LivaNova (LIVN) 2 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Matthew Dodds	SVP, Corporate Development
Damien McDonald	CEO & Director
Thad Huston	CFO
Rajbir Denhoy	Jefferies
Rick Wise	Stifel, Nicolaus & Company
Matthew O'Brien	Piper Jaffray Companies
Scott Bardo	Berenberg
Matthew Taylor	UBS Investment Bank
Michael Matson	Needham & Company
Jason Mills	Canaccord Genuity

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC's Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to your moderator today, Mr. Matthew Dodds, LivaNova's Senior Vice President of Corporate Development. ahead. go Please

Matthew Dodds

you, and Thank third welcome our to of All discussing Julie, LivaNova's call webcast the financial conference XXXX. right. and results quarter for

Officer; Damien Joining Melissa and Vice Relations. our call on Investor our our are of me Chief Financial today's Farina, Executive Thad President Officer; Huston, Chief McDonald,

discussed will most like results Factors any statements. that our forward-looking filings statement. cause actual I undertake Before you not furnished SEC, the forward-looking we would to begin, to company's discussions We website. release including include that differ in materially and documents today's are to update do remind on recent that to during the this call the available is could press

most today's GAAP found directly can be Also, release our press measures comparable financial the discussions will the certain financial in include is non-GAAP website. available that on to measures. Reconciliations

to also used to of presentation call. posted This a have materials We should website call presentation points the communication that tool. today's an enhanced other and complementary summarizes is our the as be

the website presentation our the Relations in Investor and at release press of find Events, News section investor.LivaNova.com. and under can Presentations, You

turn that, With over to now call Damien. I the will

Damien McDonald

our XXXX highlights guidance. Welcome third Matt. our will some call. and provide quarter to we Today, discuss reaffirm Thanks, sales earnings results, recent conference and

epilepsy will with before business. I the to start After some will additional details Then our in by in quarter EPS that our on results U.S. another solid Neuromodulation The Q&A. growth moving then by included upper provide wrap to softness our highlights, exceeded with single-digit discussing move end the by off high of up uptick to comments performance going Third you offset Cardiovascular I'm my sales adjusted was on by sales. closing comments, partially driven our guidance in range sequential Thad some Neuromodulation financials. franchise. sales in recent

the into to Coverage double-blind with Therapy is extend unipolar Treatment-Resistant In States. patients early registry. a the clinical also Depression. study, the in study VNS United to RECOVER include a sites protocol at randomized with least up bipolar and duration a September, RECOVER our at XXX follow-up placebo-controlled XXX year. Evidence includes evaluating for of accepted The maximum the CMS study XXX RECOVER framework of for prospective possibility a will X

On and Medical St. September for in patients first this Behavioral Systems Louis, a patient achievement for Dr. XX, from in enrolled represents Azfar the Malik, study. RECOVER Chief President who Officer the believe suffer disease. Health this landmark debilitating We CenterPointe

net comparisons constant which sales in to stated the declined Rest third World will Total Overall, the difficult mid-single business to XXXX. on due heart quarter of the while primarily in eighth distributor our grew were digits. net grew HLMs excluding Europe flat be declined X% XX%, Cardiovascular Turning and for softness Canadian impact quarter digits now results exit. third of for in and the of the compared our high quarter a nearly the single valves. U.S. in straight grew all a to currency Neuromodulation basis. sales

year. in the the year-over-year the to single difficult due in first global from the X.X% XXXX. and of sales million XXXX. a mid-to-high decline in $XXX were down a declined quarter, digits the million, half $XXX third of Heart-lung in versus performance were sales X.X% sales machine Cardiovascular quarter third and primarily comparison of better-than-expected quarter U.S. the the Europe, a Cardiopulmonary of

$X this mentioned agreement In Canadian were XXXX the Our cardiopulmonary. oxygenator million sales from third located agreement. sales the category declined in the quarter of of were and from of Rest terminated World previously distributor

well, digits. growing also the the performed to in single Cannulae mid Excluding quarter. this impact, oxygenator in sales double-digits grew high

a versus the in quarter, result valves as quarter, of declined a the XXXX Turning support, in as growth offset circulatory U.S. quarter this XXXX. decline declines representing softness heart versus in million quarter $XX to quarter acquired were growth for X.X% were double-digit the Europe than digits heart XXXX. valves. of in Sales the of by Perceval more Sales we mid-single of in April or in U.S. $X TandemLife ACS, was the in third million of Advanced business the X.X% reflects that third our

Last new FDA support circuitry system, year's LifeSPARC, customer the gain sales earlier-than-expected controller acquisition. traction, next of force expansion but impacted and generation continues to pump clearance our

quarter year ACS of full We growth accelerate excess expect and still the in fourth in to business XX%. the forecast

