Greetings, and welcome to the Edwards Lifesciences' Third Quarter 2025 Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Wilterding, Senior Vice President, Global Finance. Thank you. You may begin.

Thank you, Diego, and thank you, everyone, for joining us this afternoon. With me on today's call is our CEO, Bernard Zovighian; and our CFO, Scott Ullem. Also joining us for the Q&A portion of the call will be Dan Lippis, our global leader of TAVR and Daveen Chopra, who has global responsibility for TMTT and Surgical. Just after the close of regular trading, Edwards Lifesciences released third quarter 2025 financial results. During this call, management will discuss the results included in the press release and accompanying financial schedules and then use the remaining time for Q&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 of 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. Unless otherwise noted, our commentary on sales growth refers to constant currency sales growth which is defined in the quarterly press release issued earlier today. Reconciliations between GAAP and non-GAAP numbers mentioned during the call are also included in today's press release. Quarterly and full year growth rates refer to continuing operations. With that, I'd like to turn the call over to Bernard for his comments.

Thank you, Mark and welcome everyone. Thank you for joining us today. We are pleased with the year-to-date performance of the company, including the most recent third quarter, our focus on structural heart has positioned us to execute our growth strategy with agility this year and also give us confidence in 2026 and beyond. This strong Q3 results represent another quarter of double-digit sales growth. Sales in the quarter grew 12.6% to $1.55 billion driven by our comprehensive portfolio across multiple therapeutic areas, aortic, pulmonic, mitral and tricuspid as well and -- as well as an established presence in countries around the world. We were pleased with the better-than-expected results reflecting the performance of our talented employees. Based on our strong performance in Q3, we are raising full year sales growth guidance to the high end of a previous 9% to 10% range and are also raising our EPS guidance range to between $2.56 and $2.62. As we look ahead to '26 and beyond, the company is in a good position with multiple growth drivers to deliver sustainable top line growth. While the composition and contribution from product lines and region could vary, you could expect Edwards to grow sales and profitability in line with our commitment from last year. We look forward to talking more about this at the upcoming investor conference in December. This week was an important week for Edwards. And this quarterly call comes on the heels of TCT, where I was pleased to see many of you at the conference, physicians feature a significant amount of compelling data on Edwards' groundbreaking transcatheter therapies, including SAPIEN, EVOQUE and SAPIEN M3. Our unique leadership commitment to high-quality evidence was once again showcased by the multiple late-breaking clinical trials as well as concurrent publication in the New England…

Thanks a lot, Bernard. As Bernard mentioned, we are encouraged with our stronger-than-expected third quarter performance and the progress we made during the quarter, advancing our strategic initiatives. Our double-digit sales growth drove adjusted earnings per share of $0.67, well above our expectations, driven by both stronger-than-expected top line performance and certain spending delayed to Q4. Our GAAP earnings per share for the quarter was $0.50. A full reconciliation between our GAAP and adjusted EPS for this and other items is included with today's release. I'll now cover additional details of our P&L. For the third quarter, our adjusted gross profit margin was 77.9%, in line with our expectations compared to 80.7% in the same period last year. This year-over-year change was primarily driven by foreign exchange and operational expenses. We continue to expect our full year 2025 adjusted gross profit margin to be within our original guidance range of 78% and 79%. Our guidance continues to assume some pressure from the weakening dollar. Selling, general and administrative expense in the third quarter was $515 million or 33.1% of sales compared to $420 million -- $421 million in the prior year. We continue to expect increased SG&A spending this period due to deferral of certain first half spending and investments expected in the fourth quarter to advance our strategy. R&D expense was $281 million in the third quarter or 18.1% of sales compared to $253 million or 18.7% of sales in the same period last year. This increase in spending and decrease in R&D as a percentage of sales reflects our intentional strategic prioritization of investments in our expanding structural heart portfolio. Third quarter adjusted operating profit margin of 27.5% benefited from our better-than-expected sales performance and the deferral of certain spending to the fourth quarter. As mentioned on our…

