We're gonna get started here as we're moving down the medical devices company presentation fireside chat track at the 46th annual TD Cowen Healthcare Conference. I'm Josh Jennings from the TD Cowen Medical Devices team. We are honored to have Edwards CFO, Scott Ullem, joining us, making the trek out from the West Coast. Scott, thanks so much for being here.
It's our pleasure, and I'm here with my colleague, Teri Ansarte , who's gonna be taking over as head of investor relations in April.
Thank you for introducing her. I'm sorry I didn't introduce you myself. you know, I've got mixed emotions here at this... you've been a regular attendee and your team of, the TD Cowen Healthcare Conference, and this may be the last time we get to have a chat up here on stage.
Well, I haven't been here for all 46 of your annual investor conferences. It's always a pleasure to be here. Thanks, Josh.
Thanks, Scott. Maybe to start with just maybe, you know, the succession path and the process, any updates there. I mean, it seems like there has been some restructuring in the, some of the, some of the big executives at Edwards over the past couple of years with Michael Mussallem leaving, Larry Wood leaving, and now you're departing as well. I think in each instance, the executive's departure was the basis was you're leaving the company in a good position, and you have a strong team behind you.
Maybe just talk about where the succession plan is and how you feel about leaving Edwards and, and being well-positioned.
Yeah, sure. Thanks for asking. You know, like, we mentioned earlier, we're running an external search process and just working through the different stages of evaluating candidates. Ultimately, Bernard, our CEO, will select the next CFO. As soon as that happens, we'll certainly announce it, of course, and then orchestrate a smooth transition. That's always been the plan. Still is the plan, and it's my intention. I think you're hitting on something important, which is over the last couple years as we've had natural transitions at different positions on our
executive team, one of the encouraging things for me about Edwards is we have a deep bench. We have a lot of people who can step in. For example, our new head of THV or transcatheter aortic valve replacement, Dan Lippis, had been in the THV world, both in the US, Europe, and Japan, Asia-Pacific, before succeeding his predecessor and taking over as THV. It's an example of we have a deep bench of people, both at the senior level that you'll see and multiple levels below that.
I'm feeling positive about our team. I'm feeling positive about all the good things that will come with having a new CFO.
Absolutely. Bernard has taken the baton over the last two years and is hitting his full stride along with your team as a whole. Maybe to start, we can talk about the TAVR franchise and the market recovery and just review, you know, how well-positioned Edwards is. You continue to have dominant share in the United States. There have been some controversial debates around, you know, low- risk durability data that were those debates were answered or questions were answered last year at TCT with the seven -year data.
Maybe to start, just how big of a deal has that been for the Edwards TAVR franchise's SAPIEN platform's recent success, market growth, and also maybe supporting some asymptomatic adoption? Lot in that question, but.
Yeah
... I think you can handle anything I throw at you.
No, there are a number of questions there, but let me just try to give a little bit of an overview of what's happening in TAVR in the US. What's certain to us is that there is a renewed focus on TAVR, renewed focus by operators, by referring physicians, and by patients. There's a renewed focus on the deadliness and severity of aortic stenosis and on the treatment alternative, surgical and of course, transcatheter valve replacement. We've seen that in the growth in 2025.
If you just look at the different data presentations and podium presentations at major medical meetings during the course of 2025, whether it's ACC, New York Valves, or TCT, there were important data presentations from Edwards that reinforced the safety and efficacy and importance of getting patients diagnosed with severe aortic stenosis to the point of treatment as quickly as possible. I think that the clinical trial data in particular that has been released, including the 10-year data on durability of SAPIEN 3 that was presented at New
York Valves last summer, and most recently, the seven-year data on PARTNER 3 that was presented at TCT in the fall, reinforced the fact, the scientific evidence that this therapy, the SAPIEN family of TAVR valves, is really valuable for patients. We're doubling down. We're continuing to invest heavily in expanding the reach of our SAPIEN platform and we can talk more about what that looks like.
Excellent. You know, some of the concerns were on just hemodynamic outcomes, translating to clinical outcomes that may have been unfavorable for the SAPIEN platform. That again, that did not play out. Maybe just talk about the evolution of the SAPIEN platform, particularly on the hemodynamic front. I mean, SAPIEN 3 Ultra RESILIA or UR is, has better hemodynamics results to date. How do you see that, this debate on hemodynamics, playing out going forward?
