Greetings and welcome to Edwards Life Sciences fourth quarter 2025 results conference call at this time all participants are in a listen-only mode a question-and-answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star zero on your telephone keypad please note that this conference is being recorded I will now Now turn the conference over to your host, Jerriann Sarte. Thank you. You may begin.

Good afternoon, and thank you for joining us. This is Jerriann Sarte. I am the incoming Senior Vice President of Investor Relations. With me on today's call is our CEO, Bernard Zavigian, and our CFO, Scott Ullam. Also joining us for the Q&A portion of the call will be Dan Lippis, our global leader of TAVR, and Vivean Chopra, who has global responsibility for TMTT, Surgical, and IHFM. Just after the close of regular trading, Edwards Life Sciences released fourth quarter and full year 2025 financial results. During today's call, management will discuss the 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 speak only as of the date on which they are 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 from those expressed or implied by the forward-looking statements. Factors that could cause these differences can be found in today's press release 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 financial results press release issued earlier today. Reconciliations between GAAP and non-GAAP numbers mentioned during this call are also included in today's press release. Quarterly and full-year growth rates refer to continuing operations. With that, I'll turn the call over to Bernard for his comments.

Thank you, Gerian, and welcome, everyone. I am pleased to introduce Gerian Sarte as our new head of investor relations at Edwards. Gerian has an extensive background in MedTech and as a leader in a global finance organization prior to moving to this new position. You will be seeing and hearing from her going forward, and I know she looks forward to getting to know you. Now let me turn to discussing Q4 and 2025 results. We delivered a strong quarter growing at 11.6% and a strong full year 2025 growing at 10.7%. This is the result of our differentiated strategy with a clear vision around three key elements, focusing solely on structural heart, solving large, urgent, and very complex patient needs, and pursuing unique opportunities to innovate and lead. This is only possible due to our deeply experienced teams, their excellent execution, and their commitment to patients worldwide. With our achievement in 2025, we are entering 2026 with strength and momentum globally, with many growth catalysts in each area across the company. Starting with TAVR, there is a renewed focus on SAPIEN across the healthcare ecosystem, led by the 7-year Parler 3 and the 10-year Parler 2 data, which confirm the long-term durability and proven valve performance of the SAPIEN platform. This data, presented last October at TCT, reinforced the confidence physicians and patients have in Edwards TAVR and set a new clinical benchmark for safety, efficacy, durability, and lifetime management of patients. In addition, the practice-changing early TAVR trial is resonating with the clinical community, starting with the guideline changes in Europe. Together, all of these will have a lasting impact on the continued expansion of a SAPIEN platform globally. Continuing with TMTT, growth is fueled by a comprehensive portfolio of repair and replacement therapies and strengthened by new options for patients. These include the launch of second M3, the scaling of Evoque, the upcoming introduction of next-gen Pascal in Q4 this year, and the introduction of Pascal for U.S. tri-tested patients, also in Q4. Together, these are significant advancements for mitral and tracuspid patients and represent large opportunities to achieve our $2 billion revenue expectation for TMTT in 2030. Overall, for Edwards in 2026, we have increased confidence in meeting our 8-10% sales growth guidance as well as in our EPS guidance. We are looking forward to an updated national coverage determination for TAVR, which may present a potential tailwind later this year, recognizing that our impressive results in 2025 have set a higher bar for 2026, especially in the second half. Long-term, we are well-positioned to execute a compelling growth strategy, and specifically over the next three years, we will be pioneering new therapies, launching next generation of existing technologies, as well as expanding indication to impact more patients. Our talented team of 16,000 employees create, develop, and enable treatment of patients globally with a highly differentiated and complete portfolio of therapies to address aortic, pulmonic, mitral, and tricuspid valve diseases. We take very seriously the responsibility of investing in the development of safe and effective valve therapies with proven long-term durability. Valve technology requires dedicated focus and generation of world-class clinical evidence that will continue to differentiate edwards. I am confident that our technology will remain the first choice of clinicians to transform the care of their patients. Leveraging our experience, we are extending into structural heart failure and aortic regurgitation, or AR, for the many patients who are not well served today. This will create additional growth opportunities and extend our structural heart leadership. In 2027 and beyond, we continue to expect average annual sales growth of 10% with constant currency operating margin expansion as we continue to address patients in need by advancing novel therapies to extend life, improve quality of life, and provide greater impact and efficiency for health systems. Now, I will provide an overview of Q4 sales performance by product group. Taver's overall procedural growth in the quarter remained in the high single digit. And for Edwards, Taver's fourth quarter global sales of $1.16 billion increased 10.6% over the prior year, and slightly sequentially over a high Q3, which was inconsistent with typical summer seasonality. The Q4 performance reflected clinicians' elevated focus on sapient therapy and proactive disease management of patients suffering from severe aortic stenosis. Edwards-Taver procedural growth was comparable across the U.S. and O.U.S., and our average price and competitive position were stable on a global basis. While Early Taver studied TVRAS patients without symptoms, we are encouraged by the impact this study has had on increasing the sense of urgency for the treatment of patients who have symptoms. The timely referral, evaluation, and treatment of patients with severe aortic stenosis is fueled by a large and growing body of evidence on the long-term outcomes of sapient valves. Our position as the