LivaNova at Jefferies Conference: Strategic Growth and Challenges

On Thursday, 05 June 2025, LivaNova PLC (NASDAQ:LIVN) presented at the Jefferies Global Healthcare Conference 2025, offering a strategic overview of its operations and future plans. The company highlighted its leadership in cardiopulmonary and epilepsy markets, while also addressing challenges such as the impact of a field safety notice on its Sentiva device. Despite these hurdles, LivaNova expressed optimism about its growth prospects in obstructive sleep apnea (OSA) and difficult-to-treat depression (DTD).

Key Takeaways

• LivaNova is focusing on high-growth markets like OSA and DTD, aiming for double-digit growth.
• The cardiopulmonary segment is strong, with significant market share gains in oxygenators.
• Sentiva’s field safety notice is expected to impact financials by $2 million in the second quarter.
• The company is open to partnerships for OSA commercialization but confident in its independent capabilities.
• A CMS decision for DTD is anticipated within a year, with potential broad market implications.

Financial Results

LivaNova reported robust performance in its cardiopulmonary segment, achieving double-digit growth in eight of the last nine quarters. The company has leveraged strong pricing strategies and increased market share, particularly in oxygenators, where market share rose from 30% to nearly 40%. The introduction of the Essence heart and lung machine has been pivotal, with a price point double that of its predecessor and a targeted 60% placement penetration this year, increasing to 80% next year.

However, the Sentiva device’s field safety notice resulted in a $2 million impact in the first quarter, with similar expectations for the second quarter. Additionally, LivaNova faces a $5 million tariff headwind and a $360 million liability from SNIA litigation.

Operational Updates

LivaNova is building a growth-focused culture, emphasizing talent acquisition and innovation. In epilepsy, the company is enhancing patient pathways for drug-resistant cases. For OSA, a PMA has been submitted to the FDA, with commercialization strategies being finalized. In DTD, reimbursement requests have been submitted to CMS, with a decision expected within a year. Notably, the Essence HLM has received approval in China, with a commercial launch slated for Q3.

Future Outlook

The company is awaiting a CMS decision on DTD, which could result in no coverage, broad coverage for treatment-resistant depression patients, or narrower coverage. LivaNova is open to partnerships for OSA commercialization and plans to provide further details at an Investor Day in Q4. The Essence HLM is expected to drive growth over the next three years, and a next-generation oxygenator is in development. Capital allocation will focus on sustaining core epilepsy business, launching OSA, and expanding into new neuromodulation-related areas.

Q&A Highlights

During the Q&A session, LivaNova shared that over 80% of DTD patients maintained treatment effects from 12 to 24 months, with a 10% increase in efficacy. The company is confident in its ability to commercialize OSA independently, though it remains open to partnerships. In epilepsy, the CORE VNS study showed significant seizure reductions, with children achieving up to 100% reduction in certain cases.

Regarding cardiopulmonary competition, LivaNova noted that Gettinga is winding down its business, with no major changes from Medtronic and Terumo. The company’s manufacturing footprint is well-positioned to manage tariff impacts.

In conclusion, LivaNova’s comprehensive strategy and market leadership position it well for future growth, despite facing some operational challenges. Readers are encouraged to refer to the full transcript for a detailed account.

Full transcript - Jefferies Global Healthcare Conference 2025:

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Our next session here, Matt Taylor, the U. Medical Supplies and Devices analyst here at Jefferies. And I’m joined by the management team from LivaNova, including Vlad Makataria, CEO, and Phil Kowalsik, the CSO, Brianna Gottland, who runs the Investor Relations Program. So we’ll have about a half an hour for moderated Q and A with the team. And I just want to thank everybody for your interest, and thanks for coming.

So to get started, we’ve a lot of things to unpack here because there’s lot going on. But why don’t you just lay out the lay of the land on the fundamentals of the company and just talk about the core business first here. And you’ve been in the seat for about a year or so. So we’d love to hear your impressions about how things are going and how much you’ve been able to sort of execute through so far and what you’re hoping to see now from this big pipeline that

Phil Kowalsik, CSO, LivaNova: you have.

