Greetings, and welcome to the Edwards Lifesciences Fourth 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, Investor Relations and Treasurer. Thank you. You may begin.

Thank you very much, Diego, and good afternoon, everyone. Thank you all for joining us. 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 will be Larry Wood, our Group President of TAVR and Surgical Structural Heart; Daveen Chopra, our Global Leader of TMTT; Wayne Markowitz, our Global Leader of Surgical Structural Heart; and Katie Szyman, our Global Leader of Critical Care. Just after the close of regular trading, Edwards Lifesciences released fourth quarter 2023 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 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 product 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 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. Bernard?

Thank you, Mark, and welcome, everyone. At our recent Investor Conference, I introduced our vision for a new era of structural heart innovation to address significant patient needs. Today, I will elaborate on that theme and share highlights of our strong performance in 2023, as well as our outlook for 2024. We are pleased with our robust financial results for 2023, with total sales increasing by 12% to $6 billion, reflecting strong growth across all four product categories. We invested over $1 billion in research and development and achieved key strategic milestones, including the introduction of new technologies and expansion of indications to ensure sustainable growth. We ended the year with positive momentum, achieving 13% growth in Q4 and 12% growth in TAVR, driven by our diverse portfolio of innovative therapies. In 2024, we are well-positioned to embark on a new era of structural heart innovation. We are solidifying our leadership in TAVR, with strong demand for our SAPIEN 3 Ultra RESILIA and continued enrollment in our ALLIANCE pivotal trial for our next-generation TAVR technology, SAPIEN X4. In January, we reached significant milestones with the completion of enrollment in PROGRESS, a pivotal trial for treating moderate aortic stenosis patients, a group estimated to be twice as large as those with severe aortic stenosis. This randomized trial enrolled approximately 750 patients two years ahead of schedule. At TCT later this year, we plan to present data from EARLY TAVR, a pivotal trial assessing the treatment of severe aortic stenosis patients without symptoms. We believe these initiatives position us well for sustained TAVR growth going forward. In TMTT, we accomplished key milestones with ongoing PASCAL global expansion and the introduction of EVOQUE in Europe. EVOQUE recently received NUB Reimbursement Status 1 in Germany, an important development for therapy adoption. I am also excited to announce that EVOQUE became the first transcatheter therapy approved by the US FDA for treating tricuspid regurgitation patients. This marks a significant advancement for US patients, providing access to a treatment that can improve quality of life while demonstrating favorable trends in mortality, reintervention, and hospitalizations due to heart failure. With the introduction of EVOQUE, we now offer a unique and extensive portfolio of solutions for mitral and tricuspid patients. The completion of enrollment in the pivotal trial for SAPIEN M3 further strengthens our portfolio. I am confident we are at a critical juncture, being the only company with a commercially available portfolio of catheter-based technologies aimed at treating millions of patients with mitral and tricuspid disease. In addition to the progress in TAVR and TMTT, we are excited about our innovative RESILIA tissue, developed by our surgical business. We aim to treat half a million patients with RESILIA-based heart valves by the end of 2024, backed by seven years of clinical data. The planned spin-off of Critical Care is proceeding as expected and will allow us to focus more on structural heart initiatives. This will enhance Edwards' organic sales growth rate in 2025 and increase our agility, pace of innovation, and capacity to serve a growing patient population. With our exclusive focus on structural heart disease, we are positioned to achieve sustainable growth and maintain our leadership. Now, I will provide further details by product group. In TAVR, our total 2023 global sales reached $3.9 billion, a 10.6% year-over-year increase. Our sales growth in the US and internationally was aligned. In Q4, our global TAVR sales were $979 million, up 12% year-over-year, spurred by double-digit growth in the US, Europe, and Japan. Our competitive position remained stable globally, with local selling prices also stable. In the US, we are encouraged by the ongoing expansion and adoption of the SAPIEN 3 Ultra RESILIA platform. This technology builds upon Edwards' long-standing leadership in tissue technology by integrating advancements in tissue science with the leading SAPIEN 3 Ultra RESILIA valve. Creating safe and durable heart valves requires substantial long-term commitment, and we take pride in our 65-year legacy of valve innovation, supported by over 2,000 engineers and R&D specialists across the company. We remain committed to maintaining our leadership in structural heart and will continue to invest vigorously in these platforms. Additionally, our patient activation initiatives, along with next-gen TAVR and growing evidence on asymptomatic and moderate AS patients, position us for robust, sustainable TAVR growth in the future. Internationally, our Q4 growth mirrored our global TAVR growth, fueled by Europe and Japan. We foresee great long-term growth opportunities as the international adoption rate for TAVR therapy remains low in many areas. In Europe, Edwards' sales growth was propelled by widespread adoption of our SAPIEN platform, with growth in Q4 notably strong across all major countries. Looking forward, we are optimistic about the CE Mark approval for SAPIEN 3 Ultra RESILIA and are planning a diligent launch. Our growth in Japan has been encouraging, and we have outpaced overall procedural growth expectations. Having treated over 1 million patients globally with SAPIEN valves after more than 20 years of rigorous clinical experience, our TAVR platform is well-positioned for ongoing global leadership and sustainable growth. Given the low treatment rates, we are confident in TAVR's future, driven by increased awareness, patient activation, a platform offering comprehensive management for AS patients, technology advancements like RESILIA, and expansion of indications and global adoption. Now, turning to TMTT. In 2023, we remained focused on key drivers to unlock significant long-term opportunities for patients, including a portfolio of differentiated therapies, positive clinical trial outcomes supporting approvals and adoption, and favorable real-world clinical results. Our clinical trials and real-world learnings have allowed us to develop a strategic portfolio of leading transcatheter technologies for both repair and replacement solutions for mitral and tricuspid patients. The PASCAL Precision, EVOQUE, and SAPIEN M3 will offer best-in-class therapies for a wide range of patients. Full year global sales were $198 million, reflecting a 67% increase from the previous year. TMTT's Q4 sales reached $56 million, a 71% year-over-year increase, driven by the rapid adoption of our PASCAL Precision platform and the activation of additional centers in the US and Europe. We are encouraged by the ongoing double-digit growth in overall transcatheter edge-to-edge repair procedures, highlighting significant unmet patient needs. We continue to expand the global reach of PASCAL Precision into new countries, including Japan, where we have successfully completed our initial cases. Since launch, we proudly treated over 20,000 patients worldwide with the PASCAL repair system. For mitral replacement, we have received FDA approval for the SAPIEN 3 continued access program, with physicians continuing to treat patients using this innovative therapy. In tricuspid replacement, we have initiated the launch of EVOQUE in Europe, focused on achieving excellent outcomes and eliminating tricuspid regurgitation in patients. In the US, following recent early FDA approval, we are beginning to introduce this new therapy and laying the groundwork for long-term growth. Similar to our TAVR approach, we are prioritizing best-in-class physician training, generating further evidence, and achieving excellent patient outcomes. We appreciate the strong ongoing collaboration with clinicians worldwide in providing treatment options for patients suffering from tricuspid valve disease. Regarding tricuspid repair, the CLASP II TR pivotal trial with PASCAL is progressing well and is on track to complete enrollment by the end of the year. To summarize TMTT, we are at a pivotal moment with the only portfolio of approved catheter-based mitral and tricuspid technologies. We remain dedicated to delivering our differentiated therapy to patients facing this life-threatening condition and believe our strategy is well-positioned for leadership. In our surgical product segment, total global sales for the year reached $999 million, a 13% increase compared to the prior year. Q4 global sales were $248 million, up 10%. Growth was driven by strong global adoption of Edwards' premium RESILIA technology and overall procedural volumes. We are optimistic about the future of our tissue technology and its role in enhancing patient management over time. We continue to see positive momentum in our innovations globally, particularly for patients best suited for surgical treatment, including those requiring complex and adjunct procedures. We are working to expand the body of RESILIA evidence, including ongoing patient enrollment in our MOMENTIS clinical study. In the fourth quarter, we received CE Mark approval for our MITRIS RESILIA valve and have begun launching it in several European countries, receiving favorable feedback from physicians. Finally, in Critical Care, total global sales for the year were $928 million, reflecting a 10% increase from the previous year. Fourth quarter Critical Care sales reached $250 million, an 11% increase. Growth was attributed to all product lines, especially HemoSphere and Smart Recovery, with strong adoption of our Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm. Our Critical Care strategy focuses on growth through Smart Recovery and Smart Expansion, aimed at helping clinicians make informed decisions and enabling patients to return home to their families more quickly. Now, I will turn the call over to Scott.

