LIVN - Earnings call transcript Q3 2024

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Operator

Good day, ladies and gentlemen, and welcome to the LivaNova PLC Third Quarter 2024 Earnings Conference Call. My name is Lydia, and I'll be your operator today.

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

Matthew Dodds

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

Executive Stephanie our Director Chief Joining Makatsaria, Officer; Briana Ahmet the call Gotlin, today's Chief Financial of of Officer Innovation Stephanie our Chief and Officer; Board Shvartsburg, me Relations. of President and of Alex are Directors; Investor Tezel, member Bolton, on our Vladimir Bolton;

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

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

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

Vladimir Makatsaria

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

increase of double-digit revenue consecutive quarter XX% marks seventh Our the growth.

strength the organic and regions. XX% growth across of and following the business This balanced World U.S. is the Rest in key achieved well revenue X% By in XX% geographies X% XX% achieved drivers. in business, and is year-to-date. cardiopulmonary the supported in and Geographically, by performance Europe we growth epilepsy. with segments Our we

volumes First, healthy be our remain growing mid-single markets with procedure cardiopulmonary digits. and estimated to epilepsy both

our gained in Second, XXX percentage mid-XXs our we and year-to-date. XXXX commercial from XXs more today, low to oxygenator growth supply cardiopulmonary execution We contributing market the basis points share ability estimate market the share early via has consumables. grown to of than

we've leveraged Third, of in points cardiopulmonary of finally, this approximately growth we've approximately basis points basis and far pricing benefited contributed year-to-date. And strategies successful a which consumables, growth epilepsy from launch, so XXX which XXX year. Essenz contributed

above-market the well CMS our opportunity with we transformative pipeline further a depression, talent for patients cardiopulmonary difficult-to-treat On while programs. In we development patients difficult-to-treat in coverage. safety months all reimbursement efforts obstructive portfolio. In DTD, represent agenda expect our granted, in we obstructive OSA, sleep of any diversifying our If on focus critically pursuit depression innovation it sleep of to with for growth for of X epilepsy the could pleased is the front, and growth. primary have made apnea innovation ill or or and follow-up our endpoints drivers, progress as effectiveness. support These and sustainability we're as November, continue in apnea, DTD, in complete and

growth XX% guidance. our my results will then the XXXX our quarter Alex up details and will we revenue updates wrap call, our and of third results. will before remarks to the I Q&A. In for after remainder the the I achieved discuss with For pipeline, closing will discuss And versus year. Ahmet prior quarter, innovation provide moving comments, on

Based significantly was on our year operating Excluding XXXX. are XXXX margin. expanding achieved while we the ACS wind results, of full versus impact increased the revenue these segment increasing guidance. growth XX% also down, This

segment to turning results. Now

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

mix strong pleased continued We quarter. sequential placements in Essenz's see to in and increase a are the price

As unit driven we customer The a represent demand in point of grew reference, HLM placed business continues remain for year to global our expect to supply, track. We price. XX% capacity see XX%, by approximately expect revenue demand to XXXX. Oxygenator and and XXXX. of Essenz strong oxygenator revenue on approximately outpacing to will grow XX% manufacturing increase efforts our now cardiopulmonary full XX% annual

versus comparisons of incorporates year. quarter forecast revised last and growth continued despite demand strong for HLM Our the consumables difficult fourth

Epilepsy to the quarter XX% realized prior of patient we turning approximately Versus increased increased and growth XXXX. year-over-year. replacement achieved of double-digit X% in in epilepsy a and World, with epilepsy. new Now in of Europe. third versus implants. versus growth Rest in prior grew year, XX% X% growth implants combined year, Revenue U.S. X% by Europe World Rest revenue about in offset revenue a decline

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

which patients replacements, in Our U.S. U.S. volume over growth to fourth quarter. mid-single-digit discuss that, to be growth We and XXXX Ahmet now the for low forecast World to of mid-single-digit Rest and to flat expect to beginning new the I continues for replacement to combined assumes U.S. the our pipeline. innovation will single-digits. With grow low turn of Europe incorporate regions the call

