LIVN - Earnings call 4 2023

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Emily, and I'll be moderating your call today. After the presentation, there will be the opportunity for any questions which you can ask. [Operator Instructions].

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

Matthew Dodds

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

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

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

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

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

William Kozy

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

quarter of year, the Before CEO. and turning start Makatsaria some with on Vlad results the I'll naming comments off full as fourth in to

Vlad delivering at J&J month, on MedTech, of Circuitory served Directors Earlier the track respected and a in of The in a Our LivaNova Vlad with Vlad member high-performing innovation segment that down Board He's XX-year Vlad have of March Ethicon as recently and the ACS is Chair, industry January, confidence update company's my to will for driving an CEO Advanced a company X. to and this cybersecurity leader the we growth. as technology decision to record effective In the Board most the advance I wind as supporting incident. announced a Support goals the CEO CEO. as leading our global down right Board the appointed results, plan and strategic business. new teams. of leading medical great surgery its Group Chairman the role segment. and LivaNova's continue achieve look Board our wind long-term forward and course, the I of

and part to As growth quarter. our move core into are our cardiopulmonary value accessories cardiopulmonary segment on us this allows focus which first decision, of ACS and the portfolio will decision stand-alone This neuromodulation for and creation. well-positioned during businesses, cannula

in regarding to our quarter. disclosed Alex down to Later in incident. in contribution We the cybersecurity wind income financial performance compared a the call, strong as the provide We previously result impact excuse XXXX. results the positive adjusted delivered expect will the despite operating estimated me, comments XXXX to to -- during

who Importantly, urgency extraordinary responded sincere prior our noted back extend online we our must with Thank you. LivaNova disclosures. colleagues around in manufacturing the as able operations world and to to I our all dedication. were appreciation bring

cardiopulmonary moving and the double-digit up and my basis, growth For year, XXXX particular with adjusted results strategic the on to our revenue regions. growth turn revenue I'll driven will with modest achieved U.S. before growth then both by full share. versus portfolio the Q&A. and guidance. growth performance prior our XX% neuromodulation on strength fourth we the on In of and achieved and earnings we was by businesses prior operating regions. remainder year. the After our our This initiatives. XX% across the marked leverage, commitment achieving remarks a quarter, On diluted details versus in provide delivered to Europe we in all call, Notably, the quarter per I'll Alex wrap results, full comments, income year and discuss additional XX% adjusted some to closing year

results. Now, segment to turning

sequential fourth revenue of For by the were of the increase the Cardiopulmonary more segment, sales machine versus Essenz XXXX. price. XX%, U.S. a the meaningful during by the quarter mid-single an quarter, execution. strong driven We Oxygenator Essenz in grew driven quarter than Europe ramp in and XX% increased placements customer pleased to was and revenue the sales see revenue in demand digits, Heart-lung in pricing and $XXX with regions. million primarily

the the was and capacity made significant revenue XX%. grew quarter for and cybersecurity and to from $XXX As Cardiopulmonary the additional working million holidays. full faces the on team business shifts in previously the weekends oxygenator constraints, including mitigate the noted, disruption efforts incident, year

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

in disposables incorporates Our the capacity to offset constraints. growth, forecast slower which HLM due will strong by be current growth

versus implants representing grew versus X% the revenue oxygenator the growth prior some with We year-over-year versus increased half Europe U.S. The of capacity rate. growth in of new to X% benefit representing the and high year. Our increased and revenue quarter fourth year, Epilepsy replacement prior achieved expected world the quarter, are implants. provide XXX expand now in new X% year. the of unusually an versus We in to growth the both rest year. X% the patient epilepsy replacement growth the Epilepsy second XXXX. revenue implants, prior recent X,XXX in XX% realized efforts

Replacement full higher a than the increase, reached epilepsy year, Notably, patient also growth increased year. implants which full full for epilepsy X% U.S. X,XXX was prior new the the expected. implants the XX%. representing X% achieved For revenue in X,XXX year, versus year,

