Edwards Lifesciences Corporation

Greetings and welcome to the Edwards Life Sciences second quarter 2026 earnings 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, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. It is now my pleasure to introduce Jerry Ansarte, Head of Investor Relations. Thank you. You may begin.

Good afternoon, and thank you for joining us. With me on today's call is our CEO, Bernard Zovighian, and our CFO, Doretta Mistras. Also joining us for the Q&A portion of the call will be Dan Lippis, our global leader of TAVR, and Daveen Chopra, who has global responsibility for TMTT, surgical, and IHFM. After the close of regular trading, Edwards Lifesciences released second quarter 2026 financial results. During today's call, management will discuss the 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 speak only as of the date on which they are 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 from those expressed or implied by the forward-looking statements. Factors that could cause these differences can be found in today's press release and Edwards' other SEC filings, all of which are available on the company's website at Edwards.com. Unless otherwise noted, our commentary on sales growth refers to underlying sales growth, which is defined in the financial results press release issued earlier today. Reconciliations between gap and non-gap numbers mentioned during this call are also included in today's press release. Quarterly and full-year growth rates refer to continuing operations. With that, I'll turn it over to Bernard for his comments. Bernard?

Thank you, Geraint, and welcome, everyone. Before we begin, I'd like to welcome Dorreta to her first Edwards Life Sciences Earnings Call. Since joining in June, Dorreta has quickly demonstrated her impact and valuable contribution as a member of the team, and we are pleased to have her leadership as we deliver on our patient-centered innovation strategy and our commitment to sustainable, distinguished performance. Let me begin with a high-level comment on our quarterly performance. We delivered stronger than expected second quarter sales growth of 12.5%. As Edwards continues to invest in new structural heart therapies and expand adoption globally, our results increasingly reflect the strength of our comprehensive portfolio. With growth supported by multiple therapies across TAVR, mitral, tricuspid, and surgical, as well as meaningful contributions from each of our regions. Today, our company profile has evolved to include multiple strategic platforms across multiple regions that will support durable growth, giving us confidence in our target of 10% total company sales growth on average over the long term. For those most familiar with Edwards, you know that the long-term differentiation of our performance begins with our singular focus on transforming care in structural heart disease. This, combined with our commitment to early innovation and agile execution, enable us to create new categories and expand access for patients. Equally important is our culture. Our 16,000 employees around the world are aligned with our vision, inspired by their work. and dedicated to delivering exceptional innovation for patients in need. This dedication to developing safe and effective therapies requires unwavering focus, deep expertise and a commitment to generating world-class evidence, both on our therapies and the diseases they address, capabilities that distinguish Edwalls as a trusted partner. Our history of innovation have transformed care for patients around the world. And we know from this experience that establishing new therapeutic categories and changing the practice of medicine requires deep and sustained commitment. We believe this foundation positions Edwards to lead the future of these therapies for many years to come. As a result of his strategy and focus, Edwards is able to make a differentiated impact and develop best-in-class technologies in TAVR, TMTT and surgical. Speaking more specifically, in TAVR, years of technology advancement, development of world-class evidence and partnership with clinicians have positioned SAPIEN as the standard of care for TAVR treatment, setting the benchmark for valve performance and durability. We are committed to continuing to raise the bar for both technology and clinical data while transforming the lives of aortic stenosis patients around the world. In TMTT, our years of pioneering development and strategic investment have resulted in multiple unique therapies that enable physicians to offer options to the clinically diverse patients suffering from mitral and tricuspid diseases. As we continue to build and expand, each of our therapies is advancing along its adoption curve, enabling us to extend these technologies to a broader population of patients. In surgical, building on 70 years of innovation and leadership, We are continuing to partner with surgeons around the needs of our complex patients by expanding our leadership in valves as well as other therapies to address the many patients best treated surgically. At the same time, we are executing our proven innovation strategy to extend our leadership into structural heart failure and aortic regurgitation, which also represent Large unmet patient needs and longer-term growth opportunities. Generating world-class evidence is a key element of our strategy. We continue to demonstrate the company leadership in advancing high-quality science and innovating