Q3 2025 LivaNova PLC Earnings Call
Please press star one on your telephone keypad.
As a reminder, this conference call is being recorded.
I'd now like to introduce your host for today's conference Ms. Breanna Cortland, leaving over as Vice President of Investor Relations. Please go ahead.
Thank you and welcome to our conference call and webcast discussing <unk> financial results for the third quarter of 2025.
Joining me on today's call are Blackberry, <unk>, our Chief Executive Officer, and member of the board of directors.
Alex Schwartzberg, our Chief Financial Officer.
Matt <unk>, our Chief Innovation Officer.
Exactly <unk> director of Investor Relations.
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 filings and documents furnished with the SEC, including today's press release that is available on our web site.
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 be stated on a constant currency and organic basis.
Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website.
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 at Investor <unk> Dot com with that I'll turn the call over to Vlad.
Thank you Briana and thank you everyone for joining US today welcome deliver novel <unk> Conference call for the third quarter of 2025.
In the quarter lever, Nova delivered 13% organic revenue growth versus the prior year.
Driven by continued momentum in the cardiopulmonary business and solid epilepsy performance across all regions.
The ability to sustain strong organic growth expand margins and drive strong cash generation reflects the durable market leadership positions of our core businesses.
The consistent results also speak to the strength of our execution and the productivity improvements we've embedded across the organization.
These results also highlight <unk> unique ability to drive near term performance, while reinvesting in the core.
Advancing the obstructive sleep apnea program.
Maintaining upside optionality in difficult to treat depression.
Together these actions are aligned with our strategic priorities and position live on mobile well for the future.
We recently internally launched a new strategic framework alongside the unveiling of our refreshed logo and visual identity, which.
Which you may have noticed in today's earnings materials.
This new strategic framework in branding reflects <unk> direction.
Momentum and continued focus on growth and innovation.
We look forward to discussing these strategic priorities.
How we plan to build on our strong foundation and how we will shape the future of <unk> in more detail at our Investor Day next week on November 12.
Now turning to segment results.
For the Cardiopulmonary segment revenue was $203 million in the quarter.
An increase of 16% versus the third quarter of 2024.
Heart lung machine revenue grew over 20% versus the prior year period, driven by a sequential acceleration in essence placements and sustained favorable price premiums.
This includes a significant majority of essence placements in developed markets in the quarter.
In August we initiated the commercial launch of essence in China, which is our second largest HLA market after the U S.
We've received positive early feedback from hospitals and clinicians and we're pleased with the launch thus far.
Given the length of the sales cycles for essence, we expect the rollout to be a more meaningful growth driver in 2026.
Cardiopulmonary consumables revenue grew in the mid teens, driven by market share gains procedure growth and price.
Strong demand focused agenda continues to outpace the markets ability to supply.
Operator: If you'd like to register a question during today's event, please press star one on your telephone keypad. As a reminder, this conference call is being recorded. I'd like to introduce your host for today's conference, Ms. Briana Gotlin, LivaNova's Vice President of Investor Relations. Please go ahead.
While our manufacturing capacity expansion plans are progressing well and.
And remain on track.
Third party components supply is a limiting factor for even more rapid expansion.
Briana Gotlin: Thank you, and welcome to our conference call and webcast discussing LivaNova's financial results for the third quarter of 2025. 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, Ahmet Tezel, our Chief Innovation Officer, and Zach Glazer, Director of Investor Relations. 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 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.
Our team remains focused on working with suppliers to meet the production needs.
We now expect cardiopulmonary revenue to grow 12, and a half to 13, 5% for the full year of 2025.
Up from 12% to 13% previously.
This forecast assumes continued <unk> growth and increased penetration in existing markets.
We still expect essence to represent approximately 60% of annual HSM unit placements in 2025.
Up from 40% in 2024.
This forecast also reflects robust market and share growth for consumables.
Briana Gotlin: The discussions will include certain non-GAAP financial measures with respect to our performance, including, but not limited to, revenue results, which will be stated on a constant currency and organic basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website. 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 Investor section of our website under News, Events, and Presentations at investor.livanova.com. With that, I'll turn the call over to Vlad.
Turning to epilepsy.
Revenue increased 6% versus the third quarter of 2024.
With growth across all regions.
<unk> revenue in the Europe, and rest of world regions increased a combined 12% versus the prior year period.
While the U S epilepsy revenue increased 5% year over year.
This forecast assumes continued HLM growth and increased penetration in existing markets.
These results reflect strong commercial execution globally.
During the quarter, we initiated commercial rollout activities to drive awareness of the core Vms data among the epilepsy clinical community worldwide.
We still expect Essence to represent approximately 60% of annual HLM unit placements in 2025.
Up from 40% in 2024.
While we're still in the early stages of commercial activities initial feedback from the clinical community is encouraging.
Vladimir Makatsaria: Thank you, Briana, and thank you, everyone, for joining us today. Welcome to LivaNova's conference call for the third quarter of 2025. In the quarter, LivaNova delivered 13% organic revenue growth versus the prior year, driven by continued momentum in the cardiopulmonary business and solid epilepsy performance across all regions. The ability to sustain strong organic growth, expand margins, and drive strong cash generation reflects the durable market leadership positions of our core businesses. The consistent results also speak to the strength of our execution and the productivity improvements we've embedded across the organization. These results also highlight LivaNova's unique ability to drive near-term performance while reinvesting in the core, advancing the obstructive sleep apnea program, and maintaining upside optionality in difficult-to-treat depression. Together, these actions are aligned with our strategic priorities and position LivaNova well for the future.
This forecast, also reflects robust market and share growth for consumables.
Turning to epilepsy.
Building clinical evidence is a key component of our strategy in epilepsy.
Revenue. Increased 6% versus the third quarter of 2024.
With growth across all regions.
And the core Vms data is expected to further strengthen our foundation.
And support future commercial and educational efforts.
Epilepsy Revenue in the Europe and rest of world regions. Increase the combined 12% versus the prior year period.
For the full year of 2025, we now expect epilepsy revenue growth of 5% to 6%.
While the US epilepsy Revenue, increased 5% year-over-year.
Up from four five to five 5% previously.
These results. Reflect strong commercial execution globally.
This forecast.
Corporate mid single digit growth in the U S and assumes the Europe and rest of world regions will grow a combined low double digits for the year.
During the quarter. We initiated commercial rollout, activities to drive awareness of the core VMS data among the epilepsy clinical Community worldwide.
This is consistent with prior guidance, although at the higher end of respective ranges.
While we're still in the early stages of commercial activities.
Initial feedback from the clinical Community is encouraging.
We continue to see momentum in the global epilepsy business across volume price and mix.
Building clinical evidence is a key component of our strategy in epilepsy.
In summary.
Due to the strong growth was saw in the quarter and continued momentum across all growth drivers.
And the core viens data is expected to further, strengthen our foundation.
And support future commercial and educational efforts.
Vladimir Makatsaria: We recently internally launched a new strategic framework alongside the unveiling of a refreshed logo and visual identity, which you may have noticed in today's earnings materials. This new strategic framework and branding reflect LivaNova's direction, momentum, and continued focus on growth and innovation. We look forward to discussing these strategic priorities, how we plan to build on our strong foundation, and how we will shape the future of LivaNova in more detail at our Investor Day next week on 12 November 2024. Now, turning to segment results. For the cardiopulmonary segment, revenue was $203 million in the quarter, an increase of 16% versus the third quarter of 2024. Heart-lung machine revenue grew over 20% versus the prior year period, driven by a sequential acceleration in Essence placements and sustained favorable price premiums. This includes a significant majority of Essence placements in developed markets in the quarter.
We are raising our overall organic revenue growth outlook by 50 basis points to between nine and a half and 10, 5%.
For the full year 2025, we now expect epilepsy revenue growth of 5% to 6%.
We continue to make progress on the obstructive sleep apnea and difficult to treat depression programs.
Up from 4 and a half to 5 and a half percent previously.
This forecast incorporates mid-single-digit growth in the U.S.
And we'll look forward to providing updates at our Investor Day next week.
With that I'll turn the call over to Alex.
And assumes the Europe. And rest of world regions, will grow a combined, low, double digits for the year.
Thanks Lloyd.
During my portion of the call I'll share a brief recap of the third quarter results and provide commentary on our updated full year 2025 guidance, which reflects strong performance year to date and improving business outlook.
this is consistent with prior guidance, although at the higher end of respective ranges,
we continue to see momentum in the global epilepsy business across volume price and mix.
In summary.
Turning to results revenue in the quarter was $358 million, an increase of 11% on a constant currency basis, and 13% on an organic basis versus the prior year.
Due to the strong growth, we saw in the quarter and continued momentum across all growth drivers. We're raising our overall organic Revenue growth Outlook by 50 basis points to between 9 and a half and 10 and a half percent.
As a reminder, we took a $7 million provision for the Italian payback measure in the second quarter of 2024.
We continue to make progress on the obstructive sleep, apnea and difficult to treat depression programs.
Because of recent legislative developments the company reduced its reserve for the payback matter by $3 8 million during the third quarter of 2025.
And we look forward to providing updates at our investor day next week.
With that, I'll turn the call over to Alex.
Vladimir Makatsaria: In August, we initiated the commercial launch of Essence in China, which is our second-largest HLM market after the US. We've received positive early feedback from hospitals and clinicians, and we're pleased with the launch thus far. Given the length of the sales cycles for Essence, we expect the rollout to be a more meaningful growth driver in 2026. Cardiopulmonary consumables revenue grew in the mid-teens, driven by market share gains, procedure growth, and price. Strong demand for oxygenator continues to outpace the market's ability to supply. While our manufacturing capacity expansion plans are progressing well, and remain on track, third-party component supply is a limiting factor for even more rapid expansion. Our team remains focused on working with suppliers to meet the production needs. We now expect cardiopulmonary revenue to grow 12.5% to 13.5% for the full year 2025, up from 12% to 13% previously.
Thanks lad.
Excluding these adjustments organic growth was 11%.
Foreign exchange in the quarter had a favorable year over year impact on revenue of approximately $5 million or 1%.
During my portion of the call, I'll share a brief recap of the third quarter results and provide commentary on our updated full year 2025 guidance, which reflects strong performance year to date and improving business Outlook.
Adjusted gross margin as a percent of net revenue was 69%.
Generally in line with 70% in the third quarter of 2024.
This year over year decrease was driven by unfavorable currency changes.
<unk> mix incremental investments related to oxygenate, our capacity expansion and tariff impacts.
An increase of 11% on a constant currency basis and 13% on an organic basis versus the prior year.
This was partially offset by favorable pricing across segments and geographies.
As a reminder, we took a 7 million provision for the Italian payback measure in the second quarter of 2024.
Because of recent legislative developments.
Adjusted SG&A expense for the third quarter was $123 million compared to $112 million in the third quarter of 2024.
the company reduced its reserved for the payback matter by 3.8 million during the third quarter of 2025
Excluding these adjustments, organic growth was 11%.
SG&A as a percent of net revenue was 34% generally in line with 35% in the third quarter of 2024.
The year over year decline as a percent of net revenue was driven by fixed cost leverage.
Foreign Exchange in the quarter. Had a favorable year-over-year impact on revenue of approximately 5 million or 1%.
Adjusted gross margin. As a percent of net revenue was 69%.
Adjusted R&D expense in the third quarter was $45 million.
Generally in line with 70% in the third quarter of 2024.
Compared to $47 million in the third quarter of 2024.
Vladimir Makatsaria: This forecast assumes continued HLM growth and increased penetration in existing markets. We still expect Essence to represent approximately 60% of annual HLM unit placements in 2025, up from 40% in 2024. This forecast also reflects robust market and share growth for consumables. Turning to epilepsy, revenue increased 6% versus the third quarter of 2024, with growth across all regions. Epilepsy revenue in the Europe and rest of the world regions increased a combined 12% versus the prior year period, while the US epilepsy revenue increased 5% year over year. These results reflect strong commercial execution globally. During the quarter, we initiated commercial rollout activities to drive awareness of the Core VNS data among the epilepsy clinical community worldwide. While we're still in the early stages of commercial activities, initial feedback from the clinical community is encouraging.
This year-over-year decrease was driven by unfavorable currency changes.
R&D as a percent of net revenue was 13% down from 15% in the third quarter of 2024.
Product mix.
Incremental Investments related to oxygenator capacity expansion and tariff impacts.
The year over year decrease was driven by cost optimization of the DTD program as we pursue CMS coverage.