Okay. Thanks a lot, Bernard. So today, I'll provide a wrap-up of 2023, including detailed results of our fourth quarter as well as provide guidance for the first quarter and full year 2024. As Bernard mentioned, we were pleased with our better-than-expected Q4 sales performance with strength across all product groups. We achieved total sales of $1.53 billion, which represents 13% year-over-year growth. We achieved adjusted earnings per share of $0.64. Our GAAP earnings per share of $0.61 included one-time expenses associated with our planned spin-off of Critical Care. A full reconciliation between our GAAP and adjusted EPS for this and other items is included with today's release. We are maintaining all of our previous sales guidance ranges for 2024, with the exception of TMTT. Absent big moves in foreign exchange, we expect total company sales of $6.3 billion to $6.6 billion; TAVR sales of $4.0 billion to $4.3 billion; Surgical Structural Heart sales of $1.0 billion to $1.1 billion; and Critical Care sales of $900 million to $1 billion. Given the early FDA approval for EVOQUE, we now expect full year TMTT sales to be at the higher end of our previous $280 million to $320 million guidance range. For the first quarter, we're projecting sales of $1.53 billion to $1.61 billion, and adjusted earnings per share of $0.62 to $0.66. And now, I'll cover the additional details from our P&L. For the fourth quarter, our adjusted gross profit margin was 76.8% compared to 81% in the same period last year. This expected year-over-year reduction was driven by impacts from foreign exchange. Last year, Edwards' gross profit margin was lifted by a significant impact from FX. We continue to expect our full year 2024 adjusted gross profit margin to be between 76% and 78%, driven by high-value technologies that yield strong gross profit margins. Selling, general and administrative expenses in the quarter were $480 million or 31.3% of sales compared to $411 million in the prior year. This increase was driven by investments in transcatheter field-based personnel in support of our growth strategy and patient activation initiatives. We continue to expect full year 2024 SG&A as a percent of sales to be 29% to 30% as we invest in field-based personnel and patient activation initiatives and increase our focus on efficient G&A leverage. Research and development expenses in the fourth quarter grew 16% over the prior year to $270 million or 17.6% 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 2024, we continue to expect research and development to be 17% to 18% of sales as we invest in developing new technologies and generating evidence to support TAVR and TMTT growth with the goal of treating even more patients. During the fourth quarter, we incurred approximately $17 million of one-time costs associated with our previously announced spin-off of Critical Care. Additional one-time costs will be incurred throughout 2024 prior to the expected separation at year-end. Turning to taxes. Our reported tax rate this quarter was 12.3%, or 13.4% excluding the impact of special items. For the full year 2023, our reported tax rate was 12.4% or 15.0% excluding the impact of special items. Our lower-than-expected non-GAAP rate in the fourth quarter benefited primarily from US tax credits on foreign remittances and income tax. We continue to expect our 2024 tax rate, excluding special items, to be between 14% and 17%. Foreign exchange rates decreased fourth quarter reported sales growth by 80 basis points or $9 million compared to the prior year. FX rates negatively impacted our fourth quarter gross profit margin by 320 basis points compared to the prior year. Relative to our October guidance, FX rates had a nominal impact on fourth quarter earnings per share. Free cash flow for the fourth quarter was $48 million, defined as cash flow from operating activities of $136 million less capital spending of $88 million. Adjusted free cash flow for the full year 2023 was $943 million, defined as cash flow from operating activities of $896 million less capital spending of $253 million. Adjusted free cash flow excludes the $300 million payment related to the Medtronic intellectual property agreement. We continue to expect full year 2024 adjusted free cash flow will grow to be between $1.1 billion and $1.4 billion. 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 strong and flexible balance sheet with approximately $1.6 billion in cash, cash equivalents and short-term investments as of December 31, 2023. During the fourth quarter, we repurchased 6.0 million shares through an accelerated repurchase agreement and a pre-established 10b5-1 plan. As a result, average diluted shares outstanding during the quarter declined to 607 million. We continue to expect average diluted shares outstanding for 2024 to be between 600 million and 610 million. We have approximately $1 billion remaining under our current share repurchase authorization. And with that, back to you, Bernard.

