Greetings, and welcome to the Edwards Lifesciences Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Wilterding, Senior Vice President, Investor Relations and Treasurer.

Thank you very much, Diego, and good afternoon, and thank you all for joining us. We are coming to you live from San Francisco at the 35th Annual TCT Conference. 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 are Larry Wood, our Group President of TAVR and Surgical Structural Heart, and Daveen Chopra, our Global Leader of TMTT. Just after the close of regular trading, Edwards Lifesciences released third quarter 2023 financial results. During today's call, management will discuss those 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 include but are not 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 2022 annual report on Form 10-K, 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 results press release issued earlier today. Reconciliations between GAAP and non-GAAP numbers mentioned during the call are also included in today's press release. With that, I'd like to turn the call over to Bernard for his comments.

Good afternoon, everyone. As Mark said, we are hosting today's call from TCT in San Francisco. I’m going to start by covering some of the exciting developments at the conference, share highlights of the significant progress our team has made advancing our strategy, review our strong third quarter results, and finally, discuss our confidence in the outlook for Edwards. We have a lot of data being presented this week about technologies Edwards has developed. Included among these are results from free late-breaking clinical trials, all of which reflects Edwards' commitment to generating high-quality evidence to advance innovative therapies for patients suffering from structural heart disease. Yesterday, physicians presented five-year data from the PARTNER 3 low-risk pivotal trial. We believe these data demonstrate that TAVR with the SAPIEN platform should continue to be the preferred therapy for treating patients who have severe symptomatic aortic stenosis. Still more than 20 years of rigorous clinical experiences and trials, now eight New England Journal of Medicine publications, and over a million patients treated, SAPIEN technology offers unique benefits. SAPIEN 3 has demonstrated 99% freedom from death and disabling stroke at one year, 90% survival at five years, and is the only valve with the THV and THV indication. This is true lifetime management benefit, which expands options for patients. Tomorrow at TCT, we are looking forward to the presentation of the six-month analysis of our EVOQUE tricuspid valve, the first-of-its-kind therapy for the millions of patients suffering from tricuspid valve disease. In addition, tomorrow, you will receive a one-year full cohort result of a CLASP IID pivotal trial with PASCAL. We continue to make meaningful progress to advance our vision of offering a portfolio of innovative transcatheter therapies to treat tricuspid and mitral valve disease. In the last several weeks, we achieved four important milestones in support of our commitment to patient-focused innovation. First, CE Mark approval for EVOQUE tricuspid valve replacement system. Second, CE Mark approval for the MITRIS RESILIA surgical mitral valve. Third, PASCAL Precision approval in Japan. Finally, the completion of the enrollment in the first-ever pivotal trial for any transfemoral mitral replacement therapy, the ENCIRCLE trial for SAPIEN M3. Turning now to Q3 financial performance. Third quarter global sales grew 11% to $1.5 billion, led by our differentiated portfolio of innovative therapies. We were pleased with our results, which were in line with our expectations and represent another quarter of double-digit sales growth. For the full year, we continue to expect total company sales growth to be in the 10% to 13% range. Now, I will provide an overview of the third quarter sales performance by product group. In TAVR, we continue to see strong demand for our leading SAPIEN platform with third quarter sales of $961 million, up 10% year-over-year. Our U.S. and OUS sales growth rates were comparable. Our U.S. and OUS competitive positions were stable and globally, local selling prices were stable. In the U.S., our third quarter TAVR sales were driven by the continued successful launch of SAPIEN 3 Ultra RESILIA. On the clinical side, we are pleased with the pace of enrollment in our pivotal trial alliance, designed to study SAPIEN X4, our groundbreaking next-generation TAVR technology. In Europe, Edwards sales growth was driven by the broad-based adoption of our SAPIEN platform. We look forward to additional data supporting the Edwards' benchmark program to be presented at the PCR London Valve's Conference in November. Our sales in Japan grew year-over-year, reflecting a gradual recovery in market growth and strong adoption of SAPIEN 3 Ultra RESILIA. Competitive trialing in the third quarter was less pronounced compared to the first half of this year, and as expected, we grew faster than overall procedure growth. Around the world, we remain focused on improving diagnosis and treatment of the many more patients who remain undertreated. In summary, the combination of our global TAVR leadership, along with the data presented at TCT this week, gives the company further confidence in the future of TAVR and the company's expectation of a $10 billion opportunity by 2028. Now, turning to TMTT. Our commitment to the unmet needs of mitral and tricuspid patients took a significant step forward with the achievement of several important milestones in this past quarter. TMTT third quarter global sales of $52 million increased 65% versus the prior year. This performance was driven by accelerating adoption of our differentiated PASCAL Precision platform, the activation of more centers across the U.S. and Europe, as well as key TEER procedural growth. We continue to be pleased with our excellent clinical outcomes, reflecting the impressive performance of PASCAL Precision and the value brought by our comprehensive high-touch model. We are continuing the expansion of PASCAL Precision globally, with the expected launch in Japan before the end of the year. In our mitral clinical trials, we look forward to the one-year CLASP IID randomized pivotal trial, and CLASP IID registry outcomes with PASCAL to be presented as part of late-breaking scientific sessions tomorrow at TCT. This will add to the body of evidence supporting TEER as an effective therapy for patients. With the earlier than expected completion of enrollment in the ENCIRCLE pivotal trial for SAPIEN M3, we believe we are one step closer to offering an important valve replacement option, beyond TEER to serve even more patients suffering from mitral valve disease. In tricuspid, earlier this month, we received CE Mark approval for EVOQUE. We look forward to bringing this new therapy to Europe through a disciplined launch that will focus on ensuring excellent patient outcomes. Now, with this approval, physicians in Europe will have access to this groundbreaking option in addition to TEER. As noted, tomorrow at TCT, late-breaking data from the TRISCEND II pivotal trial of the EVOQUE replacement technology will be presented on the first 150 randomized patients, based on EVOQUE's FDA breakthrough pathway designation. This landmark presentation on a novel therapy demonstrates our leadership and commitment to innovation and science, and our focus on helping a large population of patients with unmet needs. In summary for TMTT, we are proud of the new therapy introductions, clinical trial achievements, and geographic expansion. We have achieved our goal to advance our vision to build a portfolio of therapies to transform the lives of mitral and tricuspid patients. In surgical, third quarter sales of $247 million increased 11%, driven by a balanced combination of strong global adoption of Edwards' premium technology and overall procedural growth. We continue to see strong momentum in our RESILIA portfolio globally, which has been widely adopted due to the excellent durability of its proven tissue technology, supported by the recent seven-year aortic data and five-year mitral data from our commenced clinical trial. We are confident about the future of this technology as we expand the overall body of RESILIA evidence, including ongoing patient enrollment of our momentous clinical study. Finally, we received CE Mark approval for our MITRIS RESILIA mitral valve earlier this month. We expect to introduce this valve in the fourth quarter, followed by a full European launch in 2024. In Critical Care, third quarter sales of $221 million increased 6%, driven by a smart recovery portfolio, with strong adoption of our Acumen IQ sensors equipped with the high-potential prediction index algorithm. We remain confident in our pipeline of critical care innovation as we continue to shift our focus to smart recovery technologies, designed to help clinicians make better decisions and get patients home to their families faster. And now, I will turn the call over to Scott.

