Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC Second Quarter of 2023 Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Vice Corporate Senior and LivaNova's Dodds, President Development of IT. Matthew ahead, sir. go Please

Matthew Dodds

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

call are Directors Relations. Briana Chief Gotlin, Epilepsy; of Chief Financial Joining me Stephanie Interim on Bill our President the and Shvartsburg, Chair Alex Officer; Investor and Bolton, Director Kozy, Executive Officer; of Board of our Global today's of

any call discussed financial stated that Before Also, certain constant to, include we forward-looking results like would Factors the will include that discussions not today's release could with forward-looking filings including, will will begin, company's measures SEC, this discussions that all statement. to be remind on do statements. press available is our to update website. recent the the non-GAAP to during on you documents to results, differ which limited in We I but cause a most our respect furnished including sales performance, and basis. actual to not currency materially undertake the are

most the found website. which measures our can available comparable today's press to Reconciliations release, GAAP in is on directly financial be

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

press and call Presentations section Investors the the the Bill. of under in now find With investor.livanova.com. at and release that, News to website can Events presentation I You over turn our will

William Kozy

second Welcome for and for us. LivaNova's to conference quarter you, XXXX. the everyone, of Matt, you, thank Thank call joining

plan the the focus, of Bolton provide firsthand Since priorities. as on execution. and CEO strategic for and performance a our in shaping been patience, quarter, brief That will customer role like I'd XXXX ongoing Before remain some Stephanie on our to top and many and CEO I've the observations, search. taking our April, update of interim introduce engaged discussing I've to on focused quarterly commitment global recount customers with colleagues. firmly results results

LivaNova. Stephanie assignment continued of global LivaNova's In a our of record of to for strategy business before on Steph recently, well She has with roles on Most we have key President company epilepsy cardiopulmonary. execution. as worldwide Steph success. with patients. of excited to as Global started to local International, named commitments served President commercial a helping as territory epilepsy led she taking at integrated May, focus Bolton manager Steph's leadership where leveraging businesses responsibility commitment and this achievement aligns passion and an to a We're performance business for both XX-year in Epilepsy. The

participation to Steph, we in forward look Q&A. your the

CEO reviewing to slate Now allow update The first in Board the and currently our on search. are provide candidates. I process a brief of potential of me the

review, of and individual process right assessment selection to track. lead slate to Our remains team. the Board on selecting interview We're our committed

updates initiatives. will For I and to the Alex details the on XXXX and our on turn results quarter our to closing second my remarks to discuss I'll remainder comments, with additional will portfolio before our strategic provide of Q&A. up results guidance. wrap moving call, After then

we're encouraged In World and strength drove and commercial the improve of all regions, U.S. Rest the particularly strong continued profitability by quarter. execution, cardiopulmonary neuromodulation achieved the with marked growth by XX% helped in the businesses We the growth which pleased performance quarter, in in revenue regions. we across strong double-digit were Europe and revenue and the

results. segment to turning Now

by in installations by $XXX the of the Rest was segment, of Cardiopulmonary U.S., quarter, in supply XX% than of Europe an primarily the placements initial mid-teens, driven Essenz revenue For million XX%, revenue the led more Heart-lung Oxygenator driven XXXX. versus U.S. in quarter region the steady by demand SX higher the increase chain revenue grew increased and in second the and and execution. machine World

we're customer Essenz early progressing, rollout of is commercial and feedback. encouraged The by

still Following contribution. increased year now for of in the to We XX% cardiopulmonary expect XXXX. clearance our revenue XX% grow blood we the software to integration monitoring anticipate the gas later full year,

revised first performance forecast in HLMs. oxygenators Our and incorporates strong the half

stated, on new the results quarter that increased to comment wave increased previously cardiopulmonary. driven we versus As and with much implants, of U.S. year-over-year XXXX, Alex Epilepsy the revenue X in product will software higher favorable that our growth expect with in continue replacement Essenz revenue next by and on mix. through underlying strength year, to factors implants a revenue sequential of second ramp after XX% second basis. half quarter year-over-year, launches. the total all impacted of second some realized and both of the epilepsy including in price across regions XX% coming

year. versus achieved XX% Notably, by we The XXX prior implants versus Turkey prior the region the patient versus growth Nordics growth and the achieved World in Epilepsy and Europe XX% quarter, in growth led led prior by revenue U.K. achieved new of the XX% X,XXX grew the replacements, representing representing X% and Rest year, year China.

