Robust revenue performance
For fiscal 2017, Edwards Lifesciences (EW) has projected revenues for its Transcatheter Heart Valve Therapy segment, to approach the higher end of the range of $1.7 billion–$2.0 billion. However, the company expects intense competition from other aortic valve replacement (or TAVR) players such as Abbott Laboratories (ABT), Boston Scientific (BSX), and Medtronic (MDT) in 2H17.
The chart above shows that Edwards Lifesciences’ current estimate of the total prevalence of patients with severe symptomatic aortic stenosis is almost double the company’s previous estimate. This also highlights the much lower-than-projected treatment rates in this segment, opening up growth opportunities for the company going forward.
TAVR therapy trends in 2Q17
Demand for transcatheter aortic valve replacement (or TAVR) therapy has been robust in the US, mainly due to the opening of new heart valve centers and relatively lower competition.
The number of TAVR procedures performed in Europe was higher by the mid-teen rate on a year-over-year (or YoY) basis. However, the YoY growth in sales volumes of Edwards Lifesciences has not kept pace with the rise in the TAVR market in Europe, hinting at the company’s reduced market share in 2Q17 compared to 2Q16.
The company also witnessed a drop in average selling prices, which was consistent with expectations. Edwards Lifesciences, however, is confident of maintaining its European market share in 2017, as TAVR therapy is expected to be increasingly used in markets with lower adoption rates.
With new heart valve centers being launched in Japan, Edwards Lifesciences expects to witness robust demand trends for TAVR therapy in this market. In 2Q17, the company witnessed underlying volume growth, which was in line with the overall growth in demand for the TAVR procedure, which highlights the stable market share of the company in Japan.
If the trends in these international markets continue in future quarters, it may benefit Edwards Lifesciences’s stock price as well as the iShares Core S&P 500 ETF (IVV). Edwards Lifesciences makes up ~0.11% of IVV’s total portfolio holdings.
In the next article, we’ll discuss the impact of indication expansion of Edwards Lifesciences’ transcatheter aortic valve on the company’s future revenue growth.