Edwards(EW) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2024, total company sales grew 9% to $5.4 billion, aligning with original sales growth guidance [10][34] - Adjusted earnings per share for Q4 was$ 0.59, with GAAP earnings per share at $0.58 [34] - Adjusted gross profit margin for Q4 was 79%, down from 80% in the prior year [35] - Selling, general and administrative expenses in Q4 were$ 492 million, or 35.5% of sales, compared to $417 million in the prior year [36] - Research and development expenses in Q4 grew 12% year-over-year to$ 271 million, or 19.6% of sales [37] Business Line Data and Key Metrics Changes - TAVR full year 2024 global sales were $4.1 billion, increasing 6% year-over-year [18] - TMTT reported Q4 sales of$ 105 million, with full year sales of $352 million, a 77% increase year-over-year [26] - Surgical product group full year 2024 global sales were$ 981 million, up 6% versus the prior year [32] Market Data and Key Metrics Changes - TAVR sales growth was driven by the U.S. and Europe, with Q4 global sales of $1.04 billion, increasing 5.3% over the prior year [18][19] - Sales in Japan grew at a slower pace but still increased sequentially and year-over-year [24] - TMTT is expected to deliver over$ 500 million in sales in 2025, reflecting strong growth potential [15][31] Company Strategy and Development Direction - The company aims to solve unmet patient needs in structural heart disease, focusing on TAVR and TMTT as key growth drivers [9][11] - Strategic acquisitions in 2024, including JC Medical, JenaValve, and Endotronix, are expected to enhance the company's portfolio [12] - The company plans to grow total sales by 10% annually on average, with a focus on strengthening profit margins [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth opportunities in TAVR and TMTT, particularly with upcoming FDA approvals and guideline changes [15][46] - The company anticipates a sequential increase in Q1 sales, although growth rates for TAVR and total company sales are expected to be below the low end of full-year guidance [45][46] - Management highlighted the importance of clinical evidence and expanding indications for patients as catalysts for future growth [19][21] Other Important Information - The company maintains a strong balance sheet with approximately $3 billion in cash and cash equivalents as of December 31, 2024 [43] - Foreign exchange rates are expected to have a$ 130 million or 2.5% downside to sales in 2025 compared to the prior year [42] Q&A Session Summary Question: Dynamics driving TMTT performance in 2024 - Management noted that both PASCAL and EVOQUE contributed to TMTT's growth, with increasing adoption in the U.S. and Europe [51][54] Question: Sequential deceleration in Q1 guidance - Management explained that while Q4 ended strong, seasonal factors and one less selling day in Q1 are expected to impact growth rates [60][106] Question: Operating expenses guidance for 2025 - Management provided insights on maintaining flat SG&A and R&D spending while improving operating margins [65][67] Question: Regional pressures affecting TAVR growth - Management acknowledged some regional pressures, particularly in Japan, but emphasized commitment to enhancing capabilities in those markets [70] Question: Impact of NTAP and NCD on EVOQUE - Management expressed confidence that the NTAP and upcoming NCD will facilitate patient access and support growth for EVOQUE [80][112] Question: Training and adoption of EVOQUE - Management indicated ongoing training programs for EVOQUE, with a focus on expanding the number of centers and physicians involved [90][92]