Edwards Lifesciences Corporation

Greetings and welcome to the Edwards Life Sciences third quarter 2021 results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. 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 and Treasurer. Thank you. You may begin.

Thank you very much, Diego. Good afternoon, and thank you all for joining us. With me on today's call are Mike Musalem, Chairman and Chief Executive Officer, and Scott Ullum, Chief Financial Officer. Just after the close of regular trading, Edwards Life Sciences released third quarter 2021 financial results. During today's call, management will discuss those results included in the press release and accompanying financial schedules, and then use the remaining time for Q&A. Please note that management will be making forward-looking statements that are based on estimates, assumptions, and projections. These statements include but aren't limited to financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters, and foreign currency fluctuations. These statements speak only as of the date of which they are made and Edwards does not undertake any obligation to update them after today. Additionally, the statements involve risks and uncertainties, including, but not limited to, those associated with the pandemic that could cause actual results to differ materially. Information concerning factors that could cause these differences and important product safety information can be found in the press release, our 2020 annual report on Form 10-K, and Edwards' other SEC filings, all of which are available on the company's website at edwards.com. Finally, A quick reminder that when using the terms underlying and adjusted, management is referring to non-GAAP financial measures. Otherwise, they're referring to GAAP results. Reconciliations between GAAP and non-GAAP numbers mentioned during the call are included in today's press release. With that, I'd like to turn the call over to Mike for his comments. Mike?

