[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) LivaNova reported strong Q2 2025 results with double-digit revenue growth and operating margin expansion, leading to raised full-year guidance and strategic investments in core and high-growth markets [Financial Summary and Highlights](index=1&type=section&id=Financial%20Summary%20and%20Highlights) LivaNova reported strong second-quarter 2025 results with double-digit revenue growth and operating margin expansion, leading to raised full-year 2025 guidance for revenue, adjusted EPS, and adjusted free cash flow - Delivered **double-digit reported and organic revenue growth** and continued operating margin expansion[4](index=4&type=chunk) - Raised full-year 2025 revenue, adjusted earnings per share, and adjusted free cash flow guidance[4](index=4&type=chunk) - Initiated process with U.S. Centers for Medicare and Medicaid Services (CMS) for reconsideration of national coverage for VNS Therapy™ for treatment-resistant depression, supported by five peer-reviewed publications from the RECOVER study[4](index=4&type=chunk) - Published 24-month data from the CORE-VNS study, showing adjunctive VNS Therapy is associated with substantial reductions in generalized tonic-clonic seizures in people with drug-resistant epilepsy (DRE)[4](index=4&type=chunk) Second-Quarter 2025 Key Financial Highlights | Metric | Q2 2025 Value | Change vs. Prior-Year Period | | :-------------------------------- | :------------ | :--------------------------- | | Revenue (Reported) | $352.5 million | +10.7% | | Revenue (Constant-Currency) | $352.5 million | +9.3% | | Revenue (Organic) | $352.5 million | +10.3% | | U.S. GAAP Diluted EPS | $0.50 | - | | Adjusted Diluted EPS | $1.05 | - | | Net Cash Provided by Operating Activities | $62.9 million | - | | Adjusted Free Cash Flow | $47.8 million | - | [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Vladimir Makatsaria highlighted strong Q2 revenue growth driven by Cardiopulmonary and Neuromodulation, attributing success to disciplined execution, operating margin expansion, and cash generation - Strong revenue growth driven by Cardiopulmonary business momentum and solid Neuromodulation performance across all regions[5](index=5&type=chunk) - Disciplined execution contributed to meaningful operating margin expansion and strong cash generation[5](index=5&type=chunk) - Strategy focuses on investing in core businesses, sustaining market leadership, and leveraging Neuromodulation capabilities into attractive high-growth markets like obstructive sleep apnea and difficult-to-treat depression[5](index=5&type=chunk) [Second-Quarter 2025 Financial Results](index=2&type=section&id=Second-Quarter%202025%20Financial%20Results) LivaNova achieved double-digit revenue growth in Q2 2025 across Cardiopulmonary and Neuromodulation segments, alongside significant increases in both GAAP and adjusted operating income and EPS [Revenue by Segment](index=2&type=section&id=Revenue%20by%20Segment) LivaNova's total net revenue for Q2 2025 increased by 10.7% reported and 9.3% constant-currency, with organic growth of 10.3%. Cardiopulmonary revenue saw significant growth (14.7% reported, 12.7% constant-currency) driven by consumables and Essenz™ Perfusion System sales. Neuromodulation also grew across all regions (6.2% reported, 5.6% constant-currency) Second-Quarter 2025 Revenue by Segment (in millions) | Segment | 2025 Revenue | 2024 Revenue | % Change (Reported) | % Change (Constant Currency) | | :-------------- | :----------- | :----------- | :------------------ | :--------------------------- | | Cardiopulmonary | $199.3 | $173.7 | 14.7 % | 12.7 % | | Neuromodulation | $151.7 | $142.9 | 6.2 % | 5.6 % | | Other Revenue | $1.6 | $2.0 | (20.3)% | (24.4)% | | **Total Net Revenue** | **$352.5** | **$318.6** | **10.7 %** | **9.3 %** | | Total Organic Net Revenue | $352.5 | $315.6 | N/A | 10.3 % | - Cardiopulmonary revenue