Thank you, Scott. You have been a valued and key partner to me for over 10 years. first, as colleagues on the executive leadership team through the CEO transition 2 years ago. And now in this last 2.5 years since I became CEO. We have worked closely to find the right time for you personally and also for Edwards for the CFO transition and why we will be saving you in your current role, I am pleased that you will continue in the CFO role until the transition occurs by mid-2026, and remain at Edwards as a strategic adviser beyond the transition period. So I am confident that we will have a smooth hand off during this transition, and we are initiating a process to identify the successor. In closing, after more than 20 years of innovation that has benefited more than 1 million patient lives. And this week's 7-year PARTNER III results. Edwards TAVR is positioned for strong sustainable growth as many patients remain undiagnosed and untreated. Moreover, we are achieving many significant milestone in TMTT that give us confidence about treating the many mitral and tricuspid patients in need. And surgical is positioned for durable long-term growth, driven by a portfolio of differentiated technology. In addition, we are leveraging our structural heart expertise and extending into heart failure and AR, which are next generation contributors to patient impact. Altogether, we are convinced of a tremendous opportunity to drive success in the future through our patient focus, breakthrough technologies and leadership. With that, back to you, Mark.

Thank you very much, Bernard. Before we open it up for questions, I'd like to remind you about our 2025 investor conference on Thursday, December 4 at our headquarters here in Irvine. This event will include updates on our latest technologies, views on the longer-term market potential, as well as our outlook for 2026. More information and a registration form are available on our website. With that, we're ready to take your questions. [Operator Instructions] Diego, over to you.

[Operator Instructions] Our first question comes from Travis Steed with Bank of America.

Congrats on a good quarter. Maybe to start with the TAVR growth in this quarter, the 10.6%. It sounded like just a modest contribution from the Boston exit. So if you can just maybe talk about some of your underlying trends and what was the strength this quarter? And is this kind of full year TAVR 7% to 8%, and if you exclude the Boston exit, is that kind of the right way to think about sustainable TAVR growth kind of longer term?

No. Thanks, Travis. Yes, we are very pleased about the quarter. We had a strong quarter, better than expected. There are a number of things that contributed to this great performance in Q3. The first one is we didn't have so much evidence, so much news on TAVR and SAPIEN for a long time. Remember, the early TAVR, then you know the ESC guidelines on asymptomatic patients, the global consensus document and then all of them at each congresses, physicians, we are talking about it presenting a sub-analysis. So this created a halo where TAVR now is at the center of a conversation for most of the heart team in the U.S., but also outside of the U.S. So that's clearly a big catalyst. Also, what we didn't experience that usually we experienced during Q3 the summer usually the summer seasonality usually is very pronounced. And this year, we didn't experience it. So we had a higher Q3 and we have a lower impact from the summer seasonality. So all of that together basically contributed to the great quarter. We -- if you ask us about Q4 and the rest, we will talk about next year maybe late year. But for Q4 -- we expect a good Q4, better than we originally thought, but I will not take the Q3 results as the new normal for TAVR.

Great. That's helpful. And then since we were just at TCT a couple of days ago and you had a 7-year and 10-year data there, maybe just talk about now that you've had a few days to talk to doctors kind of what you're hearing from customers and the physician community and kind of the importance of that data and how it could or might not change practice.

Yes. So maybe I ask, Dan, our new leader of the TAVR franchise, he was at TCT. He talked to so many customers. He was the architect behind all of the symposium that you attended. So maybe I asked Dan to comment on that.

