Good day, ladies and gentlemen, and welcome to the LivaNova PLC Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Emily, and I'll be moderating your call today. After the presentation, there will be the opportunity for any questions, which you can ask by pressing star, followed by the number one on your telephone keypads. As a reminder, this conference call is being recorded. I'd now like to introduce your host for today's conference, Mr. Matthew Dodds, LivaNova's Senior Vice President of Corporate Development and IT. Please go ahead, sir. Thank you, Emily, and welcome to our conference call and webcast discussing LivaNova's financial results for the fourth quarter and full year of 2023. Joining me on today's call are Bill Kozy, our Chair of the Board of Directors and Interim Chief Executive Officer, Alex Shvartsburg, our Chief Financial Officer, Stephanie Bolton, President of Global Epilepsy, and Briana Gotlin, 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 financial filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statement. Also, the discussions will include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which will all be stated on a constant currency 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 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 will now turn the call over to Bill. Hey, thank you, Matt, and thank you everyone for joining us. Welcome to LivaNova's Conference Call for the Fourth Quarter and Full Year of 2023. Before turning to results in the fourth quarter and full year, I'll start off with some comments on the naming of Vlad Makatsaria as CEO, our decision to wind down the Advanced Circulatory Support segment, and an update on the cybersecurity incident. Earlier this month, the board appointed Vlad as the company's CEO and a member of the board of directors, effective March first. Vlad most recently served as a company group chairman at J&J MedTech, leading its global Ethicon surgery business. He's a respected leader in the medical technology industry, with a 27-year track record of delivering results, driving innovation, and leading high-performing teams. The board and I have great confidence that Vlad is the right CEO to advance LivaNova's strategic plan and achieve our goals for long-term growth. I will continue in my role as LivaNova board chair and, of course, look forward to supporting Vlad as our new CEO. In January, we announced the wind down of the ACS segment. As part of this decision, ACS standalone cannula and accessories will move into our cardiopulmonary segment during the first quarter. This portfolio decision allows us to focus on our core cardiopulmonary and neuromodulation businesses, which are well positioned for growth and value creation. We expect the wind down to result in a positive contribution to adjusted operating income in 2024 as compared to 2023. We delivered strong performance despite the previously disclosed cybersecurity incident. Later in the call, Alex will provide comments regarding, excuse me, the estimated impact to our financial results during the quarter. Importantly, we were able to bring all our manufacturing operations back online, as noted in our prior disclosures. I must extend sincere appreciation to our LivaNova colleagues around the world who responded with urgency and extraordinary dedication. Thank you. For the remainder of the call, I'll discuss our fourth quarter and full year results and then turn to our strategic portfolio initiatives. After my comments, Alex will provide additional details on our results and 2024 guidance. I'll wrap up with some closing remarks before moving on to Q&A. In the quarter, we achieved 12% revenue growth versus the prior year. This performance was driven by the cardiopulmonary and neuromodulation businesses, with particular strength in the Europe and U.S. regions. On a full year basis, we achieved 13% revenue growth versus the prior year, marked by double-digit growth across all regions. Notably, we delivered on our commitment to modest leverage, achieving 17% growth in both adjusted operating income and adjusted diluted earnings per share. Now, turning to segment results. For the cardiopulmonary segment, revenue was $162 million in the quarter, an increase of 17% versus the fourth quarter of 2022. Heart-lung machine revenue increased more than 40%, primarily driven by Essenz sales in the Europe and U.S. regions. We were pleased to see a meaningful sequential ramp in Essenz sales during the quarter, with strong placements and pricing execution. Oxygenator revenue grew in the mid-single digits, driven by customer demand and price. As previously noted, the oxygenator business faces capacity constraints, and the team made significant efforts in the quarter to mitigate the disruption from the cybersecurity incident, including working additional shifts on weekends and holidays. Cardiopulmonary revenue for the full year was $589 million and grew 18%. We expect cardiopulmonary revenue to grow 6%-7% for full year 2024. Our forecast incorporates strong HLM growth, which will be offset by slower growth in disposables due to the current capacity constraints. Our recent efforts to expand oxygenator capacity are now expected to provide some benefit in the second half of the year. Epilepsy revenue increased 8% versus the fourth quarter of 2022. The U.S. epilepsy revenue increased 8% year-over-year, with