Greetings, and welcome to Edwards Lifesciences First Quarter 2018 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to David Erickson, Vice President, Investor Relations. Thank you. Please begin.

Welcome, and thank you for joining us today. Just after the close of regular trading, we released our first quarter 2018 financial results. During today's call, we'll discuss the results included in the press release and the accompanying financial schedules, and then use the remaining time for Q&A. Our presenters on today's call are Mike Mussallem, Chairman and CEO; and Scott Ullem, CFO. Before we begin, I'd like to remind you that during today's call, we will be making forward-looking statements that are based on estimates, assumptions and projections. These statements include, but aren't limited to, financial guidance, expectations for clinical trials and the timing and impact of new product approvals, competitive matters, litigation, therapy adoption and foreign currency fluctuations. These statements speak only as of the date on which they are made, and we do 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 and important product safety information may be found in our press release, our 2017 Annual Report on Form 10-K and our other SEC filings, all of which are available on our website at edwards.com. Also, a quick reminder that when we use the terms underlying and adjusted, we are referring to non-GAAP financial measures. Otherwise, we are referring to our GAAP results. Additional information about our use of non-GAAP measures is included in today's press release and on our website. And now I'll turn the call over to Mike Mussallem. Mike?

Thank you, David. We're pleased with our start to 2018, with first quarter total adjusted sales of $938 million, consistent with our expectations. This represents 9% underlying growth and positions us for 10% to 11% underlying sales growth this year. Therapy adoption of transcatheter heart valves once again drove the majority of growth, aided by solid performance in our other product lines. Adjusted EPS grew 30% even while investing aggressively and making significant progress in our Transcatheter Mitral and Tricuspid Therapies, and as we continue to build capabilities and advance clinical trials across our portfolio of replacement and repair technologies. Most importantly, even more patients are benefiting from our lifesaving technologies than ever before. Turning to Transcatheter Heart Valve Therapy. We're announcing 2 new developments in our TAVR U.S. clinical trials and will discuss those in a moment. In the quarter, consistent with our expectations, adjusted gross sales were $560 million, up 12% on an underlying basis over the prior year. This growth rate includes the final quarter of adjustments for stocking inventory in Germany, which began a year ago. Growth was driven by continued strong therapy adoption, and our global average selling price remained stable. In the U.S., transcatheter heart valve procedures for the first quarter grew in the mid-teens versus prior year. We believe overall U.S. procedure growth was roughly in line with our growth. Strong therapy adoption continue to fuel procedure growth broadly across our network of hospitals, and our SAPIEN 3 valve has continued it's best-in-class clinical performance. Growth was particularly strong in lower volume centers, where this therapy is increasingly accessible to a broader population of aortic stenosis patients. Based on our continued research, we are increasingly confident there are many patients who would benefit from TAVR and are not diagnosed or treated today. We…

Thank you, Mike. We continue to see robust demand for TAVR therapy, which generated total company underlying sales growth of 9.3%. In addition to our strong sales performance, we achieved significant leverage with adjusted operating income growing 14% and adjusted earnings per share growing 30% to $1.22, aided by a reduced tax rate. There were two adjustments to our reported sales in the first quarter, first, this is the final quarter in which we recorded an adjustment for our German stocking sales. And second, adjusted sales excludes a $35 million sales return reserve related to our conversion to a consignment inventory model for surgical valves in the United States. We decided to implement this model to complement the introduction of our new premium products and to streamline inventory management at hospitals. We estimate this conversion will be completed by year-end, which will result in an additional sales return reserves during the course of this year and will total an estimated $60 million to $75 million in 2018. We will exclude these reserves in our non-GAAP sales results and underlying growth rates. As a reminder, the Medtronic royalty, which is included in our U.S. sales, was lower this quarter. The royalty rate, reduced on January 1, per the terms of the agreement and we expect the full year 2018 royalty to be $15 million to $20 million less than it was in 2017. GAAP earnings per share was $0.96, which was impacted by 2 notable adjustments, a $24 million tax reserve related to the new U.S. tax law; and the surgical valve sales return reserve I just mentioned. A full reconciliation between our GAAP and adjusted earnings per share is included with today's release, and I will provide further details on the tax reserve in a moment. I'll now cover the…