growth was driven by strong consumables demand and Essenz™ Perfusion System sales across all regions[7](index=7&type=chunk) - Neuromodulation revenue increased across all regions[9](index=9&type=chunk) - Completed 36-month data analysis of the CORE-VNS study, demonstrating early and lasting outcomes of adjunctive VNS Therapy on severe focal seizures in both children and adults with DRE[8](index=8&type=chunk) - CMS recently proposed to move DRE end-of-service procedures beginning in 2026 from Level 4 into a Level 5 Ambulatory Payment Classification under the 2026 Medicare Hospital Outpatient Prospective Payment System[8](index=8&type=chunk) [Earnings Analysis](index=3&type=section&id=Earnings%20Analysis) For Q2 2025, LivaNova reported a significant increase in both GAAP and adjusted operating income and diluted earnings per share compared to Q2 2024, reflecting improved profitability Second-Quarter 2025 Earnings Analysis (in millions, except per share) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------- | :------ | :------ | :------- | | U.S. GAAP Operating Income | $54.2 | $40.2 | +34.8% | | Adjusted Operating Income | $77.4 | $66.9 | +15.7% | | U.S. GAAP Diluted EPS | $0.50 | $0.30 | +66.7% | | Adjusted Diluted EPS | $1.05 | $0.93 | +12.9% | [Full-Year 2025 Guidance](index=3&type=section&id=Full-Year%202025%20Guidance) LivaNova has raised its full-year 2025 guidance across key financial metrics, including revenue growth, adjusted diluted earnings per share, and adjusted free cash flow, reflecting increased confidence in its performance Full-Year 2025 Guidance Update | Metric | Prior Guidance | New Guidance | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Revenue Growth (Constant-Currency) | 6.0% to 7.0% | 8.0% to 9.0% | +200 bps | | Revenue Growth (Organic) | 7.0% to 8.0% | 9.0% to 10.0% | +200 bps | | Foreign Currency Impact | 0.0% to 1.0% headwind | ~1.0% tailwind | Shift to tailwind | | Adjusted Diluted EPS | $3.60 to $3.70 | $3.70 to $3.80 | +$0.10 at midpoint | | Adjusted Free Cash Flow | $135 million to $155 million | $140 million to $160 million | +$5 million at midpoint | [Company Information](index=3&type=section&id=Company%20Information) This section provides details on LivaNova's Q2 2025 earnings webcast and conference call, along with an overview of the company's global medical technology operations [Webcast and Conference Call Instructions](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Instructions) LivaNova hosted a live audiocast and conference call on August 6, 2025, to discuss its results, with replay available online for approximately 90 days - Live audiocast and conference call held on August 6, 2025, at 1 p.m. London time (8 a.m. Eastern Time)[15](index=15&type=chunk) - Replay accessible at www.livanova.com/events for approximately 90 days[16](index=16&type=chunk) [About LivaNova](index=4&type=section&id=About%20LivaNova) LivaNova PLC is a global medical technology company with nearly five decades of experience, headquartered in London. It focuses on delivering life-changing solutions for neurological and cardiac conditions, employing approximately 2,900 people and operating in over 100 countries - LivaNova PLC is a global medical technology company with nearly five decades of experience[17](index=17&type=chunk) - Headquartered in London, it employs approximately **2,900 employees** and has a presence in more than **100 countries**[17](index=17&type=chunk) - Focuses on delivering life-changing solutions in select neurological and cardiac conditions[17](index=17&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) LivaNova utilizes non-GAAP financial measures like constant-currency and organic revenue to provide a clearer view of operational performance, while forward-looking non-GAAP measures are not reconciled to GAAP due to inherent uncertainties [Use and Definition](index=4&type=section&id=Use%20and%20Definition) LivaNova