Thank you, Scott. In conclusion, we are proud of the significant progress we made in 2023, advancing new breakthrough therapies for patients and delivering solid financial performance and healthy profitability. We are even more excited about 2024. This year, we anticipate launching groundbreaking technologies and advancing multiple important clinical trials. These breakthroughs, along with significant unmet patient needs, give us confidence in our ability to accelerate growth in 2025 and beyond. In TAVR, we will continue to drive global adoption of SAPIEN 3 Ultra RESILIA, present pivotal trial data from EARLY TAVR, studying asymptomatic AS patients, and enroll in ALLIANCE, a pivotal trial studying the next-generation SAPIEN X4. We also look forward to a number of key developments in TMTT, including the US and European introduction of EVOQUE, the expanded global adoption of PASCAL Precision, CLASP II TR enrollment completion, and SAPIEN M3 approval in Europe by the end of 2025. And in Surgical and Critical Care, we remain committed to healthy growth and expanded leadership. In closing, longer term for Edwards, we are confident in our plan to expand the structural heart opportunity, which reflects our sharpened focus on valvular and non-valvular patients and our commitment to innovation. We believe that executing our strategy will create value for all of our stakeholders. With that, back to you, Mark.

Thank you very much, Bernard. With that, we're ready to take everyone's questions. As a reminder, please limit the number of questions to one plus one follow-up to allow for broad participation. If you have additional questions, please re-enter the queue and management will answer as many participants as possible during the remainder of the call. Diego?

