Group 1 - The article highlights an increasing focus on UK-based companies, particularly in sectors such as energy, telecommunications, finance, and consumer staples [1] - The author has been actively investing more capital into these UK-based companies, indicating a positive outlook on their performance [1] Group 2 - There is a mention of a beneficial long position in the shares of SEMHF, suggesting confidence in the stock's future performance [1]

Financial Data and Key Metrics Changes - The meeting discussed the voting results, indicating that more than 46,000,000 ordinary shares, representing approximately 84% of all voting rights, participated in the meeting [8]. Business Line Data and Key Metrics Changes - No specific data on business lines was provided during the meeting. Market Data and Key Metrics Changes - No specific market data was discussed during the meeting. Company Strategy and Development Direction and Industry Competition - The company proposed several resolutions related to director elections and compensation, indicating a focus on governance and executive remuneration [10][11]. Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during the meeting. Other Important Information - The meeting was conducted virtually to maximize shareholder participation [2]. - The company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, was present for questions during the Q&A portion [5]. Q&A Session Summary Question: Have any questions been received? - No questions were received during the meeting, indicating a lack of immediate shareholder inquiries [14].

Summary of LivaNova (LIVN) 2025 Conference Call Company Overview - **Company**: LivaNova (LIVN) - **Industry**: Medical Supplies and Devices - **Key Focus Areas**: Cardiopulmonary and Neuromodulation markets, specifically in epilepsy and obstructive sleep apnea (OSA) [5][6] Core Business Insights - **Market Position**: LivaNova operates in large, growing markets driven by cardiovascular and neurological diseases, which are significant global health burdens [5] - **Leadership**: The company is a leader in the cardiopulmonary and epilepsy markets, with a strategic focus on expanding into high-growth areas with unmet needs [6] - **Growth Performance**: Achieved double-digit growth in eight out of the last nine quarters, primarily driven by the cardiopulmonary portfolio [8] Financial Performance - **Cardiopulmonary Growth Drivers**: - Strong market growth - Pricing capabilities and momentum - Market share gains in disposable products, particularly oxygenators - Successful launch of the new heart-lung machine, Essence, which has a significant pricing upgrade and customer benefits [8][9] New Business Developments - **Obstructive Sleep Apnea (OSA)**: - Strong clinical data from the OSEPRY trial, with ongoing market access approvals in the U.S. and a PMA submission to the FDA [10][11] - **Difficult to Treat Depression**: - Positive 24-month data showing significant improvements, with reimbursement requests submitted to CMS [12][19] Clinical Data Highlights - **Difficult to Treat Depression (DTD)**: - Over 80% of patients maintained treatment effects at 24 months, with a 10% increase in efficacy and a 40% reduction in suicidality compared to sham [17][18] - **Epilepsy Treatment**: - Significant reductions in seizures observed in various patient populations, with an 80% reduction in focal seizures with impaired awareness [35][36] Market Strategy and Future Outlook - **Commercialization Strategy**: - Confidence in the ability to commercialize independently while exploring partnerships to enhance market reach [27][28] - **Market Size**: - The addressable market for OSA is over $1 billion, growing at double digits, with potential for expansion due to the complexity of patients treated [32] Competitive Landscape - **Cardiopulmonary Market**: - LivaNova holds approximately 70% market share globally for heart-lung machines, with a target of 60% placement penetration for the Essence machine this year [41][42] - **Oxygenator Market**: - Increased market share from 30% to nearly 40% due to expanded manufacturing capacity and upcoming product innovations [46][47] Challenges and Risks - **Regulatory and Safety Issues**: - Anticipated deferred procedures due to a voluntary field safety notice affecting a small percentage of generators, with expected impacts on Q2 financials [50][51] - **Tariff Impacts**: - A $5 million tariff headwind factored into guidance, with minimal impact expected due to the company's manufacturing footprint [52][53] Capital Allocation Strategy - **Focus Areas**: - Continued investment in the epilepsy business, OSA, and difficult to treat depression markets, leveraging neuromodulation capabilities for growth [58][59] Conclusion - LivaNova is positioned for growth in attractive markets with a strong focus on innovation and addressing unmet medical needs, while navigating regulatory challenges and competitive dynamics [5][6][12]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=7&type=section&id=Item%201%2E%20Financial%20Statements%20%28unaudited%29) The company reported a Q1 net loss of $327.3 million due to a one-time litigation expense, despite 7.4% revenue growth Condensed Consolidated Statements of Income (Loss) (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net revenue** | $316,855 | $294,912 | | **Gross profit** | $220,775 | $207,390 | | **Operating income** | $48,617 | $16,246 | | **SNIA environmental liability expense** | ($360,393) | $0 | | **Net loss** | ($327,322) | ($41,943) | | **Diluted loss per share** | ($6.01) | ($0.78) | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $738,437 | $428,858 | | Total Assets | $2,558,746 | $2,506,389 | | SNIA environmental liability | $360,393 | $0 | | Total Liabilities | $1,524,448 | $1,186,131 | | Total Stockholders' Equity | $1,034,298 | $1,320,258 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $23,966 | $9,981 | | Net cash used in investing activities | ($10,628) | ($6,363) | | Net cash (used in) provided by financing activities | ($4,421) | $37,147 | - On May 2, 2025, LivaNova made an early repayment of **$200 million** of principal borrowings under its Term Facilities[91](index=91&type=chunk) [Note 5. Commitments and Contingencies](index=17&type=section&id=Note%205%2E%20Commitments%20and%20Contingencies) The company details significant legal liabilities, including a new $360.4 million charge for the SNIA environmental litigation - As a result of the Italian Supreme Court's decision on March 14, 2025, the Company recorded a current liability of **€333.3 million ($360.4 million)** for the SNIA environmental litigation[62](index=62&type=chunk)[63](index=63&type=chunk) - Following the court decision, the SNIA Litigation Guarantee was terminated on March 31, 2025, and the restriction on the cash deposit held as collateral was released[64](index=64&type=chunk) - The provision for the 3T Heater-Cooler product liability litigation was **$16.2 million** as of March 31, 2025[65](index=65&type=chunk) - The reserve for the Italian MedTech payback measure was **$17.6 million** as of March 31, 2025[67](index=67&type=chunk) [Note 10. Geographic and Segment Information](index=22&type=section&id=Note%2010%2E%20Geographic%20and%20Segment%20Information) Both Cardiopulmonary and Neuromodulation segments reported revenue and income growth, with the U.S as the largest market Net Revenue by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | $176,320 | $155,891 | 13.1% | | Neuromodulation | $138,893 | $133,872 | 3.8% | | **Total** | **$315,213** | **$289,763** | **8.8%** | Segment Income (in thousands) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | $24,691 | $14,711 | 67.8% | | Neuromodulation | $52,353 | $46,678 | 12.2% | | **Total Segment Income** | **$77,044** | **$61,389** | **25.5%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth drivers, operating expense reductions, and the impact of the $360.4 million SNIA liability - Cardiopulmonary revenue increased **13.1% to $176.3 million**, driven by Essenz Perfusion System sales and strong consumables demand[112](index=112&type=chunk) - Neuromodulation revenue increased **3.8% to $138.9 million**, with strength in Europe and Rest of World regions[114](index=114&type=chunk) - R&D expense decreased, primarily due to a **$5.3 million reduction** in costs associated with the company's Difficult-to-Treat Depression (DTD) program[119](index=119&type=chunk) - The company recorded a **$360.4 million liability** for the SNIA environmental litigation following an adverse ruling by the Italian Supreme Court[123](index=123&type=chunk) - The company believes its liquidity, including **$738.4 million in cash** and **$225 million in available credit**, is sufficient to cover the SNIA liability and fund operations[131](index=131&type=chunk)[133](index=133&type=chunk) [Obstructive Sleep Apnea (OSA)](index=29&type=section&id=Obstructive%20Sleep%20Apnea) The OSPREY clinical trial for the aura6000 System showed positive 12-month top-line data for treating OSA - Announced 12-month top-line data from the OSPREY clinical trial for the aura6000 System for treating OSA[105](index=105&type=chunk) - The treatment arm responder rate was **65%**, with responders defined as having at least a 50% improvement from baseline AHI and an AHI value below 20[105](index=105&type=chunk) [Depression](index=29&type=section&id=Depression) The RECOVER clinical study for DTD did not meet its primary endpoint, but the company plans a CMS submission - The RECOVER clinical study for DTD **did not meet its primary endpoint** for the unipolar cohort[107](index=107&type=chunk) - The company plans to initiate a reconsideration submission process with CMS after the final critical manuscript is published[107](index=107&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's available short-term liquidity totaled $963.4 