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    EW
    Earnings call· Jun 2025(Q2 FY25)

    Edwards Lifesciences Q2 FY25 earnings call EW

    Jul 24, 2025 Source

    Executive summary

    Edwards Lifesciences Q2 FY25 — Double-Digit Sales Growth Driven by Broad Portfolio and Strong TAVR Performance

    Edwards Lifesciences delivered strong Q2 FY25 results, exceeding expectations with double-digit sales growth across its structural heart portfolio, notably TAVR and TMTT. The company raised its full-year sales and adjusted EPS guidance, driven by broad-based adoption of differentiated therapies and anticipated catalysts like asymptomatic AS approval and SAPIEN M3. Management remains confident in its long-term growth strategy and operating leverage goals, despite expected second-half margin pressures.

    Highlights

    5

    • Total sales of $1.53 billion grew 10.6% (constant currency) over prior year, exceeding expectations.

    • Full-year 2025 sales growth guidance raised to 9% to 10% (constant currency).

    • Adjusted EPS guidance raised to the high end of the original $2.40 to $2.50 range.

    • TMTT sales grew 57% to $133 million, reflecting strong adoption of PASCAL and EVOQUE.

    • Surgical sales increased 6.8% to $267 million, driven by positive procedure growth.

    Concerns

    4

    • Adjusted gross profit margin decreased to 77.6% from 80% in the prior year, impacted by manufacturing expenses and foreign exchange.

    • Selling, general and administrative expenses increased to $502 million or 32.8% of sales.

    • Expected lower second half operating margin (mid-20%) compared to the first half, due to deferred spending and anticipated JenaValve acquisition impact.

    • Tariff impact on full-year EPS, though reduced, is still expected to be less than half of $0.05.

    Guidance & targets

    16
    CategoryTargetConfidence
    Full-year 2025 Sales Growth (constant currency)
    9% to 10%
    high materiality
    High
    Full-year 2025 Adjusted EPS
    high end of $2.40 to $2.50
    high materiality
    High
    Full-year TAVR Sales Growth
    6% to 7%
    medium materiality
    High
    Full-year TAVR Sales
    $4.3 billion to $4.5 billion
    medium materiality
    High
    Full-year TMTT Sales
    $530 million to $550 million
    medium materiality
    High
    Full-year Surgical Sales Growth
    mid-single-digit
    medium materiality
    High
    Full-year 2025 Adjusted Gross Profit Margin
    78% and 79%
    medium materiality
    High
    Full-year 2025 Operating Margin
    27% to 28%
    medium materiality
    High
    Full-year 2025 Tax Rate (excluding special items)
    15% to 18%
    low materiality
    High
    Full-year 2025 Shares Outstanding
    $585 million to $590 million
    low materiality
    High
    FX Impact on Full-year 2025 Sales
    approximately $30 million upside
    low materiality
    High
    Q3 Sales
    $1.46 billion to $1.54 billion
    medium materiality
    High
    Q3 Adjusted EPS
    $0.54 to $0.60
    medium materiality
    High
    SAPIEN M3 U.S. Approval
    First half of 2026
    high materiality
    High
    JenaValve Acquisition Close
    during the third quarter
    medium materiality
    Medium
    Operating Profit Margin Expansion
    50 to 100 basis points
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    TAVR
    Growth comparable in U.S. and OUS. Competitive position and pricing remained stable. Performance was better than expected, driven by renewed clinical focus on TAVR and early TAVR data, as well as recent asymptomatic indication approvals for SAPIEN 3 in the U.S. and Europe.
    		$1.1 billion7.8%——
    TMTT
    Impressive growth reflecting the strength and differentiation of the portfolio of repair and replacement therapies. PASCAL and EVOQUE were significant contributors to growth. Mitral procedures are growing double digits globally, and the tricuspid opportunity is growing much faster. Received CE Mark for SAPIEN M3 in Q2.
    		$133 million57%——
    Surgical
    Positive procedure growth globally for patients treated with resilient technologies. RESILIA 8-year data demonstrated excellent durability. Received CE Mark approval for KONECT in Europe during the quarter.
    		$267 million6.8%——

    Operational metrics

    16
    Adjusted EPS
    $0.67
    Q2 FY25

    Reported adjusted earnings per share.

