Q1 2024 LivaNova PLC Earnings Call

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Operator: Good morning, ladies and gentlemen, and welcome to the LivaNova PLC first quarter 2024 earnings conference call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today, Mr. Matthew Dodds, Senior Vice President of Corporate Development and IT. Please go ahead, sir.

Good day, ladies and gentlemen, and welcome to the lipid hyper plc first quarter 2020 people on its conference call.

A reminder, this conference call is being recorded I would now like to introduce your host for today's conference Mr. Matthew Dodds.

Matthew Joseph Dodds: <unk> senior Vice President of corporate development and I T. Please go ahead Sir.

Matthew Joseph Dodds: Thank you, Candace, and welcome to our conference call and webcast discussing LivaNova's financial results for the first quarter of 2024. Joining me on today's call are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors, Alex Shvartsburg, our Chief Financial Officer, Stephanie Bolton, President of Global Epilepsy, and Brianna Gotland, Director of Investor Relations.

Matthew Joseph Dodds: Thank you Candice and welcome to our conference call and webcast discussing even though this financial results for the first quarter of 2024.

Matthew Joseph Dodds: Joining me on today's call are Vladimir <unk>, our Chief Executive Officer, and member of the Board of Directors, Alex Schwartzberg, Our Chief Financial Officer, Stefanie, Bolton President of global epilepsy, and Briana Gotland director of Investor Relations before we begin I would like to remind you that the discussion was.

Matthew Joseph Dodds: Before we begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent financial filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statements. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to revenue results, which will all be stated on a constant currency basis.

Matthew Joseph Dodds: During this call will include forward looking statements.

Matthew Joseph Dodds: Factors that could cause actual results to differ materially are discussed in the company's most recent financial filings and documents furnished to the SEC, including today's press release is available on our website, we do not undertake to update any forward looking statement.

Matthew Joseph Dodds: Also the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to revenue results, which will all be stated on a constant currency basis.

Matthew Joseph Dodds: Reconciliations to the Most Directly Comparable Gap Financial Measures can be found in today's press release, which is available on our website. We have also posted a presentation on our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and press release in the Investor section of our website under News, Events, and Presentations, at Investor.

Matthew Joseph Dodds: Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website.

Matthew Joseph Dodds: We have also posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an enhanced communication tool you can find the presentation and press release in the investors section of our website under news <unk> events and presentations.

Matthew Joseph Dodds: At Investor Dot, leaving.

Matthew Joseph Dodds: Com.

Matthew Joseph Dodds: LivaNova.com. I would like to welcome Vlad to his first earnings call as LivaNova's CEO after starting March 1st. Prior to joining LivaNova, Vlad most recently served as company group chairman at Johnson & Johnson MedTech, leading its global ethicon surgery business. He's a respected leader in the medical technology industry, with a 27-year track record of delivering results, driving innovation, and leading high-performance teams. With that, I will turn the call over to Vlad.

Speaker Change: I would like to welcome glad to his first earnings call as <unk> CEO after starting March one.

Speaker Change: Prior to joining the even though the lag. Most recently served this company group Chairman at Johnson, <unk> Johnson Med Tech, leading its global Ethicon surgery business.

As a respected leader in the medical technology industry with a 27 year track record of delivering results driving innovation and leading high performance teams.

Speaker Change: With that I will turn the call over to Vlad.

Vladimir A. Makatsaria: Thank you, Matt, and thank you, everyone, for joining us. It's my pleasure and privilege to welcome you to LivaNova's conference call for the first quarter of 2024 as LivaNova's Chief Executive Officer. First and foremost, on behalf of the board and the executive leadership team, I would like to express our gratitude to Bill Kozy, chair of the board of LivaNova, for a tremendous job leading the company on an interim basis. I would also like to thank the entire Board of Directors for the opportunity to serve as CEO and express my sincere gratitude and excitement for the future of LivaNova.

Thank you, Matt and thank you everyone for joining us.

Vlad: It's my pleasure and privilege to welcome you all to leave another conference call for the first quarter of 'twenty to 'twenty four as Leila <unk> Chief Executive Officer.

Vlad: First and foremost on behalf of the board and the executive leadership team I would like to express our gratitude to Bill Cozy.

Vlad: Chair of the board of lever, Nova for tremendous job, leading the company on an interim basis.

Vlad: I would also like to thank the entire board of directors for the opportunity to serve as CEO and express my sincere gratitude and excitement.

Vlad: For the future ultimately on Nova.

Vladimir A. Makatsaria: During my first two months, I interacted with customers, met investors, and engaged with my colleagues around the world. I can confidently say that the patient-first mentality thrives across every function and geography at LivaNova. It is an honor to work with a global organization that focuses on solving significant unmet patient needs in very high impact medical areas such as neurological and cardiac health.

During my first two months I interacted with customers met investors and engage with my colleagues around the world.

Vlad: I can confidently say that the patient first mentality thrives across every function and geography I believe a novel.

Vlad: It is in order to work with a global organization that focuses on solving significant unmet patient needs.

Vlad: <unk> very high impact medical fields.

Vlad: We're a logical and cardiac health.

Vladimir A. Makatsaria: I'm humbled to be in this role and grateful to our teams for their exceptional work and dedication to serving our patients and customers. Over the coming months, I will continue to listen, learn, and complete a comprehensive review of the business. In doing so, I'm focused on three key areas: execution, innovation, and talent. Let me provide additional color on the first: execution and performance.

Vlad: I'm humbled to be in this role and grateful to our teams for their exceptional work and dedication to serving our patients and customers.

Vlad: Over the coming months I will continue to listen learn and completed a comprehensive review of business in doing so I'm focused on three key areas of execution.

<unk> and talent let.

Vlad: Let me provide additional color on each.

Vlad: First execution on performance.

Vladimir A. Makatsaria: My view of success in this area is achieving sustainable, above-market growth while improving profitability and cash flow, and, most importantly, delivering on commitments to our customers. The first quarter marks our fifth consecutive quarter of double-digit revenue growth. In cardiopulmonary, we maintained above-market growth driven by the strong launch of the Ascense heart-lung machine and our ability to fulfill the high demand for consumables. In epilepsy, we saw continued growth in both new and replacement implants, driven by disciplined commercial execution.

Vlad: My view of success in this area is achieving sustainable above market growth, while improving profitability and cash flow and most importantly, delivering on commitments to our customers.

Vlad: The first quarter marks our fifth consecutive quarter of double digit revenue growth.

Vlad: In cardiopulmonary, we maintained above market growth driven by the strong launch of their heart lung machine and our ability to fulfill the high demand for consumables.

In epilepsy, we saw continued growth in both new and replacement implants, driven by disciplined commercial execution.

Vladimir A. Makatsaria: Second, Innovation and Portfolio. Over the last year, the company has made progress in refining the business strategy and portfolio, including the wind-down of the advanced circulatory support segment and the heart failure progress. These portfolio actions position us well for the future and enable us to have appropriate resources, focus, and investment to drive growth in the business. This includes reinvigorating our cadence of core innovation to meet our customers' most prevalent unmet needs. For both difficult-to-treat depression and obstructive sleep apnea, we anticipate results in the Recover and Osprey Studies later this year.

Second innovation and portfolio.

Over the last year. The company has made progress in refining the business strategy and portfolio, including the wind down of the advanced circulatory support segment and the heart failure program.

Vlad: These portfolio actions position us well.

Vlad: For the future and enable us to have appropriate resources focus and investment to drive growth in the business.

This includes reinvigorating our cadence of core innovation to meet our customers most prevalent unmet needs.

In both difficult to treat depression, and obstructive sleep apnea.

Vlad: We anticipate results.

Vlad: And recover and Osprey studies later this year.

Vladimir A. Makatsaria: Looking ahead, we will evaluate those opportunities alongside a holistic view of all possibilities for innovation. At LivaNova, our commitment to pioneering innovation remains unwavering. And to this end, I'm very pleased to welcome Amit Tizel as LivaNova's Chief Innovation Officer, which we announced yesterday. Ahmed has a remarkable track record of leading teams and developing a wide range of market-leading technology. Ahmed will draw upon his extensive experience to guide innovation at LivaNova. And finally, the third area of focus is people and culture. Any great organization starts with great people, and in my first two months at Livanova, I have met many of our colleagues from Houston to Arvada, from Munich to Miranda.

Vlad: Looking ahead, we will evaluate those opportunities alongside a holistic view of all possibilities for innovation.

Vlad: I believe our commitment to pioneering innovation remains unwavering and to this end I am very pleased to welcome Amit to zelle as legal notice Chief Innovation Officer, which we announced yesterday.

Vlad: Amit has a remarkable track record leading teams and developing a wide range of market leading technologies.

Vlad: Amit will drop on the he has extensive experience to guide.

Vlad: Innovation ethylene rollover.

Vlad: And finally, the third area of focus.

Vlad: People and culture.

Vlad: Any great organization starts with great people.

Vlad: And then my first two months at leave alone.

I have met many of our colleagues from Houston to Nevada for a minute to mirandola.

Vladimir A. Makatsaria: As previously mentioned, I'm most impressed by their embodiment of the patient-first value. I was also struck by their deep expertise in the areas we operate in. It is no wonder we are category leaders in heart-lung machines and epilepsy surgery. We will build on this foundation and continue to attract top talent to LivaNova.

Vlad: Previously mentioned I am most impressed by the embodiment of the patient first value.

Vlad: I was also struck but their deep expertise in the areas, which we operate.

Vlad: It is no wonder where category leaders in heart lung machines and epilepsy surgery.

Vlad: We will build on this foundation and continue to attract top talent to leave on Nova.