Now that were to up the X.X% U.S., Sales let's our versus In million quarter turn The XXXX. $XXX field we straight rate were million, basis. quarter second experienced Neuromodulation. expectations. of implant the saw and the rise above our turnover to quarter pressures $XX to in and rose overall year-on-year sales X.X% the for a modestly on competitive third continue first and we moderate

adoption SenTiva the generator East, generator in performance a of represented of strategies. Europe and mix U.S. is XX% of in on Spain. Europe robust XX% from our Brazil our and SenTiva based strong strong China, growing by expansion of growth Eastern sales our U.K., Germany X/X now over and quarter in and Rest European performance continued a adoption commercial a of delivered sales World go-to-market driven sales. the over delivered Middle quarter. SenTiva the mid-teens France, the

of patients sites U.S. good our pivotal XXX ANTHEM-HFrEF finally, pipeline enroll continues progress than with to and expectations heart randomized. active Neuromodulation ahead in to make more over failure our And as trial continues XX

the for results. overview I'll an now financial over Thad call our turn of to

Thad Huston

Sales and quarter ACS the and going HLMs, from impact decline the I'm in valves heart of greater of quarter offset flat Canadian in Damien. discuss a financials termination XXXX. third detail. the the third were by the a agreement. Neuromodulation, oxygenators you, Thank in in versus Sales were growth distribution to third quarter

up was and third a mix, first driven sales the XXXX from XXX improvement margin as of margin price gross LivaNova's XX.X%, margin and Adjusted the basis percent gross net exceeded points has XX%. by in The the adjusted quarter quarter represents was time of currency.

million quarter of continued $XX $XX quarter XXXX. XXXX. RECOVER was the the to XX.X% trial the ANTHEM-HFrEF net initiation as third of the R&D third Adjusted the and is sales versus third in percentage of XX.X% expense behind R&D progress pivotal increasing our R&D was in a the of in study. million in compared quarter

Adjusted impact compared in $XXX points to quarter $XXX SG&A was of basis expense for third million of SG&A was sales million the percentage net quarter the up third a XX XXXX. as the XX.X%, organization versus Neuromodulation. commercial related our change the expanding third ACS full strengthening investments international largely The in quarter commercial markets in and is of increasing XXXX. to capabilities, of

rose in margin by were year, was $XX basis in from Adjusted investments R&D. our to $XX to key Adjusted partially adjusted compared XX operating growth in quarter operating as the our in operations gross offset XX.X%. continuing improvements points from million third million income margin of continuing drivers income operations last

mix. Our result in XXXX adjusted income of of rate geographic quarter as was effective quarter XX.X%, the an tax third a the from improvement in XX.X%

Finally, adjusted to dilutive from quarter guidance in ago was range. $X.XX EPS above to the our continuing $X.XX $X.XX compared year $X.XX operations and a

cash flow. to Moving

first flow the for the quarter cash $XX X and of was onetime from $X than million XXXX. the payments $XX for operations, Capital lower months costs X third Our integration excluding year months of restructuring was million. spending million, was which of through XXXX, the

December was up million at $XX Our $XX cash from XX, XXXX, at September million, XXXX. XX, balance

connection debt million XT first the $XXX U.S., July, the in In million, at from we payment insurance carriers. million in our year-end net made $XXX XXXX. liability Our received settlement litigation product and in quarter at from million of end of the we multidistrict was with up $XXX proceeds the $XX

U.S. the Neuromodulation third within In and guidance. Neuromodulation, turning $XXX of the to quarter XXXX range $XXX to Now business million for to fall expectations our were expect ahead now a year. the of results full million we

full XXXX includes from million sales worth impact of Also point between note the and basis, overall X% guidance although represented lower the by company's X XXXX exiting on $XX that rates of the sales the $X Cardiovascular to to range believe Canada to performance portfolio. deal this due current in prior million is negatively XXXX. the growth and end more closing guidance, agreement of remain impacted In X% we unchanged, that currency X%. a terms continue will year at in If revenue April of in distribution quarter prudent the the exchange guidance the forecast we sales TandemLife constant of be in this

Now the rest to turning the back of P&L.

operations We $X.XX to rate continue to be in per $X.XX. continuing range project the tax to of We of adjusted to $X from a share diluted range to $X.XX. our earnings expect fall now within

is from unchanged other guidance X. May for Our year full metrics all

turn the call comments. Damien that, I'll back final for some With to

Damien McDonald

Thad. Thanks,

talent growth focus developing continue and are prospects culture and portfolio in We strong and on management execution, confident the LivaNova. of our to

are business Neuromodulation in are difficult the sales and rest the business challenged well. of While U.S. the is HLMs, our we valve comparisons remain performing improving heart lines regions a of for period and and

streamline expand areas. We significant and continue gross make shareholder our forward progress our to and to value. expenses to portfolio margins, you continued in R&D on updating in delivering non-core We commitments on investments drive look our

questions. that, open for it we'll up with And Julie,

Operator

[Operator Instructions].

line question from first the comes from Your Denhoy Raj of Jefferies.

