LivaNova Q3 Earnings Call Highlights

Key Points

• Strong third-quarter results prompted higher guidance: Revenue rose 10% to $393 million, adjusted EPS increased to $1.23, and LivaNova raised its 2026 revenue growth outlook to 9%–10% and adjusted EPS forecast to $4.40–$4.50.
• Cardiopulmonary and epilepsy both grew 11%: Cardiopulmonary gains were supported by Essenz placements and consumables, while epilepsy benefited from higher volumes and pricing; the company raised its full-year growth outlook for both businesses.
• Capacity and product development remain key investments: A new oxygenator production line is building inventory, with higher output expected in 2027; LivaNova also plans a limited OSA product launch in 2027 ahead of a larger commercial investment in 2028.

LivaNova NASDAQ: LIVN reported third-quarter 2026 revenue growth of 10% from the prior-year period, driven by double-digit gains in its Cardiopulmonary and epilepsy businesses. The medical technology company raised its full-year revenue and adjusted earnings outlook, citing commercial execution, healthy demand and progress in manufacturing capacity expansion.

Third-quarter revenue totaled $393 million. Adjusted diluted earnings per share rose to $1.23 from $1.11 a year earlier, while adjusted operating income increased to $92 million from $80 million. Adjusted operating margin was approximately 24%, compared with 23% in the prior-year quarter.

“LivaNova delivered another quarter of double-digit revenue growth with strength across all regions, driven by commercial execution and healthy demand for our cardiopulmonary and epilepsy technologies,” Chief Executive Officer Vladimir Makatsaria said.

Cardiopulmonary growth supported by Essenz and consumables

Cardiopulmonary revenue reached $225 million in the third quarter, increasing 11% year over year. The company said growth was led by double-digit gains in Europe and the U.S.

Heart-lung machine revenue grew at a low-double-digit rate, aided by record quarterly placements of its Essenz system and favorable price premiums. Consumables revenue, including products other than heart-lung machines, also rose at a low-double-digit pace, led by oxygenators and perfusion tubing kits.

LivaNova said improved availability of third-party components and internal manufacturing optimization increased oxygenator output year over year. Makatsaria said global demand for oxygenators continues to exceed the industry’s ability to supply the product, creating an opportunity for the company to expand market share.

The company’s new dedicated oxygenator manufacturing line is now operational. Makatsaria said the line is currently being used to build inventory and is not expected to affect results until 2027, when LivaNova expects a double-digit increase in output compared with 2026. The company also cited its previously announced agreement with Thermo Fisher as helping secure supply of critical components.

LivaNova continues to expect its next-generation oxygenator to launch in 2028. Chief Innovation Officer Ahmet Tezel said the product is in the design verification and validation stage and is intended to provide improved gas transfer efficiency, low pressure drop and platelet preservation.

For 2026, LivaNova raised its Cardiopulmonary revenue growth outlook to 10.5% to 11.5%, from prior guidance of 9.5% to 10.5%. The company expects Essenz to represent about 80% of annual heart-lung machine placements in 2026, compared with 55% in 2025.

Epilepsy business benefits from pricing, volumes and clinical evidence

Epilepsy revenue increased 11% year over year, including 10% growth in the U.S. and combined growth of 14% across Europe and the rest of the world. LivaNova attributed the performance to higher volumes and favorable realized pricing, as well as clinical evidence, reimbursement improvement and commercial execution.

The company said realized price continued to benefit from reduced volume discounting in addition to its annual list price increase. Chief Financial Officer Alex Shvartsburg said new patient implants increased and the company’s pipeline remained strong. He added that improved reimbursement helped LivaNova renegotiate certain customer contracts, reducing discounting.

LivaNova raised its 2026 epilepsy revenue growth forecast to 8% to 9%, from 7% to 8% previously.

Tezel highlighted the publication of 36-month results from the CORE-VNS study in the journal Neuromodulation. The study involved more than 800 patients with drug-resistant epilepsy across more than 60 sites in 16 countries. According to the company, the study showed a 76% median reduction in seizure frequency at three years, while 64% of participants achieved at least a 50% reduction in seizure frequency.

The company also said its limited market release of a cloud-based clinician portal and application has reached more than 1,000 patients. LivaNova expects market releases of its next-generation implantable pulse generator and digital health platform in 2027, including future remote-titration capabilities.

OSA preparations continue ahead of planned launch

LivaNova continued to position its proximal hypoglossal nerve stimulation, or pHGNS, technology for the obstructive sleep apnea market. The company said it has made targeted commercial leadership hires while leveraging capabilities developed in its Neuromodulation business.

The American Medical Association’s editorial panel established new Category 1 CPT codes that are expected, subject to finalization, to take effect Jan. 1, 2028. Makatsaria said LivaNova contributed clinical evidence from its OSPREY randomized controlled trial to the code application and views the decision as supportive of future reimbursement efforts.

Tezel said LivaNova remains confident in its previously communicated timeline for submitting a PMA supplement for its next-generation OSA platform. The company plans a limited launch in 2027, with the larger increase in commercial investment expected in 2028.

The company said a subgroup analysis from OSPREY showed clinically meaningful benefits across patient groups, including those with severe OSA, elevated body mass index, high hypoxic burden and higher predicted risk of complete concentric collapse. LivaNova said its PolySync algorithm and six-contact electrode architecture increased the cumulative apnea-hypopnea index response rate from 65% to 85% by converting many initial non-responders into responders.

Guidance raised as investment continues

LivaNova now expects full-year 2026 revenue to grow 9% to 10% on a constant-currency basis, up from prior guidance of 8% to 9%. The company continues to expect foreign exchange to provide an approximately 1% tailwind based on current rates.

• Adjusted diluted EPS: $4.40 to $4.50, raised by $0.10 at the midpoint.
• Adjusted operating margin: 20% to 21%, unchanged.
• Adjusted free cash flow: $140 million to $160 million, unchanged.
• Capital spending: Approximately $135 million, unchanged.

Shvartsburg said fourth-quarter spending will increase to support OSA product development, Cardiopulmonary capacity expansion, next-generation oxygenator manufacturing scale-up and IT infrastructure. He also said the company expects less than $5 million of net impact from current and anticipated tariffs on full-year adjusted operating income.

At Sept. 30, LivaNova held $563 million in cash and $299 million in total debt. The company said cash and debt both declined from year-end 2025 following the early repayment of $98 million in outstanding term facilities, including accrued interest.

About LivaNova (NASDAQ:LIVN)

LivaNova PLC NASDAQ: LIVN is a medical technology company that develops and manufactures devices and therapies for patients with neurological and cardiovascular conditions. Its products are used by hospitals, physicians and other healthcare providers in markets around the world.

The company's Neuromodulation business is best known for VNS Therapy, which uses an implanted device to deliver electrical stimulation to the vagus nerve. The therapy is used primarily for drug-resistant epilepsy and treatment-resistant depression, subject to applicable regulatory approvals.

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