This was partially offset by favorable pricing across segments and geographies.
Adjusted operating income was $80 million compared to $64 million in the third quarter of 2024.
Adjusted sgna expense for the third quarter was 123 million compared to 112 million in the third quarter of 2024.
Adjusted operating income margin was 23% comp.
Compared to 20% in the third quarter of 2024.
sgna as a percent of net revenue was 34% generally in line with 35% in the third quarter of 2024,
This increase was primarily driven by higher revenue.
Fixed cost leverage and optimization of DTD program spend.
The year-over-year decline, as a percent of net revenue was driven by fixed cost Leverage.
Adjusted effective tax rate in the quarter was 22%.
Adjusted R&D expense in the third quarter was 45 million.
Principally in line with the third quarter of 2024.
Compared to 47 million in the third quarter of 2024.
Adjusted diluted earnings per share was $1 and 11 <unk>.
Compared to <unk> 90 in the third quarter of 2024.
R&D, as a percent of net revenue was 13% down from 15% in the third quarter of 2024,
The increase was primarily driven by adjusted operating income growth.
The year-over-year decrease was driven by cost optimization of the DTD program.
As we pursue CMS coverage.
We continue to make progress in generating cash.
Our cash balance at September 30 was $646 million up from $429 million at year end 2024.
Adjusted operating income was 80 million compared to 64 million in the third quarter of 2024.
Adjusted operating income margin was 23%.
This increase reflects improvements in operating cash flows.
Vladimir Makatsaria: Building clinical evidence is a key component of our strategy in epilepsy, and the Core VNS data is expected to further strengthen our foundation and support future commercial and educational efforts. For the full year 2025, we now expect epilepsy revenue growth of 5% to 6%, up from 4.5% to 5.5% previously. This forecast incorporates mid-single-digit growth in the US and assumes the Europe and rest of the world regions will grow a combined low double digits for the year. This is consistent with prior guidance, although at the higher end of respective ranges. We continue to see momentum in the global epilepsy business across volume, price, and mix. In summary, due to the strong growth we saw in the quarter and continued momentum across all growth drivers, we're raising our overall organic revenue growth outlook by 50 basis points to between 9.5% and 10.5%.
Compared to 20% in the third quarter of 2024.
And the release of $295 million of restricted cash following the Snia litigation guarantee termination.
This increase was primarily driven by higher Revenue.
Fixed cost leverage and optimization of DTD program. Spend
Total debt at September 30 was $434 million.
Adjusted effective tax rate in the quarter was 22%.
Compared to $628 million at year end 2024.
Principally in line with the third quarter of 2024.
The reduction in total debt was a result of the $200 million early repayment of the term facilities.
Adjusted diluted earnings per share was 1.11 compared to 90 cents in the third quarter of 2024.
Adjusted free cash flow in the first nine months of 2025 was $130 million up from $101 million in the prior year period.
The increase was primarily driven by just adjusted operating income growth.
We continue to make progress in generating cash.
The year over year increase was primarily driven by stronger operating results and disciplined working capital management.
Our cash balance at September 30th was 646 million up from 429 million at year end 2024.
Capital spend in the first nine months of 2025 was $49 million compared to $37 million in the prior year period.
This increase reflects improvements in operating cash flows.
And the release of 295 million of restricted cash following the sneer litigation guarantee termination.
The year over year increase was driven by it investments and cardiopulmonary capacity expansion initiatives.
Now turning to our updated 2025 guidance.
Total debt at September 30th was 434 million compared to 628 million at year. End 2024
As Rod mentioned based on performance to date, we're increasing full year 2025 revenue.
Vladimir Makatsaria: We continue to make progress on the obstructive sleep apnea and difficult-to-treat depression programs, and we look forward to providing updates at our Investor Day next week. With that, I'll turn the call over to Alex.
The reduction in total debt was a result of the $200 million early repayment of the term facilities.
Adjusted earnings per share and adjusted free cash flow guidance.
We now forecast 2025 revenue growth between eight five and nine 5% on a constant currency basis and between nine five and 10, 5% on an organic basis.
Adjusted free cash flow in the first 9 months of 2025 was $130 million up from 101 million in the prior year period.
Alex Shvartsburg: Thanks, Vlad. During my portion of the call, I'll share a brief recap of the third quarter results and provide commentary on our updated full year 2025 guidance, which reflects strong performance year to date and improving business outlook. Turning to results, revenue in the quarter was $358 million, an increase of 11% on a constant currency basis and 13% on an organic basis versus the prior year. As a reminder, we took a $7 million provision for the Italian payback measure in the second quarter of 2024. Because of recent legislative developments, the company reduced its reserve for the payback matter by $3.8 million during the third quarter of 2025. Excluding these adjustments, organic growth was 11%. Foreign exchange in the quarter had a favorable year-over-year impact on revenue of approximately $5 million, or 1%. Adjusted gross margin as a percent of net revenue was 69%.
We continue to expect the impact of foreign currency to be a tailwind of approximately 1%.
The year-over-year increase was primarily driven by stronger operating results and discipline working Capital Management.
We continue to forecast a full year adjusted effective tax rate of approximately 23%, which represents an increase of 200 basis points versus 2024.
Capital spend in the first 9 months of 2025, was 49 million compared to 37 million in the prior year period.
The year-over-year increase was driven by it Investments and cardiopulmonary capacity expansion initiatives.
To reflect stronger operational performance, we now project adjusted diluted earnings per share in the range of $3 80.
Now, turning to our updated 2025 guidance,
To $3 90.
With adjusted diluted weighted average shares outstanding to be approximately $55 million for the full year.
As Vlad mentioned based on performance to date. We're increasing full year 2025 Revenue.
Adjusted earnings per share and adjusted free cash flow guidance.
This higher range is primarily driven by increased revenue expectations and productivity improvements.
This <unk> increase continues to reflect an investment in the essence printed circuit board conversion as we discussed last quarter, which is expected to increase cost of goods in the fourth quarter.
We now forecasts 2025 Revenue, growth between 8 and a half and 9, and a half percent. On a constant currency basis and between a 9 and a half, and 10, and a half percent on an organic basis.
Be a Tailwind of approximately 1%.
As a reminder, the printed circuit board investment will support future advanced essence software updates.
Adjusted free cash flow is now expected to be in the range of $160 million to $180 million, which is $20 million higher compared to our prior guide.
Alex Shvartsburg: Generally in line with 70% in the third quarter of 2024. This year-over-year decrease was driven by unfavorable currency changes, product mix, incremental investments related to oxygenator capacity expansion, and tariff impacts. This was partially offset by favorable pricing across segments and geographies. Adjusted SG&A expense for the third quarter was $123 million, compared to $112 million in the third quarter of 2024. SG&A as a percent of net revenue was 34%, generally in line with 35% in the third quarter of 2024. The year-over-year decline as a percent of net revenue was driven by fixed cost leverage. Adjusted R&D expense in the third quarter was $45 million, compared to $47 million in the third quarter of 2024. R&D as a percent of net revenue was 13%, down from 15% in the third quarter of 2024. The year-over-year decrease was driven by cost optimization of the DTD program.
We continue to forecast a full year, adjusted effective tax rate of approximately 23% which represents an increase of 200 basis points versus 2024.
Due to higher net income expectations.
And working capital improvements as well as lower capital spend.
For the year capital expenditures are now expected to be approximately $80 million down from $95 million previously due to the cadence of capital projects.
To reflect stronger. Operational performance. We now project, adjusted diluted earnings per share in the range of 3.80 to 3.90 with adjusted diluted weighted. Average shares outstanding to be approximately 55 million for the full year.
This higher range is primarily driven by increased revenue, expectations, and productivity improvements.
I'd also like to call out that the guidance ranges share today incorporate our best estimate of the potential impact of currently applicable tariffs.
This 10-cent increase continues to reflect an investment in the essence printed circuit board conversion. As we discussed last quarter.
Which is expected to increase cost of goods in the fourth quarter.
As previously discussed we have a tariff mitigation plan in place that includes both a holistic assessment of our supply chain.
As a reminder, the printed circuit board investment will support future Advanced Essence software updates.
As well as potential pricing actions.
Based on the assessment, leaving over remains well positioned to manage the impact of tariffs.
Adjusted free cash flow is now expected to be in the range of 160 to $180 million which is 20 million dollars higher compared to our prior guide.
Consistent with our prior guidance, we estimated a tariff net impact of less than $5 million on adjusted operating income for the full year.
Due to higher net, income expectations.
And working Capital Improvements, as well as lower Capital spend.
2025 guidance range shared today fully incorporates the impact from currently applicable tariffs.
Alex Shvartsburg: As we pursue CMS coverage. Adjusted operating income was $80 million, compared to $64 million in the third quarter of 2024. Adjusted operating income margin was 23%, compared to 20% in the third quarter of 2024. This increase was primarily driven by higher revenue, fixed cost leverage, and optimization of DTD program spend. Adjusted effective tax rate in the quarter was 22%, principally in line with the third quarter of 2024. Adjusted diluted earnings per share was $1.11, compared to $0.90 in the third quarter of 2024. The increase was primarily driven by adjusted operating income growth. We continue to make progress in generating cash. Our cash balance at 30 September was $646 million, up from $429 million at year-end 2024. This increase reflects improvements in operating cash flows and the release of $295 million of restricted cash following the SNIA litigation guarantee termination.
We acknowledge this is a dynamic environment and we continue to monitor it closely.
for the year, Capital expenditures are now expected to be approximately million dollars down from 95 million previously, due to the Cadence of capital projects,
In summary, we had another quarter of strong performance marked by double digit organic revenue growth, which drove 250 basis points of operating margin expansion.
I'd also like to call out that the guidance ranges shared today incorporate our best estimate of the potential impact of currently applicable tariffs.
As previously discussed.
This translates into a 23% increase in adjusted diluted earnings per share.
We have a tariff mitigation plan in place, that includes both a holistic assessment of our supply chain.
As well as potential pricing actions.
And a 32% improvement in adjusted free cash flow.
Based on the assessment, leave an over remains. Well, positioned to manage the impact of tariffs
These results also underscore the impact of disciplined execution.
And productivity across the organization.
consistent with our prior guidance. We estimate a tariff, net impact of less than 5 million.
Our updated 2025 guidance reflects the strength of our businesses.
On the adjusted operating income for the full year.
And continued investment in the core and innovation pipeline.
The 2025 guidance range shared today, fully incorporates the impact from currently applicable tariffs.
With that I'll turn the call back over to Vlad.
Thank you Alex.
We acknowledge, this is a dynamic environment and we continue to monitor it closely.
In closing <unk> delivered another quarter of strong performance underscoring the durability of the core cardiopulmonary and epilepsy businesses as a strong foundation for the company.
In summary, we had another quarter of strong performance marked by double digit, organic Revenue growth, which drove 250 basis points of operating margin expansion.
This translates.
Our results this quarter also reflect disciplined execution enhanced productivity and operational excellence.
Alex Shvartsburg: Total debt at 30 September was $434 million, compared to $628 million at year-end 2024. The reduction in total debt was a result of the $200 million early repayment of the term facilities. Adjusted free cash flow in the first nine months of 2025 was $130 million, up from $101 million in the prior year period. The year-over-year increase was primarily driven by stronger operating results and disciplined working capital management. Capital spend in the first nine months of 2025 was $49 million, compared to $37 million in the prior year period. The year-over-year increase was driven by IT investments and cardiopulmonary capacity expansion initiatives. Now, turning to our updated 2025 guidance. As Vlad mentioned, based on performance to date, we're increasing full year 2025 revenue, adjusted earnings per share, and adjusted free cash flow guidance.
Into a 23% increase in adjusted, diluted earnings per share.
In the third quarter, we continued to expand margins and generate cash.
And a 32% improvement in adjusted free cash flow.
These results also underscore the impact of discipline and execution.
I'll still investing in innovation priorities.
And productivity across the organization.
At the same time, we continued to leverage our neuromodulation expertise to progress the obstructive sleep apnea and difficult to treat depression programs.
Our updated 2025 guidance, reflects the strength of our businesses and continue to investment in the core and Innovation pipeline.
These initiatives represent significant opportunities to address large patient populations with unmet needs.
With that, I'll turn the call back over to vlat.
Thank you, Alex.
They position liver Nova for expansion into additional attractive markets, where we have a clear right to win and can drive durable long term growth.
In closing, leave a note with delivered another quarter of strong performance underscoring, the durability of the core cardio pulmonary and epilepsy businesses as a strong foundation for the company.
