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]