EW - Earnings call transcript Q2 2021 | Edwards Lifesciences Corporation

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Operator

Greetings, ladies and gentlemen, and welcome to the Edwards Lifesciences Corporation Second Quarter 2021 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Mark Wilterding, Vice President of Investor Relations. you. Thank

begin. may You

Mark Wilterding

Financial Diego. me and Mike on Executive Ullem, and lot, joining Mussallem, you us. Chief Chief Scott and With today's Officer; Good a thank afternoon for Chairman Officer. Thanks call are

Just second XXXX released Edwards quarter close after financial of the trading, Lifesciences regular results.

limited that the note for matters making then call, remaining undertake they use management and Edwards in time those based that approvals, and update accompanying regulatory obligation guidance the speak to: be and are competitive for results fluctuations. were discuss clinical made, to today's currency release assumptions statements aren't of financial financial which These Please management estimates, statements These the and forward-looking will longer-term include, During growth any statements them included on not Q&A. foreign reimbursement, does and after only expectations trials, will press on today. litigation, as schedules opportunities, and projections. but date

the press with important all the and Additionally, available and Form associated to be could product may in our these Company's website SEC found the on on actual safety Annual XXXX of cause Report XX-K factors the other could information Edwards' to, are that differ cause uncertainties, not results and limited release, filings, that statements differences including, which Information edwards.com. pandemic those at concerning but risks materially. involve

I'd Mike during over turn to his underlying results. this mentioned using to in Otherwise, that terms reminder call management measures. and they quick a for the With to press Finally, GAAP release. included are non-GAAP Reconciliations comments. financial GAAP adjusted, to Mike? referring that, today's is when like and call referring between are numbers non-GAAP

Mike Mussallem

of breakthrough to of onset the innovative that every second Mark. Vaccine XX,XXX pandemic. world number people in Last second day. potential We “We solutions never our our to dedication fighting importantly, who cardiovascular At adoption this regions quarter. our the of the an the more the were There valves the of during providing disease an were tragic have year, increasing employees world aggressive broader seeking receiving SAPIEN pursuit of were signs treatment. of patients and, that stopped global patients Edwards, around around contributed even in Thanks, key clear technologies patients. midst recovery most by encouraged for we of noted we’re group with with in quarter. help treated the our motivates than

lifechanging that second treated Patients doctors the marked with year patients undermined time the This quarter, are more to patients effects the when were challenging are their of severe indication benefiting structural for The progressive quarter, extraordinary forced an an the weigh SAPIEN of hospitals during world from ever especially ongoing XX,XXX and more the valve surge before. patients, last were valves, as overwhelmed than and comparisons care. our disease. of technologies regular COVID XXXX risk around heart than versus heart COVID

position. their encouraging are increased patient visit we confidence now experiencing of to Fortunately, signs

now recent our to Turning results.

to sales $X.X of to product company year two by four sales in quarter annual ago second sales We delivered pleased period. XXXX. strong a a from increased QX. compounded billion, increases sales led TAVR. grew quarter groups are than the large report importantly, on Total basis year compared XX% All versus on second And expected pre-pandemic currency XX% constant of sequentially basis, a better up

and significant believe postponed reporting teams heart rates were doctor hospital QX lifted have we backlogs, that been were in their procedure previously returned because patients not While who visits treated.

the expect price mid-teens. of stable more basis We underlying versus and growth million, we on the comparable sales quarter. a the estimate pent-up pronounced our from demand the teens the we $XXX quarter price now recovery global TAVR, remain to remains associated were vacations. growth selling Edwards’ outlook additionally, pandemic exiting ago full average our mix trends raising for a given XX% performance continue are with previous quarter, year-to-date procedure high the XX% two and compounded Globally, as up In the annual second expected our better total sales the year than the or TAVR period guidance global XXXX. basis. with year We in discipline. for to an of momentum we in growth on second expect exercise versus year about cautious summer Yet, We seasonality be was

its concluded to the survival today. the in the with by trials many global symptoms pivotal even be sales aortic currently because believe we remain in that and survival beyond the TAVR before of severe procedures QX the the potential rebound included our reinforces TAVR view opportunity many being this XXXX, on since becomes untreated. in grew sequentially XXXX, mass and billion from the introduction analysis will bolstered on long-term article than $X to and In patients potential $X this The a XXXX. more U.S., has disease We lives patients. The disease transformational optimistic more severe of enrolled, the that along has potential, our up over doubled. XX% TAVR And, impact the on overall patients continue over it of by the recent the Journal deadly with of basis. severe a two in of the transform year-over-year stenosis on AS of In AS reported the billion exceed treating X,XXX reported, and long-term of era general of about impact from TAVR Cardiology because American suffering patients TAVR obtained at data patients clinical before

pre-COVID the of growth U.S. annual that in We our as was levels stable. Our volumes procedures above estimate year our two TAVR well rate were mid-teens. compounded share was

population. of diseases of a remains In and grew by countries growth driven an Europe, and across remains Edwards’ high broad low two that and for uncertainty in basis, And basis increase grew growth suboptimal we Patient to vaccinations in opportunities on although significantly in second Outside by are among by believe estimate we countries. of double-digits amongst patients elderly centers. On strong international encouraged and quarter, X sizes. the stenosis rebounded urgency fact this the procedure our broad in comparable. SAPIEN in see results, on XXXX. all across volume across the We aortic TAVR all Edwards’ of see are the TAVR and sales and approximately driven patients that TAVR was second driven about XX% throughout adoption decided growth compounded year-over-year continue strong it quarter, growth we a the remained on seek the quarter. year-over-year the TAVR and grew continued we was year. disease. Japan, also their our quite low that flow basis. of for recovered the based focused platform was uncertainty remainder estimate progress remains the adoption, the the a the annual low. adoption of goal, Long-term We as several undertreated the during as encouraged centers throughout procedure although we SAPIEN to broad immensely both large U.S. based procedures therapy year versus that OUS sales U.S., creates strong TAVR treatment country, quarter we by total U.S. Growth growth vaccination excellent expanding therapy was outside availability TAVR the the