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

factors $X increase Our impacted second an replacement and ACS versus the the quarter product epilepsy. volumes revised X% million about respiratory second in and first case quarter strong in case cardiac XXXX, was of in in half revenue quarter, offset forecast some declines incorporates implants. the reflecting by Alex growth the comment partially underlying result mix. of will that on performance strong

For now expect flat ACS to XXXX, we year-over-year. be

quarter was Turning now million. initiatives. DTD portfolio to the the strategic for revenue second $X

been continues from approximately Enrollment study. primarily for DTD cohort anticipate The million, has study now we $X to and Unipolar million results the we the the completed, of XXXX, the study RECOVER RECOVER XX-month advance. the to $X follow-up. of await revenue For of

in the of all the the patients expect results June March Unipolar we As in Upon in completed for the subsequently the Unipolar XXXX. XXXX, data conduct the XXXth analysis by publication of into XX-month final patient study May. late we receipt a and randomized XXX will reminder, and implants trial of follow-up a

assess frequent the was is The reached to interim continue with that was should Unipolar study we success if the interim controlled analysis Unipolar the Bipolar recruitment completed. This for June, the probability or in was previously the Bipolar the pleased with is patient enrolling. Bipolar cohort patients. the in success in faster similar milestone if futility will our and refocusing of In analysis that to were cohort predictive or designed cohort than randomized achieved efforts from XXXth communicated, we had study

The which heart this OSPREY as trial study OSA. the of accelerated are the closeout XX first the earlier study And of year. all as ANTHEM defined the clinical the costs progressing to We of month, Moving in fully of actively majority sites to occurred continues expected. half is patients. In the XXXX, of failure, progress. most in recruiting

continue to We year be expect failure to the $XX this R&D million. overall related to approximately spend heart

over will With call to the that, Alex. turn I

Alex Shvartsburg

Bill. Thanks,

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

results. favorable the $XXX first million, In increase versus to in comparisons. half, we was XXXX. XX% an of observed the Turning quarter Revenue quarter and

the in the supply of experienced the the half half year. growth In epilepsy pricing half gains implemented to in oxygenator the expect of chain share competitor Accordingly, XXXX, challenges. in tailwinds the cannot programs from U.S. growth XXXX, addition, second of revenue was we first by and growth will higher-than-expected due impacted replacements second reflect

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

basis R&D investment fixed portfolio expense positive and the lower costs was well freight which gross XXXX. SG&A overhead trial. volume, net $XXX impacted in quarter offset XX% the quarter absorption closing drove million increase realized to in revenue $XX higher the quarter quarter inflation. was was XXXX. favorable initiatives in price, compared Adjusted was of net Adjusted a percent the gross second quarter ANTHEM percent as the compared as was a which R&D in a second with as to line the expense strategic Adjusted of on driven margin to second was by of by million continued million costs, XX%, million associated XX% year-over-year second with XXXX. revenue compared cost the as XXXX. our Adjusted in $XX inbound of The of component $XXX second quarter second dollar for margin of out in

in increased gross compared in expense $XX the second was $XX to margin Adjusted margins quarter last million a quarter sales with such operating and to by leverage. XX% higher down income XXXX. operating was in increase XX% was of operating XX% from operating Adjusted of second These year-over-year quarter net driven the expenses. was as of percent associated The of Essenz XX%, by as variable basis marketing and XXXX. driven revenue compared the launch costs was income year. commissions revenues. on second Adjusted SG&A improved and and include income a dollar expenses freight million

is X% quarter in in rate Adjusted in was attributable of The the second tax diluted versus $X.XX the effective the quarter tax Adjusted to XXXX. rate to $X.XX geographic quarter XXXX. primarily second share earnings mix. per in of compared changes XX% was higher

$XXX at total facility Our year-end XX of million at place Total from XXXX. July increase driven the delayed A Term in at up in we debt The June million was XXXX. by June $XXX up was XX million, on million, of $XXX at cash in $XXX that balance debt year-end put XXXX. was from draw $XX million Loan

million, cash at cash the million. flow Net free was quarter in June prior $XX $XX restricted $XXX from up the negative debt, year including was XX period. million negative for Adjusted

Capital the incentive reminder, million the HLM offset quarter. inventories. half by in improvement XXXX. second operating of The first investments first by a compared bonuses half year-over-year its As pays $XX to the were million income $XX LivaNova driven in in short-term higher was

our revised to turning Now guidance. XXXX

Adjusted earnings $X.XX We based with X% revenue year range outstanding mentioned, to from million. shares and now be a now for diluted adjusted the continue flow now And constant $XX $X.XX XXXX we're is basis and between X% the be per tailwind performance exchange Bill to XXXX rates. average in to $XXX guidance. expected half, a cash adjusted million assume year. increasing the approximately weighted currency to XX the We million our on As first full XX%. share on expect of full diluted during growth of in free range expect our

In by financial half execution performance. summary, I'm to first encouraged contributing the

margin new expansion. our delivering discipline Continued position maintaining factors well epilepsy, in to key patient acquisition market as and price emphasis expense as are cardiopulmonary on

modest in positioned drive With we to year-end. these factors leverage by mind, operating remain

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

William Kozy

Thank you, Alex.

to worldwide, employees progress of portfolio across and first work the without focus leverage patience, for the this call commitment a ready and them continued Emily, for positioned X to on by through I'll focus creation. we This These the long-term not thank commitments full dedication open are well XXXX operating year-end. questions. their now half patients and year on would to areas company, execution. hard As moment certainly of demonstrated our are the our we've and that, the take deliver and our With innovation pipeline serving on our across globe. underpin be value shareholder performance possible guidance, to

Operator

[Operator Instructions].

