Edwards Lifesciences Corporation (EW) Earnings

Management highlights

### Company Strategy and Long-Term Vision - The company maintains a singular focus on transforming structural heart disease care, built on early innovation investment, agile execution, and world-class clinical evidence generation, which has positioned it to lead new therapeutic categories. - The company targets 10% average annual total company sales growth over the long term, with TAVR expected to deliver mid-to-high single-digit long-term growth, alongside consistent operating margin expansion. - TMTT targets $2 billion in annual revenue by 2030, with multi-layered durable growth across the portfolio beyond that milestone. ### Clinical and Regulatory Milestones - At the recent New York Valves Conference, the company presented new 7-year data confirming best-in-class long-term durability for the Sapien TAVR platform, and 5-year data supporting earlier TAVR intervention for asymptomatic aortic stenosis patients. - Baseline characteristics from the PROGRESS trial of moderate aortic stenosis patients were presented, confirming 50% of moderate patients have at least one at-risk feature; full trial results will be presented at TCT 2026. - The first patients have been treated with the next-generation Sapien X4S platform, with full data expected after completion of the Alliance trial. - 10-year data for Resilia surgical tissue was presented, confirming favorable long-term freedom from structural valve deterioration and low reoperation rates. - U.S. approval for ECLIPTIS surgical left atrial appendage technology was received, with a full U.S. launch planned for late 2026. - CE Mark approval was received for SAPIEN M3 Resilia, with indication expanded to include patients with mitral annular calcification. - Japan approved the asymptomatic indication for the Sapien platform. - PASCAL next-generation technology with Capture Clarity is on track for U.S. and European approval in Q4 2026, alongside U.S. approval for a tricuspid indication for PASCAL. ### Commercial Performance - The Sapien platform maintains its position as the global TAVR standard of care, with modest year-over-year competitive share gains in both the U.S. and Europe. Updated European guidelines supporting earlier TAVR intervention are driving broader adoption. - All three TMTT platforms are scaling globally: PASCAL adoption is growing driven by strong real-world clinical outcomes, Evoke is accelerating with expanding center access and strong mortality/hospitalization data, and SAPIEN M3 early clinical results confirm strong unmet need for a mitral replacement option.

Guidance

- Full year 2026 total company sales growth guidance was raised to 10-11% from the prior 9-11% range, with total company sales expected to reach $6.6-6.9 billion at current exchange rates. - Full year 2026 TAVR sales growth guidance was raised to 8-9% from the prior 7-9% range, with full year TAVR sales expected to reach $4.75-5 billion at current exchange rates. - Full year 2026 TMTT sales guidance was raised to $760-780 million from the prior $740-780 million range. - Full year 2026 adjusted EPS guidance of $2.95-$3.05 is maintained, despite the effective tax rate now expected to land at the upper end of the 16-19% range due to Pillar 2 impacts and changes to California R&D tax credit rules. - Full year 2026 adjusted gross profit margin is now expected to land at the lower end of the prior 78-79% guidance range, due to foreign exchange headwinds. - Full year 2026 adjusted operating margin is now expected to land at the upper end of the prior 28-29% guidance range, delivering ~150 basis points of constant currency operating margin expansion for the full year. R&D as a percentage of sales is still expected to be ~17% for 2026. - Q3 2026 guidance calls for total sales of $1.63-1.71 billion and adjusted EPS of 71-77 cents. Q3 2026 underlying growth is expected to be artificially low due to the high comparison base from the unusually strong Q3 2025, with normalized seasonality returning in 2026.

Segment performance

1. TAVR: Q2 2026 global sales of $1.3 billion, representing 10.5% year-over-year growth. Revenue contribution to total Q2 sales is 74.7%. Growth was similar in the U.S. and outside the U.S., supported by competitor exit in Q2 2025, strong long-term durability data for the Sapien platform, and stable average selling prices globally. 2. TMTT (transcatheter mitral and tricuspid therapies): Q2 2026 global sales of $195.9 million, representing 44.8% year-over-year growth. Revenue contribution to total Q2 sales is 11.3%. All three core platforms (PASCAL, EVOC, SAPIEN M3) delivered above-expected growth, with double-digit global procedural growth. 3. Surgical: Q2 2026 global sales of $284 million, representing 5% year-over-year growth. Revenue contribution to total Q2 sales is 16.3%. Growth was driven by adoption of Resilia tissue therapies, including Inspiris, Mitris, and Connect. Total company Q2 2026 sales were $1.74 billion, growing 12.5% year-over-year.

Risks & headwinds

- Second half of 2026 faces a very high comparison base from strong second half 2025 results, which will create downward pressure on reported year-over-year growth rates even amid strong underlying operational performance. - Ongoing foreign exchange volatility has created margin headwinds in the second quarter and is expected to create a $35 million sales headwind in the second half of 2026 if current exchange rates hold. - Changes to California tax law and global Pillar 2 tax regulation have increased the expected 2026 effective tax rate, creating incremental headwinds for full year earnings. - Adoption of new TAVR indications (asymptomatic, moderate aortic stenosis) requires gradual change in clinical practice, and revenue contribution from these new indications is not expected to materialize meaningfully in the near term.

Analyst Q&A

• Q: How have competitive share shifts impacted TAVR growth, and which TMTT product drove the Q2 sales upside? /

  A: The strong TAVR performance is the result of 20+ years of technology development and clinical evidence that has positioned the Sapien platform as the global TAVR benchmark, making the current share gains durable. U.S. and ex-U.S. TAVR growth rates were nearly identical in the quarter. For TMTT, the upside was broad-based across all three platforms: Pascal saw strong adoption in both regions due to its differentiated design, Evoke accelerated, and the early-stage SAPIEN M3 also delivered positive results that met management expectations.

• Q: Why was the PROGRESS trial's baseline data presented separately, what would be the TAVR business impact of positive results, and can the company deliver 10% total company growth next year? /

  A: Baseline data was presented separately to help clinicians and the market understand the heterogeneous, complex nature of the moderate aortic stenosis patient population ahead of full results release. If results are positive, adoption will be gradual, with minimal impact to 2026 revenue, and the existing mid-to-high single-digit long-term TAVR guidance already accommodates this opportunity. The 10% average long-term total company growth guidance has been consistent across prior calls and remains in place, driven by multiple growth catalysts across TAVR, TMTT and surgical.

• Q: What is the expected impact of the updated U.S. TAVR NCD policy on future growth, and does it open capacity for TMTT as well? /

  A: The final NCD policy is expected in September 2026, and the draft policy is encouraging. It creates a coverage pathway for the asymptomatic TAVR indication, removes unnecessary evidence development requirements for established symptomatic severe aortic stenosis treatment, and modernizes policy to streamline patient access. While the draft retains the requirement for TAVR programs to be affiliated with cardiac surgery programs (limiting dramatic new center expansion), the main benefit will be improved operational efficiency for existing programs, which will support demand growth from new indications starting in 2007 and beyond.

• Q: What is the timeline and positioning for the U.S. launch of Pascal for tricuspid disease? /

  A: Clinical trial data will be presented at TCT 2026, and U.S. approval and launch is still planned for Q4 2026, in line with prior guidance. In Europe, where Pascal tricuspid has been available for several years, the device's independent grasping design is especially well-suited for tricuspid cases, leading to strong physician adoption. There is already significant pre-launch demand from U.S. physicians who participated in the trial, and this launch will add a new layer of growth for the TMTT segment.