Ahmet Tezel

good and morning. Thank you, Vlad,

operational to areas, joined committee for depression advanced OSA and innovation and which areas I As has key core roadmap driver is these processes talent a while We our focused Vlad drive mentioned, simultaneously on May, X our we LivaNova. Since our in innovation portfolio targeted model, programs. culture. governance, are and innovation key our growth

particularly in capture and foundational Essenz our for leading upgrades, Let me position our as platform future starting data including with around few analytics. provide examples, a business. innovation, future a machines, will serve CT our Heart-lung Furthering market

a includes our the blood to targeting monitoring also best-in-class environment. Similar design, treatment, difficult-to-treat national outcomes. In standards. In our a next-generation utilizing capture For further performance we that deliver on detection CP, to VNS in optimize both the capabilities remote has and patient-tailored to during investing programming, by in which continue procedure This features are data connectivity technologies. focusing real-time our patient business, of feature as next-generation perfusionist Therapy patients to outcomes. In that a in-line we're potential designed prediction and combine System a and the in guide improve work our example, in to the is are we sensor with consumables depression, of seizures data and offering set to we're additional to we such connected oxygenator epilepsy, enhanced unique enables physicians coverage analytics, value investing pursuit efforts CMS. developing

the X expect over coming We months. publications critical

for study the from quarter. The endpoints primary first X are will the next in OSA, CMS result the the to subsequent chance pivotal the the will define difficult-to-treat by details that to a manuscripts X path RECOVER all will forward patients there that in quarter with the which quarter we in-depth Once OSPREY critically in should published determination significant in in the and endpoint supporting a was coverage a greater analysis, on on early primary first the CMS secondary effectiveness. the a a findings make manuscripts of published statistically we enrollment are ill a publications fourth or for manuscripts discussing are We is there XX.X% formal be the unipolar study. Based March, study for cohort provide expected journal submitted will published, on data look this of depression. be based XXXX. and to in for we coverage. In encouraged stoppage be to with the request anticipate These on of peer-reviewed forward be

half submission, this November, is and is reach which expect patients X follow-up We months again part to continue endpoint. primary in of all is will our over as pleased to Alex. as in turn PMA This first the programs. With expected data call of the with summary, to of core difficult-to-treat in I the well and progress depression we that, OSA XXXX. In are our innovation

Alex Shvartsburg

Ahmet. Thanks,

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

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

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

was on operating global third as higher basis was well of primarily the of third the failure of This program the third the ACS year-over-year as improved million XXXX. with operating in of leverage the net increase year-over-year down quarter included the in wind of the in net in XXXX. closeout was of operating a XXXX. compared to segment. Adjusted heart expense as XXXX. The the to investments the quarter XX% $XXX XX%, is of higher as a of to the in favorably to rate percent million the net was margin operating The to XX% increase the effective R&D percent leverage million in XXXX. third in XX% XXXX. ACS was heart and quarter of revenue negligible by 'XX. and to compared with was by XX% $XX dollar of a SG&A third R&D third tax of a compared driven as in the of compared segment. Adjusted XX% in epilepsy in as This the driven million failure with The a as quarter third segment. Adjusted by quarter was revenue the the third the program million increase quarter wind DTD margin in decrease line down one-time income of $XXX quarter increase expense improved related was quarter gross landscape. tax impact. Adjusted was had downs $XX the the in a to ACS quarter the was percent compared quarter wind developments the business. percent charge and was offset XX% quarter revenue impacted the of Foreign the XX%, $XX Adjusted compared million Adjusted income line year-over-year a third $XX the of of revenue, XXXX. SG&A quarter in revenue associated exchange third trial by for partially and was

to and third XX% Looking anticipating a diluted of the earnings XXXX. XXXX, we're attributes geographic tax low tax compared effective by to XX% mix $X.XX rate. Adjusted in per historically driven in the contributed that rate effective quarter share to out phase have of $X.XX tax our was ahead,

and expansion convertible offering the repurchase maturing working results XX $XXX capital million the September by the balance increase $XX year-end XX period. operating September the million up for stronger driven XXXX in notes by closing Total debt in notes. of was total up XXXX. This million, at up $XX The primarily XXXX. $XXX cash $XX $XXX $XXX million year-end year debt of from restricted including was of prior and at cash $XXX year-over-year XX million. Adjusted increase free capacity senior from Our cash September private of at flow driven the quarter The was million at investments. months was million, cardiopulmonary spend Net year-over-year senior in in of compared $XXX was Capital million, from debt, initiatives to year was IT convertible million prior first was improvements. at $XX and period. XXXX was million million X driven increase $XX in the by a

Now XXXX turning to our revised guidance.