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

Frederick Wise

it's could the fully Is in there part off half? the are about And that a comments And little dig or growth. to can your half? into better-than-expected And maybe -- and the wouldn't -- of created about of included the assume this or price nice comps why continues bit. And or second Can the possible that? replacement hoping second at could of about clear I'm . as Starting factors, see same sense now? you a you into maybe we the time benefit price give what Stephanie benefit second two you favorable quarter. -- the the talk in better-than-expected some volumes. that the done Is replacement. likely talk any the the quarter us very latter

William Kozy

Sure.

Let and end, then volumes. end me will on take to service I Steph of the front the Rick, pass

pretty complex clearly factors. a range, of the As or tell, oxygenators sure, in analysis that's as about cluster underlying these in contributed so and of for revenues kind a recognition as best you we price, well can and and X%. X% know, somewhere But of it's end-of-service products

shipping customer anticipated we that know do sure We London market who here second shipping not competitors Monday, and in are back happen. in to been just oxygenator the quarter product having for did our they on fact a they're right coming I that recognize a We the with know products. now that for

year. most factor that one our activity third on. of kicked we the that's last So price was in of mentioned the got off Alex eye quarter

of So we started to get benefits year. quarter some third in last those fourth of and

So there. see big we don't a carryover

Now revenues. ask if Steph, I on I you related comment could, Rick's may to to question end-of-service

Stephanie Bolton

hear Sure. Rick, it's you. to good

our we've that that been that seeing the of from believe a benefit Moreover, called to programs mind to to increased of ensure help We patients. identify casting in an we continue and entered quicker. with sort really the for devices XXXX in and physicians key place important all had enables have includes end-of-service and programs those patients an care feature continuity optimal programming, therapy back, that SenTiva we're reach SenTiva market and scheduled driving

In drives are who a fact, reaching a therapy And SenTiva. versus patients see itself with continuation XX to starting to X an in we that, rate. in those first of wave That as months. see from treated optimal we higher replacement the patients replacement were initially months

come in second second which question, part if your So we of see to year. is that the flowing your I potentially do of why the half

is end-of-service have we're rate. based into a for consideration I'll you this our to we answer current move as continuing monitor the coming our latest quarters. better takes on that which probably revised have we're data, and on forecast of continuing impact the we monitor The through our to So expectations. SenTiva

can to year. you in QX fact, come next Thank back me In you.

Frederick Wise

replacement? again, Okay. Maybe as follow-up side sorry, And business what's Bill, of particularly well. NPI sales growth, the quarter the very that about and sense, about just NPI just talk -- on looking the same driving from ahead thinking versus of sort kind growth, Neuromod in trends? the of happening I'm business that's mix second epilepsy a the did on And

William Kozy

Yes, since role has the very spent bulk good time that. in of this question. new her starting on Steph

mind? going would I'm you it Steph, So push to

Stephanie Bolton

results the Sure, team. sure. the about I epilepsy pleased this seen as quarter, really are we've know we're Rick,

journey team Our the focus us focus what it doing, identify not mechanisms, working operating that's creating doing that all-important has to tirelessly will disciplined been for but how treatment are is and at physician base set about right we're patient And just we're to firmly being NPI on with right what the the and on consistent and of My implementing focusing our it. up urgency the point treat. and future. clear their

between An to have example the and is clear our commitment of group. sales we management case organization this that collaboration our

Another clear improved our being to quarter end the between we've well. our QX factor also fewer in at and that were to rescheduled management due case our the workflows of results those surgeries put providers contributing as group place

Matthew Dodds

U.S. quarters. NPI with the And EOS, numbers then quickly, quarter. just It's in pretty XX-XX Rick, which this NPI Bill is the the consistent to recent gave most

Operator

Our next line from Matt the Jefferies. of question Taylor with comes

Matthew Taylor

good a on quarter. Congrats

about -- So I of other in call I the did these launch out orders of initial to was was getting wanted and some maybe you about talk there. you and Europe a bit I little little guess ask World Essenz about the side CP trends. some the contributions bit sure of Rest from what house a the the curious and

gone launch coming ramp far the so you how hoping So color and could and in I was the bit funnel more think just a quarters? to has expect on of us help some the that more how what some could us about little give there and

