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01/10 17:23
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A reveal a positive sentiment overall. The company is confident in achieving long-term growth goals, with a focus on innovation and market expansion. Despite headwinds like the JenaValve acquisition affecting EPS guidance, the company maintains a positive outlook with strong growth expectations. The anticipated NCD updates and international expansion efforts are likely to positively impact the stock price. The company's strategy for TMTT and TAVR growth, along with the potential for increased market share, further supports a positive sentiment.
Total Sales $1.53 billion, grew 10.6% year-over-year. The growth was driven by broad-based growth across the company's unique portfolio of structural heart therapies.
TAVR Global Sales $1.1 billion, increased 7.8% year-over-year. Growth was comparable in the U.S. and outside the U.S. (OUS). The growth was attributed to the adoption of SAPIEN technology and renewed focus on TAVR across the clinical community.
TMTT Sales $133 million, grew 57% year-over-year. The growth was driven by the strength and differentiation of the portfolio of repair and replacement technologies, including PASCAL and EVOQUE.
Surgical Product Group Sales $267 million, increased 6.8% year-over-year. The growth was due to positive procedure growth globally and the impact of premium resilient technologies like INSPIRIS, MITRIS, and KONECT.
Adjusted Gross Profit Margin 77.6%, compared to 80% in the same period last year. The decrease was due to additional manufacturing expenses related to the expansion of new therapies and foreign exchange impacts.
Selling, General and Administrative Expenses $502 million, or 32.8% of sales, compared to $448 million in the prior year. The increase was due to deferred spending year-to-date and anticipated spending related to JenaValve.
Research and Development Expense $276 million, or 18% of sales, compared to $272 million or 19.8% of sales in the same period last year. The increase in spending reflects strategic prioritization of investments in the structural heart portfolio.
TAVR (Transcatheter Aortic Valve Replacement): Second quarter global sales of $1.1 billion, a 7.8% increase year-over-year. Recent approvals for asymptomatic indication in the U.S. and Europe provide a multi-year growth opportunity. Early TAVR trial data and 10-year outcomes from the PARTNER II study reinforce the technology's clinical benefits.
TMTT (Transcatheter Mitral & Tricuspid Therapies): Second quarter sales of $133 million, a 57% increase year-over-year. Strong growth driven by PASCAL and EVOQUE technologies. CE Mark approval for SAPIEN M3 achieved, with U.S. approval expected in 2026.
Surgical Product Group: Second quarter global sales of $267 million, a 6.8% increase year-over-year. CE Mark approval for KONECT in Europe achieved. Positive clinical data for RESILIA technology presented.
Geographic Expansion: TAVR sales grew in mid-single digits in Japan and showed strong growth in the rest of the world. European market share benefited from a competitor's exit.
Financial Performance: Total Q2 sales of $1.53 billion, a 10.6% increase year-over-year. Full-year sales growth guidance raised to 9%-10%, with adjusted EPS guidance at the high end of $2.40-$2.50.
Operational Efficiency: Adjusted gross profit margin for Q2 was 77.6%. Full-year operating margin guidance remains at 27%-28%.
Portfolio Expansion: Acquisition of JenaValve expected to close in Q3 2025. Expansion of TMTT portfolio with SAPIEN M3 and EVOQUE technologies.
Leadership Transition: Larry Wood, leader of TAVR, to depart in September 2025. Dan Lippis to assume leadership of the TAVR franchise globally.
Tariffs and Regulatory Changes: Edwards guidance reflects its current estimates of the impact from tariffs that are in effect or have been announced to date. Any modifications to such tariffs or any new tariffs could have a material impact on the company's future financial results and guidance.
Foreign Exchange and Currency Risks: The weakening dollar and foreign exchange rates negatively impacted the company's gross profit margin by 60 basis points in Q2. FX rates are expected to have a $30 million upside to full-year 2025 sales, but they remain a variable risk.