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

low Our in of forecast of U.S. quarter revenue fourth versus incorporates growth mid-single-digit the $XX ACS million X%. more year replacements. X% grew and the increase and million single-digit normalized in growth revenue patients, an ACS quarter, XXXX. for full was $XX a continued for was the new

previously full was the Alex $X noted, for ACS impact As later $X the the end the complete the the wind financial XXXX. be comment to of fourth DTD million. substantially segment by of quarter on down of year for the million revenue is wind in call. anticipated and down was ACS the will

RECOVER million, continue. does we RECOVER the primarily DTD study XXXX, anticipate study. For The approximately revenue of $X from

patients June enrollment of completed. study of the cohort XX-month after reminder, unipolar which for the conduct a XXX has in of the a will As receipt for the data been the We unipolar we XXXX, final anticipate analysis. follow-up

XXXX. We continue as continues by to results to bipolar expect expected. the late enroll The publication cohort the of study

the to year. which Moving the The of majority OSPREY With call failure turn half is with clinical to substantially to heart complete. Overall, all first study in recruiting to Alex. over the related in OSA. the spend sites progress that, closeout R&D trial $XX XX the of was study occurred In ANTHEM I'll of the million, continues failure, patients. XXXX heart

Alex Shvartsburg

Bill. Thanks,

charges I'll ACS the call, the of wind the incident also guidance. brief portion in fourth with the of I'll the results. business. details additional and of cybersecurity commentary quarter provide recap XXXX connection offer down the a share my onetime I'll the During on on

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

gross in revenue. million the due $X to quarter Foreign closeout costs the the Adjusted This quarter decrease unfavorable or margin the of XX% was impact compared of with fixed offset favorable exchange Adjusted XX%, higher by $XX margin in incident as revenue of in expense had adjusted net fourth compared points XXXX. down a of revenue labor to quarter as in quarter the by of driven approximately associated of of R&D and a quarter lower X% XXXX. percent The costs million volume XX% and the was in overhead largely cybersecurity the mix. basis ANTHEM was absorption. by fourth fourth impacted trial. of to R&D was was favorable fourth XXXX. The million partially from net a product year-over-year percent XXX $XX year-over-year gross approximately XX%

Adjusted million launch, by as in $XXX Excluding the R&D increased versus year. quarter commissions investment prior to the X% and and freight fourth our targeted for expense Essenz fourth such compared variable XXXX. revenues. to SG&A ANTHEM, was costs the supporting associated The increased related driven the expenses costs legal million $XXX increase of with was quarter year-over-year investments

the to quarter fourth quarter Additionally, quarter the was $XX was was Adjusted fourth of $XX over as operating XX% XXXX. the million income compared net XX% from cybersecurity in was in resulting was operating adjusted incentive XXXX. to last compared percent income earnings to the The rate income compared to in as our operating the Adjusted effective valuation plan increased quarter XX% performance. with per the allowance. compared in diluted by quarter points and $X.XX rate manufacturing of XXX our share Adjusted release impacted in to disruption negative XXXX. by fourth the basis quarter $X.XX The fourth tax was tax the fourth revenue negatively of incident SG&A margin margin short-term XXXX. a impacted accrual million in of line due approximately a sites. of to of Adjusted year. cardiopulmonary X% XX% business of

$X.X the excluded costs XXXX the year-over-year with These driven systems was working $XXX XX Capital in income up put the $XX year-end a system costs. $XXX prior $XX Total our $XX from from In primarily was flow debt, compared debt quarter and XXXX. year-end improvements $XXX of and debt the million, facility investments. Adjusted external up the adjusted prior cash XXXX costs which infrastructure at Loan, higher company in increase of for million incident, that cardiopulmonary the cash operational million increase free included million cash XXXX. including The IT was counsel driven on restricted in million restoration quarter, The from period. total manufacturing in fourth by capital. are Term experts, July was at connection from in mostly Our was $XX and driven year-end in year we December the year. The at $XX by million, results. spend at million million legal cybersecurity by $XXX up balance increase million million, at to year-end $XX place was incurred was the cybersecurity approximately was in million. in draw Net delayed XXXX.