only TAVR therapy with an asymptomatic indication will provide additional benefits along with the potential of an updated TAVR NCD and U.S. and Japan guideline evolution. These additive catalysts provide multiple layers of durable growth. In addition to the long-term data presented at TCT, more than 30 distinguished physician thought leaders published the first-ever AS Global Consensus document. This validates the movement away from the outdated practice of watchful waiting and further supports the importance of guideline-band management of severe AS patients. Let me turn to some U.S. commentaries. We saw intentional and urgent treatment of severe aortic stenosis patients, fueled by a large and growing body of world-class evidence on the SAPIEN platform and the increased adoption of SAPIEN-free ultra-resilia. We are pleased that CMS formally opened the process to reconsider the NCD for Tiber. This decision has the potential to improve timely and equitable access to life-saving TAVR therapy. The initial 30-day public comment period closed on January 14, and we look forward to the process continuing. In Q4, we expanded our partnership with the American Heart Association as the founding sponsor of the Heart Valve Initiative. This new initiative is focused on timely diagnosis and treatment to save lives and improve care for millions living with heart valve disease. It is a multi-year program to elevate heart valve disease as a critical focus area for hospital systems through adherence to specific quality metric-based care, expanded data collection, enhanced healthcare professional education, and patient engagement. In Europe, fourth-quarter results reflected healthy underlying TAVR procedure growth, as well as our consistent execution across the region. Updated guidelines from the European Society of Cardiology and the European Association for Cardiothoracic Surgery are reshaping clinical discussions around proactive disease management and reinforcing the role of TAVR for a broader patient population. We also continue to see modest year-over-year share improvement in several key countries, strengthening our leadership position in the wake of a competitor's exit. In summary for TAVR, we are pleased with our strong Q4 results and full year 2025 performance. Tapian Growth globally was supported by rising clinical urgency for intentional proactive disease management and long-term evidence demonstrating the proven durability and valve performance of Sapien-Free. As we look ahead, we are well positioned to continue the momentum and remain focused on driving our patient access strategy, generating additional clinical evidence, and delivering on our innovation pipeline to address the growing patient needs across the world. These strengths reinforce our confidence in Edward Staver as a durable growth engine and a meaningful contributor to long-term value creation. Now let's turn to our TMTT product group. Our comprehensive portfolio of repair and replacement therapies offers meaningful opportunities to physicians to best treat their mitral and frequency patients. This drove another strong quarter, with TMTT growing over 40% to $156 million. We were also pleased that for the full year, TMTT sales exceeded $1.5 billion. Continued global adoption of Pascal and Evoke contributed to overall growth. Physicians continue to provide positive feedback on Pascal's differentiated benefits for treatment of their patients who need transcatheter edge-to-edge repair. With Evoque, we are expanding the number of centers and training more physicians while focusing on excellent patient outcomes. The recent FDA approval of Sapien M3 expands our mitral portfolio in the U.S. and represents the first trans-catheter replacement option suffering from mitral disease. Similar to our other therapy launches, the strategic introduction of CPNM3 is leveraging our proven high-value support model and focusing on outstanding clinical outcomes. We are initially opening sites that were previously in our in-circle pivotal clinical trial, And physician interest in this technology is growing. With Pascal and Evoque growing globally, and now with the introduction of CPNM3 in the U.S. and Europe, Edwards continues to deliver on our vision of offering a portfolio of therapies to treat more mitral and trespassive patients. Overall, PASCAL adoption, globally, is delivering differentiated outcomes for patients. The introduction of next-gen PASCAL in Q4 will further distinguish this important therapy for patients who need edge-to-edge repair. The upcoming U.S. approval of PASCAL for tric acid patients will provide an enhanced therapy alternative. And the scaling of Evoque and launch of CPNM3 will further advance treatment for tricuspid and mitral patients. These represent multi-layer growth opportunities starting in 2026 and contributing to achieving $2 billion revenue in 2030 and additional growth beyond. Finally, this year, we continue to expect sales in the range of $740 million to $780 million. In our surgical product group, fourth quarter global sales of $254 million increased 2% over the prior year. The underlying fundamentals of our surgical product group remained strong, while growth in Q4 was impacted by end-of-year distributor inventory adjustments in one country. All-year surgical sales grew 4.3%, and for the first time exceeded $1 billion. We continue to expect mid-single-digit sales growth rate in surgical in 2026, driven by continued adoption of our Resilia therapies that offer extended durability of our surgical therapies, including Inspiris, Connect, and Mitris. We were encouraged by new data presented at the recent STS meeting, including strong one-year data from the Momentis study. Momentis is studying long-term durability for the Edwards mitral systems for surgical mitral valve replacement. A one-year result from the study demonstrated 100% freedom from SVD, impressive stable hemodynamic performance, and excellent safety. This specifically designed surgical valve customized for mitral patient will advance and improve care. We are also pursuing multiple new innovations to advance surgical solutions for patients, including left atrial appendage closure, or LAAC. This is a new therapeutic area that is a complementary solution to specific valvular procedures, and we are planning on a preliminary introduction of our new surgical LAAC technology later this year. In summary, we still expect to deliver our mid-single-digit sales growth rate guidance in 2026. And finally, we are looking forward to seeing 10-year data from our comments trial at the AATS conference in May, studying long-term durability of our best-in-class Resilia Tissue. And now, Scott will cover the details of the company's financial performance.