With a strong team and clear strategic priorities, we are confident in our ability to sustain momentum and create lasting value for patients customers and shareholders.
Our results. This quarter also reflect discipline execution, enhance productivity, and operational excellence.
In the third quarter, we continue to expand margins and generate cash.
We will look forward to sharing our vision for the next chapter of Lenovo and the strategic priorities that will drive long term growth and value creation in greater detail at our Investor Day next week on November 12.
While still investing in innovation priorities.
Alex Shvartsburg: We now forecast 2025 revenue growth between 8.5% and 9.5% on a constant currency basis, and between 9.5% and 10.5% on an organic basis. We continue to expect the impact of foreign currency to be a tailwind of approximately 1%. We continue to forecast a full year adjusted effective tax rate of approximately 23%, which represents an increase of 200 basis points versus 2024. To reflect stronger operational performance, we now project adjusted diluted earnings per share in the range of $3.80 to 3.90, with adjusted diluted weighted average shares outstanding to be approximately 55 million for the full year. This higher range is primarily driven by increased revenue expectations and productivity improvements. This 10-cent increase continues to reflect an investment in the Essence printed circuit board conversion, as we discussed last quarter, which is expected to increase cost of goods in the fourth quarter.
At the same time, we continue to leverage our neuromodulation expertise to progress, the obstructive sleep, apnea and difficult to treat depression programs.
With that well.
We're ready to open the call for questions.
Okay.
These initiatives represent significant opportunities to address, large patient, populations with unmet needs.
Thank you if you have a question at this time. Please press the Star then the number one key on your touch time telephone.
If you have your question has been answered or you wish to remove yourself from the queue. Please press star two.
They position levanova for expansion into additional attractive, markets, where we have a clear right to win and can drive durable. Long-term growth.
As we enter the Q&A session. Please limit yourself to one question and one follow up.
And then return to the queue. If you have any additional follow ups.
Last question comes from Michael Pollock with Wolfe Research. Your line is open. Please go ahead.
With a strong team and clear. Strategic priorities. We are confident in our ability to sustain momentum and create lasting value for patients, customers and shareholders.
Hey, good morning, Thank you.
I'm going to start in the region.
The fourth quarter and whats implied there if I do the simple math of EPS I am getting 80.
Greater detail at our investor day next week. On November 12th.
Flat year on year, just looks extremely conservative relative to the performance year to date at.
With that, we're ready to open the call for questions.
It implies gross margin.
The operating margin down a lot sequentially year on year. So Alex are glad I'm hopeful you can walk us through a little more precisely like puts and takes in the fourth quarter or anything that you are.
Thank you. If you have a question at this time, please press the star, then the number 1 key on your touch time. Telephone,
Alex Shvartsburg: As a reminder, the printed circuit board investment will support future advanced Essence software updates. Adjusted free cash flow is now expected to be in the range of $160 million to $180 million, which is $20 million higher compared to our prior guide, due to higher net income expectations, working capital improvements, as well as lower capital spend. For the year, capital expenditures are now expected to be approximately $80 million, down from $95 million previously, due to the cadence of capital projects. I'd also like to call out that the guidance ranges shared today incorporate our best estimate of the potential impact of currently applicable tariffs. As previously discussed, we have a tariff mitigation plan in place that includes both a holistic assessment of our supply chain, as well as potential pricing actions. Based on the assessment, LivaNova remains well-positioned to manage the impact of tariffs.
if you have your questions been answered, or you wish to remove yourself from the queue, please press star 2.
Racing for in this guide the street might have been.
Under considering I heard about the PCB conversion, maybe that's a big piece of the answer could be tariffs as well but.
As we enter the Q&A session, please let me yourself to 1 question and 1 follow-up.
And then return to the queue if you have any additional follow-ups.
Any any further context on the fourth quarter implied earnings outlook I would appreciate it.
First question comes from Michael Pollock, with wolf research, your line is open. Please go ahead.
Mike.
Hey, good morning, thank you. Um,
Yes, you are.
Absolutely right.
The printed circuit boards.
Investment that we're making is indeed happening in the fourth quarter in my prepared remarks, I referred to Tencent impact that.
I'm gonna start, uh, in the weekend, just the fourth quarter and what's implied there. If I do the simple math on Epps,
uh, I'm getting 80 cents.
That's what the key drivers of.
Next slide year on year. It just looks extremely conservative relative to the performance year to date. Um, it implies gross margin
Kind of the softer Q4.
And if you recall, we talked about the investment in <unk>.
As a.
It's a platform for us to <unk>.
To drive strategic revenue in the future with software and service so thats.
Down a lot operating margin down. A lot sequentially year on year and so Alex there or Vlad I'm hopeful you can walk us through a little more precisely like puts and takes in the fourth quarter or anything that you're bracing for in this guy that the street might have been.
It was a planned investment we kind of foreshadowed at last quarter end.
It is indeed happening in Q4.
Under considering I heard about the pcba conversion, maybe that's a big piece of the answer could be tariffs as well. But um any any further context on the on the fourth quarter implied earnings Outlook? Uh, I would appreciate
Alex Shvartsburg: Consistent with our prior guidance, we estimate a tariff net impact of less than $5 million on adjusted operating income for the full year. The 2025 guidance range shared today fully incorporates the impact from currently applicable tariffs. We acknowledge this is a dynamic environment, and we continue to monitor it closely. In summary, we had another quarter of strong performance, marked by double-digit organic revenue growth, which drove 250 basis points of operating margin expansion. This translates into a 23% increase in adjusted diluted earnings per share and a 32% improvement in adjusted free cash flow. These results also underscore the impact of disciplined execution and productivity across the organization. Our updated 2025 guidance reflects the strength of our businesses, and continued investment in the core and innovation pipeline. With that, I'll turn the call back over to Vlad.
Thank you I'll ask a follow up on oxygenated, obviously, the cardiopulmonary performance impressive again.
On the consumable side I heard two things just good volumes good share taken price I heard good progress on your internal.
Capacity expansions, but I heard caution again on kind of a third party.
Am I, yeah, you're absolutely right. The printed circuit boards investment that we're making is indeed happening in the fourth quarter. In my prepared remarks, I referred to a 10% impact. That's.
Component supply so can you unpack for us a little more on.
That's what is the key driver is of uh kind of the software Q4.
From a capacity internal capacity investments.
Remind us how much you're adding there and when these projects are expected to completed on the third party supply.
<unk> has a thing of things gotten tighter Q over Q of about the same Q over Q and what's the path.
And if, if you recall, we talked about the investment in pcba as a, uh, it's a platform for us to continue to drive strategic Revenue in the future with software and service.
From your perspective for for that piece.
To relieve as you roll into 'twenty six thank you so much.
So that's uh, you know, it was a a planned investment. We kind of foreshadowed this last quarter and uh, it is indeed happening in Q4.
Thanks, Mike for the question, it's indeed, gaining share and oxygenator is has been and will continue to be one of our key growth drivers.
We have very strong momentum over the last 24 months in terms of share gains and that is supported by our ability to continue manufacturing.
Um, thank you. I'd like to follow up on oxygenators. Obviously the cardio pulmonary performance, impressive again. Um, I'm a consumable site. I heard 2 things just good volumes. Good share. Take good price. I heard good progress on your internal.
Extending our manufacturing so last year. If you recall, we have been agreed with our capacity by around 10%.
Capacity expansions, but I heard caution again on kind of third-party.
Vladimir Makatsaria: Thank you, Alex. In closing, LivaNova delivered another quarter of strong performance, underscoring the durability of the core cardiopulmonary and epilepsy businesses as a strong foundation for the company. Our results this quarter also reflect disciplined execution, enhanced productivity, and operational excellence. In the third quarter, we continued to expand margins and generate cash, while still investing in innovation priorities. At the same time, we continue to leverage our neuromodulation expertise to progress the obstructive sleep apnea and difficult-to-treat depression programs. These initiatives represent significant opportunities to address large patient populations with unmet needs. They position LivaNova for expansion into additional attractive markets where we have a clear right to win and can drive durable long-term growth. With a strong team and clear strategic priorities, we are confident in our ability to sustain momentum and create lasting value for patients, customers, and shareholders.
This year again, our capacity expansion is as close to 15%. However, our external output for the full year will be below 10% and that gap is driven by.
Components Supply. So can you unpack for us a little more? You know what? I'm a Capac. Internal capacity Investments.
Um, remind us how much you're adding there. And, and when these projects are expected to complete it on the third-party Supply,
Deficit and third party components suppliers, we're working very closely with.
Um, front has has been have things gotten tighter Q over Q about the same Q over q and and what, what's the past? Um, from your perspective for, for that piece?
A group of our suppliers to make sure that.
We continue to.
Improve acceleration.
And all best to close the year strong now for the next year, we are actually adding another manufacturing line within legal Nova it's been ongoing investment and projects that we have been driving so that it will allow us to have a step change in our AUM.
To relieve as you roll into 26. Thank you so much. Yeah. Uh, thanks Mike for the question. It's indeed, uh, gaining share and oxygenators has been and will continue to be 1 of our key growth drivers.
Manufacturing capacity and obviously, we're working closely with all the suppliers to make sure that they continue to grow and extend their.
Capacity as well.
Thank you.
Okay.
Now turning to auto Mehta with Piper Sandler Your line is open. Please go ahead.
Hi, Good morning, Thank you for taking the questions and congrats on a nice quarter.
Um, we have very strong momentum over the last 24 months, in terms of sheer gains, and, uh, that is supported by our ability to continue manufacturing, um, expanding, um, manufacturing. So, last year, if you recall, we've increased our capacity by around 10%. Uh, this year, again, our capacity expansion is, is close to 15%. However, our actual output for the full year will be below. 10% and that Gap is driven by, uh, deficit in, um, third-party components supplies. We're working very closely with a group of file suppliers to make sure that
Two for me. The first one is on the Q4 implied guidance, Mike just asked about bottom line, but maybe I'll ask about the topline.
Vladimir Makatsaria: We look forward to sharing our vision for the next chapter of LivaNova and the strategic priorities that will drive long-term growth and value creation in greater detail at our Investor Day next week on 12 November. With that, we're ready to open the call for questions.
I think the implied Q4 revenue growth.
Suggests a growth deceleration and when I look at the prior year comp it looks easier. So maybe just square that for US is it largely conservatism or are there. Some other considerations that we should be aware of in the top line outlook for Q4. Thanks.
Operator: Thank you. If you have a question at this time, please press the star, then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star two. As we enter the Q&A session, please limit yourself to one question and one follow-up, and then return to the queue if you have any additional follow-ups. First question comes from Michael Polark with Wolfe Research. Your line is open. Please go ahead.
Uh, we continue to uh, improve that situation uh and and our best to to close the year strong. Now, for the any next year, we are actually adding another manufacturing line within levanova. It's been a ongoing investment and project that we have been driving. So that will allow us to have a step change in our own, uh, manufacturing capacity. And obviously, we're working closely with all the suppliers to make sure that they continue to grow and expand their um capacity as well.
Hi, Adam.
Look our revenue guide for Q4 is prudent.
Thank you.
The biggest.
The biggest item I would call out is the Q4 comps related to DHL on right we had.
Okay. Now turn to Adam maida with Piper Sandler. Your line is open. Please go ahead.
A really big quarter last year.
And so just kind of the compounding effect.
Michael Polark: Hey, good morning. Thank you. I'm going to start in the weeds on just the fourth quarter and what's implied there. If I do this simple math on EPS, I'm getting $0.80. Slight year-on-year. It just looks extremely conservative relative to the performance year-to-date. It implies gross margin down a lot, operating margin down a lot sequentially year-on-year. Alex or Vlad, I'm hopeful you can walk us through a little more precisely, like puts and takes in the fourth quarter, anything that you're bracing for in this guide that the street might have been under-considering. I heard about the PCBA conversion. Maybe that's a big piece of the answer. It could be tariffs as well. Any further context on the fourth quarter implied earnings outlook, I would appreciate.
Is causing this.
Deceleration if you will but look we're we.
We're continuing to perform well and.
Uh, thank you for taking the questions and congrats on a nice quarter. Um, 2 for me, uh, the first 1 is on the, the Q4 implied guidance. Um, Mike, just asked about bottom line, but maybe I'll ask about the Top Line. Um, you know, I think the implied Q4 Revenue growth,
Really pleased with.
With an 8%.
Growth for Q4 so.
Think we're in pretty good shape.
Okay. Appreciate the color there Alex.
For the second question <unk>.