Vlad Makataria, CEO, LivaNova: Matt, thank you for the question. Before I go there, first of all, you for the opportunity to join you here, for the invitation. We met in person. I think I was first week in the job. And so thank you for sticking with us.

And it’s special to be back here, so thank you. And thank you to all of you for your interest in LivaNova. So let me start with the fact that we are operating in very attractive markets. They are large, and they’re growing. And that is driven by the fact that cardiovascular and neurological diseases are world’s top disease burdens.

And so we operate in attractive markets as a consequence of that. Number two, we are leaders in our segments of the markets, which is cardiopulmonary and epilepsy market. And we have a path to build on our leadership and continue with our leadership in those markets. And number three, we made significant progress toward getting into faster growth, high unmet need markets where we have the right to win. And today, for us, this is obstructive sleep apnea and difficult to treat depression.

So when you put this together, being operating in attractive markets, having a strong foundation with our core businesses and leadership positions, and have a path to areas of fast growth, that to me is kind of summarizes our strategic portfolio path. And then let me touch a little bit on your question on how we’ve progressed on in our portfolio. First, and maybe where my energy was during the last year is really to focus on building our culture, focused on growth and innovation, accelerating talent within LivaNova, and bringing new capabilities into the organization. And I’m very proud where we are in terms of talent and our team. We made some significant progress on the core business.

Our growth was double digit in eight out of the last nine quarters. And that was driven by the strength in our cardiopulmonary portfolio and with four growth drivers, you know, healthy market growth. We have very strong pricing capability, and we’re able to gain price momentum. We were gaining share in the disposable business driven by oxygenators. And then we had a very successful launch of a new heart and lung machine, Essence, that not only is given an upgrade in terms of pricing, but also, more importantly, gives significant benefit to our customers and patients.

And so my confidence in durability of growth of our cardiopulmonary business has increased during the year, and that is basically driven by strong commercial execution, expansion of our manufacturing, and investments that we made in the innovation pipeline in the cardiopulmonary business. On the epilepsy front, this is a space where VNS and other treatment penetration of epilepsy patients is the penetration of procedures is very low. And so we have a significant task as med tech industry, or health care industry, to treat more patients and do this better. And so our focus is really on improving, accelerating patient path to treatment of drug resistant epilepsy, and to do it with less invasive and more efficient way, and with more clinical efficacy. So we have significant opportunities ahead of us in epilepsy.

In our new businesses, let’s call it this way. On OSA, we made significant progress in terms of understanding the clinical data, very strong clinical data that came from OSEPRY trial. And we are in the process of getting market access approvals in The United States. We’ve submitted PMA to FDA, and we’re awaiting their decision, and are in the process of finalizing our commercial go to market model. But very strong progress on OSA.

And then finally, on difficult to treat depression, we had a couple of very important milestones that came out earlier this week. We have now twenty four months data that shows very strong improvement during the past year. And then we are in the process of submission of reimbursement requests to CMS and expect kind of normally it takes about a year to receive it. So again, good progress there. So I think in summary, I’m confident in our core portfolio with epilepsy and cardiopulmonary businesses to continue with our growth momentum.

And at the same time, we’ve made some good progress on the new technologies that will help us accelerate entrance in the faster growth markets.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. So I want to double click on a few of the newer things and talk a little bit more about the pipeline here, and maybe come back to the core later. So this week, you kind of hit go on the CMS process and have now submitted these manuscripts talking about different aspects of your data. So I guess I’d love for you to unpack that a little bit and maybe talk about what you’re excited about in the data. And then also you referenced sort of a year as an average timeline.

What do you think the range of outcomes could be on the timing? Sure.

Phil Kowalsik, CSO, LivaNova: I’ll take that one. So it’s an exciting moment for the DTD program. In terms of is it on? Okay. In terms of you mentioned kind of the five publications in peer reviewed journals, four that have been published today, the fifth that’s been accepted, which was the impetus for beginning the reconsideration process with CMS.