Vladimir A. Makatsaria: Focusing on execution, innovation, and talent will lead to success as an organization. We're confident that by delivering in each of these areas, we will improve patient outcomes and create shareholder value. For the remainder of the call, I will focus on the first quarter results and then turn to our strategic portfolio initiative. After my comments, Alex will provide additional details on our results and update our 2024 guidance. I will wrap up with closing remarks before moving to Q&A.

Focus on execution innovation and talent will lead to success as an organization, we're confident that by delivering in each of these areas, but will improve patient outcomes and create shareholder value.

Speaker Change: For the remainder of the call I will focus on the first quarter results and then turn to our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results and update 2020 for guidance.

Alex Shvartsburg: I will wrap up and closing remarks before moving to Q&A.

Vladimir A. Makatsaria: So in the first quarter, we achieved 12% revenue growth versus the prior year, excluding the impact of the ACS segment wind down. Revenue increased 14% versus 2020. This performance included double-digit revenue growth in both cardiopulmonary and neuromodulation segments. We were encouraged by our team's continued strong execution as demonstrated by our performance in the quarter. Now turning to segment results.

Alex: So in the first quarter, we achieved 12% revenue growth versus prior year, excluding the impact of ACS segment wind down revenue increased 14% versus 2023.

Alex: This performance included double digit revenue growth.

Alex: In both cardiopulmonary and Neuromodulation segments, we're in.

Alex: Encouraged by our team's continued strong execution and the demos as demonstrated by our performance in the quarter.

Vladimir A. Makatsaria: For the cardiopulmonary segment, revenue was $156 million in the quarter. That's an increase of 16% versus the first quarter of 2020. Heart-Lung Machine revenue increased more than 20% driven by SEM. We are pleased to see continued ascent placements and strong price mix in the quarter. Oxygenator revenue grew in the low teens driven by customer demand and price.

Alex: Now turning to segment results.

Alex: The cardiopulmonary segment revenue was $156 million in the quarter.

Alex: That's an increase of 16% versus the first quarter of 2023.

Alex: Heart lung machine revenue increased more than 20% driven by <unk> we.

Alex: We were pleased to see continued defense placements and strong price mix in the quarter.

Alex: Oxygenated revenue grew in low teens, driven by customer demand and price.

Vladimir A. Makatsaria: As previously noted, the oxygenated business continues to see strong demand, and our efforts to increase capacity remain on track. We now expect cardiopulmonary revenue to grow 8-9% for the full year 2024. Our revised forecast incorporates strong HLM growth and continued strong demand for consumables. Athletics revenue increased 11% versus the first quarter of 2020.

Alex: As previously noted the oxygenator business continues to see strong demand and our efforts to increase capacity remain on track.

Alex: We now expect cardiopulmonary revenue to grow 8% to 9% for the full year of 2024.

Alex: Our revised forecast incorporates strong HLA AUM growth and continued strong demand for consumables.

Alex: Epilepsy revenue increased 11% versus the first quarter of 2023.

Vladimir A. Makatsaria: U.S. epilepsy revenue increased 13% year-over-year, with growth in both new and replacement implants. We achieved 826 new patient implants in the quarter, representing 4% growth versus the prior year. We realized 1,941 replacement implants, representing 5% growth versus the prior year. Epilepsy revenue in Europe and the rest of the world grew 7% versus the prior year.

Alex: U S epilepsy revenue increased 13% year over year.

Alex: With growth in both new and replacement implants.

Alex: We achieved 826, new patient implants in the quarter, representing 4% growth versus the prior year.

Alex: We realized 90 to 141.

Alex: Replacement implants, representing 5% growth versus the prior year.

Alex: Epilepsy revenue in Europe, and the rest of the world grew 7% versus prior year.

Vladimir A. Makatsaria: For the full year 2024, we continue to expect global epilepsy revenue to grow 6 to 7 percent. Our forecast incorporates a continued, mid-single-digit growth rate in U.S. new patients and a more normalized low-single-digit growth rate in replacements. We now expect international revenue to grow in high single digits.

Alex: For the full year of 2024, we continue to expect global epilepsy revenue to grow 6% to 7%.

Alex: Our forecast incorporates that continued.

Alex: Mid single digit growth rate in the U S new patients and more normalized low single digit growth rate in replacements.

Alex: We now expect international revenue to.

Alex: To grow in high single digits.

Vladimir A. Makatsaria: Difficult-to-treat depression revenue in the first quarter was $2 million, and for the full year, we continue to anticipate approximately $7 million in revenue, primarily coming from the recovered study. The recovery study continues to advance, and the bipolar cohort continues to enroll as expected. As a reminder, enrollment for the Unipolar Cohort of the study is now complete, and we anticipate the 12-month follow-up data for the 500 unipolar patients in the second quarter. At that time, we will conduct an analysis and continue to expect publication of the full study results by late 2020.

Alex: Difficult to treat depression revenue in the first quarter was $2 million.

Alex: And for the full year, we continue to anticipate approximately $7 million revenue primarily coming from the recover study.

Alex: The recover study continues to advance and the bipolar cohort continues to enroll as expected.

Alex: As a reminder, enrolment for the unit follow cohort of this study is now complete.

Alex: We anticipate the 12 month follow up data for the 500 unit polyp patients in the second quarter.

Alex: That time, we will conduct an analysis and continue to expect publication of the full study results by late 2024.

Vladimir A. Makatsaria: Moving to obstructive sleep apnea, the Osprey Clinical Study achieved a positive predictive outcome and concluded enrollment in March. This means that there is a very high probability that there will be a statistically significant result in the primary endpoint, which is the 7-month AHI response. In accordance with the study protocol, once the last implanted patient completes the last follow-up visit, we will conduct a final analysis for the study. We are pleased to have achieved this positive milestone for the Osprey study, and we will continue to work actively with clinical science to manage the study patients. With that, I will turn the call over to Alex. Thanks.

Alex: Now moving to obstructive sleep apnea.

Alex: Osprey clinical study achieved a positive predictive outcome and concluded enrollment in March.

Alex: This means that there is a very high probability.

Alex: There will be a statistically significant result in the primary endpoint.

Alex: Which is seven months.

<unk> response rate.

Alex: In accordance with the study protocol once the last implant the patient completes the last follow up visit we will conduct a final analysis for this study.

Speaker Change: We're pleased to have.

Speaker Change: Achieved this positive milestone for the Osprey study and we will continue to work actively.

Speaker Change: With clinical sites to manage the study patients.

Speaker Change: With that let me turn the call over to Alex.

Alex: Slide <unk>.

Alex Shvartsburg: During my portion of the call, I'll share a brief recap of the first quarter results and provide commentary on 2024 guidance. Turning to results, revenue in the quarter was $295 million, an increase of 12% versus 2023. Excluding the impact of the ACF segment winding down, revenue increased 14% versus 2023. Foreign exchange in the quarter had an unfavorable year-over-year impact of approximately one million dollars, or less than one percent of revenue.

Alex: During my portion of the call I'll share a brief recap of the first quarter results and provide commentary on 2020 for guidance.

Alex Shvartsburg: Adjusted gross margin as a percent of net revenue was 71%, compared to 69% in the first quarter of 2023. The year over year increase was driven by favorable product mix and price. Adjusted R&D expense in the first quarter was $43 million, compared to $46 million in the first quarter of 2023. R&D as a percent of net revenue was 15%, down from 18% in the first quarter of 2023. The year-over-year decrease was largely driven by the closeout of the Anthem trial.

Alex Shvartsburg: Excluding the costs related to Anthem, our R&D investments increased 15% versus the prior year. Adjusted SG&A expense for the first quarter was $113 million, compared to $108 million in the first quarter of 2023. The year-over-year increase was driven by targeted investment in supporting essence, legal expenses, and variable costs such as freight and commissions associated with increased revenues, offset by the reduction in ACF. SG&A as a percent of net revenue was 38% compared to 41% in the first quarter of 2023.

Alex: Turning to results revenue in the quarter was $295 million, an increase of 12% versus 2023.

Alex: Excluding the impact of the Acs segment wind down.

Alex: Revenue increased 14% versus 2023.

Alex: Foreign exchange in the quarter had an unfavorable year over year impact of approximately $1 million or less than 1% of revenue.

Alex: Adjusted gross margin as a percent of net revenue was 71% compared.

Alex: Compared to 69% in the first quarter of 2023.

Alex: The year over year increase was driven by favorable product mix and pricing.

Alex: Adjusted R&D expense in the first quarter was $43 million <unk>.

Alex: Compared to $46 million in the first quarter of 2023.

Alex: R&D as a percent of net revenue was 15% down from 18% in the first quarter of 2023.

Alex: The year over year decrease was largely driven by the closeout of the anthem trial.

Alex: Excluding the costs related to anthem, our R&D investments increased 15% versus the prior year.

Adjusted SG&A expense for the first quarter.

Alex: Was $113 million compared to $108 million in the first quarter of 2023.

Alex: The year over year increase was driven by targeted investments supporting essence legal expenses and variable costs, such as freight and commissions associated with increased revenues offset by the reduction in Acs.

Alex: SG&A as a percent of net revenue was 38% compared to 41% in the first quarter of 2023.

Alex Shvartsburg: Adjusted operating income was $53 million, compared to $27 million in the first quarter of last year. Adjusted Operating Income Margin was 18%, compared to 10% in the first quarter of 2023. This increase was driven by improved gross margin and operating expense leverage primarily related to the winding down of the heart failure program and the ACS segment. The adjusted effective tax rate in the quarter was 21%, compared to 6% in the first quarter of 2023.

Alex: Adjusted operating income was $53 million compared to $27 million in the first quarter of last year.

Alex: Adjusted operating income margin was 18%.

Alex: Compared to 10% in the first quarter of 2023.

Alex: This increase was driven by improved gross margin and operating expense leverage primarily primarily related to the wind down of the heart failure program and the Acs segment.

Adjusted effective tax rate in the quarter was 21%.