Thanks, Bernard. Today, I will provide a wrap-up of 2025, including detailed results of our fourth quarter and guidance for the first quarter and full year 2026. We were pleased with our better-than-expected Q4 sales performance with strength across all product groups. Total sales of $1.57 billion grew 11.6% year-over-year. Our adjusted earnings per share was $0.58. This lower-than-expected EPS was driven by higher spending on patient access initiatives at a higher-than-expected tax rate. It is important It's important to note that we have increased confidence in our 2026 Earnings Per Share Guidance of $2.90 to $3.05. Our GAAP EPS for the quarter was $0.11, which included one-time charges related to the GennaValve acquisition that did not close, as well as litigation expenses. A full reconciliation between our GAAP and adjusted EPS for this and other items is included with today's release. And now, I'll cover additional details of our P&L. For the fourth quarter, our adjusted gross profit margin was 78.3 percent, in line with our expectations, compared to 79.0 percent in the same period last year. This expected year-over-year change was driven by additional manufacturing expenses related to the fast expansion of new therapies. We continue to expect our full-year 2026 adjusted gross profit margin to be within our original guidance range of 78% to 79%. Selling general and administrative expense in the quarter was $603 million, or 38% of sales, compared to 35% of sales in the prior year. We increased SG&A spending in the fourth quarter to fund strategic investments in order to amplify patient access to therapy, such as early TAVR education, investment in field resources, and the AHA Heart Valve Initiative. Some of this strategic spending was delayed from previous quarters in the year. Research and development expense was $268 million in the fourth quarter, or 17.1% of sales, compared to $271 million, or 19.6% of sales in the same period last year. This decrease in R&D as a percentage of sales reflects our strategic prioritization of investments in our expanding structural heart portfolio. We continue to expect 2026 R&D as a percentage of sales to be approximately 17%. Fourth quarter adjusted operating profit margin of 23.7% was aligned with our previous guidance of mid-20%. Our full year 2025 adjusted operating profit margin of 27% was within our original expectations for the year. For 2026, we expect approximately 150 basis points, constant currency operating margin expansion, which includes less spending related to removing Kenna Valve from our operating plans for the year. We continue to plan for 50 to 100 basis points of operating margin expansion annually, on average, in 2027 and beyond. We continue to plan to deliver leveraged earnings per share. Turning to taxes, our reported tax rate this quarter was 29%, or 17.9% excluding the impact of special items, which was above our expectation for the quarter driven by Pillar 2 impact and country income mix. We continue to expect our 2026 tax rate, excluding special items, to be between 16 and 19%. Turning to the balance sheet, we continue to maintain a strong and flexible balance sheet with approximately $3 billion in cash and cash equivalents as of December 31st. Edwards currently has approximately $2 billion remaining under its share or purchase authorization. Average diluted shares outstanding during the quarter were $582 million. We continue to expect average diluted shares outstanding for 2026 to be between $580 to $585 million. Foreign exchange rates increased fourth quarter reported sales growth by 170 basis points, or $20 million, compared to the prior year. FX rates had minimal impact on our fourth quarter gross profit margin compared to the prior year. Relative to our October guidance, FX rates had a nominal impact on fourth quarter earnings per share. At current rates, we now expect FX to have an approximately $40 million upside to full-year 2026 sales compared to the prior year. I'll finish with comments related to our outlook. We have increased confidence in meeting our 2026 full-year sales growth rate guidance of 8% to 10% and earnings per share guidance of $2.90 to $3.05. The product group sales guidance we provided at Investor Conference remains unchanged. For the first quarter, we're projecting sales of $1.55 to $1.63 billion. We expect slightly higher growth rates in the first half of 2026, following unusual summer seasonality that benefited 2025. We are expecting adjusted EPS in Q1 of $0.70 to $0.76, representing mid-teens growth at the midpoint of that range. And with that, I'll pass it back to Bernard.