But in addition to those journals, part of that reconsideration process will include, you know, a few really exciting elements of data. And so it’s really around the durability. It’s around the increased efficacy. And it’s around the reduction in suicidality. So on the durability side, what we saw was over eighty percent from who had an effect at twelve months maintained that effect at twenty four months.

And if you look at other interventional therapies, ECT, TMS, or pharmacotherapies, none of them see that level of durability. And so as we talk to physicians, it’s really an exciting part of the DTD story and one that will bring an important benefit to patients. In addition, we saw about a 10 increase in efficacy from twelve months to twenty four months. So again, speaking to the long term effect that VNS therapy can have on the disease. Finally, on suicidality, we saw over a forty percent reduction in the active arm versus sham on the suicidality endpoint.

And what I’d say there was very important is that we saw the first part of the study where we looked at it, which was at three months, we saw a statistically significant difference between the two arms at three months and then that endured through the twelve month endpoint. So all three of those taken together we believe are really compelling story for patients and for CMS as well. And then maybe one final data point in terms of the overall package and the value to payers. We recently received a positive coverage decision from Highmark, which is, you know, serves The Middle East for Blue Cross Blue Shield. So I think it’s another indication on the private side of interest in supporting this therapy.

And

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: then just on CMS pathway, could you talk about what to expect? I guess a year is a benchmark, but what’s sort of the range of outcomes there in terms of timing? And also, what kind of differences could we see in the ultimate coverage?

Phil Kowalsik, CSO, LivaNova: Yeah, sure, sure. So as Vlad mentioned, when we looked at the analogs, the analogs would suggest about a year. Not all of that is in our control. So we’ve started the process where we’re now engaging with the draft submission with CMS. We’ll reach a point.

The next step will be the final submission where then it enters into the CMS queue. I believe they have eight others right now in the queue. Ours is the only RCT in that queue. And as we understand, you know, they do not have to follow it in chronological order from submission and that they really do prioritize based on level of unmet need and the impact that you can have to Medicare patients. And so we’re hopeful that there might be some positive in terms of the timeline for when it’s pulled out of the queue.

They will then do their assessment which based on the guidance on their website is about six months. And then there’s a thirty day public review period and then a sixty day to the final decision. So those are the components of the timeline. There is some kind of variability in kind of where it could go, we see we’re hopeful that there’s upside to that year, but we’ll see. In terms of the range of outcomes, there’s likely three.

One is that they decide that they are not going to cover it. You know, hope and our belief based on the clinical data is that won’t be the case. The second is that there will be a broad coverage decision in the population of TRD patients, which is three million patients in The U. S. And the third is that it’s a narrower subset that requires the failure of some other interventional therapies before us.

And maybe just one point there is, you know, even in that most narrow subset of failure, you’re still talking about one hundred thousand patients a year that get interventional therapy and about a fifty percent failure rate. So we still see a very significant opportunity in front of us even in that narrower subgroup. But we’ll see where we land.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: And of course, that’s larger than epilepsy, which is also a great business for you. So even that outcome would be very good. Exactly. Maybe we could pivot and talk a little bit about sleep. It was great to see finally the data at thirteen months, and it looks really strong, actually.

And so I’d love for you to talk about some of the strategy there. I know you’ve said that you’re going to talk about this at Analyst Day more and your go to market. And maybe we could discuss now, in the past you’ve mentioned you consider a sale, you consider a partnership. What options are on the table and then what could it look like if you went with it on your own?

Phil Kowalsik, CSO, LivaNova: Yes, sure. I’ll take that one as well. So maybe to answer your kind of last question first. We’re very confident in our ability to commercialize on our own. And we see a very significant opportunity with a clinically differentiated device.

That being said, we are open to exploring partnerships and we’re in the process of having conversations that would allow us the commercial channel and scale to accelerate the impact that we could have with patients. And so the fact that we have our twelve month data enables a different sort of conversation now. And the opportunity is kind of being assessed along multiple scenarios. And as part of that Q4 Investor Day, I think we plan to share the concrete scenario and path that we’re choosing to move forward with. You know, overall we’re really excited about the opportunity, the level of unmet need, the size of the market, the growth that it presents and the differentiation that we have.