Alex: Compared to 6% in the first quarter of 2023.

Alex Shvartsburg: The year-over-year increase is related to developments in the global tax landscape and is in line with our expectations. Adjusted diluted earnings per share was $0.73, compared to $0.43 in the first quarter of 2021. Our cash balance at March 31st was $309 million, up from $267 million at year-end 2023. Total debt at March 31st was $624 million, up from $587 million at year-end 2023. This increase in total debt was driven by the closing of a $345 million private offering of convertible senior notes maturing in 2029 and the repurchase of $230 million of convertible senior notes. Net debt, including restricted cash, at March 31st was $120 million.

Alex: The year over year increase is related to developments in the global tax landscape.

Alex: And is in line with our expectations.

Alex: Adjusted diluted earnings per share was <unk> 73.

Alex: Compared to <unk> 43 in the first quarter of 2023.

Alex: Our cash balance at March 31 was $309 million up from $267 million at year end 2023.

Alex: Total debt at March 31 was $624 million up from $587 million at year end 2023.

Alex: This increase in total debt was driven by the closing of a $345 million private offering of convertible senior notes maturing in 2029 and repurchase of $230 million of convertible senior notes.

Alex: Net debt, including restricted cash at March 31 was.

Alex: It was $120 million.

Alex Shvartsburg: Adjusted free cash flow for the quarter was $11 million, down from $20 million in the prior year period. The year-over-year decrease was driven by higher working capital needs and the ACS Restructuring Clause. Capital spend in the quarter was $6 million, compared to $8 million in the prior year. The year-over-year decrease was driven by the timing of key investments.

Alex: Adjusted free cash flow for the quarter was $11 million down from $20 million in the prior year period.

Alex: The year over year decrease was driven by higher working capital needs.

Alex: In Acs restructuring costs.

Alex: Capital spend in the quarter was $6 million compared.

Alex: Compared to $8 million in the prior year.

Alex: The year over year decrease was driven by timing of key investments.

Alex Shvartsburg: Now turning to our revised 2024 guide. As Ladd mentioned, based on our performance in the first quarter, we're increasing our full year 2024 revenue on adjusted diluted earnings per share guidance, while maintaining the range on our adjusted free cash. We now expect 2024 revenue growth on a constant currency basis between 6 and 7%, and between 8 and 9% when excluding the portion of the ACF business that we are exiting. In the first quarter, we observed favorable comparisons, which will continue in the second.

Speaker Change: Now turning to our revised 2024 guidance as Vlad mentioned based on our performance in the first quarter, we're increasing our full year 2020 for revenue and adjusted diluted earnings per share guidance, while maintaining the range on our adjusted free cash flow.

Speaker Change: We now expect 2020 for revenue growth on a constant currency basis between 6% and 7% and between 8% and 9% when excluding the portion of the Acs business that we're exiting.

Speaker Change: In the first quarter, we observed favorable comparisons.

Speaker Change: Which will continue in the second quarter.

Alex Shvartsburg: While we do not provide quarterly guidance, we expect revenue growth to be lower in the second half of 2024 compared to the first half of this year. Foreign currency is now expected to be a 1% headwind based on current exchange rates.

Speaker Change: While we do not provide quarterly guidance, we expect revenue growth to be lower in the second half of 2024 compared to the first half of this year.

Speaker Change: Foreign currency is now expected to be a 1% headwind based on current exchange rates.

Alex Shvartsburg: We continue to expect a full-year adjusted effective tax rate of approximately 21 percent. We now project adjusted diluted earnings per share in the range of $3.05 to $3.15, with adjusted diluted weighted average shares outstanding to be approximately $55 million for the full year. Adjusted free cash flow is still expected to be in the range of $95 to $115 million, an increase of approximately 9% at midpoint versus the prior year. This range includes a meaningful step up in capital spending, which we forecast to be approximately $60 million.

Speaker Change: We continue to expect a full year adjusted effective tax rate of approximately 21%.

Speaker Change: We now project adjusted diluted earnings per share in the range of $3 five.

Speaker Change: To $3 15.

Speaker Change: With adjusted diluted weighted average shares outstanding to be approximately $55 million for the full year.

Speaker Change: Adjusted free cash flow is still expected to be in the range of $95 million to $115 million, an increase of approximately 9% at midpoint versus the prior year.

Speaker Change: This range includes a meaningful step up in capital spending, which we forecast to be approximately $60 million.

Alex Shvartsburg: As a reminder, our cash flow projections include costs associated with the ACS wind-down in the range of approximately $15 to $20 million, the majority of which occurs in 2024. Thus, from a phasing perspective, free cash flow generation in the first half of the year is lower than in the second half.

Speaker Change: As a reminder, our.

Speaker Change: Cash flow projections include costs associated with the Acs wind down in the range of approximately $15 million to $20 million.

Speaker Change: The majority of which occurs in 2024.

Speaker Change: From a phasing perspective free cash flow generation in the first half of the year is lower than the second half and as a reminder, leaving overpays. Its prior year short term incentive bonuses in the second quarter.

Vladimir A. Makatsaria: And as a reminder, LivaNova pays its prior year short-term incentive bonuses in the second quarter. In summary, I'm encouraged by the company's execution and financial performance in the first quarter. Looking to the rest of the year, we will continue to invest in critical capabilities to support innovation, growth, and infrastructure. We remain well-positioned to drive above-market growth and more than 300 basis points of operating leverage in 2021. With that, I'll turn the call back over to Vlad.

Speaker Change: In summary, I am encouraged by the company's execution and financial performance in the first quarter.

Speaker Change: Looking to the rest of the year, we will continue to invest in critical capabilities to support innovation growth and.

Speaker Change: In infrastructure.

Speaker Change: We remain well positioned to drive above market growth and more than 300 basis points of operating leverage in 2024.

With that I'll turn the call back over to Vlad.

Vlad: Thank you Alex.

Vladimir A. Makatsaria: And so to conclude, our first quarter results were marked by double-digit revenue and operating income growth in both the cardiopulmonary and neuromodulation sectors. Our performance in the quarter positioned us well to build on this competitive momentum. Looking ahead, we will focus on execution, innovation, and talent. With this framework in mind, we're expected, and we're excited, for the remainder of the year. Again, we will build on the strength of our core cardiopulmonary and epilepsy businesses, making investments to drive sustainable above-market growth.

Vlad: And so to conclude our first quarter results were marked by double digit revenue and operating income growth in both the cardiopulmonary and Neuromodulation segments.

Vlad: Our performance in the quarter positions us well to belt on those competitive momentum.

Vlad: Looking ahead, we will focus on execution innovation and talent.

Vlad: With this framework in mind, where expects it so we're excited for.

Vlad: For the remainder of the year again, we will built on the strength of our core cardiopulmonary in epilepsy businesses, making investments to drive sustainable above market growth. We will also gain clarity on the results from the recovery and Osprey studies, which will allow us to strategically target our most compelling.

Vladimir A. Makatsaria: We will also gain clarity on the results from the RECOVER and OSPRI studies, which will allow us to strategically target our most compelling opportunities. Finally, we will continue to explore areas of high clinical unmet need in markets with high growth potential to create long-term shareholder value. In closing, I would like to thank my colleagues across the organization for the warm welcome to LivaNova. Their hard work and passion underpin our success as an organization.

Vlad: Opportunities.

Vlad: Finally, we will continue to explore areas of high clinical unmet need in markets with high growth potential to create long term shareholder value.

Vlad: In closing I would like to thank my colleagues across the organization for the warm welcome to leave on Nova their hard work and passion underpin our success as an organization I am grateful for their continued dedication to serving customers and patients.

Vladimir A. Makatsaria: I'm grateful for their continued dedication to serving customers and patients, and together, we will continue to advance our mission of improving outcomes for patients with neurological and cardiac health conditions around the world. So with that, Candice, I think we're ready for questions.

Vlad: Together, we will continue to advance our mission of improving outcomes for patients with neurological and cardiac health conditions around the world.

Speaker Change: So without Canada, I think we are ready for questions.

Speaker Change: Yeah.

Operator: Thank you. If you have a question at this time, please press star then number one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star followed by the number two. As we enter the Q&A session, please limit your questions to one question and one follow-up and then return to the queue if you have any additional follow-up. Our first question comes from the line of Rick Wise of Stifle. Your line is now open, please go ahead.

Speaker Change: Thank you if you have a question at this time. Please press Star then the number one.

Speaker Change: If your question Hassan Alex yet or you wish to remove yourself from the queue. Please press star followed by the number.

Speaker Change: As we enter the Q&A session. Please limit your questions to one.

Speaker Change: I have one follow on and number 10 for Keith if you have any additional follow up.

Speaker Change: Our last question comes from the line of Rick Wise of Stifel. Your line is now open. Please go ahead.

Rick Wise: Good morning, everybody, and good morning to you, Vlad. I look forward to meeting you in person.

Rick Wise: Good morning, everybody.

Good morning to you applied.

Rick Wise: Forward to meeting you in person.

Vladimir A. Makatsaria: Maybe to start off, you talked about the fundamental momentum, and it's clearly visible in the outperformance. Maybe you could help us better understand, first at a high level, the sustainability of the strong epilepsy growth that we saw in some of the drivers there, both on the new implant side and replacement. How are you thinking about the year unfolding and the drivers of that? And on the Oxy side, where are you with capacity expansion? And are you seeing competitors come back? So again, addressing sustainability and your thoughts about it as you look ahead to the full year.

Rick Wise: Maybe to start off.

Rick Wise: You talked about the fundamental momentum is clearly visible in the outperformance maybe you could help us better understand.

Rick Wise: First at a high level.

Rick Wise: The sustainability of the strong epilepsy growth that we saw some of the drivers there both of them are new.

Rick Wise: Implant side in replacement.

Rick Wise: How are you thinking about the year unfolding in the drivers of that and on the oxy side.