Thanks, Scott. We're confident in our outlook for continued strong sales goal, and we remain passionate about helping more patients around the world. We continue to focus on driving organic growth with leading innovative technologies while aggressively investing in our future. Our foundation of leadership, coupled with a robust product pipeline, positions us well for continued longer-term success and greater shareholder value as we put -- as we pursue multibillion-dollar market opportunities. And with that, I'll turn it back over to David.

Thank you, Mike. We're ready to take questions now. [Operator Instructions]. Operator, please go ahead.

[Operator Instructions]. Our first question comes from the line of Jason Mills with Canaccord Genuity.

Mike, can you hear me okay?

Yes, I hear you fine, Jason.

Super. Mike, maybe if we could start by talking about the U.S. TAVR market. Coming out of the fourth quarter result, it was somewhat surprising in a lot of ways, the strength, just coming couple of months after your Investor Day, in which you gave your guidance, which you reiterated today. Q4 results were stronger and you talked about some of the end-of-quarter trends that you saw, as well as strength that's sort of surprised us in the lower volume centers, which you reiterated here today. So today's result was seemingly roughly in line with your expectations. I think many of us on The Street are a little excited after your Q4 results, so a little over than ours. Maybe you can talk about the U.S. TAVR market within the context of what you saw coming out of Q4 and what you saw during Q1? And then maybe what you might expect as the year progresses with the CAP for PARTNER III coming through, as well as the commencement of the trial for CENTERA, which you announced today?

Okay. Let me try and recap that, Jason. There's quite a few little pieces in there. But bigger picture, the THV growth globally of 12.4% was something that was very consistent with our overall expectation. The U.S. was very consistent with our expectation as well. And as I mentioned, we continue to expect to be at the high end of 11% to 15% for the full year. Now a couple of things that people may not have remembered or not taken account for, the Medtronic royalty changed at the start of the year per the contract, and so that's expected to be $15 million to $20 million less that affected the first quarter. And first quarter a year ago, you might have considered a tough comp. There's -- the seasonality is always difficult for us. Quarters vary from one to another. The fourth quarter was quite strong, whereas the first quarter probably have some impact with Easter in it. So there may have a little bit of an atypical seasonality pattern. But by and large, we felt that these results were consistent with what we expected.

I'll follow up, sticking with the U.S., I guess, maybe give us an update on the number of centers that you have in the United States. And you talked last quarter about the lower volume centers, and clearly, over the last call it 18 months, there's been -- and there've been more centers added with respect to the TAVR program than many of us expected it. How do you see that trending going forward? And I guess just as a follow-up to your comments about the PIII CAP, how much of an impact do you think that, that will have? I guess, the question is more with respect to any inkling you have about pent-up demand within that low-risk cohort ahead of a late 2019 approval?

Okay, thanks. While, I think last time we reported, it was around 575 centers. So we add sites as they qualify, and I think that typically turns out to be 20 to 40 over that period of time. The thing that we found interesting is it seems to bring new patients into the system. Maybe it's because patients are in their own networks, and when we add a hospital, even though it might be a smaller one, that it opens that up, so we continue to see that trend. As it relates to the CAP program, FDA wanted to give sites the ability to continue to process patients that were already in their queue, but it wasn't -- it's not an unlimited CAP program. As a matter of fact, it is quite limited by site, by over a certain period of time. Even if we max that out this year, it would contribute less than 1% to our sales growth. So it's helpful, but kind of minor in the total scale of things.

Our next question comes from the line of David Lewis of Morgan Stanley.