growth in both new and replacement implants. We achieved 856 new patient implants in the quarter, representing 6% growth versus the prior year. We realized 1,982 replacement implants, representing 10% growth versus the prior year, an unusually high growth rate. Epilepsy revenue in Europe and the rest of the world grew 7% versus prior year. For the full year, epilepsy revenue increased 10%. Notably, U.S. epilepsy achieved 3,300 new patient implants in the full year, representing 7% growth versus the prior year. Replacement implants reached 7,608 for the full year, also a 7% increase, which was higher than expected. For the full year 2024, we expect global epilepsy revenue to grow 6%-7%. Our forecast incorporates a continued mid-single-digit growth for U.S. new patients and more normalized low single-digit growth in replacements. ACS revenue was $10 million in the quarter, an increase of 5% versus the fourth quarter of 2022. ACS revenue for the full year was $40 million and grew 3%. As previously noted, the wind down of the ACS segment is anticipated to be substantially complete by the end of 2024. Alex will comment on the financial impact of the ACS wind down later in the call. DTD revenue for the fourth quarter was $2 million, and for the full year was $7 million. For 2024, we anticipate DTD revenue of approximately $7 million, primarily from the RECOVER study. The RECOVER study does continue. As a reminder, enrollment for the unipolar cohort of the study has been completed. We anticipate the receipt of the 12-month follow-up data for the 500 unipolar patients in June 2024, after which we will conduct a final analysis. We continue to expect the publication of the study results by late 2024. The bipolar cohort continues to enroll as expected. Moving to OSA, the OSPREY trial continues to progress with all 25 study sites recruiting patients. In heart failure, the closeout of the ANTHEM clinical study is substantially complete. Overall, R&D spend related to heart failure in 2023 was $25 million, the majority of which occurred in the first half of the year. With that, I'll turn the call over to Alex. Thanks, Bill. During my portion of the call, I'll share a brief recap of the fourth quarter results. I'll offer additional details on the one-time charges in connection with the cybersecurity incident and the wind down of the ACS business. I'll also provide commentary on the 2024 guidance. Turning to results, revenue in the quarter was $310 million, an increase of 12% versus 2022. Foreign exchange in the quarter had a favorable year-over-year impact of approximately $3 million or 1% of revenue. Adjusted gross margin as a percent of net revenue was 68%, compared to 69% in the fourth quarter of 2022. The cybersecurity incident impacted adjusted gross margin by approximately 100 basis points due to unfavorable labor costs and fixed overhead absorption. This was partially offset by higher volume and favorable product mix. Adjusted R&D expense in the fourth quarter was $42 million, compared to $43 million in the fourth quarter of 2022. R&D, as a percent of net revenue, was 14%, down from 16% in the fourth quarter of 2022. The year-over-year decrease was largely driven by lower costs associated with the closeout of the ANTHEM trial. Excluding the costs related to ANTHEM, our R&D investment increased 9% versus prior year. Adjusted SG&A expense for the fourth quarter was $120 million, compared to $100 million in the fourth quarter of 2022. The year-over-year increase was driven by targeted investments supporting the Essenz launch, legal expenses, and variable costs such as freight and commissions associated with increased revenues. Additionally, our short-term incentive plan accrual increased, resulting from the business overperformance. SG&A as a percent of net revenue was 39%, as compared to 36% in the fourth quarter of 2022. Adjusted operating income was $48 million, compared to $47 million in the fourth quarter of last year. Adjusted operating income margin was 16%, compared to 17% in the fourth quarter of 2022. The cybersecurity incident negatively impacted adjusted operating income margin by approximately 100 basis points due to disruption to our cardiopulmonary manufacturing sites. Adjusted effective tax rate in the quarter was -3%, and in line with the fourth quarter of 2022. The tax rate was impacted by the release of a valuation allowance. Adjusted diluted earnings per share was $0.87, compared to $0.81 in the fourth quarter of 2022. Our cash balance at December 31st was $267 million, up from $214 million at year-end 2022. Total debt at year-end 2023 was $587 million, up from $542 million at year-end 2022. The increase in total debt was driven by the delayed draw of $50 million on the Term Loan A facility that we put in place in July 2022. Net debt, including restricted cash at year-end, was $48 million. Adjusted Free Cash Flow for the quarter was $60 million, up from $31 million in the prior year period. The year-over-year increase was driven mostly by higher income and improvements in working capital. Capital spend was $35 million in 2023, compared to $27 million in the prior year. The increase was driven by IT systems and cardiopulmonary manufacturing infrastructure investments. In connection with the cybersecurity incident, the company incurred costs of approximately $2.6 million in the fourth quarter, which are