Rick Wise: Where are you with the capacity expansion and.

Rick Wise: Are you seeing competitors come back so again addressing the sustainability.

Rick Wise: Thoughts about it as you look ahead to the full year.

Vladimir A. Makatsaria: Yeah, well, Rick, thank you for the question. And, likewise, I look forward to meeting you in person soon.

Speaker Change: Yes, Rick. Thank you for the question and then likewise I look forward to meeting you in person soon.

Vladimir A. Makatsaria: Look, I think, the first order of business, as I said earlier in my comments, is to, you know, build sustainable above-market growth in the core business. And I think it's both in the cardiopulmonary and in the neuromodulation segment. On the cardiopulmonary side, you know, the sustainability comes from continuous upgrade to the essence heart and lung machine, which, you know, still around the world, we have a major opportunity. And as a market leader, I think that upgrade is our biggest driver for that growth momentum, as we continue to upgrade customers but also to upgrade the technology itself. On the disposable side, you know, we have a significant opportunity to increase our market share still, and obviously, we will

Speaker Change: Look I think.

Speaker Change: The first order of business of as I said earlier in my comments as to.

Speaker Change: Bill, it's a sustainable above market growth in the core business and I think.

Speaker Change: Both in cardiopulmonary and in Neuromodulation.

Speaker Change: Segment.

Speaker Change: On the cardiopulmonary side.

The sustainability comes from continuous upgrades to the <unk> heart and lung machine, which.

Speaker Change: Still around the world will have major opportunities.

Speaker Change: And as a market leader I think that upgrade is our biggest driver.

Speaker Change: That growth momentum.

Speaker Change: As we continue to upgrade the customers, but also to upgrade.

Speaker Change: The technology itself.

Speaker Change: On the disposable side.

A significant opportunity.

Speaker Change: To increase our market share still.

Speaker Change: And obviously we were helped.

Vladimir A. Makatsaria: Unknown Executive, Alex Shvartsburg, Vladimir Makatsaria, LivaNova PLC, And the key drivers there will be short-term, will be expansion of our capacity, which we are on track. You know, we are using our current footprint to really improve the way the work is done. So that's number one. And then number two is... going back to innovation, you know, making sure that our cadence in innovation in the oxygenator and other disposable businesses is going on. [inaudible] So that's on the cardiopulmonary side. On the neuromod side, there is. You know, similar drivers.

Speaker Change: In this quarter.

Speaker Change: The previous quarters, what some of the competitive disruptions.

Speaker Change: So we have capitalized on that momentum.

Speaker Change: And the key drivers there will be short term will be expansion of our capacity, which we are on track.

Speaker Change: And.

Speaker Change: We are using our current footprint to really improve the way the work is done.

Speaker Change: So thats number one and then number two is.

Going back to innovation is.

Speaker Change: Making sure that our cadence and innovation in the oxygenator another disposable business is following.

Speaker Change: So that's on the cardiopulmonary side on the neuro Mod.

Speaker Change: As.

Similar drivers, obviously were coming from the position of strengths where currently the leader.

Vladimir A. Makatsaria: Obviously, we're coming from a position of strength. We're currently the leader in the technology, in the space of kinds of neuromodulation, interventional procedures, surgical procedures, and we will build on that strength. The key driver there for sustainable growth will be innovation. And so our first step is to invest in digitally connected technologies that will make procedures easier for physicians and better outcomes for patients. So that is gonna be the major driver of our long-term sustainability.

Speaker Change: And the technology.

Speaker Change: In the space of kind of Neuromodulators interventional procedures surgical procedures, and we will build on that strength the key driver for <unk>.

Speaker Change: Sustainable growth will be innovation and saw a first step is to invest in.

Speaker Change: Digitally connected.

Speaker Change: Technologies.

Speaker Change: That will make procedures.

Speaker Change: Easier for the physicians and and better outcomes for patients.

Speaker Change: So that is going to be the major driver of all of our long term sustainability.

Vladimir A. Makatsaria: And the short-term is really about our commercial execution around the world, which with Steph's leadership over the last year, we have significantly improved. So that's that. And I'm really encouraged because now I look back, and it's five quarters of double-digit growth. And, you know, my key role here is to make sure the organization is enabled to continue this momentum.

Speaker Change: And short term is really about our commercial execution around the world, which.

With steps leadership over the last year, we have significantly improved.

So that's that and I'm really encouraged because it's now I look back five quarters of double digit growth.

Speaker Change: <unk>.

Speaker Change: Obviously my role here is to make sure our organization is enable to continue this momentum.

Rick Wise: Yeah, that's great. And maybe just as a follow-up, you've highlighted innovation repeatedly. I think I'm correct in saying you said R&D growth x whatever 15% from You've made an important hire with the Chief Innovation Officer. What are you charging him with? What are you asking him to do? What are his priorities? What are your priorities? What can we expect to see? You've touched on that a little bit. Maybe you can give us a little deeper perspective. Thank you.

Speaker Change: Yes, that's great.

Speaker Change: And maybe just.

As a follow up.

Speaker Change: <unk> highlighted innovation repeatedly.

Speaker Change: I think I'm correct in saying you said.

Speaker Change: R&D growth ex whatever.

Speaker Change: 15%.

Speaker Change: We're seeing it correctly anyway.

Speaker Change: You've made an important hire.

Speaker Change: Chief Innovation Officer.

Speaker Change: Morning.

Speaker Change: Are you charging him with what are you asking him to do what are his priorities. What are your priorities. What can we expect to see you've touched on a little bit can you give us a little deeper perspective. Thank you.

Vladimir A. Makatsaria: Rick, thank you for highlighting this. I think it's a big deal for us. Ahmed comes with just an incredible track record, and you can look at his background in various companies, various technologies, and clinical states. And he led not just R&D but a holistic innovation function with regulatory and medical affairs, clinical, preclinical, and market access. So that's a little bit about Ahmed's background.

Speaker Change: Rick Thank you for highlighting that so I think it's a big deal for Us I'll, let Carlos just an incredible track record and you can obviously you can look at his background and various.

Speaker Change: The company is.

Speaker Change: Various technologies and clinical states.

Speaker Change: And he led not just R&D, but a holistic innovation function of the regulatory and medical affairs clinical preclinical.

Speaker Change: Market access.

Speaker Change: So that's a little bit on Armours background, and I think just outside of pure innovation capability. He is an extraordinary leader.

Vladimir A. Makatsaria: And I think just outside of pure innovation capability, he is an extraordinary leader and I think just a great addition to our leadership team. You know, my and to go back on the why and what needs to get done, you know, it's been two months for me, and I've been kind of deeply engaged with teams around the world and learning and assessing. And, like I said, I'm extremely impressed with the people, talent, and culture of LivaNova.

Speaker Change: <unk> just done a great addition to our leadership team.

Speaker Change: You know what.

Speaker Change: And to go back on the why and what needs to get done.

Speaker Change: It's been two months for me and I have been kind of deeply engaged with teams around the world and learning in assessing.

Speaker Change: And like I said I am extremely impressed with the people and talent and culture of Lenovo, obviously execution is there.

Speaker Change: Very strong and you see that in the results.

Vladimir A. Makatsaria: Obviously, execution is very strong, and you see this in the results. You know, innovation is one area where we need to build on the strength of our core and really accelerate. And my ask for Ahmed is to come in and continue to develop top talent and bring top capabilities to functions that are, [inaudible] And then finally, help us assess and make decisions on spaces in which we should work. You know, short term, these will be some of the main, major decisions that we will have to make with our OSA and DTD strategies. And I think it will be important to have his voice.

Speaker Change: Innovation is one area, where we need to built on the strength of our core and really accelerate and my ask for Amit.

Amit: That is to come in and continue to develop the top talent and bring top capabilities.

Amit: And the functions that are.

Surrounding innovation, so bring top talent and develop our current talent that legal Novo Thats number one.

Amit: Improve our processes on how we look at innovation from end to end stage.

Amit: Right.

Amit: Insight generation product development market access links to supply chain, so improve the entire process of innovation end to end.

Amit: And then final help us assess and make decisions on spaces in which we should work short term. This will be some major decisions that we will have to make with our OSA in DTD strategy and I think it would be important to have his voice on this.

Speaker Change: Thank you very much.

Operator: The next question comes from the line of Matt Taylor of Jeffreys. Your line is now open; please go ahead.

Our next question comes from the line of Matt Taylor of Jefferies. Your line is now open. Please go ahead.

Matthew Charles Taylor: Thank you for taking the question. I guess I actually wanted to ask one about the medium-term outlook for some of your businesses. You know, it's a little bit challenging to try and forecast. Cardiopulmonary with some of the dynamics going on with Oxy's this year. Can you help us understand? I guess first for oxygenators with your increase in capacity combined with all the share you've gained and the potential for competitors to come back.

Matthew Charles Taylor: Hi, Thank you for taking the question.

I guess I wanted to ask about.

Matthew Charles Taylor: The medium term outlook for for some of your businesses, it's a little bit challenging to try and forecast.

Matthew Charles Taylor: Cardiopulmonary with some of the dynamics going on with with Oxy. This year can you help us understand I guess first for oxygenated with your increase in capacity.

Matthew Charles Taylor: And bind with all the share gain and the potential for competitors to come back how do you expect that business to grow over the next couple of years and.

Matthew Charles Taylor: How do you expect that business to grow? Over the next couple of years, and the same kind of question I have on the heart and lung machine launch. So obviously, that's done really well. You're out of the gate. What happens when you start to compare the launch? What kind of growth would we expect through that period?

Matthew Charles Taylor: Same kind of question I have on the heart lung machine launched obviously, that's gone really well youre out of the gate.

Matthew Charles Taylor: What happens when you start to comp.

