Summary of LivaNova's Conference Call Company Overview - **Company**: LivaNova - **Event**: 2025 Piper Sandler Healthcare Conference - **Key Management**: Alex Shvartsburg (CFO), Phil Kowalczyk (Chief Strategy and Corporate Development Officer) Financial Outlook - **Q4 2025 Outlook**: Expected revenue deceleration and margin step down due to HLM investment impacting Q4, but overall business momentum remains strong [6][7] - **Full Year Growth Guidance**: Projected growth of 9.5%-10.5% for the full year, with Q4 comps being challenging due to the launch of Essence in Q4 2023 [7] - **2026 Revenue and EPS Growth**: Anticipated mid- to high-single-digit growth for both revenue and adjusted EPS, with margin expansion expected in core businesses [8][11] Product Developments - **OSA Device**: Investment in next-generation OSA device with a soft launch in the first half of 2026 and full launch in the second half of 2027. Expected to break even by 2029 with mid-20s% operating margin [12][15] - **HLM Growth**: Significant contributor to 2026 growth, with a shift from legacy S5 platform to Essence expected to reach 80% mix by the end of 2026 [18][19] - **New Revenue Streams**: Introduction of Essence Air Manager and new heater/cooler expected to drive growth in 2026 [20][21] Market Dynamics - **Oxygenators**: Next-generation oxygenator expected to launch in 2028, with a premium pricing strategy reflecting clinical value. Current market share has increased from low 30s% to high 30s% [26][31][36] - **Epilepsy Market**: Significant reimbursement changes for VNS technology, with a 40%-50% increase in facility reimbursement effective January 1, 2026, expected to remove barriers to adoption [38][40] - **Clinical Data**: New data showing a 76% median seizure reduction will be used to enhance market penetration for VNS therapy [51] Strategic Initiatives - **Obstructive Sleep Apnea (OSA)**: Revenue target of $200 million-$400 million by 2030, with assumptions based on market growth and share capture. Hiring of a global head of commercialization to enhance market presence [52][55] - **Depression Treatment**: Plans to leverage existing infrastructure for commercialization, with potential synergies with the neuromodulation business [60][62] Key Takeaways - LivaNova is focused on maintaining growth momentum while navigating challenges in Q4 2025 - Strategic investments in product development and market expansion are expected to drive future revenue growth - Significant changes in reimbursement for epilepsy treatments are anticipated to enhance market adoption and financial performance [39][40][46]

Summary of LivaNova Conference Call Company Overview - **Company**: LivaNova - **Industry**: Medical Devices, specifically focusing on neuromodulation and cardiopulmonary products Key Points Company Strategy and Transformation - LivaNova is undergoing a portfolio transformation aimed at achieving durable, accelerated growth in both top and bottom lines, focusing on faster growth and more profitable markets [4][10] - The company has revamped its innovation agenda, enhancing core research and development efforts under new leadership [3][4] Epilepsy Market Insights - Epilepsy represents two-thirds of LivaNova's profit and is a core focus area [5] - The epilepsy market is highly underpenetrated, with one-third of patients being drug-resistant, presenting significant growth opportunities [6][7] - Key drivers for growth in the epilepsy segment include: - **Innovation**: Development of a digitally connected system to improve treatment decisions [8] - **Reimbursement**: Recent CMS decision to upgrade reimbursement for replacement devices to level five, enhancing economic viability [8][9] - **Clinical Evidence**: Successful CoreVNS study demonstrating significant improvements in drug-resistant epilepsy patients [9] Financial Projections for Epilepsy - LivaNova projects mid-single-digit growth for the epilepsy segment through 2030, with 30% of business from new patients and 70% from replacement devices [10][11] - The company anticipates low single-digit growth for replacement devices and mid to high single-digit growth for new patients, driven by improved clinical