William Kozy

commercial in We're mode. launch Sure.

all There Essenz on focused those efforts Europe As know, U.S. areas. outside going is on activity is no the you or Essenz

earlier, revenues, heard And you so were quite the all they of Rest too. what SX, and were World healthy, about

cardiac Essenz surgical pipeline is will that an suite. it many, use I When Nobody many purchase creating personally in launch, term Our are have building. tried they their the remember until commercial we evaluations.

activities We of have now. those a nice underway load right

major the activities in EU of have U.S. We in the a and in number institutions, both

our recognize software are many bigger important upgrades customers. to out continuing are to that We quick to that roll are the of

Their got they going mentioning evaluations X The much purchase could X XX okay, bigger in on buy now a many order. machines. to as that buy XX the facilities some institutions We've won't be cardiac care single as keep or larger. right tend customers, that reason I remember in to

made quarter, going us. So overall the to that's if nice to that we upgrades. get going efforts from to growth in take HLM They're would, we some encouraged did some the the time. XX% test signals, you the want But

a a that part though was in Essenz we the U.S. SX. of And modest actually in small decline had

some in the quarter we teed the also forecasting to the penetration There's And that perked we it as in are quarter for early essence stage. no had expect up well And our terms that U.S. Europe, be the window question very critical that So as alignment was us starting more good the in off. leading up our production take ramp to and XQ of really 'XX. of into fourth

Matthew Taylor

wanted benefit. discrete Could I clarifying anything is that. that Got follow-up. it. there just a was ask know, one to the for out Thanks just call in to quarter I

know have stocking . I quarter? Is some inventory think this competitors of helped supply benefit. I that quarter, out minor there you issues. out called call And anything would some last some that you had your

William Kozy

Yes. do Yes, The me that we noted. we were call out let -- get I I hey, course, but company? a it we I of there's things do. mean, I X explicit, you, growth XX% -- didn't tell wish

within But volume their and product the quarter of pleasant on math watch what we for quarter. are got our about there. than will But that. year. continued those perfect. that the our the that We to to see were until had got things Steph, X% that And started out somewhere best a X the support the is the better got that to that we very We think half We've carry oxygenator last quarters of EOS, had in which happens couple back, very, this the dock. sales price, quarter. we direct being the third a collectively second that. by can is to Those year-on-year do the price this the year. anticipated. epilepsy on around we Know way, know a favorability this we identify We know impact really not of much cardiopulmonary. complex and things X P&L competitors on not end-of-service eyes surprise Oxygenators, hitting

Alex Shvartsburg

want just I clarify. Matt, to

to were year. see programs, we'll pricing to of it's our the last into comparative price relative implement when to half which the forward carry second started So of continue QX we but in year, the

we're getting So in the first comp the favorable half.

Operator

Michael Our Research. next question with comes Polark Wolfe from

Michael Polark

I strategic that epilepsy quarter interested picture. can for -- U.S. in then XXX, in second just the what on to key big team, the had I one the us and X some to, relative of like described the And On are question mentioned leadership. was months, involuntary. epilepsy changes the obviously, 'XX? over have And epilepsy, baseline. you we Bill, last where pre-COVID is number were of you in remind which some NPI I'm one on sales as

you execution you're you at sit the heads XX pleased over changes and currently? look team say, block you As anticipate of would team -- in more today and here Stephanie, settled are the Or as is tackle, your role? new field it kind X the and and in down months, to next, with

William Kozy

me the one, right. sure switch got let and first Let's I question make the

interested 'XX in You're NPI XQ placements.

Michael Polark

Correct. Yes, U.S.

William Kozy

we by that it. room have in sure. I'm don't or do the Steph, I not have chance,

Michael Polark

Do line in or with that's guess pre-COVID the below I baseline? you or think you're above question.

William Kozy

You I'll know get done, Briana just up and will promise to us question. we're you. to answer with what, an hook we're we get let you to -- that when back

that that don't Is us. of we that. to in front have commit number me here okay? Let just Because

that what Steph, add we've NPIs a 'XX to in of else view were year-on-year on to to down the far encouraged first you Remember give seen quick, by thus other trying things. to year. 'XX we're or... X%. real get though, Just anything the half And some context

Stephanie Bolton

you a of about of talent team. we the I'd coming seen organization. that also address I've the think, I culture bit little some a to some the of like like about talk passionate I'd committed into in, that to well culture the a and as hugely of brought points Michael,

you'll So me this. for the of excuse early days

therapy working on in the my over this started I've this my with amazing etched spent I It May. advancing of on and XXth So of role it. adoption half professional always will be of life brain.