for patients through several important clinical presentations at the recent New York Valves Conference. This new data spanning aortic, mitral, and tricuspid therapies provide further understanding of the complexity of structural heart disease and the need for innovative treatment options. Across Edwards, the result of our unique strategy and strong execution is reflected in the significant advancements that are building the foundation for continued long-term growth. In TAVR, this includes long-term sapien valve performance and the asymptomatic indication, both supported by differentiated evidence. In TMTT, PASCAL, EVOC and Sapien M3 continue to scale globally. And in surgical, these include continued expansion of our portfolio. Ahead of us, in the remainder of a year, We anticipate the finalization of an updated U.S. TAVR NCD and the presentation of progress trial results, a new TR indication for Pascal in the U.S., the launch of next-generation Pascal technology in the U.S. and Europe, and the introduction of surgical left atrial appendage with ecliptis in the U.S. Altogether, we believe these important advancements represent multi-year opportunities that will materialize gradually over time. These underpins are annual sales growth targeting 10%, on average, alongside operating margin expansion for the company, with TAVR growing mid to high single digits. As we create and shape new therapeutic categories and achieve important clinical, regulatory, and commercial milestones, There may be some minor variability in growth rate within therapeutic areas. But the more meaningful takeaway is the long-term durability of our growth and distinguished performance. Combined with our financial strength, these give us confidence. Confidence in both the short term and confidence in the long term. Let me now turn to our financial expectation for the rest of the year. Given our second quarter performance, We are increasing our full year 2026 sales growth guidance for TAVR, TMTT and Total Company and reaffirming our earnings guidance. Our updated 2026 sales guidance is 10 to 11% for the company with strong earnings leverage and operating margin expansion. As a reminder, our second half performance in 2025 set a higher bar for the second half of 2026. In summary, let me put our durable performance in perspective. After delivering a strong 2025, we are on track to deliver on our increased company guidance of 10 to 11% this year and remain confident in our longer-term outlook. Now, I will provide more detail about the performance of our product groups. Taver second quarter global sales of $1.3 billion were stronger than expected and increased 10.5% over the prior year. Globally, procedural growth benefited from sustained clinical momentum and data supporting proactive disease management of CVRS. At the same time, treatment decisions continue to be shaped by the long-term differentiation of our sapient platform. Edward's growth rates were similar in the U.S. and outside of the U.S. Growth also benefited from the exit of a competitor in Q2 2025 and compelling long-term sapient durability data. Average selling prices were stable globally. At the recent New York Valve conference, a new parallel-free sub-analysis of a sapient platform at seven years reinforced the best-in-class valve performance and long-term durability of Edwards TAVR. Further, a five-year analysis from the early TAVR trial adds to the growing evidence supporting a shift toward treating aortic stenosis patients earlier in the disease pathway. Also, a newer valve The PROGRESS trial presentation on baseline characteristics provided a new insight into the heterogeneous nature of moderate AS patients. Research has shown that approximately half of these patients present with at least one at-risk feature. The PROGRESS trial is designed to evaluate whether this patient may benefit from TAVR earlier than current guidelines of surveillance suggest. We will learn more about the clinical relevance of treating this patient with TAVR when the progress trial results are presented at TCT later this year. We were also pleased to share an update on our next-generation Sapien platform. Through our unwavering focus on innovation, we continue to elevate our best-in-class TAVR technology, and the first patients have now been treated with the updated Sapien X4S. We are excited about this innovative platform and look forward to sharing more when the Alliance trial is complete. Let me now turn to some commentary on US TAVR. In Q2, procedure growth continued to benefit from the heightened focus on the therapy as the clinical community further incorporates into practice the meaningful evidence supporting proactive disease management. Edward's competitive position in the U.S. increased modestly year over year, enabled by continued adoption of sapien-free ultra-resilia. We are also pleased that CMS continues to prioritize and progress the reconsideration of the NCD for TAVR, and we look forward to the final policy in September. Based on the draft coverage policy, we are encouraged that this update has the potential to advance TAVR therapy for Medicare beneficiaries with aortic stenosis. Outside of the US, we continue to see strong adoption of sapien. In Europe, updated ESC and ESCTS guidelines are helping shape clinical discussion around earlier intervention and proactive disease management. further reinforcing the role of TAVR across a broader patient population. Edward's competitive position increased