Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC Fourth Quarter and Full-Year 2022 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded.

I'd now like to introduce your host for today's conference, Mr. Matthew Dodds, LivaNova's Senior Vice President of Corporate Development. sir. ahead, go Please

Matthew Dodds

And financial our quarter results XXXX. year Emily. webcast and call discussing of LivaNova's for welcome you, conference to and full Thank the fourth

Executive call and Officer; Gotlin, Director McDonald, Joining Chief Relations. Briana are Investor on Shvartsburg, our today's our me Chief Officer; of Alex Financial Damien

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

our will can but results, in the performance, to, release, sales Also, Reconciliations be currency GAAP all limited financial including, measures be our website. financial the discussions will to certain not which include on directly comparable to non-GAAP which basis. on found a stated most is constant available press respect measures today's with

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

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

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

Damien McDonald

and moving with initiatives. and before for quarter on fourth and guidance. fourth full quarter provide details results additional strategic remarks Thank you, guidance XXXX. XXXX Q&A. revenue will results, and Matt. up wrap on our our After discuss And thank to my Alex you portfolio comments, our review I'll our closing everyone the to conference year for joining provide us. call Welcome I'll XXXX of full-year

against This COVID to Support team chain X% unfavorably Cardiopulmonary and inflation impacted forward significant a In macro revenue proud the supply by Circulatory across severe businesses by of cases. move was quarter, complexities. for the the decline remained continuing all challenges, regions. I'm Advanced including our achieved driven we business Neuromodulation in and growth.

Now, results. turning segment to

quarter, For led the in XXXX. of Cardiopulmonary rest by mid-single-digit, segment, versus X% revenue Heart Oxygenator the increased fourth growth all continued of of low-double-digits, world procedure across was the million revenue machine grew by lung driven revenue the region. an increase in volume recovery regions. $XXX quarter

Cardiopulmonary $XXX and revenue full the for million XX%. year grew was

We expect the grow to full XXXX. X% Cardiopulmonary revenue for X% to year the

the includes HLM rollout forecast Essenz. the staged generation Our next of

successful In initiated February, limited clinical in we centers commercial major in in two following throughout release our select hospitals QX. Europe, cases

a year. we ahead, sales Looking anticipate the gradual in ramp throughout Essenz

quarter growth implants. replacement across for total implants quarter, increased versus US the This was of fourth US growth increased replacements. the last and Epilepsy year-over-year. revenue driven epilepsy regions. Similar XXXX, outside all primarily to revenue X% with the growth new driven both US replacement X% three was by double-digit implant performance in by and

rest XX% US, Nordics. versus region quarter to XX% same prior commercial year, by a growth teams. revenue and prior the Epilepsy UK on in in basis the Europe grew implants Centers, to the Brazil. XX% Epilepsy are by approximately US of account which dedicated XX% led year. of for Comprehensive In led The during the in achieved world we strategy XX teams accounted as continuing advance These our compared included go-to-market

For the full year, epilepsy revenue increased X%.

full X% at the the X%. to expect to For XXXX, grow year revenue epilepsy global we

mix, by quarter year-over-year representing and a the by offset Results decrease ACS to in the be revenue XX% XXXX. partially in was in severe was $XX million product of fourth of by cases. continued in part from COVID the growth which quarter, reduction cases, impacted non-COVID

severity progressed year-over-year as declined COVID required volumes hospitalized fewer more field a to suggests than therapy. case ACS that Our data patients related ECMO XX% to

of hospital than cases easing driven by more non-COVID constraints. an XX% XQ increased XXXX, ACS versus However, capacity

million, $XX a was ACS representing revenue of full XX%. decline the year for

For XXXX, X% ACS to we at to X%. expect grow

forecast Our first COVID the quarter. to after the anniversary return growth we impact once includes the

portfolio revenue the fourth Turning was initiatives. was quarter DTD year strategic million. for now for $X the $X to the million, full and