from excluded and to We we noncash results. to during the continue investigation adjusted ACS certain which a wind impairment of incident. monitor million our the ongoing down cardiopulmonary, and of pretax to related business the the recorded costs this $XXX With quarter, charge may products is incur fourth additional transition operational developments of respect into of

We of effective in of expect the to charges approximately to $XX and majority million, range XXXX. the additional of million XXXX, in $XX first be Also, reorganizing quarter which segment. the restructuring cardiopulmonary will in cardiopulmonary within stand-alone paid accessories incur business our from are we X X the be and to operating segments: and remaining within reporting will cannula other. neuromodulation. and included ACS included The be will structure reportable The recognized ACS

a Now, on currency between and growth portion turning of when excluding XXXX to X%, X% and and will between business be guidance. ACS X% We the that basis X% we XXXX the revenue forecast exiting. constant

based be on exchange currency to rates. current expected is negligible Foreign the

with XXXX the as in a to in approximately contribution the $X.XX impact EPS. result to compared expect an of wind in XXXX operating ACS adjusted down positive to business income We of

effective continues in our With full unfavorable and of to rate substantially we effective in to result The related a approximately in XXXX. rate impact rate tax XXXX complete, to in to a ANTHEM of EPS. compared impact XX%. R&D in to adjusted expect of $X.XX adjusted landscape We to heart as clinical positive results EPS. the tax approximately adjusted reduction global earnings tax spend XXXX, anticipate closeout will in Applying XXXX of contribution in an program this evolve approximately year with income impact an failure the study operating the the $X.XX

tax the of per to outstanding approximately shares our earnings with step-up diluted full weighted Despite effective in EPS $X.XX average the the adjusted unfavorable impact number rate XXXX share be are midpoint. projecting adjusted diluted the unfavorable results. up in year. range at moving in adjusted are an effective that in for million growth step of of tax there We and our recognize clear, EPS X% by We our range $X.XX caused rate, parts on To the the $XX have a EPS be impact guidance. represents will our

failure at the to a heart meaningful by $XX of prior down million, of wind the including $XXX and approximately enable this program impact. This flow midpoint to capital segment which includes driven actions, innovation, range is ACS spending, to free optimization in range we of forecast expected the is increase portfolio $XX million infrastructure. our step-up the X% be year. Adjusted us However, the to an manage and versus This to increase support critical approximately investments in million. be cash growth

for In cybersecurity modernization, of associated and by was I'm out. incident. financial along performance capabilities critical encouraged with XXXX our and achieved while the XXXX, including XX position XXXX. addition, managing costs operation us company's our a infrastructure In improvement. in margin with These well well flow of include ACS summary, the for business operating execution as a This company, the cash projections manufacturing result revenue impact IT investing performance the actions which of included double-digit as growth as wind the basis point in the

adjusted Our operating implies XX%, income approximately an XXX operating in improvement of margin. income points guidance basis growth of adjusted

XX% Excluding to achieving margin adjusted our Bill. in and benefits, over trend improvement operating consistent and than failure would XX% X-year commitment builds with with And in leverage operating of back the I'll in both This XX% greater to operating that, XXXX, been heart call turn have a upon XX%. XXXX, XXXX. ACS growth income

William Kozy

our portfolio change XXXX, has performance much our opportunity dedication as did exceeded maintaining want year some generate their the taking these that to investment Investing work thank organization to company, very line reflected capabilities the actions these mentioned, to certainly Under while chance results, optimization. and been entire for Thank XXXX. is and the we hard top interim realized leadership, I results and initiatives. leverage. in take and organization and in We you, for and in full In appreciated. guidance operating demonstrated critical Alex. related on full bottom pipeline sees embraced in the

focused and businesses ahead, are on targeted growth Looking innovation, sustained core our value creation.