X As approved patients earlier in risk previously received QX. SAPIEN to and at in anticipate in is reimbursement when approval for increased Japan surgical low announced, we second quarter we treatment continue in rates the the

our that compelling will the expectation as In by optimistic underlying as to XXXX similar TVT, recent body of favorable week patients about improvement the meaningful showed confidence clinicians TVT impact at sales X summary, the increasingly quarter, results versus TAVR the on and resource TAVR further last life. TAVR PARTNER XXXX highlights, achieved clinical understand ever a as TAVR patients, evidence. demonstrated XX% benefits growth. we in platform saw several which patient opportunity to based patients and approach assess previous outcomes in as quality in We discharge. second comparison symptoms X that conducted trial value XX-days which bicuspid TAVR the Study XX% significant substantial XX% have of Conference, economic Economic the remain our we the SAPIEN of SAPIEN the minimalist to X the next significant registry in patient well strength resulted and of to outcomes the a supported cost as around of turning with other grow improvements. post-procedure from was data platform, utilization, were presented better enhanced Also Vancouver’s at economic day of the of long-term growth Now, The therapy, on

Turning to TMTT.

continue growth long-term We to they opportunity. with very key in as significant many outcomes be driver our remain the treating to a and clinical need unlocking pleased patients

a be We procedural touch committed to success continue model. clinical to ensuring high employing and support

for the our from tricuspid We progressing support five patients in are regurgitation. enrollment and across mitral suffering differentiated of portfolio to trials therapy pivotal

with year. patients are late on PASCAL We as replacement transcatheter approval feedback our with precision physician use we We CLASP for enrollment track tricuspid been remain clinical of U.S. have trial currently initiated for positive. for EVOQUE platform X enrolling and our experience We replacement. the early advanced pivotal DMR PASCAL has and continued next of TRISCEND with

trial EVOQUE We Eos. replacement with mitral the continue ENCIRCLE pivotal Study MX SAPIEN also MISCEND transcatheter our patients the therapies and both for to treat through for

of of mitral, body late-breaking portfolio. our PASCAL pleased treated provided we we clinical patients of recent with several presentations evidence As the the analysis EuroPCR platform. In of efficacy, the over data evidence, continue further TMTT the an comprehensive build safety, ease across use of commercially to compelling and are X,XXX of from

tricuspid and functional significant for is life two improvements demonstrated the of Similarly, CLASP TRISCEND system for resulted and for quality valve sustained patients. for rates safety, and favorable MR significant technical XX-day the in reduction, repair well of study In outcomes in FMR replacement patients. And improvements results survival strong of DMR for complication EVOQUE as reduction, high six both tricuspid, and feasibility and quality addition, outcomes with life highlighted our PASCAL tricuspid study rates, months. as tricuspid year and at sustained from low regurgitation valve PASCAL TR along

Turning to activated sales Europe. sales across our platform, from million, we global adoption of driven up expect more performance $XXX now $XX our previous million were $XX XXXX of the million. sales to PASCAL by of the financial We continued of million TMTT, guidance as $XX centers in TMTT

by increased valves surgical Revenue by the in and mitral clinical including mitral RESILIA tissue to a well was mitral We the the previous American improvement steady strength toward with adoption up mid-teens transform surgical pleased period. valve vision of of from year quarter. as the of be as by the the valve, tissue of basis We XX% were In aortic summary, the are valve of year-over-year we the aortic RESILIA sales strong clinical global expectation to we Heart, growth. lives we through the excellent We second the was and year-to-date our of continued surgical of XXXX global global valves patients growth high-single-digit in on our our meeting approximately Surgery, Thoracic In growing triple rebounding as technology procedure body demonstrates RESILIA growth lifted evidence, estimate in trial bolstered even aortic the the with to adoption of sales high Surgical adoption record Association our an by will treatment Heart quarter in TMTT mitral we at valve, opportunity recent ago which performance, our the pressure Japan encouraged our Structure of now our experienced INSPIRIS rates in million billion and well of tissue are tricuspid this COMMENCE of raising to position. versus technologies progress second Edwards world RESILIA underlying U.S. in tissue guidance, of continue versus premium data progress our the new $X advancing disease. around Structural durability RESILIA year Surgical volumes, launched full underlying as RESILIA conduit, given KONECT the adoption We the surgical $XXX RESILIA expect which quarter. further presented year was as believe four MITRIS

we ago U.S. We period. underlying show Critical and excited on of In powers from our the led our to on the billion were Heart current in through Care in raising including those as products non-invasive year continue sales previous that our hypotension used patients. tool an the not line. will of we better pre-COVID quarter balanced turn by following focus recovery. cuff their to Recovery high-single-digit finger product with ClearSight our in remain Scott. recovery IQ its hospital the shift given call year the software high-risk mid-single-digits over our summary, We contributions $X.X Hypotension in XX% remains up The reduce performance, market designed the Growth FDA versus Prediction expectation to the first are technologies help signs HemoSphere for HemoSphere to elective of Index, guidance the of pipeline received versus to clinicians Critical of for basis IQ grow cuff Smart that Care, in decisions capital low-double-digits spending XXXX. $XXX cuff. Demand accelerated Critical range continues our believe growth. do And million, continue by Structure And the procedures Surgical global smart second to was algorithm for recovery full strength In sales the clinicians broader to to I’ll Acumen about driven HPI strong, used now, a to require lines Acumen Care patients new make demand as surgeries in for levels and year-to-date clearance quarter. arterial an provides important an all non-invasive innovations

