Welcome, everyone. I'm Robbie Marcus, the MedTech analyst at JPMorgan. Very happy to introduce our next speaker, Bernard Zovighian, at Edwards. Bernard is going to do a presentation followed by some Q&A.
Thank you, Robbie, for hosting. Good morning, everyone. Great to see all of you. I'm very excited to share with you the vision we have for the company in 2026 and beyond. We'll be making some forward-looking statements which involve risk. They are all listed on our website and filed with the SEC. We will be also using non-GAAP financial measures. The reconciliations are available on our website. In the last three years, our focus solely on structural hearts gave us an opportunity to deploy our strategy with speed and agility, and speed and agility across our core platforms, so TAVR, TMTT, so Mitral, Tricuspid , and Surgical, where we will continue to invest and bring next-gen innovation. Because we believe there is still a big opportunity. There are many patients in need in this category.
But we will also expand the structural heart portfolio for patients who today have no other option. So how do we do this? And so in a very simple manner, simple manner to say, not necessarily simple to execute, we will continue to bring novel innovation, differentiated innovation, and world-class evidence to transform care. In addition, what I believe is very exciting, for all of you that know us very well, we will continue to pioneer therapies for the many patient groups currently unaddressed. What I mean by unaddressed, patient groups who have no other solutions today. So let me give you some examples. Patients with asymptomatic AS, patients with mitral disease, tricuspid disease, or aortic regurgitation. Each one of these unaddressed patient groups represents a very large opportunity. First and foremost, a large opportunity for patients, but also a very large opportunity for growth.
And we are one of the only companies committed to invest early, to be first, and to deliver first-of-its-kind innovation for all of these patients. And we know what it takes. This is the DNA of a company. When it is complex, when there is no solution, when most of the companies are not focusing, we are trying to go there and change patient care. I like to always qualify us as a very special MedTech company. And what makes us special is the combination of our success, our differentiated performance, the very unique strategy we have, and our patient-focused culture, where we have more than 16,000 employees across more than 100 countries every day caring about patients. And we know that there are many patients in need, more than 20 million. They are very diverse in their needs with no option today.
We are also very committed to strengthening the communities where our employees are living and working, something that I'm very proud of. The result of our unique innovation strategy is when we lead, everyone benefits. Physicians have access to best innovation. And we bring this best innovation with cadence on a regular basis. We impact patient care and patient lives who can live longer and better. The employees of a company, they are part of something special, something meaningful, something mission-driven. And overall, we impact the practice of medicine and create value, cost-benefit value to the entire healthcare ecosystem. So let me now go through our product groups. In TAVR, Edwards is leading with best-in-class technologies. The SAPIEN platform is by far the best platform globally. In 2025, we brought two large important practice-changing evidence, EARLY TAVR and the seven-year PARTNER 3 trial, both randomized studies.
By the end of this year, we are going to present the MODERATE trial at TCT. All of this together is basically enabling us entering a new era. What I mean by us is the entire ecosystem, an era of proactive disease management for this patient. In TMTT, we now have fully realized the impact of a fully comprehensive portfolio with PASCAL, EVOQUE, and more recently, SAPIEN M3, enabling personalized care for this patient. At the same time, we are committed to remain fully focused on supporting the Heart Team globally to ensure excellent patient outcome. We feel confident about the acceleration of this business and us achieving $2 billion in revenue in 2030 with continued long-term momentum beyond 2030. In surgical, we will continue to drive adoption of a RESILIA tissue portfolio. We know that RESILIA today is the standard of care for tissue durability.
And the technology that we have are INSPIRIS, MITRIS, KONECT, and more in this great surgical platform. At the same time, we are committed to emerging opportunities in structural heart. In order to reach more patients, this will complement our core, again, the core being TAVR, TMTT, and surgical. And it is a very natural progression for the company. So TAVR AR, for instance, we are developing a new therapy for patients with very limited options today. IHFM, what we want, the goal here is to establish a new standard of care with patients at the center of care management. And we are not going to stop here in this expansion within structural heart disease because many other heart failure patients are in need. So let's now look at the growth outlook. What I want to do is briefly look back.