fully open SPIs that and that, Vlad, leadership, Emily, with now the creating while confidence are our his LivaNova maintain we're value. Additionally, approaching. will our ready With to patients milestones questions. I call great CEO, have data to shareholder achieving commitments funded as momentum, serving With in for

Operator

Instruction]. [Operator you. Thank

Our first Rick Wise Stifel. from question today with comes

Rick Wise

strategic And first Good could the talk role as broadly at into are deeply I in Bill, of time, as and operational step hard Maybe morning, to level should having from mean starting goals Maybe the you'd pleasure you? everybody. leadership? like you it's welcome high you much. I'm of as to resist it's or speaking we terms or pipeline. Vlad. what through Hi. so your a since expect priorities you. innovation, you off who the the your us Thank

Matthew Dodds

Vlad. it's But initially on it's X, not -- When But okay. there. on Vlad briefly March the on on Matt. can the thoughts Hey I Rick, starts intros, He gave was Bill so not initial he's some call. could on comment comment Bill

William Kozy

Sure.

in. for the months they the several and standard talked that this jump to me about had the that Board spec We created had Let over hire. you

and more market boxes interest the all for vision, in role. checked the XX,XXX little all activities. aligned I including that R&D, had London of major a for the lead been and talent, Vlad mentioned in on He's we coming execution, internationally. York career closely place significant a the overseeing to commercial working access, He only health proven business around the to in His supply moved bit, a with company. strategy, in living XX the to to than not and global company somebody, got As years world time care accountable set with with multibillion-dollar spec. A innovation, experience, that chain Moscow New Singapore operational we've requirements employees,

emphasize entire took As decision I join with you that try LivaNova. know, our the Rick, speaking behalf of to we we timing the to the of pleased know And extremely hire. a of to specification. Vlad's Board, I lot questions about intentionally is to wanted the just stick Board on that

Rick Wise

really this Bill, it's great LivaNova congratulations point, started That's And I taking great. should done you've That's with to and impressive. review. all have on

question, you? And to expansion heard -- sense any through correctly, the But the think a maybe us set as have us competitors us if half. much. level situation you help I coming Thank your you do we're are see whole so in again, expansion? Just follow-up Where Where going second said that on it can that think through current back? you on side? are business. I be? oxygenator the competitive capacity take Just

William Kozy

Yes. Yes. and and here. one front Thanks, -- good Rick. it's center That's a question

We mentioned changed dissipate. at the position one this nothing side. had still continues all, before, smaller of point on in we we've time, -- whose really has you competitive as competitor to First to

a don't on time frame who not have We have the We market. has returned competitor major that. a yet to

in All uncertain. that of still determine field our efforts to the best remain just

On the capacity of taking the several within implement supply. of we the our are operations manufacturing predict second ready to these improvements the work, to right year, those. level to And to confident now to going the get. ability and thing, actions we'll upscale in to We're positive to we some increase we're impact that have told yet But benefits we've half you will improvement capacity. that process we start identified were not

Rick Wise

Great. Thank you.

William Kozy

Rick. Thanks,

Operator

comes question Anthony Mizuho. next with from The Petrone

Anthony Petrone

interim X. on Maybe Thanks. and And of Vlad just congratulations, Bill, welcome. as the you're on here follow-up coming a shortly -- as role in March

have on how sticky has few just gained if couple a look be years. would next and competitors on follow-ups how question again, company First over And I'll we back? when and oxygenators, do wondering guidance. that actually much And as can the be a the follow-up then of come share

William Kozy

course, XX But the sitting the we very becomes now half underline if somewhere. benchmark to be XX%. markets let in guess, words at Anthony, the tried ago, of growth Maybe business particularly of external to is months XX right And is and into that the mid-XXs know of tender-based. you guess very, no get when difficult. There's our kind me around data. world, about about Sure. best might it us, our best high-volume We you

got And position so we know good a that there. steady we've

Our that in on revenue oxygenator highly course, and be the focus significant of sales is sustain force of aware got non-tender our our position to current and that. has challenge business, will,

growth particularly are And You'll but sustain before to that to a get that. about those nothing do effort best I we in well-organized talked business. markets