excluded from our adjusted operational results. These costs primarily included external cybersecurity experts, legal counsel, and system restoration costs. We continue to monitor developments of the ongoing investigation and may incur additional costs related to this incident. With respect to the wind down of the ACS business and transition of certain products into cardiopulmonary, we recorded a pre-tax non-cash impairment charge of $103 million during the fourth quarter, which is excluded from our adjusted operational results. We expect to incur additional restructuring charges in the range of approximately $15-$20 million, the majority of which will be recognized and paid in 2024. Also, effective in the first quarter of 2024, we are reorganizing our operating and reporting structure from three to two segments: Cardiopulmonary and Neuromodulation. The ACS standalone cannula and accessories will be included within the Cardiopulmonary reportable segment. The remaining ACS business will be included within other. Now turning to 2024 guidance. We forecast 2024 revenue growth on a constant currency basis between 4%-5%, and between 6%-7% when excluding the portion of the ACS business that we will be exiting. Foreign currency is expected to be negligible based on the current exchange rates. We expect the wind down of the ACS business to result in a positive contribution to adjusted operating income in 2024 as compared to 2023, with an impact of approximately $0.10 in EPS. With the closeout of the ANTHEM clinical study substantially complete, we expect a reduction in R&D spend related to the heart failure program to result in a positive contribution to adjusted operating income in 2024 as compared to 2023, with an impact of approximately $0.35 in EPS. The global tax landscape continues to evolve and will impact our adjusted effective tax rate in 2024. We anticipate a full year adjusted effective tax rate of approximately 21%. Applying this rate to 2023 earnings results in an unfavorable impact of approximately $0.45 in EPS. We are projecting adjusted diluted earnings per share in the range of $2.95-$3.05, with adjusted diluted weighted average shares outstanding to be approximately 55 million for the full year. Despite the unfavorable impact caused by the step up in our adjusted effective tax rate, this EPS range represents growth of 7% at midpoint. We recognize that there are a number of moving parts in our 2024 EPS guidance. To be clear, the step up in our effective tax rate will have an unfavorable impact on our EPS results. However, our portfolio optimization actions, including the wind down of the ACS segment and the heart failure program, enable us to manage this impact. Adjusted free cash flow is expected to be in the range of $95 million-$115 million, an increase of approximately 9% at midpoint versus the prior year. This range includes a meaningful step-up in capital spending, which we forecast to be approximately $60 million. This increase is driven by critical investments to support innovation, growth, and infrastructure. In addition, our cash flow projections include the costs associated with the ACS wind down. In summary, I'm encouraged by the company's execution and financial performance in 2023, which included double-digit revenue growth, along with a 50 basis point of operating margin improvement. This 2023 performance was achieved while investing in critical capabilities for the company, including manufacturing infrastructure and IT modernization, as well as managing the impact of our business operation as a result of the cybersecurity incident. These actions position us well for 2024. Our guidance implies adjusted operating income growth of approximately 25%, an improvement of 300 basis points in adjusted operating income margin. Excluding both heart failure and ACS benefits, adjusted operating income growth would have been 10%. This builds upon our consistent three-year trend of operating leverage improvement with 14% operating margin in 2022, 15% in 2023, and a commitment to achieving greater than 17% in 2024. With that, I'll turn the call back over to Bill. Thank you, Alex. In 2023, we exceeded full-year guidance on the top and bottom line and did generate operating leverage. We realized these results while maintaining full investment in our pipeline initiatives, investing in critical capabilities for the company, as mentioned, and taking actions related to portfolio optimization. I certainly want to take the chance to thank our entire organization for their hard work and dedication demonstrated in 2023. Under interim leadership, the organization embraced some change and seized performance opportunity as reflected in these results, and that has been very much appreciated. Looking ahead, our core businesses are focused on targeted innovation, sustained growth, and value creation. Additionally, our SPIs are fully funded with data milestones approaching. With Vlad as CEO, I have great confidence in his leadership and that LivaNova will maintain momentum, achieving our commitments to serving patients while creating shareholder value. With that, Emily, we're now ready to open the call for questions. Thank you. If you have a question at this time, please press the star, then the 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 followed by two. As we enter the Q&A session, please limit yourself to one question