Scott Ullem

of momentum we the as exited we Mike. lot, all product second in continued am experienced the I the first across quarter pleased lines. with our a quarter Thanks

are business as were second to pursuing about conditions about the confident of While sales year-over-year, headwinds due some increasingly Edwards. we quarter. we optimistic grew and COVID patients are for schedule vacation expecting in the summer XX% various treatment favorable Total flare-ups in more regions,

last also growth sales high reflects Of unusually course, depressed second the due rate COVID. quarter in year’s to

quarter high procedure guidance through to outlook, previous Based year indicator much year fell was share The to in strong the performance rate growth are are per second that the two the Our sales our start unexpectedly bottom-line compounded expected sales improving. than underlying resulting ranges conditions by XX%, raising another we stronger earnings $X.XX. our volume in for and of adjusted positive upon XXXX. lifted

$X.X $XXX Surgical to to $XXX million, For Critical billion, billion, total we TAVR Edwards, $X.X billion to $XX billion million now for for $X.X expect and $XXX TMTT, of to Heart, million million Care, $X.X for for to Structural sales million, $XXX $XXX million.

spending margins, Now, of product to intending in regions. higher and clinical planned to teams field we regarding second are our increase, half resume a especially multiple commercial introductions activities continue our support as we new as build rate to

in to of expenses we moderated In increase. development and addition, contributes trial for expect as our in combination The growth clinical activities these actions our research more second margins half. guidance the

per earnings full high-end $X.XX expect of share the range adjusted $X.XX. guidance previous to year our of our We at

are billion we to in third between to quarter $X.XX resulting total $X.XX $X.XX sequentially share grow earnings billion uncertain, conditions sales of health per $X.XX. to remain public and projecting the adjusted While in

cover our results. will details I Now additional of

negative margin impact For partially quarter, by the year period our profitable from XX.X% when and was second COVID. exchange. we increase offset a last substantial XX.X%, to profit cost experienced lower the more by driven mix, responding adjusted also in This was to product sales a gross foreign compared same

$XXX expect of XX%. including to OUS compared impacted million to to and and primarily was Selling, currencies, be gross sales, activities COVID the million continue expenses by in between in commercial prior primarily the XX.X% our strengthening performance-based margin of prior euro. quarter administrative year, We general, or $XXX increased This increase the adjusted were and XXXX second profit compensation, the to costs compared driven the year. personnel-related XX%

We as in are in expenses half to planning the above growth. up to noted see subside restrictions support a second continued ramp COVID-related the

be our investments Research increase to continue or XX% expect to $XXX increased This percent grew of XXXX of to items to million, result year was including sales. XX%. in expenses transcatheter primarily excluding expenses XX% full trial clinical XX.X% continued SG&A of We in the the a activity. development innovations special as and quarter sales,

the to we and generating ramp expenses second pointing as and technologies in in expand are TMTT. We developing invest evidence for indications half up TAVR new

we full expect expenses of the in to to sales be to the XXXX, and as year range. For XX% development percentage continue research a XX%

with from share During making payments does the in our of second quarter, excluded consideration by gain of per This XXXX $X.XX impact previous acquisitions. was not reduction I the accounting earnings the which share associated our of we recorded milestone earlier. This reflects adjusted that guidance. a accounting earnings future $XXX This mentioned million per reduction fair net expectations benefited value for contingent liabilities reduced impact $X.XX. adjustments

taxes, compensation. expected benefit reported tax to this accounting our from a Turning larger rate than was This included XXX XX.X%. basis the rate point quarter stock-based for

continue XXXX in stock-based between of including XX% accounting. percentage XX% to rate an from year benefit and We compensation X to expect our points items excluding be estimated full special

rates sales basis At increased the about points positive or X.X% we second million, year. impact expect or rates, compared prior exchange to year quarter current by sales, now an to approximate to XXXX. reported $XX XXXX Foreign XXX growth full compared $XX million

positively for activities as rates penny. Free exchange basis by cash operating impacted defined April spending second gross million. points impacted $XXX prior second compared $XX EPS to was our Relative million, margin of flow negatively second quarter year. the quarter quarter guidance, cash profit less to by XXX the our our $XXX FX Foreign of flow rates a from capital million,

over the with turning our activities. and to sheet on Mike, an balance call repurchase back update finish I’ll Before share

sheet average program. Board authorization and repurchased we We the end down outstanding in of the X.X prior during XXX it quarter quarter $XXX with million balance now approximately flexible In June an we approval XX. currently back to second $X.X cash we at In maintain the repurchased $X.X price XXX And at for as expect half May, under billion XXX quarter to that, share approximately diluted the the shares strong the be of second X.X lower guidance million have as obtained our range. of shares shares first from million of We were repurchase during pass and the million, investments million. our outstanding XXXX to to for I’ll and with continue increase Average $XX. year, our average Mike. shares a remaining billion to

Mike Mussallem

Hey, Scott. thanks,

are we performance in XXXX. growth many our Heart we stopped investing technologies first patients capacity. with our our So, serve innovative the Disease, pleased the Structural people, of half and suffering new To never from our in

As the we of about by opportunity. remain of long-term patients increasingly significant the evidence, compelling body and technologies, benefits substantial growth supported clinicians recognize transcatheter-based the optimistic

Our back robust product combined I a us well success. positions of continued call And over turn Mark. that, leadership, foundation pipeline will with to the with for

Mark Wilterding

Thank Mike. you very much,

look broad plus we ready one of to we In questions month. on for number now, order well next we at Before announce that participation, This on in will our am headquarters take up updates latest use XXXX With information the here are place to as that, our follow-up. Irvine, potential, one, as to take our event Please open California. outlook limit the allow questions our excited Xth, that more Investor it I questions, for on please ask for to Wednesday, you will term on include technologies, XXXX. for website December our market Conference longer Diego.