Um, suggests a growth deceleration and when I look at the prior year comp it it looks easier. So maybe just square that for us is it largely conservatism or are there some other considerations that we should be aware of in the uh the Top Line outlook for Q4, thanks.
Three I think Mark your first quarter with essence in China.
That's our second largest end market.
Hi, Adam. Uh, look, our Revenue guides for Q4 is is prudent. Uh, the biggest
And it looks like we did see rest of world growth pick up a little bit.
Can you just help us better understand the expectations.
For launch in the Chinese market I heard more of an impact in 2006, but.
The biggest item I would call out is the the Q4 comps related to the HLM, right? We had a really big quarter uh, last year.
If you could just kind of flesh that out for us a little bit more in terms of cadence of rollout and then just remind us the current install base there and the opportunity for China that would be helpful. As well. Thank you.
Alex Shvartsburg: Hi, Mike. Alex. Yeah, you're absolutely right. The printed circuit board investment that we're making is indeed happening in the fourth quarter. In my prepared remarks, I referred to a $0.10 impact. That's what the key driver is of kind of the softer Q4. If you recall, we talked about the investment in PCBA as a platform for us to continue to drive strategic revenue in the future with software and service. It was a planned investment. We kind of foreshadowed it last quarter, and it is indeed happening in Q4.
Yes. So thanks, Nicole next question as well so were launched.
We have a commercial launch in China in August.
And and so, you know, just kind of the the compounding effect uh is is causing this uh, deceleration if you will. But look, we're you know, we're we're we're continuing with the per perform well and uh, really pleased with uh, you know, with an 8%, uh, growth for Q4. So I, I, I think we're, we're in pretty good shape.
It's about six months before the kind of the internal target date, and that's a really good sign for us from the Chinese.
Chinese market both from <unk>, but also from regulators that means there is a high demand for this for this product.
Okay, I appreciate the color there, Alex. And, um, just for the second question, HLM. Uh, Q3, I think, marks your first quarter with Essence in China.
So far the feedback from the clinical.
That's their second largest, uh, end market. Um, it looks like we did see rough world growth pick up a little bit.
The hospital community has been very strong very good on the launch.
The selling cycle on the equipment is relatively long haul basically then the disposables and so that's why I kind of made a comment that.
Michael Polark: Thank you. I'll ask a follow-up on oxygenators. Obviously, the cardiopulmonary performance is impressive again. On the consumable side, I heard two things: just good volumes, good share take, good price. I heard good progress on your internal capacity expansions, but I heard caution again on kind of third-party component supply. Can you unpack for us a little more on the internal capacity investments? Remind us how much you're adding there and when these projects are expected to complete. On the third-party supply front, have things gotten tighter Q over Q, about the same Q over Q? What's the path from your perspective for that piece to relieve as you roll into 2026? Thank you so much.
We expect.
The majority of growth impact starting in 2026.
Can you just help us better? Understand the expectations uh, for launch in the Chinese market? I I heard more of an impact in 26, but if you could just, you know, kind of Flesh that out for us a little bit more in terms of cadence of roll out and then just remind us the current install base there and the opportunity for China that would be helpful as well. Thank you.
So if you recall, what we've always said.
Last year, 40% of our worldwide placements.
<unk>.
This year, 60% of all HLA misplaced.
I believe we will be essence under next year, 80% of voyage allowance placed around the world will be essence, and China will be the main contributor to that upside from 60% to 80%.
And then during the Investor Day next week, which I hope you can attend.
Yeah, so uh thank you for this question as well. So we launched. Uh, we had a commercial launch in China in August. Uh, it's about 6 months before the kind of the internal, uh, Target date. And that's a really good sign for us from the, you know, Chinese market both from the clinicians. But also from Regulators, that means there's a high demand for this for this product. Uh, so far the feedback from the clinical
We will unpack a little bit more of the opportunity in China, and specifically, what we expect from launch.
Alex Shvartsburg: Yeah. Thanks, Mike, for the question. It's indeed gaining share in oxygenators, has been and will continue to be one of our key growth drivers. We have very strong momentum over the last 24 months in terms of share gains, and that is supported by our ability to continue manufacturing, expanding our manufacturing. Last year, if you recall, we've increased our capacity by around 10%. This year, again, our capacity expansion is close to 15%. However, our actual output for the full year will be below 10%, and that gap is driven by a deficit in third-party component supplies. We're working very closely with a group of our suppliers to make sure that we continue to improve that situation and do our best to close the year strong. Now, for the next year, we are actually adding another manufacturing line within LivaNova.
Thanks very much.
Now to answer Matt Taylor with Jefferies. Your line is open. Please go ahead.
<unk>.
You know, the selling cycle on the equipment is relatively longer obviously than the disposables. And so that's why I kind of made a comment that we, you know, we expect um the majority of growth impacts starting in 2026.
Hi, Thanks for taking the question.
Thanks to CV.
Neuro growth stabilizing here I was wondering if you could just at a high level talk about.
And the trajectory into next year for that business, given we will start to see some of the roll off of the Covid implant headwinds and you have these other.
Helpers, including the new reimbursement for replacement in the <unk> data.
Um so if you recall what we've always said, you know, we've last year 40% of our worldwide placements were Essence, this year, 60% of all hlms placed globally will be Essence and then next year, 80% of all hlms placed around the world will be Essence and China will be the main contributor to that upside from 60 to 80%.
Can we can we see a pickup in that growth next year.
Yes, so good morning, Matt and thank you for the question so.
And then during the invested day next week, which I hope you can attend. Uh, we will unpack a little bit more of the opportunity in China and specifically what we expect from launch.
Thanks very much for that.
All measures.
Compartmentalize a little bit.
There will be two occasions that we will share in more detail our longer term projections on epilepsy as well as expectations for 2006. So again November 12 of our Investor Day, and then we will guide early in the year for 2026, but a little bit of flavor on what we're starting to see in terms of results.
We now, thank you, Matt Taylor, with Jeff. Your line is open, please go ahead.
Alex Shvartsburg: It's been an ongoing investment and project that we have been driving. That will allow us to have a step change in our own manufacturing capacity. Obviously, we're working closely with all the suppliers to make sure that they continue to grow and expand their capacity as well.
Hi, thanks for taking the question. Um, nice to see the um,
Two things one is.
Strong strong execution globally. So we'll continue to just improve our level of commercial execution.
Neuro growth, uh, stabilizing here. I was wondering if you could just at a high level, talk about the trajectory into next year for that that business given we will start to see some of the roll off of the, the coid, uh, implant headwinds and you have these other
And that pays off with consistent results across the world.
Michael Polark: Thank you.
Number two.
Operator: We now turn to Adam Maeder with Piper Sandler. Your line is open. Please go ahead.
We have core Vms study results out thats, the largest todays real world evidence study and we're starting to.
Helpers, including the new, uh, reimbursement for Replacements and the the data um, could we could we see a pickup in that growth next year.
Adam Maeder: Hi, good morning. Thank you for taking the questions, and congrats on a nice quarter. Two for me. The first one is on the Q4 implied guidance. Mike just asked about bottom line, but maybe I'll ask about the top line. I think the implied Q4 revenue growth suggests a growth deceleration. When I look at the prior year comp, it looks easier. Maybe just square that for us. Is it largely conservatism, or are there some other considerations that we should be aware of in the top line outlook for Q4? Thanks.
Yeah, so good morning Matt and and thank you for the question. So I'll I'll make this.
<unk> deployed the results of the study to the clinical community and starting to get very positive result, and so maybe after I finish ill comment just to say a few points about that.
compartmentalized a little bit, you know, uh,
And then to your point on we're very pleased on the reimbursement improvements that as anticipated.
As of January 1st with a shift from level four to level five on the end of service.
The units.
And that obviously improves the economic viability of.
Alex Shvartsburg: Hi, Adam. Look, our revenue guide for Q4 is prudent. The biggest item I would call out is the Q4 comps related to the HLM, right? We had a really big quarter last year, and just kind of the compounding effect is causing this deceleration, if you will. Look, we're continuing to perform well and really pleased with an 8% growth for Q4. I think we're in pretty good shape.
Our level of commercial execution.
Over the lifetime of Av.
BMS patients, while the providers and so that clearly is an important growth driver for us moving forward and we'll continue to work on.
Market assets and improved reimbursement.
Also for the Mpls. So maybe if you can comment a little bit on the corvette us sure.
As Bob stated this was the largest study state with Vienna, with 800 patients and because it was largely allowed us to do subgroup analysis, because we had large sample sizes and the outcomes kind of further validated the early and sustained reductions in seizure frequency across multiple.
And that pays off with consistent results across the world number 2. Uh, you know, we had core VMS uh, study results out. That's the largest to date real world evidence, uh, study and we're starting to uh, deploy the results of the study to the clinical community and starting to get very positive results. And so, maybe after I finish, our last comment, just to say, a few points about that. Um, and then to your point on, you know, we're very pleased on the reimbursement, improvements that is anticipated.
Michael Polark: Okay. Appreciate the color there, Alex. Just for the second question, HLM Q3, I think marked your first quarter with Essence in China. That's your second largest end market, and it looks like we did see rest-of-world growth tick up a little bit. Can you just help us better understand the expectations for launch in the Chinese market? I heard more of an impact in 2026, but if you could just kind of flesh that out for us a little bit more in terms of cadence of rollout, and then just remind us the current install base there and the opportunity for China, that would be helpful as well. Thank you.
Uh, as of January 1st with a shift from Level 4 to level 5, on the end of service. Um,
Seizure types, including the most severe disabling seizures.
Units. Uh, and that obviously improves economic viability of
For example, I'll just give you one data point at 36 months the analysis show that the median seizure reduction.
Over the lifetime of, um,
It was 80% for focal onset seizures, so we're still as.
Stated in middle overhauling, the data out, but we're getting very very strong feedback from physicians.
You know, VMS patients for the providers. And so that, that clearly is an important growth driver for us moving forward and we continue to work on, uh,
you know, Market access and improve reimbursement. Um,
About the strength of the data.
Got you.
Ask one follow up I know you probably want to comment on the pipeline next week.
But I did want to get an update on the process for depression, I think last quarter, you said it could be about a year before we see a decision is.
Alex Shvartsburg: Yeah. Thank you for this question as well. We had a commercial launch in China in August. It's about six months before the internal target date, and that's a really good sign for us from the Chinese market, both from the clinicians and also from regulators. That means there's a high demand for this product. So far, the feedback from the clinical and the hospital community has been very strong, very good on the launch. The selling cycle on the equipment is relatively longer, obviously, than the disposables, and that's why I made a comment that we expect the majority of growth impact starting in 2026. If you recall what we've always said, last year, 40% of our worldwide placements were Essence. This year, 60% of all HLMs placed globally will be Essence.
As of now six to nine months or is there any anything new on timing or your confidence in getting.
Coverage there.
Also, for the uh, NPI. So, maybe I might, if you can comment a little bit on the CVS. Sure. Um, you know, as Vlad state is this was the largest study date with VNS with, with 800 patients. And because it was, uh, large, it allowed us to do subgroup analysis because we had large sample sizes and the outcomes kind of further validated the early and sustained, reductions in seizure frequency across, multiple seizure types, including the most severe and disabling seizures.
So.
In terms of the process yet.
The fundamentals have not changed for us with regards to the timelines so.
For example, I'll just give you 1 data point, at 36 months, the analysis to show that The Measure median seizure reduction.
We submitted our draft application CMS has given us some questions we view that as a positive part of the process.
Uh was 80% for focal onset seizures. So we're still at last stated in the middle of rolling a data out, but we're getting very, very strong feedback from Physicians, um, about the strength of the data.
We answer their questions and then the government wins to shutdown so right now.
Because of that there is a pause as soon as the government opens we will.
Gotcha, let me ask 1, follow-up. I know you, you probably want to comment on the the pipeline next week. Um,
Go back with the process and the next step is to do our formal application.
Now from that point on there is no strict timelines, but as a reference that is just the reference.
Alex Shvartsburg: Next year, 80% of all HLMs placed around the world will be Essence. China will be the main contributor to that upside from 60% to 80%. During the Investor Day next week, which I hope you can attend, we will unpack a little bit more of the opportunity in China, and specifically what we expect from launch.
But I did want to get an update on the process for depression. I think last quarter, you said it could be about a year before we see a decision is it? Now, you know, 6 to 9 months, or is there any anything new on timing or your confidence in getting uh, uh, coverage there?
Chronic just complete that renal denervation and for them. The process took 11 months in total from the time of the formal application to.