Thank you, Scott. But in closing, we finished 2025 strong and achieved many lasting catalysts. We have increased confidence in our top-line and bottom-line guidance for 2026. Our strategy of focusing on structural heart is demonstrating impactful results for the company and the patients we serve, and is positioning us for long-term sustainable growth and value creation. With that, I will turn it back over to GIM.

Thank you, Bernard. We're ready to take your 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.

Thank you. And to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Robbie Marcus with J.P. Morgan. Please state your question.

Oh, great. Congrats on a good quarter. Thanks for taking the questions. Two for me. First, maybe just on TAVR, 10.6 percent, another very strong quarter. I would have to imagine you're taking some share, even excluding the Boston Scientific exit. So maybe just speak to the strength you're seeing, the confidence in it and any regional differences. And just one thing if you can talk to volumes versus sales I imagine the Delta's price

but had some questions on that thank you know Robbie good afternoon everyone yes you know one is you know we are very pleased about the quarter overall in the year for Edwards with regards to tether very pleased about the quarter like you said you know going 10.6 year over year and what we see is three the result of of our strategy here where last year we brought you a very compelling evidence early taver powder three seven years powder to ten years and all of these gave confidence all of these also enable a renewed focus on you know taver as a category and specifically you know the sapien platform so this is creating a physician to talk more about taver to talk more about sapien you know this is enabling in a physician to treat their patient a little bit early which is also you know enabling providers to prioritize TAVR so it is all of that together but I'm going to ask you Daniel to give you more you know

specific details about the quarter yeah thanks Bernard and Robbie you're spot on right like the overall procedural growth rate in the quarter was in the high single digit and so there is a gap and you're absolutely on the money as far as share gain and pricing contributing to that gap. Largely on the share perspective I mean the share gain that we had from the Boston Scientific Exit contributed a big chunk of that. We're pleased to see the stickiness of that share gain from quarter three to quarter four. We took our piece of that, but most of the competitors in Europe also benefited from Boston's exit. I would say that we benefited about in line with our competitive position in the market. But if you look at globally, like overall, our competitive position remains relatively stable, I would say. I mean, you know, for sure we're not weaker in in Q4 than we were in Q3. But another piece of this is F3UR penetration, right? And we continue to see very strong adoption of this outstanding platform, a lot of positive feedback from physicians. And so this is also contributing, like you mentioned, a little bit on the price side.

Great, maybe, Scott, just if you could talk to the increased spend on market access You highlighted in fourth quarter, step up in SG&A was roughly 100 million, which is pretty substantial. So maybe just dig into that, where did the spending go? And how should we think about that rolling into, do we think of that as a one-time cost?

Yeah, thanks, Robbie. Appreciate the question. You know, we had planned a step up in the fourth quarter spending, and we decided to be aggressive in light of the reception we were getting to the things Bernard mentioned earlier, the asymptomatic trial, the seven-year results, the 10-year results. And so we intentionally upped the spending in the fourth quarter, $112 million year over We were still in operating margin terms in the area that we had expected for the fourth So we had said mid-20%, and that was sort of in the range of where we came in. And we invested more aggressively in patient access, so asymptomatic amplification. Bernard mentioned the American Heart Association partnership. We've also been reinforcing our field force in THV and also in TMTT. Some of the spending was delayed from earlier quarters in 2025. So, you know, following this elevated level of spending in Q4, we are planning a more moderated operating expense growth and SG&A expense growth in 2026, which is how we get to the operating margin guidance of the high end of our original 28 to 29%. The other benefit in that margin increase or margin expansion is the exclusion of the original spending that we had planned for Genovalve. Maybe, Dan, you want to talk a little bit more

about some of these initiatives? Yeah, I think like a couple of big ones here, right? So with the change in the European guidelines, this is the biggest shift that we've seen in over 10 years, and it's a real important shift from watchful waiting to intentional and urgent treatment of severe aortic stenosis earlier in the in the disease pathway this is a this is a big shift it involves change management and change of behavior particularly at the referral level and so we see an opportunity here to bend the curve of adoption of these guideline changes and so we have a number of significant and amplification programs that we have started and started to implement in Europe. This is a big one. Second one, as Scott and Bernard mentioned, our partnership with the AHA. This is an important one. And this is a multi-year partnership. And it's designed to do the same thing, democratize and educate on the importance of treating earlier in the disease pathway for aortic stenosis. And so this is all designed to improve diagnosis and treatment of severe AS through guideline-based care, through extended data collection, but also heavy on education. And so these are two big ones. We also invested further in some of the sort of short-range pilot stage marketing programs to improve treatment rates and patient and referrer education in the United States. And like Scott said, we're very much a high-touch clinical field force, and with volumes increasing, we need to get ahead of those resources in the field. They take time. They take time to train and get people certified. So we got ahead a little bit of that, but also a big chunk we got behind early in the year, and a lot of that caught up with us in Q4. So they're the big items.

