Edwards(EW) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total company sales for Q2 2024 reached $1.6 billion, reflecting an 8% increase on a constant currency basis compared to the previous year [10] - Adjusted EPS was$ 0.70, while GAAP EPS was $0.61, which included one-time separation expenses related to the sale of Critical Care [36][50] - Adjusted gross profit margin was 77.1%, down from 77.7% in the same period last year, primarily due to foreign exchange impacts [39] Business Line Data and Key Metrics Changes - TAVR sales in Q2 were$ 1.04 billion, a 6% year-over-year increase, which was lower than expected [13] - TMTT sales reached $83 million, representing a 75% increase year-over-year, driven by the PASCAL repair system and early commercial introduction of EVOQUE [23] - Surgical structural heart sales were$ 264 million, up 5% from the prior year, supported by strong adoption of premium surgical technologies [29] - Critical Care sales were $246 million, increasing 7% year-over-year, led by pressure monitoring devices [30] Market Data and Key Metrics Changes - In the US, TAVR sales growth was slightly below the global constant currency growth rate, impacted by increased competition and hospital workflow pressures [16] - Outside the US, TAVR sales growth was slightly above the global average, with double-digit growth in Japan driven by SAPIEN 3 Ultra RESILIA [20] - The company anticipates TAVR sales growth for the second half of the year to be between 5% to 7%, down from previous guidance of 8% to 10% [21] Company Strategy and Development Direction - The company announced acquisitions of JenaValve and Endotronix to expand into new therapeutic areas, specifically aortic regurgitation and heart failure [12][31] - The strategic focus remains on advancing TAVR and TMTT technologies, with a commitment to improving patient care and expanding market share [45] - The company is confident in its long-term growth strategy, aiming for sustainable double-digit revenue and earnings growth [51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that TAVR growth was below expectations due to increased competition and hospital workflow challenges, but remains optimistic about long-term opportunities [11][70] - The company is focused on improving referral and treatment rates for patients with severe symptomatic aortic stenosis through initiatives like the ENACT patient activation program [18] - Management expects minimal revenue contribution from recent acquisitions in 2025 but anticipates long-term growth opportunities from these investments [34][43] Other Important Information - The company plans to close the sale of Critical Care by late Q3 2024, with one-time costs associated with the sale impacting financials [42] - The company maintains a strong balance sheet with approximately$ 2 billion in cash and short-term investments as of June 30 [42] Q&A Session Summary Question: What would be compelling for early TAVR? - Management indicated that a compelling case for early intervention would need to demonstrate significant benefits, such as mortality reduction, to drive TAVR growth [56][58] Question: What is the outlook for TAVR growth? - Management acknowledged that TAVR growth has been slower than expected, but they believe hospitals will adapt and scale to support increasing volumes over time [70][74] Question: How does the company view the TAVR market's long-term potential? - Management remains confident in the long-term potential of the TAVR market, with a previously stated total addressable market of $10 billion by 2028, although they are not updating guidance at this time [95][96]