Thank you. Our first question comes from Larry Biegelsen with Wells Fargo. Please state your question.

Good afternoon. Thanks for taking the question, and congratulations on the early approval of EVOQUE in the US. I feel like I need to start there. So, I'd love to hear you guys talk about your commercialization plan for EVOQUE. Are you ready to launch now? Should we expect a price premium? And talk about the reimbursement pathway? Should we expect you to file an NCD? And I had one follow-up.

Thank you, Larry. I hope you are doing well. Let me start and then I will ask Daveen to add some context here. So, first, the way we are thinking about this one is like we did in TAVR, we want to make sure that we are going to introduce this very novel therapy, having in mind, building the foundation for long-term expansion. So, we're going to be focusing on physician training, generating more evidence, and excellent patient outcomes, making sure we have coverage, payment, and reimbursement established in the US and in Europe. So, we are taking a long-term view, the same way we did in TAVR over the last 20 years. But again, Daveen, I'm sure you want to share some of your plan.

No, definitely. Thanks, Bernard. I'll start by saying, of course, we are very excited by this approval coming through the FDA breakthrough pathway. This innovation is obviously the first transcatheter technology in the US to change the lives of many patients suffering from tricuspid regurgitation. As we look at our rollout model, as Bernard said, we are really planning a controlled rollout of this technology, focused on great clinical outcomes. And we're really going to start with those centers that were in a clinical trial, and then over time, we will grow it to new centers. We're going to have a dedicated team of clinical case support who has been training on the over 1,000 EVOQUE cases that have now been completed to date. And this team will continue to scale as we move forward. Specifically, regarding your question about the NCD and the timing, obviously EVOQUE is a parallel review technology. So, CMS is working on the national coverage process on their own, and we are continuing to work with them to provide information to help support their process. So, as we all hear more about that, you will definitely be informed.

Super helpful.

Thank you, Daveen. So, as you can see, Larry, we have a long-term view on this one. We want to shape the space in a way that we like, in a way that everybody is going to be very proud of, as we did for TAVR.

That's helpful. And Daveen, just one follow-up for you. What are your thoughts on the likelihood of seeing a statistically significant mortality benefit at one year or 18 months when the full TRISCEND II data is presented at TCT? And how important is that for adoption and reimbursement? Thanks.

Well, I think right now, as we've talked about, we've obviously shown very favorable trends in all-cause mortality, heart failure hospitalizations, and tricuspid regurgitation. And those were some of the key trends that'll help us lead to our approval. Obviously, our full data set will come at TCT in the fall with one-year follow-up, and it's hard to speculate on what that data will show.

Our next question comes from Robbie Marcus with JPMorgan. Please state your question.

Great. Thanks for taking the questions, and congrats on a very nice data. Maybe just to follow up on that. We've seen just TMTT, in general, whether it's mitral or tricuspid maybe ramp over the past few years a little slower than expected. Obviously, COVID really disrupted that upward trajectory. Maybe just speak to some of the bottlenecks that you see in the system, especially with tricuspid replacement, it's a totally new therapy. There will be some education, I imagine. But maybe just speak to what you see as the bottlenecks and what Edwards can do to help ramp adoption in a pretty sick patient population?

Thank you, Robbie. So let me start on your earlier comment about being slower than expected in the past years. Then, Daveen can talk about the bottleneck in the system. So, if you think about it, since the beginning, six years ago, when we put together this vision, we studied this patient population, mitral and tricuspid, and we knew that they were very complex and diverse. We also knew from the beginning that one device, one therapy, or a repair technology only will not be sufficient. Repair technology, and we are very pleased about PASCAL, but can only treat a small proportion of patients. So, it is why we have this vision of having a portfolio. Right now, we have this portfolio on the tricuspid side, and we are on track to get also a mitral replacement. What we will see altogether is an acceleration. Clinicians will be able to treat more patients. The dynamic in the next 10 years is going to be very different than the dynamic in the last 10 years. But again, Daveen...

Yeah, I'll make a couple of quick comments. First, we're really excited because we see that the replacement technology really has the potential to treat a large number of patients. Because especially in tricuspid regurgitation, no one patient is alike. There's really huge heterogeneity and replacement will really be at the core of treating the largest number of patients. We see other technologies like TEER as well as other modalities that are still in trials potentially to add new patient groups on top of that. We've seen in Europe where tricuspid as a therapy has been approved longer, centers are starting to continue to build up and grow the tricuspid practice. As you bring in technology to market, you start seeing the awareness of the disease grow, more referrals, and you see more patients getting to the heart team. Some of that becomes from how we image people correctly and how we refer them correctly at centers. And we can see exactly what happens with the new therapy of tricuspid in the US. We'll be able to start building up diagnosis referrals to heart teams. Also, we see an opportunity, as Larry talked about in the investor conference, in the TAVR group. We're doing so much with patient activation, and we see that all those learnings from patient activations in the future will be able to be leveraged over to the TMTT space, both for mitral and tricuspid to continue to grow the market.