call. have any of answer questions, the the additional please re-enter many as you will participants queue the remainder and If during management Diego? possible as

Operator

from state America. comes question. Hopkins Our Please Thank you. question Instructions] with [Operator of your Bank Bob first

Bob Hopkins

– such and board. performance the quick on have guidance. Great. questions I good the strong Thank on just you two I across congrats and afternoon,

this on comments short-term about of just quarter. is some First you and the the made

that mentioned you thoughts about something of quantify lot QX backlog can any not really major then in which before. And the curious, quarter, the But that is looks that? a like in Just on you the dynamic back half? a talked what factor you

Mike Mussallem

results. with Thanks, the were based. were pleased Bob. Yes. we And, They broad

on team, that patients we rate on data, we were we pick larger happened. primary number backlogs, that’s some we’ve their believe general care seen treatment to so part patients, But and that of was, visiting the Most we the is sources, potentially our like in what’s of on, real what their of with really noted to anything insurers of come haven’t a talk that a being in the compared that cardiologist the there. difference We activity. second to companies of on really data believe world, quarter was was past. in a back how physicians. that of up the but more them much teams what but when of they others have healthcare past. other And general this things conversations, Patients Bob, some seen key believe flow to observation we based all the around especially about space historically a their don’t cardiologist, much much that And in heart we we referring our really or ever in of note they’ve Your have delayed the only anecdotal of the quantify correct. in to this than in in believe based going of heart that it because U.S. their from path, talked there going a not them, patient that our heart talking It’s think much

Bob Hopkins

Okay. that. Thank you for

guidance which then for And on the curious. that second of revenue. feeds kind back Just the also total into is around question half my

talk expect a would to parts the might QX. that the similar have given higher been a you about then, with have there. did the parts think bit decline decline you for moving roughly sequentially flat of assuming a for and moving into from you Do of bit went and then, am that curious But just I curious some maybe Mike I you in So thought just being guidance. and maybe of QX called I sequentially momentum. QX little little for that just Scott, or X% QX kind what are QX

Mike Mussallem

you’ve add was mean, fact come momentum it with are I’ll the to Yes. to mindful same color we that of right of and we But and coming exit invite got right, probably more momentum out time, in in at it. But of strong acutely QX. we Scott are help from you did got the are I and it that’s pandemic can and us of aware with all hasn’t dramatic what’s Also, although some QX patients of going sideline. system and all healthcare these surge on that so we some think the far, off happening recent coming on had the impact the the have it impact.

so, a baked people QX, themselves we get our with think thinking. And a be the pronounced and there associated and healthcare to wanting in is away also into that’s take seasonality going to vacation. system both patients

so, And to much that, but. our is Scott into if don’t add know, I to And those thinking. all went there

Scott Ullem

good to exceeded QX so just we level some back our up we No, fourth QX a as quarter. trend succeeded you we a seen much do seasonality If have and sales about Mike of that’s probably that get into normalized not more going to much expectations summary. from QX as the then, this as sales sequential a by through when continue and would that But to pandemic. we talked grow different of we see QX that we’ll have would think did, recover we

Bob Hopkins

much. very Thank enough. you Fair

Operator

question next Please Vijay question. from ISI. Our Evercore state with your Kumar comes

Vijay Kumar

a from maybe for came I in the quarter Hey TAVR. beat the here, here. a my look guys. print big taking question, congrats the when question picture Thanks guidance and at Mike, on nice

the those segment was think when Japan, other was U.S. so there outbreak. nervousness I that due slowdown COVID regions offset how at How normalize? about strong, – I Asia-Pac, to the some regions, think raised. was when you it every given And weakness around in look guide, those

I process was TAVR am concerns the about around So is went thought into these the that guidance? guide, around what what when curious thought outbreaks, you it? Some

Mike Mussallem

Thanks, Vijay. Yes.

a last One bit to have careful and is little climate was growth of of little you QX things of measuring that to bit as more like when a reflective QX the the you in use on rates a look of be way at what year. be

didn’t just as the year. U.S. Europe and So, last declined as Japan much

Japan so, as Europe hard. performer get very was nicely. as QX of hit looks like less the And as looks hit the it U.S. Japan did the didn’t less was doing quite rate grew U.S. well while quite like in really growth – a Similarly, or it hard and got in actually,

So, actually a been high Europe we pretty level. performing, at think has

having well. know, said Japan said that, Europe that Europe that in hey, comparable are just U.S. this morning portions note portions of U.S. correctly still lockdown vaccination Now saw of although in or There in data as you signs a is is that, in near you is troublesome, Europe regions. encouraging there in places are some where I rates. pressure some rates that to know we the vaccination And under are

we each backward when regions. So, we we’ve taken But across strength of we all guidance. at like a that QX, into saw account. our feel We’ve provided look the

Vijay Kumar

XXXX? then, curious, is at TAVR up concerns comment cannibalization. am or Edwards? the make helpful, that heard singles some I say a I mid has the sure through That’s market I growth on correctly. this maybe most there Heart. been you portion, about Did I think, one being on to Structural And is entire Mike. of that want mid-singles for it outlook

Mike Mussallem

through No, so, the that what we XXXX. in market, were commenting total will said that the was, billion total that’s mid-single-digits $X.X and we on grow market

signal are total call still that that we than we the What total, growth send in to so think more market it’s TAVR is Structural that impact. It Surgical Heart, market is this – and that’s a Now it. has not valves. just that trying what the we with

that. grow impact surgery definitely to to time. is going that think in But it’s have going period on during we So, TAVR spite of of

Okay. number strength premium reasons. A of some built on We’ve a RESILIA for platform. lot of very just of it’s enjoyed our nice the growth

Scott Ullem

into greater things happens of of more a come continue a many candidates patients of system. is stenosis would aortic to expect grow. valvular coming surgery and isolated the and awareness is have And just when one system there who I it’s are disease structural great business we into of just But the heart patients the for disease one why reasons that, those who to that TAVR. that lot to the are who add there that patients need are of

Vijay Kumar

perspective, Scott. helpful That’s Thank you guys.