Matthew Charles Taylor: Launch what kind of growth, we expect through that that period. Thank you.

Matthew Charles Taylor: Thank you

Ed: Hey, Matt its Ed.

Ed: I'll take this one first so in terms of the mid term outlook for the cardiopulmonary business.

Alex Shvartsburg: Hey Matt, it's Alex. I'll take this one first.

Alex Shvartsburg: So in terms of the midterm outlook for the cardiopulmonary business, we are really, really excited about the opportunity that we have in the HLM replacement cycle. We said all along this was going to be a multi-year opportunity for LivaNova, and we're capitalizing on the great technology and the insights that we use to develop the product. So, we think that DHLM growth will continue, and it will continue to accelerate into the balance of the year. And we project that for, as I said, the next couple of years.

Ed: Really really excited about the opportunity that we have in the HSM replacement cycle. We said all along this is going to be a multiyear.

Ed: Opportunity for for leaving.

Ed: <unk>.

Ed: We're capitalizing on.

Ed: The great technology, and the insights that we use to develop.

Ed: The product.

So we think that DHL AUM growth will.

Ed: Continue it will continue to accelerate.

Ed: Into the.

Ed: The balance of the year so.

Ed: And we project that for as I said for next.

Ed: A couple of years.

Alex Shvartsburg: As far as the oxygenator business is concerned, as we've said all along, we reached our sort of peak capacity for oxygenators in the second half of last year. We've been really working hard to expand the capacity, and the team's doing a really good job at that. We're actually seeing some acceleration in those programs where we're really improving our processes at the Miranda manufacturing facility and continuing to add some automation to enable that.

Ed: As far as the oxygenate her business.

Ed: As we've said all along we were.

Ed: We reached our sort of peak capacity in oxygenated in the second half of last year.

Ed: We've been really working hard to expand the capacity and the team is doing a really good job at that.

Ed: We're actually seeing some acceleration.

Ed: In those programs were.

Ed: We are really improving our processes the mirandola manufacturing facility.

Ed: Continuing to add some automation to enable that.

Alex Shvartsburg: So, we expect some capacity expansion primarily in the second half of this year, but we're probably going to see some benefits in the second quarter as well. So I feel good about the opportunity that we have there. Now, we're monitoring the competitive situation. I'm never sure what the competition will do in terms of coming back into the market, but we feel like we have a great opportunity to continue to enhance our market position and continue to capture market share. All right.

Ed: So we expect we expect some capacity expansion.

Ed: Similarly in the second half of this year, but we're probably going to see some benefits in <unk>.

Ed: The second quarter as well.

Ed: So.

Ed: Feel good about the.

Opportunities that we have there now we're monitoring the competitive situation.

Ed: Never sure what the competition will do in terms of coming back into the market, but we feel like.

Ed: We have a great opportunity to continue to.

Ed: Enhance our market position and continue to capture market share.

Matthew Charles Taylor: Thanks for the call, Alex.

Okay. Thanks for the color Alex.

Alex: Sure thing.

Operator: The next question comes from the line of Michael Pollack of Wolf Research. Your line is now open; please go ahead.

Alex: The next question comes from the line of Michael.

Michael: Research. Your line is now open. Please go ahead.

Michael K. Polark: Good morning. Thank you for taking the question. My first question is about the sleep program.

Michael: Hi, Good morning. Thank you for taking the question. My first question is on the sleep program, obviously, a positive update here from.

Michael K. Polark: Obviously, a positive update from the clinical trial prediction work. You know, this is a confirmatory study; you know a lot about this asset already. If I just speculate on timing, kind of steam setup, or LivaNova setup to get FDA approval, call it the middle of 2025, maybe one year away from today. And so I'd imagine you would want to think about doing some commercial prep here, hiring a field force, that sort of thing.

Michael: Clinical trial prediction work.

Michael: This is a confirmatory study you know a lot about this asset already.

Michael: If I just speculate on timing kind of steam setup or leaving over setup to get an FDA approval, we'll call it.

Middle of 2025, maybe one year away from today, and so I'd imagine.

Michael: You would want us to think about doing some commercial prep you're hiring a field force that sort of thing. So what is the state.

Michael K. Polark: So what is the state? What is the view on that, prepping for a sleep launch in 2025 and maybe as it relates to 2024 numbers, do you have anything built in here from an OPEX perspective on early sleep prep?

Michael: What is the view on that prepping for a sleep launch in 2025 and.

Michael: And maybe as it relates to 2024 numbers do you have anything.

Michael: Built in here from an Opex perspective.

Michael: An early sleep prep.

Matthew Joseph Dodds: Hey, hey, Mike, it's Matt. I'll go through those for you. So for the program, we are going to have around 105 patients implanted. You know, we took a look at 90. But as we were discussing with the FDA on early stoppage, all patients in the queue were implanted, so we're going to have the primary endpoint data, which is seven months of reduction in AHI around year end. And to your point, we'd probably file then if we assume the data is there in the early 25.

Michael: Hey, Mike It's Matt I'll go through those for you. So for the program. We are going to have around 105 patients implanted. We took a look at 90, but as you were discussing with the FDA on early stoppage for all patients in the queue were implanted.

Matthew Joseph Dodds: And just so you're aware, we do have to give the FDA one year of safety data as well, so that'd probably be in like April. So it's still a 2025 approval based on where we are today. It didn't change that much.

Matt: We're going to have the primary endpoint data at seven months reduction in Agi around year end and to your point, we probably file then assuming the data is there in early 'twenty five.

And just you are aware, we do actually.

Matt: The FDA one year safety data as well that would probably be in late April. So it's still a 2025 approval based on where we are today didn't change that much.

Matthew Joseph Dodds: In terms of commercial prep, I think the seven-month data will be directionally very important, but again, we're not going to get that until year-end. The 13-month data, which will compare to the competitive data we've seen from now two companies, that's the really important data. So I would say, you know, commercially, we're going to take this very slow until we see A, the seven-month data, and then B, the 13-month data. So there's really not much in 2024 in terms of commercial.

Matt: In terms of the commercial prep.

Matt: I think the seven month data will be directionally very important, but we're again, we're not going to get that until year end.

Matt: 13 months data, which will compare to the competitive data we've seen from now to companies. That's the really important data. So I would say commercially we're going to take this very slow until we see a seven month data and then b. The 13 month data so theres really not much in 2024 in terms of commercial.

Matt: Spend.

Matt: Helpful.

Matt: Sure.

Michael K. Polark: helpful And then my follow up on the Essence launch. I'm just curious, in the US and Europe where this product is available, kind of what the Essence that Five makes any color on units and how it is ramped versus the back half of last year and what that's in unit expectations might be for this year. Thanks so much. Hey, Mike, it's, it's Alex. We're not, we're not sharing.

Speaker Change: And then my follow up on the <unk> I'm just curious.

Speaker Change: In the U S and Europe, where this product is available.

Speaker Change: Kind of.

Speaker Change: What is the absolute best five mix any color on units and how it.

Speaker Change: As ramp versus the back half of last year, and what Hudson unit expectations might be for for this year. Thanks. So much.

Alex Shvartsburg: Hey, Mike, it's Alex. We're not sharing the actual unit numbers, but what I will tell you is typically, the first quarter is kind of a lower volume quarter for our heart lung machine placements, and we continue to anticipate that we'll have a steady increase in placements throughout the year.

Hey, Mike It's Alex.

Alex: We're not we're not sharing the actual unit numbers, what I will tell you is <unk>.

Alex: Typically first quarter is kind of a.

A lower volume quarter anyway for for our heart lung machine placements.

And we continue to anticipate that we will have a steady increase in placements throughout the year.

Speaker Change: Thanks Keith.

Alex Shvartsburg: Thank you. The next question comes from the line of Adam Maeder from Piper Sandler. Your line is now open, please go ahead.

Speaker Change: The next question comes from the line of Anthony.

Anthony: Peter Piper Sandler Your line is now open. Please go ahead.

Adam Carl Maeder: Hi guys, good morning. Congratulations on a nice start to the year. And thank you for taking the questions. I wanted to follow up on Essence. And, you know, I believe you're fully launched in the US and Europe, but was hoping you could talk about potential timelines for the rest of the world, and then also wanted to better understand how the existing heart-lung machine install base is kind of broken down by geography as we think about a potential replacement. And then I had a follow-up.

Anthony: Hi, guys. Good morning, Congrats on the nice start to the year and thank you for taking the questions.

I wanted to follow up on assets.

Anthony: I believe you're fully launched in the U S and Europe, but was hoping you could talk about.

Potential timelines for rest of world.

Anthony: And then also wanted to better understand how the existing heart lung machine install base kind of broken down by geography, as we think about a potential replacement curve.

Speaker Change: And then I had a follow up.

Adam Carl Maeder: Yeah, Adam, again, as far as the essence, the rest of the world rollout, this is already starting to occur in select markets. As we saw in Europe and the US, we kind of start out slowly with limited commercial releases, and then ramp up as we get insights and feedback from our customers. So throughout the year, we'll see a continued flow of new markets coming online.

Speaker Change: Yes, so Adam again as far as the <unk>.

Speaker Change: Since the rest of world rollout.

Speaker Change: This is already starting to occur in select markets.

Speaker Change: As we saw in Europe, and the U S. We kind of start out slowly with kind of the limited commercial releases and then ramp as we get insights and feedback from our customers. So throughout the year, we will see a continued flow of.

Speaker Change: New markets coming online.

Adam Carl Maeder: And Alex, any color on the existing heart lung machine install base and kind of how that looks between the US, Europe, and rest of the world?

Speaker Change: And Alex any any color on the existing heart lung machine install base and kind of how that looks between the U S Europe and rest of world.

Matthew Joseph Dodds: Sure, Adam, it's Matt. The U.S., say roughly 30%. You're up about 20%, and the rest of the world.

