Good morning. I'm Larry Biegelsen, the medical device analyst at Wells Fargo. It's my pleasure to host this session with the management team from Edwards Lifesciences. With us, we have Bernard Zovighian, the new CEO, and Scott Ullem, the CFO. In terms of format, it's gonna be fireside chat. If anybody has a question, just raise your hand, we'll come around with the mic. Bernard and Scott, thanks so much for being here. My pleasure. Yeah. Thank you. Kevin, can you please start the clock? Thank you. All right, so let's jump in. Bernard, you recently became CEO. My question is, do you foresee any changes to the strategy going forward? Under Mike Mussallem, the company was very focused on innovation, structural heart disease, and critical care. Thanks, you know, Larry. You know, thanks for having us. Good morning, everybody. It is always, you know, a privilege, you know, to talk about the company. So I have been with the company now, you know, for more than 8 years. And, you know, we made, you know, the decision, you know, together as a leadership team. I am very confident about all of the decision we made in the last 8 years. So let me give you a sense about, you know, why am I confident? It is mainly around, you know, 4 things. The first one is about there are so many patients in need. Despite our success, there are still many patients who need, you know, to be treated. You know, the second element is about, you know, we are in a position of strength. Before COVID, during COVID, you know, we committed to big investment in R&D. You know, we didn't step down, you know, during COVID. You know, we are heavily invested in R&D. You know, when I look at what we have done, you know, even this year, very pleased about, you know, the beginning of the year. Strong Q1, strong Q2, double-digit growth. We raised our guidance, you know, 10%-13%, you know, for full year. So feel good about, you know, the, in the position of strength we are in today. Number three is about our very unique strategy. We have about 2,000 engineers committed to bring breakthrough innovation, not just incremental innovation. You know, we are, you know, aiming to being first in any marketplace, you know, we want to play, and becoming the leader. Also, you know, we are focused on, you know, structural heart disease, critically ill patient. So the benefit of that is what? Our people are very deep. We have domain, domain knowledge. And finally, you know, I feel very fortunate that, you know, the leadership around me is very strong, very experienced. We are all committed to one mission, bringing breakthrough innovation to more patients. So because of all of that, you know, I have... I'm confident that what you are going to see is durable, sustainable growth from Edwards Lifesciences. That's very helpful. How do you see Edwards' business changing over the next, call it, five years? You know, in short, what you can expect is, you know, given the patient need, given our commitment to innovation, big change, more growth, and a more global footprint. Now, I can expand on that, and I'm sure, you know, Scott, you may want to add in a few things. You know, in TAVR, we expect, you know, the market to grow, continue growing, low double-digit, and us, you know, maintaining our leadership position. How to do that? We are going to maintain our playbook. Best innovation, world-class science, high touch model to ensure, you know, great patient outcome. We believe also that we are going to be focusing on increasing, you know, awareness, you know, patient activation, indication expansion. So we see the stable business, despite the fact it is a big business today, has the potential to grow double-digit in the years to come, 5 years, you know, 10 years. So more than, even more than 5 years, Larry. TMTT, we have been focusing on three key value drivers: best innovation, but also adding a toolbox, because these patients, mitral and tricuspid, are very diverse, very complex, and one device is not going to be sufficient. So adding repair technology, replacement technology for mitral and tricuspid. Critical evidence. At TCT, you are going to see more. And then, you know, real-world outcome, you know, very pleased about with one technology so far, what you have seen is a very healthy momentum. So confidence about, you know, TMTT, too, surgical and critical care continuing to bring innovation and science. So if you think about the picture, you know, for us, you know, we see that the market we are playing doubling between now and 2028, so a little bit more than five years, to $20 billion market potential, and us extending our leadership position. Scott, you want to add anything to that? Well said. That, that's helpful. You know, under Mike's leadership, the company talked about moving into new areas like heart failure. Yeah. You know, I don't think we saw that much. Do you... Under your leadership, do you expect to move more aggressively into new adjacencies? So for sure, you know, like I said, you know, we are in a position of strength. You know, we have a very strong P&L, a very healthy, you know, balance sheet, and we're very fortunate about that. I, I see ourselves remaining focusing on the patients we serve today. At the same time, what we noticed is we learn a lot in the past, you know, few years about aortic stenosis patients, mitral patients, tricuspid patients, and we see an overlap with, you know, heart failure patients. So yes, we have not discussed a lot about it, but we see an overlap. We have, we have been very active. You know, we have some investment, internal, external. We didn't talk a lot about it. We are not ready to talk a lot about it today, but we have some active investment. You know, when ready, we will talk more about it. That's helpful. So let's switch gears and talk about TCT. I can't remember a meeting that could be more impactful, you know, for the space and for you. You have important data coming out in TAVR, mitral, and tricuspid. Maybe, Bernard, and I know it's limited what you can say, but at a high level, how are you thinking about TCT and what it could mean for Edwards? I am, you know, 1, is very excited. 