modestly year-over-year in Europe, which included what we believe to be the final quarter of benefit from a competitor exiting the market. In Japan, we are encouraged by the growth and continued adoption of sapien-free ultraresilia. We also received the asymptomatic indication approval in Japan. In summary, we are pleased with our TAVR performance. And given our Q2 results, we are increasing our full-year sales growth guidance to 8% to 9% from 7% to 9%. Edwards' leadership in TAVR, built on differentiated innovation, world-class clinical evidence, and continued indication expansion, is increasing patient access and supporting sustained adoption of a sapient platform. creating a durable mid to high single digit long term growth opportunity. With that, let me turn to two of our important growth drivers in mitral and trachea speed. Our differentiated TMTT repair and replacement therapies drove second quarter sales of $195.9 million, an increase of 44.8% year over year. Globally, mitral and trachea speed procedural growth remain in the double digits. Growth from our differentiated TMTT platforms, PASCAL, EVOC, and CPNM3, exceeded our expectations in the quarter. Individually, each therapy delivers meaningful benefits for patients and healthcare systems. Collectively, they provide physicians with a comprehensive set of options to tailor treatment to a broader range of patients, with the goal of eliminating regurgitation, which indicates better outcomes for patients. Adoption of Pascal continues to increase, reflecting strong physician interest for its differentiated design and clinical outcomes, as well as the significant unmet needs of mitral and tracheal patients. At last month's New York VAL conference, real-world outcomes demonstrated sustained safety and effectiveness of the Pascal precision system for one year in a broad population of more than 4,600 U.S. DMR patients. We continue to expect that our next generation Pascal with Capture Clarity technology for both mitral and tracheospital patients in the U.S. and Europe will be approved in the fourth quarter. Also, in the fourth quarter, we continue to expect Class II-tier results to be presented at TCT and the launch of Pascal in the U.S. for tracheospital patients. This launch expands the population of patients that can benefit from this impactful therapy and adds another layer of growth for TMTT. Evoke is a significant growth platform from TMTT and continues to scale in the US and Europe. We are increasing patient access to Evoke and driving further adoption by expanding into new centers, deepening utilization in existing centers, and streamlining patient screening processes. We believe the value of our growing body of clinical evidence will further increase with time as demonstrated by recent reduction in all-cause mortality and heart failure hospitalization and will support continued physician adoption and expansion of access for patients with TR. Turning to SAPIEN M3, our early experience validates The significant need for mitral replacement solution for patients who are not well suited for mitral tear or surgery and demonstrate excellent clinical outcomes for patients. We continue to execute a major launch of CPNM3 in the US and in Europe, steadily opening new centers and supporting sites as they build procedural experience. During the quarter, results from the in-circle mitral annular classification, or MAC, registry were presented at NeurValves demonstrating low 30-day mortality, virtual elimination of regurgitation, and impactful quality-of-life improvements. In Q2, we also received C-mark for CPNM3 Resilia, and broaden our indication for sapien M3 and sapien M3 Resilia to include patients with MAC, increasing access to therapy for a patient population with a significant unmet need. In summary, we enter the second half of 2026 with both a strong foundation and multiple opportunities to further strengthen our position in TMTT. As a result of our continued sustainable performance, We are increasing TMTT self-guidance to $760 to $780 million from $740 to $780 million. Together, Pascal for Mitral, Evoke, CPNM3, and Pascal for TrackerSpeed represent layers of durable growth that support our path to $2 billion in TMTT revenue in 2030 and position us for additional growth beyond. In surgical, second quarter global sales of $284 million increased 5% over the prior year, driven by continued adoption of our portfolio of Resilia therapies, including Inspiris, Mitris, and Connect, which provided extended durability for patients. At the recent AATS conference, 10-year data from our comments trial studying the long-term durability of our best-in-class Resilia tissue were presented. The results showed favorable 10-year freedom from structural valve deterioration, or SVD, and a very low rate of SVD-related re-operation regardless of age, even in a relatively young cohort. These defining 10-year clinical milestones adds to the growing body of clinical evidence Supporting the long-term performance of Resilia as a differentiated tissue technology. We also received U.S. approval for ECLIPTIS, our surgical left arterial appendage technology, and are planning for a major rollout later this year, supported by a continued focus on procedural excellence and patient outcomes. In summary, our progress in the quarter reflects our long-term commitment to meaningful innovation, lifetime care, Thank you, Bernard. I'm pleased to join you all today to cover our second quarter results.