Hey. Thanks a lot, Bernard. We are pleased to report third quarter sales performance in line with our expectations, with strength across all product groups. We achieved total sales of $1.48 billion, which represents 11% year-over-year growth. We achieved adjusted earnings per share of $0.59. Our GAAP earnings per share of $0.63 benefited from a change in U.S. tax regulations. A full reconciliation between our GAAP and adjusted earnings per share for this and other items is included with today's release. I'll now cover some additional details of our third quarter sales results and full-year 2023 outlook by product group. A continuation of double-digit global TAVR growth reflected a more balanced hospital staffing environment, as well as strong adoption of the SAPIEN family of valves. U.S. TAVR sales growth was driven by the launch of SAPIEN 3 Ultra RESILIA, which remains on track to represent the majority of our U.S. TAVR sales before year-end. In Europe, Edwards' sales growth was driven by the continued demand for our SAPIEN platform and was broad-based by country. In Japan, improved growth in the third quarter was driven by the ongoing launch of our SAPIEN 3 Ultra RESILIA valve. For global TAVR sales, we continue to expect full-year 2023 sales of $3.85 billion to $4.0 billion, representing 10% to 13% growth. TMTT growth in Q3 was driven by the adoption of our differentiated PASCAL Precision platform, activation of more centers across the U.S. and Europe, and strong procedure volumes. Overall, we are pleased with our continued progress towards establishing a portfolio of TMTT therapies, combined with temporary clinical data, in order to achieve our vision of transforming the lives of patients with mitral and tricuspid valve disease. We continue to expect full-year 2023 TMTT sales of $180 million to $200 million. In Surgical Structural Heart, 11% sales growth in the quarter was driven by the adoption of Edwards RESILIA products. Based on positive year-to-date performance, we continue to expect that our full-year sales will be in the range of $960 million to $1.02 billion, implying low double-digit growth in 2023. And in critical care, we continue to expect full-year 2023 sales of $870 million to $940 million. For total Edwards, based upon the performance we have delivered year-to-date, we continue to expect full-year 2023 sales to be in the range of $5.9 billion to $6.1 billion and full-year sales growth to be in the 10% to 13% range. Lastly, we continue to expect our full-year adjusted earnings per share to be between $2.50 and $2.60. We are projecting fourth-quarter sales to be between $1.45 billion and $1.53 billion. We are also projecting fourth-quarter adjusted earnings per share to be between $0.60 and $0.66. Now, I'll cover additional details of our P&L. For the third quarter, our adjusted gross profit margin was 76.4% as expected, compared to 81% in the same period last year. This year-over-year reduction was driven by impacts from foreign exchange. Remember last year, Edwards' gross profit margin was lifted by an unusually positive impact from foreign exchange. We continue to expect our full-year 2023 adjusted gross profit margin to be between 76% and 78%. Selling, general and administrative expenses in the quarter were $440 million or 29.7% of sales compared to $377 million in the prior year. This increase was driven by investments in transcatheter field-based personnel in support of our growth strategy and performance-based compensation. We continue to expect full-year 2023 SG&A as a percent of sales to be 29% to 30%, as we invest in field-based personnel and our therapy adoption initiatives. Research and development expenses in the third quarter grew 16% over the prior year to $270 million or 18.3% of sales. This increase was primarily the result of continued investments in our transcatheter valve innovations, including increased clinical trial activity. For the full-year 2023, 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 12.7% or 18.8%, excluding the impact of special items. Our reported rate benefited from the suspension of certain U.S. tax regulations concerning forward tax credits. Our slightly higher than expected non-GAAP rate resulted primarily from income mix and a lower excess tax benefit from stock-based compensation. We continue to expect our full-year tax rate, excluding special items, to be between 13% and 17%. Foreign exchange rates decreased third-quarter reported sales growth by 140 basis points or $16 million compared to the prior year. At current rates, we now expect an approximately $40 million year-over-year negative impact on full-year 2023 sales, compared to 2022. FX rates negatively impacted our third-quarter gross profit margin by 410 basis points compared to the prior year. Relative to our July guidance, FX rates had a $0.01 negative impact on third-quarter earnings per share. Free cash flow for the third quarter was $356 million, defined as cash flow from operating activities of $411 million, less capital spending of $55 million. We continue to expect full-year 2023 adjusted free cash flow to be between $1.0 billion and $1.4 billion. And before turning the call back over to Bernard, I'll finish with an update on our balance sheet and share repurchase activities. We continue to maintain a solid and flexible balance sheet with approximately $1.9 billion in cash, cash equivalents, and short-term investments, as of September 30. During the third quarter, we repurchased 2.2 million shares under our 10b5 plan. We continue to expect average diluted shares outstanding for 2023 to be between $610 million and $615 million. We have approximately $500 million remaining under our current share repurchase authorization. And with that, back over to you, Bernard.