to welcoming me. upgrades are, opportunity the now one team do as we've those and for they the culture that in wanting is to And is been talent incredibly sure, say months and have seen win, that have So as from a years. I and execute wonderful well leaving benefiting to can. this recent wanting the of we And I'm for

Michael Polark

one this closer gotten new what for is Helpful. kind The most you've role, as you, of in this business surprised XX picture bigger to Bill, just the first days? you in

William Kozy

a our these a cardiac of to surprises, flat they to and is in Every see there's couple of terms question I you that one We good to that for plant being the to important is take opportunity had the to get -- In coming a oxygenator guess going Mirandola, saved. tailwinds. instrumental of and Italy the Remember here. and thing is way tailwind a in running surgical people, surprise the pleasant making And organization tailwind. while, My your is of advantage react. product that are my every suites, this health possibly favorites out, can. into lives once

So been surprise. nice one that's

now about team CP to top see want -- and for did X, of down, because and they've X is know talk production really I made with complexity Mirandola well. It's how chance be thank physicians. months team displayed, the been guys the I've equally see you'd a we with of X% They've to approach of physician is the grower. to a X now get this, remember, at type our done This collaborate the well. effort that that have X, effort certainly which heads I -- things you revenue Steph's right running discipline for this because question you the thing wanted -- to the and you we recognize to that product. list, probably of our this now is in are the hard patient also starting the how Those is we impressed to

tailwind I and give And all advantage. credit seeing so the for them taking

Operator

Our next Piper Maeder question comes from Sandler. with Adam

Adam Maeder

in guidance. beat me. here from to Obviously, couple on the a I A quarter. QX. adjusted nice the EPS on wanted Congrats big start

up guide took $X.XX, You year believe. by EPS I full the

puts reconcile a for or takes? that maybe key talk then about kind us the of And considerations and So and follow-up. I just have

Alex Shvartsburg

Sure.

about we but the half, competitors particularly half, to we expect feel the the to back component. I impacted on come expect half. good overachieved in with the the first to the revenue comes as second side the market. We So into volumes oxygenator first cardiopulmonary down We be think do the really business it ultimately

So level quarter, we that in we significant the saw we to to the but of improvement -- same in -- first not gross first first benefit half enjoy half. second margin the we're expect going had in the

as second think as those some to that as have in I the on to investments business. the and -- make make we we drive going look to of that We're productivity the improve innovation investments half. well at our core

So that derisked largely and that's good about where of we've as bit well. our the expenses we on why we're year impact will guiding. an have a But feel

Adam Maeder

When can cohort, Okay. see potentially the should about there? to had registry Alex. you Talk I the patients? we start the the about I And guys think Bipolar looks color transition expect Should to RECOVER XXX randomized, mid-June. earlier? this we run And maybe going the you set level patients follow-up, to interim Or for do Street? expectations full then believe, and there, we appreciate to for enrollment cohort trial pace XXX I to the specifically of in forward? ask wanted

Matthew Dodds

Sure, Adam, it's Matt.

all there. average seen group also, better would the a you've little follow-up Bipolar, earlier that we at be started looks got Unipolar. when from assume as for the longer prior XXX. performs interim that Part obviously But than is bit generally a the it data, Bipolar the So of we

Unipolar, slower. expect enroll there's only of will So patients do X/X we about we're are expecting X/X -- so the it are Bipolar,

about a is quarter. Our current estimate XX

the are kind So the same looks more to it's or earlier, going either quarterly. reimbursement you stop be or transition around as going. Bill lines to perspective futility the of of early And time keep this to the occur told interim as Unipolar going

it take the been there. So at on assumption no overall, estimates a there the will can you look full would will you XX I a in potentially our the -- paper while. the different But trial the complete. that's quarter, are when XXX. see That if working past, from is say, public published as could

Operator

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

Michael Matson

Just a couple more on Essenz.

So older ones of you trialing I wondering units? seeing do with versus I or what earlier upgrades of In past? what that other this it upgraded purchased the to are was think just How many seen regard have from words, either it? is customers, the kind Essenz guess in you the those driving you're actually SX than are would

William Kozy

Well, years old. think, call had XX commented, that I X,XXX last were we had that there that were over over we in machines out the

on degree interest. to And into the accounts so there's of way, all our no been an admitted those part focus accounts. back get those And some surprise, by have of

going in first geographies. pretty not kind thumbs the replacement through, us goes many force The the in X just in mentioned now. got try at I on Rest there both we're Now as of We've And World, more just I bit U.S. extensive earlier, going focus on the this they're sales our little of to that's a is who don't or interested EU have SX and availability trial We and aren't any like right forward. right Essenz many, in now on give where up before X period. patients than they'll mentioned, a customers less accounts any of