Great. I appreciate that. Maybe one on the TAVR market. We have the exciting data from EARLY TAVR coming later this year at TCT. How do you think about what that does to the TAVR market growth going forward? You put up double-digit growth in the fourth quarter. Does that guidance include double-digit growth over the next few years for the most part? How do you think about what's coming from low, intermediate, and high risk and severe? And then, how do you think about what asymptomatic adds? Is that just what helps keep you at double digits, or can that help accelerate growth? Thanks.

Yeah. Thanks. This is Larry. That's a great question. I think the first thing is we're just going to learn a lot from this trial. There's a lot of unknown questions out there in terms of what percentage of patients are truly asymptomatic when subjected to a stress test, how fast do people progress, and what happens to people while they're waiting. The biggest thing about it is, as we've talked about, and I spent a lot of time at the investor conference, the time from a patient to get diagnosed or treated is just really long. A lot of that is the interpretation of the guidelines and the overlay of symptoms. It's all really standing in the gears preventing the patients from moving through. Unfortunately, given the deadliness of the disease, many people never actually make it to therapy. I think with the EARLY TAVR trial, assuming it's successful, it will just streamline that process where we can apply guideline criteria to aortic stenosis and it won't require this additional evaluation of symptoms, and people can just move through. Remember, only about 13% of patients right now with severe aortic stenosis actually get treated. So, there's a huge under-treatment right now. We think asymptomatic just adds to that.

In addition, Robbie, what I like is our commitment to — after 20 years of TAVR, we are still highly committed to bring big evidence. Look at these two trials, PROGRESS and EARLY TAVR. This is a potential, for sure, to learn more, but also to expand indication to change the guidelines. As a leader in the space, we are committed. In the next 10 years, we are going to see very exciting things happening in TAVR.

Yeah, I think that's right. It’s a return to the earlier days in TAVR, where I think we're planning on having a steady cadence of new trials, new data, and new evidence that continues to not only raise awareness about the therapy but also open up new opportunities for patients to get treated that don't currently get treated today.

Appreciate it. Thank you.

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

Hey, thanks for taking the question. Maybe talking about EVOQUE over a multiyear period, just curious how you think that market develops compared to the mitral market, if you think that goes faster or slower? And when you think about the data that we have so far, it seems like replacement is doing better than clipping. So, I don't know if you think about the mechanism of action why replacement would be better than clipping and kind of where you see a place for clipping in the market in tricuspid?

Go ahead?

Yeah. So, I guess I'll start off with the latter part of your question about the technology. As I mentioned, we see that in replacement, you're able to really eliminate tricuspid regurgitation. We see an awesome opportunity to help patients and really improve their quality of life. We see replacement as having broad applicability, really treating a large chunk of tricuspid regurgitation patients. But there are still many patients where replacement may not make sense for anatomical or other reasons where clasping technology or other modalities may make sense. Back to your first question about how the market develops related to mitral, we see continued strength in this. We think the mitral market had some early strength, but slowed down during COVID. We think that the tricuspid market will continue to grow at a very strong rate, potentially exceeding mitral, especially with the two modalities entering the market in a very similar time, now you have an opportunity to treat a larger proportion of patients.

Helpful. And a follow-up, curious on the SMART trial. If the data there is good? If you think there's an impact on the market? And then also, there was news last week, when the last competitor comes to the market in 2024. Does that change your view on 2025? I'm just curious what kind of competition you had baked into your long-term guidance. Thanks a lot.

Sure. With regard to the market trial, I think we'll have to wait and see the trial, and we don't know what it's going to show. The key thing is how physicians select TAVR valves for their patients. It's really a multi-factorial decision. You have to look at mortality rates, stroke, future interventions, all those things, and hemodynamics is certainly one consideration, but I don't think it's even a driving consideration compared to some of the other factors that are probably higher on the hierarchy for patients. In terms of the competitive space, we didn't have a lot in 2024 because it was expected the approval was going to come late. It takes time to ramp a new therapy, and we'll have to see what the impact on 2025 is and what the revised approval timing is. There is no real value in me speculating on that.

In addition, as the new CEO, I'd like to reflect a little bit on where we are as a company. When I think about making heart valves, it is not easy. Given the nature of patient needs, this is not luck. We are committed and focused for more than 60 years, bringing experience and deep knowledge. In the past few years, we've seen many platforms and companies come in and leave the market after a year, two, or three. We are leading the space with a significant long-term commitment, more than 2,000 engineers, and R&D specialists. We are proud of our uninterrupted leadership in the space, and we will continue investing. We take all competitors seriously, but we're very confident about our leadership, technologies, and evidence.

