Edwards Lifesciences: Sustained TAVR Growth and Margin Expansion Reshape Medical Device Sector

The medical device sector is undergoing a transformative shift, driven by innovations in structural heart therapies. At the forefront of this evolution is Edwards Lifesciences (NYSE: EW), whose Q3 2025 earnings results underscore the company's dominance in transcatheter aortic valve replacement (TAVR) and its ability to deliver durable margin expansion. With TAVR sales reaching $1.0 billion-a 6% year-over-year increase-and an adjusted gross margin of 80.7%, according to Edwards' Q3 results, Edwards is not only capitalizing on structural demand tailwinds but also redefining industry benchmarks for profitability and innovation.

TAVR Growth: A Structural Tailwind

TAVR remains the cornerstone of Edwards' growth strategy. The $1.0 billion in Q3 TAVR sales reflects robust global demand, fueled by the adoption of advanced platforms like the SAPIEN 3 Ultra RESILIA valve in Europe and the PASCAL and EVOQUE systems in the U.S. and Europe, according to a Nasdaq preview. This performance aligns with broader industry trends: the structural heart therapies market, valued at $14.9 billion in 2024, is projected to expand to $15.99 billion in 2025, with a compound annual growth rate (CAGR) of 7.3%, per the Structural Heart Market Report.

The aging global population and rising prevalence of cardiovascular diseases are amplifying demand for minimally invasive procedures. According to a report by the American College of Cardiology, cardiovascular risk factors such as diabetes are expected to surge by 39.3% in the U.S. by 2060. TAVR's advantages-shorter hospital stays, reduced complications, and faster recovery-position it as a superior alternative to traditional open-heart surgery, further accelerating adoption.

Margin Resilience and Operational Efficiency

Edwards' margin performance in Q3 2025 highlights its operational discipline. The 80.7% adjusted gross margin represents a 0.8 percentage point improvement year-over-year, driven by pricing stability and cost optimization. While selling, general, and administrative expenses rose to 31.1% of sales, this increase was attributable to strategic investments in field-based personnel to support the PASCAL and EVOQUE launches. These expenditures, though temporarily dilutive, are critical for capturing market share in high-growth segments like TMTT (transcatheter mitral and tricuspid therapies), which saw a 74% surge in Q3 sales to $91 million, according to a Benzinga note.

The company's R&D investment also underscores its long-term vision. Spending increased by 4% year-over-year to $253 million, or 18.7% of sales, as Edwards advances next-generation therapies and clinical evidence for its structural heart platforms. This focus on innovation not only strengthens its competitive moat but also supports sustainable margin expansion by reducing reliance on price erosion.

Industry-Wide Tailwinds and Strategic Positioning

The structural heart therapies market is poised for accelerated growth, with a projected CAGR of 8.8% from 2025 to 2029, reaching $22.43 billion by 2029. Edwards is uniquely positioned to benefit from this trajectory. Its leadership in TAVR-accounting for over 60% of global market share-and early-mover advantage in TMTT provide a dual engine for revenue growth.

Moreover, regulatory tailwinds are amplifying opportunities. The potential expansion of TAVR indications to asymptomatic patients, coupled with the EVOQUE tricuspid system's commercial rollout, could significantly broaden the treatable patient population. These developments align with industry forecasts that highlight the Asia-Pacific region as the fastest-growing market for structural heart devices, driven by rising healthcare investments and an aging demographic, according to Metatech Insights.

Investment Implications

For investors, Edwards Lifesciences represents a compelling case of value creation through innovation and operational excellence. The company's ability to sustain TAVR growth while expanding margins-despite macroeconomic headwinds-demonstrates its resilience. With full-year 2024 sales guidance of 8–10% growth and Q4 2024 sales projected between $1.33 billion and $1.39 billion, Edwards is on track to outperform broader medical device peers.

The structural demand for minimally invasive heart therapies is no longer a speculative trend but a proven driver of long-term value. As Edwards continues to pioneer advancements in structural heart care, its strategic focus on R&D, margin optimization, and market expansion positions it as a bellwether for the sector's next phase of growth.

Historical backtesting of EW's earnings release performance from 2022 to 2024 reveals additional insights for investors. While the sample size of five events is limited, the data shows a directional bias: 80% of events generated positive returns after day +10, with cumulative excess returns peaking at approximately +5.8% around day +20, as shown in a Backtest of EW earnings. This suggests a mild but inconsistent upside drift following earnings announcements, reinforcing the case for a long-term buy-and-hold approach aligned with the company's structural growth drivers.