LIVN - Earnings call transcript Q2 2024

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC Second Quarter 2024 Earnings Conference Call. My name is Emily, and I'll be moderating 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. Matthew Dodds, LivaNova's Senior Vice President of Corporate Development and IT. sir. ahead, go Please

Matthew Dodds

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

Chief Officer, of on Officer Financial Alex Relations. Officer; me today's our are Laser, Chief Makatsaria, Joining Chief Manager Tezel, Innovation Investor call Shvartsburg, our and Zach Board the our member Ahmet of and Directors; Vladimir Executive of

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

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

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

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

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

Vladimir Makatsaria

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

on question ECJ demerger the connection a raised the that out in came Let to judgment with Supreme the the Italian law. Justice of The litigation. on me by Court by start by European European addressing Court SNIA Monday, responded

that lot there the for and still company prior more this a be can spin-off. there a matter, says responsible spun ECJ the are complex lot While ruling and off demerger of effectively a a -- a nuance here, liabilities are is to

company a to responsible liabilities national can spin-off. is that for if law the The arise to decide sells up it after be ECJ also held

goes While we decide the are disappointed Italian Supreme with the on now for appeals. to ECJ Court all the the back to case decision, it

by While Court until XXXX. We the Italian the decision do the at of expect not uncertain. least a timing is decision Supreme

the on to provide X we I'd previously strategic turning quarter, like before to for an results the the Now highlighted. update imperatives

and maximizing our First, the strength of businesses. cardiopulmonary epilepsy

quarter growth, capitalizing this momentum This of growth revenue achieve priority. both consecutive to key sustainable sixth marks the remains businesses double-digit quarter for a above-market on

expansion improving We also remain to generation. committed cash and margin

In the difficult-to-treat in setting for direction preliminary programs. depression, we obstructive RECOVER unipolar cohort clinical apnea patient Second, the results announced the for sleep difficult-to-treat the June. the study depression and of

analysis from Following additional of data scientific we leading and to continue independent reimbursement the to and pursue input experts, coverage. CMS in-depth clinical, decided

later model a operating that made. direction we deployment in profile As us need. decision decision and in program with detail in financial coverage the the CMS a reduce will allow unmet population us call. provide includes a forward, of financial new investment significant LivaNova's on for impact this allows decision the of is the This more improve continue pursuing a to Alex to patient will XXXX until move this coverage

apnea clinical direction entirety for concluded We of second the In obstructive quarter set enrollment program review XXXX. in and positive to the and plan outcome data sleep achieved the study apnea, in clinical the obstructive the predictive OSPREY March. the OSPREY sleep of

success, we execution, and focus we to explore capabilities. clinical with of Overall, our continue markets Third, enable high are and strengths we our will and need high areas and to progress in in to people. with strategic on pleased potential growth the innovation continue with imperatives aligned unmet our

provide additional businesses. to before up For quarter with our results Q&A. XXXX cardiopulmonary epilepsy Alex our opportunities remarks and wrap and on and After second the discuss moving details in will will closing results will I remainder of guidance. my the update call, I comments,

takeaways key performance. X financial basically are from our There

First, XX% we sixth double-digit growth are our year. marking achieved revenue quarter, consecutive prior versus the quarter growth. of In we

ACS while wind Excluding impact XXXX. versus the increased down, revenue of margins. achieved We expanding XX% segment the this

we're year and guidance. Second, adjusted share earnings full per increasing our XXXX revenue

to we XXXX. incremental to Third, EPS expect least decision adjusted our result difficult-to-treat in in at depression $X.XX of

Now turning to segment results.

driven was of increase an revenue the the XXXX. segment, increased quarter Heart-lung over cardiopulmonary quarter, the in machine second XX% versus XX%, For $XXX by of Essenz. revenue million

pleased sequential XX% and in than price ramp a demand mix driven continued price. to strong in customer see Essenz placements by revenue quarter. We more are the grew and Oxygenator

see The XX% capacity continues to for to remain XXXX. now year efforts on expect full We track. manufacturing and to revenue our demand grow XX% the strong to business oxygenator continuously increase cardiopulmonary

Our revised cardiopulmonary HLM consumables. continued growth forecast to and We in see for key opportunities growth drive X incorporates demand business. long-term

of global HLM is have to base installed First, estimate upgrades. We opportunity and them HLMs our Essenz. roughly to upgrade X,XXX, we

sales that provide not point expect and XX% unit in of XXXX, will approximately do in we reference, Essenz placements represent our targeting XX% annual XXXX. of as a we numbers, we're While

revenue our expanding upgrades. equipment capture rate, software including our servicing recurring and Second,