Rajbir Denhoy

the business. start could Maybe business, VNS we with the epilepsy

are then some particularly headwinds seems recent you as turnover parse Is be which could recovery. you issues the the is those noted, to the So pipeline really drug you getting kind kind seeing you of I'm of the playing patients for in it lessening slowness year, on of where from competitive is recovering maybe -- launch, the maybe are if more the progression the curious out you? sales of because that force that it this thoughts Or and of the hires of in Any maybe productive? through? sales is drug -- just that earlier

Damien McDonald

lot the it's We've really Well, all the that. market a to months of last combination of a in I X think dynamics. understand done

Epidiolex, of of uptake the uptake think rate flattened. I the is

So patients, more I We and become we in growth expectations. And year-on-year, than rate see declined the and -- has of I a new but still thing. in of our patient progression a one seeing think really is the anticipated ahead that sales Definitely, we're their implants. lower it decline was productive. believe, that not force,

along I the being decreased I that you and at like they're debt mix are we're get way low about End reduction. to Those -- VNS changing talking I other this cardio play to have service of things, guardian well to to single line. So our why story to drugs need continues productive. think, through starting think benefits, sue in think the and so more the protection, And our in messaging really neurocognitive hospitalization, benefits, essential digit. of is tick

Rajbir Denhoy

Fair ones Okay. And enough. quickly. two just other

sort to but -- Just of Is as U.S. can the the the mid-single last you get recovery follow this to And so we of you raised on terms guidance are now? of for question, reasonably a the -- VNS. move that into again, can a for thinking back the assume U.S. XXXX? we where digits I know kind in business

Damien McDonald

Yes.

well the that I and too, have for and the is months like this and done teams seen Rest is terms in the robust as too. in We've the particularly I'm with they're always we'd positioned. us think, think ticking U.S., really, along I results. with tremendous teams and work are what where X printing international have to the business doing, pleased business pleased what of of last Europe World a really

Rajbir Denhoy

my And question, last clinical here's just study. on the Okay.

patients. at are the so anything of about with progressed? you first third, in going? the the and really, done I'm thinking curious, there you look XXX question maybe XXX data, get pace to patients has when that is has getting interim comfortable -- is terms mentioned, of you getting of that patients And you of So next how or can quarter occurred. can the fourth an density offer year? you implant How Are is to enrollment

Damien McDonald

Yes.

We're after the study. just 'XX. really and that's from weeks effort Raj. at, on get team, We That's patients around is while a we in there, It's X to ramp. XXX patient were had exactly the fabulous thrilled Dr. approval -- we're for going a Malik spot really You're whole to take that what thinking. looking what little we're could the in XQ

Operator

Your from Wise next Stifel. Rick comes line of with question the

Rick Wise

let But part performance. business, could. turn Congrats of the on Cardiovascular if I the Neuro to me better-than-expected the

wanted softness of some expected. elements. It later talk But you you said business-by-business, sort others. like quarter than their cardiopulmonary among see. earlier rollout understand the is this obviously, quarter. approval us TandemLife, to LifeSPARC there's not various pieces? of, take some help sounds came I'm You -- us this the controlled Can just sure through was the

how back understand the and us help on get how Just what in happened that pieces track fourth the business, quarter. various

Damien McDonald

impacted account anticipated. Rick. HCS. get earlier new our set start than are think ability saw. Good I on customer be think that's less want what Great to is for of we you. to the the Look, people If doing questions, hear I trained the inclined really old I'll the team We to to clearance acquisitions. that and progressing. is new honestly, well And the planning did coming, with model, is But model the and drive launch

release a in do limited XQ, and we're building that launch we'll do we XQ. XQ, in inventory end So back really so robust a more can now of

to I think think it's we with I is the contiguous that chain, a market planning go track. important there supply on and

that's, business excited about. I that That's think, a us. very So step high-growth for we very important are a

tough We XX% grew Europe XX% and XQ the in so overall. in U.S. HLMs, XX% comps. 'XX,

but left the some But the and of tough in we're getting later innings. growth conversion Rest U.S. for innings of SXs, a room World, pipeline still was working later into it are comp. that So We're still pipeline. in Europe our the

all new back installations do competitive but conversions. And the business end program. is our conversions, have not at of We that just and we're about

the drive think that really is business. management continue expecting team again, the I'm I is and to in to the conversion happened comps So there. really funnel place, what tough cycle in But

tough was for this valves, Heart us.

to As we see. what not you say, wanted

well. their the First just in with is thousandth We've the with Perceval. Europe of Italy, execution clinic of doing the but a largest it's fascinating. Massa, implant there, U.S. struggle to center it's all, that's recent And important. in celebrated think really single world what we're I still to and to continues is the results I series focus execution, The in in training. But commercial that indication procedure there. think And and continue struggling U.S. Valve-in-Valve the traction Better phenomenal we patient yet, commitment still on. find really And

see like around, committed So I'm we're turn continuing Perceval. really to I'd still to work with that team. that to

for alternative. think patients an for offers an not I a minimally where is of TAVI a think the this I it's looking invasive is if And great great solution, a thousands product alternative option. and you're really

flat, really the from continuing been that's tissue traditional was portfolio single to we've was useful. And that also which valves, lastly, digits. then so And moving decline high whole mechanical away

Great but continue to So in in the HLMs with working Perceval I make international U.S. work then group. for headway out funnel. think tough getting we the HCS, the continuing story. And that's profile to comps prospects the while

Rick Wise

I Yes. actually... was

Matthew Dodds

in well, I'd The as highlight, high single only the thing did quarter. quite oxygenators, mid-to you earlier, highlighted digits do

and business that So holding is gaining share.