Thank you, Scott. In closing, after more than 20 years of rigorous clinical experience and over 1 million patients treated, the five-year PARTNER III results show that Edwards TAVR is positioned for strong sustainable growth, as many patients remain undiagnosed and untreated. In addition, we have two strong global businesses, critical care and surgical, which are positioned for durable long-term growth driven by portfolios of differentiated technology. Moreover, we are achieving many significant milestones in TMTT that gives us the confidence to progress our vision to treat the many mitral and tricuspid patients in need. Altogether, we are convinced of the tremendous opportunity to drive success in the future through our patient-focused, breakthrough technologies and leadership. With that, I pass it back to Mark to open up Q&A.

Thank you very much, Bernard. Before we open it up for questions, I'd like to remind you about our 2023 investor conference, which we will host at our headquarters in Irvine, California, on Thursday, December 7. This event will include updates on our latest technologies, views on longer-term market potential, as well as our outlook for 2024. More information and a registration form are available on our website. With that, we're ready to take questions now. 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, please go ahead with additional details on accessing the Q&A portion of the call.

Thank you. Our first question comes from Robbie Marcus with JP Morgan. Please state your question.

Great. Thanks for taking the question. Maybe to start you guys did 11% TAVR growth in the quarter, roughly similar U.S., OUS. How do we think about what's holding it back here from being faster, pre-COVID it was growing at much higher rates? It's been one of the slower to recover, sub-sectors in med-tech. Data we presented this weekend should be supportive of growth. But what gives you confidence this is going to remain a double-digit growth market for the foreseeable future?

Thank you, Robbie. Let me start, and then I will ask Larry to continue here. First, we are pleased with this quarter. Again, it is the third quarter in a row of double-digit sales growth, and we are very pleased about it. Very balanced between U.S. and OUS. Our Ultra RESILIA adoption is going very well according to plan in U.S. and in Japan. And, we look at the opportunity with so many patients who are undiagnosed and untreated. So we feel good about what's ahead of us, we feel we are well-positioned. All of the data presented this week give us even greater confidence. But, Larry, you want to add anything?