    GAAP EPS
    $0.57
    Q2 FY25

    Reported GAAP EPS, included a onetime charge related to external investments.

    Adjusted Gross Profit Margin
    77.6%compared to 80% prior year
    Q2 FY25

    In line with expectations, but lower year-over-year.

    Selling, General and Administrative Expenses
    $502 millioncompared to $448 million prior year
    Q2 FY25

    Increased spending, with more expected in H2 due to deferred spending and JenaValve.

    Research and Development Expense
    $276 millioncompared to $272 million or 19.8% of sales prior year
    Q2 FY25

    Increase in spending, decrease as a percentage of sales, reflecting strategic prioritization.

    Adjusted Operating Profit Margin
    28.2%year-over-year improvement
    Q2 FY25

    Benefited from better-than-expected sales performance and deferred spending to H2.

    Reported Tax Rate
    16.1%
    Q2 FY25

    Reported tax rate for the quarter.

    Tax Rate (excluding special items)
    16.8%
    Q2 FY25

    Tax rate excluding the impact of special items, in line with expectations.

    Cash and Cash Equivalents
    $3 billion
    as of June 30

    Strong and flexible balance sheet.

    Share Repurchase Authorization Remaining
    $1 billion
    as of Q2 FY25

    Remaining under its share repurchase authorization.

    Average Diluted Shares Outstanding
    588 million
    Q2 FY25

    Average diluted shares outstanding during the quarter.

    FX Impact on Reported Sales Growth
    130 bps
    Q2 FY25

    Increased second quarter reported sales growth compared to prior year.

    FX Impact on Gross Profit Margin
    60 bpscompared to prior year
    Q2 FY25

    Negatively impacted second quarter gross profit margin.

    FX Impact on EPS
    nominalrelative to April guidance
    Q2 FY25

    FX rates had a nominal impact on second quarter earnings per share relative to April guidance.

    Mitral Tier Procedures Growth
    double digits
    Q2 FY25

    Mitral tier procedures continue to grow globally.

    Tricuspid Opportunity Growth
    much faster
    Q2 FY25

    Developing tricuspid opportunity growing much faster across both repair and replacement.

    Industry KPIs

    7
    MetricValueDetails
    Tariff impactless than half of $0.05USD
    Pricing realized price—
    New product launch ramp—
    Procedure volume growthdouble digits%
    FCF conversion leverage guidance9% to 10%%
    Segment franchise organic growth10.6%%
    Pivotal trial clinical evidence milestones—

    Deals & partnerships

    1
    JenaValveExpected acquisition of JenaValve Technology

    Reaching the end of the regulatory review process, hopeful to close during the third quarter.

    Risks & headwinds

    5
    Gross Profit Margin PressureQ2 FY25, expected to continue impacting full year

    77.6% in Q2 FY25 vs 80% prior year

    Operating Margin Pressure in H2 FY25Second half of 2025

    Mid-20% operating margins for H2 FY25 (lower than H1)

    Tariff Impact on EPSFull year 2025

    Less than half of $0.05 EPS impact for full year (down from $0.05)

    NCD Update DelayOngoing

    Not quantified

    Mitigation: Company continues to work with CMS and provide information to advocate for reopening the NCD.

    Asymptomatic AS Coverage RiskOngoing until NCD update

    Not quantified

    Mitigation: Local MACs evaluate cases individually; company provides data. Some hospitals are waiting for NCD update to avoid risk of cases being rejected.

