LivaNova PLC

Good day, ladies and gentlemen, and welcome to the Livanova PLC First Quarter 2024 Earnings Conference Call. As a reminder, this conference call is being recorded. I would 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.

Thank you, Candice, and welcome to our conference call and webcast discussing Livanova's financial results. for the first quarter of 2024. Joining me on today's call are Vladimir Makasaria, our Chief Executive Officer and member of the Board of Directors, 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 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 statement. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to revenue 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 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.Levanova.com. I would like to welcome Vlad to his first earnings call as Levanova's CEO after starting March 1st. Prior to joining Levanova, Vlad most recently served as company group chairman at Johnson & Johnson 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 performance teams. With that, I will turn the call over to Vlad.

Thank you, Matt, and thank you everyone for joining us. It's my pleasure and privilege to welcome you to Livanova's conference call for the first quarter of 2024 as Livanova's chief executive officer. First and foremost, on behalf of the board and the executive leadership team, I would like to express our gratitude to Bill Cozy, chair of the board of Livanova. for a tremendous job leading the company on an interim basis. I would also like to thank the entire board of directors for the opportunity to serve as CEO and express my sincere gratitude and excitement for the future of Livanova. During my first two months, I interacted with customers, met investors, and engaged with my colleagues around the world. I can confidently say that the patient first mentality thrives across every function and geography at Livanova. It is an honor to work with a global organization that focuses on solving significant unmet patient needs into very high impact medical fields, neurological and cardiac health. I'm humbled to be in this role and grateful to our teams for their exceptional work and dedication to serving our patients and customers. Over the coming months, I will continue to listen, learn, and complete a comprehensive review of business. In doing so, I'm focused on three key areas, execution, innovation, and talent. Let me provide additional color on each. First, execution and performance. My view of success in this area is achieving sustainable above-market growth while improving profitability and cash flow, and most importantly, delivering on commitments to our customers. The first quarter marked our fifth consecutive quarter of double-digit revenue growth. In cardiopulmonary, we maintained above-market growth driven by the strong launch of the Essence Heart-Lung Machine and our ability to fulfill the high demand for consumables. In epilepsy, we saw continued growth in both new and replacement implants, driven by disciplined commercial execution. Second, innovation and portfolio. Over the last year, the company has made progress in refining the business strategy and portfolio, including the wind down of the advanced circulatory support segment and the heart failure program. These portfolio actions position us well for the future and enable us to have appropriate resources, focus, and investment to drive growth in the business. This includes reinvigorating our cadence of core innovation to meet our customers' most prevalent unmet needs. In both difficult to treat depression and obstructive sleep apnea, we anticipate results in RECOVER and OSPRI studies later this year. Looking ahead, we will evaluate those opportunities alongside a holistic view of all possibilities for innovation. At Livanova, our commitment to pioneering innovation remains unwavering, and to this end, I'm very pleased to welcome Amit Tezel as Livanova's Chief Innovation Officer, which we announced yesterday. Ahmed has a remarkable track record leading teams and developing a wide range of market leading technologies. Ahmed will draw upon his extensive experience to guide innovation at Livanova. And finally, the third area of focus is people and culture. Any great organization starts with great people. And in my first two months at Livanova, I have met many of our colleagues from Houston to Arvada, from Munich to Mirandola. As previously mentioned, I'm most impressed by their embodiment of the patient first value. I was also struck by their deep expertise in the areas which we operate. It is no wonder we are category leaders in heart lung machines and epilepsy surgery. We will build on this foundation and continue to attract top talent to Livanova. Focus on execution, innovation, and talent will lead to success as an organization. We're confident that by delivering in each of these areas, we will improve patient outcomes and create shareholder value. For the remainder of the call, I will focus on the first quarter results and then turn to our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results and update 2024 guidance. I will wrap up in closing remarks before moving to Q&A. So in the first quarter, we achieved 12% revenue growth versus prior year. Excluding the impact of ACS segment wind down, revenue increased 14% versus 2023. This performance included double-digit revenue growth in both cardiopulmonary and neuromodulation segments. We're encouraged by our team's continued strong execution as demonstrated by our performance in the quarter. Now turning to segment results. For the cardiopulmonary segment, revenue was $156 million in the quarter. That's an increase of 16% versus the first quarter of 2023. Heart-lung machine revenue increased more than 20% driven by a sense. We are pleased to see continued sense placements and strong price mix in the quarter. Oxygenator revenue grew in low teens, driven by customer demand and price. As previously noted, the oxygenator business continues to see strong demand, and our efforts to increase capacity remain on track. We now expect cardiopulmonary revenue to grow 8% to 9% for the full year 2024. Our revised forecast incorporates strong HLM growth and continued strong demand for consumables. Epilepsy revenue increased 11% versus the first quarter of 2023. U.S. epilepsy revenue increased 13% year over year with growth in both new and replacement implants. We achieved 826 new patient implants in the quarter representing 4% growth versus the prior year. We realized 1,941 replacement implants representing 5% growth versus the prior year. Epilepsy revenue in Europe and the rest of the world grew 7% versus prior year. For the full year 2024, we continue to expect global epilepsy revenue to grow 6% to 7%. Our forecast incorporates a continued mid single digit growth rate in the US new patients and more normalized low single digit growth rate in replacements. We now expect international revenue to grow in high single digits. Difficult to treat depression revenue in the first quarter was $2 million. And for the full year, we continue to anticipate approximately $7 million revenue primary coming from the RECOVER study. The RECOVER study continues to advance and the bipolar cohort continues to enroll as expected. As a reminder, enrollment for the unipolar cohort of the study is now complete. We anticipate the 12-month follow-up data for the 500 unipolar patients in the second quarter. At that time, we will conduct an analysis and continue to expect publication of the full study results by late 2024. Now moving to obstructive sleep apnea. The Osprey clinical study achieved a positive predictive outcome and concluded enrollment in March. This means that there is a very high probability that there will be a statistically significant result in the primary endpoint, which is seven-month AHI response rate. In accordance with the study protocol, once the last implanted patient completes the last follow-up visit, we will conduct a final analysis for the study. We are pleased to have achieved this positive milestone for the Osprey study, and we will continue to work actively with clinical sites to manage the study patients. With that, let me turn the call over to Alex.