2, I am proud because it is not just about saying that we are committed to innovation, that we are committed to clinical evidence. It is about doing it. We few years ago we basically created, you know, this 3 large study, important study. One for aortic stenosis patient, one for mitral patient, one for tricuspid patients. They are all, you know, large, randomized, and we are going to follow, you know, you know, these patients for a long, you know, period of time. So to be able to be at TCT and see this kind of evidence, brought to the clinical community, we're proud about it. Now, can I talk about the result? No, I can't. You know, we need to wait, you know, for the result, you know, to be presented. It is important to at TCT, you know, Mark and Scott, you know, we are talking about having an investor event, and we are still thinking about when exactly. Correct, Scott? Okay, Mark? Yeah. So Thursday, after the second of the two late breakers from Edwards on Thursday. 26th, 25th or 6th? 26th, I think. Okay, good to hear. So we'll get details around everybody, but if you can join us, we'd love to have you. We'll have Edwards leaders, as well as some physician leaders who participated in the clinical trials. That's after the third one? That would be- Yes. Yeah. Okay. After the first, so all three. Well, that's helpful. What, what... Go ahead, please. No, go ahead. So on the PARTNER 3, you know, low risk five-year data. You're meeting with investors, people are gonna ask you about it. You know, Bernard, I saw the data, the curves converge between year one and two. It's still in favor of TAVR, of SAPIEN 3. Is there anything you can point to, any public data that could allay people's concerns that those curves won't, you know, continue to go in the wrong direction for you? Is there anything out there that you could point to? No. So that's a good question. You know, it is the typical question that everybody's asking before a study is presented. Don't you think? We want to know. You know, I want to know. We want to know. I want to start with a big picture kind of answer, which is: Let's look at the body of evidence on TAVR and the body of evidence on the SAPIEN platform. Unprecedented. All of them highly positive. And, you know, we have seen that, you know, based on our global leadership. You know, the SAPIEN platform deliver amazing safety, amazing efficacy, amazing ease of use. So very often, you know, I hear some people, you know, just, you know, mentioning one element of a clinical endpoint. One element is important. We need to look at the body of evidence. Think about the physician. You know, the night before, you know, doing the procedure, you know, with the patient, they meet with the family, and they tell them, "We are going to take care of your dad or your mom, you know, tomorrow." And what they know is with SAPIEN, it is predictable, it is safe, it is effective, it is durable. Stroke rate is low, everything. So it is the full spectrum. So, you know, summarizing, you know, in my mind, you know, an event with one piece of data, you know, I, I don't believe it is the way to think about it. We are very, you know, confident about our, our body of evidence. Our two years data, we are very strong. Superiority of SAPIEN, and, and we feel good about. Now, five years is going to bring us more information, adding to the body of evidence, and, you know, together, when we discuss that, you know, when we have, you know, this data in front of us. That's helpful. Got it. Okay. And just curious, Medtronic's focus is gonna be showing four-year data. Their curves at three years continue to diverge. And any concerns that you know might create a marketing advantage for them? It is tough for me to comment on. One is a competitive trial. Don't you think it is tough to comment on a competitive trial? Tough to compare, you know, trials, but we need to look at things, you know, big picture again, looking at everything. You know, the therapy arm, you know, the control arm, you know, the body of evidence, you know, everything together. Okay. And I think I understand the control arm. If I just look at the two-year data, their control arm did, I think, worse than your control arm. So the TAVR, you know, treatment control arm may not be the same. I know you are deep into the data. You know all of this. Okay. Okay, so let's move on. So TRICEND II, with that was a, you know, pleasant surprise on the Q2 call, interim analysis of TRICEND II with EVOQUE for tricuspid. What data are we gonna see there? I know you said you completed enrollment- Yeah. Early this year. Are we only