Michael Matson

at premium SX. it. a believe And -- know Got priced Essenz I to Okay. the is or then I

it that's as launches, accretive product have up be get on end products? is something than the know the especially sometimes So I -- with with production this to before these immediately to volumes margin it as kind a to start complicated of going of margin this, gross -- you kind volumes -- gross new is older better or your up to ramp

William Kozy

Yes, yes, good question.

to many ahead. I this question times, asked go because remember me think but going let I've have Alex is him . him

Alex Shvartsburg

and as SX. to margin the volumes margin the and component currently But really the gross costs, start to comparable Essenz impact absorption we The on is scale gross will improve.

the So relative premium we're charging to for Essenz. higher is the base cost

mix overall should oxygenator start to profile Essenz relative for volume company. positive the the the to a we of mix, As our the have on gross margin it ramp impact

Operator

from comes Miksic question next with Barclays. Our Matt

Matthew Miksic

one strong on couple really A follow-up of quarter on questions, Congrats a here. epilepsy.

on forward. welcome, very investments just one and and going You're Bill, of margin kind

programs So of that that positives just end-of-service put of -- sounds the drove place on the kind to that the in epilepsy, were understand was here in of patients. like part quarter. second the sort identification It this of

have meaningful Just through to lift have And impact, like a long significant lift then then of that see there yet And just a but it sort you how then when to as one not continues impact, of what's number fair put of more if that those statement? show in mentioned that follow-up. maybe the if that's to some sort of sounds so, some we -- NPIs, come? drive on that is I a efforts sense yet to sort and place do that kind that

William Kozy

please? Steph,

Stephanie Bolton

Thanks, for Yes. question. Matt, the

back at database. rolled through. if the that we full look you program so a we've in allow out So that of been if so if I end-to-end and last follow-up view, place specifically building our customers portal like, And would physician their the life the battery of on, end we're programs implanted that to have say to also had have we've the patient a working year, have get we cohort, we full

obviously, So up we'll year. move into future. that ramp And see throughout this continue to we as the

start that looks through days, the is lead this and this our to the what and quarterly weekly, is at ensuring all operating out, mechanism. that have about and discipline start of how early terms get much that some NPI, will daily, rigor so read operating very customers I I've seen the coming specifics to that see uplift more forward all our And we to when the to to on appreciated. that future already is quarters. back we with do of that But And it's feedback the the is we're we bleed we what that the establishing and this forward from that is mechanism so monthly spending NPI then what So the in like. our moment, really efforts look I'm in looking

Matthew Miksic

be to if through failure or the reinvestments sort And reinvestment $XX of study. Terrific. from heart of the maybe on and then drop is investment, sort leverage of there million

if where of that talked there maybe in you or program margin the currently some off and modest And reinvestment about roll just to goes, think and that further puts you're the the OpEx? how highlight spend what thinking gross leverage takes I about and could of clinical that you year-end, by So are leverage?

Alex Shvartsburg

Thanks did the question, year, We going Matt. modest started that for our to P&L, leverage I said modest we're your we the this mean deliver year. when remains goal. leverage target for to we

the seeing core first taking IT half how opportunity capabilities. year, make Now that in given well business the investments as as we're rest projecting the our we're to the the incremental to better in our some manufacturing of our performance we're and strengthen capabilities

well programs reinvigorating at the We're as innovation epilepsy within also looking as Cardiopulmonary.

to the are taking investments we're value those our where the deliver to future business the goal So some opportunity modest drive put coming incremental off back of and in growth creation, to not leverage.

about of million we program, first year, investment about that your the follow-up have for heart of occurred planned the said XX% Now half before, year. question of the $XX on I as in failure this

closeout are we feel the still good where this program, about on at with we're track So of point. the

William Kozy

both that we to year. we do programs to at We've And we more plan These question look was that X support to me, to more specifically to heart as those we've done the we on our Number failure on one, have trust definitive 'XX agenda, are we is and want still things sure Alex figure the then budget maintain your question. as and will to mentioning planning got done, in got move work not on we timing heart the our and we never into next want topic to make got we address come that do. strat in budget. that And to and quite couple the out And it couple to failure. XXXX be will take of what next of quarters. failure 'XX. as quarters and over heart of and benefit eyes the But we miss plan to the things through a

Operator

comes Mizuho with from question Petrone Anthony next Our Group.