And so if you think about it from a technology standpoint, we have a six electrode cuff placed on the proximal end of the nerve, which confers a number of different benefits. One, it’s a faster procedure time. The median procedure time in our case was seventy two minutes. In addition to that, what we’ve seen is the six electrode cuff and the ability to stimulate different parts of both the tongue and the throat muscles allows us to treat a more complex patient population. And so as part of our trial, CCC patients or complete concentric collapse were enrolled.

In our trial, was over forty percent of the patients in the trial were complete concentric collapse. The broader market is about twenty five percent to thirty percent. And in the data that we saw, we saw parity between that subset of patients and the overall patient type. And so we believe that really creates a benefit for us not only in being able to address the patient that is currently contraindicated with the technology that’s on the market today, But also it allows us to have a different care pathway because no longer do you have to introduce the DICE diagnostic in order to determine whether you’re eligible for the procedure. So we see real benefits to all patients, not just CCC patients in terms of the care pathway as well.

So when we put kind of those benefits together, it’s we view this as a very exciting part of the future of Levenova’s portfolio and one that, you know, we’re excited to get through the PMA process and move forward.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: I guess just given the strength of the data and those advantages that you talked about, could you discuss how you size the market and how you see Levonova fitting in there longer term?

Phil Kowalsik, CSO, LivaNova: Yeah. I mean, what I’d say is I think we can share more details in terms of what that looks like. I’d say what’s open to us is not only the addressable market today, which is over $1,000,000,000 growing double digits, But we see it as one where we address that and have potential to expand the market because of the complexity of the patients that we address.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. So maybe I’ll switch back to the CORE. And you also had some new data on VNS in the CORE VNS study. And so I was hoping you could talk a little bit about that and how that data kind of speaks volumes and is different from some of the other data sets, and what this means for VNS versus some of the alternative treatments.

Brianna Gottland, Investor Relations, LivaNova: Sure. Thanks, Matt. So Cora VNS is our largest prospective VNS therapy study that Levenova has done. Given its size, we were actually able to analyze subpopulations, and that’s really interesting. So we can start with the focal seizures that we saw.

So with focal seizures with impaired awareness, we saw an eighty percent seizure reduction at 36. And in children, it was even higher. It was eighty seven percent. In focal to bilateral, the median seizure reduction was ninety five percent at 36. And in children, it was actually one hundred percent.

So this is really strong clinical data. And this is supportive of our efforts to increase to narrow the DRE treatment gap with really strong clinical evidence and that’s one of our strategies. We also talked about the general tonic clonic seizures and this is a really difficult patient population to treat. So at baseline, these patients failed a median number of six anti seizure medications up to 20 and they had about a median of four seizures per month And with that really sick patient population, at twelve months, the median seizure reduction was seventy four percent, and that increased to seventy seven percent at twenty four months. So again, really strong efficacy seen there.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. How do you think it could impact the results? And obviously there’s a good clinical message here. Can you talk about how you’re going to use that to help to expand awareness, expand the market, and support your efforts commercially?

Brianna Gottland, Investor Relations, LivaNova: Yeah. So again, what we’re really focused on is narrowing that treatment gap for the drug resistant epilepsy population. And one of the factors that we talk about, among other things so innovation is a big one, market access is another one, clinical evidence is another really important factor. And that is a very strong that piece is really important. So not quite ready to quantify what that looks like within the business, but this is a very important part of our strategy going forward.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. Maybe I’ll turn back and ask a couple on cardiopulmonary, which we talked the beginning about how it’s been really strong with kind of multiple drivers here. And it was great to see it again beating expectations in the first quarter, and you raised the guidance. Maybe talk about where we are in sort of the pathway for the HLM launch? And also on the oxy side, which we didn’t discuss as much before, you’ve been taking a lot of share and expanding capacity and could continue to make sort of a land grab there.