gonna see out to six months, or will we see some patients out to one year who, or longer follow-up to those patients that were enrolled earlier? Yeah. So, this, you know, the cohort you are going to see at TCT, at TCT is what you are going to see is a planned interim analysis that was part of a study design. You are going to see a cohort of the patients at 30 days and 6 months. The full cohort of patients, again, you know, TRICEND II is a big study, 450 patients at 1 year. You will see that, you know, later, not, you know, not in 2023. But again, you know, we believe this first cohort is going to give us some great indication about tricuspid disease, which is, you know, not well-known today, not well understood. And so this one with TRILUMINATE is going to inform, you know, the clinical community about the disease itself, the difference between two technology, you know, a clip or TEER device and a replacement device. So but again, it is the beginning, but you think we are just at the beginning of a tricuspid journey. We see, you know, a great potential to help, you know, these patients. You, you know that, you know, Larry, and I'm sure you know all of you, these patients have a terrible quality of life. There is no option for these patients. So if we can go there and provide solutions to physicians to help, you know, these patients. Also, these patients are a huge burden, you know, to the healthcare system. They go and see their physician on a regular basis. They go in, in the hospital on a regular basis. So being able to touch on everything, will be important here. So I was as bullish as anyone going into the TRILUMINATE data at ACC, but after seeing, talking to doctors about the data, I heard some disappointment because they only saw quality of life benefit. There were no trends on hard endpoints like heart failure hospitalizations and mortality. So I guess my question is, you know, I hear the same things you do, high unmet clinical need, nothing else for these patients. What do you think is needed to drive adoption for tricuspid? Is quality of life enough, or do we need to see more than that? So for sure, I heard, you know, the same than you. For some people, you have also another group of physicians who see the potential with the TRILUMINATE data. Because if you think about, you know, this patient population, I have met many of them before the PASCAL tricuspid procedure or an EVOQUE tricuspid procedure, and I have seen them after. Their quality of life is completely different. So I am not sure that we can say, you know, quality of life is not necessarily important. I say if we can reduce TR, if we can improve, you know, quality of life for these patients, and they can get back to a normal life, I say that's big already. Now, if, if like in TAVR, we can have a triple win impacting, you know, mortality, quality of life, and the cost for the healthcare system, for sure it is even better. In my mind, you know, there is a starting point. We need to better understand the disease. You study, you know, you, you have your more study, and you go from there. I cannot tell you about anything about the TRICEND II study right now. In my mind, you know, quality of life is a big event for this patient, and we should not, you know, undermine, you know, this one. Anything to add here, Scott? Scott's waiting for the financial question, for the 2023, 2024 question. Bernard, it may be a difficult question for you to answer, but six-month data, it's hard to show in any trial, outcomes benefit at six months. Is that, is that fair? I guess, like I said, I know it's a hard question to answer, but I was a little surprised to hear you're only presenting six-month data because any invasive procedure, you have paid an upfront penalty. You rarely see an up, a benefit on outcomes at six months. No, you know, you're right. But because we thought that it was important to bring early evidence to the clinical community on the tricuspid disease, we decided when we designed the study to have, you know, this interim analysis done. So this interim analysis will give us, you know, plenty of learning. For sure, we have a full cohort, 450 patients, six months and one year will give us more. But I'm still hopeful that given what I have seen with our TRICEND I study, single-arm study, that, you know, EVOQUE, you know, was a very effective therapy for this patient. This patient, you know, the day before they were hospitalized, were not able to have a normal life. A week later, they lost, you know, 20 pounds of fluid. They were able, you know, to walk again, to see their grandkids and do things and get back to having a normal life. You know, I see some potential here. Okay. All right, and I guess one more question. I mean, in mitral, repair has kind of outpaced replacement. In tricuspid, how do you see things playing out, repair versus replacement? Yeah. You want me to compare both. What I am seeing is, if you look at the learning on the mitral side, TEER, even though has improved a lot over the years, and we demonstrated that with our CLASP IID six months data last year at TCT, gets better in safety and efficacy and all of that. TEER can only treat a small portion of the mitral patients. And so we need both. We need replacement and TEER for mitral. We need, you know, the same TEER and replacement for tricuspid. So your question is about which