Yeah. I don't have a lot to add, this is our third straight quarter of double-digit growth, which coming out of COVID and all the rockiness that we saw during that period, it's actually been really good to see the stability that we've seen and the continued growth even as our business gets larger. So, I feel really good about our growth rate. I think we're continuing to work to get patients off the sidelines and our patient activation initiatives. I think the data, hopefully, is reassuring for patients. People were worried about a durability signal with TAVR. And now we have really high-quality data published in the New England Journal of Medicine which shows absolutely no durability signal at five years using the recognized definition. So we think all of those are positive and those continue to help us maintain double-digit and sustainable growth over a long period of time. So I feel great about where we are.

Great. Maybe one more product question here from me. You just got EVOQUE approved in Europe with CE Mark. We'll see the data for six months tomorrow in tricuspid replacement. This is a market we hear from doctors a lot; they may not be terribly excited about repair, but replacement could be a really exciting option. What do you think Edwards needs to do as a company to take this market and accelerate adoption and drive uptake here in an area that's been pretty slow with tricuspid repair? Thanks.

Thank you, Robbie. So, we are going to do what we have done in TAVR for the last 15 years, basically. Focusing, number one on the patient outcomes, which is why we are going to be focusing on making sure our team is well-trained and well-equipped to support the physicians. We are going to have a disciplined launch in Europe, and we are going to produce evidence from trials in two cohorts you're going to see tomorrow. And we are going to continue to produce more evidence. But maybe Daveen, you want to add anything here?

Yeah. No, thanks, Bernard. I appreciate it. No, I think, as Bernard has said, we really do believe that it's the comprehensive high-touch model and outstanding outcomes that are a key step. But it's much more than that. Us having the ability to take the TAVR playbook from long ago and help apply it to this new area is really important. And for us, that includes not only technology innovation, evidence, but also continuing to then over time work on helping improve diagnosis referral and eventually treatment of patients. But for us, this is a comprehensive kind of play; a long-term play for us to really build a new therapy that we're really excited about to help patients with.

And if I may add, Robbie here. We're also beginning to better understand this tricuspid disease. We believe that with TEER and replacement adoption, physicians will have more options to treat even more patients. So, we are going to learn a lot here about what therapy suits which patient, but I think the two therapies in Europe, and as you know, leading that space, we are going to learn a lot in the coming few years, and I'm sure patients will benefit from that.

Thank you.

Our next question comes from Larry Biegelsen with Wells Fargo. Please state your question.

Good afternoon and thanks for taking the question. Hey, Scott, year-to-date the TAVR growth is a little over 10% I believe, and the midpoint of the guidance is about 11.5%. So, should we be thinking about the low end of the TAVR range of 10% to 13% for the year? And if not, what drives the acceleration implied in Q4 for TAVR? Then I had one follow up.

Well, I'd take you back to the beginning of the year when our guidance for the full year for both TAVR and Edwards was 9% to 12%. We increased it to ultimately 10% to 13% because of the first quarter and second quarter results. So we're coming in about where we thought we would for Q3 and Q4. The 10% to 13% guidance reflects the stronger than expected Q1 and Q2. In the fourth quarter, our guidance for the full company is about $10 million higher at the midpoint than our results in Q3. So we haven't broken out guidance by business unit, but you can expect that overall, we expect the fourth quarter to look pretty similar to the third quarter. You're right; I think for the full year, we're probably going to end up about in the middle of the range that we said, 10% to 13%, but that doesn't mean that it's 10% to 13% for Q4 because, again, that higher range reflects the increase from the first quarter.

Thank you for that. And obviously, people are starting to think about '24 right now. So Bernard, at our conference you talked about targeting double-digit annual revenue growth. Does that apply to 2024? And Scott, you know, '23 guidance implies margins are down year-over-year because of investments and currency. What are some of the puts and takes in the P&L that we should be thinking about? And any help on FX would be appreciated? Thank you.

Thank you, Larry. Let me take you to the first part of your question here. So for 2024 guidance, you will get all of the details here in December at our investor event. And your question is about my confidence and our confidence as a company. Yes, we are confident. As I said during the script, I think we have an amazing opportunity in front of us with so many patients. All of our businesses are in solid positions and global leadership positions. So I am confident for the years to come for 2024; more to come in December, Larry.

And Larry, it's Scott. For the second part of your question about FX, we'll talk about more of the specifics at the investor conference. But if you take our exchange rate environment right now and apply it to 2024, it would be a headwind to sales and also a headwind to EPS. So we'll be able to quantify that more specifically, and we'll see what happens to FX rates between now and then as well.