Speaker Change: Sure Adam It's Matt U S say roughly 30%.

Alex: Europe about 20%.

Alex: The rest of the World 50.

Matthew Joseph Dodds: Okay, I got it. That's a good color, guys.

Speaker Change: Okay I got it that's good color guys. Thank you for that.

Speaker Change: And then for the follow up wanted to ask.

Adam Carl Maeder: Thank you for that. And then for the follow-up, I wanted to ask Vlad, you know, for your thoughts on the recovery program and, You know, I guess it's a two-part question. First, you know, what would you define as a successful recovery trial? You know, maybe to ask the question differently, you know, what do you want to see to push forward and commercialize the program? And then I did want to ask about data disclosure.

Speaker Change: For your thoughts on the recover program.

Speaker Change: I guess two part question first.

Speaker Change: What would you define as a successful recover trial.

Speaker Change: Maybe to ask the question differently, what do you want to see to push forward and commercialize the program.

Speaker Change: And then I did want to ask about.

Speaker Change: Data disclosure.

Adam Carl Maeder: It sounds like you'll see the data in June or next month. Will you topline that information to the investment community? Do you have approval to do that from CMS? Or is that still up in the air? Thanks again for taking the question.

Speaker Change: It sounds like Youll see the data in June So next month.

Speaker Change: Will you topline that.

Speaker Change: Information to the investment community do you have approval to do that from CMS or is that still up in the year. Thanks again for taking the questions.

Vladimir A. Makatsaria: Yeah, so Adam, thank you for the question. Obviously, the outcome of the RECOVER trial is a very important milestone for us because, I mean, not only will it make some opportunities potentially available for, you know, patients but it will also kind of determine the direction of our strategy on this one. So it's an important milestone. All the decisions will be routed in or founded on the outcome of the clinical study.

Speaker Change: Yes.

Speaker Change: Sorry, Adam Adam. Thank you for the question it's obvious there.

Speaker Change: The outcome of the recover trial is a very important milestone for us because.

Speaker Change: I mean, not only it will most more importantly make some.

Speaker Change: Opportunities potentially available for <unk>.

Speaker Change: Patients, but also will kind of determine the direction of our strategy on this one so it's a it's an important milestone.

Speaker Change: All the decisions will be routed and founded on the outcome of a clinical study and and like you said.

Vladimir A. Makatsaria: And like you said, we anticipate the results before the end of this quarter. And once we have them, we will analyze them, and we will make them transparent at a high level to the community. So that's that's important, and two, based on these clinical results, we will then determine the path with work with CMS with the clinical sites and with the investment community on what is the best path forward.

Speaker Change: Anticipate the resolved before the end of this quarter.

Speaker Change: Once we have them, we will analyze and we will make it transparent at the high level to the community. So that's that's that's important.

Speaker Change: And two based on this clinical results. We will then determine the path with work with.

Speaker Change: CMS.

With the clinical sites.

Speaker Change: And with the investment community on what is the best.

Path forward so.

Vladimir A. Makatsaria: To your point, there will be transparency to data as we have it, at a high level. And then the full data will be available by the end of the year, with a scientific publication. And then the way look, it's a complex trial because it hasn't answered a number of questions in in in various, at www.globalonenessproject.org, you know, questions were positively answered.

Speaker Change: To your point, there will be a transparency to data as we have it.

Speaker Change: At the high level.

Speaker Change: And then the full data will be available by the end of the year.

Speaker Change: With the scientific publication.

Speaker Change: And then the way I look at it as a complex trial because it hasn't we're answering a number of questions in various <unk>.

Speaker Change: Clinical needs within difficult to treat depression.

Speaker Change: So we will have to assess together with CMS on path to reimbursement depending on what.

Speaker Change: Clinical.

Speaker Change: Questions were positively I'm sorry.

Speaker Change: Thank you.

Operator: The next question comes from the line of Anthony Petrone of Mizzou Group. Your line is open, please go ahead.

Speaker Change: Your next question comes from the line of Anthony <unk>.

Anthony: Your line is open. Please go ahead.

Anthony Petrone: Thank you and congratulations to the team here at Strong1Q and Vlad, congratulations on the new role of CEO with the company. Maybe to start with guidance and maybe just a little bit of math on the 1Q beat versus the guidance outlook. So, you look at the prior guidance versus revised guidance. The top line is up by 200 basis points, and the midpoint of the range is up 10 cents. You had a sizable 600 basis point beat on the top line and a 24 cent beat in one cue.

Anthony: Thank you and congrats to the team here on strong <unk> and Vlad congrats on the new role as CEO with the company maybe to start with guidance and maybe just a little bit of math on the <unk> beat versus the guidance outlook.

Vlad: So you look at the prior guidance versus revised guidance top line is up by 200 basis points in midpoint of the range is up 10.

Vlad: And you had a sizable 600 basis point beat topline.

And a 24 beat and <unk>, so theres, a little bit of spread there so hoping to just get a little bit of color on the extent of the <unk> and what's implied for guidance.

Anthony Petrone: So there's a little bit of spread there. So hoping to just get a little bit of color on, you know, the extent of the one cue beat and what's implied for guidance. And then one specific to guidance would be on capacity for oxygenators, you know, what is actually assumed there in the revised guidance of 4 to 6%. Does that

Vlad: And then one specific to guidance would be on capacity for.

Vlad: For oxygenated what is actually assumed in there in the revised guidance of 4% to 6% does that reflect a tailwind in the second half for that business, specifically and I have one quick follow up thanks.

Alex Shvartsburg: Hey Anthony, it's Alex. So the first quarter is typically a low quarter for us in terms of revenue and profitability. So we had favorable comparisons, and we do not expect the same level of growth in the second half of 2024. We're still continuing to invest in critical capabilities to support Innovation and Growth and Infrastructure.

Alex: Hey, Anthony it's Alex.

Alex: The first quarter.

Alex: <unk> is typically a low quarter for us in terms of revenue and.

Alex: And profitability, so we had favorable comparisons and.

Alex: We just we do not expect.

Alex: But at the same level of growth in the second half.

Alex: 2024.

We're still continuing to invest in critical capabilities to support.

Alex: Innovation and growth and infrastructure.

And we expect spending to me.

Alex Shvartsburg: Unknown Speaker.

Alex: For the remainder of the year.

Alex Shvartsburg: Additionally, we saw favorable pricing and product mix, which contributed meaningfully to our gross margin expansion in the quarter. So look, at the end of the day, it's still early in the year. And the way we think about this is we have some significant opportunities, as I talked about the innovation portfolio, etc. And I think it's At this point in time, we're taking sort of a prudent approach.

Alex: Additionally, we saw favorable pricing.

Alex: And product mix, which contributed meaningfully to our gross margin expansion in the quarter. So look at the end of the day, it's still early in the year.

Alex: <unk>.

Alex: The way we think about this is we have some significant.

Alex: Opportunities.

Alex: As I talked about the innovation portfolio et cetera.

Alex: I think it's at this point in time, we were taken sort of a prudent approach to the revised guidance.

Alex Shvartsburg: No, that's very helpful. Go ahead. Sorry. Sorry, I'll go ahead. That's all for me.

Speaker Change: No that's very helpful.

Go ahead sorry.

Speaker Change: No go ahead.

Speaker Change: <unk>.

Speaker Change: That could all go ahead.

Anthony Petrone: Thank you, Alex. Maybe just a quick follow up here, and I'll get back in one. One would be, you know, just to recap on, you know, the cost savings from ACS. And when we think about depression, how do you think about the bipolar cohort here? So in other words, you know, there's a go, no go sort of option here for unipolar. You know, how does that influence the bipolar cohort decision-making process? Thank you.

Speaker Change: Thank you Alex maybe just a quick follow ups here and I'll get back in.

One would be yes.

Just to recap on the cost savings from Acs and when we think about depression.

How do you think about the bipolar cohort here so in other words.

Speaker Change: There is a go no go sort of option here for unit polar.

Speaker Change: How does that influence the bipolar cohort decision making process. Thank you.

Alex Shvartsburg: I'll take the ACS question first. As far as we guided the ACS savings and the impact on EPS to about approximately 10 cents at the beginning of the year, we still feel good about that. Now, with your follow-up question, I'll turn it over to Matt.

I'll take the Acs.

Speaker Change: Question first so the as.

As far as the.

We guided the Acs savings and the impact on EPS to about approximately 10 to.

Speaker Change: At the beginning of the year, we still feel good about that.

Speaker Change: Now with.

Speaker Change: With your follow up question I'll turn it over to Matt sure. So I think for bipolar and we said last June we had 150 patients enrolled and we said roughly 25 patients a quarter and we've said that's on track.

Matthew Joseph Dodds: Sure, so I think for bipolar, we said last June we had 150 patients enrolled, and we said roughly 25 patients a quarter, and we said that's on track. For that one, the unipolar data could have an influence on it, but this is a very different patient group. And if you look at some of the historical data that we've shown, generally, BNS does better with bipolar patients. So there is still a path for bipolar patients regardless of where unipolar ends up. And Anthony, just follow up on your question regarding

Matt: For that one the uniform data could have an influence on it but this is a very different patient group and if you look at some of the historical data that we've shown generally VNS does better with the bipolar patients. So there is still a path for bipolar regardless of.

Matt: Where unit polar ends up in our opinion.

Matthew Joseph Dodds: Anthony, just to follow up on your question regarding capacity, we're continuing the program to expand our capacity in Mirandola, and that, as I said, is going really well. We incorporated that capacity expansion into our original guidance, and so we're kind of maintaining that assumption. We're going to see some favorable benefits, some tailwinds, in the second quarter as we were able to achieve some success there earlier than anticipated. But the expectation is that there's going to be some growth in the back half of the year as a result of our ability to expand capacity.

Matt: Anthony just follow up on.