Before I begin, I want to say how excited I am to be part of Edwards and supporting the important work we are doing to meaningfully impact patient lives. Over the past several weeks, I've had the opportunity to spend time across the organization, meeting many of our employees and getting to know many of our analysts and investors. I look forward to continuing to build upon these relationships going forward. Turning to our financial results. We are pleased with our financial performance in the quarter, including strong top-line growth and earnings leverage. Total sales of $1.74 billion grew 12.5% year-over-year, reflecting strength across all product groups and regions. Adjusted EPS in the quarter was 78 cents. Based on our second quarter performance, We are increasing our full-year sales guidance for a total company to 10-11% from 9-11%, TAVR sales guidance to 8-9% from 7-9%, and TMTT guidance to $760-780 million from $740-780 million. Edwards now expects total company sales of $6.6-6.9 billion and TAVR sales of $4.75 to $5 billion at current exchange rates. As a reminder, our second half performance in 2025 set a higher bar for the second half of 2026, particularly in the third quarter when we experienced unusually low impact from seasonality last year. Moving to EPS, We have confidence in delivering our previously increased full year adjusted EPS guidance of $2.95 to $3.05, despite now assuming our effective tax rate will be at the high end of our original 16% to 19% range, driven by Pillar 2 impact and changes to California law restricting the usage of R&D credits. I'll now cover additional details of our Q2 results, starting with EPS. Adjusted EPS of 78 cents in the quarter benefited from our better than expected top line performance, as well as our planned phasing of strategic investments in R&D and SG&A throughout the year. Our gap EPS for the quarter was 42 cents, primarily driven by the California R&D tax credit impact. A full reconciliation between our GAAP and non-GAAP measures, including adjusted EPS and other items, is included with today's release. Moving on to other elements of the P&L. For the second quarter, our adjusted gross profit margin was 77.6%, flat compared to the same period last year, driven by foreign exchange headwinds offset by lower manufacturing expenses. Foreign exchange reduced our second quarter gross profit margin by 70 basis points compared to the prior year. We now expect gross profit margin to be at the lower end of our full year 78 to 79% gross margin guidance, driven by the impacts of foreign exchange through our hedging program. SG&A expense in the quarter was $561 million, or 32% of sales, This was in line with our expectations and reflects continued investment in resources to support patient care as well as a higher translation of our OUS expense base from the weakening dollar. R&D expense was $279 million in the second quarter, or 16% of sales. compared to $276 million or 18% of sales in the same period last year. This decrease in R&D as a percentage of sales and increase in total expense reflects our growing revenue and strategic prioritization of investments in our expanding structural heart portfolio. We continue to expect R&D expense as a percentage of sales to be approximately 17% in 2026. Second quarter adjusted operating profit margin was 30%. Our first half operating margin benefited from the planned phasing of strategic investments in SG&A and R&D during the course of the year. We continue to expect full year operating margin to be at the high end of the original 28% to 29% guidance. resulting in approximately 150 basis points of constant currency operating margin expansion for the full year. Going forward, we continue to plan for 50 to 100 basis points of underlying operating margin expansion while continuing to invest in the business. Turning to our tax rate, we now expect our 2026 effective tax rate excluding special items to be at the high end of our previous range of 16 to 19%. This reflects an expectation that side-by-side safe harbor taxation legislation alongside pillar two does not come into effect before the end of the year. Our tax rate is also impacted by changes to California law permanently limiting the usage of R&D credits. Despite these incremental tax headwinds, we remain on track to deliver operating margin expansion and leveraged EPS growth. If legislation is passed before year end related to Pillar 2, we would expect to see a benefit to this rate. Foreign exchange rate changes in the second quarter increased reported sales by approximately $15 million or 110 basis points versus the prior year, which was $6 million higher than our expectation. On a constant currency basis, Bales in the second quarter were near the top end of our guidance range. If foreign exchange rates were to hold at current levels, we estimate foreign exchange to be a second-half headwind of approximately $35 million compared to the prior year. Turning to the balance sheet, we continue to maintain a strong and flexible balance sheet with approximately $2.9 billion in cash and cash equivalents as of June 30, 2026. Edward's disciplined approach to capital allocation remains unchanged as we continue to support growth and create long-term value for patients and shareholders. Our highest priority remains investing in organic growth opportunities and strengthening our manufacturing network. Next, we look for external opportunities within Structural Heart where we can create value by applying our unique innovation strategy to address large, unmet patient needs. Finally, we will continue to be active in returning capital to shareholders through opportunistic share repurchases. Edwards has approximately $1.5 billion remaining under our share repurchase authorization. Average diluted shares outstanding during the quarter were $578 million. We continue to expect average diluted shares outstanding for 2026 to be between $575 and $580 million. Now, let's turn to our Q3 guidance. For the third quarter, we're projecting sales of $1.63 to $1.71 billion. From a modeling standpoint, as expected, Q3 underlying sales growth will be artificially lower than our first half performance. Given the high bar that our 2025 performance set for the second half. On a sequential basis, we expect normalized seasonality in Q3 this year. We are expecting adjusted EPS in Q3 of 71 cents to 77 cents. The strength of our first half performance and the strong fundamentals across TAVR, Mitral, Tricuspid, Surgical, and our regions gives us confidence in delivering on our increased outlook for the rest of the year and targeting 10% sales growth on average longer term. And with that, I'll hand it back to Bernard.

