LivaNova PLC

After the presentation, there will be the opportunity for any questions, which you can ask by pressing Start, followed by the number 1 on your telephone keypads. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Matthew Dodds, LevaNova's Senior Vice President of Corporate Development and IT. 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 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, Stephanie Bolton, President of Global Epilepsy, 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 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 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 complementary to 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 Bill.

Hey, thank you, Matt, and thank you, everyone, for joining us. Welcome to Livanova's conference call for the fourth quarter and full year of 2023. Before turning to results in the fourth quarter and full year, I'll start off with some comments on the naming of Vlad Makatsaria as CEO, our decision to wind down the advanced circulatory support segment and an update on the cybersecurity incident. Earlier this month, the board appointed Vlad as the company's CEO and a member of the board of directors, effective March 1st. Vlad most recently served as a company group chairman at J&J MedTech, leading its global Ethicon surgery business. He's a respected leader in the medical technology industry with a 27-year track record of delivering results, driving innovation, and leading high-performing teams. The Board and I have great confidence that Vlad is the right CEO to advance Levanova's strategic plan and achieve our goals for long-term growth. I will continue in my role as Levanova Board Chair and of course look forward to supporting Vlad as our new CEO. In January, we announced the wind down of the ACS segment. As part of this decision, ACS standalone cannula and accessories will move into our cardiopulmonary segment during the first quarter. This portfolio decision allows us to focus on our core cardiopulmonary and neuromodulation businesses, which are well positioned for growth and value creation. We expect the wind down to result in a positive contribution to adjusted operating income in 2024 as compared to 2023. We delivered strong performance despite the previously disclosed cybersecurity incident. Later in the call, Alex will provide comments regarding the estimated impact to our financial results during the quarter. Importantly, we were able to bring all our manufacturing operations back online, as noted in our prior disclosures. I must extend sincere appreciation to our Levanova colleagues around the world who responded with urgency and extraordinary dedication. Thank you. For the remainder of the call, I'll discuss our fourth quarter and full year results and then turn to our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results and 2024 guidance. I'll wrap up with some closing remarks before moving on to Q&A. In the quarter, we achieved 12% revenue growth versus the prior year. This performance was driven by the cardiopulmonary and neuromodulation businesses with particular strength in the Europe and U.S. regions. On a four-year basis, we achieved 13 percent revenue growth versus the prior year, marked by double-digit growth across all regions. Notably, we delivered on our commitment to modest leverage, achieving 17 percent growth in both adjusted operating income and adjusted diluted earnings per share. Now, turning to segment results. For the cardiopulmonary segment, revenue was $162 million in the quarter, an increase of 17% versus the fourth quarter of 2022. Heart-lung machine revenue increased more than 40%, primarily driven by essence sales in the Europe and U.S. regions. We were pleased to see a meaningful sequential ramp in essence sales during the quarter, with strong placements and pricing execution. Oxygenator revenue grew in the mid-single digits, driven by customer demand and price. As previously noted, the Oxygenator business faces capacity constraints, and the team made significant efforts in the quarter to mitigate the disruption from the cybersecurity incident, including working additional shifts on weekends and holidays. Cardiopulmonary revenue for the full year was $589 million, and grew 18%. We expect cardiopulmonary revenue to grow six to seven percent for full year 2024. Our forecast incorporates strong HLM growth, which will be offset by slower growth in disposables due to the current capacity constraints. Our recent efforts to expand oxygenator capacity are now expected to provide some benefit in the second half of the year. Epilepsy revenue increased 8% versus the fourth quarter of 2022. The U.S. epilepsy revenue increased 8% year over year, with growth in both new and replacement implants. We achieved 856 new patient implants in the quarter, representing 6% growth versus the prior year. We realized 1,982 replacement implants representing 10% growth versus the prior year, an unusually high growth rate. Epilepsy revenue in Europe and the rest of the world grew 7% versus prior year. For the full year, epilepsy revenue increased 10%. Notably, U.S. epilepsy achieved 3,300 new patient implants in the full year, representing 7% growth versus the prior year. Replacement implants reached 7,608 for the full year, also a 7% increase, which was higher than expected. For the full year 2024, we expect global epilepsy revenue to grow 6% to 7%. Our forecast incorporates a continued mid-single-digit growth for U.S. new patients and more normalized low single-digit growth in replacements. ACS revenue was $10 million in the quarter, an increase of 5% versus the fourth quarter of 2022. ACS revenue for the full year was $40 million and grew 3%. As previously noted, the wind down in the ACS segment is anticipated to be substantially complete by the end of 2024. Alex will comment on the financial impact of the ACS wind down later in the call. DTD revenue for the fourth quarter was $2 million, and for the full year was $7 million. For 2024, we anticipate DTD revenue of approximately $7 million, primarily from the RECOVER study. The RECOVER study does continue. As a reminder, enrollment for the unipolar cohort of the study has been completed. We anticipate the receipt of the 12-month follow-up data for the 500 unipolar patients in June of 2024, after which we will conduct a final analysis. We continue to expect the publication of the study results by late 2024. The bipolar cohort continues to enroll as expected. Moving to OSA, the OSPREY trial continues to progress with all 25 study sites recruiting patients. In heart failure, The closeout of the Anthem clinical study is substantially complete. Overall R&D spend related to heart failure in 2023 was $25 million, the majority of which occurred in the first half of the year. With that, I'll turn the call over to Alex.