So I’d love to talk little bit more about the momentum in HLMs and the oxys.

Vlad Makataria, CEO, LivaNova: Yeah. So thank you. So I thank you, Matt. I talked about four growth drivers for cardiopulmonary business, price, upgrade of new HLM, market share gains in oxygenators, and market growth. And gaining share in oxygenators and launch and upgrade to the new HLM machine are two of the biggest drivers.

So let me start with Essence, which is the heart lung machine. And when we look at the global landscape, we have It’s about 70% market share globally. And today, the way I would think about it is the old machine is kind of like an old car without any technology in it. The new machine has a number of options that we can build into it. It’s digitally enabled.

It’s connected. It has ability to keep upgrading software. And ultimately, and more importantly, it delivers more value to perfusionist, heart cardiac surgeons, and patients. So last year, forty percent of our placed machine in that year were Essence machine. And the price difference between Essence and the old generation machine was about 2x.

This year, our target is 60% placement penetration of Essence. And so far, we were able to maintain high high price premium, and thus, you saw really strong results in quarter one. And then I think next year, the goal is 80% placement penetration, and after that, 100%. So we have a really nice tailwind for the next three years in terms of growth. And our key focus then would be to make sure that we maintain the price differentiation with the old generation machine.

One of the key milestones for us was approval that we received for Essence in China. It came about six months before our own internal expectation, which is really good news for us. So in quarter three, we will have a commercial launch there. China is our second largest market from installed base point of view. So we think that is a very nice accelerator for our growth.

So net net for HLM, I think we will continue to see strong momentum this year. And the tailwind for growth because of the upgrade cycle is going to be there for the next three years. So that’s on HLM. On oxygenator, a somewhat different story. Our starting point two years ago was about 30% market share.

We’re now closer to 40%. And the reason for that is we were able to expand our manufacturing capacity as the total market kind of hit the manufacturing capacity limits. We increased our manufacturing output by 10% last year. The plan for this year is another 10%. We’ve made investments, and next year, we will go live with additional manufacturing line of our own.

And that gives will give us some tailwind moving forward in terms of capacity. And then beyond that, we are currently in development of a new generation, next generation oxygenator that is, from clinical performance point of view, should be superior to anything on the market today. So that kind of gives a nice sequence of key milestones and growth for the next few years on oxygenator. So you asked me about kind of what’s new, what’s different. I mean, for me, my confidence level in the durability of our growth in cardiopulmonary business has significantly increased during this year.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Maybe just touch on the competitive landscape there. We know Gettinga announced that they’re going to wind down that business over the course of the next year, and there’s been some struggles with the other competitors. Has anything changed there?

Vlad Makataria, CEO, LivaNova: Yes. So on oxygenated front, there are four main competitors. It’s Medtronic, Terumo, Gedinger, and us. We also the announcement from Gedinger that they are exiting this market. The main impact of that is going to come next year.

From Medtronic and Terumo, we don’t see anything new in terms of activity. I think they’re yeah, we don’t see anything new from either of those companies.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. A couple questions to just round out the discussion on kind of key areas that investors have been focused on. The first is I wanted you to just clarify. You had this issue with Sentiva. I know there’s going to be some remediation that’s happening.

Could you talk about how that could impact the second quarter and the rest of the year, if there’s any impact?

Brianna Gottland, Investor Relations, LivaNova: Yeah, sure. So just as a reminder, in the first on our first quarter call, we talked about the expectation of deferred procedures in the first half of the year related to this voluntary field safety notice. So as a reminder, the field safety notification was related to a component issue that impacted 0.13% of generators worldwide. So that being said, we were able to continue implanting the current generator. But because the FDA recently approved the updated generator, we expect to see physicians just deferring procedures until that updated generator is available.