Thanks, Dorita. So in summary, our second quarter performance underscores the strength of our focus strategy and reinforces our confidence that the investments we are making today will drive sustainable growth and meaningful value creation over a long term. Before we move to Q&A, I also like to highlight two upcoming opportunities to engage with our team. We will host an event at the TCT Conference in San Diego this fall and we will also host an annual investor conference on December 4th at the New York Stock Exchange. Additional details for both events will be provided and we hope you can join us. With that, I will turn it back over to Jerian to facilitate Q&A.

Thank you, Bernard. We're ready to take your questions. As a reminder, please limit the number of questions to one plus one follow-up to allow for broad participation. If you have additional questions, please re-enter the queue and management will answer as many participants as possible during the remainder of the call. Diego?

Thank you. And to ask a question, press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please stand by while we pull for questions. And your first question comes from Robbie Marcus with JP Morgan. Please state your question.

Oh, great. Thanks for taking the questions. Congrats on a great quarter. Bernard, two for me. I'll just ask them both up front, both revenue-driven, TAVR and TMTT focused. First on TAVR, clearly a very strong quarter. It appears you're getting the benefits. and some competitive wins from your main competitor. The share seems to be shifting over. I'd love if you could dive into those two and talk to the trends you're seeing on competitive share shift, market expansion and, you know, if you want to throw in how different U.S. and outside U.S. growth was concerning the focus there. And then on TMTT, my guess is that it's all the products, Pascal and Evoque, that's driving the upside. But if there is any one that contributed more aggressively to the 7% sales beat versus consensus, I appreciate it in color. Thanks a lot.

Thanks, Robbie. Great to be with all of you. So allow me to start with a very brief comment about the company performance. We are very excited about it, very pleased, better than expected. And this is reflecting in our strategy. Our strategy in structural heart is working very well. I want also to recognize our team with having a flawless execution globally. You know, we have seen, you know, in Q2 and even in Q1, you know, this year, you know, great performance, you know, by therapy and in each of our regions. So again, you know, all of these, you know, give us confidence. So back to your question about TAVR. I would say on TAVR, you know, a little bit of the same, better than expected. And these results are not happening by chance. They are the result of years of technology advancement, you know, about 20 years, you know, building world-class evidence. All of these together as, you know, position Sapien as the benchmark TAVR platform, you know, globally with regards to valve performance and valve durability. So it is why, you know, it is important, you know, for us, you know, to always, you know, step back and look at, you know, why the results. And we believe that because of these, our results are durable. Now, if you want to compare U.S. to U.S., our growth rate in TAVR were very similar between U.S. and no U.S. And the way the result of this renewed focus on TAVR, given all of the clinical data we have produced in the last 12 months and many years. So that's probably what I want to say about TAVR. I'm sure Daniel later will be able to provide more details. On TMTT, Yes, I think, you know, the value of a portfolio is now, you know, clearly in action. You know, we have seen, you know, Pascal doing very well with an increased adoption also, you know, in US and in Europe because of its differentiated feature. You know, Evoque also, you know, I've seen an acceleration in doing, you know, very well. And M3 is also, you know, having, you know, some Even though it is early, it's going, you know, very well. We got very good feedback, you know, from European physicians and U.S. physicians. So the beauty of this quarter is it is all together. And again, here, I'm sure, you know, Daveen, you know, later today, you know, will provide, you know, more detail about EMTT. So thanks very much for the question, Robbie.

Thank you, Anne.

Your next question comes from Larry Beagleson with Wells Fargo. Please state your question.

Good afternoon. Thanks for taking the question. I'll echo my congratulations on the really strong quarter here. Bernard, just one on progress and one high-level question for me. So Bernard, on progress, can you talk about why you highlighted the heterogeneity of the progress population in the press release and in your prepared remarks? And If progress is positive, how would you frame the impact to your TAVR business relative to earlier new indications like asymptomatic?

Thank you, Larry. Let me start about first why we decided this time to split the progress presentation into the baseline characteristic at New York Valve and the full presentation of the result at TCT. We did that because a little bit of a learning from early time. When you study a disease in eight minutes of a presentation, it is very difficult for a physician to provide everything. What the study design is, why we did it, the baseline characteristic, and then the results. And so here, given the importance and given the learning from early time, we said it was probably important to split it in two. So we went a little bit deeper into, hey, one is potentially the size, and what we have presented in your value that moderate is at least as big as severe. Some analysis is showing even bigger. This population is very diverse, very complex. and so we thought it was important in advance so people understood this disease. We also talk about the fact that there is no difference in age between the severe and moderate AS. But that's a little bit about what we wanted to achieve here. Maybe Dan, you want to add a couple of things on that?

Yeah, I think you covered it largely. I mean, it's the first randomized trial looking at the treatment of moderate AS patients and The heterogeneous nature of this population is not well understood and I think you know understanding the baseline characteristics a little bit better give us a greater insight into that and just help us understand when we get to digest the results at TCT later this year just help us focus on what those results really mean and so you know as you well know Larry this is a trial studying moderate AS patients with at least one at-risk feature and I think it was important to Describe what they are. And that population is, you know, at least in the literature anyway, suggests that it's representative of about 50% of the total moderate population. So it's still a large population here. And so, you know, we shouldn't be surprised by it, but, you know, maybe some people were. Maybe some people don't understand that the Severe AS patient population and the moderate AS population are very similar in terms of their age. In fact, there's, you know, again, the literature on prevalence suggests there's only one year gap between severe and moderate. And so all those sort of details come out in the baseline characteristics. And then, you know, again, it allows us to sort of answer those questions and then focus on the results when they drop at TCT.