Anthony Petrone

just we look on XXXX, Alex, a then at bit bridge additional some guidance. Maybe, earnings in ACS. residual tax inflation the have are little still but When helpful. failure seeing benefits for and from heart you That's you there,

for think I $X.XX ACS. you out called

wound because the until suggesting to relative step the the the that is from won't business down cost expect maybe year? at Is should the sort where you. once look earnings up fully end the here timing a Just Thank early And to So be little been we that bit standpoint. again, on piece pieces? the that's operations annualized, just that a that running the has of fully and a of bigger moving benefits? bridge

Alex Shvartsburg

Anthony. That's right,

the In $XX wind is million down a approximately losses. ACS year. So call business this transition incurred is, I'll the XXXX, of it

the significant we we're And wind as part realize that improvements of year-over-year. the essentially, to full next expect then benefit So year, in see that. of out,

Anthony Petrone

That's queue. then back helpful. quick and in I'll just one get one, And

we it Thanks wind of phasing thinking just that that XXXX? that, features certain all this through of Or sooner? Or out sort loaded, are just calendar of terms is happen of there it down in be again. should is Just back-end phasing the gradual? can

Alex Shvartsburg

fully be year. going back-end the in -- happen It's last loaded, quarters going not it's but to to X the of it's

Anthony Petrone

again. Thanks

Alex Shvartsburg

Sure.

Operator

from comes with question Wolfe. Michael next Our Polark

Michael Polark

growth. benefit accessories guidance Alex, Question for that's morning. confirm, X% It XXXX, no ACS? and cardiopulmonary cannula good to you X% from from Hey, has the on Can apples-to-apples. the

Alex Shvartsburg

at The results That's will cannula correct, business, recast Mike. of the we end QX. all the

roughly So broader same portfolio. apples-to-apples that apples-to-apples of assuming profile as the the we'll have of cardiopulmonary an products comparisons. growth guide This line The is is comparison.

from So growth apples-to-apples. a perspective, it's

Michael Polark

Does look being and if a ECS $XX give I this million? how guided of last $XX mean million accessories last on this X%, in kind ACS exited, implies total year, that about is And the it million full cannula year, basis, of $XX at take. year or year you was

Alex Shvartsburg

you It's the number. -- It's give million. $XX exact I'll

Michael Polark

Okay.

was that my think I first topic.

taking up and I'm is investments? second capacity, it in anything there fairly definitely. heard I sounds Those the depression thinking CapEx. and/or terms. investments innovation does the Is The growth just are and It else, sleep-readiness oxygenator critical mean? What specifically like questions. for step generic about infrastructure. exactly Thanks

William Kozy

it's Mike, Bill. Hey

one. me Let grab that

first facility significant You capacity it's on and the to in one now, that. address in and right Mirandola Yes, particularly hit planning the perfectly. main oxy going

cyber already the okay, broadly us some The encouraged infrastructure. serious very way, Additionally, had at really look commitment to our our we even event -- improve in a IT systems. event to more

in an see our uptick IT will investment. you So

-- As LivaNova, Those we've other a a strengthen our points priorities of moving natural of us. percent of targeted operated systems, number see for which for a you'll points threat one, and number actors. entry basis us always are of north where number high we modernize for couple position; sales two, as security were

Alex Shvartsburg

would that, in also on into systems I XXXX. of that in we're accelerating focused our We plan. well. efforts long-range kind that Mike, to those our really X-year We're had add modernizing Yes. as ERP just

Michael Polark

you. Thank

William Kozy

Hey, thanks, Mike.