Yeah. One of the things that we've learned during the progression of introduction of new valve technologies over the years is that picking one particular element and focusing on it is not as telling and valuable in reaching conclusions as looking at the composite endpoints and the most important elements which include all-cause mortality, rehospitalization, stroke, pacemaker rates. Looking at in total, we saw from the transition from SAPIEN to SAPIEN XT, SAPIEN XT to SAPIEN 3, SAPIEN 3 to SAPIEN Ultra, and finally now our flagship current
technology, SAPIEN 3 Ultra RESILIA, really phenomenal performance across all of those different measures. Whether it's hemodynamics or anything else, I think the really important thing is to look at in totality the body of clinical evidence supporting these different therapies and what they can mean for patients. We're really pleased with what we've seen, and we're really pleased with the investments that we've made in innovating on our own technologies to make our therapies even better, and we're going to continue to do that.
SAPIEN 3 Ultra RESILIA is still getting rolled out globally, and we think that's gonna continue to be a fabulous therapy for patients for the foreseeable future. We do have next-gen products, including SAPIEN X4 and the successor to SAPIEN X4, as we always do. For now, we're really excited about SAPIEN 3 Ultra RESILIA and the clinical trial results that we're seeing.
When you issued guidance for the Edwards TAVR franchise, I believe you expected stable share globally, and so the grow at relatively at the market pace, that was in front of the Evolut six-year data being published and being made public. Were there's any share shift assumptions just to review in that initial guidance and, you know, some of our recent checks suggest that there could be a share mix or share shift benefit to the SAPIEN platform as these Evolut Low Risk six-year results are digested by the interventional and cardiac surgery
communities?
Well, our most recent guidance of having increased confidence in our TAVR full-year growth rate of 6%-8% was prior to the other data that was presented. It's too soon to say. I mean, it's. We obviously watch carefully what other participants in this field are doing, and I think there's focus on that most recent clinical evidence, of course. Frankly, we're more concerned about how do we get more patients into the system. You know, market share is important, but we think that the value is even greater if we can increase the number of patients who can get
access to and treatment with SAPIEN technology. That's really where our heads are focused right now. Over time, you know, we'll see what the reaction is among physicians to that six-year data.
Understood. Just on that point you just raised about getting more patients access to TAVR intervention and benefiting from it, you know, this asymptomatic population is now in play. Any just maybe qualitative or quantitative, if you can, just a sharing of data points just in terms of how the asymp-- adoption in that asymptomatic indication is played out in 2025 and it should progress favor positively in 2026 is our assumption. Maybe just talk about that. Is Edwards SAPIEN platform seems to be best positioned because the EARLY TAVR data
studied SAPIEN and not any competitor's valves. Do you see a big advantage in that segment, which is relatively large as it starts to become a bigger contributor to overall market growth?
Yeah. We do, thanks for the question. Maybe we should just step back and talk about how the asymptomatic effort has unfolded. We ran this trial, of course, looking at patients who were diagnosed with severe aortic stenosis but did not have identifiable symptoms. When those data were presented at the TCT conference in the fall of 2024, it was impressive, and I think it made a real impact on physicians' view of this disease. We're in the middle of this transition of going from the former precedent of watchful waiting, where it didn't matter if a patient had.
The belief was it didn't matter if the patient had severe AS if they were not yet showing symptoms, to now understanding that symptoms are irrelevant. The data presented through this EARLY TAVR trial demonstrated and proved that symptoms are not relevant to the importance of getting diseased valves treated. When in 2025, the, you know, we got approval for asymptomatic on the label from FDA last summer, and that caused even focus on this therapy and the importance of all patients with severe aortic stenosis.
