Edwards Lifesciences Corp. (EW): Takeaways from management meetings

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Edwards Lifesciences Corp. (EW): Takeaways from management meetings

Goldman Sachs Edwards Lifesciences Corp. (EW)

Edwards has continued to grow its Surgical Heart Valve (SHV) business (~3% CAGR

from 2015-2025). Volume share gain and positive mix (from new product

introductions) represent the primary drivers that have offset the advent of minimally

invasive therapies. The company continues to invest in this business with

new-to-market products (i.e. the first surgical valve to treat tricuspid valve disease)

as well as upgrades/enhancements to existing platforms. While cannibalization risk

remains a point of discussion, the company noted that more broadly treating

tricuspid valve disease represents the bigger opportunity as a significant unmet

need in this category. Adjacent to SHV, the company plans to enter the surgical

appendage management (LAAC) market later this year with the intention to grow the

category (currently ~$200-250 million) and gain a leadership position. We note that

we have not included any contribution from LAAC in our published estimates.

n Capital allocation: The company reiterated its perspective that organic

reinvestment creates the strongest — and highest return — path to DD% top-line

growth. Edwards plans to continue incubating — and investing in — early stage

technologies with a capital efficient and risk-adjusted approach. A recent topic of

investor dialogue surrounds whether Edwards would consider diversifying into new

categories. To this end, as Edwards considers adjacent growth opportunities,

management maintains strict criteria to (1) operate in categories where the

company is either creating (i.e. interventional heart failure management) or (2) bring

meaningful innovation that can reshape a category. Share buybacks also remain a