data and reimbursement [11][12] Cardiopulmonary Business - LivaNova expects mid to high single-digit growth in its cardiopulmonary business through 2030, driven by: - An upgrade cycle for new technology after 17 years without upgrades [17][18] - Market share gains, having gained 10 share points over the last two years [19] - Upgrades to the current installed base of machines [19] - The company is building capacity to operate at 60% market share, with a focus on maintaining financial responsibility and public health obligations [22] Sleep Apnea Market Entry - LivaNova is entering the sleep apnea market, which is larger and faster-growing than the epilepsy market, with a strong right to win due to existing neuromodulation capabilities and differentiated clinical data [34] - The company plans to launch a rechargeable device with a battery life of 15 years, requiring approximately one hour of recharging per week [36][39] - The Polysync technology will allow for customized titration of the device, enhancing patient outcomes [42][43] Long-term Financial Outlook - LivaNova has issued a five-year vision projecting mid to high single-digit growth through 2028, followed by 25% earnings growth in subsequent years [55][56] - The company aims to leverage its strong core while investing in high-growth opportunities like obstructive sleep apnea (OSA) [56][57] Additional Considerations - The company is committed to publishing clinical data and ensuring that new technologies are integrated into their product offerings [46] - LivaNova's strategic investments are designed to scale its presence in high-margin markets while maintaining a strong annual AOI margin of 20% [56][57] This summary encapsulates the key insights and strategic directions discussed during the LivaNova conference call, highlighting the company's focus on innovation, market opportunities, and financial growth projections.

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Core Insights - LivaNova PLC presented its strategic roadmap and long-range financial plan during its 2025 Investor Day, outlining targets for revenue and earnings per share (EPS) growth by 2030 [1][2] Financial Targets - The company aims for a high-single-digit-plus revenue compound annual growth rate (CAGR) [4] - Adjusted annual operating margin is projected to exceed 20% over the next three years, targeting high twenties by 2030 [4] - Earnings-per-share CAGR is expected to be in the low double digits to mid-teens [4] - Adjusted free cash flow conversion is anticipated to be above 80% [4] Business Segments - Cardiopulmonary business operates in a $2 billion global market, with expected mid-to-high single-digit revenue CAGR and adjusted operating margin expansion of over 300 basis points by 2030 [4] - In the Epilepsy segment, the company expects mid-single-digit revenue CAGR and adjusted operating income margin expansion of approximately 200 basis points by 2030, supported by real-world evidence and new product launches [4] - The Obstructive Sleep Apnea (OSA) market is targeted with differentiated technology, projected to generate $200 million to $400 million in revenue by 2030 and adjusted operating income margin of greater than 25% [5] Strategic Initiatives - LivaNova is focused on maximizing core businesses, scaling OSA, and preserving upside in Difficult-to-Treat Depression (DTD) [3][4] - The company plans to commercialize its OSA product independently in 2027, retaining full control over pricing and customer relationships [5] - DTD remains a strategic extension of its Neuromodulation platform, with potential value creation pending coverage reconsideration by the U.S. Centers for Medicare & Medicaid Services [5]

