Greetings, and welcome to the Edwards Lifesciences First Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to our host, Mark Wilterding, Vice President of Investor Relations and Treasurer. Thank you. You may begin.

Thanks, Diego, and thank you all for joining us this afternoon. With me on today's call are Mike Mussallem, Chairman and Chief Executive Officer; and Scott Ullem, Chief Financial Officer. Just after the close of regular trading, Edwards Lifesciences released first quarter 2022 financial results. During today's call, management will discuss those results included in the press release and accompanying financial statements 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 include, but aren't limited to: financial guidance and expectations for longer-term growth opportunities; regulatory approvals; clinical trials; litigation; reimbursement; competitive matters; and foreign currency fluctuations. These statements speak only as of the date on 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 and important safety information may be found in the press release, our 2021 Annual Report on Form 10-K and Edwards' other SEC filings, all of which are available on the company's website at edwards.com. Finally, a quick reminder that when using the terms underlying and adjusted, management is referring to non-GAAP financial measures. Otherwise, they are referring to GAAP results. Reconciliations between GAAP and non-GAAP numbers mentioned during the call are included in today's press release. With that, I’d like to turn the call over to Mike for his comments. Mike?

Thank you, Mark. Let me begin by saying I remain very proud of our team's steadfast dedication to our patient-focused strategy. Throughout the first quarter, our supply chain delivered, and our field team continued to support the skilled clinicians and patients who count on Edwards. We continue to believe that 2022 will be an important year for Edwards Lifesciences as we expect low double-digit sales growth and meaningful progress on our pursuit of significant opportunities to improve patient care. Looking beyond 2022, we remain confident in our long-term strategy and our pipeline of innovative therapies. Our patient-focused culture drives us and motivates our employees around the world, and our R&D targets breakthrough therapies that can create significant value for patients and health systems, enabling strong organic sales growth. As we're hopeful, the worst of the pandemic is behind us, we're constantly reminded of the importance of our work as we pursue solutions for cardiovascular disease, which continues to be the number one killer in the U.S. and the world, well ahead of cancer and other deadly conditions. Turning now to our first quarter financial results. Sales of $1.3 billion increased 13% on a constant currency basis versus the year-ago period. Despite the impact that Omicron had on hospital capacity, resources and procedure volumes in January, especially in the U.S., Q1 global sales were moderately better than our expectations. Sales were lifted by performance outside of the U.S., where we experienced a less pronounced impact from the pandemic. Underlying sales growth was double-digit across all regions and benefited from improving trends as we progress through the first quarter. In TAVR, first quarter global sales were $881 million, an increase of 14% on an underlying basis with continued strong growth outside the U.S. We estimate that global TAVR procedure growth was comparable with our own growth, and average selling prices were stable globally. In the U.S., our first quarter TAVR sales grew approximately 10% versus the prior year, and we estimate total procedure growth was comparable. TAVR adoption was broad-based across hospitals, and our SAPIEN valves continue to demonstrate distinguished clinical performance. Outside the U.S., in the first quarter, our underlying TAVR sales grew approximately 20% on a year-over-year basis, and we estimate total procedure growth was comparable. We continue to see excellent opportunities for OUS growth, as international adoption of TAVR therapy remains low. In Europe, Edwards sales growth was driven by the continued strong adoption of our SAPIEN platform and was broad-based across all countries. Our treatment rates recovered nicely throughout the quarter, although they differ by country, reflecting variable COVID impacts. We estimate that our competitive position was stable. In Japan, we also experienced strong TAVR adoption and the number of TAVR procedures performed exceeded surgical aortic valve replacement. Following reimbursement approval last year for the treatment of patients at low surgical risk, we remain focused on expanding the availability of TAVR therapy throughout the country. Broadly across the globe, we continue to see encouraging TAVR adoption in many underpenetrated countries. In addition to geographic expansion, we remain focused on helping more patients gain access to TAVR therapy. In Q1, we continued to advance two pivotal trials aimed at expanding indication. First, our early TAVR trial for the large group of patients with severe AS and no diagnosed symptoms. And second, our PROGRESS trial that is evaluating patients with moderate AS, which represents a group that is much larger than those with severe AS. We also remain on track to begin treating patients this quarter in our ALLIANCE pivotal trial for our next generation TAVR technology SAPIEN X4. In summary, assuming no new COVID headwinds and a gradual improvement in U.S. hospital staffing