Operator

Matt comes question The Taylor Jefferies. next with from

Matthew Taylor

the question. taking Hi, thanks for

depression wanted just the on your I on comments to So study. clarify

thinking mentioned we the then June So in results talk the or middle different might until might see about kind what June. going that's we you Are if mean do wait You in still what's do like heart with poor scenario scenarios? scenarios, we've July? middle-of-the-road that of a a that. I the you road have in good Or what guess, see to the ACS? you to you or question. just the going mixed if and you'll or get of build can in result have And results what result? Can We know about trial of the successful kind we the you But failure first spending? are seen behind for to less savings do

Matthew Dodds

so Matt. me It's Matt. let yes, So start,

said, the in data So get we'll the June. timing, as for Bill

still to confirm this plan before top CMS line we data, to other including from release at critical is Our confirmation but the parties, that. publishing get have we can

we've So is can said, see But it manner. we a release year. again, publication end of the out worst as likely the comes timely the in you'll hope at case, when the

terms points, of of we several there's lot right? endpoints, talked about There's data a trial, CMS in the other In things So about the looking primary about think we're other to points. endpoint end the multiple time multiple and other at. cares way response.

So say at would it's really on right in favorable now way it. read don't to hard how the we all want we path? I a doesn't to with can if -- we Bill, data there's do you if until know, see if out comment a what different data the

William Kozy

hit taking that team the just depict Yes. were see. time And only We've this we'd that, you let's that his the set type, was data way say, the to possible look endpoint. expectations could number again, a we're of but outcome. and bar scenarios to add course, that this high knows And to already thing of Jonathan going the a endpoints as had wait a everybody might there. that's confirms at and by this the the clinical scenario, whole in CMS. way, high trial by Well, the every take a well, of And randomized

the happen that to for it's us work hard couple into we've what's But the a still hit of direction to some got to I we've because at. then you're without data, That's and to situation, and work from starting which think that too. may you the without ambiguity say CMS, those, You get -- data do. were not going really seen it's specific once we want the exactly do to

everybody that to a times the where is more We a it blinded. this frustrating of little We've gets part told are number wait.

Matthew Dodds

We're getting closer.

William Kozy

there. getting We're

Matthew Taylor

Thanks for talk, guys. the

Operator

The Piper Maeder next with question Sandler. comes from Adam

Adam Maeder

assuming But guys. understand and taking bit and little the a on specifically, And for And that's that into same XXXX. it of on I to Congrats or the preparatory year, wanted ask in two. guidance push depression? maybe wondering the SPI guidance depression trying for I the forward, spend depression And differently. topic, what to trial finish follow-up positive you is the of OSA to in thank if SPIs. the questions. pick for a up then have Thanks. to some the I'll accounts costs just Hey, level baked a for

Alex Shvartsburg

Adam, it's Alex.

million So in we $XX spent XXXX. roughly

We XXXX. decision we just The spend is. of the are level really once compelling the in how on spend of the know investment. a on depends June will trial how in results to increase And definitive is as a level anticipating modest around data trending, that make the

William Kozy

market a was Is anything the -- -- there sub-question was about. interest there -- there an And there in

Alex Shvartsburg

There's a the far small XXXX. as million spend as And $XX In amount we of roughly market Yes. guide. OSA. in development incorporated goes, into OSA spent

end investment as in trial. of step-up enroll modest that as the through a expect program in We well we to continue patients the and follow

Adam Maeder

there. color. great for you the Thank clarification That's

flip questions. cybersecurity for the I a business? remarks, one finer reasonable some 'XX, then the oxygenator could the HLM growth. in to that heard side on to little What the CP of you was question, guidance assuming you the clarification the on just in I for the wanted X% was hoping and I And of to outlook are taking of to but What assumed Oxy's? second what's revenue issues? bit was the incident a Thanks assume year. prepared over last put for versus my competitor X% For growth on for impact? that point CP And QX more of the

Alex Shvartsburg

All right.

time. a at one this take Let's

expected mid-single-digit the and double-digit assumes mentioned, of heart-lung and in The guide in a consumables. the Bill as in guide we constraints on goes, capacity as rate sort expect benefits, modest the growth the So also that guide. our segment growth as the far half, second our due low to to

Adam Maeder

go Yes, ahead.