I'm very proud of the team and our accomplishment in 2025. We delivered significant goals with lasting impact. Let me give you some examples. Two practice-changing evidence. EARLY TAVR, which is changing right now the path for all aortic stenosis patients. Seven-year PARTNER 3, setting new benchmark for TAVR durability. We launched not just one, but two world-first catheter-based replacement valves for mitral and tricuspid. And we are continuing to be a top investor in our strategy. More than $1 billion in R&D while delivering profitable growth. Financially, we are on track to deliver the high end of our original guidance of 8-10 sales guidance and to exceed our original EPS guidance that we gave you in December 2024. We are exiting the year strong, which gives us confidence for 2026 and beyond.
Starting in 2026, our strategy will result in many catalysts across our core businesses. What you can see on the slide here is one, in my mind, many, many catalysts. I'm so proud about what we have in front of us. What you can see is basically two categories of catalysts. The next gen, where you see next-gen SAPIEN, next-gen EVOQUE, next-gen PASCAL, next-gen M3. Plenty of exciting new technology coming in the next few years. But also the one with a star are basically the catalysts where we are first. We are pioneering a new category. For the many patients I already talked about, the ones that have no solutions today. Simply said, we are creating a new market. New market, new opportunity for growth, new opportunity for patients. Let me give you some examples here.
You have TAVR for asymptomatic AS patients, TAVR for moderate AS patients, TAVR for AR patients, transcatheter tricuspid valve, surgical tricuspid valve, transcatheter mitral valve, transcatheter therapies for heart failure. So clearly, a broad-based set of catalysts, short-term and near-term. So since we saw you at the last investor day in December, we have had a couple of exciting updates. CMS reopened the U.S. NCD for TAVR. And we are supportive of this action. This will ensure that patients with AS will gain improved access to this lifesaving technology. The process between an opening and a close usually takes up to 12 months. So it has been opened in December 2025.
In December also, we received U.S. approval of a SAPIEN M3, which is already approved in Europe, which is a first-of-its-kind therapy, a game changer for the many patients suffering from mitral disease, and now complementing our full comprehensive TMTT portfolio. The timing of this event was largely consistent with expectation, so no impact to our 2026 guidance. You have seen the news on Friday that the acquisition of the JenaValve was blocked. Obviously, the buyer, ourselves, and the seller, we are disappointed with this result, especially for the many patients in need. But you know what? This is the past. We get it. So I can tell you that as a true pioneer in the space, we are very confident in our continued AR strategy. There is no change to our commitment to deliver breakthrough innovation to these many AR patients.
We are committed to lead AR strategy for patients. We are very active with our pivotal study with the JC Medical technology. Let me transition to our financial outlook for 2026. 2026 is set to be another very successful year. 2025 was a great year. 2026 is set to be another great year, led by a diversified source of growth, which is very important. In the past 10 years, most of our performance was driven by TAVR. Now we have three large sources of growth, making this company more diversified within structural heart disease. We expect sales growth of 8%-10%. We are continuing to have a high level of investment in innovation while improving R&D and SG&A ratio. Let me talk briefly about the implication of the JenaValve transaction not happening basically in 2026. We have a short-term EPS gain of about $0.10.
So the EPS now at the midpoint of a range is going to grow 15%. So very pleased about the kind of top-line trajectory, 8%-10%, EPS growing about 15%, and about 150 basis points margin improvement in 2026. So clearly, very well set to have another distinguished year. And all of these multi-year catalysts that you have seen in a couple of slides earlier will result beyond 2026. TAVR will continue to grow mid- to high-single-digit, TMTT increasing to $2 billion by 2030, surgical mid-single-digit. And then you have structural heart failure, TAVR AR will have increased contribution to growth. So confident about all of this as a company, overall achieving about 10% average annual total company growth with leveraged EPS. So I feel like we are well positioned. We will create long-term sustainable, differentiated, and profitable growth.
And this is my last slide before getting into Q&A. In summary, we are confident in our strategy. We are exiting 2025 with distinguished performance and enhanced leadership. Near term, so the next two to three years, our catalyst in TAVR, TMTT, and surgical will provide very novel solutions for the large and growing needs of millions of patients. Therefore, we are confident in maintaining this distinguished performance. And longer term, beyond this near term, between our core innovation and the emerging opportunities, we expect sustainable growth and value creation. Thanks. So with that, Robbie and maybe Scott, let's start our Q&A session.