Thank you. And your next question comes from Travis Steed with Bank of America. Please go ahead.

Hey, everybody. Congrats. Just wanted to maybe focus on for travel and total company growth, anything to kind of call it for cadence over the year and wasn't clear on an organic basis what Q1 was to me since I didn't have the FX impact in Q1 and any comments on kind of like the January trends that you've seen so far to give you confidence in the guide.

then had a follow-up. Yeah, thanks, Travis. Yeah, so I mentioned that we expect about $40 million of tailwind from FX to sales, and this has changed since our investor conference. A lot of that falls in the first quarter, and so we're expecting Q1 sales growth on a reported basis to be about 300 basis points higher than the underlying growth that we are expecting in Q1. Now, remember the first half growth rates in Q in 2026 should be higher than the second half growth rates and maybe Dan will ask you to talk a little bit more about that.

Yeah thanks Scott and hi Travis. Yeah it's true the growth rate in our guidance moves down a little bit over the course of this year as previously we guided that the front half will be stronger than the back half in 26 and this is because we have much tougher much higher year-over-year comps in the second half we also applied classical seasonality and other assumptions to the to the year that weren't the case in 2025 that makes it a little bit more of a challenge but the q4 results that we had in 2025 give us increased confidence in our six to eight guidance and this is really important on top of that we have these meaningful tailwinds and catalysts later in the year that give us confidence in the mid to high single digit beyond 2026 got it and another

a follow-up on the Tavern CD. You called it a potential tailwind later this year. Just wanted to kind of think about how you're seeing that help growth, more centers, faster patient pathways. And if you read the public comments, they're all mostly positive on expanding the indication, but there's a bit more debate on the care team. So I'm curious if you think how that shapes up in the final and how it might impact the different scenarios you're thinking about.

Yeah, so I'll take this one. I think obviously it's very, very important. The first phase, first of all, it's important that the process was formally reopened. That was really important. That happened right before the end of the year. And the first phase is now over, as Bernard mentioned. So we expect the initial draft around the June timeframe, there will be a second round of public commentary at that point. And then assuming that the normal CMS process follows, the final determination could be in the Q4 timeframe. So if you think about impact for 2026, negligible, but probably important and more relevant in 2027 and beyond. Now the key priority areas for us is to ensure timely and equitable access to care for patients, right? And the big win for patients would be coverage to label and any changes that may reduce procedural complexity or help improve equitable access to care. So that's what we're focused on. But, you know, we need to see what the draft looks like, and we look forward to the process continuing. And like you mentioned, we're also pleased that most of the commentary was positive and largely in line with our thinking.

Thank you. Your next question comes from Larry Beigleton with Wells Fargo. Please state your question.

Good afternoon. Thanks for taking the question. Two for me, I wanted to just ask about the LAA opportunity. How big is that market today? There's a competitor that has a device with sales of, you know, I think over $200 million. How is yours differentiated, and how do you want us to think about, you know, your LAA sales ramp over the next few years? And I had to follow up.

Thanks, Larry. You know, we apply, you know, always, you know, the same filter. When we decide to get into a new space, it is all about, you know, is there a big unmet patient needs? can we have an impact can we bring a differentiated technologies and so we look at this one and we say yes yes and yes so how big it is we don't know where you know very well you know this segment yet but we believe there is some technology out there we believe there is still as a met patient needs and a long term we believe we can have an impact here but I'm going to ask you Devine which is very close to this one, to add some comments.

Thanks, Bernard. Thanks, Larry, for the question. Yeah, obviously, as we mentioned, we're looking to enter the market later this year. And if you look at existing technologies out there, we think there's still unmet patient needs. And that's where we believe, obviously, that we can come out with a technology in this new therapeutic area for Edward Surgical. We can come out with a solution that can really help patient care. And we see this as a complementary solution to our specific valvular procedures that we're already in. So as a result of that, we kind of see kind of, you know, a measured commercial rollout, an opportunity to be a growth driver in the future for Edwards Surgical. That's super helpful.

Bernard, you know, we saw the long list of catalysts in 26 in your press release today, And I think people will notice that you didn't mention moderate AS. So can you talk about why you let that out and how you're thinking about the moderate opportunity today? Thanks for taking the questions.