Operator

Our next question. Please Larry with question from comes your state Fargo. Wells Biegelsen

Larry Biegelsen

What question on percent sales nice trend how to taking that I guidance in mitral afternoon. this significant $XXX to congrats million Good clinical percent Thanks the The is tricuspid am hear Mike, what your million the the glad are seeing for mitral? businesses. And you you talk year, and for TMTT about number? quarter. is $XX in and tricuspid?

Mike Mussallem

So, in of Larry. it. range exact, I of tricuspid pick a minor. maybe itself the transcatheter of – market the the clinical XX% But But sales. the the up would it’s portion in guess quarter. did know I overall growth in mitral like feels and it’s are it’s don’t The

a And than still tricuspid. we market that’s see so, it. It’s by driven mitral more

don’t that’s know I if helpful. So,

Larry Biegelsen

it’s up that did I a I helpful. business taking million big from XXXX. Thanks $XXX about do that very business you I pretty beyond think is mean, to what How million for pick No, about thinking just hear forward? to the your question. love in mean, I’d you XXXX. $XX going

Mike Mussallem

from that beginning doubling we $XX when year Yes, was Yes, thanks, million last a Larry. at year. of said the the about

in know We unit we differentiated more awful about of you than this lot around space. think think going and But a have I an important it we feel market. this on it business innovations now So, really double. how will about formed

to key that focused pivotal we road important. on a So, work have trials. is on confidence to very making are We that have we going level rigorous sure and It’s that’s great outcomes be us. we high a having this

touch We our having by said think $X going great it’s real working more have to and XXXX. We’ve be with outcomes than model. that billion high we we world differentiated therapies on

as gives we So to it you where today. maybe in a is think that the signal what market billion neighborhood $X

Larry Biegelsen

Thanks, Mike.

Operator

Our next state from Chase. JPMorgan Marcus question comes Please with your question. Robby

Robert Marcus

light Thanks some touch question. the I gross was quarter. Nice Yes. margin Scott, the P&L for question. in can start Maybe a taking quarter.

of get through year. guidance gives up us XX%, how the maybe confidence? Just walk you part the through XX% back back you the the to What

Scott Ullem

of manufacturing couple point mind these light, exchange, moving contracts in to that was, it opposite pieces. had and with than primarily special by One from hedge XXX the but downsides of that points touch where than second there U.S. more from we it of about from quarter. a Well, the foreign we benefit are was keep had sales are XXX and basis hit the a efficiencies expenses translation they get due slumped COVID works what the basis outside we lower was of But in

year So, margin play bottom and guidance. at end in got efficiencies at came the range points full manufacturing XX for and you the we our of gross FX short basis

than As end XX% get looking Robby. are more that lower right granular too of to we But now, something closer is the probably at to that early probably, the it’s range. XX% to

Robert Marcus

a I on Great. The we while are I’ll was accounting didn’t charge And the P&L, what that related benefit another here. this it was use quarter. hear to.

know If it’s it’s I letting to. you tied don’t mind, appreciate us lot. Thanks what just it. a what

Scott Ullem

Sure. Sure.

milestone future making acquisitions some with done. accounting past So expectations were in adjustments lower it that to payments some connected we’ve that was associated

with is, and in milestone those. this might associated those some we accounting of make and assumptions some and likelihood is we the evaluate the of around payments case, we timing the the there think whether probabilities So, those lower

through non And that as up earnings gain, so, or GAAP in a run our but as per a it share. something not shows non-GAAP – we

Robert Marcus

talk overall portfolio? the deals Okay. to? Is just it is you can Or it any specific

Scott Ullem

milestones are those And and two move those where big move accounting and those company Harpoon. P&L. into Well, for results the where the and the deals we exposure two details there the through deals have time the that. run is is of expectations we’ll down over future up and the Valtech, the where earn we are outs. is, CARDIOMAN parent One product primarily to got get which But you’ve other beyond

Robert Marcus

Great. Appreciate it. Thanks for questions. taking the

Operator

Our comes Pito with your next question question. Deutsche Bank. from state Please Chickering

Pito Chickering

Good afternoon taking questions. and my thanks for

centers is first the on established centers in versus XQ. question The in growth one a new

center you any half If constraints growth? look capacity into back manufacturing sales could that or the limit at that of people, the are year, the there

Mike Mussallem

we We across centers. broad thanks. Yes, growth like feel all quarter this saw size

Maybe that’s of real even strength more And think we the seen the I have big noteworthy. so, in from most than past centers. some

normal was along. kind I to of say, of centers quarter. would we’ve adding been add continued kind this addition We what right it a

now. probably We are centers level plus of an at terms right in XXX

going impact adding and But results. small to that’s diminishing importance. now really be have so, quite that And centers are don’t material we to probably a the are ones our

Pito Chickering

changed at your XX those clinical increase question last investments the trials about I those curious And days for that Okay. I talking in were to year. investments? But margins, increasing sort the just are you forward am this in mid-teens of going - as look what you investments.

Scott Ullem

You are clinical trials? about talking

Mike Mussallem

pivotal clinical point surgical now. TAVR TMTT ones those secondly, Yes, in continue we X.X expenses right enroll at so, expenses times multiple to got these we’ve treatment. of incurred out and we and underway we follow to patients, we lot got But years. of increase. then as in Keep at patients mind, the then ten in and other trial Five

our we this expense part increasing clinical got recurring strategy. so, is And of that and

part we We build a top-line clinical over are of evidence are to body important how of robust and grow trying it’s the to intending time.