revenue million, anticipate approximately primarily $X DTD For RECOVER XXXX, study. the $XX to million from of we

continues to advance. randomized study designed has frequent probability is if predicted assess that study with will analyses RECOVER should of continue The The enrolling. controlled success reached or been if study interim the

which the unipolar XXXth patient study's interim analysis unipolar The interim Our complete XXX next continuation. or and patients, was can recently is for transition longitudinal confirmed study either to cohort. the enrollment XXX the patients cohort at in the for at point the we look prospective completed to

study, the aggressive principal Dr. study week, treatments International Fifth depressed are the as ketamine. and highly failed RECOVER data RECOVER the detailing participants collected such of for Conference resistant TMS poster having Earlier presentation The far. investigator the demographic a patients baseline these severely more for Conway, delivered majority so this treatment are and Brainstem at the ECT, unipolar

second ANTHEM-HFrEF the recommended heart triggered analysis protocol. analysis. conditions XXXth US study that enrollment continue filing quarter, trial met, DSMC not US the early In the which pivotal accordance and we determined in current last the failure, the patients FDA interim were the that The in enrolled with

unlikely However, study functional demonstrate such data impact impact. that the of not positive has the evaluation revealed on sufficiently or mortality further and it an study endpoints, our a is will

down process and result, winding close a the stopping failure enrollment, the are program. the beginning to clinical heart we study As

the the safety decision to participated in and any important trial We'd employees thank to committees also investigators, thank the to that the concerns. stop note and to enrolling program. commitment was not patients with for who their study like It's associated this

still which In approval been five trial OSPREY We activated. FDA approval Moving include in sites, FDA of additional an received assume has to we one XXXX. January, OSA. already progress. the from to The to continues

the over turn call Alex. I'll that, with And to

Alex Shvartsburg

Damien. Thanks,

of provide fourth commentary During a my share on portion and I'll of the call, brief recap XXXX results quarter guidance. the

revenue of X% million, increase XXXX. results, quarter versus to was Turning the $XXX in an

Foreign of year-over-year or impact exchange had an revenue. $XX X% million unfavorable approximately of

gross net impacted unfavorably pressures, of partially mix, by improvements. pricing XX% product a of fourth was compared revenue margin to XXXX. was the as inflationary challenges, in margin and supply percent gross by XX% Adjusted Adjusted offset chain quarter

in $XX XXXX. of was R&D fourth in revenue in compared XX% the the Adjusted the quarter net percent million of versus $XX million to quarter XXXX. of was a as XX% quarter R&D fourth fourth expense

was by sequentially year-over-year in strategic continued flat, investment the portfolio driven increase our While initiatives.

fourth Adjusted XX%, SG&A expense was for million in $XXX of compared fourth XX% the XXXX. fourth million quarter net for percent of $XXX of as to XXXX. quarter was a revenue the the quarter down SG&A

to fourth quarter in XX% XX% was of the income operating $XX operating compared margin fourth quarter million XXXX. income to million Adjusted was $XX compared Adjusted last year. in of the

was mix. fourth quarter to XX% compared the lower primarily the XXXX. tax changes The full in is in rate tax to negative in effective quarter income attributable X% geographic year of Adjusted rate

per was was full the $X.XX Adjusted XXXX. $X.XX. share in diluted per quarter $X.XX to of year fourth Adjusted diluted compared earnings for the share earnings

December The Our year-end executed at facility from to $XXX year-end was million, $XXX primarily increase $XXX the million cash up million Total XX, at $XXX XXXX. year-end versus at debt balance we in $XXX July. that XXXX million loan million relates XXXX. at XXXX was term

$XX year-end cash restricted million. at including was debt Net

pressures, ratio was working XX%. was offset for the million unfavorably full Adjusted the for inflationary The partially in cash and free generation Free by build million $XX and flow flow cash impacted year. $XX improvements flow was by conversion capital. inventory was quarter free cash

