LivaNova PLC

Good day ladies and gentlemen and welcome to the Levenover PLC second quarter 2022 earnings conference call. If you would like to ask a question following today's presentation you can do so by pressing star followed by one on your telephone keypad. As a reminder this conference call is being recorded. I would now like to introduce your host for today's conference Mr Matthew Dodds, Levenover's Senior Vice President of Corporate Development. Please go ahead sir.

Thank you, Melissa, and welcome to our conference call and webcast discussing Leva Nova's financial results for the second quarter of 2022. Joining me on today's call are Jamie McDonald, our Chief Executive Officer, Alex Schwarzberg, our Chief Financial Officer, and Brianna Gotland, our newly appointed Director of Investor Relations. I am pleased to announce that Lindsay Little has been promoted and is moving back into the finance group to work with Alex. And Brianna is now heading investor relations. Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that can cause actual results to differ materially are discussed in the company's most recent financial filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statements. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results which will all be stated on a constant currency basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release which is available on our website. We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complimentary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and press release in the Investor section of our website under News, Events, and Presentations at investor.livanova.com. With that, I will now turn the call over to Damian.

Thank you, Matt. And thank you to everyone for joining us. And welcome to our conference call for the second quarter of 2022. I'll start by discussing our second quarter revenue results and reviewing our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results, recent financing activities, and an updated outlook. I will wrap up with closing comments before moving on to Q&A. In the quarter, we achieved 7% revenue growth, excluding heart valves. This was driven by year-over-year growth in cardiopulmonary and neuromodulation. Advanced circulatory support was unfavorably impacted by a significant decline in severe COVID cases and hospital staffing challenges. Now turning to segment results. For the cardiopulmonary segment, revenue was $126 million, an increase of 14% versus the second quarter of 2021. Oxygenator sales grew in the mid-teens, driven by continued procedure volume recovery. Heart-lung machine sales increased in the mid-teens, led by growth in the rest of the world and U.S. regions. We were particularly pleased with the way the international team is driving results through the application of the Livonova business system to execute commercially. We now expect cardiopulmonary revenue to grow 6% to 8% for the full year. This range considers the strong first-half performance and continued demand for the S5 HLM particularly in the rest of world region. Epilepsy revenue increased 3% versus the second quarter of 2021, driven by Europe and the rest of world regions. In the US, favorable pricing was partially offset by lower implant volumes. Year over year comparisons were especially difficult given that implant volumes in the second quarter last year were the highest since the pandemic onset. Procedures continue to be impacted by hospital staffing challenges and COVID-related postponements. U.S. epilepsy revenue was flat year over year with total implants down in the mid-single digits. On a sequential basis, total implant growth increased in the high single digits driven by replacements. U.S. epilepsy results continue to be led by our go-to-market initiative, which currently encompasses 14 dedicated CEC teams. These teams accounted for 21% of U.S. revenue in the quarter as compared to 20% on a same account basis during the prior year. This key commercial strategy continues to deliver absolute revenue and implant growth as well as relative growth above the baseline business. Epilepsy revenue in Europe grew 7% versus prior year, primarily led by improved commercial execution on NPIs in France and Germany. The rest of world region achieved 19% growth led by Brazil, Japan, and Taiwan. For the full year, we continue to expect global epilepsy revenue to grow 5% to 7%. Our forecast includes sequential growth in new patient implants through the remainder of the year as we expect healthcare staffing challenges to gradually improve. In addition, we anticipate a continued tailwind in replacement implants related to the backlog created during the pandemic. We're pleased with the progress of the go-to-market initiative and plan to add two additional dedicated teams in the second half. ACS revenue was $9 million in the quarter, representing a decrease of 29% from the second quarter of 2021. Results were primarily impacted by a reduction in severe COVID cases and continued hospital staffing challenges leading to lower procedure volumes versus the prior year period. Our field data suggests that ACS case volumes related to COVID declined nearly 80% year over year, as fewer hospitalised patients progressed to the severity that required ECMO therapy. Notably, ACS non-COVID case volumes increased in the mid-teens year over year, driven by account acquisition. For the full year 2022, we now expect ACS revenue to be down in the mid to high teens, Our forecast has been updated to reflect a further decline in COVID-related cases and assumes sequential growth in non-COVID cases. We believe this business will return to double-digit growth in 2023 and beyond. A positive step towards this goal was achieved on Monday. The US Centers for Medicare and Medicaid approved a new technology add-on payment, or NTAP, for our haemolung respiratory assist system for in-care patients. The NTAP designation is awarded to novel medical technologies and services supported by clinical evidence that are expected to substantially improve the diagnosis or treatment of Medicare beneficiaries. It will go into effect October 1, 2022. As a reminder, our heart valve business was divested on June 1 of last year, and heart valve revenue for the second quarter of 2021 was $15 million. Now turning to our strategic portfolio initiatives. DTD revenue for the second quarter was $1.8 million. For 2022, we now anticipate DTD revenue of approximately $9 million. The RECOVER study continues to maintain momentum. The randomized controlled study is designed with frequent interim analyses by cohort that will assess if predicted probability of success has been reached or if the study should continue. As stated previously, we believe a series of interim analyses is likely needed as we collect patient follow-up data over time. Our interim analyses for the unipolar cohort to date have confirmed the study's continuation with the next interim look at 350 patients, which is expected this month. We still anticipate a transition to the prospective longitudinal study for the unipolar cohort in late 2022 or early 2023. In heart failure, the Anthem HEPREP US Pivotal Trial continues to advance. The Independent Statistical Analysis Committee will conduct the next interim analysis after the 500th patient is enrolled, which we anticipate in the fourth quarter. If all pre-specified conditions are met, including safety, a trend towards primary endpoint, and success in the three functional endpoints, we would expect to submit the functional data to the FDA. Moving to OSA, the Osprey trial continues to progress. All 20 study sites are active, the majority of which are recruiting patients. We still assume submission for FDA approval to occur in the latter half of 2023, with a decision anticipated in 2024. Before turning the call over to Alex, I wanted to provide a brief comment on the SNEA litigation. The Supreme Court hearing has been scheduled for October 5, to review the appeals of liability and damages. And we anticipate a decision in the first half of 2023. And with that, I'll send the call over to Alex.