Mike, just a question from me on the U.S. and a follow-up on international, if I could. So Mike, you're confident of 11% to 15%, you mentioned it several times in this call. To get from the 12% to the upper end of 11% to 15%, can you just kind of talk to us as you progress through the balance of the year, your confidence in that. I mean the comps do get easier, you have some incremental product launches, there's some seasonality, but how do we get from the 12% to the upper end of the 11% to 15% across the quarters?

Well, thanks, David. I think you just answered the question. Those are exactly the points. The comps in the second half of the year certainly aren't equivalent to the comps that exist in the first half. We are in the process of launching CENTERA and we'll have -- hopefully, have Ultra here towards the end of the year, so those will be helpful. And we just generally have momentum. We continue to believe that we have the most competitive product line and that we've got a real growing marketplace. The more we study this marketplace, the more we believe and have confidence in the fact that there are many untreated patients.

Okay. Maybe I'll ask you more complicated questions about the x U.S. markets that I won't answer, but two-part question, Mike, for x U.S. One, you talked about shared dynamics x U.S., can you just talk about the shared dynamics you referred to. Was that product positioning, pricing? And kind of related, as we think about the IP dispute with Boston, as you mentioned, are you planning any inventory stocking in the second quarter in anticipation of disruption? And as you think about the Ultra skirt you also mentioned, do you see that it's differentiated from S3 from an IP perspective? And I'll stop at that.

There's quite a few little questions in there. Let's see if I get to them, David. First of all, I think you asked about the share shift that we said we had a share shift that occurred to our largest competitor. You know that Edwards sells at a significant price premium to competitors. And what we feel like has happened is there was a 2- to 3-point share point difference from year-over-year to our largest competitor. We think actually it's been pretty stable quarter-over-quarter. We look forward to getting the SAPIEN 3 Ultra and the CENTERA valves to strengthen our leadership positions. When -- Ultra is different, probably from an IP perspective, we don't feel like SAPIEN 3 infringes. We think it's even probably a bigger stretch for Ultra. And just your other question about do we plan any stocking programs. No, we don't have any stocking programs planned at this time. We'll share those if we feel like that's the right thing to do.

Our next question comes from the line of Bob Hopkins with Bank of America.

I had a question for Scott, but before I got there, I wanted to ask one quick on just sort of the dynamics around the Medtronic royalty. Thank you for the $15 million to $20 million. I'm just curious, should we think about it as being sort of evenly paced throughout the year? Or is that $15 million to $20 million sort of front-end loaded here in the first quarter?

Scott might be the best one to answer that.

Sure. It's probably a few million dollars of that $15 million to $20 million was realized in the first quarter, and the rest should be fairly evenly distributed during the rest of 2018.

Okay. And then just a couple of questions on the earnings guidance. First, just -- can you just walk through the dynamics of the pacing of the year, why Q2 earnings is lowered in Q1? Obviously, The Street is a little bit higher than the guidance you're giving for Q2 earnings. And then maybe talk a little bit about in terms of the full year earnings guidance versus the previous guidance. Wondered if you could just quantify the impact of the tax rate, FX, the extra spending. So I guess, two questions in there, one, just understanding cadence and why Q2 is a little lower and then understanding what's changed?

Sure. Let's start with the first quarter and how it varied from our February guidance, where the midpoint of our range was $1.09. We beat that by about $0.13 on a non-GAAP basis, and it was driven roughly 1/3 from each of some delays in spending, so some expanding that we expect to hit in SG&A and R&D that we expected in Q1 that will now be pushed out to later quarters. The second, third would be foreign exchange, and specifically related to the new tax legislation. And then the third piece, that drove better adjusted earnings per share in Q1 than we originally expected was the benefit from -- the excess tax benefit from stock-based compensation. In terms of how our guidance for 2018 has changed since February, back in February, we expected $4.43 to $4.63 for the full year, and that $0.07 gap from the midpoint of that range to our new range of $4.50 to $4.70 is really driven by couple of things. One, greater SG&A, principally due to foreign exchange. So as we translate OUS expenses at current rates, we realize higher expenses from SG&A; the second is greater spending on research and development. And both including some of the investments we fund with the tax savings as well as the new CENTERA trial that's driving higher R&D expense than we had factored in during our guidance last year -- last quarter. And the third one is it's really more than offset by this greater excess tax benefit and the tax reform. So all net-net, it gives us a little bit of pick up to the tune of $0.07 at the midpoint of the range from February to today.