Sorry.

Alex Shvartsburg

What second part. was the

Adam Maeder

I this cybersecurity. Yes. wanted to clarify

that from the revenue cybersecurity I did business, but what confirm like? on CP to think wanted that the was I of in a that. impact Sorry, look side standpoint, QX Thanks. And

Alex Shvartsburg

right. That's

inventory So the really because kind incident wasn't how of constraint on revenue. a about constraint the result flows exactly and to hard week we impact of that the the the oxygenator track capacity of you or lost see production, depends the of it impact to inventory revenue sort expect when lost a -- It would the production, on in

Adam Maeder

Got Alex. Thanks, it.

Operator

Matson question with next Mike from The comes Needham.

Michael Matson

good or morning afternoon. Good

So looking just in and kind terms XX% of of about the tax now to at before XX%. rate, I you think you're XX%, like talked

So end baked or is there mainly -- XX% a up assuming have then why being the else this anything you did higher for you haven't into guidance. And And it through that expected? in I'm something X, guess, you going on? than benefit Pillar I stock-based is compensation

Alex Shvartsburg

at range time, at of jurisdictional looking Mike, a we're rate it the predict function when was really tax because profitability. to a So is the difficult in point

So got closer at how exiting your our XX% And 'XX, I'm projections best XXXX, work at time. stock-based out, compensation. better we a I for of question around estimate point for will the the this got is as profitability we in mix not sense looking understand yes, to sure

Michael Matson

I just their or tax there rate is companies unpredictable. stock-based thought tax benefit guidance that kind into factor of of some from kind that is typically, but comp, don't generally

Alex Shvartsburg

Yes.

okay to come follow you, will I that's that, and up with you. on us back Let if

Michael Matson

think gross it just for then the in going much Yes, gross sure. just will And how in Essenz, to assumed premium your from margin you guidance wondering 'XX? the help? price margin help And there, do given is what benefit you've that

Alex Shvartsburg

We're improvement of Yes. points overall improvement. a year-over-year It about, as expecting margin company. XXX basis gross modest call absolutely it, supports margin gross a

major So that. role Essenz in plays a

Michael Matson

you. Thank Okay. Got it.

Alex Shvartsburg

welcome. You're

Operator

question with comes David Rescott from next Our Baird.

David Rescott

for thanks taking start the questions. I to segment. Neuromod on the wanted guys, Hey,

X% patient getting for out guide that maybe a I the guide growth this as to to, replacement, you ultimately whole. and think was the low think, new mid-single-digit I the segment but single-digit X% called

to math, I if getting the X%. that at you're you or X% something to think do below just, So

So you which I'm in specifically? And there, a the if the you've growth out itself wondering better piece for And way has kind if be Neuromod, understanding I about is pricing higher then inability laid sustainable. XXXX. of to the of level in talked that for guidance think segment done

to think point. about color would cycle So the just wondering Are replacement be can which growth we structural is where some a the Just any new to implant changes we we Neuromod stand helpful. better start Neuromod? at at in there where or cycle that seeing point to from

William Kozy

will take Steph that.

Stephanie Bolton

that. take David. I'll Hi,

U.S. in to digits. mid-single continuing forecast So to epilepsy that we're so be the regards for business MPI, would

of right talk element. service U.S. about end you You're of sort when the

rate. we the to expect a we see region low expect But international normalized to double low So still continuing digits. to more grow to return single-digit

the refresh that's experiencing latest And us every there. service. a expectations there. service to why of end X% in 'XX. of our more sort you've we'll And tells a be we So normalized got I our do on quarter, some of bit as model say, continue that do of the to X% in data We

really favorable 'XX, a 'XX 'XX to been comparison performance reminder, As positive. a very was and our in has

much through So as more growth we to the normalized rates see move become we do expect 'XX.