one is going to be bigger? I don't know. But what I know for sure is both will be important for both, you know, patient groups. Okay, that's fair. And just lastly, on TCT, switching gears, we're going to see the one-year data from CLASP IID. We've talked to doctors who said you usually see the same results at six months at twelve months that you see at six months. I haven't checked other data sets, to be honest, but is there anything you can point to from older data sets that where you see kind of similar results, you know, twelve months that you see at six months? It is tough, well, you know, to compare trial, but you think, and my turn is such, even though, you know, TEER has been in the marketplace for 10 years, very little has been done in terms of clinical evidence. We are committed to change that. To compare trial, tough exercise, I would say we were very pleased with our 6 months data set, showing that TEER is safe and effective, and that PASCAL is durable from an efficacy standpoint. Very durable from an efficacy standpoint. You know, let's look at the 12 months data, but so far, you know, the physician have been reacting very well to what we have shown last TCT, and well demonstrated by our momentum in the adoption of PASCAL in Europe and in the U.S. Any more color you can add on the adoption of PASCAL in the US since the launch? It is going according to plan. You know, you saw our results, you know, in Q1 and Q2, you know, our TMTT growth is going well. We increase our guidance, you know, for the year. We feel good about it. The other thing that we feel good about in the U.S. is really our primary focus at this point in the early days of the introduction, has been on procedural success rate and clinician experience, and we've seen very positive results on both fronts. We saw the same thing in Europe, and we decided we'd take the same playbook to the U.S., where we're really trying to build a strong foundation that we're gonna grow off for many years into the future as this market continues to grow. It starts with physicians being well trained, comfortable, and having excellent experience and outcomes with their patients. We've seen that in the U.S., so we're really pleased with where we are. Yeah. Well, well said, Scott. Thanks. Switching gears, TAVR. You know, most investors are hyper-focused on U.S. TAVR, right? You know that. I like the pipeline. You know, we'll talk about U.S. TAVR and just TAVR in general. You talked about earlier, low double-digit CAGR for TAVR. I mean, what are the drivers? How confident are you in that? Maybe touch upon some of the issues you've seen in Japan. What can you say on TAVR that will make people feel better? I think... Look, we have EARLY TAVR coming late next year, I believe. PROGRESS, 2028 or so. PROGRESS, that's the moderate trial, right? I think between now and EARLY TAVR, how do you want people to think about the TAVR growth? Very confident. I'm very confident about it. We are very confident about it. We see, you know, questions coming from, you know, some of you from the suite about it. We are confident, you know, that they are- Look, you know, we have- think about what we have. We have an amazing technology, and we are going to continue, you know, executing on our playbook. You know, best innovation. There is more innovation coming, even though we are very pleased with what we have today. We are launching, you know, SAPIEN 3 Ultra RESILIA, which is going well. The body of evidence is excellent. You know, our field people, you know, are, you know, supporting physicians to ensure, you know, we have best patient outcomes. This is a playbook which is working. There are so many patient in needs. We are just, in my mind, just, you know, scratching the surface here in terms of patient needs. Then you have indication expansion, asymptomatic, moderate, who can, you know, increase, you know, the, this patient population in a big manner. And then you have, we have a number of activities around improving the diagnosis of patients, improving the treatment rate of patients. So all of that together, we feel good that, you know, this market is going to grow double, you know, low double digits, you know, CAGR in the next, you know, years, 5-10 years. And this TAVR, you know, market doubling from 10, you know, from, 10 today to 20, I think something like that, you know, in 2028. So feel excited about it. I think, you know, we are going to maintain our leadership position also. The competitive trialing in Japan? It is typical, you know, it is happening. Every time there is a new therapy, a new competitor, physicians do what they should do, try it. Typically, you know, they try it, you know, more than one time, more than two times, you know. Usually, it is 10 patients, 15 patients, 20 patients. This takes, you know, like a couple of quarters, you know, three quarters, and then, you know, physicians are back to their preferred therapy. We have been the global leader forever. You know, they know what they have with, you know, the SAPIEN platform. It is happening right now. We are very confident that we are the leader today in Japan. Sequentially, we grow in Q2. Year-over-year, we grow in Q2, even if it was, you know, slightly below our expectation, but we are growing, and we believe that, you know, it is going to be back to a more, more normal state, you know. Just one