uses non-GAAP financial measures to supplement U.S. GAAP, monitoring operational performance and benchmarking. These measures, such as constant-currency and organic revenue, provide a consistent basis for evaluating performance by excluding impacts from currency fluctuations, acquisitions, and divestitures - Non-GAAP measures are used by management to monitor operational performance and for benchmarking against other medical technology companies[18](index=18&type=chunk) - Constant-currency percent change excludes the impact from fluctuations in various currencies[19](index=19&type=chunk) - Organic revenue percent change excludes the impact of acquisitions, divestitures, and currency translation effects[19](index=19&type=chunk) [Forward-Looking Non-GAAP Measures](index=4&type=section&id=Forward-Looking%20Non-GAAP%20Measures) The company calculates forward-looking non-GAAP measures based on internal forecasts, omitting certain GAAP items like fair value changes of derivatives or asset impairment charges. Due to inherent uncertainty and variability of these adjustments, LivaNova does not reconcile forward-looking non-GAAP measures to their most directly comparable GAAP measures without unreasonable effort - Forward-looking non-GAAP financial measures are based on internal forecasts that omit certain amounts included in GAAP measures[20](index=20&type=chunk) - Examples of excluded items for adjusted diluted EPS guidance include changes in fair value of derivatives, contingent consideration arrangements, and asset impairment charges[21](index=21&type=chunk) - The company does not reconcile forward-looking non-GAAP financial measures to GAAP due to the uncertainty and variability of adjustments, making it impractical without unreasonable effort[21](index=21&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This section outlines LivaNova's forward-looking statements, emphasizing that actual results may differ materially due to known and unknown risks. It lists numerous factors that could cause discrepancies, including market volatility, supply chain pressures, cybersecurity incidents, regulatory changes, and litigation - Statements in the news release, other than historical facts, are 'forward-looking statements' subject to known and unknown risks[23](index=23&type=chunk)[24](index=24&type=chunk) - Actual financial results, performance, achievements, or prospects may differ materially from those expressed or implied by forward-looking statements[24](index=24&type=chunk) - Key risks include global market volatility, economic conditions, supply chain pressures, cybersecurity incidents, changes in technology, regulatory compliance, litigation (e.g., 3T Heater-Cooler), and environmental liabilities (e.g., SNIA)[24](index=24&type=chunk)[25](index=25&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company undertakes no obligation to update them except as required by law[27](index=27&type=chunk) [Investor Relations Contact](index=7&type=section&id=Investor%20Relations%20Contact) Briana Gotlin serves as the Vice President of Investor Relations for LivaNova, providing contact information for investor inquiries - Briana Gotlin is the Vice President, Investor Relations[28](index=28&type=chunk) - Contact information provided for investor inquiries: Phone: **+1 281 895 2382**, e-mail: **InvestorRelations@livanova.com**[28](index=28&type=chunk) [Detailed Financial Data and Reconciliations](index=8&type=section&id=Detailed%20Financial%20Data%20and%20Reconciliations) This section presents unaudited detailed financial statements, including net revenue by segment and region, condensed consolidated statements of income, balance sheets, cash flows, and various GAAP to non-GAAP reconciliations [Net Revenue by Segment and Region - Unaudited](index=8&type=section&id=Net%20Revenue%20by%20Segment%20and%20Region) This section provides detailed unaudited net revenue breakdowns for