just transcatheter share follow-up. continues you Or about supplement should you out mitral think to build. that maybe cash Do we And of allocation, repurchase is Capital – going quick future Great. uses pipeline? to How cash? and or ASR this focus? the look mitral be tricuspid Thanks. year, the Okay. to but build one the did

Scott B. Ullem

Sure.

really allocation capital haven't priorities changed. our So,

the is returns The call first cash on generate programs invest growth over higher that continuing our would to especially and long-term. in internal programs

investments size. we our acquisitions smaller external the of and continue with it's minority we'll then over programs or whether internal those companies get time. balance investments, do on sheet, supplementing is to And repurchase, engineering Second to which like financial share using

a of reminder, $XXX repurchase As million share left. we've authorization got

Michael A. Mussallem

continued and additional all. interest Scott you, in Edwards, appreciate Okay. Well, thanks, I questions any David welcome We to your David. by Back and telephone. and

David Ryan Lewis

Relations can underlying of edwards.com. our call. for on in numbers for the between us joining website Reconciliations the growth GAAP also rates non-GAAP mentioned during and sales and are and be amounts Investor Thank and include today's at special call, found you in which adjusted included section items, press today's release

be a this, available for please and XXX-XX-XXX. call, conference any hours. To XXX-XXX-XXXX portion telephonic XXX-XXX-XXXX number missed access replay you use will of If today's dial XX or

number me Let and XXX-XXX-XXXX, repeat conference the Dial XXX-XXX-XXXX XXX-XX-XXX. numbers. is or those

Additionally, our of very be section an the available website. Thank replay in audio much. will you Relations Investor

Operator

Thank you. This concludes web today's conference.

You may thank time your disconnect for lines and your at you this participation.

Edwards Lifesciences (EW) 26 Jul 182018 Q2 Earnings call transcript