Thanks, Larry. I'm glad you saw the long list, and indeed it is a very long list. And let me first talk a little bit about why all of these catalysts, and then I will get to your question about moderate. The risk is very long because of our very unique strategy where we invest early, we are very committed, we have a flawless execution. I'm sure you have seen that, the kind of result we have had in 2025 is pretty spectacular. Financially, having all of these catalysts, new technologies, new evidence, lasting evidence, you know, lasting impact, all of them are, you know, basically in play, you know, for this year. With moderate, for sure, you know, moderate is a big category. You know, we know that, you know, the moderate prevalence is bigger than the severe one. We know it is big, but at the same time, we don't know what the study result will be. So we are waiting, you know, to know more about, you know, progress, you know, the progress trial, which will be presented at TCT, to talk more about it. What, you know, the least what you have seen is where we know for sure when it is coming and the type of impact, you know, we are going to have. Progress and moderate, big opportunity. We don't know yet, you know, the study results.

Thank you. Your next question comes from David Roman with Goldman Sachs. Please state your question.

thank you good afternoon everybody I was hoping to go into a little bit more detail on the comments regarding lifetime management for TAVR and maybe more specifically talk about what you think the implications will be to valve and vendor selection balloon expandable versus self-expandable and how that might end up being a contributor incremental market share gains as you think about the TAVR business here in 2026 and beyond

I know that Dan has a lot of passion about this one, so I'm going to let Dan talk about

You're on the right point, David. I mean, look, the evidence, and when I say evidence, I'm talking the early TAVA evidence, the sub-analyses from early TAVA, the evidence that the likes of Philippe Genereau has published now on acute valve syndrome, and then you've got partner three and partner two, long-term data on top of this, all pointing to the fact that, you know, you're going to get a better clinical and economic benefit if you treat earlier in the disease pathway. This is a huge shift, and it changes the conversation between doctor and patient. So if you can imagine a year ago or a little bit more, it might have been something along the lines of let's see if we can eat this out another six months or twelve months or maybe a patient would want to thinking that they're trying to time their treatment and trying to figure out how to make their valve last as long as possible to avoid secondary or tertiary procedures and and this conversation has completely shifted because the evidence says that you know the benefit of doing that is is is not there's no upside to that right there's no upside to waiting anymore and so this brings in to the very important conversation and the concept of lifetime management this is very very important because you got to get the first procedure right to make sure you've got options and the right options for patients for their second procedure whether that be another valve and valve or whether that be coronary artery access you know PCI or what have And so, you know, we think our platform is uniquely positioned both acutely and with lifetime management options, whether that be secondary or tertiary procedures, and I think that's going to be one of the key value propositions that we have not only immediately but in the years to come.

And maybe just a clarification there, so in that scenario, is it reasonable to expect It's just a significant percentage of patients receiving TAVR, either in the asymptomatic or call it the sub-75 population, that creates a unique opportunity for SAPIEN. And maybe just my follow-up, I'd ask you on capital allocation, you've obviously pulled the Genoval deal, did not end up coming to fruition. You brought back a good amount of stock last year, but you've also made some key hires to the business development team. Maybe just talk to us about your latest thinking here on capital allocation.

Yeah, so as far as the, look, whether it be younger patients or whether it be elderly patients, there's a good chance now with modern medicine and the way that this is going that patients will outlive their first valve. I mean, it's, I think lifetime management considerations is not just now for youthful patients. And in fact, more and more we see, we find ourselves in scenarios where certain valve platforms were chosen with the idea that the patient would not outlive that valve and then, you know, finding the options for that patient limited at that time point, which is really disappointing. So this lifetime management thing, getting the first procedure right up front is a big thing. It is a conversation that everybody is focused on in the clinical community. Now as far as strategic allocation, look, we think valve and valve and whether you throw in leaflet modification or other types of things associated with secondary procedures. We think this is going to be very real. It's small now, but it will be growing. It's all about the denominator, right, and the numerator. And so, you know, we're looking at ways as we always do to lead in this space. And that's something that we're looking at very, very closely. The other thing that obviously we do is we look at how we apply our field force here and how we invest in our field force and what kind of value that we bring with our service model as these conversations and these types of procedures evolve in terms of how to get the best outcome for a patient at any given time.

And on capital allocation, David, our priorities have not changed. Our first priority is investing in the business to support our growth, and that comes in the form of making sure we've got sufficient production capacity. And as we've mentioned at the investor conference, we're increasing our production capacity to keep up with the growth in TAVR and TMTT and surgical. It also involves making external investments, and so we've got a number of different activities We've always been active in M&A. As you know, most of the things that we invest in or purchase tend to be smaller in size because we're focused on structural heart. But that's going to be in a continual direction for allocation of capital. And then share repurchase is one of our best ways to return capital to shareholders. And we continued our share repurchase activities in the fourth quarter. We bought back about $40 million, bringing the total repurchase in 2025 to just under $900 million. We still have about $2 billion of authorization remaining. And you should expect that we're going to continue to look for opportunistic times to repurchase more shares.