million, deemed sufficient to fund operations and commitments Liquidity and Debt Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $738,437 | $428,858 | | Availability under Credit Agreement | $225,000 | $225,000 | | **Available Short-term Liquidity** | **$963,437** | **$653,858** | | Working Capital | $429,578 | $735,061 | | Total Debt Obligations | $628,793 | $627,628 | - Cash provided by operating activities increased by **$14.0 million** year-over-year, mainly due to higher customer collections and lower payments for restructuring[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency, interest rates, and supplier concentration - The company is exposed to market risks from foreign currency exchange rates, equity price risk, interest rates, and supplier concentration[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were **effective**[140](index=140&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[141](index=141&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201%2E%20Legal%20Proceedings) This section refers to Note 5 for details on material legal proceedings like the SNIA litigation and 3T cases - For a description of material pending legal proceedings, the report refers to "Note 5. Commitments and Contingencies" in the condensed consolidated financial statements[142](index=142&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A%2E%20Risk%20Factors) The company highlights an updated risk concerning adverse changes in global trade policies, tariffs, and import/export costs - A key risk factor highlighted is that adverse changes in export/import costs, trade restrictions, and global tariffs could **materially harm the business**[144](index=144&type=chunk) - A significant number of Cardiopulmonary products are sourced from Italy and Germany, while Neuromodulation products are made in the U.S. and distributed internationally, making the company **vulnerable to tariffs and trade disputes**[144](index=144&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[146](index=146&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205%2E%20Other%20Information) The company reports no new officer trading plans and discloses continued lawful sales to distributors in Iran - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter[149](index=149&type=chunk) - Two non-U.S. subsidiaries sell medical devices in Iran, with gross revenue of **$5.1 million** and net profits of **$3.0 million** for Q1 2025[151](index=151&type=chunk)

Financial Data and Key Metrics Changes - The company achieved $317 million in revenue for Q1 2025, reflecting a 9% increase on a constant currency basis and a 10% increase on an organic basis compared to the prior year [29][30] - Adjusted operating income rose to $65 million, up from $53 million in Q1 2024, resulting in an adjusted operating income margin of 20% compared to 18% in the prior year [31][32] - Adjusted diluted earnings per share increased to $0.88 from $0.73 in Q1 2024, driven by operating income growth despite a higher effective tax rate [32] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue was $176 million, a 15% increase year-over-year, with heart-lung machine revenue growing approximately 30% [12][13] - Epilepsy revenue increased by 4%, with Europe and the rest of the world regions growing a combined 13% [15][17] - The company expects cardiopulmonary revenue to grow 9% to 10% for the full year 2025, up from a previous forecast of 7% to 8% [13][14] Market Data and Key Metrics Changes - The U.S. Epilepsy business experienced a 2% growth year-over-year, impacted by procedure deferrals due to a voluntary field safety notification [16][17] - The company anticipates low single-digit growth in the U.S. for epilepsy, while Europe and the rest of the world are expected to grow in the low double digits [17][19] Company Strategy and Development Direction - The company is focused on expanding its portfolio in areas of high unmet clinical need, particularly in neuromodulation and OSA [52][43] - The recent twelve-month data from the OSREY trial positions OSA as a significant long-term growth opportunity [8][43] - The company is investing in additional manufacturing capacity to support growth in cardiopulmonary and neuromodulation segments [14][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff impacts, estimating a negligible effect on adjusted operating income for the year [39][75] - The Italian Supreme Court's decision regarding the SNEA matter is seen as a positive development, allowing for greater capital allocation flexibility [36][43] - The company raised its overall organic growth outlook by 100 basis points to between 7% and 8% for 2025, reflecting strong first-quarter performance [19][40] Other Important Information - The company recorded a liability of $360 million related to the SNEA litigation, which is expected to retire a long-standing overhang [9][35] - Adjusted free cash flow for the quarter was $20 million, up from $11 million in the prior year, driven by stronger operating results [33][37] Q&A Session Summary Question: Can you help us understand the OSSPREY data in a competitive context? - Management highlighted the strength of the clinical data, noting that the trial included more severe patients and achieved a rapid therapeutic response [47][48] Question: What is the outlook for the HLM business and Essence rollout? - Management indicated strong demand for oxygenators and a significant increase in Essence placements, with regulatory approval in China being a major milestone [54][56] Question: Can you elaborate on the changes in the OUS Neuromodulation business? - Management noted improved commercial execution in Europe, with a focus on strengthening talent and customer segmentation [64][66] Question: What is the impact of tariffs on the company's guidance? - Management confirmed that the $5 million tariff impact is included in the guidance, with some pricing actions assumed to offset costs [70][75] Question: How does the company view its leverage ratio and capital allocation? - Management expressed confidence in a healthy leverage ratio and indicated a focus on investing in core businesses while remaining open to inorganic growth opportunities [88][89]

Financial Data and Key Metrics Changes - The company achieved $317 million in revenue for Q1 2025, reflecting a 9% increase on a constant currency basis and a 10% increase on an organic basis compared to the prior year [29] - Adjusted operating income rose to $65 million, up from $53 million in Q1 2024, resulting in an adjusted operating income margin of 20% compared to 18% in the prior year [31] - Adjusted diluted earnings per share increased to $0.88 from $0.73 in Q1 2024, driven by operating income growth [32] - Cash balance at March 31 was $738 million, up from $429 million at year-end 2024, primarily due to the reclassification of $295 million of restricted cash [32][33] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue was $176 million, a 15% increase year-over-year, with heart-lung machine revenue growing approximately 30% [11] - Epilepsy segment revenue increased by 4%, with U.S. revenue growth at 2% and Europe and rest of world regions combined growth at 13% [14][16] - The company expects cardiopulmonary revenue to grow 9% to 10% for the full year 2025, up from a previous forecast of 7% to 8% [12] Market Data and Key Metrics Changes - The company reported strong demand for oxygenated products, with growth in the high single digits driven by customer demand and pricing [11] - The U.S. epilepsy business faced procedure deferrals due to a voluntary field safety notification, impacting revenue by less than $2 million [15] - The company anticipates low single-digit growth in the U.S. epilepsy market, with Europe and rest of world regions expected to grow in low double digits [16] Company Strategy and Development Direction - The company is focused on expanding its portfolio into areas of high unmet clinical need, particularly in neuromodulation and OSA [52][43] - The company is investing in additional manufacturing capacity to support growth in cardiopulmonary products and anticipates sustaining double-digit growth in heart-lung machines [13][58] - The company is pursuing Medicare coverage for VNS therapy for treatment-resistant depression, which represents a significant growth opportunity [27][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff impacts, estimating a negligible effect on adjusted operating income for the year [39][40] - The company believes the Italian Supreme Court's decision regarding the SNEA matter effectively removes a long-standing overhang, allowing for greater capital allocation flexibility [37][43] - Management raised the overall organic growth outlook by 100 basis points to between 7% and 8% for 2025, reflecting strong first-quarter performance [19] Other Important Information - The company recorded a liability of $360 million related to the SNEA litigation, which is expected to impact adjusted diluted earnings per share by approximately $0.20 for the remainder of 2025 [36][37] - The company is implementing a tariff mitigation plan that includes a holistic assessment of its supply chain and potential pricing actions [38][39] Q&A Session Summary Question: Can you help us frame where the OSSPREY data puts you on a market competitive basis? - Management highlighted the strength of the clinical data, noting that the trial enrolled more severe patients and achieved a rapid therapeutic response, with 65% of patients responding at twelve months [47][48] Question: What is the outlook for the HLM business and Essence placement rollout? - Management indicated that Essence represented 40% of all HLM placements in 2024 and is expected to reach 60% in 2025, with strong demand and regulatory approvals in new markets like China [58][59] Question: Can you provide more detail on the U.S. Neuromodulation business and updated guidance? - Management noted improved commercial execution in Europe and rest of the world, with a focus on maximizing VNS therapy access in the underpenetrated drug-resistant epilepsy population [64][66] Question: What is the impact of tariffs on guidance? - Management confirmed that the estimated tariff impact on adjusted operating income is less than $5 million, with mitigation strategies potentially offsetting some costs [70][74] Question: How does the company view its leverage ratio and capital allocation flexibility? - Management stated that the leverage ratio is healthy, allowing for continued investment in core businesses and potential inorganic growth opportunities [88][90]