shortages throughout the year, we continue to plan for underlying TAVR sales growth to be in the range of 12% to 15%. We remain confident that this large global opportunity will double to $10 billion by 2028, which implies a compounded annual growth rate in the low double-digit range. Now turning to TMTT. To transform patient care and unlock the significant long-term growth opportunity, we continue to make steady progress on three key value drivers: a portfolio of differentiated therapies, positive pivotal trial results to support approvals and adoption, and favorable real-world clinical outcomes. We are pleased with our high procedural success rates, and we continued our strong momentum with more patients than ever treated with our TMTT technologies this quarter. In mitral repair, we continue to achieve excellent clinical outcomes with PASCAL as we expand commercially and treat more patients in Europe. We remain on track for U.S. approval of PASCAL Precision for patients with degenerative mitral regurgitation late this year, supported by our Class IID pivotal trial. We continue to advance the enrollment of CLASP IIF pivotal study for patients with functional mitral regurgitation. Later this year, we expect European approval of our new PASCAL Precision system, which is engineered for enhanced navigation and an intuitive user experience, extending our differentiated platform. In mitral replacement, we continue to broaden our experience with both of our transcatheter mitral replacement technologies through the ENCIRCLE pivotal trial for SAPIEN M3 and the MISCEND study, EVOQUE Eos. This early experience with these sub-30 French transfemoral therapies gives us confidence that these platforms have the potential to transform treatment for the many patients in need. Turning to transcatheter tricuspid therapies. As we continue to build a body of clinical evidence for PASCAL in the tricuspid position, we're pleased with the recently presented late-breaking data at the ACC meeting last month. We are encouraged by the sustained significant reduction in tricuspid regurgitation and improvements in quality-of-life measures experienced by patients and look forward to bringing additional clinical evidence through our Class IITR pivotal trial, which is currently enrolling. In addition, we continue to make progress in enrolling our TRISCEND II pivotal trial of the EVOQUE system. We expect a late 2022 approval for EVOQUE tricuspid replacement in Europe and remain committed to providing solutions for these patients who have a very poor prognosis and few treatment options today. Turning to our results, first quarter global TMTT sales were $27 million, driven by the continued adoption of the PASCAL platform in Europe. Although there was an impact from COVID early in the quarter, we exited March with positive momentum. As we expand in Europe, physicians continue to achieve high procedural success rates and excellent clinical outcomes. Assuming a diminishing COVID-related impact, we are planning a gradual ramp in Q2 and a significant acceleration in the second half of the year to reach our 2022 sales guidance of $140 million to $170 million. We look forward to continuing our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease. In Surgical Structural Heart, the first quarter 2022 global sales of $221 million increased 6% on an underlying basis over the prior year. Despite a soft start to the year associated with COVID, we were encouraged by the steady improvement across most regions over the course of the quarter, driven by increased penetration of premium technologies and procedure growth. Although hospital staffing shortages remain a concern, we believe that lifesaving surgical therapies continued to be prioritized. At the end of March, we announced the U.S. FDA approval and commercial launch of our e MITRIS RESILIA valve, which adds to the portfolio of durable RESILIA tissue products with a valve designed for the heart's mitral position. Built upon previous generations of proven mitral valve technology, MITRIS offers greater ease of use and is designed to facilitate potential future transcatheter interventions. Today, nearly 60% of the world's surgical mitral valves are mechanical. RESILIA tissue should allow patients to thrive without the quality-of-life compromises that may come from having a mechanical valve. Initial feedback from U.S. surgeons has been very positive. In summary, we remain confident that our full year 2022 underlying sales growth will be in the mid-single-digit range for a surgical structural heart driven by market adoption of our newest premium technologies. In Critical Care, first quarter sales of $212 million increased 11% on an underlying basis, driven by balanced contributions from all product lines. Demand for our state-of-the-art hemisphere monitoring platform remains strong and lifted our sales. Our broad portfolio of smart recovery sensors and our TruWave disposable pressure monitoring devices supported the increased number of patients in the ICU in the first quarter. Additionally, we continued enrollment in the HPI SMART-BP trial focused on generating additional clinical evidence to support the adoption of our Hypotension Predictive Index software. In summary, we continue to expect mid-single-digit underlying sales growth for 2022, which are moderated by the strong prior year comparisons over the remainder of the year. We remain excited about our pipeline of Critical Care Innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients. And now I'll turn the call over to Scott.

