Edwards Lifesciences Corporation

Greetings and welcome to the Edwards Life Sciences first quarter 2022 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow a 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.

Hey, thanks, Diego, and thank you all for joining us this afternoon. With me on today's call are Mike Musalem, Chairman and Chief Executive Officer, and Scott Musalem, Chief Financial Officer. Just after the close of regular trading, Edwards Life Sciences released first quarter 2022 financial results. During today's call, management will discuss those results included in the press release and accompanying financial statements, 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 on which they were made, and Edwards does not undertake any obligation to update them after today. Additionally, the statements involve risks and uncertainties that could cause actual results to differ materially. Information concerning factors that could cause these differences and important safety information may be found in the press release, our 2021 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. And with that, I'd like to turn the call over to Mike for his comments. Mike? Thank you, Mark.

Let me begin by saying I remain very proud of our team's steadfast dedication to our patient-focused strategy. Throughout the first quarter, our supply chain delivered, and our field team continued to support the skilled clinicians and patients who count on Edwards. We continue to believe that 2022 will be an important year for Edwards Life Sciences as we expect low double digit sales growth and meaningful progress on our pursuit of significant opportunities to improve patient care. Looking beyond 2022, we remain competent in our long term strategy and our pipeline of innovative therapies. Our patient focused culture drives us and motivates our employees around the world and our R&D targets breakthrough therapies that can create significant value for patients and health systems, enabling strong organic sales growth. As we're hopeful the worst of the pandemic is behind us, we're constantly reminded of the importance of our work as we pursue solutions for cardiovascular disease, which continues to be the number one killer in the U.S. and the world, well ahead of cancer and other deadly conditions. Turning now to our first quarter financial results. Sales of $1.3 billion increased 13% on a constant currency basis versus the year-ago period. Despite the impact that Omicron had on hospital capacity, resources, and procedure volumes in January, especially in the U.S., Q1 global sales were moderately better than our expectations. Sales were lifted by performance outside the U.S., where we experienced a less pronounced impact from the pandemic. Underlying sales growth was double-digit across all regions and benefited from improving trends as we progressed through the first quarter. In TAVR, first quarter global sales were $881 million, an increase of 14% on an underlying basis with continued strong growth outside the U.S., We estimate that global TAVR procedure growth was comparable with our own growth, and average selling prices were stable globally. In the US, our first quarter TAVR sales grew approximately 10% versus the prior year, and we estimate total procedure growth was comparable. TAVR adoption was broad-based across hospitals, and our sapien valves continued to demonstrate distinguished clinical performance. Outside the U.S., in the first quarter, our underlying TAVR sales grew approximately 20% on a year-over-year basis, and we estimate total procedure growth was comparable. We continue to see excellent opportunities for OUS growth as international adoption of TAVR therapy remains low. In Europe, Edward's sales growth was driven by the continued strong adoption of our SAPIEN platform and was broad-based across all countries. Our treatment rates recovered nicely throughout the quarter, although they differed by country, reflecting variable COVID impacts. We estimate that our competitive position was stable. In Japan, we also experienced strong TAVR adoption and the number of TAVR procedures performed exceeded surgical aortic valve replacement. Following reimbursement approval last year for the treatment of patients at low surgical risk, we remain focused on expanding the availability of TAVR therapy throughout the country. And broadly across the globe, we continue to see encouraging TAVR adoption in many under-penetrated countries. In addition to geographic expansion, we remain focused on helping more patients gain access to TAVR therapy. In Q1, we continue to advance two pivotal trials aimed at expanding indication. First, our early TAVR trial for the large group of patients with severe AS and no diagnosed symptoms. And second, our progress trial that is evaluating patients with moderate AS, which represents a group that is much larger than those with severe AS. We also remain on track to begin treating patients this quarter in our alliance pivotal trial for our next generation TAVR technology, Sapien X4. In summary, assuming no new COVID headwoods and a gradual improvement in US hospital staffing shortages throughout the year, we continue to plan for underlying TAVR sales growth