Great. Bernard, if you'll allow me to say, I feel like Edwards, since you've taken over as CEO, is probably in the best position it's been. The TAVR market has stabilized and even accelerated a little.
You've had a number of new product launches, both in the mitral and tricuspid side of TMTT, some long-term data. So maybe a two-part question. One, how do you feel about where the business is today? And number two, what are you as CEO most focused on for the coming, let's call it, three to five years to keep this double-digit growth alive?
Thanks. You know what? I feel very good, to be fair. Like you said, we never had so many catalysts. And these are the results of our strategy. They didn't happen by chance. Our unique innovation strategy, our investment, our amazing team execution. Like you said, in TAVR, we have so many opportunities. Now, SAPIEN is the most durable valve at seven years, proven. It was one of the important questions. With EARLY TAVR, we have proven that waiting for this patient is not a good idea.
In TMTT, having this full portfolio, which is the result of a vision we had 10 years ago. And so yes, I feel very good about all of that. I think when I think about where I'm spending my time right now and where I will spend my time, I will see twofold. Short term, it is about the execution of a catalyst to make sure they are happening. Long term, what I mean long term is the next three years, you saw it. With this catalyst, we are going to be pleased about our performance. But I will be spending time about how to maintain that beyond 2028, 2029, and 2030 to make sure that we remain this innovator, this pioneer. We are now a large-cap company growing double-digit. And I want to sustain that for the foreseeable future.
You had your analyst day in early December.
You laid out 2026 guidance, as you have on the slides, 8%-10% organic growth on the top line, 6%-8% TAVR growth within that. If we start with TAVR here, this is a market coming out of COVID, has now returned to its, let's call it, premium growth versus some other med tech markets. It went from a four-competitor to a three-competitor market last year. And we saw you actually take some dollar share versus your largest competitor. So maybe speak to underlying patient trends you're seeing, how asymptomatic is or isn't benefiting the market now, and any benefit you're seeing from SAPIEN 3 Ultra RESILIA and pricing within that.
I do believe that what happened last year was fundamental of our outlook for TAVR. Two questions were unanswered last year. Is TAVR lasting? Is TAVR a durable technology?
And we know that most of the valves, when they fail, they are failing in the five-to-six years kind of time frame. So what we have proven is that SAPIEN is not and is the most durable valve. So this was a big question. The second one was about with EARLY TAVR, the mindset about waiting for symptoms. And we have proven that this is a progressive disease. And for many asymptomatic patients, for many, not all of them, but for many, waiting is not a good idea. So this created basically the beginning of a change in mindset. It's the beginning. And so that's, in my mind, we will remember 2025 and these two studies. This is going to shape how AS patients are going to be treated in the next 10 years.
Do you think we're seeing a tangible benefit from asymptomatic patients today in the TAVR numbers? Or do you think that's all still yet to come?
I believe it is still yet to come. What you have seen, our momentum and the TAVR momentum in H2 compared to H1 in 2025 is more coming by the amplification of this new evidence and the beginning of a change of mindset. And the beauty of that is what? Is we have a multi-year of growth ahead of us. We had also, I didn't talk about that, a new guidelines in Europe in the summer. So all of that creating this new environment, positive environment around treating these patients. But I don't believe that if any asymptomatic patient were treated in the U.S., very minimal. The Heart Team will wait for the new NCD to be in effect.
What about on market share? It's been very stable for several years, and then it's hard for us to discern volumes share, but we do see on a dollar basis share that Medtronic is growing a little slower than Edwards in TAVR. Do you think that's? Do you see that on the volume side? And do you think that's something that's more regional? Or do you see that trend sustaining globally as well?
Yeah, we get a lot of questions on share. To be fair, let me start there. We are very pleased about our share position. We are the global leader everywhere on this planet with SAPIEN, but it is not where we are focused on. What we are focusing on in unlocking the market potential, making sure that the patients that deserve a treatment have access to a treatment, and so share is always the same.
