UBS Global Healthcare Conference - LIVANOVA PLC

Financial Performance:

• Achieved double-digit revenue growth for three consecutive years, with guidance raised significantly (300 basis points top-line, ~10 cents EPS) during the current year.
• Operating discipline focuses on margin expansion and cash generation; core cardiopulmonary and epilepsy segments are profitable and cash-generating.
• Revenue mix in Cardiopulmonary is roughly one-third capital equipment (70% market share) and two-thirds consumables (oxygenators), with consumable market share growing from 30% to 40%.
• Realized prices and volume in the epilepsy segment have outperformed expectations due to improved reimbursement rates.

Guidance and Future Outlook:

• Cardiopulmonary guidance driven by supply chain improvements and new product adoption (Essence).
• Epilepsy business growth re-forecasted from mid-single digits to 8-9% annually, supported by new patient funnel expansion and favorable reimbursement.
• Obstructive Sleep Apnea (OSA) business targeting $200M–$400M in revenue by 2030, with a projected path to enterprise-wide profitability and mid-20% margins as this segment scales.
• Next-generation OSA system supplemental PMA filing expected in the second half of 2026 to first half of 2027.

Business Segments and Product Lines:

• Cardiopulmonary: 70% market share in capital equipment; growth fueled by aging patient demographics requiring open-heart procedures and capacity expansion for oxygenators via Thermo Fisher partnership.
• Epilepsy (VNS): Reimbursement increased 47% for new implants (NPI) and 48% for battery replacements (EOS) in the prior year, with a further 11% EOS increase scheduled for 2026; core VNS study shows 77% median seizure reduction.
• Next-Gen IPG: Bluetooth-enabled device with digital health platform enabling remote programming to reduce patient burden; commercialization planned for next year with financial impact in 2028.
• OSA (HGNS): Technology features a six-electrode cuff and PolySync algorithm (85% responder rate) targeting higher BMI and "triple C" patients; expanding TAM by ~30% by treating patients contraindicated for incumbent therapies.

Market and Competitive Landscape:

• Cardiopulmonary market accelerating from historical low-single-digit growth due to demographic shifts; Levenova is well-positioned with supply chain advantages over competitors.
• Epilepsy market is underpenetrated with only ~10% of the 1 million drug-resistant epilepsy patients utilizing advanced therapies; reimbursement changes have shifted VNS from a loss-maker to a breakeven/money-maker for hospitals.
• OSA market historically double-digit growth; recent plateau attributed to coding ambiguity (resolved by upcoming Category 1 codes in Jan 2028) and GLP-1 care pathway adjustments, expected to rebound as therapy eligibility expands.
• Competitive differentiation in OSA relies on clinical efficacy (85% vs. 66% competitor responder rate) and treating complex cases (high BMI, triple C).

Risks and Challenges:

• Supply Chain Constraints: Historically limited by fiber component supply from Solventum/Thermo Fisher; new capacity coming online in 2027 is critical to unlocking full growth potential.
• Market Headwinds: OSA growth recently hindered by reimbursement coding ambiguity and GLP-1 drug therapies altering patient care pathways.
• Execution Risk: Building a new commercial channel (ENT/Sleep) for OSA and integrating new sales teams requires disciplined scaling to avoid over-hiring prior to regulatory approval.
• Commercialization Lag: Significant financial impact from next-gen OSA and IPG products is not expected until 2028 and beyond.

Management Commentary and Tone:

• Tone is highly confident and execution-focused, describing the company as a "turnaround story" with a clear strategic focus on two core cash-generating businesses.
• Management emphasizes a disciplined capital allocation strategy: Core business reinvestment > OSA commercial scaling > Tuck-in M&A.
• Highlighted as "unexpected tailwinds" the improved epilepsy reimbursement and the clinical uptake of core VNS data, both of which exceeded initial forecasts.
• Stressed that the company is leveraging existing neuromodulation infrastructure (supply chain, digital platforms, market access teams) to drive synergies in the OSA venture.

Analyst Questions and Answers:

• Thermo Fisher Agreement: Confirmed as a critical enabler to unlock "unlimited supply" for oxygenators; capacity expansion at Thermo Fisher is expected to come online later in 2027.
• Epilepsy Reimbursement: Confirmed stability for 2027 NPI rates and an 11% increase for 2026 EOS; this has removed the "losing money" constraint for hospitals.
• OSA Market Dynamics: Clarified that GLP-1s are a short-term pathway elongation but a long-term tailwind as higher BMI patients become eligible for HGNS; coding issues are resolved with 2028 Category 1 codes.
• Capital Allocation: Reiterated that M&A is not a primary growth driver but will be used as a force multiplier for core and OSA businesses subject to strict strategic/financial hurdles.

Other Key Points:

• The company is transitioning from a turnaround phase to a sustained growth phase, having completed portfolio shifts to focus strictly on cardiopulmonary and epilepsy.
• Digital health platform used for the epilepsy IPG will be ported directly to the OSA business to ensure operational synergies.
• Management expects the OSA segment to reach profitability significantly faster than typical new business units due to shared infrastructure.
• No immediate direct-to-patient advertising is planned for OSA; growth will be driven by clinical evidence and physician education.