Thanks, Mike. We are encouraged by our start to the year. Despite the impact from Omicron early in the quarter, all product groups performed well and sales were balanced across all regions. We achieved total sales in the quarter of $1.341 billion, which represents 12.7% year-over-year underlying growth. This strong sales performance flowed through to our operating income, and we achieved adjusted earnings per share of $0.60. Assuming no new COVID headwinds, and a gradual improvement in U.S. hospital staffing shortages, we're projecting second quarter sales to be between $1.36 billion and $1.44 billion, which represents sequential organic growth from the first quarter, partially offset by foreign exchange headwinds. We expect our year-over-year sales growth in the second quarter to be our lowest of the year, given our strong prior year sales performance. We are also projecting second quarter adjusted earnings per share of $0.61 to $0.69. Although we haven't fully overcome the January Omicron impact, we are maintaining all of our previous full-year sales guidance ranges for 2022, despite more pronounced foreign exchange headwinds and COVID-related hospital staffing challenges in the U.S. As a reminder, for total Edwards, we expect sales of $5.5 billion to $6 billion; for TAVR $3.7 billion to $4.0 billion; for TMTT $140 million to $170 million; for Surgical Structural Heart $870 million to $950 million; and for Critical Care $820 million to $900 million. We're also maintaining our full-year adjusted earnings per share guidance of $2.50 to $2.65, representing mid-teens growth over 2021. And now I will cover additional details of our results. For the first quarter, our adjusted gross profit margin was 77.8% compared to 76.0% in the same period last year. As we expected, this improvement was driven by the positive impact from foreign exchange, primarily the strengthening of the dollar against the euro and the yen. We continue to expect our full year 2022 adjusted gross profit margin to be between 78% and 79%. This guidance range reflects our assumptions of a favorable impact from foreign exchange hedged gains and improved product mix and is partially offset by supply chain inflationary pressures. Selling, general and administrative expenses in the first quarter were $370 million or 27.6% of sales, reflecting field-based personnel-related costs and commercial activities in support of our growth. We continue to expect full year 2022 SG&A as a percentage of sales to be between 28% and 30% as we continue to invest in our high touch model for TAVR, and ongoing build-out of the TMTT commercial team. Research and development expenses in the quarter grew 10% to $229 million, or 17% of sales. This increase was primarily the result of continued investments in our transcatheter innovations, including increased clinical trial activity. For the full year 2022, we continue to expect R&D to be 17% to 18% of sales, as we invest in developing new technologies and generating evidence to support TAVR and TMTT. Turning to taxes. Our reported tax rate this quarter was 14.3%, or 14.4% excluding the impact of special items. This is slightly higher than the midpoint of our full year guidance range, because it included the unplanned impact of U.S. tax regulations published in Q1. These regulations potentially limit the amount of foreign taxes that are creditable against U.S. income taxes. We continue to expect our full year tax rate excluding special items to be 11% to 15%, including an estimated benefit of three percentage points from stock-based compensation accounting. Foreign exchange rates decreased our first quarter reported sales growth by 2.5 percentage points, or $27 million compared to the prior year. At current rates, we now expect an approximate $170 million negative impact, or about 3% to full year 2022 sales compared to 2021 versus our previous expectation of a $100 million negative impact. We forecast this additional $70 million negative impact to sales will occur over the remainder of the year. FX rates positively impacted our first quarter gross profit margin by 240 basis points compared to the prior year. Although this benefits our operating margin rate relative to our January guidance, FX rates had a minimal impact on first quarter earnings per share. As we mentioned at the Investor conference, in periods of a strengthening dollar like this, sales are negatively impacted, but as a result of financial and natural hedges, margin rates benefit resulting in little impact to the bottom line. At current rates, our operating margin in 2022 is benefiting by approximately 200 basis points from foreign exchange. Free cash flow for the first quarter was $221 million, defined as cash flow from operating activities of $294 million, less capital spending of $73 million. We continue to expect full year 2022 free cash flow will be between $1.2 billion and $1.5 billion. This includes approximately $200 million of accelerated tax payments due to a change in the tax treatment of research and development expenses. Before turning the call back over to Mike, I'll finish with an update on our balance sheet and share repurchase activities. We continue to maintain a strong and flexible balance sheet with approximately $1.5 billion in cash, cash equivalents and short-term investments as of March 31, 2022. In the first quarter, we repurchased approximately $400 million in stock through an accelerated share repurchase agreement and pre-established 10b5-1 programs. As a result, average diluted shares outstanding during the quarter declined by approximately 3 million to 629 million. We continue to expect average diluted shares outstanding for 2022 to be between 630 million to 635 million. And with that, I'll pass it back over to Mike.