    What to watch in Q3 FY25

    5

    JenaValve Acquisition Close

    Q3 2025
    CurrentPending regulatory review
    TargetClosed

    Why it matters

    The acquisition is expected to have a negative effect on EPS and operating margin upon closing, impacting H2 FY25 financial performance.

    We are reaching the end of the regulatory review process and expect a decision soon. We remain hopeful that we will be able to close the acquisition during the third quarter.

    Q&A highlights

    7

    What drove the better-than-expected U.S. TAVR performance, and was asymptomatic AS already contributing?

    Management stated that the strong U.S. TAVR growth was primarily due to a renewed clinical focus on managing severe AS patients, driven by the early TAVR data. While some centers participating in the early TAVR trial might see a slight impact, significant asymptomatic volume is not yet a major driver, with future catalysts like NCD and guidelines expected to contribute more.

    “I think what we're seeing is just a renewed attention on the management of patients with severe aortic stenosis. And I think this data set was very powerful.”

    asked by Robbie Marcus · answered by Larry Wood

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Focus and Portfolio Diversification

    Edwards Lifesciences is executing a sharpened focus strategy, anticipating key milestones such as asymptomatic AS approval, EVOQUE launch expansion, SAPIEN M3 introduction, and strategic entry into structural heart failure and aortic regurgitation. This approach aims to position the company for sustainable growth across a balanced portfolio of aortic, mitral, and tricuspid therapies, reducing reliance solely on TAVR as the primary growth driver. The company emphasizes its unique innovation process and long-term commitment to addressing unmet patient needs.

    02

    TAVR Market Dynamics and Catalysts

    Global TAVR sales grew 7.8% to $1.1 billion, with comparable growth in the U.S. and OUS, exceeding expectations. This performance was driven by a renewed clinical focus on managing severe AS patients, spurred by recent early TAVR data and the SAPIEN 3 platform's asymptomatic indication approvals in the U.S. and Europe. Management anticipates future catalysts, including updated NCD and guidelines, to drive multi-year growth. Long-term data from PARTNER II (10-year outcomes) and Detect AS (EcoAlerts impact) further reinforce the value of early intervention.

    03

    TMTT Growth and Innovation

    The Transcatheter Mitral and Tricuspid Therapies (TMTT) product group achieved impressive 57% sales growth, reaching $133 million. This growth reflects strong adoption and differentiation of the PASCAL and EVOQUE technologies. The recent CE Mark approval for the pioneering SAPIEN M3 valve further strengthens Edwards' position as a leader in transcatheter mitral and tricuspid repair and replacement. Enrollment has also commenced for the large TRISCEND III clinical trial in Europe, which will track EVOQUE outcomes over five years.

    04

    Surgical Segment Performance

    The Surgical product group reported global sales of $267 million, an increase of 6.8% over the prior year. This growth was attributed to positive procedure trends globally for patients treated with resilient technologies like INSPIRIS, MITRIS, and KONECT. The company highlighted the impact of RESILIA 8-year data, demonstrating excellent durability and reduced reoperation rates. Additionally, KONECT received CE Mark approval in Europe during the quarter.

    05

    Financial Performance and Outlook

    Edwards reported adjusted earnings per share of $0.67, benefiting from better-than-expected sales. The adjusted gross profit margin was 77.6%, down from 80% year-over-year, primarily due to increased manufacturing expenses for new therapies and foreign exchange impact🌐s. Despite expected lower operating margins in the second half of 2025 due to deferred spending and the anticipated JenaValve acquisition, the company raised its full-year sales and adjusted EPS guidance, maintaining confidence in its long-term financial targets.

    06

    Leadership Transition in TAVR

    Larry Wood, Global Group President of TAVR and Surgical, will depart Edwards in early September after 40 years of service. Dan Lippis, with over 15 years of TAVR experience in the U.S., Europe, and Asia, will succeed him as the global leader of the TAVR franchise. This transition is expected to be smooth, leveraging Dan's deep experience to build on the current momentum and ensure continued long-term success for the TAVR business.

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