Thanks, Mark. Let me begin by expressing appreciation for our global teams who have been highly engaged throughout the pandemic. We're also pleased that our supply chain remained resilient during these challenging times to meet the needs of the patients we serve. Turning to results, third quarter total company sales of $1.3 billion increased 14% on a constant currency basis versus the year-ago period. Strong mid-teens growth was driven by our innovative platforms, although lower than our July expectations, due to the significant impact COVID had on US hospitals. Although we experienced encouraging signs of patient confidence and continued willingness to seek medical care in July, the Delta variant had a significant impact on hospital resources during the last two months of the third quarter, especially in the US. Despite the pronounced impact of the Delta variant in the U.S., in Q3, we're encouraged by the recent decline in hospital COVID admissions. We believe some procedures were unfortunately deferred in the third quarter. And based on what we saw in Q2, we expect many of these patients who deferred treatment in Q3 will be treated in the future. We continue to expect total company sales growth to be in the high teens for the full year. In TAVR, third quarter global sales were $558 million, up 14% on an underlying basis versus the year ago period. We estimate global TAVR procedure growth was comparable with our growth in the third quarter. Globally, our average selling price remains stable. In the U.S., our TAVR sales grew 12% on a year-over-year basis, and we estimate that our share of procedures was stable. Growth was broad-based across both high and low volume centers. As you might expect, procedure volumes in Q3 were affected by seasonality and varied by geography and even by hospital as patients and providers turned their focus again to the pandemic. Our TAVR sales in July benefited from encouraging signs of continued recovery from the pandemic However, procedures were negatively impacted in the last two months of Q3 due to the significant impact Delta had on hospital resources. Outside the U.S., in the third quarter, our sales grew approximately 20% on a year-over-year basis, and we estimate total TAVR procedure growth was comparable. We continue to be encouraged by strong international adoption of TAVR broadly in all regions. And despite the impact of Delta, the TAVR market in Europe showed relative resilience with strong growth in procedure volumes. Growth was broad-based across Europe and driven by continued strong adoption of our Sapien 3 Ultra platform. We were pleased with the growth rate, considering that in Q3 of 2020, centers in Europe had already recovered from pandemic lows. Longer term, we see excellent opportunities for continued OUS growth as we believe global adoption of TAVR therapy remains quite low. It's worth noting that recently published guidelines from the European Association of Cardiothoracic Surgery now definitively recommend TAVR for patients over the age of 75. The acknowledgement by the Surgical Society that TAVR is preferred for those over 75 is a significant development. We believe these guidelines represent an important long-term opportunity, and although transcatheter valves have been commercially available for over a decade in Europe, it remains clear that there is still a large unmet need for this therapy. Strong TAVR adoption continued in Q3 in Japan. As expected, we received reimbursement approval in Q3 for treatment of patients at low surgical risk. We remain focused on expanding the availability of TAVR therapy throughout this country, driven by the fact that AS remains a significantly under-treated disease amongst this large elderly population. At the upcoming TCT meeting, there's a planned late-breaking update on the economic outcomes of partner three at two years. In summary, Based on October procedure trends, we expect Q4 growth for TAVR to be similar to Q3. We continue to expect underlying TAVR sales growth of around 20% in 2021. We remain as confident as ever about the long-term potential of TAVR because of its transformational impact on the many patients suffering from aortic stenosis and because many remain untreated. The long-term potential reinforces our view that this global TAVR opportunity will exceed $7 billion by 2024, which implies a low double digit compound annual growth rate. Now turning to TMTT, we've made meaningful progress across all our platforms with over 6,000 patients treated to date. To transform treatment and unlock this significant long-term growth opportunity, we remain focused on three key value drivers, a portfolio of differentiated therapies, positive pivotal trial results to support approvals and adoption, and favorable real-world clinical outcomes. This quarter, we've progressed on the enrollment of five pivotal trials across our portfolio to support therapies for patients suffering from mitral and tricuspid regurgitation. We are gaining experience with the Pascal precision platform as part of our class trials and physician feedback continues to be positive. We look forward to presenting randomized data from the class 2D pivotal trial next year and remain on track for the U.S. approval of Pascal for patients with DMR late next year. This important milestone will mark a transition from large single arm studies to significant pivotal trial results that support approval and adoption and will be the first of several key data sets from our CLASP trials. We continue to treat patients with both of our transcatheter mitral replacement therapies through the ENCIRCLE pivotal trial for sapien M3 and the MISEN study. of Evoke EOS. We are ramping up enrollment with our novel Evoke Tricuspid Replacement Therapy as part of the TRICEN2 Pivotal Trial. These promising transfemoral therapies are critical for many patients without treatment options today and exemplify the importance of a comprehensive portfolio. As we continue to expand our body of clinical evidence, we look forward to presenting meaningful data at TCT and PCR London valves next month. Presentations will include six-month outcomes of evoked tricuspid replacement from our clinical trial experience in the TRISEN study. In addition, 30-day outcomes for mitral repair with Pascal from our MyCLASP post-market clinical follow-up study of over 250 patients. We also anticipate several live case demonstrations of our differentiated therapies. Turning to the financial performance in TMTT, despite the impact of Delta and summer seasonality, global sales of $22 million were driven by the continued adoption of Pascal in Europe. As we expanded commercially, we continue to experience high procedural success rates and excellent clinical outcomes for patients and we remain committed to employing our high touch clinical support model. We're pleased with our level of site activation during the quarter. We continue to expect to achieve our previous full year guidance of 80 to $100 million and estimate the global TMTT opportunity to triple to approximately $3 billion by 2025. And we're pleased with our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease. In surgical structural heart, third quarter global sales were $217 million, up 6% on an underlying basis versus the year ago period. Despite the Q3 resurgence in COVID cases, we're encouraged to see continued SAVR procedure growth across most regions. We remain encouraged by the steady global adoption of Edwards Resilia tissue valves, including the Inspiris Resilia aortic valve, the Connect Resilia valve conduit, and our Mitris Resilia mitral valve. This advanced tissue treatment is increasingly supported by a growing body of real-world evidence as demonstrated at the European Association of Cardiac Thoracic Surgeons annual meeting earlier this year. Registry data confirmed excellent real-world outcomes with Inspiris Resilia in patients under the age of 60. As patients increase their awareness of surgical valve choices, we believe that they're learning about the durability potential of Resilia and engaging with their physicians to choose this technology. In summary, we have confidence that our full-year 2021 underlying sales growth will be in the mid teens for surgical structural heart driven by market growth and adoption of our premium technologies. We continue to believe the surgical structural heart market that we serve will grow mid single digits through 2026. In critical care, third quarter global sales were $213 million, up 17% on an underlying basis versus the year ago period. Growth was driven by contributions from all product lines, led primarily by strong hemisphere capital sales in the U.S. Our TruWave disposable pressure monitoring devices used in the ICU remained in demand due to the elevated hospitalizations in the U.S., and demand for products used in high-risk surgery also grew year over year, in addition to demand for the ClearSight noninvasive finger cuff used in elective procedures. In summary, we continue to believe that critical care will grow revenue in the low double digit range in 2021. We remain excited about our pipeline of critical care innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients. And now I'll turn the call over to Scott.