LivaNova's Cardiopulmonary and Neuromodulation segments across different regions for both the three and six months ended June 30, 2025 [Three Months Ended June 30, 2025](index=8&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For Q2 2025, LivaNova's total net revenue was $352.5 million, an increase of 10.7% reported and 9.3% constant-currency. Cardiopulmonary revenue grew 14.7% reported, with Europe showing the highest regional growth at 27.2%. Neuromodulation revenue increased 6.2% reported, with Europe also leading regional growth at 13.7% Q2 2025 Net Revenue by Segment and Region (U.S. dollars in millions) | Segment | Region | 2025 | 2024 | % Change | Constant-Currency % Change | | :-------------- | :------------- | :----- | :----- | :------- | :--------------------------- | | Cardiopulmonary | U.S. | $71.2 | $64.9 | 9.8 % | 9.8 % | | | Europe | $49.0 | $38.6 | 27.2 % | 20.3 % | | | Rest of World | $79.0 | $70.3 | 12.4 % | 11.3 % | | | **Total** | **$199.3** | **$173.7** | **14.7 %** | **12.7 %** | | Neuromodulation | U.S. | $117.2 | $111.7 | 5.0 % | 5.0 % | | | Europe | $17.7 | $15.6 | 13.7 % | 7.3 % | | | Rest of World | $16.7 | $15.6 | 7.1 % | 8.2 % | | | **Total** | **$151.7** | **$142.9** | **6.2 %** | **5.6 %** | | Other Revenue | | $1.6 | $2.0 | (20.3)% | (24.4)% | | **Totals** | **U.S.** | **$188.5** | **$179.5** | **5.0 %** | **5.0 %** | | | **Europe** | **$66.8** | **$51.3** | **30.3 %** | **23.1 %** | | | **Rest of World** | **$97.3** | **$87.8** | **10.8 %** | **10.0 %** | | | **Grand Total** | **$352.5** | **$318.6** | **10.7 %** | **9.3 %** | [Six Months Ended June 30, 2025](index=9&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) For the six months ended June 30, 2025, total net revenue was $669.4 million, up 9.1% reported and constant-currency. Cardiopulmonary revenue increased 14.0% reported, with the U.S. showing the highest growth at 14.4%. Neuromodulation revenue grew 5.0% reported, with Europe leading regional growth at 13.5% Six Months Ended June 30, 2025 Net Revenue by Segment and Region (U.S. dollars in millions) | Segment | Region | 2025 | 2024 | % Change | Constant-Currency % Change | | :-------------- | :------------- | :----- | :----- | :------- | :--------------------------- | | Cardiopulmonary | U.S. | $132.1 | $115.5 | 14.4 % | 14.4 % | | | Europe | $93.6 | $79.5 | 17.7 % | 15.5 % | | | Rest of World | $150.0 | $134.7 | 11.4 % | 12.3 % | | | **Total** | **$375.6** | **$329.6** | **14.0 %** | **13.8 %** | | Neuromodulation | U.S. | $225.6 | $217.6 | 3.7 % | 3.7 % | | | Europe | $32.9 | $29.0 | 13.5 % | 11.2 % | | | Rest of World | $32.1 | $30.1 | 6.4 % | 9.9 % | | | **Total** | **$290.6** | **$276.7** | **5.0 %** | **5.1 %** | | Other Revenue | | $3.2 | $7.1 | (54.8)% | (55.3)% | | **Totals** | **U.S.** | **$357.6** | **$340.2** | **5.1 %** | **5.1 %** | | | **Europe** | **$126.5** | **$105.6** | **19.8 %** | **17.5 %** | | | **Rest of World** | **$185.3** | **$167.7** | **10.5 %** | **11.8 %** | | | **Grand Total** | **$669.4** | **$613.5** | **9.1 %** | **9.1 %** | [Condensed Consolidated Statements of Income (Loss) - Unaudited](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) This section presents LivaNova's unaudited GAAP and adjusted condensed consolidated statements of income (loss) for the three and six months ended June 30, 2025, highlighting profitability and key adjustments [Three Months Ended June 30, 2025 (GAAP & Adjusted)](index=10&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20%28GAAP%20%26%20Adjusted%29) For Q2 2025, GAAP net income was $27.2 million ($0.50 diluted EPS), up from $16.3 million ($0.30 diluted EPS) in Q2 2024. Adjusted net income was $57.4 million ($1.05 adjusted diluted EPS), compared to $50.8 million ($0.93 adjusted diluted EPS) in the prior year, demonstrating improved profitability on both GAAP and adjusted bases Q2 2025 GAAP Condensed Consolidated Statements of Income (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Net revenue | $352.5 | $318.6 | | Gross profit | $239.0 | $214.9 | | Operating income | $54.2 | $40.2 | | Income before tax | $33.3 | $21.6 | | Net income | $27.2 | $16.3 | | Diluted income per share | $0.50 | $0.30 | Q2 2025 Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Adjusted SG&A | $121.4 | $108.7 | | Adjusted R&D | $44.0 | $41.3 | | Adjusted operating income | $77.4 | $66.9 | | Adjusted net income | $57.4 | $50.8 | | Adjusted diluted earnings per share | $1.05 | $0.93 | Q2 2025 GAAP vs. Adjusted Statistics (as a % of net revenue) | Metric | GAAP 2025 | GAAP 2024 | Adjusted 2025 | Adjusted 2024 | | :---------------- | :-------- | :-------- | :------------ | :------------ | | Gross profit | 67.8 % | 67.4 % | 68.9 % | 68.1 % | | Operating income | 15.4 % | 12.6 % | 21.9 % | 21.0 % | | Net income | 7.7 % | 5.1 % | 16.3 % | 15.9 % | | Income tax rate | 18.5 % | 24.2 % | 22.0 % | 20.8 % | [Six Months Ended June 30, 2025 (GAAP & Adjusted)](index=12&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20%28GAAP%20%26%20Adjusted%29) For the first six months of 2025, LivaNova reported a GAAP net loss of ($300.2) million (diluted loss per share of ($5.51)), significantly higher than the ($25.6) million loss in H1 2024, primarily due to a large SNIA environmental liability expense. However, adjusted net income increased to $105.5 million ($1.93 adjusted diluted EPS) from $90.8 million ($1.66 adjusted diluted EPS) in H1 2024, indicating underlying operational improvement H1 2025 GAAP Condensed Consolidated Statements of Income (Loss) (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Net revenue | $669.4 | $613.5 | | Gross profit | $455.2 | $418.1 | | Operating income | $102.8 | $56.4 | | Loss before tax | ($282.3) | ($12.6) | | Net loss | ($300.2) | ($25.6) | | Basic loss per share | ($5.51) | ($0.47) | | Diluted loss per share | ($5.51) | ($0.47) | - A significant **SNIA environmental liability expense of ($362.1) million** impacted GAAP loss before tax and net loss for the six months ended June 30, 2025[38](index=38&type=chunk) H1 2025 Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Adjusted SG&A | $237.1 | $217.8 | | Adjusted R&D | $82.2 | $84.1 | | Adjusted operating income | $141.9 | $120.0 | | Adjusted net income | $105.5 | $90.8 | | Adjusted diluted earnings per share | $1.93 | $1.66 | H1 2025 GAAP vs. Adjusted Statistics (as a % of net revenue) | Metric | GAAP 2025 | GAAP 2024 | Adjusted 2025 | Adjusted 2024 | | :---------------- | :-------- | :-------- | :------------ | :------------ | | Gross profit | 68.0 % | 68.1 % | 68.9 % | 68.8 % | | Operating income | 15.4 % | 9.2 % | 21.2 % | 19.6 % | | Net (loss) income | (44.8)% | (4.2)% | 15.8 % | 14.8 % | | Income tax rate | (6.3)% | (102.6)% | 23.0 % | 20.8 % | [Reconciliation of GAAP to Non-GAAP Financial Measures - Unaudited](index=14&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed unaudited reconciliations of LivaNova's GAAP financial measures to non-GAAP measures for operating income, net income, and diluted EPS for both quarterly and year-to-date periods [Three Months Ended June 30, 2025](index=14&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For Q2 2025, GAAP operating income of $54.2 million was adjusted to $77.4 million, primarily by adding back depreciation and amortization, contingent consideration remeasurement, certain legal & regulatory costs, and stock-based compensation costs. Net income reconciliation shows similar adjustments, leading to adjusted net income of $57.4 million Q2 2025 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $54.2 | | Restructuring Expenses | ($0.1) | | Depreciation and Amortization Expenses | $4.2 | | Contingent Consideration | $2.8 | | Certain Legal & Regulatory Costs | $7.1 | | Stock-based Compensation Costs | $9.2 | | **Adjusted Operating Income** | **$77.4** | Q2 2025 