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.