Great. And congrats again on the EVOQUE approval.

Thank you. Our next question comes from Patrick Wood with Morgan Stanley. Please state your question.

Amazing. Thank you for taking the questions. I guess maybe for the first one on TAVR in Japan, in general, do you think you've been taking back some share post-trialing? It sounded like you feel very good about the market, and you have taken back some share on that side. Just any color you could give there would be great.

Sure. I think what happens when new technology comes into Japan, due to the certification process, it certainly had an impact for us. In Q4, we grew faster than the market. I think that relates to some of the trialing ending, and people moving back to our platform. This is something that goes on, but we're very pleased with how we grew in Japan in Q4 and continue to look forward to that market growing because it's a much lower penetrated market than places like the US and Europe. So, we continue to see that as a long-term growth driver for us.

That's very helpful. And then just quickly as a follow-up, I get this might be difficult to comment on, but the faster-than-expected approval of EVOQUE, what were your discussions with the FDA? What do you think they placed a great weight on in getting comfortable with it going to market faster than expected? Do you think there was one area of data or sense of the products? Because that's obviously not been the experience for everyone? So just curious to get any thoughts there.

Yeah. No, sure. This is Daveen again. I'll kind of jump in this one. Obviously, we received an approval through this FDA breakthrough pathway. This was a really innovative pathway where the basis of approval was the breakthrough cohort of the 150 patients we presented at TCT. At the same time, as we were working with the FDA and answering their questions, we presented and gave them data from our larger cohort and other descriptive statistics. As we mentioned, it's that larger cohort where the results really showed favorable trends in all-cause mortality, heart failure hospitalizations, and tricuspid reinterventions. It was these trends that I think we believe probably led the FDA to say that we didn't need an advisory panel that resulted in our approval. We are excited that the full cohort of data, the full one-year cohort on the 400 patients will be presented at TCT, so we can see all the data, not just the breakthrough cohort and the initial data. For us, as we launch this therapy, we're going to continue to have strong evidence. We'll continue to conduct trials and gather data that show how great this therapy can be for patients. So I'm really excited for that long-term opportunity and what it means for helping patients.

Looking forward to it. Thanks again for taking the questions.

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

Hi, guys. Thanks for taking my question, and congratulations on a nice print here. Maybe on the last question on EVOQUE, Daveen, you made some comments here about the totality of data. But I'm curious when you think about the market development, is there a bar? Like, do we need to see a statistically significant mortality benefit? There's a reason this valve was called the forgotten valve. I'm curious what wakes up physicians to take this valve seriously, maybe compare and contrast how this adoption curve could look like versus, I don't know if TAVR is a good example, but I would love your comments.

Yeah. No, I'll start off a little bit first on the totality of data. Now with EVOQUE, we've implanted and tracked data in clinical trials on over 1,000 patients in various studies. We've consistently seen that these patients are patients who don't have an option. There are patients looking for options who don't feel great and can't do the things they want to each day, and the EVOQUE technology makes a huge difference in their lives. This concept of quality of life really does matter for patients, allowing them to pick up their grandkids, walk up stairs. It truly matters. I'm not trying to discount that these other statistics matter, right? Mortality, heart failure hospitalization; those are very important as well. But we've shown in the breakthrough cohort that we have this amazing quality of life improvement. And that's why our indications focus on improvement in health status. We've got favorable trends in the other data points, all cohorts mortality, heart failure hospitalization, tricuspid intervention. We will continue gathering data on patients and larger patient populations to demonstrate how EVOQUE can really assist patients. I think it's that kind of data, along with careful physician training, controlled rollout, and excellent outcomes, that will significantly contribute to market creation and development. It’s hard for me to speculate how this compares with the technologies like TAVR, same question about mitral, but I'm excited for what it can do. I believe there's plenty of opportunity to grow this market.

Yeah. Thank you, Daveen. Well said. We are very excited. Consider TAVR, after 20 years, we are still generating evidence and innovating with Ultra RESILIA X4. We still believe TAVR can grow double digits for many years to come globally. Therefore, with TMTT EVOQUE, we are thinking the same way. It's not just the next five years, we're envisioning 10 or 20 years here.

Just to add to that, having spent so much time in the TAVR space while dealing with regulators and payers, there's a strong focus on mortality. People get really focused on it, almost singularly. But spending time with the patient groups, I find, living longer but poorly is not a value to them. If you told them there was the same life expectancy but their quality of life would dramatically improve, that's far more valuable to them. When you can get that quality of life improvement and see the mortality benefit, that’s where you really have the home run therapy, as we’ve seen with TAVR. That's what we're aiming to build on. The quality of life benefits are truly significant for patients.