And we said that updated generator will be available in The US beginning in the mid year and other major geographies in the second half of the year. So because of that and we said the impact in the first quarter was about $2,000,000 The second quarter, it’s a reasonable assumption to assume that impact would be pretty similar. But going down the P and L, what you may see is the gross margin impact is a little bit more significant just due to product mix. So gross margin would likely come down a bit from a modeling perspective in the second quarter sequentially versus the first quarter and then look to improve throughout the year.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: And then also sort of a modeling point, but you mentioned there was a $5,000,000 tariff headwind. Could you talk about how that’s evolved with the escalation and what you can do to mitigate it and just overall how tariffs are going to impact the P and L this year and next?

Brianna Gottland, Investor Relations, LivaNova: Yeah, so we’re not going to comment on any updates or changes just because it’s a highly dynamic and changing environment. But it would be helpful just to talk about the $5,000,000 impact that we factored into guidance and our manufacturing footprint, we can do that. So from our supply chain, our analysis shows that there is relatively negligible impact on that. From a manufacturing footprint standpoint, we’re really uniquely positioned because Levenova manufactures its neuromodulation products in The United States. And 80% of the corresponding revenue is also generated in The United States.

On the cardiopulmonary side, our HLM products and the bulk of our consumables are manufactured outside of The US in Germany and Italy. And two thirds of the corresponding revenue is also generated outside of The US. So we are uniquely positioned to manage tariffs due to our footprint.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Okay, great. The last hot topic I wanted to talk about, we thought it was gone, it came back a little bit, the Sneel litigation. So maybe you could just give us an update on what’s going on now with the Italian court. What’s the value at risk? And how do you like your odds?

And when could we actually see this resolved?

Brianna Gottland, Investor Relations, LivaNova: Great question. So the update you’re referring to is eight ks that we put out a couple of weeks ago. Since that eight ks, I would say that our position is unchanged. So the $360,000,000 liability that we booked in the first quarter, that maintains Levenova’s best estimate of the liability. There is no change to guidance based on this update or accruals or the liability.

The ministry, which is the counterparty to LivaNova, they made an assertion. This is not a payment. It’s not a demand for payment or a judgment. It’s simply an assertion, and it’s part of the litigation process. So to reiterate, the $360,000,000 liability remains our best estimate at this time.

And we remain unable to allocate capital with greater flexibility. And we’re comfortable with our capital structure at this point.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. Maybe that’s a good point to kind of end on. Could you talk about capital allocation from here now that you’ve gotten a lot of the SNIA stuff behind you? That was a big constraint for a long time. How are you thinking about capital allocation?

Obviously, all these things that you could invest in the business and the potential that you’ve talked about to add to the core, Seems like a lot going on, a lot of options. But what are your key focus areas for allocation?

Vlad Makataria, CEO, LivaNova: No, thank you for that question. I think you’re right. I think with having SNIA in the rearview mirror and having some of the really interesting innovation assets, it’s very important that we, you know, have a very clear capital allocation strategy. We will lay out with much more detail during the Investor Day in quarter four. But what I can tell you from our priority point of view is a little bit how I kind of built my story in the beginning.

And it starts with us continue to win and sustain our core business. And specifically, we believe that our strength in epilepsy business unit, the value that it creates, unmet need in that space, gives us a kind of an opportunity to continue to invest and expand our portfolio in epilepsy and build a long term winning business unit in this space. So that’s number one. Number two, we believe that I mean, Phil discussed that that we believe that we have a very strong asset with OSA, and launching it in the way that we will generate maximum value for patients and for our shareholders is very important. Number three, we have an option with difficult to treat depression.

And this is potentially a very attractive market with no other alternatives for significant patient population. So we await the decision from CMS, and that gives us then a platform to build a new business. And then number four is we believe our superpower is neuromodulation and expanding to different diseases and different modalities with high unmet clinical need, high growth markets, and the areas where we have the right to win with connection to neuromodulation. That would be our next priority.

Matt Taylor, Medical Supplies and Devices Analyst, Jefferies: Great. Fantastic. I think that’s a good place to end, but thanks so much for your time, and thanks everybody for your interest in LivaNova.

Vlad Makataria, CEO, LivaNova: Thank you everybody, and thank you Matt.

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