LivaNova (LIVN) Q1 2025 Earnings Call May 07, 2025 08:00 AM ET Speaker0 Good day, ladies and gentlemen, and welcome to the LivaNova plc First Quarter twenty twenty five Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Brianna Gottlin, Levernova's Vice President of Investor Relations. Please go ahead. Speaker1 Thank you, and welcome to our conference ...

LivaNova (LIVN) came out with quarterly earnings of $0.88 per share, beating the Zacks Consensus Estimate of $0.75 per share. This compares to earnings of $0.73 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 17.33%. A quarter ago, it was expected that this medical technology company would post earnings of $0.80 per share when it actually produced earnings of $0.81, delivering a surprise of 1.25%.Over the last four quarters, t ...

1 Safe Harbor Certain statements in this material, other than statements of historical or current fact, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. These statements include, but are not limited to, LivaNova's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events, and involve ...

Financial Data and Key Metrics Changes - The company achieved 11% organic revenue growth in 2024, marking the second consecutive year of double-digit organic growth [7] - Adjusted operating income grew by 41%, and adjusted diluted earnings per share increased by 21% [15] - Adjusted free cash flow for the full year was $163 million, up from $96 million in the prior year, representing a 70% growth [48] Business Line Data and Key Metrics Changes - Cardiopulmonary segment revenue was $182 million in Q4 2024, an increase of 11% year-over-year [17] - Epilepsy revenue increased by 1% in Q4 2024, with U.S. epilepsy revenue growing by 4% year-over-year [21][22] - For the full year, cardiopulmonary revenue was $684 million, growing 14%, while epilepsy revenue grew 7% [19][23] Market Data and Key Metrics Changes - The hypoglossal nerve stimulation market for obstructive sleep apnea (OSA) is expected to approach $2 billion by the end of the decade [9] - The company anticipates U.S. epilepsy revenue to grow 4% to 5% in 2025, with expectations for a return to high-single-digit growth in Europe and the rest of the world [24][25] Company Strategy and Development Direction - The company plans to increase investment in product development to ensure a competitive and differentiated product portfolio [9] - A focus on innovation and talent development is emphasized, with approximately 30% of director-level positions filled by new hires or internal promotions [12] - The company aims to sustain growth in core businesses while entering faster growth markets like OSA and difficult-to-treat depression [80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical data supporting OSA and the potential for significant market growth due to high unmet needs [81] - The company is optimistic about its ability to return the epilepsy business to growth, addressing execution issues that impacted performance [87] - The guidance for 2025 includes organic revenue growth between 6% and 7%, reflecting continued investment in innovation [50][51] Other Important Information - The company expects to submit a PMA for OSA in the first half of 2025, with a limited commercial launch anticipated thereafter [85] - The Italian Supreme Court is expected to rule on the SNIA litigation in the first half of 2025, but the company has not included potential impacts in its guidance [53][54] Q&A Session Summary Question: Can you help us understand the U.S. and EU cardiopulmonary performance in the quarter? - Management acknowledged a challenging comparison due to prior year growth but noted sequential growth in HLM placements and strong demand for consumables [64] Question: What is the impact of the launch of the new ECMO-related product? - The Specialty Cannulae business is expected to grow approximately 10%, primarily driven by the launch of ProtekDuo Plus [76] Question: How much are you spending to prepare for the OSA launch? - The company invested $27 million in 2024 for OSA and plans to invest an additional $8 million in 2025, shifting focus from clinical spend to product development [83] Question: What are the execution issues in the OUS epilepsy business? - Management identified personnel issues as isolated incidents and expressed confidence in returning to growth levels historically seen in the OUS business [87] Question: Can you clarify the capital allocation strategy? - The company is focusing on sustaining growth in core businesses while also investing in faster growth markets like OSA and DTD, with a declining R&D spend as a percentage of sales [129][133]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Form 10-K For the fiscal year ended December 31, 2024 (Mark One) or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number: 001-37599 LivaNova PLC (Exact name of registrant as specified in its charter) England and Wales ...