Understood. That's helpful. And maybe, Scott, one quick one for you on this Q1 EPS guide. I think at the midpoint, it's slightly below Street. I'm curious what's driving that. Is that a step up in OpEx? Or is that a gross margin or below-the-line sort of issue that's impacting Q1 EPS?

Yeah. It's a couple of things, but largely it relates to just the lumpiness of SG&A and R&D and in what period we record those expenses. Q1, the increase in OpEx will outpace revenue according to our current forecast. That's the reason we end up with the midpoint of the range around $0.64 level, similar to the EPS from the fourth quarter. But overall, it's important to remember that for the full year, we expect bottom-line growth to exceed top-line growth once we move beyond the different quarter-to-quarter cadence.

Thanks, guys.

Our next question comes from Matt Taylor with Jefferies. Please state your question.

Hi, thanks for taking the question. I wanted to ask if you thought that the delays that your competitors are having in the US would have any impact on international markets. Does it provide you an opportunity to gain any share? Does it change anything?

We'll have to see what the impact is. Certainly, we've seen cases where US data has impacted international share in international markets. It really depends on what the data is. There has been no data released; all we know is that they are delaying their approval and seeking additional data. I don't know how much people will react to that. The other thing is that there’s more that goes into the purchasing decision, especially in Europe, than just clinical data. The purchasing groups may make decisions based on favorable pricing and significant discounts, so I don't know how much that will be impacted.

Got you. Can I ask one follow-up about the activation of patients? I know you're doing a lot in that area. Are you implementing anything new and different, or is it more of the same? I just noticed the mentions during this call.

I think we continue to do a lot of new things. We're running a number of programs. One of the things I discussed at the investor conference is there's a lot of skepticism regarding whether all those patients really exist considering the under-treatment rates. We've examined enough major health systems where we've applied AI to echo reports. We can definitively say the patients are there. They're just not moving through the system for various reasons. The first thing you have to do is validate. The second thing is to help people understand what to do about it. You also need to move them through the process and into treatment. We have multiple initiatives to drive those patients forward, but we are evolving these programs continually to optimize them, activate patients off the sidelines, and keep them moving through the system efficiently.

Thanks a lot, Larry.

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

Hi, thanks so much for taking the question. So, I had one on EVOQUE and one follow-up on margins, if I could. So, not to put too fine a point on it, but moving from the middle of your TMTT range to the high end is like $10 million to $20 million. If we think about EVOQUE coming about five or six months early, does that tell us what we need to know about your expectations for the run rate this year, knowing what we know now, I guess, in EVOQUE as we just get started in the US? And then I have one follow-up.

No, Matt. Thanks so much for the question. It's Daveen again. Sure, let's first examine the timing. We initially suggested midyear, which has a couple of months' window. So this definitely came a couple of months earlier than we expected. And so, based on what we know now, we continue to be confident in what we think EVOQUE can do. We need to monitor adoption as we move through centers and conduct training to determine how fast the rate develops, but that help us bring this up slightly. I think there are other factors like new technology add-on payments that are helpful for hospitals to ensure that they remain profitable and perform well come online. Those dates don't really change based on early or late approval. We'll continue reviewing over the course of the year how it grows and will provide updates as needed.

That's great. And then the follow-up regarding margins in light of the activities you're getting into the field. You added personnel in the fourth quarter, which contributed to the increase in spending there. Just wondering, first, does that affect Q4? Can you discuss the benefits you're seeing from those investments? Secondly, are you continuing these investments? Or, to your earlier point, Scott, about leveraging those investments, are you done now and shifting to achieving leverage against that additional spending?

Yeah. Thanks for the question, Matt. We're just getting started in building out our field force both for EVOQUE and as we continue to expand the presence of our overall TMTT portfolio. This signifies the beginning of an investment in establishing a team in the field, not the end. You should anticipate continued growth in resources and investment in the field team. By the way, that's not limited just to TMTT. TAVR continues to grow aggressively, and we're investing more resources to support that growth. We are examining general and administrative expenses globally. As Edwards expands its overall global footprint, it offers us an opportunity to gain leverage from scale. We'll persist in observing that closely to maintain efficiency on the P&L.

Okay. And then in the TAVR sector, did you see any results from these field activations and patient activation efforts in Q4? Or is that something still to come? Thanks.

Yeah. Matt, I think we saw some benefit from patient activation initiatives that we have in place. It's tough to isolate those from the other efforts we are undertaking to support TAVR growth. Still, that certainly contributed to growth in Q4 and beyond.