And then the Q2 dynamic?

So Q2 dynamics, part of it is just really the ETB, that excess tax benefit that was front-end loaded. We had our stock price traded up significantly in the first quarter. We also had additional option exercises that were not factored in. And so that was the lumpiest piece in Q1 that we are not modeling to finish in Q2. The other piece is just step-up from spending from the tax savings in the second quarter.

Our next question comes from the line of Larry Biegelsen with Wells Fargo.

One, on the low-risk indication one on Ultra. So Mike, the investor debate around low risk is I think less about the outcome, which people expect to be positive. It's more around the opportunity and adoption. Specifically, I think some people have questioned whether the low-risk population's already penetrated. And given your surgical heart valve business continues to grow, it would suggest to me that the answer to that is no. The other question is will the greater importance of durability in the low-risk population, will that slow adoption? So what are your views on these questions? And as I said, I have one follow-up on Ultra.

So we think that low risk is a very significant opportunity. I think sometimes, people get confused and they think that low risk means younger patients. And although that might seem to be the case, there's actually very -- there's a high number of low-risk patients that are elderly, many in their 70s, 80s and more. It's just the way that the system works. And so I think you shouldn't underestimate what happens. And I think TAVR would be the particular beneficiary of that. The more we study this, the more we find that there's real obstacles for patients to be treated. We think that the sites, by and large, do stay on label, that they're very concerned about the payment policies and so that's important to them. And we continue to believe that the estimates that we put out about the size of the market in 2021 and beyond are still, if anything, conservative.

That's helpful. Then on Ultra, Mike, I heard your comments on the U.S. in conversation with the FDA. What is required by FDA from a regulatory and clinical data standpoint? I'm asking because, obviously, what happened in Europe was a bit of a surprise to everybody. And my understanding is, and perhaps I'm wrong, but you're going to use overseas data for the U.S. approval. So I'm asking because we just want to understand why you're so confident in a late 2018 approval for Ultra in the U.S.

Yes. So we did, as I mentioned, we did get surprised by the Ultra approval process in Europe. We had initially believed, and this was through conversations with regulators, that we wouldn't require clinical data. And then ultimately, we did require them, so that was a hit to timing. We've had an ongoing dialogue with FDA. We typically don't share the ins and outs of our regulatory process. But as I said, we continue to be very confident in our ability to be able to get Ultra approved in the U.S. by the end of the year.

Our next question comes from the line of Raj Denhoy with Jefferies.

I wondered if maybe I can ask a couple on the mitral developments. You noted Cardioband still less than $1 million revenue in the quarter. So I guess, I'm curious about either the ramp there, you noted $15 million for the year is still your target, but what's been the level of interest in that product? Are there a lot of clinicians in Europe that are looking to get trained? And how quickly can you start to see a faster result out of that business?

Yes. Thanks, Raj. Actually, we've probably been the ones constraining ourselves. We felt a lot of interest on the part of clinicians. They have a lot of interest who want to join this, and the good news is that the procedural success rate has been quite good. As I mentioned, we're integrating the supply chain into the Edwards Quality System. And that's taken us longer than we thought. And so it means that we have to be thoughtful in terms of the way that we dish out supply. Remember, we're also feeding clinical trials in addition to our commercial success. And our goals in the near term really are not to maximize commercial sales but to learn as much as possible and to make progress on our regulatory pathways.

And has there been any change or improvement in the treatment time or the procedure time with Cardioband yet?