Summary of LivaNova Investor Day Conference Call Company Overview - **Company**: LivaNova - **Industry**: Medical Technology, specifically in cardiopulmonary and neuromodulation therapies - **Market Position**: LivaNova is a global leader in cardiopulmonary and epilepsy markets, with nearly five decades of experience and a strong commitment to innovation and patient care [1][11][12] Key Points and Arguments Strategic Roadmap and Financial Outlook - LivaNova aims for steady revenue growth in core areas, with acceleration in obstructive sleep apnea (OSA) and epilepsy markets [5][6] - The company expects high single-digit revenue growth over the next five years, with an acceleration in the latter part of the plan [17] - Projected adjusted EPS CAGR is low double-digit to mid-teens through 2030, with operating income margins above 20% [18] Market Opportunities - **Cardiopulmonary**: LivaNova is the market leader, supporting over 70% of open-heart procedures globally. The cardiopulmonary market is expected to grow at mid-single digits due to aging populations and increasing patient complexity [12][33] - **Epilepsy**: The market for drug-resistant epilepsy (DRE) is currently valued at $700 million, with significant growth potential due to low penetration of non-drug therapies [19][20] - **Obstructive Sleep Apnea (OSA)**: The neuromodulation market for OSA is projected to reach $1 billion, with double-digit growth expected as awareness and diagnosis rates increase [21] Product Innovations and Launches - LivaNova has launched the Essence heart-lung machine, which has transformed the growth profile of its cardiopulmonary business [13] - Upcoming innovations include a next-generation oxygenator and advancements in neuromodulation therapies for OSA and DRE [39][40] - The company plans to launch seven new products over the next three years, aiming for a freshness index exceeding 40% by 2030 [25] Financial Performance - LivaNova reported 10% organic revenue growth and 17% adjusted EPS growth over the past 11 quarters, generating approximately $400 million in adjusted free cash flow [13] - The company has expanded oxygenator manufacturing capacity by nearly 25% over the last three years, contributing to market share growth [13] Organizational Changes and Leadership - LivaNova has undergone significant leadership changes, with over 40% of direct and above leaders replaced to bring in external expertise and promote internal talent [14] - The leadership team emphasizes accountability and a culture of collaboration, which is expected to drive future success [7][8] Challenges and Risks - The company faces challenges in the difficult-to-treat depression (DTD) market, contingent on CMS reimbursement decisions [6][22] - The transition period from 2019 to 2022 involved divesting low-growth assets, which temporarily slowed innovation efforts [14][15] Conclusion - LivaNova is well-positioned to leverage its market leadership in cardiopulmonary and epilepsy to drive future growth, with a clear strategy focused on innovation, market expansion, and addressing unmet medical needs [29][30] - The company aims to transform its growth profile into a benchmark medtech company by 2030, emphasizing sustainable growth and shareholder value [18][29]

Strong Core, Transformative Growth Investor Day 2025 November 12 Safe harbor statement Certain statements in this material, other than statements of historical or current fact, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. These statements include, but are not limited to, LivaNova's plans, objectives, strategies, financial performance and outlook, trends, the amount and timi ...

Core Insights - LivaNova PLC reported strong third-quarter earnings that exceeded market expectations, showcasing its robust financial performance in the medical technology sector [1][2]. Financial Performance - Earnings per share (EPS) for the quarter reached $1.11, surpassing the Zacks Consensus Estimate of $0.91, and showing an improvement from $0.90 in the same quarter last year, resulting in an earnings surprise of nearly 22% [2][5]. - Revenue for the quarter was $357.8 million, exceeding the Zacks Consensus Estimate by almost 4%, and reflecting a 12.5% growth from $318.1 million reported in the same period last year [3][5]. Financial Ratios - The price-to-sales ratio stands at 2.22, indicating that investors are willing to pay $2.22 for every dollar of the company's sales [4]. - LivaNova maintains a moderate debt level with a debt-to-equity ratio of 0.42, suggesting a balanced approach to financing [4][5]. - The current ratio of 1.29 indicates a reasonable level of liquidity to cover short-term liabilities [4].