Thanks, Scott. So we're confident in our long-term outlook for strong sales growth, and our teams 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 long-term success and greater shareholder value as we pursue significant opportunities to improve patients' lives. And with that, I'll turn it over to Mark.

Thanks a lot, Mike. With that, we're ready to take questions. In order to allow for broad participation, we ask that you please limit the number of questions to one plus one follow-up. If you have additional questions, please reenter the queue and management will answer as many participants as possible during the remainder of the call. Diego?

Our first question comes from Larry Biegelsen with Wells Fargo. Please go ahead.

Good afternoon. Thank you for the question, and congratulations on a strong start to the year. I have two questions. First, I would like more details on the recovery, particularly what you are observing in March and April across different regions, especially in your TAVR business. Second, regarding the guidance, should we be considering the midpoint of the revenue range or slightly lower because of the additional currency impact? Additionally, for Q2, I noted your comment indicating about 6% underlying growth, accounting for a 4% FX headwind. However, it seems only to be increasing around 4% sequentially, which appears conservative when compared to historical trends and the Omicron effects you mentioned in January. Could you clarify your outlook for the year and Q2? Thank you for addressing my questions.

Thank you, Larry. I'll begin by discussing the recovery progress, which varies globally. First, let’s focus on the recovery in the U.S., as it likely has the most significant impact on Edwards' results. Overall, we remain uncertain if U.S. hospitals have completely recovered from COVID-19. There are still residual protocols in place, and notably, the ongoing labor shortages and workforce turnover are significant concerns. These staffing challenges are affecting costs and are a priority for the healthcare sector. Some of this relates to employee turnover, while other positions remain unfilled. In discussions with hospital executives, we’ve learned that institutions are actively trying to tackle these issues and expect to see improvements, although we are forecasting a gradual recovery. Despite these challenges, Edwards’ procedure growth has been relatively strong. We recognize that these healthcare systems are under considerable strain, yet we continue to achieve solid growth in this difficult environment.

Larry, on your second question regarding guidance, we always guide people to the middle of a range just for modeling purposes. So, at $1.360 billion to $1.440 billion, the midpoint of that is $1.4 billion. So that's a good modeling assumption. Your math is right, which is year-over-year underlying growth for Q2 with that range is in the range of about 5.5%. And yes, it's 4.4% of these exchange rates sequentially from Q1. So, sequentially up from Q1. And really for the full year, it doesn't change our underlying growth rate and our guidance of low double digits. And so, while FX is impacting our dollar guidance ranges, it hasn't had a big impact on our underlying growth expectations.

Thanks, Scott.

Thank you. Our next question comes from Robbie Marcus with JPMorgan. Please go ahead.