As we the will these revenue Essenz through installed opportunities. base drive additional growth look continues to to grow,

consumables Third, market share.

in We HLMs have gain market leading in oxygenators we global and have other the a opportunity and position share to disposables.

supply. commercial behind gaining share and our ability and already are to We execution disposables

and always business and most his functions. He putting first. delivered very Franco been various pleased organization has LivaNova, with on Poletti consistently Gretel. the starts that from leadership, the of interim career spanning with President spent cardiopulmonary to his recently on an has patients of note, appointed majority results Franco Cardiopulmonary announce team has great I'm Under Any basis. the that customers led geographies And strong while business.

implants quarter the X% year. in of X% to X,XXX year-over-year U.S. growth versus versus increased prior the in with rest and prior growth replacement world Epilepsy prior of replacement increased XXXX. representing in Europe patient grew We new quarter, year. the revenue year. the X% epilepsy. new XXX implants We in also X% realized quarter, X% the and epilepsy the the revenue Revenue Turning representing versus versus second growth achieved both implants.

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

U.S. to and growth continues replacements. leader surgery, new We to for growth the X epilepsy the expect mid-single-digit mid-single-digit business. forecast epilepsy international for Today, in now U.S. drug-resistant low the incorporate see we're we Our for key mid-single-digit market revenue the growth for opportunities patients. growth

clinical First, increased to procedure and drive access through we continue penetration market initiatives. evidence

we this is Development Second, has And driven Vice for Grammer we end, innovation. Holy and see Holy Holy We're growth welcome pleased accomplished our to by than of the more and track opportunity our Research President joined record neuromodulation. teams to proven an executive a XX excited with to lead of has pipeline LivaNova in high-performing that R&D neuromodulation. leading as innovation acceleration of of years are experience.

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

Alex Shvartsburg

Vlad. Thanks,

the the financial During on my difficult-to-treat brief recap results, decision. impact share call, of XXXX second portion a depression quarter the the provide of commentary of I'll and comment guidance on

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

XXXX. Excluding the impact of the XX% ACS segment wind increased down, versus revenue

payback had the Foreign XX% of described year-over-year in revenue. in decrease $X as as approximately X% the to release. was exchange of revenue by provision quarter The approximately of XX% the of million unfavorable impact year-over-year compared driven Italian Adjusted quarter measure was net our in or an second for margin a the XXXX. taken press percent primarily gross

was compared $XX the as R&D Adjusted The quarter down revenue second to million the of a failure trial. driven by heart in R&D XXXX. of the closeout expense was from quarter the year-over-year of in $XX was net XX% the percent XXXX. decrease second million XX%, second quarter of in largely

for failure the program, $XXX the prior to heart the $XXX X% of in our related compared the quarter Excluding second second quarter costs was the versus investments SG&A increased Adjusted million expense to R&D XXXX. million year.

of in second decrease compared XX% was operating quarter of net revenue favorably SG&A ACS the impacted segment. by leverage XX% by percent and as driven the year-over-year XXXX. to a wind of the was improved was as The down

to $XX second the million revenue, was XX%, was operating by the and of in This XXXX. Adjusted the XXXX. improved quarter the driven quarter downs in operating wind Adjusted second heart income of margin the was higher operating program $XX and primarily leverage to XX% compared of segment. income increase ACS failure compared million

quarter year-over-year effective The landscape compared compared rate tax the with is of to to of expectations. quarter $X.XX the Adjusted in $X.XX developments line quarter in share tax global in second and the the in related was in is our XXXX. XX% was diluted second per XX% increase Adjusted to earnings XXXX.

notes. up cash of Total was million, increase year-end and Our driven repurchase convertible was $XXX million up in million in This June of $XXX by at $XXX $XXX notes convertible June at the XX from $XXX of private the total the senior XXXX maturing of debt closing senior offering was from balance year-end at million XX million, debt million $XXX at XXXX. XXXX.

operating half to results by expansion including million first driven the prior quarter in XX year-over-year million. in improvements. the was prior increase up compared flow increase The driven free the period. million $XX by cardiopulmonary was year working debt, was year the Adjusted capital $XX year-over-year of $XX cash in at cash Net negative initiatives was XXXX primarily June $XX from restricted million, Capital spend period. for investments. and capacity stronger and The $XX million was IT

turning guidance. our Now XXXX revised to

free while quarter, revenue on full based performance maintaining diluted cash earnings second and mentioned, XXXX our our on adjusted Vlad increasing range guidance year share flow. the As adjusted in we're per the

constant currency and X% are We the basis business expect X% revenue between we when that now a and ACS between the XX% growth on and excluding portion of XXXX X% exiting.