Vlad constant growth on the portion that year revenue our We of X.X% quarter, As third we're the X.X% excluding XX% on mentioned, in performance we the basis between now XXXX XX% increasing guidance. business and when our XXXX are full expect exiting. and based a currency between and ACS

XX%. is to earnings impact the forecast XX% with adjusted $X.XX rate based outstanding year. expected diluted of range the adjusted for diluted We and current in million negligible XX share currency per $X.XX average year exchange We full adjusted to approximately full effective a Foreign on the shares tax be weighted to rates. be between project

compared rates innovation. our higher higher year-to-date. quarterly R&D forecast expenses plans This investments Our quarter the to operating includes on to fourth in based contemplates accelerate run

$XXX year. midpoint we year, to million. by to spending step-up increase growth to activities This SG&A range meaningful to which driven a range the prior peak in versus XX% an commercial for at free the quarter infrastructure flow fourth includes support scalability. Adjusted of and million be of expect the prior in forecast now expected we cash million, $XXX in to of Additionally, is enabling the capital be approximately XXXX, $XX versus approximately

which the diluted XXXX, the XX% than well growth adjusted our earnings over leverage, financial approximately million, with commitments XXX the wind to adjusted points range which including cash the in the has effective I'll to summary, a positioned in Vlad. step-up of operating basis share more and $XX growth our despite pleased operating led projections occurs growth associated majority team's our of ACS our approximately significant income with XX% expansion. call I'm million in consistent reminder, remain to tax that, We back rate. With to down include of and As per execution, $XX over in turn in XXXX. In margin continued deliver flow in costs

Vladimir Makatsaria

To year, double-digit we've the revenue X conclude, pleased of are significant this growth Thank operating progress we quarters over made and with first margin Alex. the you, including expansion.

achieved LivaNova while this was future for Importantly, positioning performance success.

business our cardiopulmonary Our foundation growth well the across gives is supported confidence in drivers geographies as us sustainability by of strong and portfolio. well-balanced and as the epilepsy businesses. This

make We on and in to the continue building and look efforts our as continued the our by on programs. well we progress driven Additionally, quarter core momentum performance, innovation as XXXX, OSA this in DTD the and to in fourth forward innovation on talent. focus

to thank you possible without team's for customers strength Lydia, ongoing their patients. steadfast that, the Finally, turn a and questions. I our our success commitment And you. With execution would to will of not for be I say over that, big and it serving

Operator

Roman from Sachs. with Our first Goldman David Instructions] comes question [Operator today

David Roman

a just the the wanted outlook had year. follow-up related then and strategy the I start, higher-level on balance I for question, maybe to Vlad, a of to

to role of relates bit maybe into more to core R&D programs and You've higher-risk been of a how and momentum balance can innovation the management, you're the in between investment a year support gains specifically XXXX, portfolio on as you reflect the in OSA in versus DTD approaching the like and of some help CEO share kind us little kind maybe and continued when it and just get business? you deployment incremental

Vladimir Makatsaria

was first the our was made David, the the to -- the refocus it's think. right focus I over been some that portfolio where question. and kudos And of that win. have to I execution look, and before which in all, really to X really thank arrived, have you Yes, team decisions strong better for think just I areas months, portfolio we

sure kind wind middle key that, Alex on look XXXX. is, I LivaNova way our and core and the example an how for decisions. Look, So and -- innovation the chapters forward we is think businesses maximize within strategy are in cardiopulmonary. strategy are, to And forward going into in and of communicating one on of decade to we said, that think have reinvesting of I the next core I those look we down businesses, pipeline. ACS those shape that one is epilepsy the of longer-term are the look But sustainable our R&D making to that number like working we is

a investments, two investments then reimbursement year DTD the freeing the like is see and You that in some piece the investments kind clinical to the on front, progress. DTD LivaNova, for core. And further markets OSA. line to then the to would directions of for into getting DTD growth for leveraging have bottom but the commercial where for back next said, in from or and And portfolio the markets need, also our clinical right some reinvesting win, that we there's feedback and the unmet in the growth what's faster I significant I be where communicating We're some decisions. but in with not make capital. Number dollar example, just also Ahmet getting setting next chapter in and data the But the of and third to human look XXXX. waiting like in the And said, community we're up the we're the capabilities. investment on either R&D and forward the on for for pleased dropping the OSA markets planned

David Roman

you've year. Can growth to of there. on comments timing for think the Alex, related business, willing here, that the kind and the slowdown on you earnings? specific down as about the should put seen of well rest any anything XXXX? produce in fourth the or drivers of there capital trying think And we maybe you're sequential maybe, kind the around revenue of assumptions through QX with of that the offer of quarter? Appreciate kind momentum any pieces initial us guidance implied here all as then sales in some the other the the in the help setting as of to to would kind maybe for step the year-to-date And how base commentary detail And that the a follow-up is together just what in