Yes, Travis. Thanks for the question. Obviously, important meeting for us and more importantly, very, very important data that was presented there answering probably the last of the unanswered questions on TAVR, which is what are these TAVR valves look like at the critical window of vulnerability, which is this 5- to 7-year period. And it's nice, it's reassuring to be able to now answer that definitively, at least with the SAPIEN 3 platform. And as you can imagine, physicians were very, very positive. Obviously, the conversations kind of sort of stand with like it's a shame that a lot of people were maybe betting against, it was no surprise to me. Congratulations. And I think overall, everyone is super positive. I think it gives physicians and patients just again, reassurance to treat earlier in the disease progression pathway and maybe younger, and that's the direction of TAVR that we see. Also, with the guideline evolution, et cetera, that's the way that it's going. We now see clinical benefit for treating earlier in the disease pathway. But also new evidence that's come out, Bernard mentioned so much new data coming out just consistently over the last 12 months, but a lot of new evidence to suggest that there's economic consequence if you treat later in the process. And all this is driving just a renewed focus both domestically and internationally on TAVR programs. So that's probably the best way to sum up TCT.

Congrats on a good quarter.

Your next question comes from Larry Biegelsen with Wells Fargo.

And Scott, congratulations on all the success at Edwards, I know you'll be around for a couple more quarters, but I enjoyed working with you and we'll miss working with you when you leave. So for my question, Bernard, it sounds like you're comfortable with the 10% plus organic growth and 50 to 100 basis points margin expansion next year. What's giving you the confidence this early and Scott, as of today, would FX positively or negatively impact margins next year? And I had 1 follow-up.

Yes, no, thanks, Larry. To be fair, when I look back, we always -- that I always had confidence. And let me give you a context on why I am seeing that. We have been studying this platform, SAPIEN for 20 years. We have been iterating this platform for 20 years. We know what this platform is delivering for patients, more than 1 million patients receive in this platform. So when we gave you the guidance last year about TAVR for the foreseeable future, basically mid- to high single digit. And the company, on average, 10% with leverage EPS, we knew that. And when I say that, we knew that because all what we do is rational, is science-based, you don't have surprises. So it's like the 7 years maybe was a surprise to some, but for us, it was a confirmation about what we knew here. So no change to the guidance we gave you last year in December, Larry.

Yes, Larry, I'll just add to that. First of all, thanks for nice comments, appreciate it. Just to reiterate what Bernard said, last year, we said on average, 10% over the year's constant currency. And we think that 10% growth on the top line for Edwards in 2026, will be within the range that we provided at the investor conference. But remember, now with the third quarter results and the momentum that we see in the business going into the end of the year, we now have a higher bar that we'd need to clear when we're calculating that year-over-year growth rate. As it relates to your question on FX, I thought you might ask the question, we're just going to have to hold off for 5 weeks until we get to December 4. We're still running all the numbers, and we'll take you through when we take you through our guidance, we'll take you through the impact of FX on guidance.

All right. Fair enough. And just for my follow-up, Bernard, as you approach the scheduled trial for the JenaValve deal, what's your level of confidence you could overturn the FTC block? And just remind us of where SAPIEN X4 stands and when we'll see the pivotal data.

These are important questions. So let me take the first one and maybe Dan take the second one. We continue to pursue this regulatory approval for JenaValve for a very simple reason. You know us. We have identified these large unmet needs. These patients have no solutions. And we know that when we come into a space. We bring our leadership, our innovation power, our commitment. We make a big difference, patient benefits. So we believe here we have great facts. At the same time, we will know in Q1. So before Q1, I can tell you, Larry. But I really hope that we are going -- we will have a favorable ruling at the end because, again, these patients are waiting.

Just regarding X4. First of all, very excited about our pipeline. X4 has the real potential to be a game changer in TAVR. And that trial, the ALLIANCE trial completed at the end of 2024. Right now, the patients are in follow-up phase, right? And so until that the patients have gone through that period and the trial is complete and the data is analyzed, we don't have a whole lot more to say about X4.

Your next question comes from David Roman with Goldman Sachs.