Yes, there have been improvements. There's -- the procedure times have been coming down. Most of that I would attribute to learning curve. We're probably moving from procedures that were more in the 3-hour range to the 2-hour range. We've got bigger plans for ourselves in terms of next-generation systems. But even while we're within the existing system, there have been improvements in procedure times.

Maybe just lastly, on the replacement side. You noted the positive data on the 10 patients on the M3 device. Have you sort of changed your thinking? Or is there a horse in that race now you're preferring between CardiAQ and M3 at this point? Or it's really get to make any sort of decisions there?

Yes, it's early. We're continuing to see good clinical programs for -- good clinical progress for both of those transseptal programs. So we're pleased with it. It's been going well and we're not trying to send a signal that we have a preference.

Our next question comes from the line of Isaac Ro with Goldman Sachs.

It's still a little early in earnings season, so I was trying to piece together kind of the commentary we've seen from various companies and wondering if you thought there might have been any impact to TAVR volume from whether it be seasonal items like flu, or just the deductible dynamic in health care leading to fewer inpatient days. Anything really that were at the margin displaying some incremental headwind that you didn't have in the same period last year?

Yes, it's very difficult for us to say, Isaac. I can understand your question. So for example, in the fourth quarter of last year, we felt like we saw more activity than we would have anticipated sort of in that last week or so of the year that's normally affected by holidays. Did that have any impact on Q1? I don't know. We had the Easter holiday that actually crept into the very end of Q1. So those things probably have some impact here on the margin. Our folks have count selling days, saying, Hey, there might have been a 1% difference between one and the other, if that's helpful.

Sure, that's helpful. And maybe a follow-up on the pricing environment. I imagine that there's not a big change there, but curious if you can maybe communicate kind of what transpired in the quarter from a pricing standpoint, if there was anything notable?

Yes, generally, when we talk about pricing, Isaac, we're talking about it in constant currency, so that was pretty flat. You go right around the globe, and usually what we're most susceptible with is what happens in terms of the geographic mix. Actually, the thing was kind of interesting. This quarter is the very favorable trend that we saw in Europe. And so because the euro strengthened and actually made what the sales prices that we realize in dollars are much higher out of Europe, it actually would have ended up affecting the global rates if we would do it on an actual basis, but we try and stay out of that.

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

So maybe I'll start one with the TAVR volume for OUS. I think I heard you guys say international was up low double digits, that would imply the U.S. volumes growth of 14%. I just want to know, one, is that math correct? And second, when you talk what the impact from Medtronic royalty, where was that being recognized? Was that being recognized in U.S. TAVR revenues or OUS -- international TAVR revenues?

Maybe I'll start with -- it's Scott, with the answer to your second question, which is we realized the Medtronic royalty revenues in our U.S. THV business. And as I give it back to Mike, could you just repeat the first part of your question?

So the volume growth, I think I heard you guys mentioned 10% in international for TAVR. That would imply 14% growth for U.S. Is that the right number?

Okay. Yes. So I think what we said was OUS procedure growth was low double digits, and we said THV procedures in the first quarter in the U.S., we're in the mid-teens versus prior year. So I don't know, does that help, Vijay?

That's helpful, Mike. Just maybe one last one on gross margin. It looks like it was a little light for this quarter. When you look at that guidance range for the year, 74% to 76%, maybe can you just help us on what are some of the moving factors as you progress sequentially? It looks like there's an [indiscernible] coming in below the midpoint for the year, so I just wanted to understand what drives in the back half. Is this FX or something else going on? Or is this pricing?

Sure. So maybe up we've lightened up a little bit as you model gross margin for the rest of the year, something like 20 basis points, but it really gets lost in that range of 74% to 76%. Using the middle of that range is still probably a good modeling assumption. In the first quarter, you're right, FX was a big piece of it and the other difference from Q1 of 2017 was continuing manufacturing investments. Both of those were partially offset by mix. So as you know, we've been continuing to see a pickup on mix and gross margins as a result of the faster growing THV business.

