The acquisitions by Edwards of JenaValve Technology and Endotronics come as the company moves to expand its portfolio of heart offerings and improve growth. Both of these companies are involved in the cardiac device market and can become an integral part of the Edwards ecosystem.
JenaValve Technology’s valve comes from its work in developing a solution to the problem of aortic regurgitation. Edwards’ own transcatheter aortic valve replacement (TAVR) technique is used for aortic stenosis when the valves become partially blocked due to the buildup of calcium deposits. Adding JenaValve will allow the company to offer additional treatments for aortic regurgitation, where a valve closes improperly, resulting in blood leaks. The company hopes that the US Food and Drug Administration will approve the new heart valve system by next year.
The other acquisition by Edwards was of Endotronics, in this case for the purpose of obtaining its pulmonary artery pressure sensor which is also implantable. This means the company is expanding its operations into a new area in hopes of diversifying from its major business, TAVR.
The two additions complement Edwards’, according to an analyst. He said, “These two acquisitions would appear to complement Edwards’ structural heart portfolio and strengthen its presence in the aortic disease and heart failure treatment niche markets.”
Edwards has also focused its attention on other investment opportunities as they have come. A few days before in July, the company announced it had availed an option to buy Innovalve Bio-Medical for close to $300 million. The company also invested 15 million euros for a piece of Affluent Medical and also got an option to buy the mitral ring part of the company. It also gained a global license for its technology involving biomimetic mitral valve replacement.
One of the chief concerns of the company that has prompted it to increase investments and company acquisitions has been a sharp fall in its share price, which is listed on the New York Stock Exchange, to about 75% of its previous value. This came after its earnings report for the second quarter of 2024 showed growth that was considerably less than expected by analysts.
While the sales for TAVR in the quarter showed growth over the previous year of about 5%, they came as a surprise even to CFO Scott Ulem. The cause, as explained by the latter, seems to be a shift in the procedures employed by heart teams in hospitals. Increasingly, they have turned towards transcatheter mitral and tricuspid therapies, or TMTT for short, and as a result, TAVR has suffered in terms of volume.
The CFO went on to assure investors that this was not due to lower patient numbers that would indicate falling demand but that it was a matter of work being jammed that would eventually resolve itself. Other analysts, like those at BTIG, however, believe that this is a long-term problem that has no easy solution. An analyst at William Blair, Margaret Andrew, also mentioned how TAVR centers and cardiologists who used TAVR are shifting towards TMTT, thus causing a problem for Edwards.
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