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | $0.50 | | Depreciation and Amortization | $0.08 | | Financing Transactions | $0.18 | | Contingent Consideration | $0.05 | | Certain Legal & Regulatory Costs | $0.16 | | Stock-based Compensation Costs | $0.17 | | Certain Tax Adjustments | ($0.18) | | Certain Interest Adjustments | $0.10 | | **Adjusted Diluted EPS** | **$1.05** | [Three Months Ended June 30, 2024](index=15&type=section&id=Three%20Months%20Ended%20June%2030%2C%202024) For Q2 2024, GAAP operating income of $40.2 million was adjusted to $66.9 million, with significant add-backs for depreciation and amortization, legal & regulatory costs, and stock-based compensation. Adjusted net income was $50.8 million, up from GAAP net income of $16.3 million Q2 2024 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $40.2 | | Restructuring Expenses | $2.1 | | Depreciation and Amortization Expenses | $4.3 | | Contingent Consideration | $0.4 | | Certain Legal & Regulatory Costs | $11.7 | | Stock-based Compensation Costs | $8.2 | | **Adjusted Operating Income** | **$66.9** | Q2 2024 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | $0.30 | | Restructuring Expenses | $0.04 | | Depreciation and Amortization | $0.08 | | Impairment | $0.11 | | Financing Transactions | $0.05 | | Contingent Consideration | $0.01 | | Certain Legal & Regulatory Costs | $0.21 | | Stock-based Compensation Costs | $0.15 | | Certain Tax Adjustments | ($0.15) | | Certain Interest Adjustments | $0.14 | | **Adjusted Diluted EPS** | **$0.93** | [Six Months Ended June 30, 2025](index=16&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) For H1 2025, GAAP operating income of $102.8 million was adjusted to $141.9 million, with significant add-backs including depreciation and amortization, contingent consideration, legal & regulatory costs (including SNIA environmental liability), and stock-based compensation. The GAAP net loss of ($300.2) million was adjusted to a net income of $105.5 million, primarily due to the large SNIA environmental liability adjustment H1 2025 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $102.8 | | Restructuring Expenses | ($0.2) | | Depreciation and Amortization Expenses | $8.3 | | Contingent Consideration | $3.7 | | Certain Legal & Regulatory Costs | $10.3 | | Stock-based Compensation Costs | $17.0 | | **Adjusted Operating Income** | **$141.9** | H1 2025 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | ($5.51) | | Depreciation and Amortization | $0.15 | | Financing Transactions | $0.07 | | Contingent Consideration | $0.07 | | SNIA environmental liability, legal & regulatory costs | $6.81 | | Stock-based Compensation Costs | $0.31 | | Certain Tax Adjustments | ($0.25) | | Certain Interest Adjustments | $0.26 | | **Adjusted Diluted EPS** | **$1.93** | [Six Months Ended June 30, 2024](index=17&type=section&id=Six%20Months%20Ended%20June%2030%2C%202024) For H1 2024, GAAP operating income of $56.4 million was adjusted to $120.0 million, with significant add-backs for restructuring, depreciation and amortization, legal & regulatory costs, and stock-based compensation. The GAAP net loss of ($25.6) million was adjusted to a net income of $90.8 million H1 2024 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $56.4 | | Restructuring Expenses | $11.4 | | Depreciation and Amortization Expenses | $8.6 | | Contingent Consideration | $0.3 | | Certain Legal & Regulatory Costs | $24.9 | | Stock-based Compensation Costs | $18.4 | | **Adjusted Operating Income** | **$120.0** | H1 2024 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | ($0.47) | | Restructuring Expenses | $0.21 | | Depreciation and Amortization | $0.16 | | Impairment | $0.11 | | Financing Transactions | $0.78 | | Contingent Consideration | $0.00 | | Certain Legal & Regulatory Costs | $0.46 | | Stock-based Compensation Costs | $0.34 | | Certain Tax Adjustments | ($0.20) | | Certain Interest Adjustments | $0.28 | | **Adjusted Diluted EPS** | **$1.66** | [Condensed Consolidated Balance Sheets - Unaudited](index=18&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, LivaNova's total assets remained stable at $2,506.7 million compared to December 31, 2024. Current assets decreased slightly due to a reduction in restricted cash, while current liabilities significantly increased to $827.1 million from $392.1 million, primarily driven by the recognition of a $392.3 million SNIA environmental liability and current contingent consideration Condensed Consolidated Balance Sheets (U.S. dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $593.6 | $428.9 | | Restricted cash | — | $294.7 | | Total Current Assets | $1,066.1 | $1,127.2 | | Total Assets | $2,506.7 | $2,506.4 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | SNIA environmental liability | $392.3 | — | | Current contingent consideration | $48.3 | — | | Total Current Liabilities | $827.1 | $392.1 | | Long-term debt obligations | $348.5 | $549.6 | | Total Liabilities | $1,383.9 | $1,186.1 | | Total Stockholders' Equity | $1,122.8 | $1,320.3 | | Total Liabilities and Stockholders' Equity | $2,506.7 | $2,506.4 | - Significant increase in current liabilities primarily due to the recognition of **SNIA environmental liability** and current contingent consideration[50](index=50&type=chunk) [Condensed Consolidated Statements of Cash Flows - Unaudited](index=19&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $86.9 million from $53.3 million in H1 2024, largely due to the SNIA environmental liability adjustment. Net cash used in investing activities remained stable. Net cash used in financing activities was ($213.4) million, a significant change from the $25.3 million provided in H1 2024, mainly due to debt repayments Condensed Consolidated Statements of Cash Flows (U.S. dollars in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $86.9 | $53.3 | | Net cash used in investing activities | ($19.6) | ($18.9) | | Net cash (used in) provided by financing activities | ($213.4) | $25.3 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | ($129.9) | $55.2 | | Cash, cash equivalents, and restricted cash at end of period | $593.6 | $633.1 | - Operating cash flow benefited from the **SNIA environmental liability adjustment**[52](index=52&type=chunk) - Financing activities shifted from cash provided to cash used, primarily due to repayment of long-term debt obligations[52](index=52&type=chunk) [Other Non-GAAP Reconciliations - Unaudited](index=20&type=section&id=Other%20Non-GAAP%20Reconciliations) This section provides unaudited reconciliations for LivaNova's income tax rate, organic net revenue, adjusted free cash flow, and adjusted diluted weighted average shares outstanding [Income Tax Rate Reconciliation](index=20&type=section&id=Income%20Tax%20Rate%20Reconciliation) For Q2 2025, the GAAP income tax rate was 18.5%, adjusted to 22.0%. For H1 2025, the GAAP income tax rate was (6.3)%, adjusted to 23.0%, reflecting the impact of certain tax adjustments on the reported loss Income Tax Rate Reconciliation (Three Months Ended June 30) | Metric | GAAP 2025 | Adjusted 2025 | GAAP 2024 | Adjusted 2024 | | :-------------- | :-------- | :------------ | :-------- | :------------ | | Income tax rate | 18.5 % | 22.0 % | 24.2 % | 20.8 % | Income Tax Rate Reconciliation (Six Months Ended June 30) | Metric | GAAP 2025 | Adjusted 2025 | GAAP 2024 | Adjusted 2024 | | :-------------- | :-------- | :------------ | :-------- | :------------ | | Income tax rate | (6.3)% | 23.0 % | (102.6)% | 20.8 % | [Organic Net Revenue Reconciliation](index=20&type=section&id=Organic%20Net%20Revenue%20Reconciliation) Organic net revenue for Q2 2025 was $352.5 million, representing a 10.3% constant-currency growth, after excluding $3.0 million from the former ACS segment in 2024. For H1 2025, organic net revenue was $669.4 million, a 10.4% constant-currency