Core Viewpoint - LivaNova reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and showing an increase from $0.73 per share a year ago, representing a 17.33% earnings surprise [1][2] Financial Performance - The company achieved revenues of $316.9 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.41%, and up from $294.9 million year-over-year [2] - Over the last four quarters, LivaNova has consistently surpassed consensus EPS estimates four times and revenue estimates three times [2] Stock Performance - LivaNova shares have declined approximately 24.1% since the beginning of the year, contrasting with the S&P 500's decline of 4.7% [3] - The current Zacks Rank for LivaNova is 4 (Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $1.01 on revenues of $331.03 million, and for the current fiscal year, it is $3.65 on revenues of $1.3 billion [7] - The outlook for the Medical - Instruments industry is favorable, ranking in the top 35% of over 250 Zacks industries, suggesting potential for better performance compared to lower-ranked industries [8]

Financial Performance - Net revenue increased by 8.9% on a constant-currency basis and 10.4% organically[15] - Cardiopulmonary revenue grew by 15.0%, driven by Essenz™ Perfusion system sales and consumables demand[12] - Neuromodulation revenue increased by 4.7%, with strength in Europe and Rest of World regions[12] - U S Epilepsy revenue grew 2.2%, partially impacted by procedure deferrals[12] - Adjusted diluted EPS was $0.88[12] - Adjusted free cash flow was $20 million[12] Guidance and Outlook - Full-year 2025 revenue guidance raised by 100 basis points to 6.0% - 7.0% on a constant-currency basis and 7.0% - 8.0% on an organic basis[10] - Full-year 2025 adjusted diluted earnings per share range revised to $3.60 - $3.70[10] - Adjusted operating income margin increase of > 190bps and adjusted operating income growth of > 15% is expected[45] - Targeting $135 - $155 million of adjusted free cash flow for full-year 2025[39] SNIA Environmental Liability - Recorded a liability of €333.3 million ($360.4 million as of March 31, 2025) related to SNIA environmental liability ruling[10]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) [Q1 2025 Performance Summary](index=1&type=section&id=Q1%202025%20Performance%20Summary) LivaNova reported strong Q1 2025 organic revenue growth and expanded margins, despite a significant SNIA liability, with key product advancements Q1 2025 Key Financial Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Net Revenue | $316.9 million | +7.4% Reported, +10.4% Organic YoY | | GAAP Diluted EPS | ($6.01) | Impacted by SNIA environmental liability | | Adjusted Diluted EPS | $0.88 | - | | Net Cash from Operations | $24.0 million | - | | Adjusted Free Cash Flow | $20.0 million | - | - The company recorded a significant liability of **$360.4 million** related to the SNIA environmental case, which heavily impacted GAAP earnings[5](index=5&type=chunk)[11](index=11&type=chunk) - Completed the Premarket Approval (PMA) submission to the U.S. FDA for the aura6000™ System, designed to treat obstructive sleep apnea (OSA)[5](index=5&type=chunk) - Announced positive 12-month top-line data from the OSPREY trial for OSA, showing a **65% active patient responder rate** and a **68% median reduction** in the apnea-hypopnea index[5](index=5&type=chunk)[6](index=6&type=chunk) [First-Quarter 2025 Results](index=2&type=section&id=First-Quarter%202025%20Results) [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Q1 2025 net revenue grew 7.4% (10.4% organic), driven by Cardiopulmonary's strong growth and Neuromodulation's contributions Q1 2025 Revenue by Segment (in millions) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Cardiopulmonary | $176.3 | $155.9 | 13.1% | 15.0% | | Neuromodulation | $138.9 | $133.9 | 3.8% | 4.7% | | **Total Net Revenue** | **$316.9** | **$294.9** | **7.4%** | **8.9%** | - Cardiopulmonary growth was driven by sales of the Essenz Perfusion System and strong demand for consumables across all regions[8](index=8&type=chunk) - Neuromodulation growth was primarily driven by strength in the Europe and Rest of World regions[8](index=8&type=chunk) [Earnings Analysis](index=3&type=section&id=Earnings%20Analysis) Q1 