Having the reimbursement completed so we are also hoping that the process for us will be within that kind of timeframe of one year. So nothing has really changed for us. The only thing is this kind of a temporary pause with the government shutdown.
Michael Polark: Thanks very much, Vlad.
Okay, great. Thank you very much.
Operator: We now turn to Matt Taylor with Jefferies. Your line is open. Please go ahead.
Okay announcements here Anthony Petrone with Mizuho your.
So, um, in in terms of the process. Yeah, I, you know, the fundamentals have not changed for us with regards to the timeline. So, uh, we submitted our Draft application. Uh, CMS has given us, uh, some questions. Uh, we view that as a positive part of the process, uh, we uh, answer their questions and then the government, uh, wants to shut down. So right now, um, because of that, there's a pause, uh, as soon as the government opens we will, uh,
Your line is open. Please go ahead.
Michael Polark: Hi, thanks for taking the question. It's nice to see the neuro growth stabilizing here. I was wondering if you could just, at a high level, talk about the trajectory into next year for that business, given we will start to see some of the rolloff of the COVID implant headwinds, and you have these other helpers, including the new reimbursement for replacements and the DRE data. Can we see a pickup in that growth next year?
Thanks, and congrats here on the quarter, maybe one quick one on <unk> and then a high level question, just maybe a little bit on the contribution from the China launch in the quarter.
Go back uh with the process. And the next step is to do our formal application.
And how that that that product cycle, and China essence, specifically will sort of evolve here.
Over the next 12 months.
And then I'll have a quick high level follow up.
Hey, Anthony in.
In terms of China.
Alex Shvartsburg: Yeah. Good morning, Matt, and thank you for the question. I'll maybe compartmentalize a little bit. There will be two occasions that we will share in more detail our longer-term projections on epilepsy as well as expectations for 2026. November 12th is our Investor Day, and we will guide early in the year for 2026. A little bit of flavor on what we're starting to see in terms of results, I think two things. One is strong execution globally. We continue to just improve our level of commercial execution, and that pays off with consistent results across the world. Number two, we had Core VNS study results out. That's the largest-to-date real-world evidence study, and we're starting to deploy the results of the study to the clinical community and starting to get very positive results.
For the quarter, we actually saw some early indications of.
Kind of positive positive reception we.
Now, uh, from that point on, there's no strict timelines but as a reference and it's just the reference, uh, Medtronic just uh, complete that uh, renal denervation. And for them, the process took 11 months in total from the time of the formal application to um having the reimbursement completed. So we are also hoping that the process for us will be within that kind of time frame of 1 year. So nothing has really changed for us. The only thing is this kind of a temporary pause with the government shutdown.
We had some some orders come into Q3.
Okay, great. Thank you very much.
I think there was kind of the Mad Rush ahead of the Golden week two to get these orders in bye bye.
We now offer to Anthony Patron with Mojo. Your line is open, please go ahead.
Certain distributors in hospitals, but it's still early on in the game and as Les said, we're going to see most of the impact.
Next year from that launch.
All right. Thanks and congrats. You're on on the quarter, maybe 1 quick 1 on Essence and then a high level question. Just maybe a little bit on the contribution from the China launched in the quarter.
And then maybe just high level as we head into the analyst day, when you think about managing.
And how that that that product cycle in China, Essence specifically will sort of evolved here.
The topline growth algorithm with just priorities at at EBITDA.
you know, over the next, uh, 12 months,
Obviously, two new initiatives here depression sleep, maybe just a little bit of a preview on how the company is prioritizing top line growth over EBITDA margin expansion and earnings.
Uh and then I'll have a quick uh, high level follow-up.
hey, Anthony in um, in terms of China,
Congrats again and look forward to seeing everyone next week. Thanks.
Look we don't want to preempt discussion today for Investor day.
Alex Shvartsburg: Maybe after I finish, I'll ask Ahmet just to say a few points about that. To your point, we're very pleased on the reimbursement improvements that are anticipated as of 1 January with a shift from level four to level five on the end-of-service unit. That obviously improves economic viability over the lifetime of VNS patients for the providers. That clearly is an important growth driver for us moving forward. We continue to work on market access and improve reimbursement also for the NPIs. Maybe, Ahmet, if you can comment a little bit on core VNS. Sure. As Vlad stated, this was the largest study to date with VNS with 800 patients. Because it was large, it allowed us to do subgroup analysis because we had large sample sizes.
Next week, we'll connect the dots between our current execution.
Our financial ambitions.
The long range plan, so again kind of looking forward to sharing the details of our long term strategy and financial objectives next week on November 12, and Anthony look.
Uh certain uh distributors in hospitals. But you know it's still early on in in in the game and uh as as lad said, we're going to see most of the impact. Uh, next year from that launch
And then maybe just high level as we head in the analyst. Dave, when you think about, you know, managing
Look forward to seeing you next week and thank you for taking the time to join us.
Fair enough. Thank you.
Right now to answer David <unk> with Baird. Your line is open. Please go ahead.
Oh, great. Thanks for taking my questions and congrats on the quarter here.
I want to follow up on some of the comments around this investment behind the core VNS trial.
The Topline growth algorithm, which is your priorities at at ebita, you know, obviously 2, new initiatives, here, depression and sleep. Maybe just a little bit of a preview on on how the company is prioritizing. Topline growth over ibida margin expansion and earnings. Uh, and congrats again, look forward to seeing everyone next week. Thanks.
More curious.
About how.
How internally you're expecting to gauge what the benefits of that investment can be and over what period.
Alex Shvartsburg: The outcomes kind of further validated the early and sustained reductions in seizure frequency across multiple seizure types, including the most severe and disabling seizures. For example, I'll just give you one data point. At 36 months, the analysis showed that the median seizure reduction was 80% for focal onset seizures. We're still, as Vlad stated, in the middle of rolling the data out, but we're getting very, very strong feedback from physicians about the strength of the data.
I know, there's some elevated reimbursement on the service.
Essentially being a benefit for.
New centers opening up.
Look, we we we don't want to preempt uh, discussion today for investor day. Um, you know, we'll next week we'll, uh, we'll connect the dots between our current execution and, uh, our financial Ambitions, uh, for the long range plan. So again kind of looking forward to sharing the details of our long-term strategy, and financial objectives. Uh, next week, on November 12th and Anthony. Uh, I look forward to seeing you next week and thank you for taking the time to join us.
New generic adopting the therapy.
Fair enough. Thank you.
On the NPI reimbursement.
Is this something that you'll see.
David Prescott with bed, your line is open, please go ahead.
Ground level.
And it relates to exploring new implants to just more centers.
Yes.
Therapy, how are you thinking about gauging the success of <unk>.
Michael Polark: Gotcha. Maybe I just ask one follow-up. I know you probably want to comment on the pipeline next week. I did want to get an update on the process for depression. I think last quarter, you said it could be about a year before we see a decision. Is it now six to nine months, or is there anything new on timing or your confidence in getting coverage there?
Korean asset.
And the financials I gotcha okay.
So David.
And very important question and thank you for asking it.
I think this is if you look at.
One third roughly all epilepsy population they have.
Yes resistant to drugs.
And then it takes 10 to 15 years to get from the diagnosis of being in DRP patients to actually getting a seeking for treatment.
Alex Shvartsburg: In terms of the process, yeah, the fundamentals have not changed for us with regards to the timeline. We submitted our draft application. CMS has given us some questions. We view that as a positive part of the process. We answered their questions, and then the government went to shutdown. Right now, because of that, there's a pause. As soon as the government opens, we will go back with the process. The next step is to do our formal application. Now, from that point on, there's no strict timelines. As a reference, and it's just a reference, Medtronic just completed that renal denervation. For them, the process took 11 months in total from the time of the formal application to having the reimbursement completed.
If you look at.
Kind of across various clinical specialties.
Treatment of drug resistant.
Epilepsy patient has one of the lowest penetration.
Great. Um, thanks for taking the questions and congrats on the, the quarter here. Um, I want to follow up on, on some of the comments around this, um, investment behind the, the, the core VNS, um, trial, um, you know, more Curious, um, uh, about how, um, you know, how internally you're expecting to gauge. Um, what the benefits, uh, of that investment can be in, in over what? Period. Um, I I know there's, there's some elevated reimbursement on the, the, the end of service, um, potentially being a a benefit for um, a new centers opening up uh maybe new center adopting the therapy. I'm not sure if there's been an update on the, uh, NPI reimbursement. But, you know, is this something that that that you'll see, um, on the ground level? Uh, it relates to, to accelerating new implants, to, to just more centers. Um, uh uh, on boarding via therapy how
And there are a number of barriers or if you'll flip of drivers that will contribute to improvement of that penetration and you mentioned the two of them one is reimbursement.
How are you thinking about gauging, kind of the, the success of what corbyn has to showed, uh, in the financials? I guess of the company.
And making sure that.
Hospitals also have financial economic benefit from those procedures and we made a major step on that in terms of level four to level five.
So David good morning and very important question. Thank you for asking it. Look, I think this is um, if you look at
you know, 1 third roughly of epilepsy population have
And and you know like I said, we're continuing to work on level six <unk> as well.
Uh yeah, I resistant to drugs.
The other kind of clinical strategic.
The direction is.
And in the innovation area is <unk>.
And uh and then it takes 10 to 15 years to get from the diagnosis of being in Dr. Patient to actually getting a seeking for treatment and
Alex Shvartsburg: We are also hoping that the process for us will be within that kind of time frame of one year. Nothing has really changed for us. The only thing is this kind of a temporary pause with the government shutdown.
you know, if you look at the
How do we make sure that we continue to.
Create products.
Kind of across various clinical specialties.
And the procedures that are less invasive and more clinically effective and ultimately that is the goal of innovation minimally invasive more clinically effective and.
Treatment of drug resistance.
Epilepsy patient has 1 of the lowest penetrations.
Michael Polark: Okay. Great. Thank you very much.
Operator: We now turn to Anthony Patron with Mizuho. Your line is open. Please go ahead.
What.
Four of the MF study shows is that with relatively less invasive procedure is like VNS, we're starting to see really strong long long term resolve.
and there are a number of barriers or if you flip a drivers that will contribute to Improvement of that penetration, and you mentioned the 2 of them, you know, 1 is reimbursement, uh, and making sure that
Michael Polark: All right. Thanks, and congrats here on the quarter. Maybe one quick one on Essence and then a high-level question. Just maybe a little bit on the contribution from the China launch in the quarter, and how that product cycle in China, Essence specifically, will sort of evolve here over the next 12 months. I'll have a quick high-level follow-up.
And that is an important data point for the clinical community to drive penetration of the procedure and so I'll turn it to Ahmed.
A little bit more to talk more from scientific point of view.
You know, hospitals also have Financial economic benefits from those procedures and we made a major step on that in terms of level photo level 5. Um and and you know, like I said we're continuing to work on on level 6 for the NPI as well. Uh, the other
In terms of the investments in terms of the data investment the investment is.
kind of clinical strategic, uh, direction is in in in the Innovation area is
It is mostly done so from this point on we're talking.
Alex Shvartsburg: Hey, Anthony. In terms of China for the quarter, we actually saw some early indications of kind of positive reception. We had some orders come into Q3. I think there was kind of the mad rush ahead of the Golden Week to get these orders in by certain distributors and hospitals. It's still early on in the game, and as Vlad said, we're going to see most of the impact next year from that launch.
Publications advisory boards and things like that that are.
That are not substantially lessons from an investment standpoint.
Two comments to what Vlad said one day.
Data show that the earlier you start VNS therapy, the better clinical outcomes are so I think that's an important learning of this study that we are going to ensure that our physician based understands so that crude kind of accelerated a little bit of utilization because earlier, the better and as <unk> talked about it.
how do we make sure that we continue to um create products and and the procedures that are less invasive and more clinically effective and ultimately that is the goal of innovation minimally invasive, more clinically effective and
<unk> locked in simplifying the workflow.
Michael Polark: Maybe just high-level as we head into analyst day, when you think about managing the top-line growth algorithm, which is your priorities at EBITDA, obviously two new initiatives here, depression and sleep. Maybe just a little bit of a preview on how the company is prioritizing top-line growth over EBITDA, margin expansion, and earnings. Congrats again. Look forward to seeing everyone next week. Thanks.
And we also show with the core data that dosing and titration and getting that right is really really important. So anything we can do to make the workflow easier and faster helps the end outcome. So I think those will be the two key points I will make earlier utilization of VNS is really important and impactful.