Manufacturing Expenses: Additional manufacturing expenses related to the expansion of new therapies have impacted gross profit margins, contributing to a decline from 80% to 77.6% year-over-year.
Leadership Transition: Larry Wood, a key leader in the TAVR team, is departing in early September. This leadership change could pose risks to the continuity and momentum of the TAVR franchise.
Acquisition of JenaValve: The planned acquisition of JenaValve is expected to increase SG&A spending and lower operating margins in the second half of 2025. The acquisition is still under regulatory review, adding uncertainty.
Supply Chain and Expansion Costs: The company is incurring additional costs related to the expansion of new therapies and global operations, which could strain financial resources.
Market Competition: In Europe, the exit of a competitor has led to a rebalancing of market share, but competitive pressures remain a concern in other regions.
Full Year 2025 Sales Growth Guidance: Raised to 9% to 10%, with total sales expected to be between $5.9 billion and $6.1 billion.
Adjusted EPS Guidance for 2025: Raised to the high end of the original range of $2.40 to $2.50.
TAVR Sales Growth Guidance: Increased to 6% to 7%, up from the previous guidance of 5% to 7%, with total sales expected to be between $4.3 billion and $4.5 billion.
TMTT Sales Guidance for 2025: Expected to achieve $530 million to $550 million in sales.
Surgical Product Group Sales Growth: Expected to achieve mid-single-digit growth for the full year.
Gross Profit Margin for 2025: Expected to be within the original guidance range of 78% to 79%.
Operating Margin for 2025: Expected to be 27% to 28%, with a commitment to annual constant currency operating profit margin expansion in 2026 and beyond.
Foreign Exchange Impact on 2025 Sales: Expected to provide an approximately $30 million upside to full-year sales compared to the prior year.
Third Quarter 2025 Guidance: Sales projected to be between $1.46 billion and $1.54 billion, with adjusted EPS of $0.54 to $0.60.
SAPIEN M3 U.S. Approval: Expected in the first half of 2026.
dividends: No specific mention of dividends or a dividend program was made in the transcript.
share repurchase: The company has approximately $1 billion remaining under its share repurchase authorization. Average diluted shares outstanding during the quarter were $588 million. Based on year-to-date share repurchases, the company now expects lower full year shares outstanding to be between $585 million to $590 million, versus original guidance of $585 million to $595 million.
The earnings call indicates strong financial performance, with significant sales growth across key segments and raised guidance for 2025. Despite a slight decrease in profit margins, the overall outlook remains positive, supported by new product launches and strategic investments. The Q&A section highlights management's confidence in sustained growth, although some concerns about FX impacts and litigation charges were noted. The positive physician feedback and strategic initiatives further bolster the sentiment, suggesting a positive stock price movement over the next two weeks.
The earnings call summary and Q&A reveal a positive sentiment overall. The company is confident in achieving long-term growth goals, with a focus on innovation and market expansion. Despite headwinds like the JenaValve acquisition affecting EPS guidance, the company maintains a positive outlook with strong growth expectations. The anticipated NCD updates and international expansion efforts are likely to positively impact the stock price. The company's strategy for TMTT and TAVR growth, along with the potential for increased market share, further supports a positive sentiment.
The earnings call summary presents a positive outlook with strong financial performance, particularly in TMTT sales growth. Despite some competitive and supply chain challenges, guidance remains optimistic. The Q&A reveals management's confidence in overcoming regional pressures and operational challenges. The unchanged sales growth guidance and significant share repurchase authorization further support a positive sentiment. However, the lack of clarity on regional pressures may slightly temper expectations, leading to a moderate positive outlook for the stock price.
The earnings call presents a mixed picture. Strong financial performance with a 9.6% sales increase and robust TMTT growth is offset by regulatory delays and regional pressures affecting TAVR sales. The Q&A reveals some uncertainties, particularly in Q4 guidance and management's vague responses on critical impacts. The share repurchase plan is a positive factor, but overall guidance adjustments and external challenges suggest a neutral market reaction.
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