Hey, thanks a lot. I'll add my congratulations on a nice start to the year as well. Maybe a follow-up on Larry's question. I was hoping to get a better sense of where some of the bottlenecks are in the patient recovery here. In some of let's call it the easier-to-schedule and diagnose procedures, we're seeing a little faster recovery or maybe a little more positive commentary. So, maybe walk us through where you're seeing the biggest bottlenecks here. And I imagine it's not a patient demand issue; it's probably more a logistics issue. So, I think that'd be helpful just to hear from you. Thanks.

Yes. Yes, thanks, Robbie. We don't have perfect visibility into the patient funnel. It's just kind of limited and we get a lot of our data from conversations with health care providers and our own frontline clinical specialists that really help give us some perspective. And certainly, we believe that there's a small COVID-related backlog at this point, but we think that that's relatively small by comparison, because I think the positive experience and clinical outcomes that people are having, but this is a story yet to be told. And so, we're going to have to live this one.

That's it for me. Thanks.

Thank you. Next question comes from Matt Miksic with Credit Suisse. Please state your question.

Hi. Thanks so much for taking the question. So maybe just one if I could on TAVR centers, where you stand now. I know, we're sort of getting to maybe capacity of potential centers in the U.S. So, where you're at now and what the pace of new centers looked like, and then I just have one follow-up.

Okay. Yes, we think at this point, we're starting to approach about 850 centers in the U.S. And at this point, it's possible for there to be additional centers added, we still have some centers that approach us, but we think are going to be relatively few at this point. And we also think that they're going to probably tend to be smaller centers and probably not have a dramatic impact on the overall numbers. But hopefully that gives you a sense of where we're at and what we're projecting.

Sure. Yes, no, that's super helpful. And then on sort of just the TAVR capacity, I know you've a labor intensive model, you've been expanding, obviously in investing, maybe, or Mike or Scott, if you could talk about what the pace of capacity build-out looks like, compared to last year, maybe what it looks like this year going forward?

Yes. It's easy to overlook the impact of the pandemic, given the many fluctuations we've experienced. Let me remind you of what the company has achieved since 2019. Whether you examine the first quarter or the full year of 2022, we've seen a 10% compounded annual growth rate. This means a 10% increase each year from 2019 to now over three years. Despite various challenges and distractions, there has been a consistent rise in TAVR treatment rates. TAVR is growing slightly faster than other areas of the company, although I don’t have the exact figure at the moment. Overall, this trend has been steady, and we anticipate that our systems will continue to adapt, evolve, and expand capacity, though we expect this to occur gradually rather than all at once.

Super. Thanks so much, Mike.

Our next question comes from Bill Plovanic with Canaccord. Please state your question.

Thank you. Good evening. I appreciate the opportunity to ask a question. I wanted to follow up on the comments regarding the international TAVR business, which is approaching 20%. This seems like a significant change for Europe, and I would like some clarity on the growth rates for Europe, Japan, and the rest of the world. Thank you.

Yes, we typically don't give country-by-country growth rates. But that we did experience 20% constant currency growth outside the U.S. And that most of the geographies around the world were all in that 20% range, and that included Europe and Japan, and other places in the world were dramatically under penetrated. So, all that is a big positive. In the case of Europe, it was broad-based across many countries. I mean, every country just grew in the first quarter. Now some of that might have been the fact that it was a little tougher last year, but nonetheless, it was very impressive to us and here it is a product that was launched in 2007. Now it's 15 years later and still growing at this kind of pace tells you that in some ways the system is still catching up with what the demand is out there and what gives us optimism for the future. So, on a long-term basis, do we expect Europe to grow 20%? No, we don't. But we'd be very pleased if Europe can continue to be an important contributor to growth. We haven't tried to parse long-term growth rates out, but I have to tell you that it's exceeded our expectations in the recent past.

I would like to add that one of the advantages of our significant TAVR business with a global presence is having various regions contribute to growth at different times. We are introducing new technologies and receiving new indications for TAVR devices in different markets. This broad presence is beneficial because if one area is not performing as strongly during a particular period, it can be balanced out by another region that is doing well.