the first to are half In of favorable of comparisons, we remainder expected not observed the year, year. which continue the for the

be half year. growth the first to second of to in We XXXX revenue the expect half compared lower the of

We exchange to rates. headwind current continue a be on to currency based foreign X% expect

effective expect tax of year to XX%. We the continue adjusted approximately full rate

We per $XX shares for diluted approximately the $X.XX be share the with of now range $X.XX earnings outstanding in project diluted weighted full adjusted to million year. to adjusted average

businesses. half higher and Our year expenses R&D investment in first epilepsy above-market the operating higher to growth XXXX contemplates the the innovations. as based to compared second invest This in of a on accelerate includes of maintain to cardiopulmonary plans we half our forecast

year. percent in expect a flow This in $XX the to be to meaningful forecast free of includes half saw X% million, XXXX. of net $XXX we range to with spending range we a the first as quarter approximately of to Adjusted year, still be expected million. prior second what step-up which cash versus prior an revenue consistent is SG&A in Additionally, in versus be of capital XXXX at more million the the we of midpoint increase approximately $XX the

costs As XXXX. cash with the a ACS of flow down in majority $XX projections approximately occurs to the $XX the reminder, in range million, associated million include which our wind of

decision. of guidance, financial the million DTD. impact to XXXX difficult-to-treat forecasted $XX turning investing the Now net we depression In in in our

we in as $XX while CMS year the this in investment to program. deliver we of to we DTD level continue optimize that in program maintain reduced investments, XXXX, earnings million be will optimizing pretax accretion. least savings By at XXXX is The in to will equivalent $X.XX which share We investment expect pursue per coverage.

initiatives that high-value systems businesses infrastructure. development, and product We manufacturing creation. and sustain will capacity also allocated include value in investments expect be select our long-term cardiopulmonary IT new towards growth additional savings their epilepsy These to and

despite summary, including operating operating In earnings team's in points and roughly to financial in execution, growth positioned in in growth rate. of to XXXX share with remain led our continued approximately diluted consistent income pleased effective I'm XX% We step-up adjusted over expansion. basis deliver per significant growth and adjusted which our our tax well XX% XXX the margin leverage, has commitments

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

Vladimir Makatsaria

you, Alex. Thank

to Just I said correction what one earlier.

upgrades said, us. represents installed I what of is for of significant not X,XXX, course, for Our a opportunity which X, HLM base

continue execute So we on to X moving imperatives. forward, strategic our

quarter our This our the strength of priority. growth, remains strength sixth epilepsy marks by revenue our businesses, driven quarter cardiopulmonary and consecutive key double-digit maximizing in

program forward step path depression evolution a key the Deciding in the company. difficult-to-treat of represents for our the

unmet capabilities. with we continue and of As exploring clinical high aligned our plan growth in we're and future, to need with the areas for strengths potential high markets

will be enabled to execution, and our people. innovation quality success the Our by of continue

my like and patients to to world would unwavering colleagues commitment gratitude I reiterate And for their my in closing, around for the customers.

we operator, questions. for that, With ready to open are call the

Operator

[Operator Our first question from Instructions] Rick with comes Wise Stifel.

Frederick Wise

Good to quarter. see the

guidance. with off Let start me

You first growth solid a a detail, of gave But us double-digit times, after lot you as several lot commentary. a emphasized half strong, of outlook. --

investment maybe the on -- second said slowdown more and highlighted the like -- mouth, You on the to spending want -- to mid-single for half guide your yourself Alex Alex, implies the put of -- well, sounded words it wrong don't sounds SG&A sort I digits, more aggressive words a it as in your like it and side.

and the should us degree better which half this possibly understand conservative. to us the potentially for and help setting or your as view we Just thinking up second

Alex Shvartsburg

question. the for thanks Rick,

first favorable had So half comparisons. XXXX of

second If year. you started recall, our half revenues ramp of the to Essenz the we in really

So significant we XXXX. second do step-up expect -- we of half the had in a

we And the back of slower expect sales so in half the growth year.

