Edwards Lifesciences Corporation Price & Performance (EW)

Thanks, Alicia, and thank you everyone for joining us this afternoon. With me on today's call is our CEO, Bernard Zavigian and our CFO, Scott Ullum. Also joining us for the Q and A portion of the call will be Larry Wood, our Global Head Global Group President of TAVR and Surgical, Devine Chopra, our global leader of TMTT, Wayne Markowitz, our global leader of surgical. Just after the close of regular trading, Edwards Lifesciences released first quarter twenty twenty five financial results. During today's call, management will discuss those results included in the press release and accompanying financial schedules and then use the remainder of time for Q and 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 were made, and Edwards does not undertake any obligation to update them after today. Additionally, the statements involve risks and uncertainties that could cause actual results to differ materially. Information concerning factors that could cause these differences 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.

Edwards' guidance reflects its current estimates of the impact from tariffs that are in effect or have been announced as of the time of this press release and assume such tariffs remain in place for the remainder of 2025. Any modification to such tariffs or new tariffs could have a material impact on the company's future financial results and guidance. Unless otherwise noted, our commentary on sales growth refers to constant currency sales growth, which is defined in the quarterly results press release issued earlier today. Reconciliations between GAAP and non GAAP numbers mentioned during this call are also included in today's press release. Quarterly and full year growth rates refer to continuing and do not include discontinued operations. With that, I'd like to turn the call over to Bernard for his comments.

Thank you, Bob. Welcome, everyone, and yeah, please, Total company sales grew 8% to $1.141000000.000 dollars in the first quarter. Reflecting the benefits of our broad and differentiated portfolio of therapies to treat patients with structural heart disease. The many milestones achieved in Q1 are the result of our focused strategy. And our decades of unwavering dedication to driving breakthrough innovation in pioneering and leading categories. Collectively, these milestones mark the significant progress we have made to unlock this large and growing opportunity to transform care for millions of structural heart patients around the world. I'd like to thank our 16,000 global employees for their many contributions to advancing patient care. TAVR growth in the quarter was better than expected, as clinicians continue to adopt our best in class SAPIEN technology. Looking ahead to the rest of the year, we continue to believe that the results of the early TAVR trial represent a multi year growth opportunity. That will begin with the expected indication approval in the second quarter. And expand with the evolution of policy and guideline changes in The US and globally. And in late twenty twenty six, we look forward to the presentation of the results of the groundbreaking PROGRESS trial.

Which has the potential to further expand the therapy to many new patients with moderate AS. I am proud of our commitment to TAVR innovation and high quality science that is increasing access to treatment options for all AS patients. We continue to be pleased with TMTT strong momentum. Reflecting our portfolio of differentiated repair and replacement technologies and we are raising our twenty twenty five T and T sales guidance range to five thirty to $550,000,000 As a reminder, our successful TMTT strategy position us to become the first to develop and launch a transcatheter tricuspid valve with Evoque in 2024. Today, I am also very proud of the recent approval of our [indiscernible] The world's first transketeer mitral valve replacement system. Which will benefit many patients with mitral regurgitation who have limited treatment options. This breakthrough technology demonstrates our team's long term and steadfast commitment to solving large, unmet patient needs. Edwards, with Evoque, and Fori and PASCAL, is uniquely positioned to meet the broad and diverse needs of patients with tricuspid and mitral valve diseases. In surgical, our category leading business continues to benefit from increasing adoption of our premium resilient portfolio. [indiscernible] Mytris and Connect. Edwards continues to invest in surgical innovation and evidence as we expand access to our therapies globally.

Last week, at the Heart Valve Society meeting, eight year data were presented demonstrating the excellent durability of a company's novel Resilia tissue. Which is used in a wide range of Edwards surgical platform as well as SAPIEN three Ultra Resilia. The results represent the longest follow-up study on the durability of valves, which highlights our dedication to pioneering unique innovation. With patients of all ages living longer and seeking higher quality of life, the important of lifetime management has never been greater. We also continue to make steady progress advancing our portfolio of emerging opportunities, which we discussed at our investor conference in December. Our team continued to build capabilities to reach the millions of patients around the world who suffer from structural heart failure. And in in aortic regurgitation, we are enrolling patients in JOURNIE, the pivotal trial for the Edwards J valve AR system. Turning to our 2025 financial outlook, we are confident in our full year total company sales growth guidance of 8% to 10%, and we have plans in place to offset the estimated impact of a currently announced tariff and the estimated dilution from the Yanaval acquisition. Which we are planning to close mid year.

As a result of our plans, we are in a position to deliver on our original EPS guidance of €2.4 to €2.5 Our priorities continue to be serving the patients who count on us and maintaining the highest level of service and support to our physician partners around the around the world. Looking ahead to 2026 and beyond, Edwards is positioned to transform care for the many [indiscernible] We are confident that our strategic focus unique innovation strategy, and exceptional work of our employees around the world will deliver significant value to patients, the health care ecosystem, and shareholders. Now I will provide some additional detail by product group for Q1. In TAVR, our first quarter global sales of $1,050,000,000 increased 5.4% over the prior year or 6.5% when adjusted for billing days, which was a little higher than expected. Growth was comparable in The US and OUS. And while strong competitive position, and pricing remained stable globally with some regional variability. I am proud of our team's commitment to leading with science. Supported by a decade of clinical research, that set the standard for quality evidence and physician decision making. This significant body of high quality science from rigorous FDA trials underscores the excellent clinical outcomes delivered by Edwards premium SAPIEN technology.