Thank you, guys.

Our next question comes from Vijay Kumar with Evercore ISI. Please state your question.

Hey guys. Thanks for taking my question. Bernard, maybe a first one for you on this TAVR five-year data that was presented. A lot of noise in the Street on the lines crossing for Edwards and your peer, the lines widening between TAVR and Control. Does that worry you at all just from Edwards' perspective when you look at the data? And I think you also mentioned recognized definition for durability. Is that something that your peer also used the same definition or are there some differences here in how durability was defined in these two trials?

Thank you, Vijay. Let me start high level. I believe last night's investor event was very insightful with Dr. Leon and Dr. Mark. They went very deep into the data and the meaning of the data and the trial design. At the end of the day, for me, I like to keep it very simple: 90% survival at five years. That's amazing for patients; that's in my mind, what we should remember, but I'm going to ask Larry to comment with greater detail here.

Yeah. Thanks, Bernard. This whole thing about the curves continuing to diverge just isn't really accurate. I think we had a little bit of a catch-up. But if you notice from the New England Journal of Medicine manuscript, we were impacted somewhat by the patients that withdrew on the surgical side disproportionately. When we did the phone sweep, the absolute difference that we're showing at five years is about 1%. When you go into the causes of death, you look at cardiovascular mortality, they're about the same. We had double the rate of cancer. We had three times as much COVID death in the TAVR group as we had in the surgical group. I think higher rates of sepsis were adjudicated to be not TAVR related. I don't think anybody is suggesting that TAVR causes cancer or COVID. When you get into the depths of the data, we feel great about the data. What's amazing about this data set is that both groups performed incredibly well. Given the prominence of Edwards' surgical valves and then obviously our TAVR cohort, we're looking at both groups that have over 90% survival at five years. The other thing that people have been worried about with TAVR was durability. You're right, we did use the bark definitions for durability, which remember isn't what surgery historically uses. Surgery historically uses freedom from explant due to structural valve deterioration, not echo-derived criteria. Part of what drives the New England Journal of Medicine publication is we used all the contemporary standards, all the contemporary things. I don't want to comment on other people's data. You can ask them about their data and what methodologies they use. But I'm very comfortable we applied the highest academic standard STAAR study. We feel great about the data. I think there's just a little bit of an oddity here that people are discussing that somehow TAVR has to be better than surgery. If we have two procedures, TAVR and surgery, and we can go to patients and say your results are identical at five years, then that's going to automatically default people to the less invasive therapy. We need to continue to follow these patients. We need to follow them all the way up to 10 years. For a pretty significant interim look at the data at five years, I don't think we could be any happier about the data than we are.

And in addition, Vijay, if you think about what we have been seeing all along about the underdiagnosis and undertreatment of this patient. Now you look at this PARTNER 3 five years, we hope that our referring network of cardiologists will send more patients because they have options, safe options, effective options. So we feel good about all of this.

Yeah. I mean, I'll just add that this was a great day, a great meeting for the field in general. If you have patients on the sidelines, who say 'I just don't want to have open-heart surgery; I'm too scared of open-heart surgery,' but they're being told, 'TAVR doesn't really have any data behind it, and it's still early.' If you look at both datasets that were presented, there is absolutely no durability signal at five years or four years, depending on which study you're looking at. I think that's to just give the referral community tremendous confidence that they can present patients for this procedure and they're going to get a durable outcome.

That's helpful, guys. And Bernard, just one more for you. There were some headlines on the investigation in Europe. Any financial implications here? It looks a little odd. And I know it's a silly question, but I have to ask. Is there any GLP-1 exposure to TAVR or TAVR patients related to GLP-1s?

No, thanks. In Europe, no, there is no financial exposure. We had a brief statement on that. So no expectation here. With regards to GLP-1 exposure to TAVR, we don't think so. We have not seen any evidence that losing weight has any impact on aortic stenosis disease. We don't know that; we don't see that. We have not seen any evidence. So we don't see any possible implication here. Larry, anything to add?

No, I totally agree. I think as it relates to just general things, obviously, people losing weight is a good thing, but we've never seen anything related to even coronary disease. A lot of these things are genetically derived and genetically driven, and I don't think your weight is going to be the determinant of those things. So I don't really see any impact of this.

Understood. Thanks, guys.

Our next question comes from Joshua Jennings with TD Cowen. Please state your question.

Hi. Good afternoon. Thanks for taking the questions. I wanted to ask first on the tricuspid repair and replacement segment, and just get your views on patient-reported outcomes driving approvals and then potentially reimbursement decisions, positive reimbursement decisions. Are patient-reported outcomes or quality of life improvements enough to clear those two hurdles?