As innovation, growth investments the we're those really higher critical will spend and the related infrastructure remainder to towards and of it putting investments, relates to support the capabilities in be year.

goal growth. And in sustainable Our drive margin both while above-market expand to to businesses. continue is we our

So we're us the spend targeting to that. achieve help

Frederick Wise

potential? expensively. Got going DTD And guess there DTD better to packet the you and you decision. bipolar being there's just help maybe on so -- clear sense weren't the I'll outlook decisions or this of that so does to all comments Are a arm clinical upside better this It's ask But sort you. whole this ask quarter, negative left decision? more -- And of be from I'm see this trial understand that DTD. for to about us I EPS much on maybe invest, Are good decision. actually and to to the the us into might focus How help thank you understand choosing you the on decision. now -- if Alex's with but you figure

Ahmet Tezel

of results. we we have our since Rick, Ahmet. June preliminary kind this when what summarize first I'll is done communicated

being influence, clinically then, benefit to we us trial select show not through successful. is patient as endpoints pivotal significant statistically a that the being the So there able primary back despite certain communicated demonstrated we in and meaningful

high that since is then, like conducted rate in the things additional the we So response subgroups looked at there certain arm. we have analysis. perform that done what We We control are better. investigated

of fired was While independently group we experts we and internal consortium external in a data. reimbursement, we from the to did clinical, emphasize do our important also internal assessment done. that group. And also them an medical We analysis, it it's the and of worked had with independent that all

So Therapy. an saw what to internal to benefit that pursue for And And assessment unmet assessment we with comprehensive medical external there difficult-to-treat strong external is from need, we had coverage. a and patients data. and the this external because an and internal assessment CMS strong continue internal VNS the of both the was assessment and positive we decided of

Alex Shvartsburg

still $XX pretax with for -- least we the said, savings, look as XXXX in looking as year. Rick, the I And early to at planning. regard long-range the is million we're it's in We're basis, -- on planning at doing our our

settles Ahmet Officer, epilepsy Chief coming as invest So and in at as our innovation programs. our behind cardiopulmonary looking Innovation we're in to opportunities

point, epilepsy kind portion DTD businesses. the we into So some savings this and of are, at the of core CP allocating

Ahmet Tezel

study this the had since for data, third Rick, be to Ahmet because a mention assessment had operating But again. recruitment. bipolar carefully. party data the at is about different rate We to of the you continuing despite no terms the at inappropriate lower in trial. I and that know, external the LivaNova will look enroll reason we're expense asked. an enrolling. a you our into is It forgot independent look still study to Therefore, internally as model to stop

Operator

question comes Taylor from Jefferies. next with Our Matt

Unknown Analyst

This Sarcone for is Mike on Matt.

follow-up more Could pulling back kind year? you expense Just little where on of a for base. next around elaborate quick the specifically you're DTD a

Alex Shvartsburg

Yes.

our phase. getting focused this spend of on portion good a to a us publication So year is

obviously recruitment still -- completed we're But the So cohort. recruiting now. unipolar be is will bipolar the

commercialization, towards preparation this in of investments which are year. second portion. the we there We're of back So that scaling sort expected also savings for half

to in for. of just terms investments targeted XXXX what is currently in So our it's decision, are us focus CMS a final our primary which really getting large,

Unknown Analyst

what us that you you you on there on if you're commercialization, Got just And it. have that where maybe think OSA. come question get it as I spend like investment a that guess to build P&L does how ready And then about to out just have another help are about getting point Or organization? to kind of commercial all the commercialize? what looks thinking strategically? to to the

Matthew Dodds

Matt. it's Matt, Sure,

time late our X of think, because where nothing's help, X-month to for us X on directionally lines. that's phase, the plus month in We'll still months get primary in the year. endpoint. we So changed the OSA, again, data, that will I That We're what follow-up. follow-up submit the FDA. the tell that's are will And actual we

clinical safety then XX-month have And And also We XXXX, comparator be of that April we'll have similar to have the think XX-month X which most to XXXX. terms around more April companies is results. length. the really that's will the what trials likely I other submit data, in also

So get impact where side. just to to in the on beginning that come to a we have spend where big sit understand XX-month we on competitively, we our likely when will is of commercial decision expect 'XX that data, the

So program you that XXXX. expect on decision to see the more in firm early

Operator

Polark Wolfe Next question comes from Research. Michael with

Michael Polark

I X-part one on have just then this in topic queue. get follow-up so ask and I'll depression, back a

on Unipolar should that's or like? this milestones. we coverage If with does have timing And one. might see publicly, what like sound on so, expect question to data we like as of the engagement CMS. top data, decision Two, preliminary the pursue path of or coverage, look So to this when had any you when expect part more that to CMS

then And spend. of the on three, million net $XX depression

that and then $XX Any million to be innovation bridge on is great. comes bipolar? math fund it leaves So assume to clear Would if $XX for cardiopulmonary I'm to is $XX line. down correct the needed color doing still to million. and and reallocated million of epilepsy heard would loud XXXX, that that I which $XX fair bottom be all million the that another

