LivaNova PLC

quarter and full year 2024 earnings conference call. As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's conference, Ms. Brianna Gotland, Leva Nova's Vice President of Investor Relations. Please go ahead.

Thank you and welcome to our conference call and webcast discussing Leva Nova's financial results for the fourth quarter and full year of 2024. Joining me on today's call, are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors, Alex Schwartzberg, our Chief Financial Officer, Ahmet Tizel, our Chief Innovation Officer, and Zach Glazer, 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 statements. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to revenue results, which will be stated on a constant currency and organic 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'll turn the call over to Vlad.

Thank you, Brianna. And thank you everyone for joining us today. Welcome to Ivanova's conference call for the fourth quarter and full year of 2024. The year was marked by strong financial results, significant innovation milestones, and a meaningful transformation of talent and culture. We delivered 11% organic revenue growth in 2024, our second consecutive year of double-digit organic growth. We also expanded operating margins and increased free cash flow. We are pleased with this result and the execution that made them possible. Additionally, we're encouraged by the clinical milestones achieved in obstructive sleep apnea, difficult-to-treat depression, and the three-year results from the largest real-world evidence study of VNS therapy for epilepsy called CoreVNS. In obstructive sleep apnea, or OSA, the OSPRI clinical study met its primary efficacy and safety endpoints. This achievement unlocks a strategic growth opportunity for Livanova. We plan to bring this technology to market, and in doing so, we will leverage and extend the vast clinical and scientific expertise of our neuromodulation business to a new therapeutic area. We will increase investment in order to accelerate product development and ensure a competitive and differentiated product portfolio. With growing worldwide prevalence and improved diagnosis for OSA, we expect the hypoglossal nerve stimulation market to approach $2 billion by the end of the decade, with plenty of room for treatment alternatives. Based on these factors, combined with a strong Osprey clinical data, we are confident This program will generate value for Livanova, and I'm excited by the opportunity to impact more patient lives. In difficult to treat depression, or DTD, we continue our pursuit of CMS coverage. Five critical publications will support our position, two of which were already published in December. A positive reimbursement decision would represent a meaningful opportunity for critically ill patients with DTD while further diversifying our portfolio. Finally, and importantly, in 2024, Livanova embarks on a transformative journey to strengthen our talent and culture with a clear focus on innovation and a growth mindset. To accelerate our future progress, we have prioritized attracting industry-leading professionals while developing and promoting top talent from within. Over the past year, approximately 30% of our overall director level and above positions have been filled by new hires or internal promotions, bringing fresh perspectives and expertise to drive our next phase of growth. We have also enhanced our executive leadership team with five new leaders. Most recently, we welcomed Natalia Kazmina, as our chief human resources officer with more than 25 years of global experience in that that and pharmaceuticals not that is a proven leader who will play a pivotal role in shaping out down strategy. I'm excited to partner with her and the entire executive leadership team as we continue building a high performing innovative organization voice for future. For the remainder of the call, I will discuss our results and top line guidance for full year 2025. After my comments, Amit will discuss our innovation pipeline. Alex will then provide additional details on our results and 2025 guidance. I will wrap up with closing remarks before moving on to Q&A. In the quarter, we achieved 5% revenue growth and 7% organic growth versus the prior year. On a full year basis, we achieved 9% revenue growth and 11% organic growth versus the prior year, driven by the strength in both the cardiopulmonary and epilepsy businesses. Notably, we achieved 41% growth in adjusted operating income and 21% growth in adjusted diluting earnings per share. I want to acknowledge the entire organization for their dedication to enhancing our cash generation. Our progress was evident in our strong free cash flow performance, delivering $163 million in adjusted free cash flow for the full year 2024. Now turning to segment results. For the cardiopulmonary segment, Revenue was $182 million in the quarter, an increase of 11% versus the fourth quarter of 2023. Heart long machine revenue grew in the mid single digits, despite the difficult year over year comparison. As a reminder, the HLM business grew more than 40% in the fourth quarter of 2023 due to accelerated essence placements, following approval of the inline blood monitor. In the fourth quarter of 2024, we were pleased to see a sequential increase in essence revenue and continued strong price mix. As a point of reference, essence represented approximately 40% of our annual HLM units placed in 2024. Oxygenator revenue grew in the mid-teens driven by customer demand and price. We successfully exited a year with approximately 10% increase in manufacturing capacity, and we continue to see global demand outpace supply. Cardiopulmonary revenue for the full year was $684 million and grew 14%. We expect cardiopulmonary revenue to grow 7% to 8% for the full year 2025. Our forecast incorporates continued HLM growth as we launch Essence in new markets and continue to increase penetration in existing markets. We expect Essence to represent approximately 60% of our annual HLM units placed in 2025, while maintaining a price premium. Our forecast also reflects continuing strong demand for consumables and expanded manufacturing capacity. We believe there are opportunities to further accelerate growth in essence and to continue to grow market share in consumables. We're working diligently to expand oxygenated manufacturing capacity beyond the level built into guidance. Turning to epilepsy, revenue increased 1% versus the fourth quarter of 2023. U.S. epilepsy revenue increased 4% year over year, driven by product mix, price, and total implants. We achieved approximately 1% growth in both new patient and replacement implants versus the prior year. Epilepsy revenue in Europe and rest of the world declined a combined 9% versus prior year. we have taken measures to improve commercial execution and have confidence in the future growth of this business. For the full year, epilepsy revenue grew 7%. U.S. epilepsy revenue grew 8% and achieved 5% growth in both new patient and replacement implants versus the prior year. Epilepsy revenue in Europe and rest of world grew a combined 2% versus 2023 with double-digit growth in rest of world offset by decline in Europe. For the full year 2025, we expect global epilepsy revenue to grow 4% to 5%. Our forecast incorporates a continued mid-single-digit growth rate for US new patient implants. We expect US replacement units to be flat due to the decline in total implants that occurred in 2019 and 2020. Our forecast also assumes that the rest of world and Europe regions return to a combined high single-digit growth rate in 2025. We will continue our efforts focused on narrowing the drug-resistant epilepsy treatment gap and driving growth in surgical therapies for this significantly under-penetrated patient population. In summary, our growth in 2024 was driven by healthy markets, the successful rollout of Essence, market share gains in cardiopulmonary consumables, and pricing strategies. These drivers will continue to fuel our growth in 2025. As a result, we are guiding full-year 2025 organic revenue growth between 6% and 7%. Alex will provide additional details on our 2025 guidance later in the call. With that, I'll turn the call over to Ahmed to discuss our innovation pipeline.