Thanks. Regarding the U.S. market, the comparison seems challenging as we approach Q2 for TAVR. The first quarter felt relatively flat sequentially for the U.S. I'm trying to understand if you anticipate something similar to what you're observing with TMTT, where we might see a continued recovery in Q2 for TAVR. Perhaps we could see a significant increase as we move into the second half of the year in the U.S. Should we consider it this way?

Well, your point is a good one about tough comp in Q2 for TAVR. We saw a really strong growth. I mean, it was mind-boggling, something that we didn't expect Q2 of last year. Now having said that, so we expect a real step up in our Q2 sales in TAVR. Again, we're going to see what we think is probably an all-time record for TMTT in the second quarter as well. But we say TMTT is really going to take off in the second half. TAVR is not going to come down probably from Q2. We expect that probably to just continue to increase, be a little stronger in Q3 and stronger yet in Q4. So, we expect a continuous ramp there of really setting all-time highs.

Thank you.

Next question comes from Shagun Singh with RBC Capital Markets. Please state your question.

Thank you for taking the questions. Mike and Scott, I just wanted to ask the guidance question in a different way. So, your Q1 results and Q2 guidance, it does imply a pretty substantial improvement in the back half. And you've kept your guidance intact since December 9, despite a pretty dramatic shift in the operating environment, just given Omicron inflation, supply disruptions, staffing shortages, worse FX environment. And so, I'm just wondering, what's improved on an underlying basis since your December outlook? Is it International TAVR, TMTT? Or was your guidance just conservative?

That's a good question. Back in December, before Omicron had really made its presence felt in the U.S., we were still experiencing Delta in Europe. However, in January, we noticed a significant impact from Omicron in the U.S. We mentioned this briefly during the fourth quarter call, noting that conditions generally improved since January. Nevertheless, I wouldn’t say that conditions have returned to the level we saw during our December Investor conference. So, while things are better, they might not be fully aligned with what we anticipated back then.

Yes, and just to pile on there, and I don't have exact numbers behind this. But even though we've seen a pretty nice recovery here, not sure that the hole that was created for Omicron has been filled at this point. And that's still in the future. So, we have a pretty good-sized guidance range. And so, we continue to feel comfortable that we'll be within that guidance range. But we haven't fully filled the hole from Omicron yet.

Got it. And just to follow-up on capital, can you just comment on the capital environment in 2022, just given the exposure you have, I guess, on the Critical Care side. But just generally, as you talk to hospital customers, are you worried about a slowing capital purchasing environment, especially in the midst of labor cost inflation and high interest rates that's ongoing? Thank you for taking the questions.

Thank you for your question. While we may not be the ideal indicator, our capital business is doing quite well, representing about 20% of our overall Critical Care segment. We noticed a solid recovery that began last year, likely around the second quarter, and that has contributed positively to our comparisons this year. We find this recovery impressive and anticipate it to continue this year, although we don't expect it to surpass last year's substantial gains. Specifically regarding our HemoSpheres, we've observed a notable rebound compared to the early days of the pandemic.

Thank you.

Thank you. Our next question comes from Cecilia Furlong with Morgan Stanley. Please state your question.

Thanks for taking the questions. I wanted to ask on TMTT guidance for '22 and the expected acceleration in the back half, but really how much of that is coming from current sites and further penetration in those sites versus either additional site expansion or geographic expansion that you talked about?

Yes. So, it's a great point. Part of this is not to have COVID interfere. Just it seems as though COVID has traditionally impacted mitral is a little bit more than it has TAVR by comparison just because we still require anesthesia and some ICU stays with the mitral procedure. So, some of it is that, but probably new sites is a bigger contributor than the increased adoption in existing sites. And so hopefully that gives you a little color on what we're expecting.

That's helpful. And then just in terms of your TMTT, the sales force build-out that you've talked about in U.S., can you just walk through where you are at this point and expected future investments over the coming quarters ahead of launch? Thank you.