Ahmet Tezel

answer X Ahmet again. to is questions. your try first this So I'll

the to data. will when you was question be First see able

trial that pivotal planning QX be do So would is data to of year. are what published this the in we

have primary And So produce will QX secondary data secondary and we interesting results, will do we've for the since you endpoint. access we really the And in submissions. the and done point, that them our that at actual full will enabled from submit to us June to analysis publication.

can't speculate are this submitted I plans I them will in about. that talked QX, to they be when be analysis our but have to public, to be additional available submission

analysis data QX we available are QX. be will would we available the be done, sets. secondary and X The in those publications primary have So the them because submit the in data will

items to have of publications. Now peer publications are need those the We terms in CMS, do those gating reviewed.

will So validation Once terms of data. they compile be will that speculate and inappropriate submit that timing. be scientific data and we the will timing, of the published, are And to to CMS. for me peer-reviewed it CMS in

Alex Shvartsburg

in capital the XXXX $XX you're million investment for Mike, we're in of balance in $XX And DTD to DD, right, epilepsy. for allocation terms million the and of targeting about reallocated cardiopulmonary

Operator

Sandler. The question Adam next Piper Maeder from comes with

Adam Maeder

quarter. quarterly the in next on I the Wanted of on was of guidance, the incremental and show EPS QX EPS, QX. ask color of hoping consensus think, get to and top just to the to cadence back Congrats year, half we one million, and as the for look line to some both revenue, first I I on $X.XX $XXX consensus

then to a Just figures. have those any reaction follow-up. I And

Alex Shvartsburg

QX. don't think reasonable. consensus guide your for question. quarters. thanks Street point, Adam, Look, my QX, the We looks vantage very reasonable it But from looks I for

Matthew Dodds

kind so bit and the back I to little one add the question to said and said thank conservative. question -- you of add you -- Alex a for word color think go also Rick's to on just Maybe Adam, what

disruption that a healthier and year one made from competitors. on in past obviously, assumption -- few view is assumptions witnessed maybe industry in And also we've the a the those supply for an our back -- the over will come the of with healthy made various of We the from the a quarters, supply market the conservatism of view. competitors element is rest the and our that

Adam Maeder

improve ask a couple well share just give new what then interesting, follow-up, looking in in just upon color, the look just can of epilepsy plans to technology you details then maybe what to guys. in kind epilepsy helpful I and if looking innovation you accelerate wanted you're for you're found That's as as the terms the some and there on to And maybe front. trademarks cardiopulmonary. curious for And more -- the of a innovation pipeline? can that achieve on anything of We to

Vladimir Makatsaria

then top with will starts as is us to it and over and you my I key us great great -- this the innovation Vlad, for people. X thank our for start the me, any for priorities Ahmet, Yes. And I'll for success. question. one is Adam, turn enable opening, said organization but in of

a really in And been focus of top innovation front. leaders leadership so top that is has team the on bring big our experts, to

pleased very So to we're decision the as that Ahmet us made Innovation join Chief Officer.

joined Holly mentioned, epilepsy. us has as Grammer VP As of for I R&D

in companies have X marketing in in journey global us really leaders with stellar strategic to experience prior from tech joined We leading that really med LivaNova.

over And Phil most recently, eminent tech is that of August, joining [indiscernible] experience again, business years as the players many we us joining Strategy some incredible in LivaNova the development is in in industry. and Head announced and and of

So innovation today the key we complement accelerate kind focus of really with at for exceptional and that scientists agenda. was our can leaders capabilities the LivaNova that new have me,

Ahmet Tezel

Ahmet is So this again.

the medical the therapy, in of of like on. And safety device thinking just effectiveness kind in physician VNS the for patients this and device, the terms device for the of X about works. are of there's that any both is how can and device, areas the medical general we innovation focus As you advice, convenience

established. VNS is well So safety therapy

So there where do things can to effectiveness. are we are improve focusing on we is

the We to around obviously, ideas tried. improving need they be effectiveness, some have