2025 GAAP operating income increased, but a significant SNIA liability caused a GAAP diluted loss per share, while adjusted metrics improved Q1 Operating Income Comparison (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Operating Income | $48.6 | $16.2 | | Adjusted Operating Income | $64.6 | $53.1 | Q1 Earnings Per Share Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Diluted Loss Per Share | ($6.01) | ($0.78) | | Adjusted Diluted Earnings Per Share | $0.88 | $0.73 | [Additional Updates](index=3&type=section&id=Additional%20Updates) A **$360.4 million** SNIA environmental liability was recorded, impacting 2025 adjusted diluted EPS by approximately **$0.20** and leading to debt repayment - On March 14, 2025, the Italian Supreme Court held LivaNova liable for SNIA's environmental liabilities, resulting in the company recording a liability of **$360.4 million**[11](index=11&type=chunk) - Following the court decision, the SNIA Litigation Guarantee was terminated, and on May 2, 2025, LivaNova repaid **$200.0 million** of its Term Facilities[11](index=11&type=chunk) - The remaining Term Facilities balance is now considered part of the permanent capital structure and will no longer be excluded from non-GAAP measures, reducing the 2025 adjusted diluted EPS forecast by about **$0.20**[11](index=11&type=chunk) [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) [Updated FY2025 Outlook](index=4&type=section&id=Updated%20FY2025%20Outlook) LivaNova raised FY2025 revenue growth guidance, revised adjusted diluted EPS due to SNIA impact and tariffs, and maintained free cash flow guidance Full-Year 2025 Guidance Update | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Revenue Growth (Constant-Currency) | 6.0% to 7.0% | 5.0% to 6.0% | | Revenue Growth (Organic) | 7.0% to 8.0% | 6.0% to 7.0% | | Adjusted Diluted EPS | $3.60 to $3.70 | $3.65 to $3.75 | | Adjusted Free Cash Flow | $135M to $155M | $135M to $155M | - The revision to the adjusted diluted EPS range incorporates the impact of the SNIA decision and currently applicable tariffs[14](index=14&type=chunk) - The expected headwind from foreign currency is now smaller, estimated at **0.0% to 1.0%**, compared to the previous estimate of **1.5% to 2.0%**[13](index=13&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) [Net Revenue](index=9&type=section&id=Net%20Revenue) Detailed net revenue breakdown by segment and geography for Q1 2025 and Q1 2024, illustrating growth across most regions and segments Q1 2025 Net Revenue by Geography (in millions) | Region/Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Cardiopulmonary** | | | | | U.S. | $60.8 | $50.6 | 20.3% | | Europe | $44.5 | $40.9 | 8.7% | | Rest of World | $71.0 | $64.4 | 10.2% | | **Neuromodulation** | | | | | U.S. | $108.3 | $105.9 | 2.3% | | Europe | $15.2 | $13.4 | 13.3% | | Rest of World | $15.4 | $14.5 | 5.7% | | **Total U.S.** | **$169.2** | **$160.6** | **5.3%** | | **Total Europe** | **$59.7** | **$54.3** | **9.9%** | | **Total Rest of World** | **$88.0** | **$80.0** | **10.1%** | [Condensed Consolidated Statements of Income (Loss)](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) Q1 2025 unaudited income statement shows a net loss of **$327.3 million**, or **($6.01)** per diluted share, primarily due to a **$360.4 million** SNIA environmental liability Q1 2025 Condensed Consolidated Statement of Income (Loss) (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net revenue | $316.9 | $294.9 | | Gross profit | $220.8 | $207.4 | | Operating income | $48.6 | $16.2 | | SNIA environmental liability expense | ($360.4) | — | | Loss before tax | ($315.6) | ($34.2) | | Net loss | ($327.3) | ($41.9) | | Diluted loss per share | ($6.01) | ($0.78) | [Condensed Consolidated Balance Sheets](index=14&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The March 31, 2025 balance sheet shows total assets of **$2,558.7 million** and liabilities of **$1,524.4 million**, with increased cash and a new SNIA liability Condensed Balance Sheet Highlights (in millions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $738.4 | $428.9 | | Restricted cash | — | $294.7 | | Total Assets | $2,558.7 | $2,506.4 | | SNIA environmental liability | $360.4 | — | | Total Liabilities | $1,524.4 | $1,186.1 | | Total Stockholders' Equity | $1,034.3 | $1,320.3 | [Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 net cash from operating activities increased to **$24.0 million**, influenced by the SNIA environmental liability add-back, with cash used in investing and financing activities Q1 Statement of Cash Flows Highlights (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24.0 | $10.0 | | Net cash used in investing activities | ($10.6) | ($6.4) | | Net cash (used in) provided by financing activities | ($4.4) | $37.1 | | Net increase in cash, cash equivalents, and restricted cash | $14.9 | $37.8 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Reconciliation of Key Operating