Rick Wise

guidance turning And Got to you. for a second.

understand I'm the help imply, especially fourth And that Or if that dynamics the to fourth suggesting doing those sequential Am it? right about I'm less, be tick about quarter. will the quarter. margins. in Neuro margins, in in would here, way thinking gross wrong? keeping and it be a and at unchanged fourth on us the strong guidance guessing, Just gross results margins quickly I the would I'm right, -- big much math doing -- seem guidance, quarter impacted. gross think that it growth it it maybe guidance think softer thinking imply about It would the right, Is if down to Neuro looking after right implies is right Neuro, the I

Thad Huston

want So we new of the while this we views business. feel the range, to prudent remain good about did on

where You to look a to in we expect return QX, very at result. positive growth NPI it's

was on out, before, we sign. But there taking up the customer positive margin, U.S. grew range is we The mentioned impact for you we having XX%. really around do remain was a funnel. believe we where and Coming as should some on last still that though, that to is buying we record patterns, that think the represents to that, because about is Epidiolex a difficult comp year's -- gross a do impact As that that it think the is XX%. thing patient quarter over an really a too, QX point new think

So and maintaining the the matter think company I sign of the and for really top guidance threshold breaking we provided. of is positive through a that XX% profitability line previously a just it's bottom the

Rick Wise

me, the I in it think to Damien, worked frustrating, be the performance. I say. fair solid you quarter maybe you row, be turn X-part And a more you've think for leadership, of right get know of Europe, last a hard you. to make sort very eighth might question. U.S. around I seem said, and Got highlighted get a business, seems that it work working picture big systems, it to right perspective. in would

know because are to consistency? So here, know kind thinking know part thinking. a to not favorite What wonder get not turnaround. of in high-level is that there's question question to How needs a I CFO's one every your know be a about at a how just U.S. be year, I in the thinking the should mind? your XXXX? of my time you're And question of fair CEO's, moving give early. few next And I this it's pieces lot what we of but -- I about at sort you're you going of done, guidance... years

Damien McDonald

of think We guidance be Matt that fourth wanted say, on would call. gate our out the first on to quarter And provide we'll me to like one. I

Matthew Dodds

Yes, I would.

Damien McDonald

and So something be was would The the look, have you think think, team taking geographies tremendous there, and difference And those the areas I change there, double done think, the a important. The really and straight highlighted it strategy, team X a there? great digit, to progress, is quarter what direct. Marco really seem And Leadership. EU, working. I the in that job. of in lot have Roy with I again, international, go-to-market made

a traction. region to think, we'll he's and Paul are things. think about really bring to the in how discipline of team. took I and know, show, as And of is are I stepped opportunities leadership the to think group. of up U.S. with the there understand to It's to is important Buckman, to ago, for together. well. that quarter I U.S., that's great team where There's U.S. one-man and continue a CFO a really starting is not the who thing lot and a leadership, that region over new the gain that up team bring this Lawrence in also there's doing, And chalk people lot this people And a that focus so going to a I the is

the growth to So consistent U.S. I getting to the I'm think we on there. energy new by quietly focus leadership back continue will our encouraged but

Operator

of O'Brien Piper with Your from next line the Matthew comes Jaffray. question

Matthew O'Brien

you on interim should be one clarification Just as study depression year QX, Raj's question. Did far as the say guys of look QX the next goes?

Damien McDonald

Yes. QX 'XX the is first...

Thad Huston

First look, yes.

Matthew O'Brien

Got it.

Okay.

So Rick's question business. the Cardiovascular then, on on following little a up bit

you you there. really probably of in think had sales pull-forward bit I first a little half, said, cardiopulmonary strong a

it's going not You're machine in that year, U.S., remains and heart-lung the because sounds challenged, out next business, the to valve this point. until especially of middle at of new other like Perceval it get the clinicians have options the

we So half decent to a growth throughout as Neuromod about be it deliver headwind going growth business, is of XXXX, first year? that a think of the more business accelerates some bit? is it one Or heading that next into can little as the

Matthew Dodds

Matt, It's Matt. Yes.