So let me start, and then I'm sure Daveen can add his thoughts. It is a good start. We have seen TRILUMINATE so far, correct? And we believe TRILUMINATE was a good study, good outcome for patients, safe with great quality of life improvement for its patients, who have a miserable life. We need to remember that. With EVOQUE, we are going to talk about it tomorrow. So it's tough for me to talk about it today. We might talk about it more at the end of the day tomorrow at our investor conference. But at the end of the day, quality of life improvements are important. A solid safety profile is also important. We see that as a great start for this patient who have no other options today. Daveen, you want to add anything?

Yeah. I mean, I think we continue to see out of our European experience where we do have PASCAL tricuspid approved, that we can see these great outcomes where the technology is really making a difference in patients' lives. It's taking patients that ultimately can't do the things they want to do in their day to day. They feel really down. They have trouble breathing, and it really just helps them live the life that they want to lead. So for us to see now in this randomized trial that's been presented with TRILUMINATE, to see high-quality data where that you can treat tricuspid regurgitation in a randomized trial, get safe results, and have significant TEER reduction with meaningful quality of life, wow, I mean that's just fantastic for patients. It's something we love. Ultimately, the community and the regulators are going to keep looking at the benefit and risk trade-off to make the decisions that they need to make. But we continue to be super excited by what these therapies are doing for tricuspid patients.

What we like about where we are today is, in the past few years, it was only about TEER; it was only about repair. Physicians didn't have a lot of options. What we are doing is now progressing with our vision to be able to offer to physicians a toolbox. So they can decide what therapy for which patient, for what anatomy. That's a great progress compared to where we were a few years ago, and even in a few months ago. So a great progress here, and I see more to come.

No. Thanks for that. Just one follow-up on just the U.S. sales strategy and having two separate teams for TAVR and for the TMTT franchise. Just wanted to hear about how that's going. And I guess the concern is, are you missing any cross-selling synergies that you could potentially garner from the TAVR sales reps and their deep relationships with some of these interventional cardiologists? Thanks for taking the question.

Thank you. So how about I ask Larry, who's leading that every day to comment on this?

Yeah. It’s funny when we launched TAVR in the U.S., if you remember, half of our procedures were transapical. People were asking, why are you developing this whole new sales organization? You can get a lot of synergy. But it's really all about providing that high-touch model and that level of expertise. We built out a completely separate sales force for THV, and I don't think there's a day we looked back on that and think that was a bad decision. I think we feel that it was the right decision for the therapy. Mitral patients are different than aortic patients. If you ask your clinical specialists and your salespeople to try to be experts in 10 therapies, they're going to be generalists and all of them, not experts. One of the reasons we've had the success we've had in TAVR is that our average field clinical specialists supports about 1,200 cases a year. You bring that level of expertise to every case, and we really drive differentiated outcomes for patients, which is what we think has driven the therapy and our leadership. We like that model a lot; we think it's been hugely successful. Just because our teams sit in different organizations doesn't mean they don't talk. Daveen and I talk a lot. I have surgical structural heart now, but I talk to Wayne, our General Manager, all the time. We look for where there are opportunities for us to work together. But at the same time, we want to make sure we have focus on these new therapies, and we bring the highest level of expertise possible to drive the best outcomes for our patients possible because we believe that's what's going to drive long-term success of our franchises.

I'll add one thing on that. This is Daveen. Even here at TCT, as I talk to physicians, the one thing I consistently hear from physicians is they so appreciate our comprehensive high-touch model. They love that their Edwards person is so deep in the mitral tricuspid space, and that's all they breathe, live and really think about. They can offer the best possible advice to the physician, the best possible collaboration to ensure the best possible patient result. I just love seeing that this week as I talk to physicians.

That's helpful. Thanks so much.

Our next question comes from Travis Steed with Bank of America. Please state your question.

Hey. Thanks for taking the question. Maybe just to clarify one clarification: when I add your Q4 guide of $0.60 to $0.66, I'm getting to a full year of $2.47 to $2.53, which is different from your full year guidance. So I don't know if there was a restatement or just wondering maybe my math is off, just wanted to clarify that if you don't mind.

So your math is spot-on. At the midpoint of the range that's exactly what it implies. Take the midpoint; it ends up at the lower end of that $2.50 to $2.60 range, but still within the range.

Okay. Got it. And then the comment on U.S. and OUS growth rates being comparable. Is that referring to constant currency reported? It looks like OUS is a little bit lighter this quarter, and just wanted to make sure I understood everything going on OUS and some of the Japan comments and what's going on in Japan.

All the growth rates we've talked about were underlying constant currency growth rates.