Anthony Petrone

quarter. I then the trial. the on on one two Congrats have and operational RECOVER

on So just thinking cardiopulmonary.

quarters, to many Essenz, economics new those older, the sale opposed a over to machines share and when for sites epilepsy. few have how years have curious of actually about as new competitors an market LivaNova X,XXX one your here then I'll think much and you the has on the Just just being upgrade on XX gained? around what turned a are out And of or how

William Kozy

another of Let we because The from gets gained we're a me than we We're have share else. clear account from more trying these somebody don't in now X% get substitute lot even growing take don't orders to We little right getting that and that. favorable market hospital know a chase much a answer is that the the exactly market at is share quite it's with are historically but some down. that a question was orders first. back them. how that upturn, They order with go

a that so market X%. And is probably

of share as but X% probably don't We tubing oxygenators gain. X% on in the I a the it's say X% I estimate tell sets. somewhere to midpoint. hard X% gain you would with data or the share have the range that external on disposables, There's the to no got

can't you Alex, what we making the give just out door. one. moving we're had... on We you fact know So hard And that and really a

Alex Shvartsburg

Yes.

base, clarify to the just So installed Anthony.

those out X,XXX of the there, So life over we units useful of are believe sort XX-year about cycle. that units -- XX%

that's we're That's So immediate going kind of after. the what focus.

Anthony Petrone

double-digit where X a XX% do sustainable replacement get I low next Can think patients, epilepsy, and to, over operational now, XX% the mix. say, NPIs you mix grower? NPI, on epilepsy then go years, end-of-stage And can that be know, don't mix XX% right let's

William Kozy

open first. Steph I'd to comment. ask like me But up to Let

business me We throw plan 'XX of planning for a you. are amount 'XX just let big topic. doing on a strategic to at that significant work questions the And couple of

but number patients before, in treated. to more coming getting year. these heard You've people one, are more DRE X,XXX Only every those of XX,XXX we've deeply. There's got understand or

her here? heavy is what So going Steph on lifting really to and there's say, team being done by some

me, that to going getting where really I'm on therein this question. these that aren't go. be it that. address team view to now people please Within Right that can can a don't I How to the suggest treated? comment, And have tell lies answer today, yet she's that exercise, leading a

guesstimate so too I little in here, think but probably And for very please. We're a or estimate question. a to jump us even good today, early

Stephanie Bolton

question the continues about moment Anthony, patient we it's it XX% and a be about epilepsy, towards drug-resistant that at good I do to I'm The population asking is think one planning really when future. we know the one we as thing team of population. this think the strategic that during process look this

the basis, look we every incidence are on not yearly when pool alone treating So getting to the at incident overarching the treated a close prevalence within market. let year, we that

more we we that's of through pencils that is access one where right we're are patients can treatment our ensure to pathway sharpening options. the the treatment. those So how come absolutely understand to right And

long-winded So are well-timed it's your the challenging probably we're during question, these and question, a answer a but currently planning to strategic that process. things it's ourselves our

William Kozy

And little add Steph, if and a just color let me want. you

reenergized of time area in team deeply are two, how spending people These key surgeons. team the reimbursement a now Number she Number those place going are and the has the of and are with some economics. of a too. kind analyze that's there. of that are heavily one, Just that out I'm is These work in so and opinion And some on. epileptologists Steph to engaged both department with know healthcare factors. multiple you are leaders

going a today, it we be of break and our that additional insights higher we of take find -- up broad kind obviously, us move down though. within here trying not path taking that assignment that would to plan. It hope we're really performance strat base So work, as to are the to multifactorial

Operator

Baird. with Our next question comes from David Rescott

David Rescott

on little the quarter. of more some into prior and bit just first Congrats diving epilepsy questions. on strong Maybe the a

across we've elevated sales the or Medtech, maybe further made of from hospital about heard bit broadly investment the inpatient of but mission epilepsy, force levels. downstream, some benefits some these also maybe side. think for And I kind little of changes the a you've

kind to the quarter the maybe from at you'd year that I'm So broader what backlog in of based accelerate half least first versus I maybe on of force into or out parse is the recovery that able relative does wondering force or least half market that the in potentially or if been, at the maybe back sales if sales have contribution of the driven. investments? and the Is something year? response, that it guess QX And then just more could be

Stephanie Bolton

answer in parts. that I'll I force think, Matt I'll in David, first terms regards answer let execution. if utilization. of take in sales we X could to

past something go-to-market we've So length at the in about our that territories. spoken is

comments about that, may. like few I I'd So make a to if

that overall the see designated line with group have XX we So business. our of And base we performance go-to-market territories. in

X fully strategy However, is part we to into quarter and go-to-market so this, staffed an dig I into of this have my in and the coming see also open HX. the territories XX in look job, to outperformance we both and think, about at territories,

QX. to that be strategy. to territories continue we more operational we're also going be X in So And committed having to

can this the of for travel to Matt, you with direction I our base overarching? hand the around we current one. think right is I with say So sort sure that of customer our strategy for working can

Matthew Dodds

Sure.

and In quarter, XX% EMU I'd the second For epilepsy up track We about it that things X-month from to fourth in told we the surgery, a couple first a quarter. was what say. similar you now the of and that capacity. the quarter, There's lag. was was

quarter. I'd in neurosurgeries, didn't out say last but quarter. we a terms as for So that's like where meaningful capacity . OR then anecdotally it slightly better, nothing in have the encouraging, but from in our primarily being stood which change overall improve scheduling is implants. of the And say I'd

Operator

Wolfe from comes Michael Research. question with Polark next Our

Michael Polark

Supreme Italy, Can get Justice the European any and in? please, expectations the Court timing Court update weigh to about from of mid on we for change year for, an to next say,

William Kozy

Yes.