and one follow-up question, and then return to the queue if you have additional follow-ups. Our first question today comes from Rick Wise with Stifel. Please go ahead. Hi, good morning, everybody. Hi, Bill, and welcome, Vlad. Maybe it's hard to resist starting off, since it's the first time I'm having the pleasure of speaking to you. Maybe you could talk us through, at a high level, your priorities as you step into the role, you know, as broadly or deeply as you'd like on—in terms of operational goals or innovation, the strategic pipeline. I mean, who are you? And what should we expect from your leadership? Thank you so much. Hey, Rick, it's Matt. When I gave the initial intros, Vlad was not on there. He starts March 1, so he's not on the call. But Bill could comment- Oh, okay. You know, i t's okay. But Bill can comment briefly on, you know, on initially, some thoughts on Vlad. Sure. Let me jump in and we talked to you over several months about the spec that the board had and the standard that they had created for this hire. As I mentioned a little bit, we've got somebody, Vlad, coming in to lead the company with 27 years of experience, including significant time living and working around the world internationally. A career that moved Moscow to Singapore, to London, to New York, in a major healthcare company. He not only checked all the boxes on the spec, he's been accountable for a multi-billion-dollar global business with more than 15,000 employees, overseeing all commercial R&D, operational, and supply chain activities. His proven interest in vision, strategy, innovation, talent, market access, and execution closely align with the requirements that we had set in place for the role. As you know, Rick, we took a lot of questions about the timing of the hire. We just wanted to emphasize that we intentionally, you know, tried to stick to our specification. Speaking on behalf of the board, I know that the entire board is extremely pleased with Vlad's decision to join LivaNova. That's great. That's a great overview. And Bill, I should have started with congratulations on all you've done in taking LivaNova to this point. It's really impressive. Just as a follow-up question, take us through the current competitive situation on the oxygenator side. And again, help us think through your capacity expansion. Where can it be? I think you said, if I heard correctly, we're gonna see expansion in the second half. But do you have any sense that competitors are coming back? Just level set us on that whole business. Thank you so much. Yeah, yeah. Thanks, Rick. That's a good question, and one it's front and center here. First of all, at this point in time, nothing has really changed on the competitive side. We still, as we've mentioned to you before, we had one smaller competitor whose position it continues to dissipate. We have a major competitor who has not yet returned to the market. We don't have a timeframe on that. All of our best efforts in the field to determine that remain just still uncertain. On the capacity thing, we told you we were going to work, and we've identified several process improvements within the manufacturing operations to increase capacity, and we're right now taking actions to implement those. We're not ready yet to predict the level of improvement that we'll get, but we are confident that in the second half of the year, these benefits will start to have some positive impact to upscale our ability to supply. Great. Thank you. Hey, thanks, Rick. The next question comes from Anthony Petrone with Mizuho. Please go ahead. Thanks, and congratulations, Bill, on the role as interim, and Vlad coming in here shortly, as of March first. Maybe- Hey, thank you. Just a follow-up. You're welcome. First question will be a follow-up on oxygenators, just as we look over the next few years. And again, wondering how much share actually has the company gained and how sticky can that be, you know, if and when competitors do come back, and then I'll have a couple of follow-ups on guidance. Sure. We, it's—there's no external data, and of course, when you get into particularly the growth markets around the world, it becomes very, very difficult. But if you, if you kind of tried to benchmark us, Anthony, at, at 30%, maybe about 15-18 months ago, our best guess, and let me underline the words best guess, is we might be sitting right now in the mid-30s, somewhere. We know that about half of our high volume business is tender-based, and so we know that we've got a good, steady position there. Our challenge will, of course, be to sustain our, current, revenue position in the non-tender oxygenator business, and our sales force is highly aware of that and has got significant focus on that. You, you'll get nothing but a best effort to sustain that business. We are particularly well organized in those growth markets I talked about before to do that. That's helpful. Maybe Alex, just a little bit on guidance. When we look at the earnings bridge for 2024, you have additional tax inflation in there, but you are seeing some benefits still residual from heart failure. And then ACS, I think you called $0.10 out for ACS. Just maybe to look at that relative to where that business has been running, you know, from a cost standpoint, is that the early benefits, and should we expect, you know, sort of a bigger step up once that's fully