Scott Ullem

picked to that, activities, could future so things even definitely the Pito, trial although it QX add terms that’s I’ll go in anticipate. up And in clinical what we of faster and in

Pito Chickering

Thanks so much. Great.

Operator

comes Miksic your Our Matt Credit question. with question state from Please Suisse. next

Matt Miksic

taking so question. for Great. Hey. the Thanks much

– not could we the number interventional talked the are are to it’s the in you U.S. of is to that that where like But highlighting the follow-up seems of Pito’s right chatter is cardiac or and a reading that question just the X,XXX, XXX on speak new am of bit that, a also centers. country there go about ask if you around centers one you are way to And doing in bit maybe the I little exactly the TAVR X,XXX going the of have know centers nature had you a is if some we that centers So, number that around I centers I the really around of comparing surgery. the I that reason that as but had sort wondering have is, up some of adoption. TAVR. performing up included maybe there just sneaking meeting stenting follow-up. little about underpenetrated curve? not around then, And TDT I mean, in comments on past, information world a the

Mike Mussallem

it’s by has in clear Yes, changed that regard thanks, NCD to was that constrained have that the that. Nothing approved few am we is. I our on head centers, I way the larger, toward argue thought to around it Yes, been the weren’t continues if we NCD was it years and that really XXX we been Matt. We think – this going I that have be mean, but what probably written. belief. sorry, pretty since it is new probably is a might consistent

where I on of that’s really number And centers. so, it But overly focus wouldn’t is.

For example, with terrific for TAVR potential back. has the encouraging be is treatment. a And progress the are don’t going make TAVR, – to and don’t what in for because real growth we diagnosed the sidelines. we many to to to patients results really and off fortunate have patients reason a is the that overall. the the that to are or There key that ever making patients AS or U.S., procedure the great on severe come about is team when of issue hear are you think coming get another one it And

– vulnerable opportunity. those of Now, are find this it’s disparities the But very disparities. severe for about that stenosis real patients we patients. – obviously there it’s have a with a same health days. these is, to COVID challenge, are are real much thing that COVID, true And day similar That’s AS aortic sever conversation are There health is in patients. characteristics that other because spades those

a we our think tailwind And a of so, as the overall system to looks bit efforts. that’s to tackle that,

Matt Miksic

– the volumes eating you you Excellent. share that share contemplation are similar that the in are pace loss. Any to mentioned growing are operating in. – we regions are And or various just that thoughts of you

of You a a past had in half reasons. the significant year for variety and gains some

front? And share the so, anything on changing

Mike Mussallem

get on to a PBT very chance Yes, measure that after so, chance you get point we in comes we stable to – not It’s system our in any those are and at the from time these everyone that’s But this focus. difficult that’s see look coming reported we really changes has and the to a were as than our always you registry. back truly positions sort of that the key in quarter. patients share. into growth think Most of really rather say, one

Matt Miksic

Great. Thank you, Mike.

Operator

Cecilia Furlong state question. Morgan Please Stanley. from next with Our your comes question

Cecilia Furlong

start Mike, to and the Hey. questions. wanted Good I afternoon with TMTT. thanks taking for

new of Just the to for in it’s new in were your sites just will XX existing you open terms factored what being really, able to penetration as continued to XQ you access in then sites, in a opening site some XXX new able that sites? and do – versus contemplate year,

Mike Mussallem

part Yes. No, of growth it key is strategy. our a

observation. So, that’s a correct

have a in been involved We lot training. physician of

a high touch have We model.

up, when So start up way. sure right are they the help we really make and that people we there start

are this we opening Europe places. across I countries ten centers point, are double-digit think countries, in than and at more in all those

back and And trying up. of terms team of to increase lot course, rigor to in of so, a our that a significant

Cecilia Furlong

seen Off are you’ve thinking the you reimbursement Okay. into traction, drivers Japan, going well. years? recent forward reason how as few XXXX, as Thank being you. centers on new about next really in growth the heading recently, And driver the just really in XXXX of these but centers opening just the about look thinking forward over growth that you and just

Mike Mussallem

Yes. Thanks.

try that that of we think in getting a and the and some should issues progress. and and centers are and Adding are that rates time population treatment students their I are you think, large of I done is elderly important of higher making we there valuable. that way we become number Japan is span structural that to new every it much such undertreatment maybe there speaking that really be about Japan, in talk significant we a at

I until One we’ve high surgical of that a things most as only not risk up had indication now. think be may the clear to

terms of quarter. indication. in reaction And And from there so, patients. when expect reimbursement and low that these going this treating we surgical once a or jump are real some should which be to to to happens That’s comes clinicians we quarter in place, happen risk this

adding new but of – and in look also are forward centers these COVID So, just we to we mindful Japan.

positive in are short-term. the But we one it’s little a about So, uncertain long-term. very in the

Cecilia Furlong

Okay. Thank you.

Operator

Steed go comes Travis Our next from Barclays. question ahead. Please with

Travis Steed

I longer question. got the question term on taking margins. for thanks one Hey,

are R&D of but in have of lot a You down and spending a also you. investments front lot in SG&A,

just think versus you you spending the margin term, balance how So, curious how longer expansion?