Last month, at the American College of Cardiology Conference, new clinical data from the early TAVR trials studying patients with asymptomatic severe AS were released. The data highlighted that delayed aortic valve replacement in this patient population was associated with worse outcomes. Additionally, a new study using cardiac biomarkers revealed that the rapid and unpredictable progression of a disease both studies underscore the need for urgent referrals for treatment, evaluation for severe AS patient. Regardless of symptoms. Also at ACC, new groundbreaking data from the DETECT AS study were presented. DETECT AS is the first randomized trial evaluating the impact of physician notification, [indiscernible] For their patients with severe AS that meet treatment guidelines. The study found that these echo alerts increase both treatment and survival rate for patients with severe In The US, our leading SAPIEN three Altaris ELA platform continues to demonstrate strong performance. We are advancing initiatives to help hospitals treat structural heart patients efficiently and manage increasing procedure volumes. We are encouraged by hospitals that have demonstrated the ability to scale to accommodate posterior growth. We are encouraged by discussion with clinicians on the long term impact of early TAVR data. To streamline patient care. In addition, we expect asymptomatic indication approval in the second quarter.

Outside of The U. S, we continue to focus on the value of our differentiated technology and increasing therapy adoption. Especially in areas where TAVL remains underutilized and many patients go without care. In the first quarter, sales growth was supported by the continued expansion of SAPIEN three Ultra Resilia in Europe. SAPIEN three Ultra Resilia continues to deliver exceptional clinical outcomes reinforcing the differentiation of this best in class platform. In Japan, we continue to face weaker procedure growth environment and competitive pressure. We remain dedicated to addressing the significant under treatment of AS among the substantial elderly population in Japan. In summary for TAVR, we are maintaining our full year sales growth guidance of 5% to 7%. Long term, we are enthusiastic. About the durable mid to high single digit growth opportunity in TAVR. Supported by the upcoming early TAVR indication approval guideline and policy changes, and the potential to serve patients with moderate AS. Turning to TMTT. Our unique and increasingly differentiated portfolio drove another quarter of impressive growth. With a meaningful contribution to overall company performance. We are pleased with first quarter sales of $115,000,000 representing growth of about 60%. And led by increased adoption and balanced contribution from PASCAL and EVOQUE in The U. S, Europe and globally.

We continue to see strong therapy adoption and expansion across both Mitral and Tricuspid. Globally, Mitral tier procedures continue to grow double digits. And the developing TRIKASPEED opportunity is growing even faster across both repair and replacement. Pascal continues to demonstrate its value for patient care. Its differentiated features are driving distinguished clinical outcome, and adoption is increasing at both new and existing sites around the world. The Evoque commercial launch is progressing well in The US and Europe, with continuing excellent patient outcome. At the March, we were pleased to see the finalization of the NCD for Transcatated Tear Triacoustine Valve Replacement for patients suffering tricuspid disease. With the new NCD, Evoque is now covered for all Medicare beneficiaries who meet the criteria outlined in the final coverage policy. Expanding patient access to this important therapy. We are pleased with the recent approval of the CPNM3 mitral valve replacement system in Europe. This revolutionary transketchy device therapy is built on the proven SAPIEN platform, which has been used in more than 8,000 procedures in the mitral position. We continue to expect that results from the inCircle pivotal trial studying M3 will be presented at the TCT Conference in October 2025.

In addition, as part of our deep commitment to advancing science for patients with structural heart disease, a European post market follow-up study is planned to continue evaluation of SAPIEN M3. Following patients out to five years. As previously shared, we expect US approval of SAPIEN three to follow in 2026. The launch plan for SAPIEN three in Europe is focused on creating a new category as we have done many times before. And achieving excellent patient outcome. Without decades of experience, we are uniquely positioned to bring CPL-three to the many patients in need across Europe. We will work with all stakeholders to ensure patient access to this novel therapy providing physician training and working with policymakers to establish proper therapy coverage. Edwards is the only company that offers a transcatheter portfolio that includes both replacement and repair treatment option for both the mitral and tricuspid valves. Meeting the complex needs of underserved patients. We are committed to bringing this portfolio to patients in need around the world and expect meaningful impact from these advanced therapies in 2016 and beyond. In our surgical product group, first quarter global sales of $251,000,000 increased 3% over the prior year. We continue to see positive procedure growth globally, for the many patients best treated with Edwards premium Revelia portfolio, including Mitrais, and Spiris, and Connect.

We continue to generate high quality evidence on our Resilia tissue technology. As shown in the eight year data presented at the recent Heart Valve Society meeting, Resideo tissue valves had significantly improved freedom from structural valve deterioration and freedom from the reoperation compared to nonresilia valves. Also in the quarter, our surgical team made progress advancing important innovation around the world. Mytris Launched In China with positive surgeon feedback. And we anticipate receiving CE Mark approval for the CONNECT aortic valve conduit in Europe before year end. And now, Scott will cover the detail of the company's financial performance. Great. Thanks a lot, Bernard.