addition, which is we're excited that this year we're also introducing SAPIEN 3 Ultra RESILIA in Japan. And in Japan, we did not introduce SAPIEN 3 Ultra, so this is almost a two-generation skip, and we're really enthusiastic about the reception we've seen from physicians in Japan who have started to use it. And low risk, you also recently launched in Japan, right? We did. When was that, Scott? Do you remember? Late last year, I think we got our lowest- It is a little surprising that you've seen the softness, I think, to me, you know, given you just launched low risk. Well, you had a combination of... Remember, it just came out of wave 7 of COVID in Japan, combined with competitive trial activity. So it was an active, kind of noisy first half of 2023. As Bernard said, we've got a lot of confidence in our continued leadership position in Japan, and our growth year-over-year and sequentially this year has demonstrated that we're still in a good place. It depends how you look at, you know, you said, you know, softness. I'm looking at, we have been used to see many competitors getting into the region, in Europe, you know, for instance, over the years. We have been in Europe, you know, for more than 50 years, and we maintain our global leader, our European, you know, leadership position. It is typical. You know, you have a new competitor, you see these kind of things happening. Again, we grew sequentially and quarter-over-quarter. We wanted to do more, but we still grew, you know, in Q2, quarter-over-quarter. Yes, it is happening, but we feel good about, you know, where we are going to end the year in Japan. Switching gears to the guidance. I think 10%-13% for total Edwards, total TAVR underlying growth. Scott, keep me honest here. How are you thinking about what gets you to the high end of that range? Well, you know, a lot of it just has to deal with, you know, this more balanced staffing environment that we've seen unfolding in 2023. So that permits easier access to patients to get treatment they need, to get imaged and screened before treatment, but then ultimately getting their procedures as well. And so we're seeing a nice rebalancing of the environment, generally, where we're operating. We've expected there was going to be an uptick in the latter part of this year, and our guidance is still assuming that in Q3 and Q4. The reason we increased our guidance, originally it was 9-12, then 10-12, and then most recently, 10-13, is because of the favorable performance we've seen in the first and Q2. So we're hopeful that can continue in the second half. Got it. And Scott, on 2024, just the puts and takes, and I think, on the top and bottom line, and historically, you've been pretty helpful, when you see things that are, or things that you want to highlight or call out, like FX, you know, tailwind, headwind to margins and things like that. What are some of the things we should be thinking about? Well, FX is certainly one. In fact, remember at the beginning of this year, we thought we were going to have a big headwind to sales from FX in 2023, like $150 million. It's, it's come way down from there to almost negligible. But at today's foreign exchange rates, if you just fast-forward them to 2024, we would see a headwind to sales to some degree. We'll be able to quantify that better as we get to our, our investor conference. But that's always, that's always the case. I think more importantly, we're seeing, you know, margins that have normalized versus where they were in 2022, where there was a big FX impact. Now we're at more of a normalized baseline for a gross margin, and we'll talk more about how that may trend in 2024, later this year. So, right now, the FX impact to gross margins in 2024, you say—did I hear you say neutral or just no comment right now? No, I was talking about 2023- Right. as more of a normalized baseline gross margin. Normalized. We'll talk about 2024 gross margin at the investor conference in December. But in terms of the FX impact for, in 2024 and the gross margin, no, no comment, is what I'm hearing? No comment until December, right? I got it. From a purely business standpoint, Larry, look, we increased our guidance 10-13 earlier this year. We are in a position of strength, you know, going into next year, so we feel good about our four businesses. Bernard, at a high level, how do you want investors to think about the algorithm at Edwards? You know, is double-digit growth, you know, an important goal for you each year? You know, in terms of leveraged earnings, you know, how do you want investors to think about, you know, the algorithm for Edwards going forward? So when I, you know, Scott and I, you know, and the leadership team, you know, we have been discussing that a lot. But my point of view is a little bit the same as in the past, you know, to think about us like having consistent, sustainable growth, double-digit growth. So it is not like, you know, sometimes, you have companies, they're having a great year or great quarters, correct, because comparables are easier. Here, for us, no, we want to be consistent. We want to be durable, a company delivering this kind of durable growth, top line, double digits, committed to big investment, committed to the pipeline, to committing to all of the patient in need. So this is the way to think about it. Now, you know, EPS, you know, leverage, for sure it