LivaNova PLC Q3 2026 Earnings Call Summary

Strategic Drivers and Operational Execution

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• Cardiopulmonary growth was driven by record Essence heart-lung machine placements and internal manufacturing optimizations that increased oxygenator output to meet high market demand.

• Epilepsy performance benefited from a combination of volume growth and reduced discounting, supported by improved U.S. reimbursement and long-term clinical evidence from the CORE-VNS study.

• Management is leveraging existing neuromodulation infrastructure, supply chain, and market access competencies from the epilepsy business to build a foundation for the obstructive sleep apnea (OSA) market entry.

• Operational initiatives, including the now-operational new oxygenator production line and the Thermo Fisher component agreement, are positioned to drive double-digit capacity expansion in 2027.

• The company attributes its 'clear right to win' in OSA to differentiated technology that addresses a broader patient population by eliminating the triple-c contraindication.

• Cardiopulmonary consumables grew low double digits, supported by improvements in third-party component availability and internal manufacturing optimization.

• Management noted that oxygenator market demand continues to exceed the industry's ability to supply, representing a significant opportunity to expand market position.

Strategic Outlook and Guidance Assumptions

• Full-year 2026 revenue guidance was raised to 9% to 10% growth, reflecting sustained momentum in core franchises and an improved business outlook for the remainder of the year.

• The 2026 EPS range was increased to $4.40 to $4.50, incorporating stronger operational performance and a $0.03 benefit from the shifted timing of the SNIA payment to the fourth quarter.

• Management expects the Essence HLM upgrade cycle to continue, forecasting that Essence will represent 80% of annual unit placements in 2026, up from 55% in 2025.

• The OSA strategy assumes a PMA supplement submission on the previously communicated timeline, followed by a limited launch in 2027 and a full commercial ramp in 2028.

• Future growth in epilepsy is expected to be supported by the 2027 launch of a next-generation IPG and digital health platform designed to enable remote titration.

Strategic Developments and Risk Factors

• The establishment of new Category 1 CPT codes for pHGNS, effective January 1, 2028, is expected to bolster long-term reimbursement and patient access for the OSA technology.

• The timing of the approximately $400 million SNIA payment shifted from the third quarter to the fourth quarter of 2026, providing a near-term EPS benefit while the company maintains sufficient resources to satisfy the liability.

• A new dedicated manufacturing line for oxygenators is now live and operational, which is expected to drive a double-digit increase in output for 2027.

• The company reported a net impact from tariffs of less than $5 million on full-year adjusted operating income, inclusive of current and anticipated future tariffs.