Here's the latest at what we've got.

then it's ECJ nor uncertain. have just XXXX. specific goes -- to that we It's to not don't by the decision and While of do the We share. remember the Supreme until anticipate Court. subsequently, We timing decisions final at least back should anticipate any Italian information

inclusive That's it's still million legal $XX cost off We're year. carrying the on SNIA, million of all fees to cash a $XX and finish question, the it's guarantee. burn. about To

have we it. on continually pay We arrived So attention.

offer informed. you to going are Our General keep focused all is to we activity. -- we're this going right Counsel And particular now you highly is obviously, on that can we

Operator

from with a Anthony is Group. Mizuho follow-up Our next Petrone question

Anthony Petrone

had just effect duration of I few of treatment on points Unipolar and and a there. to a as sort relates follow-up it clarify looking just RECOVER just the to

dates So we you modular obviously, back to endpoint in when have it look at on but improvement cycle, a XXXX, scores XXXX. enrollment the XX-month

months longer theory, in on there there potentially treatment that. have XX than been that in So are patients

patients where we where So of what the has been better does treatment will the the sit? average question just of it readout? next at the -- ahead and Come the look when And March the where be today, it of final overall probably will -- And enrolled dropout duration study? sit? XXXX year

Matthew Dodds

Anthony. Sure,

you paper, So the look out, published we a dropout XX% showed out. if just the scenarios the XX% rate, at drop between numbers, overall drop

has As we're nothing past, we XX%. the said changed, below the in well

there terms any dropouts. of in issue into So nothing read to with

that at completion, -- as look based percent really number, on In it terms I'd of it's scores.

scores that we XX can quite as that look at has percentage have. scores. You It's final the you high. percentage since one what of number a matter imagine, now the in . follow-up, have And been patients gets gotten implanted, we're each of of

But to your So see scoring, the of we'll May blinded total XX there, There's response in the analyze in data far 'XX, we still along. May XXXX. of -- And we're of pretty primary. point, we're full and timing won't overall set until everything. terms endpoints, data is

Operator

question Baird. a with follow-up from next Our Rescott David is

David Rescott

durable on I are have I'll here, And think kind so about the dilutive. picture. But the you cut overall think Neuromod that DTD ask drivers my term. segments opportunities follow-up off, some profit OSA, little was and portfolio it bit then there market question growth again. just have and with of a kind are CP longer When newer got bigger these might of

or how of within least at company and those the near or shifts kind relative you how of potential X about up advertising overall? different this these the kind I about I portfolio maybe thinking X guess longer-term drivers to the think investments, think time. view So do mean, shapes and you of over portfolio

William Kozy

Sure.

open to. take DTD continued funded. to go with Let fully as They're forward. The and Alex OSA we're at failure shot -- a you the that. said, understanding stopped fully that And we some mentioned out product me committed has worth sides. the starting heart create impactful want SPIs of What know to that core both innovation build that maybe that And epilepsy. restating iterative both to is are on and portfolio CP capability the we and it's and within we

take let's in at be last meeting recall to and planning I Houston. as held mentioned, strategy talked the epilepsy might a X-day example. You had meeting an . about We technology

that's that strat core Steph product and across managers where being mentioned, of for were the modest purpose and by going in epilepsy. to kind And her of We've that's the backed improved And Alex that both that there. can that's continue innovation planning of CP, where the high started ensure, was fundamental we'll and team up that's and develop terms That's company That's to better in investment a XXXX. customer start our several on sides. is. acceptance, products, in with further process of on to that so that the that work to activity on got business. on strategy head And senior the number go. the portfolio we epilepsy one, get

Operator

we Those the are today. all questions have time for

remarks. closing turn to call for So back the Kozy I'll Bill

William Kozy

behalf On speaking we'll entire Thanks. interest appreciate to for forward everyone, you, your look team, really and LivaNova, more. Thank support joining and of we today's the in call.

Operator

you, our call. Thank us This joining for everyone, today. concludes

may disconnect lines. now You your

LivaNova (LIVN) 26 Jul 232023 Q2 Earnings call transcript