1 Real patients treated with VNS Therapy (Left to Right: Breanna; Candace; Jose, father of patient David) Safe Harbor Certain statements in this material, other than statements of historical or current fact, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. These statements include, but are not limited to, LivaNova's plans, objectives, strategies, financial performance and outlo ...

Core Insights - LivaNova reported quarterly earnings of $0.81 per share, exceeding the Zacks Consensus Estimate of $0.80 per share, but down from $0.87 per share a year ago, indicating an earnings surprise of 1.25% [1] - The company posted revenues of $321.8 million for the quarter ended December 2024, slightly missing the Zacks Consensus Estimate by 0.48%, compared to $310.1 million in the same quarter last year [2] - LivaNova has surpassed consensus EPS estimates in all four of the last quarters and has topped revenue estimates three times during the same period [2] Earnings Outlook - The future performance of LivaNova's stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.78 on revenues of $306.25 million, while for the current fiscal year, the estimate is $3.64 on revenues of $1.32 billion [7] Industry Context - The Medical - Instruments industry, to which LivaNova belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - The performance of LivaNova's stock may also be influenced by the overall industry outlook, as empirical research indicates that top-ranked industries outperform lower-ranked ones significantly [8]

Revenue Performance - Fourth-quarter 2024 revenue was $321.8 million, representing a 3.8% increase on a reported basis and a 6.8% increase on an organic basis compared to the prior-year period[4]. - Full-year 2024 revenue reached $1.25 billion, an 8.7% increase on a reported basis and a 10.7% increase on an organic basis compared to 2023[4]. - LivaNova's net revenue for Q4 2024 was $321.8 million, representing a 3.8% increase compared to $310.1 million in Q4 2023[34]. - For the full year 2024, net revenue reached $1,253.4 million, an 8.7% increase from $1,153.5 million in 2023[43]. - Organic net revenue for the year ended December 31, 2024, was $1,241.8 million, reflecting a 10.1% growth compared to $1,128.4 million in 2023[56]. Earnings and Profitability - Fourth-quarter 2024 U.S. GAAP diluted earnings per share was $1.02, up from $0.30 in the fourth quarter of 2023[10]. - Full-year 2024 adjusted diluted earnings per share was $3.38, compared to $2.80 for the full-year 2023[14]. - The company reported a net income of $55.9 million for Q4 2024, a significant increase from $16.3 million in Q4 2023[38]. - Diluted EPS for 2024 was $1.16, up from $0.30 in 2023, with adjusted diluted EPS reaching $3.38 compared to $0.87[49]. - Adjusted operating income for the year was $239.2 million, compared to $169.3 million in 2023, reflecting a strong operational performance[44]. Operating Performance - Fourth-quarter 2024 operating income was $37.0 million, a significant improvement from an operating loss of $88.0 million in the fourth quarter of 2023[9]. - Operating income for 2024 was $129.1 million, significantly improved from an operating loss of $88.0 million in 2023, with adjusted operating income at $239.2 million[49]. - Gross profit margin improved to 68.2% in Q4 2024, up from 61.3% in Q4 2023[41]. - Gross profit margin increased to 69.5% in 2024 from 66.9% in 2023, while adjusted gross profit margin rose to 70.2% from 69.6%[45]. - Operating income margin increased to 10.3% in 2024 from a loss of 5.9% in 2023, while adjusted operating margin rose to 19.1% from 14.7%[45]. Cash Flow and Financial Position - Full-year 2024 net cash provided by operating activities was $183.0 million, with adjusted free cash flow of $162.9 million[4]. - The company generated $183.0 million in net cash from operating activities in 2024, a significant increase from $74.9 million in 2023[54]. - The total current assets increased to $1,127.2 million as of December 31, 2024, up from $988.2 million in 2023, primarily driven by an increase in cash and cash equivalents from $266.5 million to $428.9 million[52]. - The company reported a net increase in cash, cash equivalents, and restricted cash of $145.7 million in 2024, compared to $62.3 million in 2023[54]. - Adjusted free cash flow for the year ended December 31, 2024, was $162.9 million after accounting for various adjustments[57]. Segment Performance - The cardiopulmonary segment reported a 13.1% increase in revenue for full-year 2024, driven by strong demand for the Essenz Perfusion System[12]. - Cardiopulmonary segment revenue increased by 9.9% year-over-year to $181.7 million, with the Rest of World showing the highest growth at 18.6%[34]. - Neuromodulation segment revenue remained relatively stable, with a slight increase of 0.5% to $137.6 million, while Europe experienced a decline of 14.6%[34]. - The company reported a significant decline in ACS revenue, down 98.7% in Q4 2024 compared to Q4 2023[56]. Future Outlook - The company expects full-year 2025 revenue growth between 5.0% and 6.0% on a constant-currency basis and between 6.0% and 7.0% on an organic basis[16]. - Adjusted diluted earnings per share for 2025 is projected to be in the range of $3.65 to $3.75[17]. - The company plans to continue focusing on R&D investments to drive future growth despite facing challenges in the market[30]. - The company plans to continue focusing on market expansion and new product development to drive future growth[46].