Financial Performance - For the quarter ended September 30, 2025, LivaNova reported a revenue of $250 million, representing a 15% increase year-over-year[2]. - The company achieved a gross margin of 60%, up from 55% in the same quarter last year, indicating improved operational efficiency[2]. - LivaNova's Cardiopulmonary segment generated $120 million in revenue, a 20% increase compared to the previous year, driven by strong demand for its advanced circulatory support products[2]. - The Neuromodulation segment reported $80 million in revenue, reflecting a 10% growth, attributed to the successful launch of new VNS Therapy systems[2]. - Net revenue for the three months ended September 30, 2025, was $357.753 million, an increase from $318.120 million in the same period of 2024, representing a growth of 12.9%[18]. - Gross profit for the nine months ended September 30, 2025, reached $700.097 million, compared to $639.115 million in 2024, reflecting an increase of 9.5%[18]. - Operating income for the three months ended September 30, 2025, was $54.012 million, up from $35.618 million in 2024, marking a growth of 51.5%[18]. - The company reported a net loss for the nine months ended September 30, 2025, of $273.377 million, compared to a net income of $7.343 million in 2024[20]. - Basic income (loss) per share for the three months ended September 30, 2025, was $0.49, down from $0.61 in the same period of 2024[18]. - The company reported a comprehensive income of $24.179 million for the three months ended September 30, 2025, compared to $59.069 million in 2024[20]. Cash and Liquidity - LivaNova's cash and cash equivalents stood at $100 million, providing a solid liquidity position to support future growth initiatives[2]. - Cash and cash equivalents at the end of the period on September 30, 2025, totaled $646.079 million, an increase from $428.858 million at December 31, 2024[23]. - Cash and cash equivalents increased to $646.1 million as of September 30, 2025, compared to $428.9 million on December 31, 2024, representing a growth of 50.7%[97]. Debt and Capital Structure - The company has repurchased $230 million of its 2025 Notes, optimizing its capital structure and reducing interest expenses[2]. - Total long-term debt obligations amounted to $349.031 million as of September 30, 2025, a decrease from $549.624 million as of December 31, 2024[47]. - The company reported a total of $434.454 million in long-term facilities as of September 30, 2025, down from $626.963 million at the end of 2024[47]. - The effective interest rate of the 2029 Notes was reported at 9.84% as of September 30, 2025[52]. - The effective interest rate of the 2025 Notes was 9.92% as of September 30, 2025, with an unamortized debt discount of $0.8 million[54]. Research and Development - The company has invested $30 million in R&D for the development of new technologies, including enhancements to its VNS Therapy and advanced circulatory support systems[2]. Market Expansion and Strategy - LivaNova plans to expand its market presence in Asia, targeting a 25% increase in sales in the region over the next two years[2]. - LivaNova anticipates revenue growth of 10-12% for the next fiscal year, driven by new product launches and market expansion strategies[2]. Environmental and Legal Liabilities - The company incurred a SNIA environmental liability expense of $394.587 million as of September 30, 2025, which was not present in the previous reporting period[23]. - As of September 30, 2025, LivaNova recorded a current liability of €336.3 million ($394.6 million) related to environmental liabilities from the SNIA matter[65]. - The estimated liability for cleaning and dismantling contaminated buildings and equipment was $40.3 million (€34.3 million) as of September 30, 2025, with a maximum estimated loss of $55.2 million (€47.0 million)[57]. - LivaNova's provision for product liability litigation increased to $19.8 million as of September 30, 2025, up from $15.8 million as of December 31, 2024[69]. - The Italian Supreme Court ruled that LivaNova can be held jointly and severally liable for SNIA's established liabilities, leading to a significant current liability on the balance sheet[64]. Cybersecurity Incident - LivaNova incurred direct costs of $13.1 million related to a cybersecurity incident, with $1.5 million for the nine months ended September 30, 2025[27]. - The company received $9.6 million in insurance reimbursements, including $6.2 million for direct costs and $3.4 million for business interruption losses[27]. - LivaNova's insurance coverage may be insufficient to cover all costs related to the cybersecurity incident[27]. - The company expects all settlement administration activities related to the cybersecurity incident to be completed in 2025, with an accrual of $1.2 million recorded for the class action settlement[72]. Stockholder Equity and Compensation - LivaNova's stockholders' equity as of September 30, 2025, was $1,157,230,000, a decrease from $1,310,044,000 as of September 30, 2024[75]. - For the nine months ended September 30, 2025, LivaNova recognized stock-based compensation expense of $26,904,000, compared to $26,984,000 for the same period in 2024[81]. - The company issued stock-based compensatory awards totaling $6,000,000 for the nine months ended September 30, 2025[80]. - As of September 30, 2025, there were 259,423 shares available for future grants under the 2025 Director Incentive Plan[79]. Segment Performance - Net revenue for the Cardiopulmonary segment in Q3 2025 was $203.2 million, a 17.9% increase from $172.2 million in Q3 2024[91]. - Neuromodulation segment revenue for Q3 2025 reached $149.5 million, up 6.3% from $139.9 million in Q3 2024[91]. - Segment income for Cardiopulmonary in Q3 2025 was $24.7 million, up from $21.7 million in Q3 2024, while Neuromodulation segment income increased to $56.2 million from $49.5 million[92]. Miscellaneous - The company identified and corrected an immaterial error in employee cost classification, with no impact on operating income or net income for prior periods[28]. - The company expects the new accounting standards to have no material effect on its consolidated financial statements[99]. - A correction was made to previously issued financial statements, adjusting cost of sales for the twelve months ended December 31, 2024, by $17.4 million[101].

