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    EW
    Earnings call· Mar 2025(Q1 FY25)

    Edwards Lifesciences Corp EW

    Apr 23, 2025 Source

    Executive summary

    Edwards Lifesciences Q1 FY25 — Strong TMTT Growth and Strategic Milestones Drive Confidence

    Edwards Lifesciences delivered a strong first quarter, driven by robust TMTT performance and strategic milestones in TAVR and mitral/tricuspid therapies. The company successfully navigated tariff and acquisition headwinds, reaffirming its full-year EPS guidance through operational efficiencies and prioritized investments. Management remains confident in its long-term growth strategy, focusing on innovation and expanding access to structural heart treatments globally.

    Highlights

    5

    • Total company sales grew 8% to $1.41 billion in Q1.

    • TMTT sales grew approximately 60% to $115 million, leading to raised full-year guidance.

    • Adjusted EPS of $0.64, at the top end of the expected range.

    • Successful launch of EVOQUE in the U.S. and Europe, with NCD finalization expanding patient access.

    • European approval of SAPIEN M3, the world's first transcatheter mitral valve replacement system.

    Concerns

    4

    • Estimated $0.05 EPS impact from tariffs in 2025, with a larger impact expected in 2026.

    • Estimated $0.05 to $0.10 EPS dilution from the JenaValve acquisition.

    • Weaker procedure growth environment and competitive pressure in Japan for TAVR.

    • Surgical growth of 3% in Q1 was slower than recent trends, though mid-single-digit guidance maintained.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year total company sales growth
    8% to 10%
    high materiality
    High
    Full-year TMTT sales
    $530 million to $550 million
    medium materiality
    High
    Full-year total company sales
    $5.7 billion to $6.1 billion
    high materiality
    High
    Full-year EPS
    $2.40 to $2.50
    high materiality
    High
    Full-year gross margin
    78% to 79%
    medium materiality
    High
    Full-year operating margin
    27% to 28%
    medium materiality
    High
    Full-year tax rate (excluding special items)
    15% to 18%
    low materiality
    High
    Full-year average diluted shares outstanding
    $585 million to $595 million
    low materiality
    High
    Q2 sales
    $1.45 billion to $1.53 billion
    medium materiality
    High
    Q2 adjusted EPS
    $0.59 to $0.65
    medium materiality
    High
    Full-year TAVR sales growth
    5% to 7%
    medium materiality
    High
    Full-year Surgical sales growth
    mid-single-digit range
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    TAVR
    Growth was comparable in the U.S. and OUS. SAPIEN 3 Ultra RESILIA platform demonstrated strong performance in the U.S. and Europe. Japan faced weaker procedure growth and competitive pressure.
    Growth adjusted for billing days: 6.5%Pricing: stable globally with some regional variability
    		$1.05 billion5.4%——
    TMTT
    Growth led by increased adoption and balanced contribution from PASCAL and EVOQUE in the U.S., Europe, and globally. EVOQUE commercial launch progressing well. SAPIEN M3 approved in Europe.
    Mitral TEER procedures growth: double digitsTricuspid opportunity growth: faster than mitral TEER
    		$115 million60%——
    Surgical
    Benefited from increasing adoption of premium RESILIA portfolio (INSPIRIS, MITRIS, KONECT). MITRIS launched in China. Expected CE Mark approval for KONECT in Europe before year-end.
    		$251 million3%——

    Operational metrics

    13
    Adjusted EPS
    $0.64
    Q1 FY25

    GAAP EPS for the quarter was $0.62.

    Adjusted Gross Profit Margin
    78.7%78.5% in same period last year
    Q1 FY25
    SG&A Expenses
    $466 million
    Q1 FY25

    Better than expectation, driven by lower sequential spending and deferral of certain strategic investments.

    R&D Expense
    $255 million19.6% of sales in previous quarter
    Q1 FY25

    Lower ratio of spending reflects prioritized investments in structural heart portfolio.

    Adjusted Operating Profit Margin
    29.1%
    Q1 FY25

    Driven by better-than-expected sales and favorable mix, as well as some variable expenses delayed beyond Q1.

    FX Impact on Reported Sales
    -$22 million-170 bps
    Q1 FY25

    Decreased first quarter reported sales growth compared to the prior year.

    Cash and Cash Equivalents
    $3 billion
    Q1 FY25

    Maintains a strong and flexible balance sheet.

    Stock Repurchases
    $300 million
    Q1 FY25

    Repurchased stock through a preestablished plan.

    Remaining Share Repurchase Authorization
    $1 billion
    Q1 FY25
    Average Diluted Shares Outstanding
    588 million
    Q1 FY25
    Tariff Impact on EPS
    $0.05
    FY25

    Based upon the tariffs that are already in place.

    JenaValve Acquisition Dilution on EPS
    $0.05 to $0.10
    FY25

    Based upon estimates and preliminary plans for integration, pending deal close.

    FX Impact on FY25 Reported Sales
    no impactvs. $100 million reduction previously guided
    FY25

    At current rates, relative to 2024.