According to the core data and dosing and titration is really impactful. So we're investing a lot in making that a lot easier for physicians and patients.
Alex Shvartsburg: Look, we don't want to preempt discussion today for Investor Day. Next week, we'll connect the dots between our current execution and our financial ambitions for the long-range plan. Again, kind of looking forward to sharing the details of our long-term strategy and financial objectives next week on 12 November 2024.
David I'm going to keep promoting our investor day, because I think it will be important.
<unk> kind of take a look at a holistic strategy on how we have continued to grow epilepsy.
And this is obviously an important leg of that strategy. So I hope to see you there and move along back a little bit.
More in terms of our holistic approach to driving durable growth and the epilepsy business.
Operator: Anthony, I look forward to seeing you next week, and thank you for taking the time to join us.
Yeah.
Okay.
That's helpful.
Michael Polark: Fair enough. Thank you.
I guess kind of clarification questions on some prior comments first on the China rollout contribution in 2026 I heard you talk about this shift from the 60% to 80%.
Operator: We now turn to David Rescott with Baird. Your line is open. Please go ahead.
Adam Maeder: Great, thanks for taking the questions, and congrats on the quarter here. I want to follow up on some of the comments around this investment behind the core VNS trial. More curious about how internally you're expecting to gauge what the benefits of that investment can be and over what period. I know there's some elevated reimbursement on the end-of-service, potentially being a benefit for new centers opening up or maybe new centers adopting this therapy. I'm not sure there's been an update on the NPI reimbursement, but is this something that you'll see on the ground level as it relates to exploring new implants, to just more centers onboarding VNS therapy? How are you thinking about gauging kind of the success of what core VNS has showed in the financials, I guess, of the company?
Is China the way of the reason that you get to the 80 or is potentially China and upside to getting to 80, and then on the oxygenate or manufacturing capacity.
Is that are not substantially investments from an investment standpoint. I'll add, uh, 2 comments to what Vlad said 1. The data show that the earlier you start the NS therapy, the better clinical outcomes are. So I think that's an important learning of the study that we are going to ensure that our physician-based understands so that could kind of accelerate a little bit of utilization because earlier is the better. And last talked about it. We're investing a lot in simplifying, the workflow. Um, and we also show with the core data that dozing and titration. And getting that right is really, really important. So anything we can do to make the workflow easier and faster helps the end outcome. So I think those will be 2 key points. I will make earlier utilization of VNS is really important and impactful according to the core data and dozing and titration is really impactful. So we're investing a lot in making that a lot.
Lot easier for our physicians and patients.
I heard that.
Our new manufacturing line next year that will be a step change I think you said on the impact just curious if you can qualify or quantify what you or your definition of step change is.
And David, I'm going to keep promoting our investors today uh because I think it will be important to kind of take a look at a holistic strategy on how we continue to grow epilepsy. Um, and this is obviously an important level of that strategy. So, I hope to see you there and we will unpack a little bit.
And we will see the team at the Analyst Day next week. Thank you.
More in terms of how holistic approach to driving durable growth and the epilepsy results.
Yes, so I'll start maybe with the second one so.
So we expect the new.
Line to be to go live in the second half of the year. So that's one we'll start to see them acceleration.
Beyond just ongoing improvements within the current network and a step change so we won't guide specifically to two hour.
Exact capacity increase but it will be beyond what we have done historically on the annual basis.
So that's the first one and then.
Alex Shvartsburg: David, good morning. Very important question. Thank you for asking it. Look, I think this is, if you look at 1/3 roughly of the epilepsy population, have, I mean, resistant to drugs. It takes 10 to 15 years to get from the diagnosis of being a DRE patient to actually getting or seeking for treatment. If you look at the, kind of across various clinical specialties, treatment of drug-resistant epilepsy patients has one of the lowest penetrations. There are a number of barriers or, if you flip it, drivers that will contribute to improvement of that penetration. You mentioned two of them. One is reimbursement, and making sure that hospitals also have financial economic benefit from those procedures. We made a major step on that in terms of level four to level five.
So that's the second one sorry.
The first one.
So China is a big driver and remember.
There are two drivers on on the growth of <unk>.
Okay, um, that's helpful. Um, 2 2, I guess, kind of clarification questions. Um, on some prior. Um, comments. First on on, uh, the the China rollout contribution in 2026. I, I heard you. You talk about the shift from the 60%, to, to 80%. Um, uh, is is China. Uh, the the way, the reason that you get to the 80 or is, is potentially China and upside, uh, to getting to, to 80. Uh, and then on on the oxygenator manufacturing capacity, uh, heard that, um, you know, new manufacturing line next year that will be a, a step change. I think you said, uh, on the impact. Uh, just curious if you can uh qualify or quantify. What your your definition of of Step change is um um and and we'll see the team at the analyst next week. Thank you.
Hello.
The first one is this kind of process improvement of placement penetration call or during the year. So we're going from.
Yeah, so I'll start maybe with the second 1. Uh, so we we expect the new, uh,
60% to 80% next year, and yes, China will be the major contributor.
That upgrade the second one and if you look over the last few quarters and this is where the biggest upside came from in terms of our growth.
Same in quarter, three is where the fact that we are able to maintain very strong price premium on.
Um, line to be to go live in the second half of the year. So that's when Google starts seeing acceleration, uh, Beyond just ongoing improvements within the current Network and the step change. So we won't uh guide specifically to to our uh, exact capacity increase. But it will be beyond what we have done historically on the annual basis.
Um, so that's the first one, and then,
Essence versus S. Five.
And.
Uh, so that's the second 1. Sorry. Uh on on the first 1.
And that ability to preserve price premium is actually a very strong indicator of.
Alex Shvartsburg: Like I said, we're continuing to work on level six for the NPIs as well. The other kind of clinical strategic direction in the innovation area is, how do we make sure that we continue to create products and procedures that are less invasive and more clinically effective? Ultimately, that is the goal of innovation: minimally invasive, more clinically effective. What the Core VNS study shows is that with relatively less invasive procedures like VNS, we're starting to see really strong long-term results. That is an important data point for the clinical community to drive penetration of the procedure. I'll turn it to Ahmet a little bit to talk more from a scientific point of view. Yeah, in terms of the investment, in terms of the data investment, the investment is mostly done. From this point on, we're talking.
The value proposition of Athens to the clinical community.
Uh so China is a Big Driver. Remember there are there are 2 drivers on uh on the growth of of uh HLN.
And so one of our.
Targets and using your point could that be an upside is to make sure that we'll continue to preserve price premium.
As we roll out <unk> across the world.
Okay. Thank you.
Playing out sensitive Mike Matson with Needham. Your line is open. Please go ahead.
Uh the first 1 is this kind of percent Improvement of of placement penetration call it during the year. So we're going from UH 60 to 80% next year. And yes, China will be the major contributor uh to that uh upgrade the second 1 and if you look over the last few quarters and this is where the biggest upside came from in terms of our growth,
Yeah. Thanks, So just a few on oxo.
you know, same in in quarter 3, is with the fact that we are able to maintain very strong price premium
<unk>.
So.
Are there any signs of your competitors trying to expand their production and then whats your confidence that the demand remains as strong as it's been.
On Essence versus xs5.
and,
Particularly the I guess procedural driven component of that.
And that ability to preserve price. Premium is actually a very strong indicator of, you know, value proposition of essence to the clinical community.
And then if the growth were to slow our demand were to slow down is there any as you have added this capacity.
and so, 1 of our
Would that pressure your margins or anything like that or is it easy easy enough to kind of turn it off.
You know targets and using your point, you know, could that be an upside is to make sure that we continue to preserve uh price premium uh as we roll out, Essence across the world.
Alex Shvartsburg: Publications, advisory boards, and things like that are not substantial investments from an investment standpoint. I'll add two comments to what Vlad said. One, the data show that the earlier you start VNS therapy, the better clinical outcomes are. I think that's an important learning of the study that we are going to ensure that our physician base understands. That could kind of accelerate a little bit of utilization because earlier is the better. As Vlad talked about it, we're investing a lot in simplifying the workflow. We also show with the core data that dosing and titration and getting that right is really, really important. Anything we can do to make the workflow easier and faster helps the end outcome. I think those will be the two key points I will make.
If you see things slowdown.
Okay, thank you.
So very very good question, so I'll start with the second part of it. So the way we're building out additional capacity is in a very financially disciplined manner. So fluctuations in the demand within the certain range I'm not going to impact.
Mark Mattson with neon. Your line is open. Please go ahead.
Negatively.
All kind of this.
This type of investment then we won't see any negative.
Pressure on the financials.
On the first part.
Of the question.
So we have now over the last two years have seen the momentum of share gains and we believe that we are now we regained share from low <unk> to very high thirties now in terms of percent of share in a very mature market like oxygenator, you rarely see that.
Word to slow or demand word to slow down. Is there any you know as you've added this capacity?
Alex Shvartsburg: Earlier utilization of VNS is really important and impactful according to the Core data. Dosing and titration is really impactful. We're investing a lot in making that a lot easier for our physicians and patients.
Would that pressure your margins or anything like that? Or is it easy easy enough to kind of turn it off? Um, if you see see things slow down,
And we attribute that not to a disruption in the market with competitors, but the fact that we have not seen any investment and innovation all capacity inquiries from Medtronic and <unk> and obviously from getting there we saw exit from from from this part of the from the segment of the market.
Operator: David, I'm going to keep promoting our Investor Day because I think it will be important to kind of take a look at a holistic strategy on how we continue to grow epilepsy. This is obviously an important leg of that strategy. I hope to see you there, and we will unpack a little bit more in terms of our holistic approach to driving durable growth in the epilepsy business.
So.
Continued to gain share our first step is to continue gaining share through improved supply.
So very, very good question. So I'll start with the second part of it. So the way we're building our additional capacities in a very Financial discipline manner so you know fluctuations in the demand within a certain range are not going to impact uh negatively uh of of kind of this this this type of investment and we won't see any negative uh pressure on on the financials.
Um,
And the second step.
Will be to launch new generation oxygenated, we're going to talk about <unk>.
on the first part, um, of the question.
Adam Maeder: Okay. That's helpful. Two, I guess, kind of clarification questions on some prior comments. First, on the China rollout contribution in 2026, I heard you talk about the shift from the 60% to 80%. Is China the reason that you get to the 80%, or is potentially China an upside to getting to 80%? On the oxygenator manufacturing capacity, I heard that new manufacturing line next year that will be a step change, I think you said, on the impact. Just curious if you can qualify or quantify what your definition of step change is. We'll see the team at the analyst day next week. Thank you.
Clinical value that it brings during the Investor day. So we see share gain an oxygenator is not just a short term blip, but it is a long term strategy and we have.
Execution plan behind that.
And then to the market growth.
Look we are learning more and more about what drives three procedure growth and it's multi dimensional part of it is that we're just as a society to give more than getting more open heart surgeries number tool is emerging markets, where open heart procedure penetration is lower and has more runway.
So we we have now over the last 2 years, has seen the momentum of share gains. And we believe that we are now. We're getting share from low 30s to very high 30s. Now, in terms of percent, share in a very mature market. Like oxygenated, you rarely see that and we attribute that not to A disruption in the market with competitors, but that the fact that we have not seen any investment and Innovation, all capacity inquiries from Medtronic and turo and obviously from getting here we saw uh exit from from from this part of the from the segment of the market.
um, so we
For growth.
Those markets are becoming bigger.
Part of the pie.
And.
So that kind of contributes positively to overall growth.
Operator: Yeah. I'll start maybe with the second one. We expect the new line to go live in the second half of the year. That's when we will start seeing acceleration beyond just ongoing improvements within the current network. The step change, we won't guide specifically to our exact capacity increase, but it will be beyond what we have done historically on an annual basis. That's the first one. On the first one, China is a big driver. Remember, there are two drivers on the growth of HLM. The first one is this kind of percent improvement of placement penetration, call it, during the year. We're going from 60% to 80% next year, and yes, China will be the major contributor to that upgrade.
continue to gain. Share our first step is to continue gaining, share through improved Supply. Uh and the Second Step uh will be to launch New Generation oxygenator. We're going to talk about um
And then finally, we believe that there was a.
Or kind of lack of diagnosis during COVID-19.
And that resulted in more advanced heart disease for patients.
After COVID-19.
So that potentially will grow that part of the market growth will potentially go away and then finally on the valve procedures, we see a more robust growth on valve procedures.
Clinical value that it brings during the Investor Day. So we see share gain and oxygenator as not just a short-term blip, but as a long-term strategy, and we have, uh, you know, execution plan behind that. And then to the market growth.