And therapy. patient and improvement things programming, the on therapy. I in by investing physician. both is convenience have both of But are patient We a for that like will that significant the and is what mean where we our use patient accelerating do VNS real for that they a want we digitization have example, opportunity to work physician for the the factor the remote the as

be will that the on side. So neuromodulation

business, can providing with very do lot of in we terms There data to achieve CP the similar. the outcomes. system a HLM additional additional better to is perfusionist more the guidance, On

system need upgrade For of our Essenz in performance. where innovation as we see of our part digitization of And its do HLM terms well. we that, to we the this continuously continue as accelerate to ongoing

and So benefits we sets Essenz the more the feature move have and as as digitize more we throughout technology. years, we'll

Operator

Our comes Petrone next Group. question from Anthony Mizuho with

Anthony Petrone

CMS bipolar Congrats one a there is is quarter. company path as to and with ongoing, on to in on when the a just this a think decision be the Maybe Maybe about here as whether a laid still of made variability in D&S. Maybe engage or I'll couple commercial some pursue guidance, on cost timing indication out you you is in going not terms CP. standpoint stick next the savings when just we of as depression clarify, forward. just to as is in to going from the

would that be So one.

market. on down costs it a Maybe In perspective, the then up back And final still there. the the line to little on variability the a whether CP to feedback out the landscape. of maybe guidance other be an are competitive it's is be half from or business, made words, when fully going little just a seems bit in going forward bit what they'll also there is the that bottom when It from second on in terms as update like competitors relates porous depression. just decision would the

half competitive extent the the CP? what into for guidance baked the was for to landscape So second

Matthew Dodds

Yes.

one with on first the CMS don't and decision. me the start let why -- the DTD So

our up focused the decision. our partnering now, energy CMS arm full path commercial reimbursement get depends decision to So the commercial on on right with our And plans forward. to is or build the

we not decision. get will activity ramp CMS up So any until we commercial the

number that's one. So

I one, second in competitors. think the dialed we've of the return On the

to think I if for healthy market we want has competitors, it's and our don't supply the think make a products. for market assumptions of healthy the I

in competitors up supply. we If so an have that. to to sides we made and And assumption the full are happen that doesn't X that step

this faster. X-step we've capacity. kind it's second need calls, our for us us And But approach in for the a improve opportunity the manufacture for said us grow one an obviously, like also a previous at One, to is to more. to of point,

current improvement to original end have is was that of productivity, improvement we gradual take step first last in capacity, the of would this lead in target the And for better terms us today. year, XX% end the in year-on-year of The from what terms the to and network year output. of of of do go a terms to

We're slightly ahead of that deliver a, now, to that us b, target products to growth. life-saving but and our market, allows accelerate the also right

second the mid strategy and even our at that significant we're customers which flexible looking there in more and is step, long will moving term strategy forward are The is network disruptions -- manufacturing so us market receiving that that capacity allow if to build our the are products.

So that, I beyond. think, is and more 'XX

Operator

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

Michael Matson

Yes.

think I going balance -- have to the on I spent this. quarter also decision, But you've excluding sheet, the been moving the to us and what expense. final next -- European of remind that you will interest it's given be can fund Justice completely I just the you know Court your be But Just to time cash think step.

dollars would start maybe quantify EPS earnings. adjusted in So what can did or you that or terms have be it if you either to from stop of excluding our

is And with the to then want once that to out? balance you paid raise cash additional would you if Or capital maybe see that you're have point. I want just at comfortable

Alex Shvartsburg

Yes. your Mike. Thanks question, for

of just ECJ me let decision. the sort sure the background make of on clear we're that So

to Court Italian laws to a referred the European related XXXX, ECJ. question the demerger in So Supreme the

LivaNova, a It So the ruling ECJ EU on decision laws. is right? is focused on not the demerger

decision decide the we've we is decision as right? really decision the to that to LivaNova's but to ECJ now Court up Vlad until Supreme it's Court as the said, the judgment back Court Italian Italian the we as to appeal the the Italian on expect apply timing So So us, from disappointed Supreme XXXX. goes but were works the process by uncertain, don't Supreme the from to decision, on it said,

aside restricted balance. for sitting set it we have a that $XXX as million in that's relates or we've our Now potential XXX to EUR million cash our ruling, negative capital

We $XXX cash revolver, million, access have remains roughly which also we $XXX to have operating undrawn. million of in and a then

of deal with plenty potential capital payment goes have we So us. against to if demand for it

Now interest to expense. related your was question final the

to of interest $XX on roughly a the gross million on kind an basis. $XX basis million is annual So expense

interest surety, actually we related that's that's today, bank Now guarantee in restricted income the generate sitting cash. to this

roughly, $XX million. million it, call that's So $XX to

-- million able the us, went the expense be today Does income wouldn't range we'd of and that's as the that operating just $XX generate to obviously sense? dealing and So make if ruling $XX I that to impact described. interest against million. interest And net around we EPS part is -- be that the the with

Michael Matson

Yes, Got Okay. it. yes.

be of would change the million the change have pay -- net the $XX $XX it roughly you in to annually, your what's terms to So million essentially hitting EPS.

