LivaNova PLC

Good day, ladies and gentlemen, and welcome to the Liva Nova PLC second quarter 2025 earnings conference call. If you'd like to register questions in today's events, please press star one on your telephone keypad. As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's call, Ms Brianna Kotlin, Liva Nova's Vice President of Investor Relations. Please go ahead.

Thank you and welcome to our conference call and webcast discussing Liva Nova's financial results for the second quarter of 2025. Joining me on today's call are Vladimir Makapsarya, our Chief Executive Officer and member of the Board of Directors, Alex Schwartzberg, our Chief Financial Officer, Amit Tizel, our Chief Innovation Officer, Stephanie Bolton, President of Global Epilepsy, 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. Reconciliation 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 .libanova.com. With that, I'll turn the call over to Vlad.

Thank you, Brianna, and thank you everyone for joining us today. Welcome to Livonova's conference call for the second quarter of 2025. In the quarter, Livonova delivered 10% organic revenue growth versus the prior year, driven by continued momentum in our cardiopulmonary business and solid neuromodulation performance across all regions. Our ability to sustain strong organic growth reflects not only robust demand, but also disciplined execution across our portfolio. This execution also contributed to meaningful operating margin extension and strong cash generation. Before turning to segment results, I'd like to highlight some important clinical and regulatory milestones from the quarter. In epilepsy, we announced long-term results from the core VNS study, the largest real-world evidence study of VNS therapy to date. The data shows clinically meaningful and durable results, demonstrating the effectiveness of VNS therapy in both children and adults with drug-resistant epilepsy, or DRE. The outcomes further validate early and sustained reductions in seizures frequency across multiple seizure types, including the most severe and disabling seizures. For example, the 36-month data analysis showed a median seizure reduction of 80% in patients with focal onset seizures with impaired awareness, and 95% in those with focal to bilateral tonic-clonic seizures. These results have been well received by the clinical community, and I expect it to strengthen the foundation of our epilepsy franchise while supporting our commercial and educational initiatives going forward. In Difficult to Treat Depression, or DTD, we initiated the process with CMS to seek national Medicare coverage for VNS therapy in unipolar patients with treatment-resistant depression. The first step in the process for CMS reconsideration was the submission of a draft formal request. This request is supported by five peer-reviewed publications from the RECOVER study and strong 24-month outcomes demonstrating the durability of VNS therapy in the severely ill patient population. And in Obstructive Sleep Apnea, or OSA, our advancing program continues to represent a significant long-term growth opportunity for Livanova. Our submission with the FDA is progressing, and we remain confident in the ability of our differentiated neurostimulation modality called proximal hypoglossal nerve stimulation, or PHGNS. This is a new therapeutic modality with the potential to treat a wide range of challenging patients, including those with high apnea hypochondria index, high body mass index, and complete concentric collapse. We're excited for the PGNS to utilize a new therapeutic modality and have a positive impact on patients with sleep apnea. These achievements underscore the strength of our team and our ability to execute across clinical, regulatory, and operational priorities. We remain focused on delivering life-changing therapies to large patient populations with significant unmet needs. For the remainder of the call, I will discuss our second quarter segment results and updates to our revenue guidance for the full year 2025. After my comments, Amit will discuss our recent clinical and regulatory achievements. Alex will then provide additional details on our results and updated 2025 guidance. I will wrap up with closing remarks before moving to Q&A. Now turning to segment results. For the cardiopulmonary segment, revenue was $199 million in the quarter, an increase of 13% versus the second quarter of 2024. Heart-long machine revenue grew in the low double digits versus the prior year period. Essence placements increased on both a -over-year and sequential basis and sustained favorable price premiums. Oxygenator revenue grew in the low double digits, driven by procedure growth, market share gains, and price. Strong demand for oxygenators is outpacing the market's ability to supply. While our manufacturing capacity extension plans are progressing well and remain on track, third-party supply is a limiting factor for even more rapid extension. Our team remains focused on working with suppliers to meet our production needs. We now expect cardiopulmonary revenue to grow 12 to 13% for the full year 2025, up from 9 to 10% previously. Our revised forecast assumes continued HLM growth as we launch Essence in new markets and increase penetration in existing markets. Notably, we anticipate launching Essence in China in the third quarter, which is our second-largest market for HLMs after the U.S. We still expect Essence to represent approximately 60% of our annual HLM units placement in 2025, up from 40% in 2024. Our forecasts reflect a robust demand for consumables. Turning to epilepsy, revenue increased 6% versus the second quarter of 2024, with growth across all regions. Epilepsy revenue in the Europe and rest of world regions increased a combined 9% versus the prior year period, while U.S. epilepsy revenue increased 5% year over year. We are pleased with a strong commercial execution globally. Specifically, in the U.S., the field safety identification process was managed very well, accompanied by a successful transition to the updated Centiva Generator, while also meeting market demands. We fully completed the inventory swap in the U.S. faster than we anticipated, mitigating potential procedure deferrals and recapturing some previously delayed implants. We expect updated generators to be available for distribution in most other major geographies during the second half of 2025, as regulatory approvals are received. For the full year 2025, we now expect epilepsy revenue growth of .5% to 5.5%, up from 4% to 5% previously. Our forecast now incorporates -single-digit growth in the U.S. up from low single digits previously, given the faster than expected inventory swap and increased visibility into deferred procedure recapture. Our outlook assumes the Europe and rest of world regions will grow at combined low double digits for the year, consistent with the prior guidance. We continue to see momentum in our global epilepsy business across volume, price and mix, and we feel confident in our ability to achieve -single-digit growth this year. Looking ahead, we're pleased with the recent CMS recommendations to move -of-service, or EOS, procedures from level 4 into a level 5 ambulatory payment classification, or APC code. Assigning EOS to level 5 would increase reimbursement support for hospitals providing VNS therapy to Medicare patients. If finalized, this change would take effect January 1, 2026, and provide outpatient facilities with higher reimbursements for VNS therapy EOS procedures under Medicare. The proposed 48% increase in reimbursement for EOS procedures would meaningfully improve hospital economics over the lifetime of therapy for patients with DRE, leading to a more sustainable financial position for providers to establish and maintain a long-term VNS therapy practice. This proposal aligns with our market access strategy to drive greater VNS therapy adoption where a significant clinical unmet need still exists. In summary, due to the strong growth we saw in the quarter, as well as the sustained success for the essence rollout, market share gains in cardiopulmonary consumables, commercial execution in epilepsy, and pricing strategy, we're raising our overall organic growth outlook by 200 basis points to between 9 and 10%. Alex will provide additional details on our 2025 guidance later in the call. With that, I'll turn the call over to Ahmed to provide an update on our recent clinical and regulatory achievements in epilepsy and DTD, progress in OSA, and an opportunity to advance HLM innovation.