Thank you. And your next question comes from Joanne Wench with Citibank. Please state your question.

Good afternoon, and thank you so much for taking my question. Could you give us a little bit of the state of the union on how M3 is being taken out in the United States and any or what impacts are going outside the United States? And then if you could just sort of flesh out and give a little bit more color on the guideline changes, that are happening in Europe, and how to think about those impacts for the remainder of the year. Thank you. Hey, thanks, Jerry.

And Stevine, I appreciate the question. Talking a little bit about the SAPI and M3 launch, we're just starting in the U.S., right? We got approval, obviously, right before the end of the year. And it's kind of scaling in line with our expectations here in the U.S. We're just starting to open up centers, really focusing on centers who are in our encircled, pivotal clinical study first. In Europe, we're scaling a line with expectations as well, but it's still pretty early in the process. I think what we like that we're seeing is that we're getting really high procedural success and we're getting really great patient outcomes. I remember I was with a patient just the other week who had previously had mitral valve surgery and then needed an M3 because his surgery had failed. And for him hearing about the difference his life made when he had no other tier or surgical alternatives with mitral regurgitation really hurting his life and how he just got so much better. It just warmed my heart so much to kind of hear that. So because of that, we're seeing this physician excitement because there's a group of patients who don't really have care or have great surgical options for which M3 really becomes a good opportunity. So for us, we're continuing to appropriately kind of scale up, open up new centers, and bring this therapy to new patients. So that's kind of safety in M3. and maybe moving on to kind of European guidelines you want to start with TAVR guidelines or on the European guidelines I already talked about the FMR guidelines a little bit so yeah so on the and the European guidelines with FMR they're now class one for for functional mitral regurgitation for reduction of heart failure hospitalizations so we're seeing I think increased awareness specifically in mitral and tricuspid increased awareness for these two diseases and increased kind of referrals happening with these guideline shifts so We see it as a helping continue that double-digit tier market growth that we've been seeing. And maybe passing on to TAVR for a comment on the guidelines, Dan.

Yeah, Joanne, as you may recall, the guidelines on the TAVR side changed in a meaningful way on two fronts. One is they reduced the age recommendation for TAVR, going from 75 to 70, right? That's one big element of the change. And then the other element was, you know, this whole concept of recommending proactive disease management regardless of symptom or heart function. So this is, you know, basically taking, you know, changing the dogma of watchful waiting in Europe. And so this is a huge shift. Now, that is a, that requires a lot of education. You can imagine we're seeing definitely, we did see healthy procedural growth in Q4 in in Europe and some of the large countries contributed that in a meaningful way. But the way that we look at this is the guidelines won't be a light switch, whether it be in Europe or the US or Japan, but give us an opportunity as those get disseminated, as those get democratized and then put into practice. It's just layers and layers of durable growth for us. And so that's kind of how it's playing out. Not a light switch, but definitely momentum.

Thank you.

Your next question comes from Matt Taylor with Jeffries. Please state your question.

Hi, thanks for taking the question. I wanted to dig into the better performance we've seen in TAVR, especially in the U.S. the last couple quarters, and just ask you what you thought was causing that you're not benefiting from Boston. There really are you gaining share. Can you estimate how much early TAVR has been contributing, or are there other factors? What's really caused the increase in growth in the U.S. in the last couple quarters?

So, yeah, thanks for the question. And I think, you know, without trying to be on repeat here, but this data, this very, very compelling data, not just on the early TAVR and the asymptomatic side, and not just clinical, but also economic data. I mean, I can't stress how important the economic data benefit of the economics treatment of patients and the hospital economics earlier in the disease pathway is having an effect as much as the clinical data. So these two things tied with definitive durability data is creating a wave of confidence in the community to have a different conversation. It is also forcing, if you like, the aortic stenosis patient, the TAVA patient, to be prioritized differently and to be treated with urgency. Typically, you might see a little bit more rearranging of the patient list to bring more sick patients to the front of the list and the more healthier patients towards the back of the list rather than just getting through the list. and this conversation is completely different now and people are focusing on this intentional and urgent treatment of symptomatic AS. So this is regardless of whether the patient is asymptomatic or not, this is the impact that it is having on symptomatic aortic stenosis is what we see largely driving our growth. When we look at the claims data, we don't see asymptomatic patients, you know, coming in in waves through the claims data. And that shouldn't be a surprise because the NCD doesn't cover asymptomatic indications at the moment. So, you know, right now that's not a huge surprise. What we do see though, since the indication in the United States, we do see increase in the number of echoes. We do see increase in the number of referrals. We do see a decrease in time from referral to CT, which is the heart team evaluation And interestingly enough, we do see a relatively sharp increase in stress tests for patients. And nobody typically likes to do stress tests. And so that's also an interesting finding that we see in the data. And so definitively, this is all positive momentum, and it's driving a lot of growth. But as I mentioned before, the other thing that is supporting and contributing to the performance now in Q3 and Q4 is the success of Sapien 3 Ultra Resilient. that's making a meaningful contribution you know to our performance and we're