Core Viewpoint - LivaNova (LIVN) shares have increased by 2.2% recently, with analysts suggesting a potential upside of 37.2% based on a mean price target of $72 [1][9]. Price Targets and Analyst Estimates - The mean estimate consists of nine short-term price targets, with a standard deviation of $8.15, indicating variability among analysts [2]. - The lowest estimate of $61 suggests a 16.2% increase, while the highest estimate predicts a 71.5% surge to $90 [2]. - A low standard deviation signifies strong agreement among analysts regarding the stock's price movement [7]. Earnings Estimates and Analyst Agreement - Analysts have shown increasing optimism about LivaNova's earnings prospects, with a positive trend in earnings estimate revisions [9]. - Over the past 30 days, three earnings estimates have been revised upward, leading to a 10.3% increase in the Zacks Consensus Estimate [10]. - LivaNova holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11]. Caution on Price Targets - While price targets are often sought after, they can mislead investors, as empirical research indicates they rarely predict actual stock price movements [5][6]. - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [6]. - Investors should approach price targets with skepticism and not rely solely on them for investment decisions [8].

Core Insights - LivaNova's OSPREY trial for the aura6000 nerve stimulation system has shown promising results for treating obstructive sleep apnea (OSA) by meeting primary safety and efficacy endpoints [1][2] - The trial demonstrated significant reductions in apnea-hypopnea index (AHI) and oxygen desaturation index (ODI), indicating the device's effectiveness in managing OSA [3][4] - The company plans to submit trial data to the FDA for premarket approval, which could position the aura6000 as a novel treatment option for patients who struggle with conventional therapies [6][7] Trial Results - The primary endpoint of the trial was responder rates, with the treatment group achieving a significantly higher rate than the sham group, meeting the statistical threshold of p<0.025 [2] - The aura6000 system led to a 66.2% reduction in AHI, with the median AHI decreasing from 34.3 to 11.6 over six months [3] - ODI showed a 63.3% reduction, with the median dropping from 34.9 to 12.8 during the same period [3] Safety Profile - The OSPREY trial reported no serious adverse device-related or procedure-related events, indicating a favorable safety profile for the aura6000 system [4] Future Prospects - The trial will continue to collect 12-month data, with results expected in early 2025, which will provide insights into the therapy's long-term efficacy and safety [5] - Approval of the aura6000 system could significantly enhance LivaNova's business prospects in the growing sleep apnea device market, projected to reach $9.3 billion by 2029 [9][10] Market Context - The global sleep apnea device market was valued at approximately $6.5 billion in 2023, with a projected CAGR of 7.3% driven by factors such as expanded reimbursement coverage and increased adoption of telemedicine and AI [9]