Alex Shvartsburg

your question, David. for Thanks

first strong So function our we've really XXXX. of contemplating The is year. the that a quarters the X seen slowdown tremendous quarter we're performance in performance in of fourth the revenue of in

you working year. the If on accelerated recall, This we placements Essenz had of fourth were was the our the that we in related quarter. to the software of additional throughout launch

of issue balance on deliver for comparison be to there. really that are in So appears performance well showing a We're The year. the the it's continued a growth. fundamentals to positioned slowdown

goes, component year. of the epilepsy, to margin above sort quarters rates, sort are market sort goes the continue But still OSA. right? fourth So investing invest incremental investing sort on in and And accelerate basis rate the portfolio commentary. with the of we're and hand-in-hand over as X of drive CP our first that's our we just revenue it core really to quarter relative of in far trying As and run We're we're positioning the of to to continuing a programs. ourselves DTD innovation to growth in at in

the So that's on the response margin.

David Roman

Okay.

single-digit it kind reasonable had in XXXX? some how mid-single some number, I'll to about relates next growth a we that made And setting digits. for public XXXX? of are above-market sort think growth comment comments if markets single-digit forums Is about or think back you starting you then queue. in point year, willing And to are kind that growth high should any sorry, make I or jump view as of around the high of

Vladimir Makatsaria

Yes.

my indication comments similar a that growth made for and see we maybe in of for in any we that to growth, the XXXX. growth. at lever kind the very in the So through have continues bit in those I David, we I high you healthy, single-digit do growth, growth opening manner point, I growth. Pricing terms drivers that of comments. give And went tried to our a the is if we second market a about And driving not what the kind levers comments like, this expected of be XXXX, of and will market as above

continuous is Essenz. third The our to equipment fleet lever upgrades of

to see CP major we continue then And share. so market will the in kind market disposables. that's we year. continued -- driver anticipate finally, And share that on gains would our growth into And here, another of next plus, see

is epilepsy. also what On replacements the the slowdown minus, the anticipate in we procedures for

So levers was those growth. if way, my comment well as of -- and at, looking be in levers. I'm obviously, forum ups all that positive terms will saying, we be there But in fire a high at will in a sure there be the will downs some single-digit

Operator

comes next Stifel. Rick question Wise Our from with

Frederick Wise

see Nice into quarter, very to impressive. solid really I things. want a to dig X

more Where detail First, for story us oxygenator performance expansion. can the or track your color being we thinking are with Vlad you about for excellent your just us give of market again, the in capacity talked sort a Talk maybe process? you, on Maybe this which little any more on into sustainability about the year. a competitor you next of about return this capacity, you're it. you're outlook. little in update unpack And that to not to about or

Vladimir Makatsaria

Thank you, the question. Rick for

procedure which, is is of oxygenators, driven average an is So all, constraint and emerging One above we above X this markets, or why we is is, facing growth industry. What penetration for this the maybe of is to historic the in step situation first we growth procedures. estimate point of by year in market low it just starting the what procedure constraint nature, anticipated cardiovascular as driving by back supply really of the are on factors.

reaching from probably point terms growth driver And don't healthy see of indication And the the market that so will of see We we of that of that's in more view, assume patients. I kind the that down. a any slow market have biggest and procedures. to

constraint. faster deficit -- than kind of capacity our market in the entire is some and to planned, contributed the the this of benefit of that way plan grow our competitors. it's estimate business, our kind products were of we is And entire industry of second the to growth we facing a of in better The the is to able we XXXX factor capacity than because that industry for

view, are in end gradual a volume a better in footprint it's of of step point XX% have track our And growth output to do our the throughout from of the the to we -- productivity XX% so least achieve the terms And terms from we And that first at manufacturing today. was on of year. end with of XXXX increase 'XX. to been

our and And of so kind we've have some this keep driving the to beyond of still we improving learned and year a keep lot, room end that productivity.