Okay. That's fair. And then my last question was on 2024. I know you're not going to talk a lot about 2024, but curious if you think you can still hold share steady with new competition coming in or if you think it's fair to assume something less than the market growth rates in 2024.

Yeah. It's Scott, let's hold off on that question about share and the environment, new product introductions, and all kind of stuff. There's a lot that we expect to happen in 2024. We'll look forward to getting into all of those details and forecasts when we get together at our investor conference in December.

Okay. Great. Thanks a lot.

Our next question comes from Joanne Wuensch with Citibank. Please state your question.

Good afternoon, and thank you for taking the questions. Two of them. I know you don't want to talk about 2024, but last year, you did a great job of helping to understand the impact of FX on gross margins. And it sounds like you're going to have that FX headwind next year. Can you sort of level set us for how to think about gross margins next year?

Yeah, I hate to do this to you, Joanne. But again, we're going to have to hold off until we get to December. Really, all we can say right now is that we think we're going to see some pressure on the top line reported sales dollars, which won't impact our underlying growth rates. The reported sales dollars headwind is going to flow right down to earnings per share. Now again, that's not current foreign exchange rate. So when we get to December and we lay out our full-year guidance for 2024, we will go through all the lines of the P&L and take you through all the details. But at this point we really can't tell you more.

Okay. My follow-up question, which is completely unrelated, is you had another quarter of double-digit surgical valve revenue. I'm curious what's helping to drive that and how much of it is maybe an upcharge from RESILIA versus underlying demand? Thank you.

Yes. So let me start here. So 11%, obviously, we are very pleased. I don't know if you remember, but a few years ago, nobody believed in surgical, and we believe in surgical because we have been a pioneer here. We have been a great innovator, and our innovation is paying off. What we see in Q3 again, like in 2023, we see a balanced combination between the adoption of our RESILIA platform, premium pricing, and also the procedural growth. So altogether, but it is very balanced between procedural growth and our premium technology.

Yeah, I'll just add. It's, we'll try to bring this to life a little bit at the investor conference. I almost feel like when we have a good surgical quarter that you guys get mad at us because you think it comes at the expense of TAVR. As the guy that runs both business units, that gets really frustrating after a while, and my new GM is really mad about it. But what you have to understand is our surgical business isn't 100% aortic stenosis. Our surgical business treats aortic; we treat mitral. Even in the aortic space, we don't just treat aortic stenosis; we treat aortic regurgitation. We have products like KONECT, 'where we're treating aortic aneurysm disease. We have repair products, replacement products. There's just a lot more that goes into that business than aortic stenosis. So, thinking that it's a zero-sum game between the two businesses just isn't the right way to think about it.

Thank you. Our next question comes from Matt Miksic with Barclays. Please state your question.

Hey, thanks for taking the questions. Could you provide some insight into how the different types of centers in the U.S. have been performing? You mentioned that staffing is stable. Can you share which large or small centers contributed to growth and in what ways? I have a follow-up question as well.

Yeah, maybe I'm going to ask Larry to comment on that.

We review this every quarter, and among ourselves, we analyze the growth rates by segment and come up with reasons for the variations. During COVID, we noticed that when cases increased, people tended to stay closer to home, leading to stronger growth in our smaller centers, while larger centers experienced slower growth. As COVID decreased, larger centers started to see higher growth again. This quarter, we observed slightly more growth in the larger centers compared to the smaller ones. However, I believe the differences are becoming less significant as we return to a more normal growth pattern across different center sizes.

That's helpful. Thank you for that. And then just one follow-up on just maybe a segment of the market that's got to be getting bigger, I guess, at this point. Looking forward being the only valve on the market with a valve-in-valve indication. How big is that now and how important is that? We talk a little bit about the expanding indications into not asymptomatic and moderate AS patients over the intermediate long-term. But does valve-in-valve become a factor that you can talk more about or maybe help us understand how that factors into your growth or the general growth in the market at this point?

Yeah. I think valve-in-valve isn't a huge part of our offering right now. It's not a big driver for us. We do TAVR and SAVR, so TAVR in failed biological surgical valves. As TAVR came online, we saw more and more biological valve usage in younger patients because they knew they would have this TAVR option down the road. We think that's going to be a factor as these patients live longer; obviously, our surgical valves are very durable. But that was a whole basis for INSPIRIS: creating a valve that would be a great platform for their TAVR procedure down the road, and that's the whole basis for it, and we think that will pay dividends later. As we just got the low-risk approval, it's still fairly new for us. It's not something that's been around forever. But the more and more patients that are younger getting TAVR, eventually those patients will come back and need a second procedure. For us, having a tab and tab option just feeds directly into our lifetime management strategy, which is putting in a first valve and ensuring you have a strategy for that next intervention. That's true whether it's in INSPIRIS as your first valve or whether it's a SAPIEN 3; we want to make sure we have an option for that patient when they come back. That's what's great about both our surgical and TAVR platforms; they're both a great host for that future valves. We do think that as you advance down the road, tab and tab will become a bigger contributor to our growth over time.