pretty happy with that and a big picture here if you process you know all of these that Dan you know talk about this is what give us confidence in our guidance for the year for TAVR 628 and our guidance you know beyond 2026 for TAVR from mid to high single digit you know all what we are doing right now you know all the issues we have been doing all of these catalysts are impacting our you know, severe symptomatic patients. And so, you know, the asymptomatic patients are still in front of us, and it is why we are so confident as to have, you know, TAVR as a durable growth opportunity for Red Walls. Thank you.

Thank you. Your next question comes from Vijay Kumar with Evercore ISI. Please do your question.

Hey, guys. Thanks for taking my question. My first one was a quick housekeeping. And Scott, I think you called out SABR was impacted by some distributor adjustments. Could you quantify what that is? And is the Q1 guidance implying a 10 percent average?

Sorry, Vijay, could you say the first part of your question one more time, Blush?

Sorry, on SABR, you called out the distributor impact in Q4. Could you quantify what the impact is for those sales coming back in Q1? I'm just curious, and what gets us to Q1 self-guidance, is it SAVR, are we modeling TAVR of 10% code?

Yeah, sure. Thanks for the question. Yeah, the surgical inventory adjustment was in one country, it was the end of the year, and it was really adjusting inventories in the distribution channel. You know, in China, we go through distributors, and we work very carefully on managing inventory levels, and so this is just something that we did at the end of the year. We still expect mid-single-digit growth from surgical in 2026 and beyond. So think of this as a one-time event.

No, sorry, Q1.

Yeah, so Q1, the guidance implies, you know, I mentioned before, on a reported basis, about 300 basis points higher than the underlying growth guidance. We haven't broken out specific underlying growth guidance, but know that the growth in the first half of the year is higher than the growth in the second half of the year. And overall, we're increasingly confident about the 6% to 8% full-year growth guidance for TAVR.

That's helpful. And then maybe one on the moderate AS. What is, I guess, a great way to think about moderate AS? You know, when these patients are untreated, right, does it look like low-risk TAVR patients? Is this asymptomatic, you know, TAVR patients? What's the right way to think about moderate AIS, and what's the underlying mortality rate in untreated moderate AIS patients?

Maybe, you know, let me start with the VJ, and first, you know, when we decide to start a big pivotal study, randomized study, multi-year randomized studies like this one, it is because we believe, you know, we can show the benefit to patients, which is because we believe it is a big opportunity. It was because we believe in that case, you know, sapient-free will have a big positive impact on these patients. So that's, you know, just to make sure that you feel, you know, our confidence and our belief, you know, behind, you know, progress and the moderate AS patient population. Having said that, we know the importance of highly scientific clinical studies, and as a company relying a lot on the world-class evidence, we are trying not to talk a lot about before having seen the results. We know the importance of it, but so it is why some studies are more like post-market studies you know marketing studies so people you know have a freedom to talk about it and here you know we want to have a very high bar in terms of clinical evidence so we have confidence belief it's the large patient population and we are going to wait you know TCT to to share more about it now that you have any anything that you want to share in addition to what I said here yeah the

only additional color that I would say is is we learned a ton from now asymptomatic early TAVA trial about how unpredictable the nature of the disease is and any and you know this whole idea of that it's a progressive predictable disease has been thrown out the window even on early TAVA and you know we this is not an asymptomatic trial right progress is not asymptomatic moderate right so we're talking about a symptomatic patient population and we don't know the results of the trial we don't know what it looks like what we do know is enrolled very fast, right, and that's usually a bit of an indicator of things. And so, you know, we're excited to sort of just learn more about how this can inform, you know, this patient population and how, you know, transcatheter therapies may fit into this. But until we see the data, until we, you know, get past TCT, there's not a lot more to add.

Thank you. And ladies and gentlemen, we have reached the end of the question and answer session, So I will now hand the floor back over to Bernard Savigian for closing remarks.

Yeah, thank you so much. Thanks for your continued interest in Edwards, Scott, Jarian, and myself. Welcome any additional questions by telephone. Thank you so much, and have a great rest of your day.

Thank you. And this concludes today's conference. All parties may disconnect.