The of competitive that, is we side, is second this meaning any see factor the don't of terms influencing in movement, that improvement. year kind on

supply achieve we on what us oxygenators. have for Ahmet in see that kind products do capacity overall terms B, outside in of improving to we with of the how continued of and supply, long are One, And capacity constraint you market that the we XXXX also the share. But if it about; factors expand looking additional this continued talked just term. opportunity gain oxygenators we like, flat new continues, in if our us productivity launch So the of and for that legacy of X of it. beyond has our Again, LivaNova. gives of today, for

few developing maybe team a a to things. the can designing capacity. and So you plan Alex, add long-term is build that

Alex Shvartsburg

second add just competitor would about the I Rick, dynamics. to your question

But Our full in understanding in world. operations global that, countries have customer the see supply continuing the that increased we demand several supply. competitors major and despite is to is that our U.S. resumed outpace around the

we in still -- the still back remain order. In fact, we're

feel good the up we into about for XXXX. the is and quarter market how pretty shaping So

Frederick Wise

an are what products of I it's timelines you highlighted you're and outlook are the Any associated I detailed. starting updated with once follow-up I Ahmet, saying some we attributes CMS know Maybe well-articulated coverage. initiatives? us the data your, X plan understand Maybe of innovation potential think, these question. help thoughtful, thinking and going innovation perfect. no, or all progress my very for about Ahmet you're perspective, see not these mean, you the years? And in of to -- of areas is there out from But are and making you as take or the going request this publications X specifically as these timing on interesting there, 'XX the capture some in with maybe well? about you'll to DTD, talked each

Ahmet Tezel

start So the with maybe piece. depression I'll

hard us is thumb So year, to The What us general not hopeful There do variance of a alternative that it of is high for need. that predict is the a are lot some cohort about you timelines with this therapies. the formal rule very patient unmet definitely it but from your point application, there. CMS. makes a has is there's

the will with collaborate believe look no help the and with purpose serve patient at But thumb they together because is of is this quickly. population, CMS data we So year. that that to a We us CMS will generally, us there's believe rule alternative therapies about primary quickly.

will, I we final will right process anticipate that publications, part of in the we after outlined, which initiate We as XXXX. early

overall timelines. competitive we In terms our share of reasons, don't for timelines

are stating are late development they the discovery are is that not very to to of want high-risk that I mid programs. exception these I -- that, of beyond They are They programs. early they're are not don't engineering many not not execution what programs early share They stage, can programs. timelines with research. programs. But I mentioned, feasibility the However, share

Vladimir Makatsaria

comment Do OSA? on to you a want make the

Ahmet Tezel

both we And endpoint for OSA, primary effectiveness have months for X our so and will is safety. -- the

for standpoint a will our data press in X-month our we line submission. application XXXX. from PMA will safety endpoints then plan first data early have preliminary And to We half and move And utilized the and exit have with the that of that the study endpoint top last PMA primary November. for forward OSA the patients November be release with effectiveness in of the in

Operator

David comes with Baird. question next Our today Rescott from

David Rescott

of follow line. some little XXXX here. more EPS up a the quarter on comments, I to bit the on expansion on kind Congrats so more wanted the of margin

think plus I XX% year. out EPS growth you this called

from this as headwind benefit year even a smaller program DTD bit It relative be might kind there this year headwind well. as of dropping a prior next some little have You maybe an well. a to trials, from tax through drop-through tax sounds of year, incremental, the like

maybe of grow well those how to shakes So pieces next margins, just the at? as as out play margins help can year line that some out whatever you expand growth above us think ability number about top

Alex Shvartsburg

XXXX Thanks David. question, your for to premature Again, talk it's about guidance.

just started stated has highest that our That base. on our objective into revenues XXXX. We my statutory grow Our and geographic revenue your than prepared rate. a faster at mix to around intend can the we in That's the faster to our continue started at level, why early insight pace our that hence, the margins But be our on as margins grow speaking, goal tax modeling will move tax highlighted models. update comments. at rates. is XXXX. We broadly looking our And in so you I I than wanted to to we provide

David Rescott

above be DTD revenue of kind inclusive the clarify, margin growth Okay. would drop-through? of or exclusive I guess the to

Alex Shvartsburg

DTD the as ACS of of which of as business, Be this well the inclusive benefits roll-off drop-through year. we're the exiting

David Rescott

Okay. And the at potential sounding, out. heard positive least like sounds then at -- on view for slightly maybe the on more program It margin, play the sounds to DTD, it in least at like there. that our comments I maybe

of that data what thinking about earlier a bring some of to this the the about So program, on the relative can there submissions -- some help maybe again, what think the about basis FDA the the how around just maybe scenarios us CMS, should you're or to comments you year? were sorry, and

Ahmet Tezel

Ahmet. Sure. This is

very have other medical there's key patient that therapies fairly mentioned unmet mean, high them earlier, few available optimistic. makes need that population I I doesn't has something a today One a that that is to points us So this works.