Anthony: On your question regarding capacity.

Anthony: We're continuing the program to extend expand our capacity in Mirandola and Thats as I said, it's going really well.

Anthony: We incorporated.

Anthony: Capacity expansion into our original guidance and so we're kind of maintaining that assumption, we're going to see some.

Anthony: <unk> benefited some tailwind in the second quarter as we were able to achieve some.

Anthony: Some success, there earlier than anticipated, but the expectation.

Anthony: <unk> is that there's going to be some.

Anthony: Some some growth in the back half of the year.

Anthony: As a result of our ability to expand the capacity.

Operator: The next question comes from the line of Mike Matson of Needham & Company. Your line is now open; please go ahead.

Anthony: The next question comes from the line of Mike Matson Needham <unk> Company. Your line is now open. Please go ahead.

Michael Stephen Matson: Yeah, thanks. Just so on the Essence launch, I mean, obviously, it's driving really strong growth. But I was wondering if you are getting a pretty big price premium with Essence. So, you know, how much of it is pricing and how much of it is volume? I know you're not going to give us the volume number, but I guess I'm getting at it. Has volume picked up? Has the availability of Essence driven more, you know, upgrades? Or has it really just been pricing so far, at least?

Speaker Change: Yes, thanks, just so.

So on the <unk> launch.

Michael Stephen Matson: Since driving really strong growth.

Speaker Change: But I was wondering you are getting a pretty big price premium with us. So how much of it is pricing how much of it is volume I know youre not going to do with the volume number, but I guess I'm getting at it has volume pick up.

Speaker Change: Availability has driven more upgrades or is it really just been pricing so far at least.

Alex Shvartsburg: Yeah, look, we're seeing a strong funnel with regard to units, and the placements have been tracking according to plan. So yeah, obviously, the price mix benefits, right? We have a substantial price premium in effect here, but we're also seeing customers sort of taking advantage of the newer technology and the features and benefits that are offered with that didn't exist with S5. So we are getting some of that benefit. But as I said, our funnel for, you know, unit placements looks strong for the balance of the year, and we're going to continue to see an acceleration of our placements.

Speaker Change: Yes look we're seeing.

Speaker Change: Strong funnel.

Speaker Change: With with regard to units and the placements have been.

Speaker Change: I've been tracking according to plan.

Speaker Change: So, yes, obviously the price mix benefit right we have a.

Speaker Change: Substantial price premium in effect here, but we're also seeing cuts.

Speaker Change: Customers.

Speaker Change: We've taken advantage of the newer technology.

Speaker Change: And as the feature and benefits that are offered with with us and with didn't exist with US five. So we are getting some of that benefit but as I said our funnel for.

Speaker Change: For unit placements.

Speaker Change: Strong.

Speaker Change: For the balance of the year and we're going to continue to see an acceleration of our placements.

Michael Stephen Matson: Okay, got it. And then with the earlier sort of end of enrollment and Osprey, is there any cost savings associated with that? I think on the last call, you said you expected to spend a little more than the 27 million that you spent in 23 on that program. So with that, would that spending be down as a result of that? Or is it kind of not impacting it? Thanks. It's roughly the same, Mike, because the majority of the costs

Speaker Change: Okay got it and then with the earlier sort of end of enrollment in Osprey is there any.

Speaker Change: Cost savings associated with that I think on the last call. You said you expected to spend a little more than the $27 million that you spent in 'twenty three on that program.

Speaker Change: So with that with that spending be down as a result of that or is it not.

Speaker Change: Not impacting us.

Alex Shvartsburg: It's roughly the same, Mike, because the majority of the cost is associated with managing the patients throughout the trial, throughout the study. So, while there's some savings in perhaps the recruitment costs, the majority of the costs reside in sort of the active management of patients throughout the trial process.

Speaker Change: It's roughly the same Mike because the majority of the costs associated with managing the patients.

Speaker Change: Throughout the trial.

Speaker Change: Throughout the study so.

Speaker Change: While there is some savings and perhaps the recruitment costs.

Speaker Change: The majority of the costs reside in sort of the active management of patients.

Speaker Change: Throughout the trial process.

Speaker Change: Okay got it thank you.

Thank you.

Operator: The next question comes from David Rescott, off air. Your line is now open, please go ahead.

Speaker Change: The next question comes from David Ross Scott Your.

Speaker Change: Your line is now open. Please go ahead.

David Kenneth Rescott: Oh, great. Thanks for taking the questions. Vlad, I wanted to follow up on one of the comments I heard you make in the prepared remarks around evaluating the recoverability of OSPRI trials alongside what you called a holistic view around some of the areas for innovation. And I'm wondering if you could expand a little bit on what some of the factors are maybe around that holistic approach. And then specifically for recovery, I heard some of the comments earlier to a prior question, but does the holistic view around recovery get accounted for a thought about maybe when we start to hear about some of the top-line results? Or is that maybe more of a, "hey, let's wait till we see the publication and think about the fit in the portfolio longer term?"

Speaker Change: Oh, great. Thanks for taking the questions.

I wanted to follow up on one of the comments I heard you make in the prepared remarks around <unk>.

Speaker Change: <unk> recover.

Speaker Change: <unk> III trials alongside what you called a.

Speaker Change: Elastic view around some of the areas for innovation and I am wondering if you could expand a little bit on what some of the factors are maybe.

Speaker Change: Around that a holistic approach and then specifically for recover I heard some of the comments earlier to a prior question but.

Speaker Change: But does the holistic view around recover.

Speaker Change: It accounted for or thought about maybe when we start to hear about some of the topline results or is that maybe more of a hey, let's wait till we see the publication and think about the fit in the portfolio longer term.

Vladimir A. Makatsaria: Yeah, so thank you, David. I think... short-term investment choices. You know, we'll, and I'll start maybe before, before the recovery and Osprey comment, you know, but if you look at some of the really good decisions that the leadership team made over the last couple of years, one was to focus the portfolio. So with a wind down of the ACS and then the hard failure business, that gave us an opportunity to reinvest in the core.

Speaker Change: Yes so.

Speaker Change: Thank you David I think short term investment choices.

Speaker Change: <unk>.

Speaker Change: And I'll start maybe before before the recover in Osprey comment, but if you look at some of the really good decisions that the leadership team made over the last couple of years, one was to focus the portfolio, so where the wind down of.

Speaker Change: The Acs and then the.

Speaker Change: The heart failure business that gave us opportunity to reinvest in the core and partly you see the kind of the outcome of those decisions and improve execution and improve results in the core business.

Vladimir A. Makatsaria: And partly you see the kind of outcome of the decisions and improve execution and improve results in the core business. So short-term... [inaudible] you know, potential kind of growth for short-term will be to reinvest more in the core, both on the innovation front, the execution front, expansion of capacity, and so forth. So that's one opportunity we're looking at. You know, in terms of strategic direction, we're going to have to wait until we see what clinical results Osprey and Recover bring, because obviously that will be a fork, if you like, in the strategic direction of the company. So that's a little bit how we're thinking about it. In the short term, more reinvest in the core. Long term, see what direction DTD and OSA take.

David Kenneth Rescott: Okay, great. Maybe I have a question for Alex.

Speaker Change: So short term.

Speaker Change: Potential kind of.

Speaker Change: For short term growth will be to reinvest more in the core both on the innovation front execution front expansion of capacity and so forth. So that's one opportunity we're looking at.

Speaker Change: Longer term.

Speaker Change: In terms of strategic directions, we're going to have to wait until we see what clinical results osprey and recover bring.

Speaker Change: Because obviously that will that will be a <unk> like on the strategic direction of the company. So.

Speaker Change: So that's a little bit how we're thinking about the short term more reinvest in the core long term see what the.

Speaker Change: What direction would take on DTD and OSA.

David Kenneth Rescott: If I look at the kind of updated EPS guide for the year in the bridge relative to what you laid out after Q4, operational growth, growth, and leverage are where things kind of have moved higher. Tax, cost, inflation, infrastructure, investments, the HF, and ACS exits all remain relatively the same as it relates to the contribution of the bridge to growth and EPS this year. My guess is that this implies that there's no real update on the latter kind of pieces to the guide.

Speaker Change: Okay, Great and maybe a question for Alex if I look at the.

Alex: Kind of updated EPS guide for the year.

Alex: The branch relative to what you laid out after Q4 operational growth growth and Leverages as where things kind of have moved higher tax cost inflation infrastructure investments CHF Acs exits.

Alex: All remained relatively the same as it relates to the contribution from the bridge to growth in EPS. This year. My guess is that implies that there is no real update on the ladder.

Alex: Pieces to the guide.

David Kenneth Rescott: If we think about maybe some levers for upside in the remainder of the year, is there any, you know, shift in potential for those three letter pieces or would or if, you know, there's more upside to be had on the EPS line, it's more going to be operational growth and leverage, you know, relative to those four other three other kind of buckets. Thank you.

Alex: If we think about maybe some levers for upside in the remainder of the year is there any.

Alex: Shift and potential for those those three letter pieces or award.

Alex: There is more upside to be had on the EPS line, it's more going to be operational growth and leverage.

Alex: Relative to those for other three kind of buckets. Thank you.

Alex Shvartsburg: Yeah, I mean, as we looked at the components of EPS, we, you know, feel really good about the savings from heart failure and the ATS wind down. The tax rate, we knew going into this year was a headwind, but, you know, we're managing through it. So, you know, the majority of the upside here is really about operating leverage and our team being super disciplined and focused about driving growth and ensuring that there is an appropriate level of drop-through on the bottom line.

Alex: Yes.

Alex: As we looked at the components of Vps.

Alex: Feel really good about the.

Alex: The savings.

Alex: From from the heart failure, and the Ats wind down tax rate, we knew going into this year was it was a headwind but.

Alex: We're managing through it so.

Alex: The majority of the upside here is really about operating leverage.