$XX during investments million in Capital million XXXX year. to the compared $XX prior were

growth from XXXX guidance. currency X% constant Now, approximately and tailwind a We turning between forecast and to a rates. X% XXXX revenue on assume basis X% exchange

outstanding average and We shares with of earnings range to per full be for the adjusted $X.XX are projecting adjusted $X.XX, year. diluted share weighted million the XX in

the range $XXX Adjusted the to free cash million. in approximately of be million flow $XX million. to $XX $XX spending forecast range to capital is We expected of million in

over the that, Damien. to call With I'll turn back

Damien McDonald

Thank you, Alex.

our balanced by was diverse performance XXXX portfolio. Our

While remains robust, to pipeline we challenges delivering therapies physicians. may differentiated patients macro some and remain linger, and committed to and products our

continue create areas and will us for focus, the our all key at In three growth, triangle execution. We the – for pipeline setting remain the we the profitability. strategic as to believe goal focused year by LivaNova guide to on positions value business quality system, underpinned use we With stakeholders. and center, this ahead,

with we're to Emily, questions. And that, open

Operator

[Operator Instructions].

Wise Our first line with question from of Rick Stifel. comes a

Rick Wise

have line XXXX aspirations? How related And that. goals December the let's you're providing seeing. with guide, help how the questions your in a guide the I'll is conservative they're to aspirational you way. about more your would understand Analyst Maybe think maybe long thinking sort us is it, what term off Day. term us But laid well a – better from But of specifically, relative long the in to the follow up both related the and outlook, guidance, optimistic it start in maybe below you at or back have out actually the guide, then top of

Damien McDonald

I I ramp we we think, time. And to that. lots our think could thought of And anticipated we at there than the ramp. Investor out year will say, X% laid for was we cover that. were XXXX Day, we'd in I X%. And reasons a stronger over

middle was range. that I think XXXX in right the of

the at just back behind to But transition. confident driver, to a year things end transition that's to disruption. the the let's like after that trajectory. looking NPI ACS XXXX, the is we're the COVID be we're plan service And growth get For for Essenz of honest, going

as to that So, and the to transitioned we've Normally, range this think, levels. the in X%, back portfolio that to pre-COVID market with stabilized and to and we is X% CP market, expecting grows Essenz. we're be

off the and I it oxygenators So, to if But upside? our ramp think run on we rest this and year. NPIs we us have continue this do, like case deliver a world chance ACS we think Yes, approaching to as ramps, they and takes guidance hope proven is non-COVID if if we're neuromod been, the way like we the promises. the HLMs ultimately gives Do will. there's of

Rick Wise

Can savings to What's from Separate, could and the the about down What but the implications? the shutdown? cash failure contributing, shutdown, that the R&D contributing it related. EPS savings you winding ANTHEM-HFrEF that also trial heart Damien? talk outlook, be

Damien McDonald

a give we But early saw this FDA XXX-patient might you the suspect, long we're as us signal the didn't after interim the, we're the As for that commitment. ending filing. disappointed program analysis

look pretty unlikely not DSMC was primary impact following sufficiently the and And And their three analysis to on took And options, of that study the that hood. continuing a while the it would endpoint. recommended strong analysis was recommend further they protocol the the or impact. under functional the is enroll. full a the we – demonstrate composite to just But positive one revealing

We're cycle the close-down. early of in really this

going for right with patients. time FDA through to we're going to that some the to that work us We're we so, have the it and the And process ensure process. takes assume to investigators the work

is that million we the $XX of terms process, And year in in on work establish bucket. we spend And this which through a of on program. about how we'll math, average, as much

Rick Wise

maybe color, even about a early No could annual year, be? savings what looking out

Alex Shvartsburg

Rick, a this burn As earlier, Damien even out perhaps start to $XX to as million approximately should how program. figure year, year. the is By and sometime wind Alex, we this we our said, rate down was recoup, XXXX,

Operator

with question Next from comes Polark Wolfe Michael Research.

