LivaNova PLC

Good day, ladies and gentlemen, and welcome to the LevaNova PLC first quarter of 2023 earnings conference call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press 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 call, Mr. Matthew Dodds, LevaNova's Senior Vice President of Corporate Development. Please go ahead, sir.

Thank you, Bailey, and welcome to our conference call and webcast discussing Leva Nova's financial results for the first quarter of 2023. Joining me on today's call are Bill Cozy, our Chair of the Board of Directors and Interim Chief Executive Officer, Alex Schwarzberg, 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 an earnings update to our website that summarizes the points of today's call. This update is complementary to the other call materials and should be used as an enhanced communication tool. You can find the update and press release in the investor section of our website under news events and presentations at investor.livanova.com. Now, it is my pleasure to introduce you to Bill Cozy. Bill joined Livanova's Board of Directors in 2018 after the conclusion of his 42-year career at Beck & Dickinson, where he retired as Executive Vice President and Chief Operating Officer in 2016. At BD, he served as a member of the corporate leadership team and held various executive roles since 1988. As a result, he brings expertise in strategy execution, operations, and financial discipline. With that, I will turn the call over to Bill.

Thank you, Matt, and thank you everyone for joining us. It is my pleasure and privilege to welcome you to Levanova's conference call for the first quarter of 2023 as Levanova's Chair and Interim Chief Executive Officer. First and foremost, on behalf of the board and the executive leadership team, I'd like to express our gratitude to Damian McDonald for his dedicated leadership and countless contributions to the company over the last seven years. We wish him all the best in his future endeavors. In this interim role, my focus is firmly on patience, performance, and execution. In the coming weeks, I'll continue to engage with our global customers and colleagues as well as the investor and analyst communities. Even though I'm new and learning, I'm already working alongside our experienced executive leadership team and the board, and I do remain confident that we'll facilitate a smooth and positive transition as we search for Libanova's next leader. For the remainder of the call, I'll discuss our first quarter results and then turn to our strategic portfolio initiatives. After my comments, Alex will provide additional details on the results and increases to 2023 guidance. I'll wrap up with closing remarks before moving on to Q&A. In the quarter, we achieved 13% revenue growth marked by strength in the cardiopulmonary and neuromodulation businesses, while advanced circulatory support remained unfavorably impacted by a decline in severe COVID cases. We were particularly pleased with the way the rest of world and Europe regions drove results especially in emerging markets. Worth noting, these regions comprise 47% of total company revenue in the quarter, up from 43% in the prior year period. Now, turning to segment results. For the cardiopulmonary segment, revenue was $132 million in the quarter, an increase of 18% versus the first quarter of 2022. Oxygenator revenue grew in the high teens, driven by higher demand and improving supply chain performance. Heart-lung machine revenue increased in the low double digits, driven by new installations and replacements in the rest of the world and Europe regions. As a reminder, our Essence heart-lung machine received U.S. FDA 510 clearance in March and approvals from Health Canada and the Japanese PMDA also during that first quarter. Additionally, we initiated a broad commercial release in Europe. We now expect cardiopulmonary revenue to grow 5 to 7% for full year 2023. Our revised forecast includes more clarity around the rollout of essence based on recent approvals. In addition, our revision now incorporates the strong first quarter performance in oxygenators. Alex will comment on some underlying factors that impacted the first quarter result in cardiopulmonary. Epilepsy revenues increased 11% versus the first quarter of 2022, with strength across all three regions, including growth in both new and replacement implants. U.S. epilepsy revenue increased 8% year over year, driven by growth in total implants, higher realized price, and product mix. In the U.S., we are continuing to emphasize our commercial strategy in comprehensive epilepsy centers. As many of you know, these CECs currently do the majority of surgical epilepsy procedures, and our focus on engaging with KOLs at these sites remains a top priority. Epilepsy revenue in Europe grew 14% versus prior year led by the U.K. The rest of world region achieved 30% growth led by Brazil. For the full year 2023, we continue to expect global epilepsy revenue to grow three to 5% as we take a fresh look at the factors driving new patient surgical penetration. I will be spending a notable amount of time with our key customers and KOLs. And again, Alex will comment on some underlying factors that impacted that strong first quarter result in epilepsy. ACS revenue was $10 million in the quarter, representing a decrease of 16% from the first quarter of 2022. Results continued to be impacted by the year-over-year reduction in severe COVID cases and in part by product mix, partially offset by growth in non-COVID cases. Our field data suggests ACS case volumes related to COVID declined approximately 90% year over year as fewer hospitalized patients progressed to a severity that required ECMO therapy. However, that field data also suggests ACS non-COVID case volumes increased versus the first quarter of 2022, driven by the easing of hospital capacity constraints and account acquisition. For 2023, we continue to expect ACS to grow 4% to 6% with the majority of the growth in the back half of the year. As a reminder, this is the last quarter this business will be significantly impacted by COVID comparisons. Turning now to the strategic portfolio initiatives. DTD revenue in the first quarter was $2 million. For 2023, we now anticipate DTD revenue of approximately $8 million, primarily from the RECOVER study. The RECOVER study continues to advance. In March, the interim analysis for the 475th patient in the unipolar cohort was completed and confirmed the study's continuation. Subsequently, we randomized the 500th unipolar patient into the trial. Upon receipt of the 12-month follow-up data for the 500 unipolar patients, we will conduct a final analysis and expect the publication of the study results by late 2024. Now that enrollment in the unipolar cohort is complete, our recruitment efforts have been refocused on the bipolar cohort. We expect to reach 150 bipolar patient implants in late third quarter or early fourth quarter. By now, I'm sure you've familiarized yourself with the RECOVER study. I recently met with two of the study's principal investigators, Dr. John Rush and Dr. Charles Conway. These conversations reflect the continued excitement from the KOL community, and I hope you appreciate the company's total commitment to finish this initiative. Moving now to OSA, The Osprey trial continues to progress with 24 study sites actively recruiting patients. Similar to my comments on DTD, myself, the board, and our project team remain committed to this project as well. In heart failure, the closeout of the Anthem clinical study is in progress. We have fully defined most of the accelerated costs in 2023, part of which occurred in the first quarter. Therefore, our expectation is that the overall R&D spend related to heart failure this year will be approximately $24 million. With that summary, I'll turn the call over to Alex.