Edwards Lifesciences (EW) Q1 2026 earnings review
TAVR Re-Accelerates as Proactive Treatment Takes Hold
Edwards Lifesciences delivered a decisive beat-and-raise quarter, quelling prior fears of slowing growth. Q1 sales grew 16.7% (12.7% constant currency), driven by a 14.4% surge in the core TAVR business and explosive 51.9% growth in the TMTT segment. The long-awaited clinical narrative is materializing: EARLY TAVR data and new European guidelines are successfully shifting physician behavior from 'watchful waiting' to proactive intervention. Following a Q4 margin scare, operating leverage returned aggressively—Adjusted Operating Margin jumped to 31.4%, driving a 22% YoY increase in Adjusted EPS to $0.78. Management capitalized on the momentum by raising full-year guidance for both sales and earnings.
🐂 Bull Case
The 14.4% TAVR growth proves that strong clinical data (EARLY TAVR, PROGRESS) and updated ESC/EACTS guidelines are successfully expanding the treatable patient population and driving procedural urgency.
After a massive SG&A spike in 25Q4, management reined in costs. SG&A fell to 31.7% of sales, driving an impressive 230 bps of operating margin expansion YoY and yielding highly profitable growth.
🐻 Bear Case
Despite stellar volume leverage, gross margin declined YoY from 78.7% to 78.2%, weighed down by persistent FX headwinds and new therapy manufacturing costs.
A surprise $123.6M loss on impairment for a VIE investment serves as a costly reminder of the risks embedded in Edwards' aggressive technology acquisition strategy.
⚖️ Verdict: 🟢
Strongly Bullish. Edwards cleanly reversed the margin anxieties from Q4. With TAVR accelerating, TMTT scaling flawlessly, and margins expanding, the company is demonstrating formidable operational command.
Key Themes
TAVR Indication Expansion Driving Volume
Accelerating. Global TAVR sales surged 14.4% to $1.20B, a notable step-up from the 10-12% range seen in late 2025. Management explicitly linked this to an 'increased focus on evaluation and intentional referral' driven by the EARLY TAVR study and updated ESC/EACTS guidelines. The clinical community is shifting away from watchful waiting, structurally expanding the patient funnel.
TMTT Hyper-Growth Becomes a Reliable Pillar
Stable. The TMTT segment grew an explosive 51.9% (42.8% constant currency) to $173 million. Edwards' 'toolbox' strategy is working. PASCAL TEER adoption continues to take share, EVOQUE is demonstrating strong 2-year TRISCEND II mortality benefits, and the recently approved SAPIEN M3 is validating the massive unmet need for mitral replacement. Next-gen PASCAL technology is slated for Q4, extending the pipeline.
Macro Tailwinds: CMS and Guidelines
The macro regulatory picture is increasingly favorable. In Europe, ESC/EACTS guidelines are already driving proactive disease management. Domestically, the ongoing CMS reconsideration of the TAVR National Coverage Determination (NCD) serves as a major future catalyst to alleviate hospital capacity constraints and improve timely access.
Gross Margin Contradicts Leverage Narrative
Decelerating. While operating margins expanded beautifully due to SG&A and R&D discipline, Adjusted Gross Margin slipped to 78.2% from 78.7% a year ago. This contradicts the narrative that massive volume gains effortlessly drop to the bottom line, highlighting the friction of a weakening dollar and the friction of scaling manufacturing for new therapies like EVOQUE and SAPIEN M3.
Costly VIE Investment Impairment
The company recorded a substantial $123.6M loss on impairment ($99M net of tax) in Q1 because the carrying amount of a VIE investment was deemed unrecoverable. While offset at the GAAP level by a $65.2M gain on remeasurement of another previously held interest, this underscores the binary outcomes and capital destruction risks inherent in Edwards' early-stage acquisition bets.
Operating Profit Reversal
Reversing. In 25Q4, SG&A surged to 38% of sales, crushing operating margins to 23.7%. In 26Q1, management executed a stunning reversal. SG&A normalized to 31.7%, and R&D fell to 16.0% (down from 18.0% YoY). The result was a massive leap in Adjusted Operating Margin to 31.4%, well above the company's long-term 28-29% target range.
Other KPIs
Stable. Grew 10.1% reported (5.9% constant currency), driven by consistent adoption of RESILIA tissues globally. The European launch of the KONECT valved conduit and broader rollout of MITRIS provide a steady baseline to offset any cannibalization from transcatheter therapies.
Accelerating capital return. The company completed a $500 million Accelerated Share Repurchase (ASR) program during Q1. Backed by $2.4 billion in cash, Edwards still has $1.5 billion remaining under its current authorization.
Guidance
Accelerating vs prior guidance. Raised from the original 8-10% range. Total sales are expected to hit $6.5 to $6.9 billion. This signals profound confidence that Q1's momentum is structural, not a one-time pull-forward.
Decelerating relative to 26Q1's blistering 11.0% CC growth, but represents an upgrade from the prior 6-8% outlook. The raise reflects structural market expansion, though the guide implies tougher comps in the back half of the year.
Accelerating. The midpoint of $3.00 represents a raise from the prior $2.90-$3.05 range and implies ~17% YoY growth over FY25's $2.56. Operating margin expansion of ~150 bps is the primary engine.
Decelerating sequentially from 26Q1's massive $0.78, reflecting typical quarterly phasing of strategic investments. However, the midpoint still represents solid 9% YoY growth over 25Q2 ($0.67).
Key Questions
VIE Impairment Post-Mortem
You recorded a $123.6M loss on impairment for a VIE investment. Can you confirm if this relates to JenaValve or another strategic bet, and how does this alter your framework for early-stage M&A?
Gross Margin Trajectory
Adjusted gross margins slipped YoY despite tremendous volume leverage. What is the specific impact of the EVOQUE and SAPIEN M3 manufacturing scale-ups versus pure FX, and when do these manufacturing inefficiencies normalize?
CMS NCD Reconsideration
How are you framing the potential upside from the CMS TAVR NCD reconsideration in terms of hospital capacity? If operator requirements are eased, how quickly could that translate into tangible procedure volume?