our XX. more For of number duration therapies than mean the a depression in mean example, patient population The was the than failed decade. in was of more study,

unmet high need CMS So would the medical is fact for. is very that to like resolve a something that there

are that one is reason feeling that we optimistic. So

and disclosed just to single questions key why with that experts are decided have we and arm certain if that's world out, certain And subgroups pursue worked will analysis than The while publications then weren't are we anticipated? better like have endpoints anticipated, at trial. tried differently? when once done the at we an the moving on was past, our answer looked know respond is everything recall, that the there therapy better And formal in second control third endpoints, we if met, looks primary They when So a the And that CMS. and and we CMS to take cohorts and did endpoints met. secondary primary than we with that path. initiate perform effect why to the our in are the placebo out, strategy is the does. And secondary the endpoints were like application is with worked looking successful why example, FDA and and piece secondary you not those endpoints CMS the primary do secondary the totality that, the of the the at trial for that

we very ill fact CMS. with is trial, there are that feeling to our that a need, medical very we has on application fact to VNS that the demonstrate summarize, a our were to impact to optimistic the able very just unmet therapy high group, So progress this positive patient in

Operator

Research. from Michael with next Our Polark question Wolfe comes

Michael Polark

the if on coding into of the question you handicap epilepsy. the X Level achieved, up would a here moved frame do have how prospects that getting U.S. to And there be us helpful. volume How week, next more next you be would beyond? takes for you to Is economics Is were payment? would because I puts impacts were expect to Any that react happen? and price positively provisionally to improved? year it procedure if a opportunity and

Stephanie Bolton

Sure. It's Thanks, Michael. here. Steph

that that. A obviously sort has years So strategy wider is to of support a drug-resistant of a on LivaNova and for X place much central Level therapy has on number very points reimbursement in of process. the to part been and access couple had able patient to scale, mission being a of

factors with there what population. From prescribing see utilization that VNS Medicare encouraged VNS that it meaningful we therapy is will drug-resistant very future products, inflationary come hot continue increase due potential centers by make obligated intend epilepsy headwinds how difference which we to not implanting greater the number a greater to in believe here, we unanimous the price but give strategy. obviously, with Level see we potential time, a standpoint, are patients. the to the a our X retiring underserved So panel annual pricing faced very to our impact, different sort to to do largely we're follow are of reimbursement of pipeline. support centers Over increase while CMS in flexibility will involved of innovative hope economic will this But, recommendation, drive to request. to our is to quantify To us the for

Vladimir Makatsaria

maybe just great what to Steph Michael, to And also question. a add said. it's

add, Vlad. this Just to is

untreated drug-resistant today. there you epilepsy that the low, back million if procedure is need, that patients clinical -- are you the over X%. and below with from it's just patient And very penetration, population at while If step unmet look X are there

And grow penetration. significant still reimbursement. growth to opportunity there's procedure of the barriers that one the to is So

And -- so solve puzzle, if the were area it it achieved, complete a very won't improvement will unlock obviously a for important us. but unlock that will in reimbursement

Michael Polark

for Quick want follow-up, simple. to another it fishing I expedition XXXX. keep

the is the by $X.XX again. If $X.XX, number Alexâ€™s -- If XX% just math knew I that, be might EPS another up next You're at do raising headwind. to it's $X.XX midpoint. to year's going by but tax higher biased it's step a on I XXXX XX%, rate

this the minus $X.XX, EPS $X.XX, $X.XX. raise base. this off growth That's year-on-year 'XX sound? How the year, tax up Street coming the it kind EPS does up unchanged, this of rate new plus XX% XX, leaves maybe So XX,

Alex Shvartsburg

I appreciate you're the mean fishing expedition, Mike. with I your good always modeling.

I'll So leave just at that. it

Michael Polark

Okay.