annualized? Again, because the timing here is suggesting that the operations won't be fully wound down until the end of the year. So just a little bit on the earnings bridge and the piece, the moving pieces. Thank you. That's right, Anthony. So the ACS wind down is, this is, I'll call it a transition year. In 2023, the business incurred approximately $14 million of losses. So we're essentially, as part of the wind down, we expect to see significant improvements in that year-over-year. And then next year, realize the full benefit of that. That's helpful. And then just, just one quick one, I'll get back in queue. Just the phasing of that, you know, is it, is it, is it gradual or, or are there certain, you know, sort of features of that wind down that can happen sooner? Or should we just be thinking this is all back-end loaded, just in terms of phasing it out through calendar 2024? Thanks again. It's not fully back-end loaded, but it's gonna happen in the last three quarters of the year. Thanks again. Sure. Our next question comes from Michael Polark with Wolfe. Please go ahead. Hey, good morning. Question on the cardiopulmonary guidance for 2024, 6%-7% growth. Can you confirm, Alex, is that ex- that, that's apples to apples, it has no benefit from the cannula and accessories from ACS? That's correct, Mike. The cannula business, we will recast all the results at the end of Q1, so we'll have apples to apples comparisons. This guide is assuming an apples to apples comparison. The growth profile of that line of products is roughly the same as the broader cardiopulmonary portfolio. So from a growth perspective, it's apples to apples. ACS was $40 million last year. If I look at how you guided this year, it kind of implies $20 million of ACSs being exited, the 2%, give or take. Does that mean the cannula and accessories in total on a full year basis last year was about $20 million? It's, I'll give you the exact number. It's $15 million. Okay. Okay, I think that was my first topic. The second is just this, the step-up in CapEx. I heard critical investments in innovation, growth, infrastructure. Those are fairly generic terms. What exactly does it mean? It sounds like oxygenator capacity, definitely. Is there anything else? And I'm thinking specifically about depression and/or sleep readiness investments. Thanks for taking the questions. Hey, Mike, it's Bill. Let me grab that one. You hit the first one perfectly. Yes, it's oxy capacity and significant planning going on right now, and particularly in the main facility in Mirandola to address that. Additionally, we already had some commitment to improve our IT infrastructure. The event, the cyber event, really encouraged us very seriously to look even more broadly at our systems. So you will see an uptick in our IT investment. As a percent of sales for LivaNova, you'll see us moving a couple of basis points, you know, north of where we've always operated as we, number one, strengthen our security position, and number two, modernize a number of targeted systems which were natural entry points for other threat actors. Those are high priorities for us. Yeah, I would just add to that, Mike, in that, you know, we, we're really focused on modernizing our ERP systems as well. We had that in kind of our long-range three-year plan. We're, we're also accelerating those efforts into 2024. Thank you. Thanks, Mike. The next question comes from Matt Taylor with Jefferies. Please go ahead. Hi, thanks for taking the question. So I just wanted to clarify on your comments on the depression study. You mentioned that you'll get the results in June. Are we still gonna see the results in June, or might we have to wait till July? So that's the first question. And then, I guess, just thinking about the different scenarios, can you talk about what you might do in kind of middle-of-the-road or less good scenarios? We know what you'll do if the trial's successful and you know, build behind that. But what are you gonna do if you have kind of a mixed result or a poor result? You know, could we see savings like we've seen with heart failure in ACS, or you know, what's the middle-of-the-road scenario mean for spending? So yeah, let me start, Matt. It's Matt. So for the timing, as Bill said, you know, we'll get the data in June. Our plan is to release the top-line data, but we still have to get confirmation from other critical parties, including who's publishing it, CMS, before we can confirm that. So worst case, again, as we've said, you know, you'll see it when the publication comes out, likely at the end of the year, but the hope is we can release it in a timely manner. In terms of, you know, the way to think about the trial, there's a lot of data points, right? So we've talked about the primary endpoint, time and response. There's multiple other endpoints, multiple other things we're looking at. CMS cares about several other endpoints. So it's really hard to say right now, you know, how we can. You know, what we would do with the data until we see it. I don't know, Bill, if you want to comment on, you know, if the data doesn't read out in a favorable way at all, if there's a different path. Yeah, the only thing we'd add to that, you know, that this, as everybody knows, the whole way, that this was a high bar set by CMS. And the number of endpoints in a randomized clinical trial of this type, again, confirms the high