Mike Mussallem

SG&A. longer about are think So, three areas, in margins, think get continue we gross scale we to margin, we I term, going R&D, from some to guess, and do benefits all

line, gross increase. invested getting around a more have footprint you’ve world, the seen volumes our production the us margin And we On physical are efficient more and our as even facilities margins. we lot into of expand gross as

And I that’s think. going to continue helpful, be to so

support a to going bigger our On a invest the continue some term administrative, getting SG&A R&D for are back-office operating expenses where side, to the in are business of revenues be the we including we we functions But to can globe. think And do source that short-term more not outpace are going additional leverage. of longer in heavily. benefits scale our around may

we expand think we’ve the operating over to margin. incrementally so, time got And opportunities

Travis Steed

helpful. That’s Alright.

any update for going. I China on how a device study today their TAVR business, international that’s if notice know don’t the in in China. and I On filed Medtronics mentioned you’ve

into as So, looking curious well, is if at any update and to move on longer there China are markets you term? other

Mike Mussallem

Yes.

Surgical contributor We’ve us, great for actually outcomes. launching minor THV that’s Valves. of very are nicely a in there. Care a to Heart approach and having the in was aimed deliberate sales did terms and Critical methodical at quarter. was we – got very patient China So, It But in still

going are to looking as to doesn’t opportunity take try intermediate from travel we to now opportunity we long-term can’t some a China. an that – It or that it help at going of then us so, perspective. And be are right long-term and this to

out And of but executing. be things so, team there that’s to those kind tend overall obstacles,

Travis Steed

question. for taking the Thanks Great.

Operator

Josh comes Cowen. with question from Jennings next Please go Our ahead.

Josh Jennings

some they hoping or but evening. checks backlog Thanks they a can’t they one their of when start in their delayed question. said they their procedure Hi. just TAVR that most around even find an relying patient Mike, physician Good of I that clear patients, are anecdotal, experts because was your taking for they saying COVID. with patient understanding that’s are of the to comments get

were And Is just just there so, physician just to that now diagnosed talk backlog, of patients care coming kind Is are offices. back primary this whether – more the your care are these channel. have incidence and that aortic your the getting or physicians not that it’s and backlog XXXX about then the when been general diagnosed the with is thrust that channel you of stenosis primary not diagnosed to in primary comment? and yet moving cardiologists

Mike Mussallem

more might so. even they risk we active, believe were home It’s they demonstrate were clinicians people think are now. do system COVID, during We We back have cases. with many that fearful they The symptoms us, anecdotal. tell some the and again, had that not But coming some over were we COVID hear of they are COVID entering simplifying, not than if of more they been yes, about the AS and indeed, of concerned very their when even in they active. may are patients

Josh. So, I from, exactly little hesitant say where that am we coming that’s know a to

had patients believe in one up surge that that we show coming sicker that tells numbers. saw kind leading patients that heard we the second a that in back the physician at but and coming were you that a example, totally are all, this enough for we will the So, quarter. things they again, and before are one anecdotal of we’ve of than system that are now But the the into back their

Josh Jennings

quick resume cardiologist office forward the of Thanks. offices about care And just technologies for diagnosis play. Are technologies, of There for one ultrasound in the the more questions. undiagnosed a Thanks technologies the stenosis of general handheld follow-up that there any enhance is primary topic. here? stronger on aortic similar maybe taking some these coming adoption enabling that. patients penetration or will deeper TAVR the accelerate optimism or into Thanks you giving

Mike Mussallem

pursuing of we’ve whether world are avoid that technologies devices some enhanced. and particular still sounds are cloud, digitizes Yes. handheld we it handheld there really of numbers or the a these think We sort of it’s or all and there this think helpful the comes early companies, Thank is stethoscopes can are going and and is from valvular very is, we commercial off directions pretty devices, as host especially of megatrend for that sort, of signals you. for to that doing there it’s could diagnosis but be help and that There that a there more more been exact thing to a many bounce any of with us. this the is heart listen ability EKGs disease. think backers is and to I’ll

Josh Jennings

a Thanks lot. Great.

Mike Mussallem

Sure.

Operator

comes Our with Anthony Jefferies. go from Petrone ahead. next question Please

Anthony Petrone

Two is that that quick a outlook, quick on just dynamics there figure billion the in has given would Congrats ones. maybe world. region a the in little just particular environment would dynamics bit the and Great. with is $X the quarter. One And TAVR then, not update competitors on be, on Europe more be well. a just the on factored Hope everyone second that richer competitive pricing in the in global of asymptomatic.

opportunity temperature just and that thoughts can be asymptomatic time? that So, the taking latest on on market here how wondering Thanks over untapped size opportunity

Mike Mussallem

is what’s various are in two account to there chance probably seems a the leading on of pretty In It Europe, was the Europe. Yes. TAVR. volume everybody, that competitors. companies a companies in of engaged Thanks. sure going in Well, complement the track XX% I am that close Anthony, general, to that with to full there gets

don’t It bit has looking see, for in I you are it are that’s you right. sense, what you asymptomatic little that’s if $X Was for. gives very let’s a opportunity, So know helpful of more, a exactly it. there billion

you We number. that’s that of not initiated TAVR trial now. also trial are right early going with moderate on a heard have that in we a Those patients big And AS.

we not TAVR cover think sort indicated The So, really that. these have trials the if of have curve. or potential today patients that particularly has remarks. $X these don’t of I as billion the to can we see top the some it we in – our grow at of general tried to in to more, XXXX, This the do and significantly value demonstrate potential for

Anthony Petrone

Thanks again.

Operator

Our next comes question question. with from your Joanne state Please Citi. Wuensch

Joanne Wuensch

taking by next a United year, data the nice and in end Thank you for ACC? Two the mean If States quarter. PASCAL approved the questions. quick of is does at that question

Mike Mussallem

don’t visibility are going medium But great when sometime Yes. We next what have see we going Certainly, going to that, data. is what sure too be it are next as it not timing are think able that we we we year. see end us we could in am which to that. see early the to of I to we means numbers judge to probably to for are the should then launching a in and by it. from see you XXXX. approval year, But perspective have It’s

Joanne Wuensch

easier it it TMTT make the bring United nicely. that from up think States? to in you. I outside And are from launch will Is that learning you or numbers that process is anything United inching States into the And there that that thank

Mike Mussallem

Joanne. Thanks, Yes.