Europe. we've A we're overall it's if lot coming giving that's HLMs, oxygenators, the you international U.S. about So from market the is, single-digit just think Cardiovascular, low guidance, said market. a not versus and expansion where of for but before, XXXX

run is the Our current assuming are rate. that's take we that

ACS, give force. as we've share, there as and to talking If sales you being just because the into a and the looking really now of been we expand right go also about, XXXX we're key ahead. continue to driver as at opportunity not the want but But

but should So not be driver, look that as the forward. just when really put now you you also your together, parts three

Matthew O'Brien

about can that on conference was And We you Okay. bit better -- a really, you talk the can for That's were a really and recently at Damien, Matt, helpful. LifeSPARC? little feedback product strong.

how those bit? selling a QX -- see I'm what in your then Europe here. the a in do Why now. we sales you're are frame did first see Europe? And up you surprised there the Is do I you that So to do slowdown I And in in little not overly QX your little accelerates could release think XXXX? that bit think

Damien McDonald

is accounts, Europe cranking. I going in we inventory -- build Yes. the are get Sales to think QX. we're this QX, small in be why And after number U.S. heading do planning it's launch have a What to into important. is limited prioritized of for

a the couple is a CMS slight But the also, thing them reinstated days. So there. other there's just XXX, really in decision, applaud is and back which coming DRG of lift we revisiting being

Matthew Dodds

No, already X. October It's started. actually

Damien McDonald

for the and going are Yes. a over codes, We DRG in -- product. benefit And sell us. access lot able that's to big a deal from of being XXX to patients

and So launching driver. that, the we LifeSPARC, key between think that's CMS the

Matthew O'Brien

here in Okay, want far of on through Raj million going one talked to just here of -- kind alluded October? assume and -- us number? you million me But of is little enrollment's do update how end a $X that's And and little it $XX XXXX. you as I depression for about a Shall give helpful. bit. right bit to just as had an we Last think is the the in low that to doing business side,

Damien McDonald

XXX We're seen but milestone and of on. very Yes. the days. this Yes, engagement accounts early towards blow-by-blow of the it's next of Spot sort end it's encouraging I from think focus year. enrollment, we've the where to not give site. on going the of look, very But

meeting the So the investigators in. we it engagement, investigator but the from and see that Chicago, just was to at that in staff not the was kickoff exciting, really also brought

'XX to going And I'm able QX what and we're a for here. Enroll So work that's about aggressively plan. the do look. excited to be

Operator

next Your comes line of with Bardo question Berenberg. the from Scott

Scott Bardo

Right.

said this the machines, the I in confidence communication But been quarter, volatility digits into about has in surprised me think cycle guess heart-lung that you launch. has grow So you visibility to I what upgrade where XX-month Polaris business forever. double see so not can't it's last some surprising had you your some

expecting this didn't come through you're quite clearly, quarter. So as

will that That you broadly, since is helpful machine understand. could a to and business some drivers? quarter? more more context predictable volatility, last is split cardiopulmonary And heart-lung capital So can please be least of so this how we given subject the gauge out, better the at what's really consumable big changed to in

Damien McDonald

to and group. close reinvigorate this whole for identify product X.X of to an years what the an last be group. cycle, And were which SX work so has I've been that to of to business just think adopted in categorize a end do the on continue the So of that we very around, as people than predominantly understand driver. well what continue I And XX% cycle any ability pleased we've the driver. lot there. over able got to it the SX tough the the winning with there driving region. also in end coming that, management. will coming business, so have to And surprised funnel Look, slow. that the team -- not which a think Cardiopulmonary, team the was we're up conversions about And Series new is longer this how I later this we're But oxygenator just seen to a share. is it's And And you innings, we think us see us exciting to we're And this of That any very to real about you are installations, been know we this how excited there really unit. the that less I team But of that having also And have and said competitive for SX to drive conversions, we've actually. to conversion the to too. put are business cycle, need do World growth rate use back to the context. just as in in primary stepped comps is really identifying late international

Scott Bardo

you determination I at talk potential? many you indicators America. and North make in Understood. that Are improve the that progress or company business all really valves, business understand, respect to its often, for comfortable the there LivaNova that impact. positioning us we try any make a Can to making what about real on full with business? this years point that obviously, could been to Okay. And about talk but know of help heart performance triggers to can key -- that this you having any That's many,

Damien McDonald

in past our ADUs, sales that's we about the daily can do benchmark U.S. We team And be performance spoken the believe implants what's seen average I've level makes Yes. in here in of just to me I've this. units, consistent. and have

talk to have We've the invested new the commercial in indication be on reason us better giving Valve-in-Valve more quarters is couple a at last of We training, procedure execution. the about for product. And -- think accounts I alternatives valve sales minimally for repair us, about the and replacement. the in the team traction the about finding invasive expensive thinking this -- is are that to

still a shouldn't For what we from is sure, large the noise that take around opportunity. but low-risk TAVI is creating see us, a headwind away for

makes here. can patients, do a reps And Massa X,XXX shows that do reps U.S. are said are how there experience, There who as it. us in the who rest in doing doing And it. opportunity is importantly, I the we we this are know it? And longitudinal world that of what believe. are So there that's

So want this continue to I team sure to succeeds. make

Scott Bardo

that PERSIST-AVR make the trial does when any sorry, here? difference And read And does out?