Our next question comes from the line of Glenn Novarro with RBC Capital Markets.

Two quick clarifying questions, and have a quick one on CENTERA. So first, Mike, outside the United States, you talked about growing below the markets, so that's share lost to your largest competitor, that's Medtronic. But if you added Abbott and Boston, they're starting to trend in that $100 million range, I'm wondering if you're seeing any share lost to Abbott or Boston Scientific in Europe. And then as other clarifying question, you said in the SAPIEN 3 low-risk CAP, even if you maxed out that CAP this year and add 1% to growth, were you referring to just TAVR growth or overall company growth?

So on the first question, I wouldn't say that we saw anything notable from Boston and Abbott. I don't know if Boston is back to where they were, but I think those smaller competitors are probably in the mid-teens growth sort of market share rates. So it hasn't changed a lot over a pretty substantial period of time. Will you repeat the second part of the question, Glenn, to make sure I have it?

Yes. You said that the SAPIEN 3 low-risk Continued Access Program in the United States. I think you maxed it out this year. You said it would add 1% to growth. I'm assuming you meant 1% of TAVR growth, correct?

Yes, it's actually one of my -- specifically, I said less than 1%, but yes, I'm talking about TAVR growth.

Great. I just want to clarify. And then just a quick one on CENTERA. You gave us details, 1,000 patients enrollment starting sometime midyear. Should we assume a year to enroll, a year of follow-up and a year through the FDA, meaning FDA approval if all goes well in 2021, is that a reasonable assumption?

Yes, it's pretty early for us to be assuming. I mean there's -- I don't think there's any reason to assume that this is going to be particularly slow. There seems to be a lot of excitement amongst our clinicians. So we'll see and will keep you informed.

Our next question comes from the line of Rick Wise with Stifel.

I also want to touch on CENTERA, if I could, Mike. You talk about CENTERA launch -- sort of a targeted launch in Europe. Maybe help us understand the thinking behind your decision to do this, so the targeted approach. We've continued to do ongoing doc checks and everybody is saying incredibly stable deployment, incredibly high device success, low needs for recapture repositioning. I'm hearing great feedback. The pushback is on price. So maybe just update us in your thinking about why the targeted center approach are you continuing to get this kind of feedback? And could this be a preview of how you roll out CENTERA in the United States?

Yes. So I mean, the short answer, Rick, your observations are correct. We also have heard a lot of enthusiasm about CENTERA and there's a real demand for it. We have decided to price this valve at a premium. As a matter of fact, even a premium to SAPIEN 3 and you know that SAPIEN 3 is at premium to competitive valves. And so I think, and that's for a very -- it's country specific. And it's just reflective of the fact that this is our latest technology and we think highly differentiated from what others see. And that's the strategy that were deploying. So we're being very thoughtful about what centers we go to and how fast and focused on really high level of procedural success.

All right. And in Japan, just a briefer question. Obviously, a smaller market, but you highlighted the -- it's one of your better growers in TAVR. Where are we in penetrating the market, let's say, number of centers? Or how much more is there to go in terms of expanding centers or gaining share? It seems like one of your bigger incremental growth drivers ahead, if that's the right way to characterize it.

Yes. We think Japan is a big opportunity. It is the fastest-growing THV region, again, this quarter. Adoption is still very early. They could use a lot more centers. I don't know what the number is, it's certainly less than 150. They could use a lot more to be able to really penetrate the opportunity and we think that demand is going to continue to be strong for quite a while.

Our next question comes from the line of Robert Marcus with JPMorgan.

Maybe I can start off, you did 12.5% underlying TAVR growth in the first quarter, and you reiterated your confidence in the upper end of the 11% to 15% range. Maybe you could talk about, a, what gives you confidence, and b, maybe some different plus or minuses as we think about the balance of the year.

