The Centers for Medicare & Medicaid Services (CMS) finalized a decision on September 10 to expand coverage for transcatheter aortic valve replacement, known as TAVR. This change could lead to a broader market for the heart valve technology produced by Irvine-based Edwards Lifesciences.
TAVR is a minimally invasive procedure designed to replace a diseased heart valve without requiring open heart surgery. Under the updated Medicare policy, coverage for TAVR will now include patients diagnosed with severe aortic stenosis even before they have started to exhibit symptoms. Previously, Medicare coverage for symptomatic aortic stenosis was restricted to patients enrolled in a clinical study or a data registry, a requirement that has now been removed.
The decision by CMS follows a formal petition submitted by Edwards Lifesciences last July, requesting a reconsideration of coverage for both symptomatic and asymptomatic patients.
Severe aortic stenosis is a condition where the aortic valve narrows, impeding the heart's ability to pump blood effectively to the rest of the body. It is recognized as the most common type of heart valve disease, affecting approximately 2.5 million Americans over the age of 75. Without treatment, one in ten individuals with this condition faces a risk of death within five weeks. However, detecting the symptoms of severe aortic stenosis can be challenging, as they are often mistaken for normal signs of aging. Historically, treatment options for patients without symptoms have primarily involved close medical monitoring.
The new Medicare policy builds upon an earlier approval Edwards Lifesciences received from the Food and Drug Administration (FDA) last year, which expanded the use of its Sapien 3 heart valves to include patients with asymptomatic severe aortic stenosis. Edwards Lifesciences stated that the updated policy "recognizes the importance of timely care" and provides heart teams with increased flexibility in making treatment decisions.
Following the news of the CMS decision, shares in Edwards (NYSE: EW) fell by 2.7% to $84.37. At press time, the shares were trading around $85.36, giving the company a market capitalization of $50 billion. Despite the slight dip in share price, Edwards reiterated its full-year sales growth guidance of 10% to 11%. The company also announced plans to provide its 2027 and long-term financial guidance at its investor conference in December.
Financial analysts largely viewed the CMS coverage determination as a positive development. Raymond James issued an Outperform 2 rating for Edwards. Raymond James analyst Jayson Bedford commented in a September 10 note to investors that while a broader path to moderate reimbursement would have been preferred, the final memo confirmed "expected positive, de-risking Street estimates that already bake in a benefit from asymptomatic AS expansion." Jefferies maintained its Buy rating for Edwards and raised its price target from $102 to $105, identifying the decision as a "strong catalyst path" for the company.
Edwards Lifesciences is currently conducting its Progress trial, which is evaluating the safety and efficacy of TAVR compared to clinical surveillance in patients aged 65 and older who have moderate aortic stenosis. The results of this study are scheduled to be presented on November 3.