And Scott, I'll add my congratulations on moving on. I finally remember your first analyst meeting in 2013, I think Edwards was a small-cap growth stock at $4 billion. So I think you're certainly leaving the company in a good position, although we'll miss working with you. Two questions for me. One, just starting on the TAVR side. When you look at the PREVUE-VALVE study that was presented at TCT and think about the early TAVR study in context, can you maybe just help us look forward and I know we're all focused on like indication expansion and asymptomatic patients. But to what extent is there an opportunity here to see broader diagnostic rates for AS increase that would not only trickle through to your TAVR business, but also be a tailwind to the surgical valve business as well?

That's a good question. And we have not talked about it when we were at TCT together. So this study was an investigator-initiated study. And if you look at it in a big picture, it validates our assumption on the size of AS market potential, the number of patients, but also it is validating basically the incidence and prevalence of all valvular heart disease. So at the high level, it's positive. There is more to learn from, but we look at this one as a positive one for the next years to look at. Dan, do you want to add anything to that?

Yes. David, I think a very, very important study and one that I anticipate is going to be referenced a lot, right? And it looks at the prevalence from a unique lens, right? Typically, when we try to establish incidence prevalence and market opportunity, it's coming starting from the basis point of who's actually got an echo. And what this study was trying to do is to take a look at the prevalence, if you like, of the disease from a out of system population or nondiagnosed population. And so it kind of brings a completely different lens and a very novel way of doing it to help our understanding of the disease. As Bernard said, when you look at the data that we've had available from an aortic stenosis perspective, it kind of validates kind of some of the assumptions that we had maybe even suggesting that the disease is larger than what we thought. But it's pretty much in that ballpark. What I would say about what is the opportunity here. As you see, whether it's this evidence, whether it's early TAVR, whether it's the sub-analyses of early TAVR, whether it's the PARTNER III and the new standard now we have for TAVR with long-term durability, all of this is going to get disseminated. It's going to be part of an education process. It's going to be democratized in the community and it's going to lead to greater awareness and greater referral and greater adoption. And I think that that's part of our strategy, part of the plan, why we are investing so heavily. And so confident about the impact, but it all helps. So thanks for the question.

And maybe on the TMTT side, I think you said M3 approval coming in early 2026. Can you maybe help us think through how to compare and contrast the M3 launch with EVOQUE? And I think Dr. Sharma at your analyst meeting on Monday kind of describe tricuspid valves as they once forgotten valve, that's starting to gain attention from the clinical community with the now treatment solutions that are out there. But I think mitral valve procedure volumes are low, is a much more mainstream and well-understood disease states. So help us think about how -- what are the factors influencing the M3 launch and whether using the EVOQUE launch is a good template or not?

No. Thanks so much for the question, Dave. It's Daveen here. Yes, we did say that we expect U.S. approval in early 2026. And if you look at the SAPIEN M3 launch, we now have a couple of months of the launch in Europe. And in Europe, what we're seeing is that we have a kind of continuing limited control launch. And we're really focusing on the high-value model. We've got really important physician training, Edwards' people really working very closely with physicians to make sure we've got great outcomes in every case. And what we're seeing from physicians is that they're actually pretty excited about this technology. As you said, they treat mitral patients today, and the SAPIEN M3 product is specifically focused on patients who are unsuitable for both TEER as well as surgery. So for them, I think that we do see patients in the system who are unsuitable and so their excitement is getting to see great results for these patients with M2. However, to your point about comparison to the EVOQUE thing, I think I wouldn't get ahead of ourself in saying that with us, it's kind of this control launch, high training and making sure that we go one center at a time, to kind of ensure that we get the best possible outcomes and results.

And your next question comes from Vijay Kumar with Evercore ISI.

Congrats on nice sprint here, Scott. Congratulations to you as well, and wishing you the best of your transition. Maybe my first question on this TAVR performance in 3Q, why isn't this performance a reflection of asymptomatic approval? I'm curious why you think the strength wouldn't sustain?

Yes. Maybe, Dan, you want to take.

