LivaNova(US:LIVN)2022-08-07 01:46Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $254 million, representing a 7% increase year-over-year, excluding heart valves [15][18] - Adjusted gross margin was 69%, consistent with Q2 2021, while adjusted operating income decreased to $33 million from $38 million in the prior year [15][16] - Adjusted diluted earnings per share increased to $0.53 from $0.50 in Q2 2021 [16] - Cash balance at June 30 was $407 million, up from $208 million at year-end 2021, while total debt increased to $466 million from $240 million [17] Segment Results and Key Metrics Changes - Cardiopulmonary segment revenue was $126 million, a 14% increase year-over-year, driven by mid-teen growth in oxygenator and heart-lung machine sales [6][10] - Epilepsy revenue increased by 3%, with growth in Europe and the rest of the world, while US revenue was flat year-over-year [7][8] - ACS revenue was $9 million, down 29% year-over-year, primarily due to a decline in severe COVID cases [9][10] Market Data and Key Metrics Changes - The rest of the world region for epilepsy revenue achieved 19% growth, led by Brazil, Japan, and Taiwan [8] - US epilepsy results were impacted by hospital staffing challenges and COVID-related postponements, with total implants down in the mid-single digits [8] Company Strategy and Development Direction - The company aims to drive long-term shareholder value through a strategic triangle underpinned by the LivaNova business system [20] - The focus remains on expanding the sales force and enhancing commercial execution in key markets [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter performance reflects the strength of the diverse portfolio despite macroeconomic challenges [20] - The updated full-year outlook anticipates constant currency revenue growth of 4% to 6%, with adjusted EPS guidance of $2.25 to $2.45 [18][20] Other Important Information - The heart valve business was divested on June 1, 2021, impacting year-over-year comparisons [10] - The company is progressing with the RECOVER study and anticipates a transition to a prospective longitudinal study in late 2022 or early 2023 [12] Q&A Session Summary Question: What gives confidence that ACS will return to growth in the second half? - Management indicated that improvements in staffing and the expansion of the sales force are expected to drive growth in ACS [23] Question: Update on RECOVER study enrollment? - Management confirmed that reaching 350 patients is imminent, with results expected by the end of the month [24] Question: Is the interest cost from the new term loan included in adjusted EPS? - Management confirmed that the interest cost from the term loan is treated as an extraordinary item and excluded from adjusted EPS [25] Question: Update on CMS response timing for RECOVER? - Management stated that the transition to registry is expected late this year or early next year, with a detailed timeline for data submission to CMS [29][31] Question: How does the company view the impact of inflation and currency on guidance? - Management indicated that both inflation and currency are significant factors impacting guidance, with expectations of a $0.30 reduction at the midpoint [36][37] Question: Update on heart-lung machine product launch? - Management expects a limited commercial release by the end of the year, with full release early in Q1 2023 [38] Question: How many patients will have treatment close to 12 months by the end of the month for RECOVER? - Management did not provide specific numbers but indicated that separation in treatment effects is expected to be observed as patients approach the one-year mark [60]