By the numbers
Q2 sales: $1.74 billion
13.6% increase year over year
TAVR sales: $1.26 billion
11.3% increase year over year
TMTT sales: $195.9 million
47.3% increase year over year
Edwards Lifesciences reported strong sales of its heart valves in the second quarter and outlined several upcoming catalysts expected to maintain solid growth rates, starting with an anticipated Medicare coverage expansion.
Sales were better than the company expected for transcatheter aortic valve replacement devices, Edwards’ largest product line, as well as newer repair and replacement treatments for mitral and tricuspid diseases, due to increasing clinical demand, executives said on a Thursday earnings call.
CEO Bernard Zovighian tied TAVR demand to growing evidence backing earlier use of the procedure to treat aortic stenosis patients and predicted the “durable” momentum would support the company’s 10% total sales growth target long term.
Edwards’ performance in the quarter “should alleviate utilization concerns” raised early in the earnings season, when hospital operator HCA Healthcare reported a $400 million loss due to patients losing coverage on the health insurance exchanges, said Evercore ISI analysts. Investors were further spooked when robotic surgery leader Intuitive said U.S. procedure growth softened after the expiration of enhanced Affordable Care Act premium subsidies.
Edwards raised its full-year sales growth outlook to a range of 10% to 11% on a constant currency basis, up from the prior 9% to 11% forecast, reflecting higher projections for both the TAVR and transcatheter mitral and tricuspid therapies businesses.
The outlook implies TAVR sales growth will moderate in the third quarter, with the company facing a difficult comparison to the year-ago period and likely taking a conservative view, several analysts said.
Still, “we think [Edwards’] momentum is sustainable in light of the strong Q2 results,” BTIG’s Marie Thibault wrote to clients.
Both the TAVR and TMTT businesses could see upside to forecasts in the second half, “most notably in the fourth quarter given its usual seasonal strength,” said Stifel’s Rick Wise. The analyst pointed to the PROGRESS study of TAVR in patients with moderate aortic stenosis as a key upcoming catalyst.
The study is the first randomized trial looking at the treatment of moderate aortic stenosis patients. Edwards plans to present data from the trial this fall at the Transcatheter Cardiovascular Therapeutics conference.
“We believe that if the data is positive and the current TAVR indication is expanded to include at least some moderate disease patients, it could help sustain or even possibly re-accelerate TAVR growth,” Wise told clients in a note.
TMTT catalysts
In the TMTT business, Edwards highlighted the expected fourth-quarter U.S. launch of its Pascal treatment for tricuspid patients and U.S. introduction later this year of the Ecliptis surgical left atrial appendage system as future growth drivers.
Zovighian also gave an update on the company’s next-generation TAVR device, telling analysts the first patients have been treated with the Sapien X4S technology in the ALLIANCE trial.
Medicare coverage update
Before the PROGRESS data readout, Edwards is awaiting a final policy change from the Centers for Medicare and Medicaid Services that would extend coverage for TAVR to asymptomatic patients.
Zovighian said that decision is expected in September.
“Based on the draft coverage policy, we are encouraged that this update has the potential to advance TAVR therapy for Medicare beneficiaries with aortic stenosis,” the CEO said.