Operator

from Our next with Sandler. Adam Maeder question Piper comes

Adam Maeder

nice quick the me for DTD. on quarter. clarification on Congrats One

that for Just change there's year. wanted to next no savings your to cost plans confirm the

models I on savings in call. think you last quarter's pretax talked 'XX back about of into cost $XX go that million plus will

had that follow-up. is So And correct? I then a

Alex Shvartsburg

absolutely that on XXXX $XX earnings. Adam, pretax is correct. million drop-through

Adam Maeder

I wanted obstructive to to pivot sleep then Okay. apnea. over And

there. kind the you get the in ultimately commercially? data importance of 'XX? push we'll get maybe get sounds about out forward the first Obviously, good nerve need see have we I So we that how question opinion? to a is think X-month to for the of success result do hanging hypoglossal predictive it of half program this we'll the What the stimulation guess And a in data think your XX.X% what like do versus technology? we'll the X-month But your that's do November good probability November. you is, what's of in in data XX-month result that

Vladimir Makatsaria

Adam, question. for thank you the

can care the that success and say data start that back with the is of previous maybe Ahmet think to if months outcome that. right? in from a OSA. What And all on from X it of the neuromodulation current is standard we XX build I know look the what would perspective I then from But treatment from the starts also I'll and like, help looks treatment. success to X improves like or first, XX data to research what step competitive So clinical clinical

be to future. clinical most is And result X-month least looking show be compares current will devices at at important of the the current we at for then months. success that the -- XX into with will will looking the we comparable extrapolate of the is our standard or and data result, it So we be how will what at same our time, at care performance ultimately, with be to going at But competitors.

is view that device device. the in kind of beyond of one. Then and of our sure number competitive is that's ease technology from make also in we're just working So to obviously, a of that, that point technology terms use

is going one the current there with options one we're for how more forward. second then moving on it. is to the compatibility competitors. And commercialize engineering the are us the decision And again, So different third

on X factors is one market. clinical big overwhelmingly, to are and the compares the those into important So consideration. it how outcome But the that to other going we're most devices take

Ahmet Tezel

I'll there if recall, design, and CCC, you One device our is trial Maybe will collapse, quick contraindication. concentric and a be not with complete add Yes. our of couple points. a is no requirement DICE

obviously, that. And final the the very we that, excited we make So haven't the about the point trial, seen second is X-month I'll of performance asked data. you feel about

the on planned. our move the that results the will indicate back to based study original truncate with expectations in truncated us than allowed that March we study and than we better saw study However, forward originally device smaller that the that performed a much

So will the maybe be points those make. will I X

pathway We not reimbursed are process, the not well treatment for excited DICE significant very prolongs patients. process. it's because a DICE a very adds about It obstacle requiring

think significant our that has with So a technology. advantage we

Operator

question Petrone next Our Mizuho. with comes from Anthony

Anthony Petrone

earlier the further certain Congrats to certainly, the on study when met, is endpoints but the had some wasn't overall there composite endpoint of Maybe release year, saw additional benefit. here. comprehensive XX quarter back on And that indication in we DTD. with analysis the press The those it was data. endpoints. The warranted

these So secondary have maybe on go ahead maybe looking through So just that which attempt Is bit depression? suicide as come the time a And go as the out whether it response, we on details at drive bit secondary success. should to gauge to the of to little remission, in Is on first we publications to with I'll one endpoints rate the it just little cetera? follow-up. decision, be really not endpoint? a et time or will endpoints they

Ahmet Tezel

soon. would and the they I endpoints, say secondary would be both what So primary is published very

be But endpoints, publications to see. my to And and very prior that you for we fourth time, in because appropriate I to secondary So publications comment want of X I mentioned won't at as during be available to those be clearly the do anticipate this publications would speech, for quarter the first not primary the publications. able that year.

Anthony Petrone

commercialize as as to are secondary or depression? move when out, not we XX these heavily whether on should words, decision commercialize decision-making being endpoints, they be other process comes relates be in drivers more we how there would at the any those In when it company's really to which thinking depression? about will of weighted And the look Right. to data out the the forward that jump endpoints

Vladimir Makatsaria

you view of point the reimbursement. thank Anthony, commercialize, If it be decision again. driven of from we the outcome of for by the it this So take will to

portfolio. the the commercialize opportunity really that significant this is current in treatment. our don't it consequences for really. view, for But of also market, of point our outcome that is another technology -- many from assumption business if of kind reimbursement the reasons the have of our us, is option that terms the are so and will expand patients critically positive, ill is we is there X And will One is

it decision decision we're reimbursement purely of to will which commercialize So driven by not the at, secondary primary, the looking driven is CMS. be by points

Anthony Petrone

will quarter. update Very but process CMS data the process after just out. that take? their publication, any on Congrats on I'm CMS round sure itself will just the And dig how is then the helpful. just into to long there

Vladimir Makatsaria

Thank you again.

should we endpoint -- out So publications. that review our looked the And generate papers, the believe secondary first to in carefully, publications X those just the of will going is not X And we primary the analysis. data we the they're CMS data which very QX. and totality come are X secondary together analysis, at us with

they It's wide for again, at QX But or are, look once look we wide, about if or but if 'XX, control less. the of you will historically. a generally, it's we which the in a we apply come year to any out, consideration. And timelines So I think, range, you anticipate formal commit can't timelines. historically,

Operator

Our with comes Matson next from question Mike Needham.