Michael Polark

quarter, gross from what's currency the margin XXXX, and in and inflation some the whatnot. XXXX [indiscernible] in as for baseline chain in your with supply year-on-year weakness and that metric margin sequential outlook? deal First adjusted guess, snafus clearly others we've one, seen fourth and gross something I

Alex Shvartsburg

to It's is being Yeah, the we've of continue. months. that by we're last impacted that XX productivity Again, still price pressures I you're that over relatively terms right. inflationary flat. in improvements think the seen we're The and anticipating seeing

Michael Polark

now? XX% seem good input for like a

Alex Shvartsburg

Yes.

Michael Polark

follow-up. may The up that there guess you that here anything the by about be Conway data. the enrollment new the there in I in the process? Is of that's I cohort poster mention not how you Intrigued have kind tells shaping seen RECOVER unipolar of Dr. to late presentation.

Matthew Dodds

It's Matt.

So, of, earlier kind you the patient came was it at demographics call that this the It And had can first we underlying a it, out week. numbers. available. make look again poster unipolar

older, is on. So, what they age, ketamine, lot average you like there's the call, is And more interesting even average you about even we trial. patients therapies things don't see age of normal other the it pharmaceutical called trial, is it a we what modular can score, failed were think therapies there. That's in with those in types aggressive this any in a therapies patients have like TMS, Damien have ECT, not

unique any I see has lot undertaken is been of trial depression so, you that think, how And demographics date. more can to just to a trial other, baseline this

Operator

Our from Jefferies. comes question Matt with Taylor next

Matthew Taylor

maybe of understand Matt, likelihood result? think take I up that could with trial, patients of for or I the success treatment do had implications the one start ultimate that follow a you any that or do on – thought guess, unique for will depression. think step based the and you the composition further this I'll have help just on some means impact the of in the you us of strength what

Matthew Dodds

some overall endpoint, why the incredibly powerful. be a initial overall example got not talk which look people over lower, they're would come than, with a relatively of score these number studies. you the rates, still is prior of pharmaceuticals say, response, that of we've these that it was, I is when the is we if lower I at depression this age terms this of to is on I the the weak overall, on impression unexpected was, timing is, what aggressive modular in design about think shows people the think, can response of they've What expect in lifetime. but percentages lot helps And been therapies, have potentially an

patient they in their had kind this state. because has a fits population are never therapy that Just depressive where of

Matthew Taylor

on depression. follow-up One

this stoppage, much can reading effect overall because any Meaning, last show have stoppage? bridge guess versus Or a obviously, the into lot think transition registry data stoppage points, does initial for under the that did could the of arm? more water now success. look that early on at a too treatment you of question your strength active here? effect more is, the So, not I is interim early see going the that expectation investors we XXX what's treatment show weaker the implications have or have I early of into lack we of in

Matthew Dodds

doing It's reading that. therapy the the into better. it's arm also what's mean It much going because, on could It control doing could all again, mean better. too probably that blinded. is arm But is

is What to we is continues are curve go a futility every the look. up there and in on this, that bottom confident of

would are us seeing haven't stop know We to to allow that we gotten that we benefit. early. So, just some level

go the X, But time, than will over control especially say, I'd arm months you have therapy other actually XX, more improve is XX, that believe XX, when X, effect the we X, Matt, a thing data where pronounced can to arm. out the

final improve not but see to could hit actually stoppage, early an the number. you time get you before over So, data

So that's why still we're really confident overall.

