Dive Brief:

• U.S. sales of Edwards Lifesciences’ transcatheter aortic valve replacement fell by mid-single digits in the fourth quarter due to COVID-19-related disruption at large treatment centers.

• Edwards warned investors COVID-19 would affect fourth quarter sales at its analyst day late last year but the hit was worse than forecast. Analysts expected U.S. TAVR sales to be flat in the quarter.

• Despite the stiffening headwind, Edwards retained its guidance for global TAVR growth of 15% to 20% this year, reflecting confidence that demand will rebound quickly as the rollout of vaccines brings the pandemic under control.

Dive Insight:

Talking to investors on Wednesday's fourth quarter results conference call, Edwards CEO Michael Mussallem said the selling environment has "been a little worse" than he expected at the analyst day seven weeks ago. "It was already trending negative and we anticipated it was going to be a tough winter and it certainly has turned out to be that way, but probably a little worse since that time," Mussallem said.

There were signs U.S. TAVR sales may fall in the fourth quarter, notably from an update to the tracker managed by analysts at Jefferies that suggested a dip of 2% was possible, but the extent of the drop was a surprise.

In working through the cause of the decline, Edwards saw growth at smaller TAVR centers was more than offset by falling sales at its biggest accounts. Mussallem said referrals to large TAVR centers have been disrupted by the resurgence of COVID-19. The big treatment centers are particularly vulnerable to a declining willingness to travel because they traditionally attract out-of-state patients. 

Mussallem said it will take "a while" for the pipeline of TAVR patients to refill and braced investors for a "slower" first quarter. Yet, the experience of the first wave of the crisis suggests the situation can improve this year. Edwards' confidence in the likelihood of a 2021 recovery was well received by analysts.

"We were encouraged by management's continued expectations for a relatively quick rebound in aortic stenosis diagnosis, which is expected to occur within months of the most recent COVID wave and not multiple quarters. This should support a healthy rebound in procedural volumes in the second half of 2021," analysts at William Blair wrote in a note to investors. 

The anticipated rebound is needed if Edwards is to hit its forecast of 15% to 20% TAVR growth and total full-year sales of $4.9 billion to $5.3 billion. Mussallem said the prospects are "maybe slightly weaker" than when he gave guidance late last year but the outlook is "still very much in the range."  

Edwards is looking to devices beyond its critical TAVR franchise to contribute to growth. Management continues to expect sales of transcatheter mitral and tricuspid therapies to double this year. The unit generated sales of $13 million in the fourth quarter, an improvement over the third quarter. Edwards is going up against Abbott's MitraClip in the TMTT space in pursuit of a market it expects to grow to $3 billion by 2025.