Metrics](index=11&type=section&id=Reconciliation%20of%20Key%20Operating%20Metrics) This section reconciles Q1 2025 GAAP net loss to adjusted net income, primarily driven by the **$363.6 million** SNIA liability adjustment Q1 2025 GAAP to Non-GAAP Reconciliation (in millions, except EPS) | Metric | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $48.6 | $16.0 | $64.6 | | Net (Loss) Income | ($327.3) | $375.4 | $48.1 | | Diluted EPS | ($6.01) | $6.89 | $0.88 | - Major adjustments for Q1 2025 included SNIA environmental liability, stock-based compensation, amortization, and certain financing and legal costs[35](index=35&type=chunk) [Reconciliation of Free Cash Flow and Organic Revenue](index=16&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow%20and%20Organic%20Revenue) This section reconciles Q1 2025 adjusted free cash flow to **$20.0 million** and organic revenue growth to **10.4%** after excluding divested business revenue Q1 2025 Adjusted Free Cash Flow Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $24.0 | | Less: Purchases of plant, property, and equipment | ($10.8) | | Add: SNIA financing costs | $6.5 | | Other Adjustments | ($0.4) | | **Adjusted free cash flow** | **$20.0** | Q1 2025 Organic Revenue Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP net revenue | $316.9 | $294.9 | | Less: ACS Revenue | — | $4.1 | | **Organic net revenue** | **$316.9** | **$290.8** |

Financial Data and Key Metrics Changes - The company achieved 11% organic revenue growth in 2024, marking the second consecutive year of double-digit organic growth [7] - Adjusted operating income grew by 41%, and adjusted diluted earnings per share increased by 21% [15] - Adjusted free cash flow for the full year was $163 million, up from $96 million in the prior year, representing a 70% growth [48] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue was $182 million in Q4 2024, an increase of 11% year-over-year [17] - Epilepsy revenue increased by 1% in Q4 2024, with U.S. epilepsy revenue growing by 4% year-over-year [21][22] - For the full year, cardiopulmonary revenue was $684 million, growing 14%, while epilepsy revenue grew 7% [19][23] Market Data and Key Metrics Changes - The hypoglossal nerve stimulation market for obstructive sleep apnea (OSA) is expected to approach $2 billion by the end of the decade [9] - The company anticipates U.S. epilepsy revenue to grow 4% to 5% in 2025, with expectations for a return to high-single-digit growth in Europe and the rest of the world [24][25] Company Strategy and Development Direction - The company plans to increase investment in product development to ensure a competitive and differentiated product portfolio [9] - A focus on innovation and talent development is emphasized, with approximately 30% of director-level positions filled by new hires or internal promotions [12] - The company aims to sustain growth in core businesses while entering faster growth markets like OSA and difficult-to-treat depression [80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical data supporting OSA and the potential for significant market growth due to high unmet needs [81] - The company is optimistic about its ability to return the epilepsy business to growth, addressing execution issues that impacted performance [87] - The guidance for 2025 includes organic revenue growth between 6% and 7%, reflecting continued investment in innovation [50][51] Other Important Information - The company expects to submit a PMA for OSA in the first half of 2025, with a limited commercial launch anticipated thereafter [85] - The Italian Supreme Court is expected to rule on the SNIA litigation in the first half of 2025, but the company has not included potential impacts in its guidance [53][54] Q&A Session Summary Question: Can you help us understand the U.S. and EU cardiopulmonary performance in the quarter? - Management acknowledged a challenging comparison due to prior year growth but noted sequential growth in HLM placements and strong demand for consumables [64] Question: What is the impact of the launch of the new ECMO-related product? - The Specialty Cannulae business is expected to grow approximately 10%, primarily driven by the launch of ProtekDuo Plus [76] Question: How much are you spending to prepare for the OSA launch? - The company invested $27 million in 2024 for OSA and plans to invest an additional $8 million in 2025, shifting focus from clinical spend to product development [83] Question: What are the execution issues in the OUS epilepsy business? - Management identified personnel issues as isolated incidents and expressed confidence in returning to growth levels historically seen in the OUS business [87] Question: Can you clarify the capital allocation strategy? - The company is focusing on sustaining growth in core businesses while also investing in faster growth markets like OSA and DTD, with a declining R&D spend as a percentage of sales [129][133]