Financial Data and Key Metrics Changes - LivaNova reported a revenue of $358 million for Q3 2025, reflecting an 11% increase on a constant currency basis and a 13% increase on an organic basis compared to the prior year [10][11] - Adjusted diluted earnings per share rose to $1.11, up from $0.90 in Q3 2024, primarily driven by adjusted operating income growth [12][13] - Adjusted operating income was $80 million, compared to $64 million in Q3 2024, resulting in an adjusted operating income margin of 23%, up from 20% [12][18] - Cash balance increased to $646 million from $429 million at year-end 2024, with total debt reduced to $434 million from $628 million [13] Business Line Data and Key Metrics Changes - The cardiopulmonary segment generated $203 million in revenue, a 16% increase year-over-year, with heart-lung machine revenue growing over 20% [5][6] - Epilepsy revenue increased by 6% compared to Q3 2024, with growth across all regions, particularly a 12% increase in Europe and Rest of World [7][8] - The company raised its overall organic revenue growth outlook to between 9.5% and 10.5% for the full year 2025 [9] Market Data and Key Metrics Changes - The cardiopulmonary revenue growth forecast for 2025 was adjusted to 12.5-13.5%, up from 12-13% previously, reflecting strong market and share growth for consumables [7] - The epilepsy revenue growth forecast for 2025 was raised to 5-6%, up from 4.5-5.5%, indicating strong commercial execution globally [8] Company Strategy and Development Direction - LivaNova launched a new strategic framework and branding to reflect its focus on growth and innovation [5] - The company is investing in obstructive sleep apnea and difficult-to-treat depression programs, which are seen as significant opportunities for future growth [19] - The company aims to leverage its neuromodulation expertise to expand into additional attractive markets [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum and creating lasting value for patients, customers, and shareholders [19] - The company acknowledged the dynamic environment regarding tariffs and indicated a proactive approach to manage their impact [17] Other Important Information - Adjusted gross margin was 69%, slightly down from 70% in Q3 2024, influenced by unfavorable currency changes and product mix [11] - The company expects to see a significant impact from the ESSENCE product launch in China, with a majority of growth anticipated in 2026 [6][40] Q&A Session Summary Question: Insights on Q4 guidance and implied earnings outlook - Management indicated that the Q4 guidance reflects a conservative approach, with the impact of the printed circuit board investment being a key factor [24][25] Question: Clarification on oxygenator capacity and third-party supply - Management confirmed ongoing capacity expansion of approximately 15% but noted that actual output would be below 10% due to third-party component supply limitations [27][28] Question: Expectations for the Chinese market and ESSENCE rollout - The commercial launch in China received positive feedback, and management expects significant contributions to growth starting in 2026 [39][40] Question: Trajectory of the epilepsy business and market penetration - Management highlighted strong execution and positive feedback from the clinical community regarding the core VNS study, which is expected to drive market penetration [44][91] Question: Updates on the depression program and reimbursement process - Management indicated that the timeline for the depression program remains unchanged, with expectations for a decision within approximately one year [50][51]

November 5, 2025 Third-Quarter 2025 Earnings Update Safe Harbor Certain statements in this material, other than statements of historical or current fact, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. These statements include, but are not limited to, LivaNova's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distr ...