And with regards to impact, you know, Larry, You know, think about it. You know that the practice of medicine is moving slowly. So we expect a minimal impact in 2026. And our long-term guidance for TAVR, mid to high single digit, is here to accommodate all of these kind of scenarios. What we will do at the investor conference is provide a more detailed guidance, obviously, for 2027. Thanks for your question.

Thanks for that comprehensive answer, but I wanted to ask about your comments about 10% total company growth on average, because you didn't highlight that on the Q1 call. The implied second half underlying growth is about 9%, which is slightly below 10%. I know it's really early, but do you believe you can grow 10% underlying next year, and if so, what are the drivers? Thank you.

Just to be clear, Larry, my comments on 10% is about the company. And it is a guidance comment long term about the company with TAVR growing between mid to high single digit. I think this was our comment that we did at investor conference. It was the same comment that we did at the end of the Q1 and the same I did today.

I got it. I meant the total company, Bernard. Sorry if there's any confusion. I was asking about total company, not caver, but I'll leave it there. Thank you.

Thank you.

Thank you, Ann. Your next question comes from Travis Steed with Bank of America. Please state your question.

Hey, congrats on the good quarter. This may be the follow-up somewhat to Larry's question. Given the tough comps in the second half, you mentioned you still expect normalized seasonality in Q3 this year. Just want to make sure I understand what normal Q3 seasonality means. Looking back at the model and worldwide TAVR kind of down anywhere between $15 to $30 million sequentially from Q2 to Q3, which to me, my math puts that at kind of 5% to 6% worldwide TAVR growth. Chris, if that's kind of the math that we should be doing or you'd say anything on the seasonality?

So maybe, you know, let me try to put in perspective how we think about the guidance for 2026. First, you know, we had a better than expected, you know, first half, you know, Q1 and Q2. So we took this sustained performance into consideration in rising our full year guidance. In addition, you know, what we talk about, you know, in Q1 and today is the fact that we expect, you know, the second half growth rate to be artificially low because of the high comps, you know, from last year. I don't know if you remember, but last year, you know, the summer, was, you know, very high, you know, from a growth rate. So we have a very high comp, 2H of 2026. And we took all of that in consideration, you know, to give you the guidance, you know, 10 to 11 for the total company. So is it good enough here or do you want more detail on this guidance and 1H and 2H dynamic?

Yeah, just there was a comment in the prepared remarks about normalized seasonality in Q3 and just want to make sure. We had that down.

Yeah, so this year we didn't expect, you know, like last year to have a very strong summer, you know, basically. And what you are going to see is basically, you know, Q2 to Q3, you are going to have some incremental dollars, you know, Q2 to Q3.

Okay, thank you. And then kind of the second question is more on the NCD issue. I don't know how big of a deal you think NCD is on kind of TAVR growth next year or how to quantify how many centers this opens up or does it open up capacity for TMTT as well as TAVR, just anywhere on the NCD now that it's kind of more finalized?

Maybe I'm going to ask Dan to comment on the NCD itself and then we can discuss about TMTT.

Thanks for the question and it's an important one. First of all, We're really pleased, right, that CMS is running this process and the good news is we're getting nearer to the end of it. You know, we've just seen a draft policy position and the second comment period, the second public comment period is now closed and so final policy memo is expected in September. And so this is where we're at in the process. When you look at that draft, you know, there are A couple of opportunities there. We're encouraged by it, number one. I think that's really important to say. And I look at it in three different ways. The big reasons to open this up and revisit it. The first one is we're encouraged, at least in the draft, it says that there's a pathway for asymptomatic indications to be covered. That's really important. That's one opportunity. The second is that there... that there's a recognition that after all these years that symptomatic severe aortic stenosis is a reasonable and necessary procedure for Medicare beneficiaries and that it can be covered without evidence development and that's super important. And then the third is modernization of the policy around empowering heart teams to give timely access to care for patients in need. These are the big ones that present what we would say tailwind or potential catalysts as far as future opportunity in 2027 and beyond. Your comments specifically about new centers, if you think about it, the current draft policy states that cardiac surgery programs still need to be in play and exist for a TAVR program to be covered or TAVR procedure to be covered. and so if you think about that where we are about 850 odd plus centers and how many surgical centers you know there's room for some expansion but that's not the big you know the big ad the the big ad will be you know how efficiently patients can be processed referred diagnosed referred and treated and what that means from a program efficiency perspective and that will be very very important as demand we anticipate to continue increase based on indications and evidence

Great, thanks a lot.

Do you have a follow-up question?

No, that was it for me.

Okay, thank you.

Thank you, and your next question comes from Joanne Wilensch with Citibank. Please state your question.