to be in the range of 12 to 15%. We remain confident that this large global opportunity will double to $10 billion by 2028, which implies a compounded annual growth rate in the low double digit range. Now, turning to TMTT. To transform patient care and unlock the significant long-term growth opportunity, we continue to make steady progress 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. We're pleased with our high procedural success rates, and we continued our strong momentum with more patients than ever treated with our TMTT technologies this quarter. In mitral repair, we continue to achieve excellent clinical outcomes with Pascal as we expand commercially and treat more patients in Europe. We remain on track for U.S. approval of Pascal Precision for patients with degenerative mitral regurgitation late this year supported by our class 2D pivotal trial. We continue to advance the enrollment of class 2F pivotal study for patients with functional mitral regurgitation. And later this year, we expect European approval of our new Pascal precision system, which is engineered for enhanced navigation and an intuitive user experience, extending our differentiated platform. In mitral replacement, we continue to broaden our experience with both of our transcatheter mitral replacement technologies through the Encircle Pivotal Trial for Sapien M3 and the Misen Study for Evoke EOS. This early experience with these sub-30 French transfemoral therapies gives us confidence that these platforms have the potential to transform treatment for the many patients in need. Turning to transcatheter tricuspid therapies. As we continue to build a body of clinical evidence for Pascal in the tricuspid position, we are pleased with the recently presented late breaking data at the ACC meeting last month. We are encouraged by the sustained significant reduction in tricuspid regurgitation and improvements in quality of life measures experienced by patients and look forward to bringing additional clinical evidence through our CLASP2-TR pivotal trial, which is currently enrolling. In addition, we continue to make progress in enrolling our TRISEN2 pivotal trial of the EVOKE system. We expect a late 2022 approval for EVOKE tricuspid replacement in Europe and remain committed to providing solutions for these patients who have a very poor prognosis and few treatment options today. Turning to our results, first quarter global TMTT sales were $27 million driven by the continued adoption of the Pascal platform in Europe. Although there was an impact from COVID early in the quarter, we exited March with positive momentum. As we expand in Europe, physicians continue to achieve high procedural success rates and excellent clinical outcomes. Assuming A diminishing COVID-related impact, we are planning a gradual ramp in Q2 and a significant acceleration in the second half of the year to reach our 2022 sales guidance of $140 to $170 million. We look forward to continuing our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease. In surgical structural heart, First quarter 2022 global sales of $221 million increased 6% on an underlying basis over the prior year. Despite a soft start to the year associated with COVID, we are encouraged by the steady improvement across most regions over the course of the quarter, driven by increased penetration of premium technologies and procedure growth. Although hospital staffing shortages remain a concern, we believe that life-saving surgical therapies continue to be prioritized. At the end of March, we announced the U.S. FDA approval and commercial launch of our Mitras Resilient Valve, which adds to the portfolio of durable, resilient tissue products with a valve designed for the heart's mitral positions. Built upon previous generations of proven mitral valve technology, Mitras offers greater ease of use and is designed to facilitate potential future transcatheter interventions. Today, nearly 60% of the world's surgical mitral valves are mechanical. Resilient tissue should allow patients to thrive without the quality of life compromises that may come from having a mechanical valve. Initial feedback from U.S. surgeons has been very positive. In summary, we remain confident that our full year 2022 underlying sales growth will be in the mid single digit range for a surgical structural heart driven by market adoption of our newest premium technologies. In critical care, first quarter sales of $212 million increased 11% on an underlying basis driven by balanced contributions from all product lines. Demand for our state-of-the-art hemisphere monitoring platform remained strong and lifted our sales. Our broad portfolio of smart recovery sensors and our TruWave disposable pressure monitoring devices supported the increased number of patients in the ICU in the first quarter. Additionally, we continued enrollment in the HPI SmartBP trial focused on generating additional clinical evidence to support the adoption of our hypotension predictive index software. In summary, we continue to expect mid single digit underlying sales growth for 2022, which are moderated by the strong prior year comparisons over the remainder of the year. 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.