Yes. Vijay, I think your question is, is the Q3 performance a reflection of asymptomatic approval. And I'm not sure if you specifically mean adoption or treatment of asymptomatic patients. But certainly, it is the asymptomatic approval, the indication, the evidence is reflected in what we're seeing here as along with -- I mean, I really can't recall over my 15 years, a period of 12 months where the scientific and academic podiums have just been so focused on TAVR with so much new evidence, so much new discussion, subanalyses, et cetera. So for sure, the asymptomatic evidence and indication is playing a part here. But as we've also seen in other indication approvals where a new indication shines the light on a previous indication and you see a renewed focus on that. And we're seeing that here, for sure, because there's also new data. There's also new data to say that timely and urgent intervention brings both clinical and economic benefit for symptomatic severe aortic stenosis, which is part of the analysis of that data. Regarding is asymptomatic patients entering into the treatment pathway in Q3, and is that driving the current performance, we don't see any specific evidence of that. It has to be caveated by the fact that there isn't coverage for the asymptomatic indication, right, at the moment. So it's hard to see that encoded CMS data. But we do have ways of looking at upstream patient populations to see what's coming through the funnel. And right now, we don't see any significant evidence that the growth is being driven by referral and treatment of asymptomatic patients. So I think that, that's an opportunity to come.

And this is probably what is most exciting, Vijay, that we have seen this momentum in Q3 just by having a renewed focus, given all of this data, all this positive data. Also, we benefited from the seasonality of the summer. But it is -- so the big catalysts are still in front of us. And this is what we have been saying. We are very confident about this multiyear opportunity for TAVR. This is what made us confident again that this is just in my mind, when I say always to the team, it is just the beginning.

Understood. That's helpful. And Scott, maybe 1 quick 1 for you. there was a litigation charge. And it was non-GAAP, could you just remind us on what the charge was?

Yes. Thanks for the question, Vijay. There's a lot that happens behind the scenes with just ins and outs of running our business. As you know, in medical technology, there is -- it's not uncommon to have litigation activities underway. And so we take reserves periodically based upon what we think that exposure looks like and you'll see that reflected in today's GAAP P&L.

Your next question comes from Matt Taylor with Jefferies.

I wanted to circle back on TCT. You had a really nice showing kind of across the board. And I think maybe stuff the most to us was how positive the real-world tricuspid data was. And you talked about having a toolbox there, and you'll have that in mitral next year. So my question is really, after this tricuspid data and having the toolbox there. Do you expect some acceleration in the tricuspid adoption could we also see that in mitral next year? Maybe you could just talk about that in general and the pace of acceleration we might see.

Yes. Thanks, Matt, for the question. Obviously, we were very excited to see the EVOQUE data coming from TCT. And I think what we saw from EVOQUE is that we see this continued trend of a great real-world outcome. First, starting at ESC a couple of months ago where we saw these hard endpoints for the most severe TR patients, and now we see with the TCT data, the improved safety, both in bleeding and conduction versus what we saw in the randomized trial. And I think what we're seeing is that we're seeing how the elimination of TR is leading to just change in patient's life. And I think what we're also seeing from Europe where we have both repair and replacement for tricuspid is that you really need both technologies to really get -- treat the maximum number of patients with the best possible outcomes. And so I think with that, as we get to your point, is having the full portfolio even on tricuspid and now then coming with mitral, you start seeing this compounding effect where when you have multiple treatment options each patient is getting the best possible outcome, you could treat the maximum possible number of patients. And with that, you see this continued strength and growth. And so in the words of seeing you were asking about specific of the acceleration of TR, I think what we're seeing is very, very strong growth in TR. I mean, this year, you see overall that our overall business is growing at over 50%. And so I think we're going to see this continued growth in TR and these provide nice tailwinds. Nice real-time examples to help continuously support the strong growth in TR to really treat an awesome number of patients in the years to come.