growth, after excluding $7.1 million from ACS in 2024 Organic Net Revenue Reconciliation (U.S. dollars in millions) | Period | GAAP Net Revenue | Less: ACS | Organic Net Revenue | Constant-Currency % Change (Organic) | | :-------------------------- | :--------------- | :-------- | :------------------ | :----------------------------------- | | Three Months Ended June 30, 2025 | $352.5 | — | $352.5 | 10.3 % | | Three Months Ended June 30, 2024 | $318.6 | $3.0 | $315.6 | N/A | | Six Months Ended June 30, 2025 | $669.4 | — | $669.4 | 10.4 % | | Six Months Ended June 30, 2024 | $613.5 | $7.1 | $606.4 | N/A | [Adjusted Free Cash Flow Reconciliation](index=20&type=section&id=Adjusted%20Free%20Cash%20Flow%20Reconciliation) For Q2 2025, adjusted free cash flow was $47.8 million, derived from net cash provided by operating activities of $62.9 million, adjusted for purchases of property, plant, and equipment, cybersecurity incident insurance proceeds, dividends received, and 3T Heater-Cooler litigation payments Adjusted Free Cash Flow Reconciliation (Three Months Ended June 30, 2025, U.S. dollars in millions) | Metric | Amount | | :-------------------------------- | :----- | | Net cash provided by operating activities | $62.9 | | Less: Purchases of plant, property, and equipment | ($15.1) | | Less: Cybersecurity incident insurance proceeds | ($1.0) | | Less: Dividends received from investments | ($0.4) | | Add: 3T Heater-Cooler litigation payments | $1.5 | | **Adjusted free cash flow** | **$47.8** | [Adjusted Diluted Weighted Average Shares Outstanding Reconciliation](index=21&type=section&id=Adjusted%20Diluted%20Weighted%20Average%20Shares%20Outstanding%20Reconciliation) For the six months ended June 30, 2025, adjusted diluted weighted average shares outstanding were 54.7 million, slightly higher than the GAAP diluted shares of 54.5 million due to the effects of stock-based compensation instruments Adjusted Diluted Weighted Average Shares Outstanding Reconciliation (shares in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | GAAP diluted weighted average shares outstanding | 54.5 | 54.2 | | Add: Effects of stock-based compensation instruments | 0.2 | 0.4 | | **Adjusted diluted weighted average shares outstanding** | **54.7** | **54.6** | [Supplemental Unaudited Revised Financial Information and Non-GAAP Measures](index=22&type=section&id=Supplemental%20Unaudited%20Revised%20Financial%20Information) LivaNova identified and corrected an immaterial error in Q2 2025 related to the classification of certain employee costs within the Cardiopulmonary segment, specifically between cost of sales and selling, general, and administrative expense. This reclassification had no impact on operating income or net income for any periods presented, but revised the reported amounts for cost of sales, gross profit, and SG&A - An immaterial error was identified and corrected regarding the classification of certain employee costs in the Cardiopulmonary segment[57](index=57&type=chunk) - The misclassification understated cost of sales and overstated selling, general, and administrative expense by equal and offsetting amounts[57](index=57&type=chunk) - The correction had no impact on operating income (loss) or net income (loss) for annual and interim periods for the years ended December 31, 2023 and 2024, and the three months ended March 31, 2025[57](index=57&type=chunk) Impact of Revision on Q2 2024 GAAP Financials (U.S. dollars in millions) | Metric | As Reported | As Revised | | :-------------------------------- | :---------- | :--------- | | GAAP Cost of sales | $99.7 | $103.7 | | GAAP Gross profit | $218.9 | $214.9 | | GAAP Selling, general, and administrative | $129.1 | $125.1 | | GAAP Gross profit (% of net revenue) | 68.7 % | 67.4 % | | GAAP Selling, general, and administrative (% of net revenue) | 40.5 % | 39.3 % |

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** |