Also in 2025, we saw guidelines evolve with the European Society of Cardiology and EACTS, which are now promoting earlier treatment of patients to make sure that there's not this watchful waiting approach. Those guidelines we expect to also be addressed in the US, along with the NCD that is currently under evaluation by CMS. It's really an important time and juncture in the journey that we've had with TAVR, and this is one of the last barriers to fall. For a while, the barrier was only patients who were so at risk of an adverse outcome from surgery
were allowed to get TAVR. Those different blockades have come down with the progression of different PARTNER trial releases. This asymptomatic one is kinda the last big barrier to fall in the field of severe aortic stenosis. As soon as we get the new NCD in place in the US, the US guidelines adjusted, it'll really be beneficial for patients. I'll offer one other observation about the asymptomatic data. While the label was important, we have not seen any demonstrable signs of asymptomatic patients being treated in the US, which is not surprising
because there's not an NCD to cover that indication on the label. We are seeing, we think, more focus that's leading to more symptomatic patients coming into the system. We're also seeing in the CMS data more echocardiograms, more referrals, more stress testing, which is all favorable in terms of treatment rates for patients suffering from this disease.
Maybe baked into some of those metrics you were sharing, those trends could be just asymptomatic patients ruling in as symptomatic. Maybe there's, I mean, there's some kind of a penetration of what historically has been thought to be the asymptomatic population, or is that not the right way to think about it?
Well, the data that we have is, of course, on a trailing basis. We just haven't seen it.
Sure. Yeah.
Certainly, as I mentioned before, what we have seen is physicians being more thoughtful about evaluating patients and being aware of symptoms. Because there's not an NCD, there's still a lot of focus on the asymptomatic versus symptomatic. A lot of times for these elderly patients who are supposedly asymptomatic, when a physician really explores that, turns out they may have symptoms, and that can be evaluated by a simple stress test, and we've seen more stress tests being performed.
We're also looking forward to a point where that kind of artificial barricade to treatment falls away and that the treatment practice and paradigm turns to just looking at the disease. Like other diseases with a high mortality rate, symptoms are not relevant. If you have a diseased severe case of aortic stenosis, if you have a diseased valve and it's severe, then you need to get the valve replaced regardless of symptoms, and that's what we're really trying to advance as a practice in medicine.
Just in terms of all these trends and how just the evaluation of a severe aortic stenosis patient is, that evolution in workup and evaluation, getting them into the queue. I think the PARTNER 3, seven-year data, I mean, it's intuitive that that's gonna help just penetration of this asymptomatic opportunity once coverage is in place and guidelines evolve. Maybe there's more of a statement in the question, but anything to just discuss along those lines?
I mean, how big of a deal the PARTNER 3 update was and that checking of the durability box has been to opening up this asymptomatic channel?
It's a huge deal, and thanks for the question. There are actually two long-term data sets that support SAPIEN durability. One was the PARTNER II 10-year data.
Right
...that was presented at New York Valves last year. The most recent one is the PARTNER 3 seven-year data that was presented at TCT. Both clinical trial sets demonstrated durability of SAPIEN long term. This is something that Edwards cares deeply about. We're the leader in surgical valves. We're the leader in transcatheter valves, and durability is exceptionally important, and it's one of the reasons why we have invested so aggressively in durability innovation. For example, the RESILIA tissue that is now on our surgical valves and on our
transcatheter valves has been tested, and we're gonna be presenting the results of the 10-year COMMENCE trial at this year's American Association for Thoracic Surgery conference, and we're looking forward to seeing what that looks like. For all the other data that we've seen, SAPIEN valves are exceptionally durable, and it's something that we think is a really critical consideration for physicians and their patients.
Great. The national coverage decision finalization will also probably be a tailwind for TAVR volumes, particularly in this asymptomatic indication. I think assumptions our team have are that, you know, asymptomatic coverage will be in play. You could potentially see, you know, the restrictions on smaller volume centers open or be eliminated. I think our biggest question, maybe you could just talk about those two buckets and then our assumptions. The third one we're not so sure about is whether or not the mandate to have a surgeon and an
interventionalist in the procedure room during a TAVR procedure. Maybe where that could be reduced down to just one operator. Maybe walk us through those three assumptions. We're not clear on that third one, but, any updates in terms of how Edwards is thinking about this national coverage decision and the importance of it for sustaining or driving stronger TAVR volumes?