Damien McDonald

I Well, you want think to that? about that -- talk

Matthew Dodds

major it's Yes, a for us. second meeting. right to for going be the be in early full quarter XXXX medical so quarter, could readout like first a being very the presented the important of it at now, PERSIST-AVR, looks It trial late

Scott Bardo

nice having Neuromodulation great And see recovery. to Understood. Okay. a

has in I fourth than company's been basis, absolute the quarter as what to the But history the don't we've not all we there's where, Neuromodulation think been looking that's look for. a fourth think performed quarter. an better on quarter, third I

trend in the just want that no context given implants, continue, understand shouldn't group that to of the your trying new reason patient just understand why improving I guidance. discussions that in to about your there, opinion, So there's

Thad Huston

Yes.

that's a very fair. think I We typically have strong QX.

so So an year this the comp want range. in so quarter the same and revision we forecast. momentum sequential QX we wanted to upwards provided and time, be prudent revised At was extremely when yes, drive we we obviously, that to last our -- quarter-on-quarter provided high

Scott Bardo

And Good. the takes puts trial. on just lastly, and treatment-resistant depression

are recruit for great to you trial. obviously, to news So this try hear going aggressively

follow-up understand would that, from but patients. a bigger But work point just patients, and that you data? what look revenue not understand, that the at on XXXX? for these the about a have to Just design? within help reimplantation do us is XX-month does for And trial help I you're might be please, Damien, you then? going again, also need means of QX the time on now context I trial at perspective if frame us patients, what that into a X,XXX How expect know

Damien McDonald

Yes.

So enroll at think the numbers, XX for previously the that XX, it. of if ramp, to gave end that reasonable. looking just about the Again, for XX And given next driving the to the is the way let's again there's the XX to of lower we we it, We'll lower I of But XX start -- year, be study. on the model to probably fast. will hard end be want -- X to you year. at I late this

You want to...

Matthew Dodds

Sure. Yes.

to look XXX months first XX endpoint We're patients, We the So patients. to that. XX we our get continually response. up every look patients registry, that get after seeing can for at would us XXX

So months XXX between the at endpoint. XXX and XX to hit when expect we follow-up, somewhere is

months best we the after patients. a guidelines it about the as that enroll and XXXX, few of then rest needing would think be So of gave late between to case the

Operator

of the Matt comes UBS. question next with Taylor Your from line

Matthew Taylor

the that of or made order or help understand Neuromod about just bulk strong, going that strong things force more big U.S.? last are that Can OUS? onetime comps for are and U.S. wanted forward and minuses the anything that then just there the demand? the us to I help follow the really to, for and there life was And you can year, you us periods? and on things that think ask end would can in Is we pluses year's couple a specifically, like any QX us or sales QX forecast in next point that to of up like what adds this

Damien McDonald

Yes.

things. traction We're internationally. the of see continuing number a there's think I in to U.S. So and SenTiva

at geography, And there's premium said decrease. before, that small selectively still. I on changes also you I now where price a to increase price X% some to to the I important is we're declines driver. gradually long our And product. talked And for typically an return of to important base. then worldwide end single-digit that. by I look to the and I and QX, the end is look we at think think sales, so there we in the that's which continuing in we think at have there's since We're service, start that arc NPIs think that's price We XX% see runway of quarter think important, sequentially, we've service, sort and of think of expectations we've about low to X% an I seen a growth

than actually anticipated So respect. that QX in we a better had we

So as that be market an I think for well. will us important

Matthew Dodds

grow and don't service. we end now -- of a We're still same at the implants actually half overall than that's did generator for only ago, is. we year thing and more the assuming versus The as rate

bit a of has an impact as that well. So

Matthew Taylor

seem Epidiolex. about over Got business you that you. And that expecting there you a think onetime And in doesn't talked doubling or Is can the then Do outlook then you're OUS, last there? kind that was strong demand? any was impact saw from frame. still of time multiyear QX, something just you that like year's you still -- there

Damien McDonald

I in The our team for really us. big internationally. have and doing really bullish are go-to-market had impact markets show has in change well. traction. The we is a Japan great very in to highlighted direct going we've Yes, the our think opportunities continued Again, about Europe

natural now which businesses those grow very bigger a with and year, as last QX, to well. International continuing a are is we'll And patterns think In well see step. the Neuromodulation, executed this business. about for U.S., normalize, the we it Europe to of than the think buying say that is I rhythm get change I would So Epidiolex huge with in talked team emergence. back we in the I all

Thad Huston

very last the momentum we and SenTiva year. QX also of because strong was just that had

Matthew Taylor

losing the rate your of to growth indicative share you some Okay. I All X valve other one those if there? I wanted understand factors. us heart follow-up Can you Help the just parse are thought out was right. of or on market business? question ask kind

Damien McDonald

where about U.S. I I'd sticking I say in Damien's good yes. is. the a we're in the that's U.S., in Internationally, talked just place. Well, think share point losing the think we're

I think in the Europe, we're in a U.S. good place. It's

think I a definitely said, headwind. I As TAVI is

here. again, results. some print that And But this will can invest We that's continuing turn why do team to more great believe I'm and on around. think from I are it companies we their seeing those