Good evening, and thank you so much for... for taking my question and for delivering the quarter. So we're getting a lot more questions on progress, and I was curious if you could sort of level set, assuming that the clinical data looks good, how you think the adoption rate might be, and how do you think the steps would be towards having that contribute to revenue? Thank you.

Yes, I'm going to let Dan take this one.

First, we can make a whole bunch of assumptions. I think the first thing is we have to see the results, and those results will be, as you know, presented, published at TCT this year. But taking a step back, I think we need to think about this patient population in a very similar way as the asymptomatic patient population. These are new indications that don't have a predicate. We spent 15 years doing a lot of evidence generation on TAVA as an alternative to surgery. And whether it be an asymptomatic patient population or a moderate disease patient population, the guidelines are not, surveillance is the recommendation for these particular indications, not surgical intervention. And so there's an element of change management and human behavior change and education, et cetera, that has to go along with any of these new indications or new data sets. And so I think that we can look at that very similarly. I think it's going to be important data. There's going to be a lot of learning. But we can think about those two things in a similar way relative to, say, high risk, intermediate risk, low risk, where it's just against an existing predicate. Does that make sense, Joanne?

It does. Thank you so much.

Thank you.

Thank you, Ann. Your next question comes from Pito Chickering with Deutsche Bank. Please state your question.

Good afternoon, guys. Thanks for taking my questions and great quarter. I'll put my two questions up front. Looking at PASIC-L tricuspid, the approval expected in the fourth quarter and we're seeing the data at TCT in the fall. Is it safe to say that the trial is successful and has already been submitted to the FDA? Any color there. And then the follow-up is, with market share gains you've seen in Mitchell with Pascal, can you talk about how you think you're positioned to enter the tricuspid market with Pascal? Thank you.

I can tell you we are very pleased about the Pascal performance, but I'm going to let Daveen provide more details. He's very close to it.

Thanks, Bernard. Thanks for the question, Pito. As you said, exactly right. Right now, we're expecting both the data to be released to TCT this year. I think we'll all look at the data together, and our expectation is for a Q4 approval in the U.S. is our current planning right now. If you look at Pascal Tricuspid, however, so far, we've had this technology now in Europe for a few years, and we see that some of those differentiated features with the Pascal device on the mitral side come off even more so in the Tricuspid side. So physicians can see that some of those cool features about independent grasping, et cetera, they really make a difference in treating their tricuspid patient. And as a result, we see that physicians want to use Pascal more and more often in the tricuspid situation in Europe. So I think it's on the back of that as we think about the U.S. tricuspid approval and launch as that next layer of growth, as that next wave of potential growth for the TMTT business where we think that those differentiated features should be able to come over to the U.S. We've got a large number of physicians who are in the trial, who are in the continued access for the trial as well, and I think there is that kind of looking forward to this technology coming and helping their patients here in the U.S.

You know, what we like with this, you know, Pascal Trekespeed, you know, upcoming approval in the U.S., this is adding a layer of growth, you know, for TMTT. So we have today Pascal Mitral, you know, we have Evoque still scaling. Great, thanks so much.

Your next question comes from Vijay Kumar with Evercore ISI. Please state your question.

Hi, Bernard. Thank you for taking my question, and congrats on a nice print here. Bernard, it looks like in the press release, you called out Evoque. I'm curious on this TMTD performance. Have you seen an inflection in Evoque, and is that what's driving the strength, or is this more broad-based when you look at the TMTD portfolio?

Let me make a brief comment about it, and then I will ask Daveen to add additional color here. I would say we have seen an inflection in evocative since the beginning. The demand is very high, so it's growing very well, and what we have seen in the quarter is great adoption, but I'm going to let Daveen be very close to this action.

I think I'll speak first a little bit more broadly. As Bernard mentioned up front in the call to Ravi's question, we've seen a growth coming across all of the platforms in TMTT and, to be honest, all the regions for TMTT. It's been great to see that all the technologies are adopted. As you can imagine, Pascal was our first technology, so it's actually our largest technology by revenue. And Evoque, though, is second in size but growing very quickly. There's a lot of excitement for this technology. We see the continued growth. New data coming out, people adding to the overall clinics portfolio that makes people want to use Evoque. And then we've got the new kid on the block, obviously, with Sapien M3, which is the newest, high growth rate, but the smallest because it's just the newest in terms of its timing. And what we're seeing overall is that it was specifically, if you dive a little into Evoque, we see a couple of different factors. We see a kind of deepening overall adoption coming from We have new centers opening up every week, every month across the world. The new centers are getting exposed to Evoque. We see that in existing centers. Over time, we're continuing to work closely with them to streamline the whole process of an Evoque patient from the pre-case plan to getting ready for that patient to actually executing the case. And that then enables those centers to actually do more cases and actually increase that kind of amount of usage in each case. I think those together are helping keep the momentum going in Evoque, but I don't want to underscore the momentum we see today both in Pascal and the initial momentum we're seeing with M3.