Michael Matson

starting Essenz. just with So

older continue of sell markets? was XXX% think to I get that do that's I around Or So can number, I'd eventually? to said of system are is global some year. it then going think that peaks? you it sales a this where developing of you the mean, XX% you the right? HLM assume in to sort And

Vladimir Makatsaria

Mike, question. you for the thank

car keep You're our XX a and this of a of get at a points year for to assume We will XXX%. about placements. bit this a by Essenz, different about which XXX% one then to right. goal X-year can us have placements. And that portfolio improving total kind of then The The you It's to get options take of to will way in year, get is like number you be range around global about it think wide XX% within of we it. opportunities penetration upgrades. for the platform percent Essenz I cycle point really every our gives

comment emerging developed be And kind wealthy those versus they will the of the between number so various can get markets rather economically market. and differentiator with options. And less, machine, having your get on to with platforms X different really hardware in you can that a than the options or of more customers and

So that's strategy. our

Michael Matson

want reimbursement just epilepsy, I to ask then this Mike's And one change. potential it. on on Got on up question Okay. following

a change Medicare a private population. just insurers? -- can in So it's tell you us have And Could just would happen that it's the does lower, reimbursement imagine spillover then I'd that epilepsy this effect on insurer it of separate? currently? change totally Or on private could this patients patient Medicare, think increasing? are the if in younger portion I that result is

Stephanie Bolton

Thanks, Mike.

effects. So our still to XX% we working of the Medicare population our team be is about the spillover potential equate numbers. NPI And at

possibility, a information yes. goes that time as by. more have we'll So But is

Operator

with Matt And comes our final from today question Barclays. Miksic

Matthew Miksic

investment, little you and wanted to puts if Depending decide P&L. is the takes hypothetical in where and on questions about I reassessing on I sidelining covered puts the maybe understanding on and/or But terms just that's to the OSA slowing the and talk you around a results XXXX investments So bit to in portfolio. direction the in maybe the and moving go, -- on the November around maybe forward based know quarter, and with DTD. of safety or which a takes results first could bunch we've of a

Alex Shvartsburg

Right.

signal way, positive that bare run the terms minimum investments to going we DTD thinking up said, of point until and CMS. continue The at about the in Vlad probably OSA. are big of the get the So to related investments program from its sort we're you're to as

gate terms we're the and of in So that's -- the in investments asset. commercializing our expanding

is FDA. of lots the -- us we item an Again, to go options to PMA asset. we that and have some submission how the commercializing from market On approval obviously, -- here the gives the in gating we opportunity have about OSA we to asset. with front, have this If positive, think the

commercialize we to ourselves, choose So we options. can or other can it it choose partner to

create So to as to we're much optionality as create can trying we value.

Matthew Miksic

minimum the OSA kind level those, is for around where of just until spend roughly? the And maybe numbers put where to point on is up us baseline just And Sure. now? investment decision remind DTD

Ahmet Tezel

point, as we said call, quarter's thinking we in this were At million about $XX last XXXX. in Yes.

Matthew Miksic

DTD? For

Ahmet Tezel

yes. For DTD,

Matthew Miksic

And for OSA?

Ahmet Tezel

OSA for yes, trial. is And coming we're OSA, of up of completion sort -- the on the

to starting the So affairs side. we're focus more medical on now

preparatory more the it's So asset. in we're to make to good commercialize place potentially sure a

Vladimir Makatsaria

like just said, Ahmet OSA Matt, we're And the add front, to of half submission on the targeting first in XXXX.

point, is expand we investment, the decision a and to This story. your to 'XX this a make So or commercialize is not if beyond. XXXX most likely

Operator

have queue. We no questions in further the

turn any I'll for the to So Makatsaria closing call Vladimir back remarks.

Vladimir Makatsaria

in your you. Lydia, thank great Have importantly, helping call the Thank you interest a ahead. for everyone, us and today the facilitate and, more day for support you, thank joining for call, and LivaNova.

Operator

much very you joining. Thank call. our concludes for This

may disconnect You lines. now your

LivaNova (LIVN) 30 Oct 242024 Q3 Earnings call transcript