LivaNova PLC Ordinary Shares Morgan Stanley 24th Annual Global Healthcare Conference

Well, Neha, first of all, thank you for the opportunity to join you, and thank you all for joining this morning, and for your interest in LivaNova. For those of you newer to the story, LivaNova is a global med tech company with nearly 50 years of experience in some of the market-leading portfolios. Today, we have our core business, which is our cardiopulmonary business, its portfolio that is used during open heart surgery, heart-lung machines, oxygenators, and other disposable technologies that help us life-saving surgeries possible. On the other side, that business has about 70% market share globally on the equipment side, and about 40% market share on the disposable side.

On the epilepsy front, which is the second part of our core portfolio, it's neuromodulation technology used for treatment of drug-resistant epilepsy, and there were more than, or nearly 200,000 patients that have been treated with this technology. Also it's a market-leading technology in this space. At the same time, we are expanding our portfolio into high unmet need areas from patient point of view, areas of potentially higher growth and market size, and areas where we have the right to win. The next chapter of our expansion comes in obstructive sleep apnea, where we have clinically differentiated technology. Then potentially we are looking at expansion in difficult-to-treat depression with a similar neuromodulation technology, and that is pending CMS approval. So that is a little bit about our portfolio. Then in terms of recent news, we had a number of tailwinds across our businesses.

On epilepsy, both new patient and replacement procedures received nearly 50% improvement in reimbursement earlier this year. At the same time, there's new clinical data that came out on treatment of drug-resistant epilepsy with neuromodulation that shows significant improvement versus the previous clinical studies that we had. So that's another step forward. On the oxygenator front, one of the barriers to growth in the market has been supply chain, so the demand has been growing faster than the ability of the market to supply. We had a major improvement in our supply with a long-term agreement we signed with Thermo Fisher to unlock mid and long-term supply opportunities. Then finally, on obstructive sleep apnea, we've completed our clinical trial and this new technology that we'll call PolySync.

It's a titration algorithm that delivered an 85% responder rate with patients with sleep apnea, which is significantly higher than the current incumbent.

Yeah. Thank you for that question. I think we focus on three things in terms of improving our performance. Number one is on talent. I strongly believe that any great organization starts with great talent and good teams drive good performance. We've focused a lot on building a strong culture, bringing great new talent. Over the last 2 and a half years, about 45% of our director and above team are new in the role, coming either from external hires or internal promotions. That's number one factor. Number two is execution. On the execution front, we were able to grow faster than the market, and the main contributors of that were our developing competitive momentum in the business, improving our supply chain. Execution has been a huge focus area. Finally, innovation. We have significantly upgraded our skills in R&D and in external innovation, and renewed our innovation portfolio, both in the core businesses where we have a few new product launches coming up, as well as getting into new categories.

Yes. Sleep apnea is an example of that.

People, execution, innovation have been improving our growth performance.

Yeah. The two things that we see in our cardiopulmonary business that is helping our growth, one is the market itself is growing with a healthy mid-single-digit growth. It is an improvement from historic low single-digit growth market. That is driven by aging population. It is driven by the fact that patients that have undergone some minimally invasive procedures are coming back into open heart surgery. We see that this mid-single-digit market growth will remain and be sustainable. Number two is we are gaining share in that market, and the drivers of the share gains came from two areas. One is the launch of new heart-lung machine that we had a couple of years ago. Number two is our ability to gain share in oxygenators.

Over the last two years, we went from 30% to 40% share in oxygenators that was supported by improved supply chain. Like I said, we recently signed a long-term agreement with Thermo Fisher that kind of removes supply as a governor of our growth moving forward.

To further gain market share.