As Bernard mentioned, we are pleased with our first quarter total company sales performance and progress on our strategic milestones, which gives us confidence in our full year outlook. We are raising our original sales guidance range for TMTT to 530 to $550,000,000, driven by more favorable foreign exchange, and continued business momentum. Total company, TAVR, and surgical sales growth guidance ranges remain unchanged. But the company is increasing our original total company sales dollar guidance range by $100,000,000 to account for recent movement in FX rates. Edwards now expects total company sales of 5.7 to $6,100,000,000 in 2025. So now I'll cover additional details of our Q1 results, starting with earnings per share. We generated adjusted EPS of $0.64 in the quarter. With solid operating performance. Our GAAP EPS for the quarter was $0.62 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 and l. For the first quarter, our adjusted gross profit margin was 78.7%, compared to 78.5% in the same period last year. We are maintaining our full year 78% to 79% gross margin guidance at this stage.

However, we do expect some pressure from the weakening dollar the impact of announced tariffs, and the expected close of the GenaValve acquisition. Selling, general and administrative expenses in the quarter were $466,000,000 or 33% of sales, which was better than our expectation for the quarter, driven by lower sequential spending and deferral of certain strategic investments originally planned for q one. Research and development expense of $205,000,000 in the first quarter was equivalent to 18% of sales. A reduction from 19.6% of sales in the previous quarter. This lower ratio of spending reflects the company's prioritized investments in our structural heart portfolio in areas where we believe there are significant opportunities for breakthrough innovation and profitable growth. Adjusted operating profit margin in the 29.1% was driven by better than expected sales and favorable mix as well as some variable expenses delayed beyond q one. We expect pressure on our operating margin as a result of the weakening dollar the impact of announced tariffs, and the expected midyear close of the EniValve acquisition. However, we are implementing plans to mitigate these anticipated costs and we maintain our full year operating margin guidance of 27% to 28%. [indiscernible] our EPS guidance of $2.4 to $2.5 We continue to expect our 2025 tax rate excluding special items, to be between 1518%.

Foreign exchange rates decreased first quarter reported sales growth by 170 basis points or $22,000,000 compared to the prior year. FX rates positively impacted our first quarter gross profit margin by 40 basis points compared to the prior year. Relative to our February guidance, FX rates had a nominal impact on first quarter earnings per share.

At current rates, we now estimate no impact from foreign exchange, on reported sales in 2025 relative to 2024 versus our investor conference guidance of a $100,000,000 reduction. As a reminder, our hedging strategy is designed to mitigate the impact of foreign currency fluctuations on the original EPS guidance we provided in December. Turning to the balance sheet.

Continue to maintain a strong and flexible balance sheet with approximately $3,000,000,000 in cash, and cash equivalents as of the end of the quarter. During the first quarter, the company entered into an ASR agreement and repurchased stock through a pre established plan totaling 300,000,000 Edwards has approximately $1,000,000,000 remaining under our share repurchase authorization. Average diluted shares outstanding during the quarter were $588,000,000. We continue to expect average diluted shares outstanding for 2025 to be between 585 to 595,000,000. So I'll finish with one final guidance comment. For the second quarter, projecting sales of 1.45 to $1,530,000,000 and adjusted earnings per share of $0.59 to $0.65 And with that, I'll pass it back to Bernard. Yeah. Thanks, Scott. Before I close this afternoon, I want to take a moment to acknowledge an [indiscernible] It was twenty five years ago this month that we rang the bell at the New York Stock Exchange and officially began our journey as Edward Life Sciences. Since then, we have transformed care for millions of care and heart patients around the world solving large and complex patient needs, and pioneering therapeutic categories. And our future is bright. Our foundation remains strong, and we will continue to bring new innovation to the many structural heart patients in need around the world.

With that, turn it back to Marc.

Thank you very much, Bernard. We are ready to take your questions. Plus one follow-up. To allow for broad participation. If you have additional questions, please reenter the queue. Management will answer as many participants as possible during the remainder of the call. Alicia, I'll turn it over to you.

Thank you. We'll now be conducting the question and answer session. If you would like to ask a question, please press 1 on your tele keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment moment please while we pull for questions. Thank you. First question comes from the line of Larry Begleson with Wells Fargo. Please proceed.

Good afternoon. Thanks for taking the question.

Congrats on a good start to the year here. Scott, you can probably anticipate the first question You're maintaining the EPS guidance despite the tariffs and the Genivalve acquisition and maybe even currency. So, obviously, people would love to hear you parse out how much each of those impact 2025, and and how much lower could the gross margin be, relative to to the guidance? And I had one follow-up.