Yes. As we mentioned, we think the market is growing in the mid-teens, and we think we have a highly competitive program. And so we would expect to also be able to grow in the mid-teens for the rest of the year. We do have the headwind of the Medtronic royalty, which will cost us a little bit. We have a little bit of a tailwind although it's small, off the CAP program. But overall, we think we're well positioned to be able to obtain that high end of 11% to 15%.

And they maybe, Scott, you iterated sales guidance at the upper end of the $3.5 billion to $3.9 billion range, and there's about incremental $80 million in FX this quarter. Should we be thinking about any changes to the underlying growth of the company? Would you have had to lower guidance this quarter without the benefit of FX? Or how should we be thinking about that?

For underlying growth number, originally, we expected somewhere in the 9% to 10% range. Now we're more in the area of 10% to 11% range of underlying growth. So FX is helping the nominal sales, but there's also strength in the underlying business. Sorry, Robbie, you also asked about $80 million. It's $80 million in FX tailwinds for the year. I think you might have said a month some of the quarter. So it's $80 million, or we call it about 2% of total consolidated sales in FX tailwinds.

Our next question comes from the line of Bruce Nudell with SunTrust.

Mike, just to clarify, should we continue to expect mid-teens procedure growth for TAVR in the U.S., low double digits x U.S.? And could you just elaborate on the cost of share loss in Europe? And I have a follow-up.

Yes, so overall, I think those are reasonable assumptions. We're, like you, watching it very closely, but I think those are reasonable assumptions. The bigger picture here is this disease is undertreated and there's every opportunity for us to be able to do that, and we're focusing even more efforts on disease awareness. But I think those kind of market growth rates are healthy. Now did you say you wanted to talk about the share shift?

Yes. Just any causal explanation you could proffer.

Yes, I mean, what we're talking about is specifically in Europe, we think there's economic pressure on customers and so that causes the difference in THV pricing to be a source of pressure. And we think that's a relatively tough issue for some customers. What I also indicated, though, is when we're able to add products like SAPIEN 3 Ultra and CENTERA, that really helps us because those products are highly differentiated and the clinical performance there we expect to be significant. So again, the -- what we tried to relate earlier is that the share shift was a year-over-year share shift, not a quarter-over-quarter share shift. So I'm just trying to put it in perspective.

Perfect. And then my follow-up is regarding COAPT. COAPT is coming up with the TCT. Do you suspect there will be a positive signal as to clinical benefit either with death or rehospitalization or both? And if it doesn't occur, how impactful will a negative result be for market development?

Yes, I'd rather not comment in terms of whether I think it's going to be favorable or not. If it's favorable, I think it would be very beneficial to the opportunity because it was just build confidence. Conversely, if it's negative, I'm going to guess that a lot of clinicians look at it and suggest that the problem was the trial endpoint design. And so I don't know that it's really going to be much of a negative for the opportunity. I can tell you ourselves, we work very closely on trial designs in TMTT. And there's going to be a number of data sets over the next year. COAPT's certainly be one of them. But I think you're going to see more data than ever before. And we continue to be very optimistic about the opportunity.

Our next question comes from the line of Chris Pasquale with Guggenheim.

Mike, first, can you provide any details on the complications you saw in the Harpoon study?

Yes. What was reported, Chris, was the return of mitral regurgitation. So we're digging into it and trying to really understand it. It's early in our evaluation and we don't really know the cause of it at this point. But that's what the clinicians called to our attention, and that's why we decided to pause here and make sure that in the abundance of safety here, that we understand what's going on.

Okay. And then do you still expect to get back in the clinic with the FORMA tricuspid spacer sometime this year? And then lastly, for me, is there anything you want to highlight coming up at PCR?

Yes. So we did resume treating some patients this quarter, just a few of them. And so we got some real procedural learnings, and the learnings have been helpful. So we're still evaluating that therapy. You're going to see probably more in the -- it's still early. You're probably going to see more coming from Cardioband tricuspid in the near term in terms of data sets.

And PCR, anything you guys want to highlight next month?