Alex Shvartsburg

$XX impact getting the to interest pretax be guarantee. million on benefit wouldn't the bank of on We The the today interest would generate basis, $XX be right? million net that the we income

Michael Matson

epilepsy is single always there the then it. I've good it's a folks well. where can't But Okay. the that faster. why the kind working to has even business underpenetrated. that lot of of digits. market right. into that really just business just And drugs in Got business, mean, aren't I And high the There's All wondered see recovered out grow

guess I Vlad. question a for So

epilepsy? past right headed are in but not, strategic even any could in is Just made what changes of terms additional products growth to drive been there's you the the some sold faster make there potentially how I changes that know are there and in that and the in the direction, business

Alex Shvartsburg

Yes. No, question. it's a great

procedure help penetration the around education, MedTech below And real-life evidence, evidence today do you again, comes step our is current we are And X world, that strategic other steps. with really down take the and correctly. I'll are activities is the can and things, -- procedure to One obviously, this. continue analogs is up. Today, X%. access maybe there portfolio, drive penetration will what it that patient market clinical in And to various similar to X penetration, awareness, accelerate growth. better really to in So One said which penetration. they

playbook do driver. our we're that, a how to on that. on much is #X very That there's and So focused

we some our second that bring is, current growth even new platform adoption will had the to and driver. product the is that the make we of alluded make easier, one is The to -- second that once I procedure innovation once

and for one to a then is our third our the in terms ongoing expand our markets. step I work me neuromodulation, ways the is is now areas and of or one what's beyond kind us is current unmet next as of second that for clinical looking in other refer terms high-growth portfolio, then epilepsy And in high this of and need portfolio work right of to in

So work we intend to year. finish the by this of that end

Operator

question next Baird. comes with Our Rescott David from

David Rescott

million their the that and net clarify number that kind the is versus pull what be just prior question restricted interest to Italian on $X.X toward comment Great. revenue. that income interest and of wanted just the in my I first net to going that was on of difference litigation specifically out that total the Italy between net was cash. income generally But

Just should out curious repetitive, on quarterly that's come should forward? something basis that that be net a is amount going a if that

is Italian And question gentlemen? then of there entire the with kind XXX, that number, the of kind second euro this for max is was is associated to higher Or the cap of amount? or potential I think on that part kind here liability

Alex Shvartsburg

Yes.

take just me in David. parts, this let So

off with this measure. payback Let's start Italian

So recent Italian issued we the a quarter. in court. ruling was the It's that by took related a provision to constitutional

the goes to industry back MedTech issue a is this XXXX. So way all

It's law companies to a courts. is, requires percentage caps maximum what for in been devices that Italian Italy the medical care devices. regional litigated selling health of repay it expenditures Basically, exceeding in the medical is

Italian any translates participates that in the company MedTech market. to this So

took in true-up we provision So million of quarter. $X the a

As I to said, this back is a true-up going XXXX.

So of we been sort sort have but of level what that's basis, ruling on of sort provision accruing required. this an of clarifies ongoing

going it's move as be rate to we going continue, an to but much on it's lower So forward. incremental a basis

So that's payback on Italian measure. the

and capital related the the regarding expense the SNIA question clarifying interest to your litigation. to back going Now

look cash. appeal balance guarantee, to capital related bank ago. we in several today, That's years So which the sheet was at restricted if we sitting you to reserved filed our that related have the

Obviously, of court to is or right? several go income. the ago. was that out, earning was of would if there lower similar what the interest pay currently so this was amount And ruling we XXX to So that that's that earning Appeals that million payment wouldn't if portion a were income, be Court portion cash the EUR towards was, interest payment, years which we that

that So impacting would expense would because we our then capital what million expense -- be an forward make as as permanent include with be we to part structure. operating that move $XX annual of of would part would of be sense? million, our $XX left earnings it Does interest with we interest which is

David Rescott

or suggests And is EUR on be Or that's piece cap Yes, there that on ruling is max amount? based higher? that the then million, could your helpful. understanding, that the just additional XXX

Alex Shvartsburg

Yes, going us the Court I'm know ruled in to caps. a Appeals mean we back -- of number on that's amounts XXXX. not and against that the I that's the speculate

not So whether on, we're that's in that but is to of the on a going I'm this liability. the number on really sort cap zeroed speculate

Operator

comes question Matt Our Barclays. with next from Miksic

Matthew Miksic

Can me you hear Terrific. now?