Yeah. It's very important in the US to have a new NCD. Edwards and many other companies and interested parties submitted letters to CMS during the first comment period. Those letters and input are being considered by CMS, and we'll see what the new NCD looks like this summer when it's published by CMS. The position that we proposed and submitted to CMS was that the new NCD first and foremost attaches coverage to label so that asymptomatic patients who are already on indication with FDA also have those procedures
covered nationally with this new coverage determination. Then the second piece that you touched on has a number of elements, which is taking out the friction and the impediments to hospitals and physicians being able to treat more patients, whether it's hospital site requirements or operator requirements or other issues that really provide limitations on growing these practices that we think should be considered by CMS. One of the relevant NCDs that we look to is the NCD that was put out for EVOQUE, which is Edwards tricuspid
replacement valve, where there are no site requirements, there are no operating requirements, and it's really left up to the hospital and the heart teams to determine the best way for patients to be cared for. We're looking forward to seeing what CMS comes out with this summer .
Great. You know, as you're winding down your tenure as CFO of Edwards, you issued guidance for some nice P&L leverage in 2026. The profitability of the business is coming into focus. Let me talk about why now is the right time to maybe deliver on that leverage at a higher clip. Is this a multiyear framework that's in play?
Yeah. Well, I'd say we've always had a focus on profitability, like a very acute focus on profitability.
Sure. I didn't mean to discount that.
No, that's okay. That's all right. It's a fair question because our guidance does include now operating margin expansion, and it's an important part of how we're running the company and how we expect to create shareholder value. Just looking back, we invested aggressively in building our transcatheter mitral and tricuspid therapies business. I'm sure you'll wanna talk more about that as well. When we did that, which is now over 10 years ago, we made an intentional strategic decision, which is that we were not going to take resources away from
growing TAVR in order to grow TMDT, and that we would do both simultaneously. It impacted our margins, and our research and development, for example, as a percentage of sales, went up to as high as over 19% back in the fourth quarter of 2024. Now that TMDT is hitting its stride, generated $545 million of sales in 2025. We expect $740 to 780 million of sales in 2026. We're seeing leverage on the research and development line, and that ratio as a percentage of sales is drifting down to around 17% we expect in 2026.
That's one of the reasons why we expect that operating margins will continue to expand 50-100 basis points on average annually in the years ahead. Now, it's not gonna be exactly, you know, the same number every year. Even as we continue to grow our investments in research and development and in the field force supporting these different therapies in TAVR, TMDT, and surgical, we do expect that expenses and our planning expenses to grow lower than the top line, which will yield that operating margin expansion.
Should we be thinking in days past when TAVR was growing in the double digits and outperformance would lead to nice flow through. Is that the same setup for 2026, or because you have such strong operating margin expansion, is outperformance benefit likely to kinda be reinvested as we look at 2026 and then out in 2027?
Well, a little bit of both. We're gonna continue to invest in growth of all of our different platforms. Again, as I mentioned, we will grow expenses at a lower rate than sales on average annually, which will lead to that operating margin expansion. I do wanna catch one thing that you mentioned, though, the double-digit TAVR. Yes, we had double-digit TAVR growth in Q3 and Q4 of last year. That is not a new normal that we're expecting. You know, our guidance for this year is 6%-8%, and long-term TAVR guidance is mid to high single digit top line constant
currency growth rate.
Thank you. Wanted to, as you referenced, touch on TMDT not leaving enough time for that important business unit. You guys have reiterated, you know, the long-range target of $2 billion for that franchise. Maybe talk about just the assumptions there. Anything you can share just in terms of the contribution from the transcatheter mitral and transcatheter tricuspid portfolios and will one outpace the other? Is there any mix you can share in that $2 billion assumption? Maybe just start there.
Yeah. It's a good question. We speculate about this even internally, we don't know. The fact that we don't know what the mix of therapies is going to be in 2030 is a reflection of the importance of the strategy we have in place, which is we believe it's critical for treating physicians to have different tools in their toolkit to treat the different forms of these diseases, mitral regurgitation and tricuspid regurgitation. For some patients, they'll benefit from our PASCAL transcatheter edge-to-edge repair system.
Other patients will benefit from a full valve replacement, whether it's EVOQUE for tricuspid regurgitation or SAPIEN M3 for mitral regurgitation. Of course, we've got parallel surgical valves as well. In TMDT, really having multiple different therapies to address custom personal patient needs is going to be a really valuable element of this growth to $2 billion in 2030 and growing beyond then as well.
