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Edwards Lifesciences Making CEO Switch

Zovighian tapped; Mussallem to retire in May

Edwards Lifesciences Corp. (NYSE: EW), Orange County’s most valuable publicly traded company, is set to see its first top executive change at the maker of artificial heart valves and other medtech products since its 2000 spinout from Baxter International.

Chief Executive Mike Mussallem, who has run the Irvine-based healthcare medical device giant since the spinout, announced this month that he would retire next May. He’ll retain the executive chairman role.

“It has been a special honor and privilege to lead our team at Edwards Lifesciences for more than 20 years in their immense contributions to helping and advancing care for millions of patients around the world,” Mussallem said.

Edwards was valued around $1 billion when it went public in 2000; it’s now worth about $47 billion.

TMTT and TAVR

Taking over the CEO role at Edwards next May is Bernard Zovighian, who joined the company in 2015 after working for locally based Advanced Sterilization Products, a unit of Johnson & Johnson.

Zovighian heads the company’s smallest—but fastest growing—unit, Transcatheter Mitral and Triscupid Therapies (TMTT), which uses minimally invasive technology to help patients suffering from mitral and tricuspid valve diseases.

The unit’s sales doubled to $86 million in 2021. Edwards forecasts the unit’s sales will again double, to $160 million to $200 million, in 2023.

The total addressable market for TMTT could explode to $5 billion by 2028, Edwards predicted.

The company, which employs nearly 5,000 in Orange County, reported $5.2 billion in sales last year, and expects 2022 sales to run around $5.35 billion or higher.

Edwards’ largest business unit, Transcatheter Aortic Valve Replacement, also known as TAVR, accounted for 65% of Edwards’ sales in 2021.

The company’s Sapien heart valves—implanted via catheter through the leg, without the need for open-heart surgery—are the most-used TAVR heart valves in the industry, and have been implanted in nearly 800,000 patients, according to Edwards.

Larry Wood, who heads TAVR operations for Edwards, will expand his role by also taking over Surgical Structural Heart, the company’s second largest unit. Wood will oversee 80% of the company’s expected sales in 2023 (see story, this page).

Daveen Chopra, who has served since 2018 as head of the Surgical Structural Heart business, will lead Zovighian’s old unit, TMTT.

TAVR Growth Questions

The management change announcement brought focus among investors and analysts about the direction and growth prospects of the company’s largest unit.

There is “relatively negative sentiments towards EW” as to doubts where the TAVR unit can continue growing above 10% in annual sales, Jefferies analyst Matthew Taylor wrote in a note to investors.

“While CEO Mike Mussallem has created tremendous value for EW shareholders, we do not view his retirement as a negative signal, but a natural progression after >20 years in the role and see Bernard Zovighian as a qualified replacement, also noting EW has a deep leadership bench,” Taylor said.

“We’re going to show just how strong our team is as time goes forward,” Mussallem said of the new exec team, while adding that “a new era” is coming for the company.

Roller-Coaster Shares

In the past two years, shares of Edwards have been on a roller coaster. In March 2020, the shares hovered around $55 each before zooming as high as $130 apiece and an $81 billion market cap last January.

The shares began a steady decline until Oct. 28, when they lost $10 billion in market cap on one day after reporting third-quarter results that missed analysts’ expectations and revising downward its annual forecast.

As of press time, the shares were trading around $74 each and a $45 billion market cap, which still makes Edwards the most valuable publicly traded company, just above the $41 billion market cap of Newport Beach’s Chipotle Mexican Grill Inc. (NYSE: CMG).

Edwards said the reason for its reduced forecast was that the company anticipated hospital staffing challenges and a predictive difficult winter COVID and flu season, which could limit the amount of procedures involving its products.

2023 Expectations

At Edwards’ Dec. 8 investors meeting, the company forecast 2022 sales will climb to $5.35 billion to $5.55 billion, implying a growth of 2.2% to 6.1% this year.

It also forecast 2023’s “underlying growth” will be 9% to 12%, signaling sales of $5.6 billion to $6 billion.

The company estimates 2023 adjusted earnings per share of $2.45 to $2.60, slightly above the $2.40 to $2.50 it expects in 2022.

Sales at its biggest unit, TAVR, will be $3.6 billion to $4 billion, meaning underlying growth of 9% to 12%

To convince investors that the company can still grow, it reiterated that its total addressable market could double to $20 billion by 2028. It said the global TAVR market opportunity will reach $10 billion by 2028, driven by greater awareness and advances in new technologies, as well as indication expansion and increased global adoption.

$10B Sales Goal

Mussallem remained optimistic by reiterating the company’s long-term goal that revenue can about double within the next six years to $10 billion.

“There’s a very exciting future,” Mussallem told the Business Journal.

“Our capabilities and pipeline are robust. I really believe that Edwards Lifesciences will do a lot for patients and will continue to be a great investment.”

For more on Mussallem, his achievements at Edwards, and his role in OC going forward, see the Jan. 9, 2023 print edition of the Business Journal.

Wood Keeps ‘the Best Job’ at Edwards

Larry Wood is philosophical about not getting the top job at Edwards Lifesciences Corp., where he has worked for 37 years.

Wood, who heads the company’s biggest unit by sales, spoke at the company’s annual investor conference on Dec. 8, after it was announced that CEO Mike Mussallem would retire next May, to be replaced by Bernard Zovighian, who leads the company’s smallest unit.

“I’m in the job that I want,” Wood told analysts who questioned the change at the Irvine-based maker of heart valves (NYSE: EW).

“When you’re younger, you just kind of chase titles. And as you get older, you have to start thinking about what do you really enjoy doing? And what do you love doing with your life?

“And I love being with the teams. I love being in the cath lab. I love being with our clinicians and working on groundbreaking trials, and I love doing all those things.

“And these two schmucks never get an opportunity to do any of that stuff, because they’re out doing other stuff,” he quipped, speaking of Mussallem and Zovighian.

“I think I kind of have the best job in the company in terms of what I get to do.”

Investor Conference

At the investor conference, which was held in New York City, Mussallem, Zovighian and Wood all took to the stage to discuss the leadership changes.

“Larry is an amazing innovator,” Zovighian told investors. “The TAVR story is a unique story. Nobody has done what we have done with TAVR, and Larry was at the beginning of it. So, I think Larry leading two businesses, that’s a great win for me. I love that. He loves that. I love it. We need that. So, I think it is a great solution for everybody.”

Mussallem also praised Wood as starting the TAVR business “from scratch.”

Wood has “dedicated 20 years of his career to create probably one of the greatest innovations in cardiovascular medicine, if not more broadly than any of us has seen,” Mussallem told investors.

—Peter J. Brennan

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.
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