Just adding to this, I mean, I think it would be incorrect to say our patient activation efforts just started paying dividends now. We've been doing patient activation over the last, I don't know, five or six years through our digital campaigns via websites, patient resources, and general cardiology awareness events. A number of those activities have driven this. What we're discussing now is a more sophisticated approach and program to tap into these untreated patients. We know the diagnosed patients are in the system but are not being treated. Therefore, it is about getting them through the system in an efficient manner.

What’s fair to say, though, is in the past few years, we have conducted numerous pilots and initiatives. We have acquired many learnings. What we are doing now is scaling up. We are dedicating spending and resources in Q4 last year, this year, and the next few years. You will observe more and more because we believe many patients in need are still not receiving treatment.

Super helpful. Thank you.

Thank you. And our final question for today comes from Chris Pasquale with Nephron Research. Please state your question.

Thanks. I think I heard you mention patient activation, not just with regard to TAVR, but also as an important part of the EVOQUE rollout. I was encouraged to hear from a lot of physicians back at TCT that they're actually seeing many more of these tricuspid patients in their practice. So, as you consider the initial launch here, do you expect to do a lot of work establishing referral channels? Or do you think there are already a large number of these patients identified and waiting for treatment?

Yeah. Hey, Chris. This is Daveen. I appreciate it. I think at least my reference to patient activation and how we think about TMTT is more about the midterm perspective. We believe there's much learning from TAVR; yes, we're doing some tasks now and testing small projects, but it’s really about scaling patient activation to follow the growth trajectory that TAVR has experienced. There are undoubtedly patients in the centers. If you observe our trial enrollment, especially the TRISCEND II trial, it enrolled really well and very quickly. We are aware there are groups of patients looking for treatment options. However, as we expand over time, we'll continue to build capabilities that allow us to assist patient activation clearly.

That's helpful. Thanks. And a lot of focus, I think, rightly so on the new US products. But you've got a couple in Europe, SAPIEN 3 Ultra RESILIA and MITRIS RESILIA both rolling out there. Are the price premiums for those products in Europe the same as what we see in the US? And do you think you can get similar adoption in what is a more price-sensitive market? Thanks.

Yeah. I'll start, and if Wayne has anything to add, he can. The price premiums are different in the various markets because it all depends on the starting price. So, we went for larger premiums in Europe than what we did in the US. In a more price-sensitive market, that becomes more challenging. We've observed more rapid adoption of our RESILIA-based therapies in the US. Nevertheless, we see this trend growing in Europe. Our RESILIA platforms show strong growth, and we're witnessing remarkable expansion in emerging markets. Many of those markets are identifying patients who are best treated surgically using the RESILIA portfolio. This has been a global initiative with strong growth in emerging markets, even with premium technology, which is encouraging.

Great. Thanks.

Thank you. And our final question for today comes from Danielle Antalffy with UBS. Please state your question.

Great. Thanks so much, guys. Thanks for taking the question. Larry, just a quick question for you on the PROGRESS trial in moderate aortic stenosis. I mean, I know this isn’t the first time we’re hearing about the speed of enrollment in that trial that it’s certainly a positive signal. So my question for you is, is there anything to interpret regarding the potential opportunity there based on the speed of enrollment? Was there something unique about that trial that allowed us to enroll so much faster than you expected, and what could this mean for potential approval and, more broadly, once we see this data uplift across the market?

Yeah. Thanks, Danielle. Clinical trial enrollment is always an important marker for opportunity. Rapid enrollment does speak to that opportunity. It also indicates enthusiasm and excitement about addressing the disease in a fundamentally different way without waiting for patients to reach an end stage before intervening. I think that can provide two benefits: If we demonstrate that treating moderate patients shows considerable advantages, it could accelerate the treatment of severe patients that aren’t currently moving. We saw this when we transitioned from high-risk approvals to intermediate risk approvals. The increase in treatment rates was significant. The moderate clinical trial has twice as many patients compared to severe patients. Therefore, over the long term, it presents a consistent growth opportunity.

So, in closing, I am very proud of what we achieved last year. 2023 was a great year with strong performance across our four product groups globally. In 2024, I’m super excited. We will introduce multiple breakthrough technologies and advance significant clinical trials. This creates an opportunity similar to what we did in TAVR 20 years ago to shape the TMTT space with EVOQUE, providing physicians with tools to treat many patients. This is a unique opportunity we take very seriously. The speed of critical care execution will be prioritized in 2024 as well. I am very confident that this year will be tremendously exciting, and we are well-positioned to accelerate growth in 2025 and beyond. Thanks for your continued interest in Edwards. Scott, Mark, and I welcome any additional questions by telephone. Thank you, everyone.

Thank you. This concludes today's conference. All parties may now disconnect.