<unk> kind of savvy growth.
Momentum is flattening.
And Mike I would just add the.
Look, we're learning more and more about what drives the procedure growth and its multi-dimensional, you know, part of it is that we're just as a society getting older and getting more open heart. Surgeries number 2 is Emerging Markets, where open heart, procedure penetration is lower and has more runway for growth
The fact that.
Those markets are becoming bigger.
The market is continuing to be a very robust market. We were still operating in a in a back order situation. So the demand is outpacing the market's ability to supply alright, So we're building capacity to address.
Part of the p. Uh, and uh, um, so that kind of contributes positively to overall growth. And then finally, you know, we believe that there was a
kind of lack of diagnosis during Co
Yes.
The demand that we're seeing and as <unk> said, we're going to do this in a.
Financially disciplined manner.
Operator: The second one, if you look over the last few quarters, this is where the biggest upside came from in terms of our growth. Same in Q3, with the fact that we are able to maintain a very strong price premium on Essence versus S5. That ability to preserve price premium is actually a very strong indicator of the value proposition of Essence to the clinical community. One of our targets, and using your point, could that be an upside, is to make sure that we continue to preserve price premium as we roll out Essence across the world.
<unk>.
We need to we need to build this capacity also in light of the fact that we're going to ultimately start converting to our next generation oxygenated. So there needs to be that transition point.
Yes, okay that makes sense, especially with the new the new Akshay are coming so and then just one quickly on the <unk> side with the piece the PCB upgrade.
And, uh, and that resulted in more advanced heart disease for patients. Um, you know, after Co so that potentially will will go that part of the market growth will potentially go away. And then finally, on the valve procedures, we see, uh, a more robust growth on on valve procedures, as kind of Tavi growth, uh um, kind of, you know, momentum is flattening.
How involved are the sales reps going to be in terms of.
Managing that with the customers and is this something that could.
Potentially distract them from selling <unk> and oxygen <unk> in the fourth quarter.
And Mike. I would just add the fact that the the market is continuing to be a very robust Market. We were still operating in a, in a backwards situation, so the demand is outpacing, the Market's ability to Supply, right? So we're building capacity to address.
No yes it is.
Good point no.
It's a service organization that will execute the upgrade.
Adam Maeder: Okay, thank you.
And then.
There will be no disruption for our sales organization.
Operator: We now turn to Mike Matson with Needham. Your line is open. Please go ahead.
Okay got it thanks.
Mike Matson: Yeah, thanks. Just a few on the oxygenator business. Are there any signs of your competitors trying to expand their production? What's your confidence that the demand remains as strong as it's been, particularly the, I guess, procedural-driven component of that? If the growth were to slow or demand were to slow down, is there any, as you've added this capacity, would that pressure your margins or anything like that, or is it easy enough to kind of turn it off if you see things slow down?
We now turn it to Shawn Mccormick with Stifel. Your line is open. Please go ahead.
Um, you know, the the, the demand that we're seeing and as glad said, you know, we're we're going to do this in a financially disciplined, uh, Manner. And, uh, you know, we need to, we need to build this capacity also in light of the fact that we're going to ultimately start converting to our next Generation oxygenator. So there needs to be that transition point.
Hi, Good morning, just wanted to go back to the free cash flow, we saw in the quarter so conversion rates above.
Yeah. Okay. That, that makes sense, especially with the new, the new oxygen are coming. So, and then just 1 quickly on the HLM side with the piece, the PCB upgrade.
Above 90%.
Last 12 month basis near $200 million.
In total just wanted to get a better sense I know snia is still ongoing here, but is there.
How involved are the sales reps going to be in terms of managing that with the customers? And is this something that could, you know, potentially distract them from selling HLMS and oxygenators in the fourth quarter?
Anything that we can attribute maybe in the future to greater M&A capacity or or other in terms of investments in the business that youre getting with this stronger free cash flow generation on the overall strategy.
No. Yeah, it's a good point. No, it's a service organization that will execute the upgrade.
Operator: Very good question. I'll start with the second part of it. The way we're building our additional capacity is in a very financially disciplined manner. Fluctuations in the demand within a certain range are not going to impact negatively our kind of this type of investment, and we won't see any negative pressure on the financials. On the first part of the question, we have now, over the last two years, seen the momentum of share gains. We believe that we are now, we've gained share from low 30s to very high 30s now in terms of percent share. In a very mature market like oxygenator, you rarely see that. We attribute that not to a disruption in the market with competitors, but the fact that we have not seen any investment and innovation or capacity increase from Medtronic and Terumo.
John Thanks for your question look we.
Um, and then uh it will be no disruption for sales organization.
Okay, got it. Thanks.
If you look at our cash position very well positioned to address.
This near payment and I appreciate you calling out the fact that where our cash generation has improved.
Yeah, obviously it gives us.
Putting snia behind this ultimately gives us.
The flexibility to deploy our capital against Us strategic initiatives and M&A is one of.
One of those tools that we will.
Hi, good morning. Just wanted to go back to the free cash flow. We saw in the quarter so conversion rates above 90% on on a last 12-month basis, near 200 million. Uh in total just want to get a better sense. I know snia is still ongoing here but is there
Look too so.
I think it's important for us to continue to focus on improving our cash generation that.
That is.
That's the the lifeline for any company to be successful is to drive cash flow.
Anything that we can attribute maybe in the future to to to Greater m&a capacity or or other in terms of uh investments in the business that you're getting with this uh Stronger free cash flow generation on the overall strategy.
Yeah.
Great that's helpful and.
A follow up on the epilepsy business you talked a lot about.
Operator: Obviously, from Getinge, we saw exit from this part of the segment of the market. We continue to gain share. Our first step is to continue gaining share through improved supply. The second step will be to launch new generation oxygenator. We're going to talk about the clinical value that it brings during the Investor Day. We see share gain in oxygenator as not just a short-term blip, but as a long-term strategy. We have an execution plan behind that. To the market growth, look, we're learning more and more about what drives the procedure growth, and it's multidimensional. Part of it is that we're just, as a society, getting older and getting more open-heart surgeries. Number two is emerging markets where open-heart procedure penetration is lower and has more runway for growth. Those markets are becoming a bigger.
Core VNS study, so far and how that's contributing also just wanted to get a sense of what's going on the ground in terms of the team's commercial presence the rep CEC teams.
All of these initiatives that you've put in place how are they working to drive greater overall market penetration in just what inning do you think we are in in terms of.
John. Thanks for your question. Look. We um you know if you look at our cash position very well positioned to address uh this Nia payment and uh I appreciate you calling out the fact that we're our cash generation has uh improved. Um, yeah. Obviously it gives us, you know, putting snea behind this ultimately gives us uh the the the flexibility to deploy our Capital against uh strategic initiatives and m&a is 1 of
Seeing this number has steadily increase.
Uh, 1 of those, uh, tools that we will, uh, look to. So
John Thanks look so.
The epilepsy business really pleased with our performance in the quarter and year to date.
The.
I I, I think it's, uh, it's important for us to continue to focus on improving our cash generation it. Uh, uh, you know, that is, uh, that's the the lifeline for any company to be successful as to, you know, Drive cash flow.
The commercial teams have executed extremely well.
Particularly coming out of the field safety notice situations that we had in the quarter. So we.
We're starting to catch up in terms of.
Deferred procedures that we saw.
And.
It's a multifaceted approach to driving penetration.
Operator: Part of the pie. That kind of contributes positively to overall growth. Finally, we believe that there was a kind of lack of diagnosis during COVID, and that resulted in more advanced heart disease for patients after COVID. That part of the market growth will potentially go away. Finally, on the valve procedures, we see a more robust growth on valve procedures as kind of TAVI growth momentum is flattening.
In the marketplace as a market leader.
<unk> obviously.
Focused on driving data.
Data generation clinical evidence to support.
Great, that's helpful and a follow-up on the epilepsy business. You talked a lot about the the core VNS study so far and and how that's contributing also, just wanted to get a sense of of what's going on the ground. In terms of the team's commercial presence, the rep, c teams. Just all these initiatives. That, that you've put in place, how are they working to, to drive greater overall Market, penetration and and just what inning do you think we are in in terms of, uh, seeing this number steadily increase?
<unk> therapy.
<unk>.
The health economic.
Reimbursement.
Improvements are going to help us this is.
It's part of our overall strategy to drive growth and again, we keep.
Pitching investor day, but we'll unpack.
A lot of that next next week, when we talk about our long range strategy.
Great. Thanks for taking the questions.
Let me now turn to Mexico with Barclays. Your line is open. Please go ahead.
John thanks. Uh look so the the epilepsy business really pleased with uh our performance in the quarter and and year to date, uh, the the the the commercial teams have executed extremely well, uh, particularly coming out of the uh the field safety notice uh, situation that we had in the quarter. So we we're we're starting to catch up in terms of uh, you know, deferred procedures that we saw. Uh and you know,
it's
Mike Matson: Mike, I would just add to.
Operator: Yeah.
Mike Matson: The fact that the market is continuing to be a very robust market. We're still operating in a backward situation. The demand is outpacing the market's ability to supply, right? We're building capacity to address the demand that we're seeing. As Vlad said, we're going to do this in a financially disciplined manner. We need to build this capacity also in light of the fact that we're going to ultimately start converting to our next-generation oxygenator. There needs to be that transition point. Yeah, okay. That makes sense, especially with the new oxygenator coming. Just one quickly on the HLM side, with the PCP upgrade, how involved are the sales reps going to be in terms of managing that with the customers? Is this something that could potentially distract them from selling HLMs and oxygenators in the fourth quarter?
Alright, thanks, so much for taking the questions.
Thank you.
Sorry folks.
So.
That's on the on the on the quarter and the momentum here I just wanted to follow up on on one aspect of it.
A, it's a multi-faceted approach to driving penetration uh in the marketplace as as a market leader. You know, we're obviously uh focused on driving uh data generation clinical evidence to support. Uh the therapy. You know the the the health economic uh
That's true.
Call. It makes it a driver's indications, which I'm sure you'll get into next week.
<unk> and <unk>.
It's a.
If you could sort of give a sense of where you know how those what those investments look like.
Two very different.
Reimbursement, uh, improvements are going to help us. This is uh, you know, it's it's part of our overall strategy to, to drive growth. And again, we we keep, uh, uh, you know, pitching investor day. But, uh, we'll unpack, uh, a lot of that next, uh, next week when we talk about our long, long range strategy,
We have the right opportunities.
Great. Thanks for taking the questions.
Very different set of investments in.
Different challenges facing each.
We now turn to Matt mix with bark, please. Your line is open. Please go ahead.
Maybe if you were to think about the P&L.
And the profile of these.
Hi, thanks so much for taking the questions.
When and how do we see say DTD phasing into your intermediate long term growth.
At a high level, when and how do we see OSA.
OSA potentially.
Sure.
Operator: No. Yeah, it's a good point. No, it's a service organization that will execute the upgrade. There will be no disruption for sales organization.
Phasing into intermediate and long term growth understanding of course, you don't really want to get into everything.
Thanks.
Yes.
Oh, sorry folks. Um, so uh, congrats on the, on the, on the quarter and on the, the momentum here. Um, I just wanted to follow up on, on 1 aspect of uh, of the sort of next. We have called next to the drivers indications which I'm sure you'll get into next week on GTD and, and Osa. Um,
Thanks for the question.
And it's a really good.
Mike Matson: Okay. Got it. Thanks.
Leave them.
And to the Investor Day, I think we'll spend majority of our time talking about our plans to launch OSA and then our progress with depression.
Operator: We now turn to John McAuley with D4. Your line is open. Please go ahead.
John McAuley: Hi. Good morning. Just wanted to go back to the free cash flow we saw in the quarter. Conversion rates above 90% on a last 12-month basis, near $200 million in total. Just want to get a better sense. I know SNIA is still ongoing here, but is there anything that we can attribute maybe in the future to greater M&A capacity or other in terms of investments in the business that you're getting with this stronger free cash flow generation on the overall strategy?
So.
You know, if you could sort of give a sense of of where, you know, how those, what those Investments look like, um, 2 very different, it to me. Anyway, uh, opportunities and very different set of, of Investments. And and you know, different challenges facing each um,
Both from the strategy point of view the value proposition point of view, but also a potential financial impact all of this will be an impact.
You know, maybe if you were to think about the p&l. Um and and the profile of these, you know,
On November 12.
Okay Fair.
Fair enough.