is important here, but, you know, this is the way we think about it. Just on growth, Larry, you know, if you just look back over the last several years, we feel really good about how we performed. There were a couple quarters last year where in 2022, we didn't have the performance we were anticipating. But in 2023, year-over-year, 2-year CAGR, 3-year CAGR, 4-year CAGR, we've consistently demonstrated around double-digit, you know, 10% or more growth for TAVR and for the full company. So it's not going to be exactly consistent every single quarter, every 90 days, but over time, we've got this unique growth opportunity where organic sales growth, we think, is going to continue to perform nicely. Capital allocation, can we expect any changes under your leadership, Bernard? So we are very fortunate, you know, to have this healthy, you know, balance sheet and PNL. We have been very active, you know, because most of our deals are, you know, pre-market approval, and because, you know, they are small in nature, we have not been public about it. But we invest, you know, heavily internally to our pipeline, to our, you know, clinical evidence, and we also have been very active in acquiring, you know, small companies, technologies to complement our pipeline. So we feel good about that. I feel like we are going to continue that. Pre-market acquisitions, small, you know, acquisitions, to make sure we have this differentiated pipeline to drive, you know, the top line. I would just add, the only other thing I'd add to that is, you know, our priorities have not changed at all. And one of our priorities is that we're going to continue to repurchase stock. We think it's an important way to return capital to investors. You saw us be very aggressive last year when we had the opportunity, and so we're not going to repurchase the same amount of stock every quarter, but over time, we intend to continue to offset dilution from incentive compensation and work the net share count down. Couple of random questions here. Competition, you talked about maintaining a leadership position in TAVR. So two here, one, is Medtronic promoting, you know, better hemodynamics with Evolut FX versus SAPIEN 3, especially with patients with small annulus or an annuli? What is Edwards' response? So we are listening to all of this, and because we take, you know, all of them competitive product, technologies, and company very seriously. Having said that, you know, we look back and we look at the big picture. You know, I know that, you know, sometimes it is easier to pick on one element of a clinical evidence. We want to look at the body of evidence. It is the way physicians are looking at it. You know, it's like, do we want to look at pacemaker rates, stroke, durability, safety, effectiveness, all of that? So it is. This is why it is important. Great to pick one or two. We believe that looking at the full body of evidence is the way that we should think about it, at least, you know, for us. You know, anybody is free to do whatever they want, but I think physicians care about the patient, and so they care about, you know, the body of evidence. Okay. And you talked about competition also earlier. Some people, people are watching Boston Scientific's entry into the US with ACURATE neo2. I think the short answer, I'd be curious to see if you agree, is more similar to its self-expanding, so more similar to CoreValve, Evolut. So is your view that because you're a balloon expandable, and a lot of other reasons, but that you're gonna be more immune from losing share to neo2 when it comes to the US? Like I said, I want to start again with, we take everyone very seriously, as we should. Two is, we have been in the valve space for more than 60 years. You know, for many companies, it is one of the business. For us, it is all what we do. We take, you know, valve disease, you know, very seriously, you know, valve technology very seriously. We have seen, you know, so many competitive products coming in and coming out. We have been very stable. We, we believe in our technology. So yes, when we look at each, when they come to market, we will take seriously, but we, we feel good about what we have. X4, what... remind us of the status. X4 is, we are restarting, you know, the study right now. And so we are going to give you, you know, more update, you know, probably during Investor Conference about the next steps. Got it. And you'll continue an annual investor conference under your leadership? Absolutely. I think we decided on a date already, you know, Mark? Okay. I thought you were going to say maybe twice a year now. No. December 7, at our corporate headquarters in Irvine this year. Okay. Bernard, we've got a minute left. This has been a great opportunity to hear your perspective. Any closing remarks you want to leave people with? No, you know, I think like, you know, I hope, you know, you are, you left, you know, this conversation as confident as I am about the potential that we have in front of us. We have solid businesses. We are in a healthy position exiting COVID because we didn't stop investing. We have great foundation. I believe that, you know, what you are going to see is durable, sustainable growth, you know, from us. I believe it is going to be an exciting time. So thank you so, so much for your interest in Edwards Lifesciences. Thank you. Bernard, thanks so much.