Matthew Dodds

in that we U.S. And don't share much the have

Damien McDonald

based share trend lost the and saw... we We on else Yes. what our in quarter

Operator

from of with comes question Mike Company. & next Your Needham the Matson line

Michael Matson

is about businesses Neuromodulation better, focus Cardiovascular your little was feels but I like bit now here, just the time. the whack-a-mole Cardiovascular where getting at a on really slowing really guess to it's down. ability wanted It weak, the and I same to ask both Neuromodulation

be, part So a it in first the separate does would businesses that's combined single have company? I and these sense guess to follow-up part. just make the X still

Damien McDonald

Yes.

crossing by lot geographic that you Atlantic. business is I think seen significantly enhanced portfolio. time gives Europe now The believe power of and with the few think, really the we us I But us, in we continue pieces all And at really unison growth our of a important. The had what that in scope and balance for LivaNova things. us the the balance recognize Neuromodulation same -- reach for working that in to see of haven't invest driving that's scale here to we that sheet, what's combination, a for And the we've the useful. can happening quarters. is about is it's combined opportunities of the in

team see portfolio for the example, XX%. can You the growing international Neuromodulation, and taking

that believe we the really the So scale of important and team is combined scope here.

Michael Matson

mentioned then new And heart-lung machine. the Okay. you

next it before existing So that to risk of if right the we sales you hasn't, get the as on that to don't because a one's launched? the And and/or weigh do reps is you of that, there start system? it year that impacted then new has I mean, think want your half think customers I -- sales old first, do one guess, existing of buy first the the just the into does the system

Damien McDonald

Yes.

we're goods think what's accounts model we're us. going I And looking very that, on to very have that a drive to is make I But and when flexible ways think believe flexible transition. we've and been how thoughtful about that This always already seen thoughtful with being we that capital you at about and the with we've question product. places that's continue here. work we being great

Let's they and been account-by-account to important responsiveness us. what need go and look I And market when. has at think that

Operator

from comes Your Mills next Canaccord. Jason the of with question line

Jason Mills

I question. wanted question. That good Mike's go first back to to a was

combination. say, business hasn't to a Cardiovascular And go win this on folks that we -- businesses, and could that The get from the I the else the the that sort you a are have to well respect on And SG&A, subject of lot the And of vis-à-vis divest had combination? and combination to a when the them back of to quite hear the combination in of value or benefit focus the you the with so the assets fair X of to you've were I'll expansion points leverage was combination I at out to, United wanted if like the P&L. the on just looks the with strength I the States vis-à-vis larger look through. been in has premise a you it of business, of ability come for but benefit have on franchise. Cyberonics front the perspective, But a to underperforming like go did squeezed the might they back there benefited. some a there, guess someone the you executed U.S. it's leverage of tax -- benefiting And well still that I this second. And And has side, of of not to couple certainly pipeline? CRM as think, to that. follow-up, point, -- my

Damien McDonald

essentially heart done think that hit machine big, valves big SG&A continue doubled you've cardiopulmonary well investment expansion, to great read heart reinvigorated. I I look, it's ability our has to think really invest We've our what the in heart-lung is, oxygenators CB points. I on wins. there. business the I done with mean think great some R&D work really has a Look, valves. believe, think except The through. some benefited, for the Sure. -- great was I pipeline, I The U.S. Yes. Taxes and are not in is medtech believe R&D. It's

believe this great that continue a combination. So we to really is

the of said the in the apart to portfolio Now that I you've U.S. as facts. valves new day we've said, us always we at in heart light pipeline And the the But combination, think believe investment going will from I seen is look read what a through. the with continued from is in really I

borne really well. out really, is think I

Thad Huston

Yes.

with as we the driven base. delivering sign. to cost coming positive with Damien our improved downs, now both and think very we sheet, versus invest improving where the in have great and but P&L. of business ups were our the been while I is pipeline And balance scale We've Neuromodulation, pointed able leverage out, results. that we've previously some and And back to a course, we've have had forecast

Jason Mills

Okay.

before be so medium my pipeline would the answer, look So you I to to that anything question, near in ask wouldn't Damien, term? would divest to that the

Damien McDonald

to that's somewhere portfolio, asset -- that we there are Yes. we and our the are else. we to said, look not at I that opportunities better for Well, But the important plan. decisions remember it's prepared understand that make as when

say never, but our never plan. that's So not

Jason Mills

it. Got

I guess Okay. And then part. two pipeline, on the

moving to back to on registry. the depression, readout question going just First about

you've you read in at that the Your hit of of to end commentary to sort endpoint think adjudication of quarter that year, need that got given to XX-month out. couple would you seem a and fourth enrollment that getting to months imply of possible XXX-plus is data

that near it seems imply the ability would to term. feeling enroll but fairly aggressive, about bullish a So

can maybe you on So just that. comment

And then calls, secondly, more to a the these about used lot talk pipeline. we on

becoming is I apnea? plan think respect you on approach a OSA to the on requiring compete? what obvious, And with And give us the long-term So a thoughts also your update can that to mitral? What maybe regurgitation Maybe it's you sleep could the market. is addressing give mitral toolbox pipeline front. current then firm's us