Sure. So let's go through the three elements, Larry. Thanks for the question. On FX, our hedging program is designed to mute the impact of foreign exchange changes on our EPS. So the real impact is from tariffs and and the UniValve acquisition. You know, for tariffs, it's probably about 5¢ to EPS based upon the tariffs that are already in place. And, you know, just a little color commentary on tariffs. We may not be as complex as some others because we operate just a handful of production facilities that are strategically located with our key business regions. And, you know, we also already have a lot of production in The US. And so think 5¢ associated with the 10% tariffs. Now that's just for 2025. The tariff impact is higher than that. But as you know, they get capitalized into inventory and recognized in our p and l as finished goods are sold. So the bigger impact is in 2026, but it's premature to be offering any guidance or spec about what tariffs could look like when we get out there. For Yenovalve, we think the impact is probably in the range of 5¢ to 10¢. Now keep in mind, we don't have current information.

We haven't closed the deal yet, But based upon our estimates and the preliminary plans we have for an integration, that's probably a good modeling assumption at this point.

That's very helpful. And a follow-up for Davin on tricuspid. Congratulations on the NCD, for Evoque. How do you see the NCD impacting the ramp of Evoke? For taking the questions.

Thanks, Larry. Thanks so much for the question.

Right? We we can be excited as Evoke as a new category for us. Right? It's a great product. And the NCD, as you know, was effective now in March of twenty twenty five, and this is a transcatheter tricuspid valve replacement NCD. The NCD ensures that both the standard Medicare as well as the large Medicare Advantage patient groups have access to Evoke as outlined in the final coverage policy. This coverage policy was very much in line with our expectations. It's kind of built into our guidance this year. We love the components of this NCD, including, you know, within an FDA approved indication, under a heart team, and in the context of a CED or coverage with evidence development, to collect additional data on the therapy. So overall, it is, in line with our expectations of 2025 being full steam with activating new sites. And continuing to treat more patients with Evoke who are getting excellent outcomes. And this is the start of a great multiyear kind of growth opportunity for treating more patients.

Thanks so much.

Thank you. Our next question comes from the line of David Rowan with Goldman Sachs. Please proceed.

Thank you. Good afternoon. I wanted just to start on on the TAVR business. And maybe you could talk us through a little bit what you're seeing on the ground as it relates to either referral patterns or physician engagement post the presentation or early TAVR now that we're kind of six months ish following TCT? And then maybe walk us through specifically what happens once you get the indication expansion approved and what the plan is to start to support market development effort and what we should see that show up in numbers? Then I have one follow-up.

Thanks, David. Yeah. That's a that's a great question. Well, first of all, I think the the dataset was very, very strong that we presented at TCT, but it does take physicians a little bit of time to work their way through the data and really understand the important nuances. We followed up those the TCT with a very strong deep dive at ACC, and they're was a few things that came out of that. One was the unpredictable nature of these patients that have asymptomatic aortic stenosis. I think one of the things that a lot of people have been utilizing and have been focused on is the use of biomarkers. And the thought being that biomarkers would be predictive and would help physicians understand what asymptomatic patients they should refer and what patients they could safely wait on. And I think the the surprising data that came out at ACC said the biomarkers were actually not predictive. They did not predict which patients had more serious events versus which versus which patients just had a progression to more mild symptoms. I think it just really stresses that these patients need to get referred. They need to get worked up by the heart team.

And we've continued to work with the clinical community and and our physicians to make sure we amplify that message. But, of course, you know, all we can do right now is just educate people on the publications, on the data, We can't actually promote in any way, shape, or form treating patients who are truly asymptomatic because we don't have the indication yet. We do expect that to come, before midyear. So we're on track for that. And the minute we get the indication approval, we have, you know, a very detailed education plan. Can then begin re reaching out to the referral base and doing all of the other things that we wanna do to help amplify this message. And but, you know, again, we expect the approval to happen in q two.

Got it. Thanks for the detail there. And then on the TMTT side, as you kind of look twelve to twenty four months forward, I believe you'll have tricuspid repair and replacement, mitral repair and replacement available U. S. And OUS. So could you maybe help us just think about market segmentation a little bit in that category? How should we think about mix between repair and replacement? Today and going forward? And whether this category is more of a sort of toolbox approach for physicians physicians or you think it converts to a one size fits all, be it in mitral or tricuspid?

Thanks, David. Let me start, and then I will ask Devine to add some additional details. I want to start where we were a few years ago. We knew that tier technology and repair technology was not going to be sufficient to unlock the full potential of a mitral and tricuspid space. So it is why we went in with the toolbox. And we brought first Pascal, highly differentiated and have seen the kind of impact we are having to patients. With PASCAL. But we know that many patients cannot be treated with TEAF. So therefore, launched we were the first to launch Evoke, which is going very well, and we see we are treating more patient than just, you know, TR patient, tricuspid patient with with Evoke. Here with M3, you know, it's the beginning of the same journey here. Is going to take us multiple years to train physician, expand, So to give you a sense about segmentation, right now it is a little bit early, but David is very close to data, so maybe I'll David to bring some color here.

Yeah.

As Bernard said, it's it's hard to give exact segmentation, but I'll try to give you at least some thoughts we have. Today in Europe now, as Bernard said, we have we have now repair and replacement for each mitral and tricuspid. So we believe with the two technologies together, we can treat a larger group of patients. Clearly, in the mitral side, again, in Europe, m three has just gotten approved. And for m sapien m three, it'll be over time to really build out this category. To train physicians, to get appropriate payment, etcetera, over time. And for that, we see we remember that the m three that this is a product that's geared toward the tier and mitral surgery unsuitable patients. So it's for patients who don't have tear or surgery options. So over time, we still believe TIER for coming years will be the largest part, and then eventually over time, mitral will continue to grow mitral replacement will continue to grow in its treatment of people offering that new option. In tricuspid in Europe, again, it's a little different, sir, in The US than The US where tricuspid tear has been around for many years.

