UBS Global Healthcare Conference - LIVANOVA PLC

Explicit Guidance:

• FY2026 revenue guidance increased by approximately 300 basis points (bps) to a midpoint raised by ~10 cents per share compared to prior year-to-date estimates.
• EPS guidance for FY2026 increased by approximately 10 cents per share.
• Long-term revenue target for the Obstructive Sleep Apnea (OSA) business: $200 million to $400 million by 2030.
• Expected enterprise margin profile: Mid-20s range as the OSA business scales and achieves profitability.
• Reimbursement outlook: Medicare Physician Fee Schedule (MPF) rates for VNS devices remain stable in 2027; End of Service (EOS) battery reimbursement sees an 11% increase in 2026.

Business-Segment Outlook:

• Cardiopulmonary (CP): Projected to grow beyond historical low-single-digit market growth (accelerating due to aging demographics shifting patients to open-heart procedures); capital equipment market share is ~70%; consumables (oxygenator) market share expected to grow from ~40% toward the 70% capital equipment level as supply constraints ease.
• Epilepsy: Growth trajectory revised from mid-single-digit to 8–9% for the current year, driven by new patient uptake; long-term growth supported by the "Core VNS" real-world study (77% median seizure reduction) and the upcoming next-generation IPG launch in 2027.
• OSA (Next-Gen HGNS): New product commercialization expected to begin next year (2027); full financial impact anticipated in 2028 and beyond; market expected to return to double-digit growth post-2028 once Category 1 codes are established.

Market and Competitive Outlook:

• CP Market: Accelerating demand driven by demographic shifts where older patients become candidates for open-heart procedures rather than repeat minimally invasive ones; competitive landscape remains concentrated with limited peer capacity expansion.
• Epilepsy Market: Significant underpenetration (only ~10% of 1 million drug-resistant epilepsy patients receive advanced therapy); reimbursement shifts have removed financial disincentives for hospitals, enabling volume price increases and volume growth.
• OSA Market: Large Total Addressable Market (TAM) expansion (~30%) due to technology applicability to C3 (congenital central hypoventilation syndrome) patients; GLP-1s expected to be a long-term tailwind by normalizing BMI and bringing more patients into therapeutic eligibility for HGNS, despite short-term care pathway delays.
• Competition: Levenova's 85% responder rate vs. incumbent's ~66% provides a structural advantage; technology differentiates on "treat all comers" capability (no DICE procedure required) and non-contraindication for obese patients.

Macro / Industry Outlook:

• Regulatory: Established Category 1 codes for HGNS set to go into effect January 1, 2028, expected to eliminate reimbursement ambiguity and remove headwinds to market growth.
• Supply Chain: Critical fiber component supply (formerly 3M, then Solventum, now Thermo Fisher) is a primary growth driver; Thermo Fisher capacity investments expected to come online later in 2027, enabling "unlimited supply" and allowing Levenova to aggressively pursue market share.
• GLP-1 Impact: Viewed as a positive long-term driver for the neuromodulation market by creating a pathway for higher BMI patients to become eligible for therapy, despite initial delays in treatment timing.

Strategic Initiatives:

• Product Launches: Next-generation Bluetooth-enabled IPG for epilepsy launching commercialization in 2027 to enable remote programming; Supplemental PMA filing for next-gen OSA system targeted for second half of 2026 to first half of 2027.
• Capacity Expansion: New manufacturing lines for oxygenators live to support supply growth; capital investments aimed at satisfying a 70% market share position.
• Commercial Scaling: Building a new sales channel (Sleep and ENT physicians) for OSA; measured hiring process for sales force as close to PMA submission as possible; leveraging existing digital health platforms and market access teams for synergies.
• Capital Allocation: Priority 1: Reinvest in core CP and Epilepsy businesses; Priority 2: Fund OSA commercial launch and scaling; Priority 3: Tuck-in M&A for strategic fit, not required for organic growth.
• Future Opportunities: Potential entry into "difficult-to-treat depression" (DTD) following OSA and CP evolution.

Risks and Headwinds to Outlook:

• Supply Chain Dependency: Growth remains gated by the fiber component supply until Thermo Fisher's new capacity comes online in late 2027.
• Reimbursement/Code Implementation: Delay or ambiguity in Category 1 coding implementation for HGNS could impact the 2028 market growth acceleration.
• GLP-1 Trajectory: Short-term elongation of the care pathway due to GLP-1 usage could temporarily dampen early adoption of OSA therapy.
• Commercial Execution: Risks associated with standing up a new sales channel (ENT/Sleep) and the pace of adoption for the next-gen OSA system.

Management Tone on the Future:

• Confidence: High confidence in meeting development timelines (PMA filing) and financial targets ($200–400M OSA revenue by 2030).
• Sentiment: Optimistic regarding the convergence of reimbursement improvements, clinical data validation (Core VNS), and supply chain resolution; management describes the OSA opportunity as "massively underpenetrated" and expects a return to double-digit market growth.
• Strategic Shift: Moving from a turnaround phase to a "next stage of evolution," with a focus on margin expansion (mid-20s enterprise margins) and cash generation.

Miscellaneous:

• Synergies: Levenova intends to leverage existing R&D (digital health platform), supply chain expertise (leads/batteries), and market access teams across epilepsy, CP, and OSA segments.
• Operational Focus: "North Star" remains disciplined top-line growth paired with margin expansion; no direct-to-patient advertising strategy for OSA, relying instead on clinical evidence and physician education.