So, we and have model. a obviously, as high mentioned, a have we touch experiences we learned from lot those

So we case. are in every

the get chance regular we basis. So, that about a to on learn

results far sure drive highly sales, are had and on but that outcomes. not we’ve great we’ve We pleased trying focused been get just to we to differentiated necessarily patients base so make really that’s are to served we are better exactly that. for these today be could because the that this know focus, striving to and do we run. And We in that long

Joanne Wuensch

you. Thank

Operator

SVB question. Danielle your Please with Leerink. comes question from Antalffy next state Our

Danielle Antalffy

much Hi. taking Good Thanks everyone. afternoon, for so question. the

a congrats quarter. and Just – on good

I follow-up guess, high these type treated. for previously, this rate Just just Mike, I about don’t they you the knocking given market Josh’s to backlog a curious, mortality question a patients on of get backlog. if the talked am

work are first confidence treating on you I if percentage is just patient give all, down this that a of really increased level guess, that you am gives I of underlying versus a you about of the color risk whether that right curious risk have all. Any So, and sense the it mix of is strong a conviction backlog, backlog there low can now. a is of about And low second volume? patients higher patients you

Mike Mussallem

driving in with what I this think exactly Sure. best are Dan, you well to said, And we AS thinking believe our treated and patients We’ve remember, trying occurred share and comments very you mean, again, that’s part XX,XXX in that XX,XXX upstream, our are treated was past right. we But hey, XX,XXX said there believe. patients we of true. this what the We we patients and score QX. were QX – don’t on in

difference all many those numbers that in to QX. So, patients all they come. like XX,XXX so, very It big and moved move – take so, it’s doesn’t

So, we patients risk Even believe risk it’s think, that in quite are low patients all sometimes understand levels. many across don’t I the people cases. old

and are it’s not perfect visibility and were to believe that treated. that. that We reenter optimism of But a of likely simply out so, really reaches quarter lift It’s And second on don’t be broadly the the just risk had indication. hesitant have newer when And elderly enter got that. the system. signs were system in peak that that they these the patients more of some to COVID we we

can’t be more I quantitative. So,

Danielle Antalffy

helpful. Thanks, No, Mike. it me. that’s That’s for

Mike Mussallem

Yes.

Operator

Guggenheim. Please from state with comes question next Pasquale question. your Chris Our

Chris Pasquale

related a the and to Two today. clinical such pipeline so of Thanks. story trials big part

Has First, would happen just CLASP spring that soon question. a it would enrollment meeting. like yet, have to piggyback on to make completed to seem Joanne’s because Xd

Mike Mussallem

Yes. Thanks.

year amount we feel details year like the exactly be the that we feel our of we place But track don’t we on so have fair what, and make on of where been could progressing pipeline. approval. that. able into we well, like do next know really You visibility have we to our We’ve a end of in share to submissions, are are to enrollment an have

Chris Pasquale

of then, reducing that. by into that guys but overlap noise And have of most COVID how studies in between a the of you lot curious are patients these thinking those studies and you little many touched, could are road? any Okay. is you about there were about COVID. that data these earlier, you treating bit the concern Mike, interpretation down Do the Just impacted complicate in a

and If you head try off? are doing anything to that

Mike Mussallem

observation. concerned things hospitalization that. about indicator we can COVID where Yes. measured in an studies get the as Yes, those those a rehospitalization a by, group, controlled the Chris, a definitely Especially outbreak. during moment are like and or affected group both is test good that’s

am sort much is of end of FDA’s very it radar on that that those and screen So, concern. It’s do play. all I sure have companies trials

our the investigators try is, then, of working it news between principal the and with people are variabilities. FDA to about it. PIs are Our And and and good all cognizant deal are together those

Chris Pasquale

Thanks.

Operator

Thank you.

comes Please next with UBS. Our question Matt state your Taylor question. from

Matt Taylor

if on doing you that so taking the questions you that just could well. to on congrats more are see from Hi. aren’t for quarter. I Thank operating the want and regions in you get specificities Again

is Europe there in Japan in some some concerns and and mentioned You APAC.

should insight we view them or improving worse Could Just want to getting think you us in about QX. QX how versus give any into that?

Mike Mussallem

into U.S. a of tend it would to really might Yes. discrete its that world. small, might I get to has we the because countries make but and are discretely, go the We in misleading, total, a at mean, not of difference. then of look pretty rest what happens be is, get hotspots. look at in as we one in and region terms though When each each Europe even those the Japan, total, country-by-country

looks but we where So, optimism But quite then the I the that in for we approval in are – of Europe. They same countries, hotspots go in quarter. low of can are vulnerable the about are positive. at well low There in lockdown, U.S. in The example, high performed total, some countries, second level very level U.S. for the on those that a you struggling thing doing Japan, specifics well. The the to are can have know Nordic growth. the Europe and more. greater is time But future. have overall, a they same pretty at the risk places to

even So, each put rest positive. the the very But is world growth. of these of has nice

their makes to of More that So, region. we smaller a are if in going affects Matt. nature, major hotspot have be probably that sense, a those don’t

Matt Taylor

color. much. good so Thanks That’s Yes.

Operator

it at Session. And will now for Question-And-Answer that’s remarks. the end turn back I of Thank to today’s you. management closing

Mike Mussallem

all Okay. telephone. welcome in questions and any for Scott Mark continued your Well, by thanks interest Edwards. additional and I

Operator

a All day. may great parties disconnect. conference. Thank you. today's concludes This Have

Edwards Lifesciences (EW) 30 Jul 212021 Q2 Earnings call transcript