Yes. So at PCR, we expect Cardioband, both the mitral and tricuspid data sets to be presented. It will be early, but there should be presentations there.

Our next question comes from the line of Joanne Wuench with BMO Capital Markets.

A couple of housekeeping items. First, the tax rate guidance for this year, should we consider that a go-forward rate also?

So, it's Scott. I think probably not, simply because we had such extraordinary tailwinds benefit from this excess tax benefit from stock-based accounting. So it's always really hard to predict, really impossible to predict because we don't know our stock price is going. But I think if you look back to our original guidance for the year of 15% to 18%, that may be a better modeling assumption longer term, and we'll keep you updated as more information becomes available. Also keep in mind, we've gotten continual updated guidance from IRS and treasury about the impacts and the interpretation of this new tax legislation. And so that will also have an influence. And to that end, some of the tax reform benefit that we're realizing now will tail off especially as it relates to some of the compensation-related deductions.

And the Medtronic royalty step-down this year, could you remind us when the next step-down is if there's one?

Is really, without getting all the details of the settlement agreement from back in 2014, just you should model, assume the $40 million minimum. And we'll let you know if that assumption should change at all in the years ahead.

All right. And then my last question is when you purchase Valtech, you had to really build out the sales force. Can you sort of give us an idea of where that is and how you're thinking about throwing other mitral products into the sales bag?

Yes, thanks, Joanne. Yes, we're building that team up in Europe. And again, we expect to have a number of launches as mentioned that we would have one mitral launch per year in each of the upcoming years since our intention is to be able to use this clinical team. This is a team that's doing clinical trials. We have a separate team that's actually doing clinical support of cases as well as sales people. So that team has been developing nicely. We have primarily focused in Germany at this point, but it's very consistent with what we have planned.

Our final question will come from the line of Josh Jennings with Cowen and Company.

I was hoping to just ask first a follow-up on Larry's earlier question about the low-risk opportunity and focus on the bicuspid registry. I'm assuming positive results. Do you see like that is enough from a clinical evidence standpoint for inclusion in the label? And then secondarily, is it good enough to convince the clinical community, particularly the surgeon community? And then lastly, on bicuspid, is there anything within the design of SAPIEN 3 Ultra that could potentially provide a benefit in bicuspid cases? And I just have one follow-up.

Yes, thanks. So this bicuspid registry, I think it's around 100 patients in this trial. And so we're glad to be able to do that. I think it sounds like you understand it pretty well, Josh. It's not contraindicated today, and so people can do it. And we have a number of clinicians that are real believers in treating bicuspid patients and they do it with SAPIEN 3 and I know that's all being accumulated in the TVT Registry. So they are being treated today. Having more data is just going to be helpful to be able to have a nice data set here that we can follow on an ongoing basis. It's just going to help reinforce it. But I think the TVT Registry had already pretty positive support for treating bicuspid patients with SAPIEN 3.

Great. Is there anything on to SAPIEN 3 Ultra design that could potentially be beneficial specifically for bicuspid cases or which we now be thinking?

Well, I mean, we like the -- not only the delivery system, but the design of the [indiscernible] and we think it is going to help potentially with tissue ingrowth and should even improve what's already a best-in-class leak performance for that valve. But I don't know that it should -- that it'll make a market difference in bicuspid.

Great. And then just lastly on EARLY TAVR, any inkling on the enrollment pace and just specifically, any data around screening of patients on the stress test kind of initial stage? And whether or not you're seeing those patients screen in as actually symptomatic aortic stenosis patients?

Yes. Well, thanks a lot. No, we're not going to report any specific data on that, Josh. We'll just say generally, it's ramping up really nicely. There's a lot of enthusiasm on the part of the investigators and I'm sure the investigators themselves are going to want to share some of that detail in terms of what they're finding when they get to the right point to that trial.

Okay. Well, thank you very much for your continued interest in Edwards. And Scott and David and I welcome any additional questions by telephone after the fact. So back to you, David.

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