And now the new category of Evoque Has Been Recently Created In Europe. Where we're now adding more patients to the pool who are both tricuspid surgery tricuspid tier ineligible. So now we're adding new patients who don't have an option and producing these amazing results. And so that's how we see the European market progressing in this couple years. The US will have a little bit different dynamics, but you'll still see that because TIER has been very well established in the mitral space, we see mitral replacement as an additive therapy. Bringing patients off the sideline and offering a solution that they didn't have before. In the tricuspid space, as you know, both repair and replacement entered The US market at similar times. So the clinical community right now is learning together about, hey. Which is the best repair patient? And which is the best replacement patient? We've seen from experience in Europe so far that having a repair and a replacement solution is really important for treating the maximum number of patients. And but the exact ratio we're gonna figure that out together with clinicians in the coming years.

Great. Thanks so much.

Thank you. Our next question comes from the line of Travis Steed with Bank of America. Please proceed.

Hey. Congrats on the quarter. First question I wanted to ask on TAVR capacity constraints and the potential for the TAVR NCD to to loosen some of the requirements or potentially broaden some of the number of centers available to treat. And that's some of the ways that some of the capacity constraints could be eased over over time.

Sure. Thanks for the question. Yeah. You know, we certainly feel if, you know, it's the time to reopen the NCD We think there's a number of things that that need to be updated. You know, the first is the NCD needs to specifically cover asymptomatic patients just to ensure national coverage is standardized for all the patients that need that therapy. I think the the second thing is we know that adding hospitals that could offer this therapy would improve care and give more people access And I think that that's, you know, another important element. In terms of more broadly on capacity, I think some of the acute capacity issues that we dealt with last year, I think we're through the worst of that. We still see centers working actively to you know, to add capabilities. And, you know, we try to partner really closely with them. You know, we offer about clinic coordinator training courses. So if that's the constraint, you know, we can certainly help them train their staff. Some places, you know, it's more about anesthesia, and so we can you know, bring in experts to help them adopt conscious sedation. You know, if they're just you know, limited to know, two or three cases a day, we can bring in things like our benchmark program.

Can allow them to do more cases in the same time and in the same footprint. So we continue to work with them. I think, you know, send the reality is we have a lot of new technology. We have a lot of new indications coming. I think hospitals realize that, and I think they are investing. We've seen that. And they'll continue to do so. But the reality is they need to keep doing that because, you know, the the indications you know, right now, it's gonna be you know, in the near term asymptomatic, but we know we already have Evoke. Know we have m three coming. And then, you know, we're only, you know, a year and a half away from seeing the progress data, which could be another indication expansion. So I think the hospitals are more in tune with what the requirements are gonna be on a go forward. I think it's gonna be all those things coming together. I think it's gonna be policy. I think it's gonna be guidelines. And I think it's gonna be those investments that are gonna be the long term solutions to to capacity.

Great. That that's helpful. And then I had a follow-up, just a modeling question on on q two tab. TAVR. I think the Street said 5.8%. I'm just curious if there's any color you want to provide on how to model Q2 TAVR in the remainder of the year and the second half And any days benefits to kinda call out over the course of the year. For the remaining portion of the year.

That growth in the first quarter. And to get to the midpoint of our five to 7% growth rate guidance for the year, you know, tells you we need something in the 6% range for each of q two, three and four. Obviously, the there's gonna be some differences. We've got some changes coming during the course of the year, including asymptomatic indication. But probably the right place to model Travis, is in the 6% range. With some expected variability quarter to quarter.

Great. Thanks a lot.

Thank you.

Our next question comes from the line of Robbie Marcus with JPMorgan. Please proceed.

Great. Good quarter. Thanks for taking the questions. Two for me.

Scott, maybe just on the EPS offsets, offsetting $0.10 to $0.15 for Edwards.

Is a big move, and and really in breath Maybe speak to sort of the undertaking you're doing to be able to offset that kind of headwind between tariffs and Yanovao dilution?

Yes. Thanks for the question. Obviously, we've been anticipating the approval of the Unnavalve and running a bunch of scenarios in the event that we're successful getting it closed, which we think we will. Our guidance for the year did not anticipate an impact from YuniValve, but we've had plans to to be able to take action when we got some confirmation and more confidence that we're gonna get it closed. So we're we're ready to go. We do think that spending will step up a bit in the second quarter. Because it was lower than what we originally had planned and expected in q one. That's really the reason why we ended up with $0.64 a share in EPS in the first quarter. You know, we're gonna be looking at things like investments that we are planning to make that are more discretionary in 2025 that will not impact our sales guidance for this year. But at this point, we're not gonna get into a a lot more of the detail about where those items are. Know, I mentioned in the prepared remarks that we're really focusing hard on prioritizing our R and D investments and really focusing on things that can drive top line organic growth and profitable growth and earnings over the long term we're gonna keep doing that.