Damien McDonald

Yes.

of in a nested there. lot -- So questions great

RECOVER, of in patients. for imply pent-up a Chicago, the the demand enrollment. we believe these at talking It does But to First, kickoff right. do time you're investigators team believe Again, line very a there there's aggressive really we and again, aggressive to there patients that can And to study. by are the that meet really put characterize this the XXX working 'XX. they hard are into XQ be

So reconsideration the to then do then period. us puts XH for submitting And work into and you've got in follow-up stats, some on that right, some 'XX. the you're --

spot with you're that So the on -- math there.

anchor the to Look, Pipeline. incorporates I a in the at job Mitral the think and back that redesign. They've great team's the issues single a valve. went done locked look delivery the with into -- since the team system. we what were, valve the and a design study new paused

team's think the there. was in user-centric it in, discussions I a I to that things and great the job the valve and of making apparent anchor think design done One became the get the simpler

was and they've studies, started in initial biocompatibility FDA the And preclinical enrollment we're looking animal feedback the back into the bench with still work. the work getting XXXX. the at testing, positive So in back

whole the out that has yet. sure toolbox entirely played not I'm thing fully

been results think product to we it. with still going believe we developed. that option the repair initially like a people And be certainly, replacement great. and team about that talking the I is there's the But have have necessary,

the Love apnea. market. Sleep sleep apnea

capability have Bluetooth such implantable work. mean we leads, generators we've I a work to there done technology and of a believe the knowhow. SenTiva we make and X.X lot and great opportunity that we there's to our in think I great really just know with these how and tremendous continue a

efforts. think that I over into So our will read R&D

do and patients. disease we state So we're on what to help market, bullish can on the bullish the

first changed design, the the THNX the we the better patients We're on start required working find when confirmatory exactly our to would stabilized The to concluded much but with We readout inherited protocol 'XX where we protocol than what this product we for in we've study. the really titration supply that. positive. titration FDA study stabilized expect business. set And on of still our been understand out we did we be has chain, last

for so a really I opportunity is And us. think great this

Operator

[Operator Instructions].

the from of with comes question Berenberg. Scott next line Bardo Your

Scott Bardo

looking your results Just margins a were XXXX, back and of had you couple margin. gross years at And ago operating in had I nearly happened calling by X business gross today, margin with gross XX% and early, margin by well XXX a have you be appear should XX% points, margin Day. XX% achieved years your you now contracted yet reflect not target you out when XXXX, you your And back XXX, to operating over expanded. has Markets basis margin. to operating Capital And and XX% your

So gone position. diametric opposite the in completely

you've that big moving XXXX, know pipeline differences. clearly, know apparent So invested some I parts, and that there's in but in look, been that wasn't I

nature margin the is next a to guess I we question that for start XX% business? margin to performance more gross the operating start So year? evidence respectable some as Do do which is see of of see when we

Thad Huston

time. over pleased on extremely XXXX now, gross read not that through expected. closer guidance to the but and We're what the is see our giving And years out, belief I'm target be able to laid right. is we you're we're margin X I absolutely than Yes. believe even XX% ultimately That call, today earlier the should

significant that investments fantastic significant So We've the in and we -- starting we've made our out also and significant things investments here and think, profile has We've both investments investments in SG&A TRD in pipeline ACS in international that getting our to in we've build built, changed. strat then But Neuromodulation I expansion. made R&D. TandemLife. we've like made a track. also plan, on made back and One, with think

you'll sustainable P&L. a start an largely investment and help in through rate the the XXXX window making. see all I high the the of with so will R&D But us, still And obviously, over things to time leverage double-digit, those XXXX in think, and that And pipeline drive is we're then come period time. this growth even single, investments

Scott Bardo

to operational potential concrete should But ratios Can you would expand R&D sense Just a going your just actually. from actually us give with that But whether some guidance. leverage do cost some ratios, think real broader have trial direction understand the not more Or could direction time, I be some year? at CMS. are you give high, next you're about But talking be you're helpful. coupled further? sense revenue next helpful. in And they ratios quite any appreciate That's TRD to year. us that and same

Thad Huston

Yes.

absolute think heart lot really that more percentage as the that TRD consistent XXXX, will of I dollars, think investments into investments, a a we progressing. mix within relatively as those and and are focused even be of failure going R&D towards are sales the

and marketing, driving are TandemLife we're particularly G&A, international We investments still with leverage expansion. and within but sales in making

Operator

are no there I question turn to for will closing remarks. at this Damien the over back time. And further call

Damien McDonald

questions your quarter. on forward next we Cheers. Julie, thank and you. your support morning. whole thanks for thanks, And really And the look, and behalf this And look we everyone, of the appreciate to interest. team,

Operator

this concludes conference call. This

You now disconnect. may

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