Yes. So, we're in the process of building that U.S. field team. And we're building with the idea that we really want to ensure that we do a great job of training our own team, and trainings of physicians, and really doing this in a very deliberate fashion. So, it's going to be a pretty gradual and deliberate build-out for us. And we're going to focus on having excellent procedural success and clinical outcomes. And so, we're taking a pretty thoughtful approach to this, rather than broadly based. We're going to try and stay in accounts that already do quite a bit of transcatheter and have real experience in doing it and are likely to be able to attain a high level of competency and maintain that. So hopefully, that gives you some sense of how we're thinking about it.

Thank you for taking the questions.

Sure.

Our next question comes from Josh Jennings with Cowen. Please go ahead.

Hi. Good evening, Mike, Scott and Mark. Just wanted to ask a follow-up on a question pertaining to SAPIEN X. Hopefully, if you could maybe share the drive behind some of the design enhancements so that the SAPIEN X4 as you start the ALLIANCE trial, with the design enhancements focused on eliminating mild PVL facilitating future TAVR and TAVR procedures or coronary access or anything you can share would be helpful. And my follow-up is just on the Alterra Transcatheter Pulmonary valve, the Medtronic Harmony valve recall today was announced or at least hit the tape. How big is that transcatheter pulmonary valve market, and what do you have baked into guidance for Alterra this year? And then could there be upside with this recall? Thanks for taking both questions.

Sure. We definitely have design intentions with SAPIEN X4, which we believe will show improved paravalvular leak performance. We also anticipate that it will feature RESILIA tissue, which we view as a significant advantage for durability. Additionally, it may help to address some of the variability seen in patients. Overall, we believe it offers several benefits and are eager to test it. Regarding the pulmonic opportunity, I haven't delved into the recent developments there. We're in the midst of launching the Alterra product, and we are satisfied with its progress. While this segment may not represent a substantial part of the overall TAVR market and may be overlooked in the larger figures, these patients truly require assistance, and we feel a strong responsibility to support them during this challenging time.

Understood. Understood. Thank you a lot, Mike.

Yes.

Thank you. Next question comes from Rick Wise with Stifel. Please go ahead.

Good afternoon, Mike and Scott. One question for each of you. Mike, you're conveying very clearly your excitement about PASCAL and the acceleration you expect throughout the year. You said it's really going to take off. I was just hoping you could give us a little more color. Is this about the sales force expansion? Is it the number of centers opened, is it about training? All the above I'm sure, but just maybe help us better understand the fundamentals behind your optimism?

Yes. Thanks, Rick. Well, maybe it's something that just a clarifying point is, remember, we're just selling in Europe at this point.

Exactly.

And so, when you talk about this transcatheter edge-to-edge therapy, the supporting evidence in Europe hasn't been overwhelmingly positive; it's been somewhat mixed. And so that's led to a growth rate in Europe, that's been probably less than what it should be. And we think there's going to be a real contribution when the family of class trials become apparent, we think has a chance to really lift market adoption. And that's going to be one of the pluses. And then as I said earlier, adding new sites is going to be a positive for us, growing the team is going to be positive and all those are going to be additional add-ons.

Great. And maybe just last for me and I'm guessing this for Scott. You bought $400 million worth of stock, clearly balance sheet in excellent shape, free cash flow strong. Given the market, the pressure is on the group on Edwards stock price, what's your appetite now? How are you thinking about stock repo as we move through the second quarter? And is there anything else on your mind from a cash use perspective? Thank you so much.

Sure. Thanks for the question. Thanks for bringing us home a little bit over the time. So, I'll try to go quickly here. But our cash priorities have not changed at all. First and foremost, we invest in the business. But eventually, we're also going to end up with a lot of cash. And we intend to at least offset the impact of incentive compensation dilution. But beyond that, we've been gradually over time buying down the overall share count. And we're going to continue to look for opportunities to do that. We got off to a good start with a $400 million repurchase this year; we'd like where the stock was from a repurchase standpoint. And we still have over $700 million left in repurchase authorization. So, you should expect that that's going to be just part of our long-term capital deployment plan.

Thank you so much.

Okay. Thanks so much for your continued interest in Edwards. Scott and Mark and I are going to welcome any additional questions by telephone later on.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.