Your next question comes from Robbie Marcus with JPMorgan.

Great. Congrats on a good quarter. And Scott, wish you all the best, we'll miss working with you. Two quick ones for me. First one, I know you've been working a lot in the past couple of years to try and improve efficiency in the cath lab, and you have some AI initiatives and educational initiatives and just wondering how that's going, what you're doing exactly and how much efficiency and extra capacity you've been able to help drive such good TAVR volumes?

Yes. Thanks, Robbie. Maybe I'll take that question for you. Like, we've got a number of programs in flight, if you like, whether it be at an early pilot stage or various stages of ramp. Specifically, as it relates to capacity building or efficiencies, one of the big programs that we have is Benchmark. And that has been in development and being -- and all about improving efficiencies for better patient outcomes in the hospitals. It couldn't be a better time to be applying that right now with the renewed focus on TAVR as the timely treatment and more urgent treatment of these patients is in the spotlight. But at a high level, we've got programs that we execute on the ground, right, with our field team. We are in just about every single case. And these are either targeted towards improving the efficiencies in the cath labs or in the program itself or with referral activity and education of evidence and guidelines and new data, et cetera. We have also partnerships with tech companies and AI-based companies that look at echo screening and upstream identification of patients and workflow solutions so that, that can be done economically. And so we're working on that. We have very sophisticated marketing programs, looking at targeting direct-to-patient activity through social media, et cetera. And then just the partnerships that we have with societies and others with GCs, with patients, et cetera, around dissemination and education and clinical evidence. So all of this comes together and kind of helps us sort of run the process of moving the needle of patient activation. And I hope that gives you some idea of what we're doing on the ground with our physician and hospital partners.

And so Dan, you gave here a full picture on all of what we do on the TAVR side. Maybe Daveen, a couple of things on TMTT?

Yes, a couple of quick things. If you think about, right Dan, for a more established procedure like TAVR went through a lot of great examples there. On TMTT, when you're creating a brand-new therapy, right, you can imagine there's so many things to quickly help improve their time in the cath lab, their time to go home, their time for pre-having a patient before you even have a procedure. So what we see is actually with things like replacement technology, both mitral tricuspid and even to some extent with TEER as we establish and grow these new therapies, we are constantly improving efficiencies across the board in almost all aspects. So I think for us, that just comes with the therapy development that happens, it helps really line you up for long-term success.

Thanks. So we do a lot here, and I'm glad we were able to share some of what we do, but we do much more than that.

Maybe if I could just ask a quick follow-up for Scott on -- we had really good margin expansion. I think you've committed to 50 to 100 basis points, and I don't want to steal any thunder from the Analyst Day, but you're one of the biggest spenders in R&D at $1.1 billion, and it's clearly given you a great product pipeline and portfolio with a lot of big trials wrapping up, how do you think about R&D and what's the right level of spend over the forward horizon? How are you thinking about that?

Thanks for the question. Look, we think about R&D as an investment in the top line. And the most important thing that we do here is innovate to drive sustainable organic top line sales growth. We've also said though, at last year's investor conference, and you'll hear it again at this year's investor conference that top line growth will outpace R&D spending growth. And you saw it in the third quarter, where we went from nearly 19% R&D as a percentage of sales last third quarter to 18.1% of sales this quarter. And so that gives you a sense of how R&D as a percentage of sales is going to trend. Again, it's still the most important driver of our strategy, of our innovation strategy and of our sustainable top line growth expectations. But it's also something we're going to be pretty disciplined about prioritizing where we're investing those R&D dollars.

And ladies and gentlemen, that's all the time we have for questions today. So I'll now turn it back to Bernard Zovighian for closing remarks.

Okay, everyone. Thanks for your continued interest in Edwards. Scott, Mark and I welcome any additional questions by telephone. And I wish you a great day. Thank you, everyone.

Thank you. And with that, we conclude today's call. All parties may disconnect. Have a good day.