    Industry KPIs

    11
    MetricValueDetails
    Tariff impact$0.05USD
    System utilizationaccommodate procedure growth
    Pricing realized pricestable
    New product launch rampgradual buildup
    Procedure volume growthdouble digits%
    FCF conversion leverage guidance8% to 10%%
    Installed base system placementsprogressing well
    Segment franchise organic growth5.4%%
    Sales force commercial capacity buildgrowing number
    Indicated addressable patient population76years
    Pivotal trial clinical evidence milestonesstrong data

    Product announcements

    2
    ProductTypeDetails
    MITRISlaunch
    KONECT aortic valve conduitmilestone

    Deals & partnerships

    1
    JenaValve Technology, Inc.Acquisition of transcatheter aortic valve replacement (TAVR) company.

    Planning to close midyear. Management has plans in place to offset estimated dilution.

    Risks & headwinds

    4
    Tariff impactFY25 (larger impact in FY26)

    $0.05 EPS impact in 2025

    Mitigation: Plans in place to offset; strategically located production facilities; significant U.S. production.

    JenaValve acquisition dilutionFY25

    $0.05 to $0.10 EPS dilution in 2025

    Mitigation: Implementing plans to mitigate anticipated costs; focusing on prioritized R&D investments and discretionary spending adjustments.

    Weakening dollarFY25

    Pressure on operating margin

    Mitigation: Hedging strategy designed to mitigate the impact of foreign currency fluctuations on EPS guidance.

    Japan TAVR market weaknessQ1 FY25 (ongoing)

    Weaker procedure growth environment and competitive pressure

    Mitigation: Enhancing capability in the region to accelerate market growth and better position technology.

    What to watch in Q2 FY25

    5

    EARLY TAVR indication approval

    Q2 FY25
    CurrentPending
    TargetApproval decision

    Why it matters

    This approval is expected to unlock a multi-year growth opportunity for TAVR by expanding the treatable patient population.

    Looking ahead to the rest of the year, we continue to believe that the results of the early TAVR trial represent a multiyear growth opportunity that will begin with the expected indication approval in the second quarter

    Q&A highlights

    5

    How much do tariffs and JenaValve impact 2025 EPS, and how much lower could gross margin be?

    Scott Ullem detailed the EPS impact: ~$0.05 from tariffs (2025, larger in 2026 due to inventory capitalization) and ~$0.05-$0.10 from JenaValve acquisition. He noted the hedging program mutes FX impact on EPS.

    “For tariffs, it's probably about $0.05 to EPS based upon the tariffs that are already in place... For JenaValve, we think the impact is probably in the range of $0.05 to $0.10.”

    asked by Larry Biegelsen · answered by Scott Ullem

    2 min read5 chapters

    Detailed Narrative

    01

    TAVR Market Dynamics and Early TAVR Trial Impact

    The company's TAVR business saw better-than-expected growth in Q1, with SAPIEN technology continuing strong adoption. Management highlighted the multi-year growth opportunity from the EARLY TAVR trial results, expecting indication approval in Q2. New data presented at ACC underscored the unpredictable progression of asymptomatic AS and the need for urgent referrals, with echo alerts increasing treatment and survival rates. The average age of patients in the EARLY TAVR trial was 76, indicating that these are not necessarily younger patients.

    02

    TMTT Portfolio Expansion and NCD Finalization

    TMTT demonstrated impressive 60% growth, driven by PASCAL and EVOQUE. The finalization of the NCD for transcatheter tricuspid valve replacement expands Medicare coverage for EVOQUE, which is progressing well in its commercial launch. The recent European approval of SAPIEN M3 marks a significant step in addressing unmet needs for mitral regurgitation patients, with U.S. approval anticipated in 2026. Edwards is uniquely positioned with both repair and replacement options for mitral and tricuspid valves.

    03

    Surgical Business Performance and RESILIA Durability

    The Surgical product group achieved 3% growth, benefiting from the adoption of the premium RESILIA portfolio. Eight-year data presented at the Heart Valve Society Meeting demonstrated excellent durability of RESILIA tissue valves, showing significantly improved freedom from structural valve deterioration and reoperation compared to non-RESILIA valves. MITRIS launched in China, and CE Mark approval for KONECT in Europe is expected by year-end, contributing to confidence in mid-single-digit growth.

    04

    Financial Performance and Strategic Offsets

    Edwards reported adjusted EPS of $0.64, exceeding expectations due to strong sales and favorable mix. Despite anticipated pressures from tariffs (estimated $0.05 EPS impact) and the JenaValve acquisition (estimated $0.05-$0.10 EPS dilution), the company reaffirmed its full-year EPS and margin guidance. This was achieved by implementing plans to mitigate costs, focusing on prioritized R&D investments, and adjusting discretionary spending.

    05

    Long-term Growth and Innovation Strategy

    The company reiterated its confidence in a durable mid-to-high single-digit growth opportunity in TAVR, supported by upcoming indication approvals and the potential expansion to moderate AS patients through the PROGRESS trial in late 2026. Edwards' unique innovation strategy across TAVR, TMTT, and Surgical, coupled with its commitment to high-quality science and addressing unmet patient needs, positions it for significant value creation for patients and shareholders in 2026 and beyond.

    AI-generated summary of the company’s earnings call. Not investment advice.