And again, I think we can continue to execute our focused strategy while also doing what we need to do to offset those headwinds that we're facing now in 2025.

So just to add on that, know, Scott, you know, well said, I would say, you know, we are very pleased about the way we are starting the year. Strong Q1, sales slightly better than expected, EPS top end of our range, We are We have achieved so many milestone in Q1. You have seen all of them. Where we are going to be able to create a new category for us. Think about a multiyear growth opportunity ahead of us, based on these new medicines. Then full year outlook, [indiscernible] And being able to offset Yanaval's dilution and basically the tariff impact. We feel good about the year. We feel good about how we are running the company.

Thank you.

Great. Maybe just a quick follow-up. The TMTT guidance range part of it's FX, part of it's underlying.

You know, first quarter was was good, but still pretty much in line with The Street. How are you thinking about the split between FX and underlying? And sort of the key drivers of progression. In the RACE guide through the rest of the year.

Thanks a lot.

Sure. I'll just confirm on FX and then pass over to Devine to talk about just the operational performance and our outlook for the rest of the year. For FX, you know, think about this hundred million dollar benefit that we're getting through the movement in FX rates and just spreading that across our businesses. Probably about half of the increase in TMTT guidance comes from FX and the other half from operational. And then the balance of that hundred million dollars would be spread across other businesses. Of course, Tavro would be the biggest place for that to to go. Devine, you wanna talk about the other half of the guidance increase? So on the operational side of things, as you can imagine, we continue to see great momentum on both PASCAL as well as Evoque. So both are kinda key drivers both in q one and going forward as we just treat more and more patients. From maybe even I'll give you just the geography component, so it's good to look at that way as well. We see both coming from both The US and Europe. But, know, in the in both these markets, Pascal continues to show its differentiation.

And Evoke as a new category continues to create treat new patients that don't have great outcomes. So we see continued growth happening from that side as well.

Appreciate it. Thank you very much.

Thank you.

Our next question comes from the line of Vijay Kumar with Evercore Please proceed.

Hey, guys. Thank you for taking my question. Scott, I had a couple of guidance clarifications, if you will.

May maybe on the EPS guidance here, you called up the tariff headwinds in in, know, well, Are are we expecting to offset you know, that increment, 10 to 15¢ of headwinds completely? Or or should we be perhaps looking at the bottom half of the guidance range just know, maybe walk us through on on what the offsets are.

Yeah. So it's a little premature to to be more precise about where within that two forty to two fifty we may fall. And the reason is because we haven't closed the UniValve yet.

So part of this depends upon the timing of that close and when we start picking up some of that burn. And part of it depends upon what the integration plan looks like and and what we're actually gonna execute. That's why we gave a range, and that's why we think that the two forty to two fifty range in EPS can accommodate different scenarios.

Understood.

And maybe one on international. Japan was a little light. Maybe cockwork, you know, trends within Japan.

Yeah. No. Thanks, you know, Vijay, for the question. So for sure, our results in the quarter and in the last quarter less than expected, a little bit disappointing for us. But we are very optimistic about Japan. What we have seen is a couple of things happening. Weaker procedure growth environment, and we need to better understand that, what's happening there. And also some competitive pressure. So so, you know, what we are doing is, you know, a couple of things is for one is enhancing our capability in the region in Japan. To accelerate market growth. One, and better position our technology. You know that when our technology are very differentiated, when we bring our technology to patients, evidence demonstrates that they live longer, better quality of life, They avoid, you know, hospitalization, complication, this is the kind of value we bring. We have a good story to tell and I believe we are good are going to have all of the Japanese physician responding very well to this. We are also enhancing capability in Japan. Address the situation. So overall, long term in Japan, we see a big potential. Aging population, there is a lot of AS patients, mitral patients, like I said, patients, so clearly an opportunity for us, an opportunity to change patient care there.

Understood. Thank you.

Thank you.

Our next question comes from the line of Matt Taylor with Jefferies.

I did want to follow-up on TMTT. I heard your comments, and guess I just wanted to confirm that none of the guidance range was was really around m three.

And also, just wanted to think about how to maybe compare and contrast the launch of the mitral replacement versus what you've seen with Evoque and tricuspid. Should we expect it to be similar and can you talk about when the European launch will start to contribute and what to expect from The US?

Yeah. Sure. This is, Devine, Matt. I can, take that, that question. So first, the first part of your question, yes, you're correct that we had built in m three into our our original range for the year already. And the change in guidance did not have to do with the specific CE mark or the timing of the CE We'd already kind of built it in. And as we look at this kind of therapy, we're, you know, we're beginning with a very controlled launch that's emphasis on this really high touch model that we have of supporting physicians and patients to ensure the highest quality outcome. The indication, though, of mitral replacement in Europe is different. It is is more similar to VOC in Europe and different than what we see of VOCA in The US. Meaning, as I mentioned, mitral replacement is for patients who are unsuitable for mitral surgery, or for tear. So for that, yeah, we expect a gradual buildup. And in Europe, as you can imagine, we're drawing on our therapy and our experience in how to create categories. Because each country in Europe is very unique. There are different ways of getting incremental payment and coverage for our therapy we've gotta work on that one at a time, and that takes time.