Don't you think it is a short-term kind of thing? Don't get me wrong. We love our position. But I'm not spending my time on share. That's a lagging indicator. I'm spending my time and the team is spending the time on bringing evidence, developing best technology, partnering with physicians, and treating more patients. And I think this is what is inspiring about our strategy.
Maybe to that point, before we went into the asymptomatic trial, we did have a number of surgical trials that showed treating asymptomatic patients work. So there was a reason to believe the trial would be positive. You're breaking new ground here with your moderate patient trial. What would be deemed a success in your view? And what do you think physicians will need to actually treat these less sick patients with a TAVR valve versus best medical care?
Oh, that's a good question.
I would say first, we have been in valve for now almost 70 years. So we know well this disease. When we start the trial, it's because we believe we can show that it makes sense to treat this patient population. By the way, a moderate patient population is a very large patient population. Having said that, we need to wait for the result of a trial. Having said that also, we know that AS is a progressive disease. So we are confident, cautiously confident until you see the result of a trial at TCT this year or later this year. Now, obviously, the better outcome we have, the more impact we will have to the clinical community. We will always lead with science, lead with evidence to make sure physicians can make the right decision for their patients.
Let's talk about the NCD. You talked about you're supportive of this. It was reopened in January or late December and should close in June based on timelines. What do you expect this can really do to the TAVR market and volumes? And is it just a TAVR volume beneficiary? Or can this help the entire cath lab?
I would say, first, it can have multiple impacts. It could have an impact on efficiencies, on making sure that patients have an equitable access to care across the nation. So that's truly the hope. When we look at what CMS did in some of the past NCDs for very novel technologies, way less studied than, say, TAVR, the NCDs were very progressive. So we expect that they will follow the same methodology. We will have to wait. But I believe it is going to help with efficiency, with less requirement, and accelerate patient access.
And maybe enable some additional centers to be activated as well to self-certify under the new NCD. But as Bernard said, that's probably not the biggest impact. It's more efficiency and taking out some of these outmoded original requirements that were put in place when TAVR was first approved.
Do you think it's a potential if you do see volume shift to some of these newer centers that it might just allow for more volumes of TMTT as some of these centers as TAVR becomes more prevalent? Sort of like stents. Stents was an incredibly difficult procedure at first. And now it's bread and butter of these doctors.
You know what? In Cath Lab, we are going to see a number of dynamics in the next couple of years.
You have some less risky procedures that are going to move from the Cath Lab to the ASCs in the next couple of years, starting this year. We saw some of the CMS announcement late last year. The NCD has the potential to streamline TAVR to basically enable more capacity for TAVR, but also for TMTT. So all of that together, we believe that capacity will benefit. Patient access to care will also be beneficial.
Maybe jumping over to TMTT. Tricuspid, the launch has been going well with the EVOQUE, but I'd say people were hoping it could go a little faster. You now have some excellent real-world data you showed at TCT last year. I know you're booked. I think you said all through 2026 with new surgeon training.
Can we see an acceleration in EVOQUE in the U.S. in 2026 now that you have a lot more data out there and you know the good results you can get in the real world?
So it is an interesting question. Because if you think about, let me go there. TMTT last year's cut grew altogether what? 50%?
Over 50%.
So 50%. EVOQUE grew faster than that. So I say I like the EVOQUE trajectory growing more than 50%. We always can do better. This is what I say to the team all the time. At the same time, we want to create a category that all of us can be very proud of, where patients are very well taken care of. And it is based upon solid foundations.
Indeed, we presented a real-world outcome, which in my mind is showing two things: that physicians are embracing the technology, that physicians with less experience have similar outcomes or even a better outcome now than the one who did the study more than two years ago. So clearly, it's working. There is an adoption happening. It's very fast. And to be fair, it is very much according to plan. Last year, we increased the TMTT guidance once. And we are on track to deliver on this increased guidance.
Yeah, we always want more from you. As you think about PASCAL TR coming in the U.S. in the not-too-distant future, how do you see having the repair and replace portfolio? And do you think physicians have in their head who the right patient is yet? Or do you think that's still an evolving discussion?
It is still evolving.
