LivaNova PLC

Good day, ladies and gentlemen, and welcome to the Levenova PLC fourth quarter and full year 2022 earnings conference call. After the prepared remarks, you will have the opportunity to ask any questions by dialing star followed by one on your telephone keypad. If you need any assistance on the call, please signal a conference specialist by dialing star zero. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Matthew Dodds, Levenova's Senior Vice President of Corporate Development. Please go ahead, sir.

Thank you, Emily, and welcome to our conference call and webcast discussing Levanova's financial results for the fourth quarter and full year of 2022. Joining me on today's call are Jamie McDonald, our Chief Executive Officer, Alex Schwartzberg, our Chief Financial Officer, and Brianna Gotland, Director of Investor Relations. Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent 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 statement. 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 everyone for joining us. Welcome to our conference call for the fourth quarter and full year of 2022. I'll discuss our fourth quarter and full year results, provide 2023 revenue guidance, and review our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results and 2023 guidance. I will wrap up with closing remarks before moving on to Q&A. In the quarter, we achieved 6% revenue growth. This was driven by the cardiopulmonary and neuromodulation businesses across all regions. Advanced circulatory support remained unfavourably impacted by a significant decline in severe COVID cases. I'm proud of our team for continuing to move the business forward against macro challenges, including inflation and supply chain complexities. Now, turning to segment results. For the cardiac pulmonary segment, revenue was $137 million in the quarter, an increase of 9% versus the fourth quarter of 2021. Oxygenator revenue grew low double digit, driven by continued procedure volume recovery across all regions. Heart-lung machine revenue increased mid-single digits, led by growth in the rest of world region. Cardiopulmonary revenue for the full year was $500 million and grew 11%. We expect the cardiopulmonary revenue to grow 3% to 5% for the full year 2023. Our forecast includes the stage rollout of the next generation HLM Essence. In February, we initiated our limited commercial release in select centers throughout Europe following successful clinical cases in two major hospitals in Q4. Looking ahead, we anticipate a gradual ramp in essence sales throughout the year. Epilepsy revenue increased 7% versus the fourth quarter of 2021 with growth across all three regions. This performance was primarily driven by replacement implants in the US and double digit growth outside the US for both new and replacement implants. U.S. epilepsy revenue increased 4% year over year. Similar to last quarter, total implant growth was driven by replacements. In the U.S., we are continuing to advance our go-to-market commercial strategy in comprehensive epilepsy centers, which included 15 dedicated teams. These teams accounted for approximately 21% of U.S. implants in the quarter, as compared to 22% on a same-account basis during the prior year. Epilepsy revenue in Europe grew 18% versus prior year, led by the UK and Nordics. The rest of world region achieved 18% growth, led by Brazil. For the full year, epilepsy revenue increased 7%. For the full year 2023, we expect global epilepsy revenue to grow 3% to 5%. ACS revenue was $10 million in the quarter representing a decrease of 30% from the fourth quarter of 2021. Results continued to be impacted by the year-over-year reduction in severe COVID cases and in part by product mix, which was partially offset by growth in non-COVID cases. Our field data suggests ACS case volumes related to COVID declined more than 90% year-over-year. as fewer hospitalized patients progressed to a severity that required ECMO therapy. However, ACS non-COVID cases increased more than 20% versus 4Q21, driven by an easing of hospital capacity constraints. ACS revenue for the full year was $39 million, representing a decline of 29%. For 2023, we expect ACS to grow 4% to 6%, Our forecast includes a return to growth once we anniversary the COVID impact after the first quarter. Turning now to the strategic portfolio initiatives. DTD revenue for the fourth quarter was $3 million and for the full year was $8 million. For 2023, we anticipate DTD revenue of approximately $8 to $10 million, primarily from the recover study. The recover study continues to advance. The randomized controlled study is designed with frequent interim analyses that will assess if predictive probability of success has been reached or if the study should continue enrolling. Our interim analysis for the 450th patient in the unipolar cohort was recently completed and confirmed the study's continuation. The next interim look is at 475 patients, at which point we can either transition to the prospective longitudinal study or complete enrollment to 500 patients for the unipolar cohort. Earlier this week, Dr. Conway, the principal investigator for the RECOVER study, delivered a poster presentation at the 5th International BrainSTEM conference detailing the baseline unipolar demographic data for the RECOVER study participants collected so far. The majority of these patients are severely depressed, and are highly treatment-resistant, having failed more aggressive treatments such as ECT, TMS, and ketamine. In heart failure, we enrolled the 500 patients in the Anthem HF-REF US Pivotal Trial last quarter, which triggered the second interim analysis. The analysis determined that the US FDA early filing conditions were not met, and the DSMC recommended that enrollment continue in accordance with the current study protocol. However, our further evaluation of the study data has not revealed a sufficiently positive impact on functional or mortality endpoints, and it is unlikely that the study would demonstrate such an impact. As a result, we are stopping enrollment, beginning the process to close the clinical study, and winding down the heart failure program. It's important to note that the decision to stop enrolling was not associated with any safety concerns. We'd like to thank the patients who participated in the trial and also thank the investigators, study committees, and employees for their commitment to this program. Moving to OSA, the OSPRA trial continues to progress. In January, we received approval from the FDA to include an additional five sites, one of which has already been activated. We still assume FDA approval in 2024. And with that, I'll turn the call over to Alex.