Additionally, we gotta train physicians, train our own team, and build it up. So we really see CPM-three in Europe being more of a gradual, long term, important category of adding new patients with mitral disease to be treated. And, yeah, hopefully, that's helped.

That's great. And then any maybe you could just finish with The US, how that'll be different.

Yeah. So in The US from different than Evoke in The US. As you imagine, mitral replacement, again, The US will also have an indication unsuitable for tear or mitral surgery. So, again, it's these patients are already in the funnel. They may may not be appropriate for surgery or tear. They don't have any other option. And now for many of those patients, m three will be an option. Evoke, as you know, when we launched it, had a different broader indication for people for health status improvement for people with tricuspid disease. So there's not this layer of first, are you appropriate for tear or surgery? So with that, we would expect that the US mitral launch in general, would be at a slightly slower rate probably than would be a slower rate than we think we saw with Evoke. But either way, we really see that the great news about this is that this technology, replacement is really complementing TIER. And adding patients to allow us for that kind of multiple years of growth in as we add more add more patients with this new treatment.

Great. Thank you so much.

Thank you. Our next question comes from the line of Joanne Wansens with Citibank. Please proceed. Good afternoon, and thanks for taking the question. Just want hit pause on the on the early TAVR label expansion and NCD? Because I think there's a couple of different things that are happening here. And correct me if I'm wrong. One is the label expansion. The second one is the NCD. The NCD could expand the number of centers. It could expand maybe something else. And I've also heard from some physicians maybe an expectations that it might eliminate the need for a cardiac surgery team in the in the OR. So could you just sort of, like, clarify what you think may happen? And then how long after all of that starts to layer on? Do you think, you know, procedures start to ramp? Thank you.

Yeah. Thanks, Joanne. You know, I think there's a multi multitude of elements here. The first thing is the label expansion, you know, which obviously is under FDA's control. And, again, we expect that to happen in q two. So that's kinda step one. The national coverage decision, you know, that's under the purview of CMS. And you know, they'll decide, you know, when they wanna reopen that and when they wanna reevaluate it. And, you know, given the safety of TAVR that's been demonstrated and the national registry that we have that really confirms the outstanding results across all of the centers that we we've opened. We do expect there to be an expansion in the number of centers. How many will that be? You know, that's gonna be up to how they write the policy and how that plays out. And and you know, we'll see how they decide to streamline the team and, you know, try to make the the health care system more efficient. The the third big element is guidelines, which fall under the society purview. And, you know, how do they take this data? How do they update the guidelines? So that patients with you know, severe aortic stenosis but haven't yet pursued the symptoms how do we make sure that they move through the health care system they're properly screened, and they're treated accordance with with what the data suggests.

And and I think, you know, we're still in that education process with with a lot of folks. Know, there's sometimes people think that asymptomatic patients are are automatically younger patients, but what we saw in the trial is I think the average age was 76, where for a low risk trial, it was 73. So these aren't necessarily younger patients. You know, we're not necessarily treating them at a much younger age. I think these things are all in important things that we just need to keep reiterating. And, once we have the approval, it really takes the the shackles off of being able to really advance our education platform and advance our ability to promote this. But until we get the FDA approval, we're just, you know, we're just kind of at a standstill beyond what the physicians themselves, the investigators, and people do at the big medical meetings.

Very helpful. Thank you.

Thank you.

Our next question comes from the line of Pito Chickering with Deutsche Bank. Please proceed.

Hey, guys. Was following up these on these entity questions.

You know, our calls with the, physicians that CMS is actually in sort of final discussion with the societies and health systems about relaxing this entity to be certified to high risk centers and that this change could actually be coming, in May or in June. Is this timing something that you guys have heard as well?

There there's no predetermined timing. You know, it it opens whenever CMS decides that they that they wanna open it, and that is completely within their purview. And no one, frankly, has any influence over that. It's completely within within their their realm of control. So anybody that provides specific timing, they're they're simply speculating. As to when they think you know, when they think that that could happen. So I don't I don't have any insights beyond what I've what I've already stated. And and it's gonna be up to them. Again, you know, we do expect that you know, a new policy I I think I think we have plenty of experience with the technology now. I do think the new policy will reflect the safety that we've demonstrated And I do expect that at some point, the policy is going to reopen. And, you know, I think one of the catalysts in front of CMS is going to be the asymptomatic approval. Of the things we've seen historically, you know, when we first got approval for Sapient, it was under local coverage and it did lead to some inconsistent with how things were done. And that really drove CMS to open the NCD because they wanted to make sure that patients across all of their all of their constituents could be treated under a national policy.

So I expect that to happen again when exactly gonna be completely up to them. But when they do, then we get to engage with them. We get to start that that process and and know, hopefully, end up with a policy that you know, is is going to allow more patients access to life saving therapy.

Great.

Then a follow-up here. Can you guys give us an update on how the demand for training for Evoke is going?