Sorry about that.

you here. -- get then innovation juggling we you businesses, optimizing exit sense kinds into next can follow-up, wanted business. the a of take, calls could. one and the if I of kinds the actions the core particularly and year, mentioned quick maybe of year Just performance, And as on this epilepsy in investments, to I

Vladimir Makatsaria

in performance cardiopulmonary in and go Yes. those mean maximize that our kind successful to the is a those of both businesses than I mean of would businesses. the mean in in to back X imperative, way, epilepsy I sustainable grow market -- to And businesses. and faster first

for a bring leading pretty upgrade think upgrades, are have significant benchmark. and to to with And it's then we the is finally, Essenz, and accelerate our levers in oxygenators. Look, and service to straightforward to quality then cardiopulmonary to share our software I to gain continue opportunity disposables

say, to ability if where more in world. manufacture products the innovation. our number are underactive And is one talked in I ask the Ahmet going, market three, in investments across manner, X you and the key Number is me commercial excellence an about would -- the and supply

So me confident And the think our we're business from in really enable those of market. grow there. cardiopulmonary to position to which X than makes future I will the starting levers faster strength, continue

penetration. business On are investments again, going driving procedure and our the epilepsy heavily into

So really education evidence on focused clinical access, on on we're on one market hand.

on an to -- a talked count in other team innovation. our again, our really the as help to pipeline on innovation technologies. accelerate about leader on the her Ahmet she has And come R&D track And hand, in and tremendous various and we and Gramana with businesses board, Holy record

And of so both key our really are areas kind those the on of that's CP -- neuromod. the and investments

Matthew Miksic

else What going the around guess program that as decision, help move from call, aspects next forward than the that the decision. least some then described metrics key spend could, a to understand so to try us And you're year the just at data like, come whether just it on to a and decisions to maybe I decide reallocate year. or your for this one I maybe the to XX-month and making Sleep bunch safety a will that originally looking best late the of portfolio. decision Apnea that early of of you've that follow-up, that are little you're you're in talk had if this something with on about of the open make hoped, you're we further sounds

Matthew Dodds

to come first And one market. need, me technologies with over growing today. in is I'll that start And let and the you on I a as to innovative of turn there growing. build it unmet think a is and all, then in start Thank in and player a apnea number for this asking I'll of know, the participate and for massive opportunity is market obviously, with then Matt. market -- population is There's sleep the a the I'll that's Matt big you this. start is But massive to companies question,

So if that that the is competitor fact it how market. you like, X I think attractive to is be to the there decision space market market on difference the we more that our on degree of even is our makes the this attractive, Ultimately, attractive. And in better on clinical to there's will equivalent strategy. depend the is And the what determine And count going current standard. results. to enter clinical commercial outcome or

So turn Matt to of it on the comments. I'll some maybe

a bring comments. of maybe little So color my to bit

Sure, Matt, time changed trial line. Remember, Vlad. the our nothing's is And randomized. on

of meaningful . And really in arm And in is tell XX-month And in is competition. only a which X-month were terms complete not. That's at focus. of trials, subsets, data us data April simple the line, X randomized including year-end if also look truly some that to head-to-head. OSA, will much competitor and the competitive really AI than therapy reduction our we'll the a the swing our It's get it's data, trial you patients. look going we're other want We're superior The inferior. trials to how but 'XX, have at more of there's in to going there concentric the versus data collapse, to DTD. look those

to X So data. it's of sets going be

will April road the when again, as on a in out actual then our thing become we'll we're profile, original more map building we well more of I 'XX ultimately hopefully of And be information. lot competitive how think informative, the competition is terms and ultimate the technology very side. competitive have but in the technology terms also, pass there

Operator

Vladimir call We have to no so for further back closing questions, I Makatsaria and the remarks. will turn

Vladimir Makatsaria

Emily, you. thank

You behalf call. Bye-bye. LivaNova. great day did a appreciate . the today's thank job everyone Have entire a great or support for to call, and facilitating and really your evening. you joining the team, interest we of On in

Operator

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

LivaNova (LIVN) 31 Jul 242024 Q2 Earnings call transcript