That's helpful, Daveen, and maybe Bernard, one on progress. I know there were a lot of, you know, it's a heterogeneous population, and you guys did a good job trying to balance out the different factors. Most of these patients had heart failure symptoms. Were the baseline drugs in this trial, was it a consideration when randomizing? I don't know if you can answer that, but if you could talk about how drug arms in both arms, how the drugs in both arms, whether they were randomized or was that a criteria? Yeah.

Thanks, Vijay. I'm going to ask Dan to reply to this. It is a technical question, Vijay, so Dan is in the best position here.

I think this is one of the reasons why we presented the baseline characteristics, and perhaps it's important for everyone to understand this is not a heart failure trial. This is a trial on moderate AS patients with at-risk features. Unload was a heart failure trial. where the patients happen to have moderate AS. And so these are two very, very different patient populations. And you could see, you could see from the baseline characteristics what's interesting about them is perhaps clinically not benign. We'll see that these patients did have symptoms. They did have at-risk features as the trial design was intended. But they also had very healthy left ventricular function. and so you know this is the type of patient that we're dealing with they're not a heart failure patient they're a moderate AS patient with certain characteristics that may predispose them to greater risk clinically than what current guidelines suggest which is active surveillance and so again a lot of learning here understanding the patients you know so you know drug regimes don't play into a big factor here because these patients don't have heart failure symptoms, although the primary endpoint is going to include hospitalization and heart failure events, obviously when you're doing a surveillance trial like this, a comparator against surveillance like this. So a lot to learn, and we'll learn more when the results are presented at TCT. Thanks for the question.

That's helpful. Thank you. Your next question comes from Josh Jennings with TD Cowan. Please state your question.

Hi, good evening. Thanks for the questions. First, I just wanted to talk about Tavern Market Growth Trials and the CMS NCD update and the moderate indication are two clear ones. Tavern is going to be on the back burner, but the indication was approved in 2019, so next year will be the eighth year post-approval. Edwards hasn't been very vocal about and Tavarin Tavar as a potential driver of sapien as well positioned for that procedure. Can you provide some insights into Edwards' internal expectations for the Tavarin Tavar opportunity and when these procedures could potentially contribute at a meaningful level to volume growth?

Josh, maybe I answered that question. You're absolutely right when you talk about some of the more obvious sort of milestones ahead of us with NCD progress, et cetera. And lifetime management, I think we've talked a lot about this. This is something that is becoming absolutely more important and more critical, particularly as the evidence suggests that you get benefit by treating earlier in the disease pathway, not just younger. I mean, earlier in the disease pathway, as we learn, can mean different things to different patients at different age groups. But the reality is that we anticipate as more as the therapy penetrates is that there are going to be patients who outlive the durability of their valve. And we're seeing that in various trials, et cetera, in various patient populations. And so lifetime management becomes a thing. And the planning of when to treat, with what option, and how to treat the second option. And there's a lot of complexity in there. So we have modeled that into our market model. We look at that right now. It represents a relatively small part of the market, relatively. We anticipate that to grow. And that's all factored into the TAVR market.

If you put all of this in perspective, we are, in my mind, sitting in front of an amazing opportunity. You look at TAVR. It is still under-penetrated. It is still under-adopted. We have asymptomatic indication to unlock with the NCD. The NCD has the potential, if the draft remains like it is, to streamline timely access for patients. You have, you know, if a study is positive, a progress study is positive, another, you know, indication for this patient population. So we look at TAVR as a very durable growth engine, you know, for the company. You add, you know, all of the catalysts we are having on TMTT, Pascal, M3, Evoke, and you look at Surgical also, you know, we didn't discuss about Surgical today, but, you know, we have also, you know, many opportunities in Surgical. So all together, you know, for TAVR and all together for the company, we feel very confident. You look at, you know, what we did last year, you know, what we are doing this year, the kind of execution we are having also. All of this together, in my mind, it is what, you know, gives us confidence about achieving Long-term, about 10% EPS leverage and operating margin improvement, you know, 50 to 100 points. So, again, excited, confident. I like, you know, what the team is doing, and it's great to be able to report to this kind of quarter.

Thank you. And, ladies and gentlemen, that's all the time we have for questions today. I'll now hand the floor back to Bernard Zovighian for closing remarks.

Thank you all for your interest in the company. You know that we are available for any call. Director, Jerry and Sine and myself are available. And I know you are going to have a phone call with the team. Thank you so much and have a great day.

Thank you. And with that, we conclude today's call. All parties may disconnect. Have a good day.