Thanks so much.

Our next question comes from Danielle Antalffy with UBS. Please state your question.

Good afternoon, everyone. Thank you for taking my question. I would like to follow up on the five-year data we reviewed yesterday. Larry, is there any insight we can glean from that data that would enhance our confidence in the upcoming asymptomatic data readout, or is it too challenging to draw any conclusions from yesterday's information regarding that trial?

Yeah. I appreciate everybody's trying to get an early read on early TAVR. I don't think there's anything that's really coming from this data, and I haven't even broken apart the early TAVR data. I think the just broadly speaking, the fact that we show excellent durability out at five years with no durability signal whatsoever, should the asymptomatic trial be successful, which we obviously hope it is, if that trial is successful, it just takes one more burden away from people saying, do I want to treat people earlier in the disease state. I think the more durability data we can put on the board will help make that if that trial is successful and we do get the indication, that will be one barrier that's removed. So I think, the long-term data continuing to build on the durability and safety and long-term results of the platform is going to be important. It's going to be important long-term for the progress trial If you're going to treat people with moderate disease down the road, you need to make sure you have a durable platform and that it has options down the road for these patients. So I think it all is complementary, but I don't think anything about this trial informs the early TAVR results.

Okay. Got it. And then just a quick question on. Bernard, you mentioned there's still a lot of these patients untreated out there. I mean, as far as Edwards' progress on getting those patients off the couch into their physician's office diagnosed and referred for TAVR. I mean, where are we in that process? You guys spent a lot of time at the Analyst Day last December. I imagine we'll get an update in December in a few weeks here. But just curious what you can say about, are you seeing any real traction in some of the direct-to-consumer campaigns, things like that. Thanks so much.

Well, thanks for the question. We see that this initiative as super important to us. We have the right platform, the right science, and how can we get more patients. We have done a lot of initiatives, a lot of pilots in the last, I want to say, three to four years. We have learned a lot. This year, we scaled some of the initiatives. So we are going to talk more about it in December. Larry and his team are going to talk about it. But we feel like we have some interesting learnings, and we believe that we are starting to see some impact also. So we feel excited about the potential of that. It is why, when we see, we believe the future is even more exciting. It is because of this reason. In addition, obviously, asymptomatic and moderate indication will add to all of this. But Larry, do you want to add anything?

Sure. One thing that people may overlook is that we haven't just recently started our patient activation initiatives. We established a website with educational resources for patients, including how to locate a TAVR center, questionnaires, and patient information kits. We've been actively engaged in these efforts for several years, which I believe has contributed to the growth and development of the market. Our digital and patient activation strategies continue to yield benefits today. As we delve deeper into the patient population, the challenges increase, requiring more activation efforts. It's not a quick switch; it's a continuous journey where we build upon past programs with new initiatives to encourage patient activation. We have multiple work streams, and we’re excited to share more details at the investor conference about what we’re developing. We have several pilots underway and a range of well-established programs that we believe are very beneficial.

Thank you. And our next question comes from Pito Chickering with Deutsche Bank. Please state your question.

Hey. Good afternoon, guys. Pre-script, you mentioned that the TAVR market share is stable. If you look at competitive accounts with hospitals or doctors that use both SAPIEN and CoreValve? Are you seeing any market changes in those accounts where RESILIA is competing against FX?

Yeah. I think market share has been pretty stable. I don't think we've seen big shifts or changes. We're very excited about RESILIA, and I think it does give people increased confidence in going into younger lower-risk patients. So, we feel good about that, but maybe we can try to update that a little bit more at the investor conference, but again, I think overall, I think share has been generally pretty stable.

Okay. Great. And then a quick follow-up for TAVR, I think you said procedure growth was the same as revenue growth. Was there any benefit from positive pricing from RESILIA? I thought that would help to drive revenue growth above the volume growth? Thanks so much.

There was a little benefit; it wasn't the big driver of our growth.

Great. Thank you. And ladies and gentlemen, that's all the time we have for questions today. I'll hand the floor back to management for closing remarks.

Thank you. So let me close this meeting by saying, I am pleased with our performance in 2023. Beyond the numbers, I am excited with the progress we have made, reinforcing our TAVR leadership position with new clinical evidence, and expanding our mitral and tricuspid patient reach with new approved technologies. As a result, we are confident in our long-term strategy to help even more patients around the world. Thanks for your continued trust in Edwards. The IR team, Scott, and I welcome any additional questions, any additional questions by phone. Thank you.

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