Maybe review the toolbox approach. I mean, we think about 2027 in the United States and internationally, Edwards will have replacement and repair solutions for both mitral, which is already in play now, and tricuspid. How big a deal is that in terms of helping you guys secure the CAGR that gets you to that $2 billion in 2030?
Yeah. It's important. In fact, even with transcatheter edge-to-edge repair, our PASCAL device does not have a full label indication at this point. We have enrolled our CLASP 2F trial studying PASCAL in patients with mitral functional regurgitation. We'll be presenting the results of the CLASP 2TR trial at TCT later this year. Adding those indications, and presenting supporting clinical trial data is gonna be really valuable in growing that PASCAL franchise. And so will new product introductions and additional clinical trial information from EVOQUE
and SAPIEN M3. Across the board, just continuing to innovate across these different therapeutic alternatives is gonna be critical to growing TMDT, and we're confident we're gonna be able to do it. We've got generation 2 of PASCAL and EVOQUE, ramped up and getting closer to introducing those and, that'll be the first of multiple next steps in bolstering those product lines.
Those are two healthy markets. Edwards is best positioned. Are you surprised that some of the other players, big players in the structural heart sector have not either invested or I guess maybe they have and just haven't had success building out technologies that can be competitive in mitral and tricuspid. It seems like a two-horse race right now. Do you expect more competition to come in? Is that one of the assumptions that baked into your ramp to $2 billion in TMDT sales by 2030?
Yeah. The $2 billion in sales is Edwards sales. Certainly, the total sales will be higher than that. I think one of the reasons why we've had the privilege of being the leader in these spaces is we are exclusively focused on structural heart care. Other companies have multiple lines of business in healthcare. We really think structural heart is critical, and that's where we've chosen to focus our attention. One of the reasons that's given us confidence to do that is because there are so many patients who can benefit from the treatments that we are
providing and will provide in future generations. Yes, there will be competition, and there always has been competition in our space. We're comfortable with that. We take competition seriously. We think about competition more as Edwards competing against these diseases than Edwards competing against other companies.
Maybe we can spend the last couple minutes on EVOQUE, the big product. A lot of investor focus over the past 18 months, the data, then the launch. Two questions. One, has the EVOQUE launch kind of met the internal bar that was set by your team? There was some real-world data presented at TCT last year that was big. Maybe just talk about the ramp and any qualitative and hopefully quantitative metrics you can share.
We're really pleased with the EVOQUE introduction and rollout, and we're still in relatively early days of doing that. The rollout has a couple of components, of course. One is training new sites and expanding the availability of the EVOQUE therapy across different hospitals. The other is increasing referrals of patients who have tricuspid regurgitation from their general cardiologist to their interventional cardiologist to the heart team. We're supporting hospitals as they do both of those things.
I think we've been really pleased with the procedural success rates for EVOQUE across the board on a number of different elements, the types of which we talked about earlier. EVOQUE has performed very well, and we're still talking about a first-generation therapy with its early on in its development. We're pleased with the start. We're very enthusiastic about the potential for EVOQUE to play a meaningful role for physicians and patients who are suffering from this tricuspid regurgitation disease.
One of the cool things, I'll just tell a quick story, Josh, is when patients with TR, tricuspid regurgitation, get treated by their physician, the results are very evident very soon. Most TR patients have a lot of swelling in their lower extremities, and they're in pain, and they're in and out of hospitals all the time. Sometimes they have heart failure. Once their tricuspid valve gets replaced, it's really almost miraculous. Patients come back and see their physicians a couple weeks later, and they may be 30 lbs lighter with plans to go dancing that coming
weekend. It's one of the things that gives physicians a lot of confidence and interest in treating even more patients.
Thanks for that. Not the best question to wrap up with, but just with the events over the weekend and the conflict that's ongoing in the Middle East. Any just help thinking about Edwards' exposure to that region? Very, very early days, so maybe hard to comment on, but any thoughts would be appreciated.
Yeah. Well, we're obviously watching the situation, carefully as it unfolds. We do have people and patients in the region, we'll continue to watch carefully and safeguard our employees and also secure to every extent possible the availability of the therapies we provide to patients in the region.
Well, we'll have to leave it there. Scott, thanks so much. This may be our last fireside chat, but hopefully not our last interaction in person, going forward. Great, great to see you, and I appreciate it.
For sure. Thanks, Josh.