And any color on how many sites have been trained, and or in process to be trained? Thanks so much. No. Sure. This is Devine again. Yeah. So first, in terms of Evoke sites, as you can imagine, I think I mentioned before, you know, we started reaching those first 50 or 60 clinical trial sites. And then from them, we're continuing to invest in new sites that are are work with sites that are investing in tricuspid disease. So that number is a growing number. We continuously are booking our trial sites out for several months in advance. So right now, if you, if you're interested in a trial site, it's it's at least a couple months away. So it's been consistently like that where the demand from physicians to get trained has been always a little bit greater than maybe our ability to open sites just in the RAM. And this really, as you know, has to do with the the value proposition where people are seeing how the elimination of TR with Evoke is really changing patients' lives, and as result, both physicians and patients are asking for the technology. And so in general, though, as you can imagine, as Larry just mentioned, they're what 850 TAVR centers or so.

I mean, it's a a very big number. And our goal is some some number of those would be great for tricuspid treatment, including Evoque, and we continue each year just to keep opening and training new centers for many years to come. Just like TAVR did over the course of many years.

Great. Thanks so much.

Thank you. Our next question comes from the line of Chris Pasquale with Nephron. Please proceed.

Thanks. The 2.6% surgical growth this quarter was the source we've seen from that business in a while. I know selling days had a bit of an impact. Can you just talk about your confidence in being able to sustain mid single digit growth in that segment, especially now that resilient platforms have really become dominant in many of your big markets that don't have as much of a tailwind from mix. Yeah, Chris. Thanks for the question there. In q one, we did have some challenging comps when we considered or compared to prior year when the business was growing in the high single digit range. And I think looking forward in 2025, as you heard from Bernard, you know, we're launching Mitra in China. We've got some other potential tailwinds later on this year with the approval of Connect in Europe. And so we are remaining confident in our current guidance in the mid single digit range for 2025.

Great.

That's helpful. And and I know this may be a bit difficult to answer given that the deal isn't closed yet, but we saw some updated data from the Align AR trial at ACC. Continues to look solid. We're about eighteen months out now from the original data presentation. Just any help you can give us in terms of what we should expect for a regulatory pathway and approval timing for that product.

Yeah. Actually, we don't have anything that we can talk about on You know, we're sort of pencils down until the deal closes. So we don't have any direct knowledge. You know, we're not in conversation with them. Until the deal closes, you know, we're we're sort of on the outside looking in. I don't have any more information than what you saw presented at ACC.

Alright. Thanks.

Thank you.

Our next question comes from the line of Patrick Wood with Morgan Stanley. Please proceed.

Beautiful. Thank you so much, guys. I guess maybe on Pascal, doing pretty well. You know, where are we at in terms of, you know, accounts sort of breadth versus depth? I'm thinking, like, is the utilization sort of where you would like it to be? I'm I'm trying to work out how wide you are versus how deep within individual accounts.

Yeah. Sure. If you think about Pascal overall, we continue to see that this product has feature differentiation that we believe is leading to really predictable positive outcomes for patients. And that and you see that in accounts who currently have access to PASCAL that as they use PASCAL more and more, they see those great patient outcomes and then they wanna use it more. And then as you can imagine, they then tell their friends through different types of programs [indiscernible] That sites who today who don't use PASCAL are interested in trying in to use it. So that's how we see it spreading in both increased depth in certain centers as well as opening new centers. In terms of the number of centers, maybe specific just speak to The US. Again, I'm able to use the the generic calendar. If there are 850 TAVR centers, give or take, in The US or so, Our goal is to grow into many of these that as many of these that make sense, But today, we're definitely in less than fewer than 50% of them. So there's still a lot of opportunity for growth, both in new accounts as well as increasing penetration and seeing those great patient outcomes in the sites that currently use PASCAL.

Thanks, Steven. That's helpful. And then very quickly, there's been a lot of sort of shuffle around of the FDA overall and and people five rehired, that side of things. Is there any expectation from you guys that approval timelines long term could be affected or anything like that, or is this just short term noise that we can ignore?

Yeah. Obviously, you know, our situation is a is a fluid one, and are all, you know, watching. But so far, we don't see any change with the FDA. Approval time line, response to any submission, all of that. So we feel like people at the FDA are very professional. They are very committed to the space, and we don't see any impact. And we don't believe we will see an impact obviously, it is a fluid situation that we need to monitor.

Awesome. Thanks, Bernard.

Thank you. At this time, this concludes the allotted question and answer session time. I would like to pass the call back over to management for any closing remarks.

Yes. So thank you, everyone, for your interest. So beyond strong start of the year, I'm very excited about what we were able to achieve in Q1 with this very strong catalyst. If you step back and you look at them, we on track to get an early TAVR indication approval in Q2. We had an NCD for Evoque. SAPIEN M3C mark, which basically represents the start of a new category for us. Resilia, eight years, amazing outcome. All of that together give us confidence in what we told you in December at our investor conference. We believe we are very well positioned to transform care for the many structural heart patients and we are continuing to target total company sales growth of 10% annually on average. So again, very pleased about the year, the numbers, all of the catalysts, I think all of our people, 16,000 employees, are doing amazing work. And I want to thank them for that. Thanks for your interest in the company, And if you need any questions, do not hesitate to call Sine, Mark, Scott, or myself. Have a great rest of your day.

Thank you.

That concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.