And just maybe.
Yeah.
When and how do we see say btb phasing into your intermediate long-term growth and, and at a high level. When, and how do we see Osa potentially, uh,
In this next quarter.
Understanding that you're already investing a fair amount of.
Phasing into intermediate and long-term growth. And understanding, of course, you don't really want to get into everything down.
Our spend into these programs.
You called out the.
Mike Matson: John, thanks for your question. If you look at our cash position, very well positioned to address the SNIA payment. I appreciate you calling out the fact that our cash generation has improved. Yeah, obviously, putting SNIA behind this ultimately gives us the flexibility to deploy our capital against strategic initiatives. M&A is one of those tools that we will look to. I think it's important for us to continue to focus on improving our cash generation. That's the lifeline for any company to be successful, is to drive cash flow.
Sort of.
The circuit board investments in some of the other businesses you're ramping up <unk>.
In the fourth quarter.
Can you quantify what your.
If youre uptick taking up the investment in Q4 at all.
From current levels or maybe just.
Level of check on sort of what the quarterly spend looks like and how that's how that's progressing and advances the bigger plan you unveil next week. Thanks.
Yeah, I mean that. Thanks for the question. Um, and it's a really good, uh, lead into the Investor Day. I think Google spent the majority of our time talking about our plans to launch Osa and then our progress with depression. Um, so, you know, both from the strategy point of view, the value proposition point of view, but also potential financial impact. All of this will be unpacked on November 12th.
Hey, Matt Thanks for your question.
Q4 is always.
We always see an uptick in <unk>.
Okay, um, fair enough. Uh, and then, just maybe, um, you know, in this next quarter, um,
And spend.
Or kind of the biggest quarter in terms of our opex, both SG&A and R&D. So that's all factored into into the full year guide.
Understood, but no color.
John McAuley: Great, that's helpful. A follow-up on the Epilepsy business. You talked a lot about the core VNS study so far and how that's contributing. I also just wanted to get a sense of what's going on the ground in terms of the team's commercial presence, the reps, CEC teams. Just all these initiatives that you've put in place, how are they working to drive greater overall market penetration? What ending do you think we are in, in terms of seeing this number steadily increase?
Safe to say, you're sort of maintaining spending levels in those two programs or.
As no significant change from Q3, Q4 is that fair or where do you see it.
Yes.
A step up it's not consistent with as you pointed out sort of the seasonal step up in.
And Opex.
No it's pretty consistent.
Understanding that you're already investing a fair amount of, uh, of of spend and into these programs. Um, you called out the, um, the sort of, uh, the circuit board Investments. And some of the other businesses, you you're ramping up the TVA in the, in the, in the fourth quarter. Um, can you quantify, what your, you know, if, if your uptick, taking up the investment in Q4 at all, um, from current levels or maybe just a, a level check on, on sort of what the quarterly spend looks like and how, that's how that's progressing in advance of the bigger plan, you're unveil next week. Thanks.
There's no there's no step up in investments and I think.
Hey Matt, thanks for your question.
So I'm trying to read into what Youre alluding to as Amit said, given the timelines for both DTD OSA. There are no incremental investments in Q4 related to those programs.
Mike Matson: John, thanks. Look, the Epilepsy business is really pleased with our performance in the quarter and year to date. The commercial teams have executed extremely well, particularly coming out of the field safety notice situation that we had in the quarter. We're starting to catch up in terms of the third procedures that we saw. It's a multifaceted approach to driving penetration in the marketplace. As a market leader, we're obviously focused on driving data generation, clinical evidence to support the therapy. The health economic reimbursement improvements are going to help us. This is part of our overall strategy to drive growth. Again, we keep pitching Investor Day, but we'll unpack a lot of that next week when we talk about our long-range strategy.
Look Q4 is always. Uh, we we always see an uptick in uh, in spend. It's our kind of the biggest quarter in, in terms of our Opex, both sgna and R&D. So that's all factored into uh, into the full year guide.
That's helpful. Thanks, so much.
<unk> next week.
And our final question today comes from David Roman with Goldman Sachs. Your line is open. Please go ahead.
Hey, Thanks. Good morning, this is Jamie on for David.
Understood. But no color. You should stay safe to say, you're sort of maintaining spending levels in in those 2 Programs. Or, um, you know, diagnose significant change from Q3 to Q4 is that fair or, or do you see a
I hate to belabor the four Q guidance question, but as we think about last year similar dynamic unfolds, you provided Q4 guidance that many of us perceived as conservative conservative given the year to date trends and modeled ahead of your guidance and then you ended up doing sort of exactly what you said.
uh, an you know, a
A step up it's not consistent with as you point out sort of the seasonal step up and and and Opex.
No, it's the it's pretty consistent. Uh, there's there's no there's no Step Up in Investments and I I think
You would do and that created a lot of volatility early in 2025, how do you consider these dynamics in constructing the outlook for <unk>.
Jamie Thanks look we guide.
If I'm trying to read into what you're alluding to is, Ahmed said given the timelines for both DTD and Osa. There are no incremental investments in Q4 related to those programs.
To a specific.
That's helpful. Thanks so much. Look forward to seeing you next week.
Set of numbers.
We're obviously full year's one quarter remaining.
John McAuley: Great. Thanks for taking the questions.
We are not expecting anyone to model.
And our final question today comes from David Roman with Goldman Sachs, your line is open, please go ahead.
<unk>.
Operator: We now turn to Matt Mikczuk with Barclays. Your line is open. Please go ahead.
Kind of ahead of ahead of the numbers that we're calling so.
I would just I would just say look where we.
John McAuley: Hi, thanks so much for taking the questions.
We are pleased with our results year to date and our guide reflects.
Briana Gotlin: John, for Q1, thanks for taking the call.
John McAuley: Sorry, folks. Congrats on the quarter and on the momentum here. I just wanted to follow up on one aspect of the sort of next, call it next set of drivers, indications, which I'm sure you'll get into next week on DTD and OSA. If you could sort of give a sense of where, what those investments look like. Two very different, to me anyway, opportunities and very different set of investments and different challenges facing each. Maybe if you were to think about the P&L and the profile of these. When and how do we see, say, DTD phasing into your intermediate and long-term growth? At a high level, when and how do we see OSA potentially phasing into intermediate and long-term growth? Understanding, of course, you don't really want to get into everything now. That's really helpful. Thanks.
The balance to go in in Q4 so.
I'd encourage you to.
To adjust your models accordingly.
Okay. Thank you and I know youll get into 2026 more next week.
We lay out some of the headwinds and <unk>.
Hey, thanks. Good morning. This is Jamie on for David. Um, I I I hate to belabor the the 4q uh, guidance question. But as we think about last year, similar Dynamic unfolded. You provided Q4 guidance, that many of us perceived as concern conservative given the the year to date Trends and all models ahead of your guidance, then you ended up doing sort of exactly what you. You said you would do and that created a lot of volatility early in 2025. How do you consider these Dynamics and constructing the outlook for 4q?
It should be incremental interest expense from eventual payment of a <unk>.
And organization of Caris investment in OSA against some of the tailwind.
The China since launch PCB, a upgrade completion capacity for oxygenated I E.
How did the headwinds and tailwind balance each other going into next year.
Look we're in the planning process at this stage and theirs.
Many puts and takes at this point in time I can I can talk to as many heads.
Headwinds.
As tailwind so I would say.
We'll talk about our 2026 guidance in February.
Jamie, thanks. Look. We we got, uh, you know, to a specific, uh, set of numbers, you know, for obviously 4 years 1 quarter remaining, uh, you know, we're not expecting anyone to model, you know, uh, in kind of ahead of ahead of the numbers that we're calling. So, uh, you know, I would just, uh, I would just say, look, we're, you know, we're, we're we're pleased with our results here today and our guide reflects, you know, kind of the balance to go in in, uh, Q4. So, uh, I'd encourage you to, uh, you know, to adjust your models according
Okay, Great look forward to next week. Thank you.
This concludes our Q&A I'll now hand back to <unk> for any final remarks.
Operator: Yeah. I mean, Matt, thanks for the question. It's a really good lead into the Investor Day. I think we will spend the majority of our time talking about our plans to launch OSA, then our progress with depression. Both from the strategy point of view, the value proposition point of view, but also potential financial impact, all of this will be unpacked on 12 November 2024.
Okay, well, thanks, so much and thank you everyone for joining us on this call today.
And on behalf of fall of US we really appreciate your support and interest in Lugano and I hope to see you.
<unk>.
Our Investor Day on November 12, Thank you and have a great day.
Okay, thank you. And I, I know you'll get into 2026 more next week. But if if we lay out some of the headwinds and, you know, which would be incremental interest expense, from eventual payment of, of snea, annualization of tariffs investment in Osa against some of the tail ends. Uh, you know, the China Essence launch pcba? Upgrade completion capacity for oxygenators. I yeah. How do the headwinds and Tailwinds balance each other going into next year?
Yeah.
Ladies and gentlemen, nice call is now concluded wed like to thank you for your participation.
May now disconnect your lines.
John McAuley: Okay. Fair enough. Maybe in this next quarter, understanding that you're already investing a fair amount of spend into these programs, you called out the sort of circuit board investments and some of the other businesses. You're ramping up TVA in the fourth quarter. Can you quantify if you're upticking up the investment in Q4 at all from current levels, or maybe just a level check on what the quarterly spend looks like and how that's progressing in advance of the bigger plan you'll unveil next week? Thanks.
As Tailwind, I would say, uh, you know, we'll talk about our 2026 guidance in February.
Okay, great. I look forward to next week. Thank you.
This concludes our Q&A and I'll hand back to Vladimir and that comes area for any final remarks.
Okay. Well uh, thank you so much and thank you everyone for joining us on this call today. And on behalf of all of us, we really appreciate your support and interestingly voneva and I hope to see you at our investor day on November 12th. Thank you and have a great day.
Ladies and gentlemen, the space call is now concluded. We would like to thank you for your participation. You may now disconnect your lines.
Mike Matson: Hey, Matt. Thanks for your question. Look, Q4 is always, we always see an uptick in spend. It's our kind of the biggest quarter in terms of our OpEx, both SG&A and R&D. That's all factored into the full-year guide.
John McAuley: Understood. No color, you sort of safe to say you're sort of maintaining spending levels in those two programs, or no significant change from Q3 to Q4? Is that fair? Do you see a step up that's not consistent with, as you point out, sort of the seasonal step up in OpEx?
Mike Matson: No, it's pretty consistent. There's no step up in investments. I think, if I'm trying to read into what you're alluding to, as Ahmet said, given the timelines for both DTD and OSA, there are no incremental investments in Q4 related to those programs.
John McAuley: That's helpful. Thanks so much. Look forward to seeing you next week.
Operator: Our final question today comes from David Roman with Goldman Sachs. Your line is open. Please go ahead.
Vladimir Makatsaria: Hey, thanks. Good morning. This is Jamie on for David. I hate to belabor the Q4 guidance question, but as we think about last year, a similar dynamic unfolded. You provided Q4 guidance that many of us perceived as conservative given the year-to-date trends, and all modeled ahead of your guidance. You ended up doing sort of exactly what you said you would do, and that created a lot of volatility early in 2025. How do you consider these dynamics in constructing the outlook for Q4?
Mike Matson: Jamie, thanks. Look, we guide to a specific set of numbers for obviously full years, one quarter remaining. We're not expecting anyone to model kind of ahead of the numbers that we're calling. I would just say look, we're pleased with our results here to date, and our guide reflects kind of the balance to go in Q4. I'd encourage you to adjust your models accordingly.
Vladimir Makatsaria: Thank you. I know you'll get into 2026 more next week, but if we lay out some of the headwinds, which would be incremental interest expense from eventual payment of SNIA, annualization of tariffs, investment in OSA, again, some of the tailwinds, the China Essence launch, PCBA upgrade completion, capacity for oxygenators. How do the headwinds and tailwinds balance each other going into next year?
Mike Matson: Look, we're in the planning process at this stage, and there's many puts and takes at this point in time. I can talk to as many headwinds as tailwinds. I would say we'll talk about our 2026 guidance in February.
Vladimir Makatsaria: Okay. Great. Look forward to next week. Thank you.
Operator: This concludes our Q&A. I'll now hand back to Vladimir Makatsaria for any final remarks.
Operator: Well, thank you so much. Thank you, everyone, for joining us on this call today. On behalf of all of us, we really appreciate your support and interest in LivaNova. I hope to see you at our Investor Day on 12 November. Thank you and have a great day.
Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.