You got it, Robbie. One is what's beautiful about our portfolio is it is a true partnership with the Heart Team. We are not telling them, "Look, this is all what we get. So you need to use this technology for all of your patients." We are telling them, "Look, we are here to help you. Look at the patient anatomy, the patient issue. And whatever you need, PASCAL, EVOQUE, and M3, we have it. We are here to support you." We are going to learn a lot from patient segmentation in the years to come. Right now, I don't believe we know exactly. For some patients, there is a clear segmentation between repair and replacement. But for many patients, it is not yet clear. And we are going to learn a lot. And we are going to learn together with the physicians.
This is what I like about, again, back to this concept about being first and being the pioneer. We are the one basically bringing the learning with the physician community. That's important. I think it is inspiring, meaningful, and lasting.
Maybe jump around a little bit. Scott, last year was on a constant currency basis. The first time I can remember, I had words giving margin expansion in a long time. You did it last year very nicely. It's, I think, 150 basis points. Is that right? Baked into guidance for 2026. Is this 150 basis points a year a lot? What do you think is the new normal as you've committed to bringing R&D down as a percentage of sales? Some of these big trials have lapsed. You continue to get better leverage out of the sales force.
Yes, this is a commitment that is baked into our strategic plan that we're going to continue to expand operating margins for the foreseeable future. Some years will have more expansion than others. For example, this year, the 150 basis points will benefit from the JenaValve acquisition not happening. Other years, we may be on the lower end of the range of expansion. But we are going to continue to see leverage in the P&L. Part of that is because of research and development. Part of it is just due to scale. As the company gets bigger, then it's easier to grow the top line faster than the expense lines. But make no mistake, we are continuing to invest aggressively in research and development. Clinical trials are an important part of building a fact pattern, building a base of evidence that supports top line growth in the therapy.
So we're going to continue to be investing in R&D, continue to invest in clinical trials, and at the same time, showing margin expansion.
Maybe within capital allocation, you had a slide with several different investments. You have externally, and you continue to put up some of the best free cash flow conversion in the med tech sector, so you have a lot to put back to use. Is M&A moving up the list in terms of usage for Edwards? Historically, we've really seen share repurchase.
Yeah. Our capital allocation priorities have not changed at all. Priority number one, of course, is funding innovation internally, and as an extension of that, funding production capacity that we need to support growth, so those are the top priorities. Of course, also funding investments that we're making externally is important.
And we make a lot of investments in early-stage companies, whether it's minority investments or seed capital or purchasing options to purchase companies based upon milestone targets that they may have. And we'll continue to do that. I don't think M&A has increased in priority. It has always been a priority. We've been an active acquirer. We've been an active investor, not just internally, but externally as well. And so expect that that's going to continue to be the case. And then you're right. It leaves a lot of capacity for continued share repurchase, which has been an important part of the value creation story for Edwards. We've bought back a lot of shares over the years. And we're going to continue to buy back shares opportunistically at a minimum to offset the impact of dilution from performance-based awards.
Then also just taking advantage of times when we think the stock is an extra good opportunity to bring down the net share count.
How do you think about external investment into Structural Heart versus other areas that maybe are near adjacencies but outside of Structural Heart?
No, we are solely focusing on Structural Heart. Structural Heart is a very large opportunity, and we believe there are more than 20 million patients between the U.S., Europe, and Japan. Many of these patients have today not great solutions. So we see many opportunities. We have a clear path. What we want, the way we are thinking about it, is where is the need, the patient need? Can we be first? If we can be first, can we become the leader in a short time period, and we have been externally also heavy investors in early-stage technologies.
Because we like to go early, to take the risk, and to create categories. So every year, we are heavy investors. And we will continue to do so. But within structural heart disease only.
Is there a preference? You obviously have two divisions at Edwards: surgical and transcatheter. Is there a preference one over the other? How do you balance investment?
It is not necessarily balancing across these businesses. It is more about where is a large patient need? Complex patient need, large? Where can we make a difference? Is there a big opportunity, growth opportunity in front of us? How can we leverage our core capabilities as a company? So it is more along these lines that where it is going necessarily within the company.
Good. I don't think we have enough time for another question. That was a fantastic discussion. Thank you. Thank you, everyone, for joining.
Thank you. Thank you.