Damien McDonald

papers six, to and separation [Multiple Speakers] see predicated Aaronson that showed X,XXX what started improve the at the paper. to is is whole and Which in patients, studies, time. six This month on prior study but you particularly continued separate the over Aaronson it

XXX the think quite is I is the runs run point was – So, trial that valid set Matt up this making longer to in fact, the patients. to

So we be in showing this to believers a significant response patients. continue these to treat

Operator

question Maeder with Sandler. Piper next from comes Adam The

Adam Maeder

start wanted really question part I guess with Neuromodulation. to on a two epilepsy. I

performance give you replacements. on hoping QX more year-over-year, either color the was I first, could So, growth, performance breakout and NPI and little Wondering a in epilepsy NPIs had if by sequentially. bit

assumptions and follow-up. geography. there replacement side guidance had for different the then, of well the kind by we through As maybe the And the at on the I as to as Neuromod guidance, XXXX, a just X% range, walk X% look NPI

Damien McDonald

were the low-single-digits, up outpaced to mid-single-digits year-over-year. And mid-single-digits. the they take implants above end was in and Let's from important we flat, NPIs. were of and see quarter sales flat. were a combination mix. grew of sequentially, signal. levels, for price grew US Unit were they I XXXX the with And NPIs declined The they think, and service the that top. us which

share, think, just to didn't do. anticipated covering into the looked like line didn't multiple NPIs CECs. in looked at we drive we've at removed has that oversight and and various of of The have team, management we team the performance we the profile processes, work some commercial to and the funnel looked angles. the really from their execution. the looked And that storm we're we looked bottom in dig their us, macro, is performers, have, we increased execute. the December at I really in businesses growth that at of For just we've the we different at We this December, the XX% bottom

So we're a performance. that in change expecting

a really delayed is the the NPIs and in of the then of X% this at to X% improvement cases, looking we're expecting sequential into in this decline we backlog we – discussed service COVID year. end as throughout XXXX, anniversary as previously For the

Alex Shvartsburg

double-digit again, small international. it's For international, a piece, in growth but

should you that enough give So, get variables to there.

Adam Maeder

new The kind to market And the For CP question, similar range. a for in last you growing think XXXX. launched Cardiopulmonary. grew machine, heart is The nice guidance that follow-up, you lung lift but to to over X% that growth. switching referenced X%. double-digits the you to X% CP of X% got I a in guidance XXXX time

when to this in the CP all that juncture? together, X% guess, range business right at why guidance XXXX, is take X% I – the I why So, is that for

Alex Shvartsburg

CP, on the For to probably the consumables. of of COVID. mid-single-digit of coming it's was from market XXXX, in a business fantastic. lot way based is the growth about we the typically, in It procedures think is developed our recovery the markets, growth business. out surgical is Obviously, a Two-thirds the low

believe So the going it's a grow that we we're market a consumables at still from sort rate to a perspective. of

kind a this capital transition of from And a year. is perspective,

step commercial forecasting limited about of ramp up the be And Essenz the we but we back our way in growth, as sales in business. the release being half start should expect We to year, this we're we're to expect effective. prudent a

Operator

question Our Matson with Mike comes Company. & next from Needham

Mike Matson

on your covenants. one have I

during curious the ratio loan. you the the XXXX? X to or stay then, you if X. are I excludes interest was with that interest on And can comfortable SNIA coverage – covenant I think requires includes an compliance within that

Alex Shvartsburg

with and in We've fine we're tested shape. on good We're them Yeah. covenants. our pressure our compliance

Mike Matson

in see could potential we when it do Is goes, going as trial XXXX? late possible OSPREY you it think XXXX, see trial? far hear be to more really Just data on it but could I or this you the from year is we approval the as the

Damien McDonald

take that then It's so FDA and we to need study, that. the one. podium publish ID, seek I'll XXXX. complete to a file It's data the pivotal or

until XXXX. be won't it So,

Operator

from comes Matt Miksic question next Barclays. Our with

Matthew Dodds

might Emily. We him, have lost

Operator

questions At closing back the call to for moment, we Damien have remarks. turn I'll registered. no further McDonald the

Damien McDonald

on joining call. behalf quarter thank your And And continued entire the the everyone, team, appreciate we of the talk you, to support we'll and today. for call LivaNova Emily. on much. in you and first interest Thanks, on Thanks very us

Operator

everyone, disconnect and your our today. us now lines. you, call you for This Thank may concludes joining

LivaNova (LIVN) 22 Feb 232022 Q4 Earnings call transcript