David Rescott

we Italian Okay. a know been then it's while reserves. follow-up. And just since talked I about a the

that could on So the balance just when line wondering update Thank where an kind then and we rear the longer-term up there? give view? through thinking around you. of stand, is what maybe and us you're sheet open that what flexibility moves around time the about if And potentially the

Alex Shvartsburg

David, it's Alex.

European litigation, the way in the will a Court. Supreme the Italian binding we're from Justice. expect funnel We That decision regard that with awaiting of then Court So its into readout actually to SNIA XXXX.

and all so appeals Supreme counter decision the Court and appeals. expect the in response And Italian issue a to we LivaNova the incorporate to of

a Term into make to we kind was That structure the regards that this, in negative against liability. With will we indication way be XXXX. booked an and funding a judgment its XXXX. because cash we funding liable. from that liability At haven't perspective, to of we that support appropriate we So ring-fenced capital A to any may But have this know, have survey Loan we've us. you took the not on potential point as time, in accounting around the the

David Rescott

Thank Okay. you.

Operator

The Barclays. next from with question Matt comes Miksic

Matthew Miksic

Thanks on I then have or different up guess, morning. to process, And sort for great stabilization, you're benefits good your following the how any the that follow-up on centers which the epilepsy. the Hey, the on and we finish and And to a you've had are? folks to focusing sense I are 'XX? sales And that you way of changes on follow-up. you the I to comments in one market the of market if on just business sort normalization epilepsy wondering U.S. could congrats the questions. sustainable on the Neuromodulation organization, 'XX. one trends give taking Where seeing they in you're how are about feeling around selling in made And there,

Stephanie Bolton

structured, Sure. when the towards our where in how X consistent do look a being we how ourselves and with of execution, the over think financial And years. we we've certainly reflects we're in base I fully the I structured the Thanks staffed and for our accounts dug lot over pleased our And since growth that, Matt. months in this business performance we I consistent past continue couple past around over to disciplined be see that. really role. are key and execution,

really sort pleased and with I territory is around continuing design, see been well in So to than partnership efforts the to one our of with our the strategy broader point over physician like combination making perform I'm our structure. make But base. to that force group expanding is And big base. would perform sales we've our

have scientific those coming you'd by In caliber impressed board this the time for the of first fact, over be we first and highly our coming advisory members. weekend, together

more So come. to

epilepsy is So also more way consistent in well. the execution our side to come the as of forward but to base physician us regards for with partnership the business, our in

Matthew Miksic

a here back And that. for couple I've calls. forth and between been hopping of Thanks

of love talked to a So Vlad would step I if of plan, get call of new a you've the gets a to sense quarter through and stand Is that, for strap first this is Any you've kind apologize, again, that update. role. second kind And us, communication of already already with it, where ready Alex, Bill. but or kind about that apologies I if things Bill gone quarter? into

William Kozy

he will, take The me, orientation effort had, of approaches. of state all little just comfortable and to strategic away Glad course, forward. the call. be company, deeper little no. seems current fully At the company encouraged All go by a the planning ideas this would pretty Board, with early summer by a over as and on starting. traditionally any a bring its that personally the from point, discussions we've he we're week the No, Vlad to but

to the got timing strategy. He's to pretty active for starts here responsibility, So couple And is in July. gets CEO him get be including grounded. He June, full May. months up of clear, That great. process a he has

so Board. wants And the process that is the and to bring on support March full the get X to he going from approach

Matthew Miksic

that. Got much. Thank so to look it. I forward

William Kozy

Thanks. Sure.

Operator

call no Kozy closing I'll Bill the back have remarks. further to questions. We for turn

William Kozy

Thank We call. for thank we LivaNova. everyone again. appreciate the entire behalf your on your and you. of joining in today's Thanks us support On team, interest

Operator

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

LivaNova (LIVN) 21 Feb 242023 Q4 Earnings call transcript