LivaNova PLC Ordinary Shares 2026 Global Healthcare Conference

First of all, good morning. David, thank you for the opportunity to join you and thank you, everybody, for your interest in joining this morning. First of all, thank you for pointing out the performance. We're pleased with the growth we delivered over the last several quarters. The focus was very clear. One is on talent. We strongly believe that good leaders and good teams deliver good results, so there was a lot of focus on talent, and about 45% of our directors and above are new in the role, whether either coming from an external world or being promoted and developed internally. Number 2, we focused a lot on execution and competitiveness, and one of the big examples of that is our improvements in supply chain that we had in cardiopulmonary business. Number 3 is innovation. While we've executed in our core, we also are getting into new categories with sleep apnea, getting in the markets that are faster growth markets, and that can kind of accelerate the growth profile of LivaNova.

So people, execution, innovation have been drivers of our success over the past few quarters. Moving forward, our strategy is pretty clear. We are number 1, we're building strong foundation and sustaining growth in our core, and the goal is to grow faster than the markets in our core, expand margins, expand cash, and use this as an opportunity to kind of reinvest back in the core, but at the same time get into the markets with high unmet need, faster growth, and where we have the right to win. For us, that next chapter is sleep apnea. That's that. And then maybe the last thing I think I'll say is more on the tactical level.

We've outlined our strategy during the investor day. There were several tailwinds that followed that we didn't consider in our investor day discussion. Number one is the reimbursement improvement on new patients for epilepsy. There was nearly 50% improvement that went live as of January 1st this year for the new patient implants. That's number one. That's been an important tailwind for us. Number two is on the cardiopulmonary front, we gained about 10 points of share over the last two years, but the market is still operating in deficit for oxygenators. The reason for that deficit, one of the reasons was that component shortage in the market.

We were able to sign a long-term agreement with Thermo Fisher that really removes output or supply as a barrier for future growth. That long-term agreement has been a very important development for the market overall, but for us specifically. Number three is that in obstructive sleep apnea, at the time of investor day, we didn't have full data set with our PolySync responder rate results. We kind of assumed at the time 65% responder rate, and when the results came out after the clinical study was complete, we were at 85%. That's very significant because now the current data on the market with the current incumbent, one out of three patients that get implanted does not have a positive response. With 85%, it's one out of seven patients doesn't have. It's a very different conversation with patients.

Those are the three tailwinds that came after the investor day discussions, and that in a way gives us more confidence in our long-range financial plan.

Well, I think just generally speaking, we have two large-scale businesses, right? The growth that we are able to deliver has translated into margin expansion, EPS growth. These businesses are very leverageable, if you will. These are platform technologies that when we generate growth in a particular region or in a particular product line, we are able to translate that into profitability. We said in our investor day that during the first phase of our LRP, that margin expansion is going to be leveraged into launching into OSA. We are looking to stand up a new channel that we do not have today, which will help us accelerate our growth in the second phase of our plan. But the profitability that we are able to generate from cardiopulmonary and epilepsy businesses will be reinvested in OSA. So our margin expansion will not be as significant as we have seen in years past.

And we said that our EPS essentially will grow in line with our top-line growth. So that is kind of the way we see it, and it is going to play out that way.

I will just say, look, we are not going to continue to update our LRP every quarter, but obviously the signals are there that give us an opportunity to look at that as a way to create value for the company. At this point in time, we are sticking to the targets that we set. And obviously we will update guidance accordingly as we enter 2027.

Yeah, I think just to add in, the one thing I failed to mention on the tailwind as well is that on epilepsy, we have more understanding on the core VNS data that came out of real-world evidence and also gave us kind of significant tailwind moving forward. Our previous data set with the previous device showed about 40% clinical efficacy, and that was done early 2000s. Now with the new device, the core VNS data shows that 80% of epilepsy patients reacted positively. So that's a significant change in patient algorithm. On epilepsy front, and I'm going to your question as well, the previous question, we have two significant tailwinds, reimbursement and clinical data. We want to get some time behind our belt to see how the clinical community reacts to two of those.

On the supply chain, again, the impact of Thermo Fisher agreement is mid to long term, and we'll want to see how the competitive landscape plays out there. On OSA, again, I think we've given a range on top line. We have more confidence in that range now, basically, given the way the clinical data ended up.