Alex: <unk>.

Alex: Our team being.

Alex: Super disciplined and focused about.

Alex: Driving growth and ensuring that.

Alex: There is a an appropriate level of drop through on the bottom line.

Speaker Change: Alright, great. Thank you.

Operator: The next question comes from the line of Mike from Matt Misic of Barclays. Your line is now open, please go ahead.

Alex: The next question comes from the line of Mike.

Alex: Mike.

Michael Stephen Matson: Barclays. Your line is now open. Please go ahead.

Operator: Transcription by CastingWords

Matthew Stephan Miksic: Thanks so much. Can you hear me okay?

Michael Stephen Matson: Thanks, So much can you hear me okay.

Michael Stephen Matson: Yes.

Michael Stephen Matson: Great.

Operator: Yep. Great. Thanks for taking the question. Maybe just if I could follow up on the sort of scenarios and your decision process between OSPREY and Recover, that'd be super helpful, and which of those programs you're likely to move forward with. Thanks.

Michael Stephen Matson: Thanks for taking the question, maybe just if I could follow up on.

Speaker Change: And sort of scenarios in your decision process between Osprey and recover.

Speaker Change: That would be super helpful in which we're drilling programs you likely to move forward with.

Speaker Change: Thanks.

Matthew Stephan Miksic: Hey Matt, it's Matt. So for both, I mean, the data is obviously critical, you know. We, as we said, with Recover and for Unipol, we'll get that data by the end of the quarter. And then for the Osprey OSA program, around year end, I'd say, you know, in terms of product development, there's a little bit of a difference with OSA, you know, that's, that's a component as well to look at. But generally, those are the core timelines when we get the clinical data to show, basically, where we would play in each one and what the value would be to the patients Yeah, and that may be just me.

Michael Stephen Matson: Hey, Matt its Matt for <unk>.

Matt: I mean, the data is obviously critical.

Matt: As we said with recover for unipolar or we get that data by the end of the quarter and then for the Osprey OSA program.

Matt: Around year end.

Matt: I would say in terms of product development.

Matt: There is a little bit of a difference with OSA, that's a component as well to look at but generally those are the core timelines when we get the clinical data to show basically where we would play in each one and with them with the value of each of the patients and physicians and Matt maybe just.

Vladimir A. Makatsaria: Yeah, and that may be just I mean, obviously, we don't have the outcome of the decision. But I think what's important is the principle of how we make it. And we're going to look at three dimensions. You know, the first one is, what is the clinical benefit to patients? And that's number one. That's the most important one. The second one is how competitive is our technology in the space versus other available technologies in the marketplace.

Matt: I mean, obviously, we don't have the outcome of the decision, but I think what's important is the principle on how we make it.

Matt: And we were going to look at three dimensions. The first one is what is the clinical benefit to patients.

Matt: Thats number one thats the most important one.

Matt: Second one is how competitive.

Matt: As our technology in this space versus other available technologies on the marketplace.

Vladimir A. Makatsaria: And then the third one is looking at the end-to-end kind of business model, if you like, and how we can create value, not just for patients but also for shareholders. So those will be the three kinds of parameters that we're going to use to decide how to prioritize between those.

Matt: And then the third one is looking at the end to end kind of business model. If you like and how we can create value not just for patients, but also for the shareholders. So those will be the three.

Matt: Kind of parameters that we're going to use to decide how to prioritize between those two.

Matthew Stephan Miksic: That's helpful. If I could just follow up on the epilepsy market, you know, if you could maybe talk about the biggest sort of factors driving or maybe, you know, enabling or restraining your execution there and ability to operate are competition? Is it some of the changes in your sort of go-to-market strategy? Is it, you know, just the general sort of, you know, end of life cycles of your current and previous kind of implant into patients, maybe just what are the most significant factors that we can look at to measure that performance this year?

Speaker Change: That's helpful. If I could just one follow up on the epilepsy market.

Matt: If you could maybe talk about the biggest sort of factors driving or maybe.

Matt: <unk>.

Matt: Enabling are restraining your execution, there and ability to operate.

Matt: As competition is it.

Matt: Some of the changes in your sort of go to market strategy is it.

Matt: Just general general sort of.

Matt: End of life cycles in your current and previous kind of.

Matt: We plan to patients maybe just what are the most significant factors that we can look at.

Speaker Change: To measure that performance this year. Thanks, so much.

Stephanie Bolton: Hi Matt, it's Steph here. Sure, let me tell you where our focus is for the remaining part of this year. For the U.S., it's going to be the continuation of that discipline, commercial execution, building very much on the foundations that we laid last year in 23. You touched on our sales force structure, but we'll be maintaining our sales force structure and our territory design. We're also building a strong talent bench for those large influencing territories as well.

Stephanie Bolton: Thanks so much. Hi Matt, it's Steph here. Sure. Let me tell you where our...

Speaker Change: Hi, Matt.

Speaker Change: So.

Speaker Change: Let me tell you where our scientists for the remaining part of this year.

Speaker Change: So the U S. It's going to be a continuation of that disciplined commercial execution building very much on the foundations that we made.

Speaker Change: Last June 23.

Speaker Change: Touch on our sales force structure.

Speaker Change: But we will be maintaining a sales force.

Speaker Change: Chemistry design.

Speaker Change: We're also building a high talent bench for those.

Speaker Change: Large influencing climate change as well.

Stephanie Bolton: But as I mentioned on the last call, our strategy is a little broader than that, than just our sales force structure, and in combination with that, it's also making sure that we expand our efforts in regards to partnership with our physician base. We had a really successful recent scientific advisory board full of great insights. And also, as we look towards 2024 and our end of service, so that's based on our latest data, but the comparisons do get a little more tricky throughout the rest of the year.

Speaker Change: I mentioned on the last call our strategy is a little broader than that and then just our salesforce <unk> combination with the Tuesday, making sure that we expand our efforts in it.

Speaker Change: Our partnership with our physician base.

Speaker Change: We had a really successful.

Speaker Change: Recent scientific advisory board full of great insights.

Speaker Change: As we look towards 2024, and this survey said that based on our latest data that the comparisons do get a little more tricky throughout the rest of the year.

Stephanie Bolton: But we are still encouraged by our end of service performance and partnering with our physicians to identify patients in accordance with that all important continuity of care. So those are the sort of main aspects, really. Partnership with our physician base, ensuring that we can expedite care, continuation of our territory structure, and, as I say, key partnership with our advisory board.

Speaker Change: Still encouraged by our understanding.

Speaker Change: Partnering with acquisitions to identify patients.

Speaker Change: <unk>.

Speaker Change: Coordinates to not only continue to occur.

Speaker Change: Those are the sort of main aspects screen, a partnership with our physician base, ensuring that we can expedite can.

Speaker Change: Continuation of our current structure.

Speaker Change: <unk>.

Speaker Change: And that's a key partnership and that is voluntary pools.

Operator: The next question is a follow-up from Anthony Petrone of Mizuzu Group. Your line is open, please go ahead. Thanks.

Speaker Change: The next question is a follow up from Anthony Petrone of Mrs. Macquarie. Your line is now open. Please go ahead.

Anthony Petrone: Thanks, Clyde. Just a quick follow-up on recovery and the messaging there is the go or not go forward decision. Will that be on the headline readout in the June-July time frame, or will you wait for the final data set at the end of the year to make that decision?

Anthony Petrone: Thanks, Brian.

Anthony Petrone: A quick follow up on <unk>.

Anthony Petrone: Recover and the messaging there as the go or not go forward.

Anthony Petrone: Decision will that beyond the headline readout.

Anthony Petrone: In June July timeframe or will you wait for the final data set at the end of the year to make that decision.

Anthony Petrone: Okay.

Anthony Petrone:

Vladimir A. Makatsaria: And then thank you for the follow-up, you know, the If the clinical data is negative, then it's a clear no-go decision. If the clinical data has elements of positive, whether holistically or in certain clinical areas, then we will continue working with CMS to define a go or no-go decision. So I, you know, and that is, for me, the best scenario where, you know, we can continue to work with them to evaluate.

Speaker Change: And then thank you for the follow up just.

Anthony Petrone: The.

Anthony Petrone: If the clinical data is negative then its a clear and logo decision if.

Anthony Petrone: If the clinical data.

Anthony Petrone: Has elements of positive weather holistically on certain.

Anthony Petrone: Clinical areas, then we will continue working with CMS to define.

Anthony Petrone: A go no go decision.

Anthony Petrone: So.

Anthony Petrone: <unk>.

Anthony Petrone: And that is for me the best scenario, where we can continue to work with them to evaluate that.

Anthony Petrone: Yes.

Vladimir A. Makatsaria: As there are no additional questions waiting at this time, I'd like to hand the conference back over to Vladimir Makatsaria for closing remarks.

Pat Mascara: As there are no additional questions at this time I would like to hand, the conference back over to Pat demand Mascara.

Anthony Petrone: Box.

Vladimir A. Makatsaria: Thank you. Thank you, Candice. And thank you, everyone, for joining the call for your feedback and very thoughtful questions. And on behalf of the entire leadership team at LivaNova, we really appreciate your support and your interest in the company. And we'll talk to you soon.

Pat Mascara: Thank you. Thank you.

Pat Mascara: Candice and thank you everyone for joining the call for your feedback on the very thoughtful questions and.

Pat Mascara: On behalf of the entire leadership team I believe Nova we really appreciate your support and your interest in the company.

Speaker Change: And we'll talk to you soon.

Speaker Change: Have a good day.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect your line.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you for joining and you may now disconnect your lines.

Pat Mascara: Yeah.

Pat Mascara: [music].

Pat Mascara: Sure.

Pat Mascara: Yes.

Pat Mascara: Okay.

Pat Mascara: Yeah.

Pat Mascara: Yeah.