expectations that were there. We've already had Jonathan and his team taking the time to just take a look at scenarios that might depict the data outcome. And of course, you could say, well, we're gonna hit every endpoint. And by the way, that's a possible scenario, but let's wait and see. You may not hit a couple of those, and then you're into that ambiguity situation, which I think you were starting to get at. That's the work that we've still got to do. But without the data, and without some specific direction from CMS, it's really hard for us to say exactly what's gonna happen because it's, we wanna do the work once we've seen the data, too. You know, it's, we are blinded. We've told everybody a number of times that this is the part where it gets a little more frustrating to wait. We're getting closer. We're getting there. Great. Thanks for the talk, guys. The next question comes from Adam Maeder with Piper Sandler. Please go ahead. Hi, guys. Congrats on the finish to the year, and thanks for taking the questions. I wanted to pick up on that same topic, depression and SPIs, and maybe I'll ask it a little bit differently. But just trying to understand, you know, what is the level of SPI spend for depression in OSA that's baked into the guidance for 2024? And, you know, specifically, wondering if the guidance accounts for some of the preparatory costs, you know, to push forward, assuming a positive trial on depression? And then I had a follow-up or two. Thanks. Hey, Adam, it's Alex. So we spent roughly $32 million in 2023. We are anticipating a modest increase on that spend in 2024. The level of spend really depends on just how compelling the data is. And once we know as to how the trial is trending, the results in June, we'll make a definitive decision around the level of investment. The market dev, there was an interest—there was a sub-question there about, is there anything in yet? There's a small amount of market development spend incorporated into the guide. And OSA. OSA. Yeah. And, as far as OSA goes, we spent roughly $27 million in 2023. We expect a modest step-up in investment in that program as well, as we continue to enroll and follow patients through the end of the trial. That's great, color. Thank you for the clarification there. If I, for my second question, wanted to flip over to CP, and the outlook for 2024, the 6%-7% growth. You know, I heard some of the prepared remarks, but just hoping you could put a little bit of a finer point on what's assumed in that guidance for HLM growth versus Oxys. What are you assuming for, you know, the oxygenator competitor issues? Then just one clarification on a cybersecurity incident in Q4 of last year. What was the revenue impact, and reasonable to assume that was more on the CP side of the business? Thanks for taking the questions. All right, let's, let's take this one at a time. So as far as the guide goes, and we expect double-digit growth in the heart-lung segment in our guide. The guide also assumes that, due to the capacity constraints and our expected benefits, as Bill mentioned in the second half, a modest sort of low to mid-single-digit growth rate on the consumables. Now, the next- That's helpful, Alex. The next part is. Yeah, go ahead. Go ahead. Sorry. What was the second part of your question? Just wanted to clarify the cybersecurity impact in Q4, yeah, sorry, from a revenue standpoint, what did that look like? And I think that was on the CP side of the business, but wanted to confirm that. Thanks. That's right. So the incident impacted the oxygenator production. We lost about a week of production. Kinda hard to track exactly the impact on revenue because it really depends on, you know, how the inventory flows and, you know, when you expect to see the sort of the capacity constraint or the inventory constraint that it would result in lost revenue. It wasn't material. Thank you. Got it. Thanks, Alex. The next question comes from Mike Matson with Needham. Please go ahead. Yeah, good morning or good afternoon. So just in terms of the tax rate, I think before you talked about kind of 15%-20%, now you're looking at, like, 21%. So I guess, why did it end up being higher than you expected? And is this mainly due to Pillar Two, or is there something else going on? And then, I’m assuming you haven’t baked anything in for the stock-based compensation benefit into that 21% guidance. So, when we're looking at the range at a point in time, Mike, it was really difficult to predict because the tax rate is a function of jurisdictional profitability. So, you know, as we got closer to exiting 2023 and looking at projections for 2024, we got a better sense for how the mix of profitability will work out. 21% is our best estimate at this point in time. And, yeah, I'm not sure I understand your question around the stock-based compensation. I just thought that, typically there's some kind of, tax benefit from, from stock-based comp, but companies generally don't factor that into their guidance or tax rate. It's kind of unpredictable. Just let us come back to you, and I will follow up on that, if that's okay with you? Yeah, sure. And then just wondering if what you've assumed in the guidance for gross margin benefit from Essenz, just given the price premium there, you know, is it gonna help your gross margin in 2024? And, you know, how much do you think that'll help? Yeah, it absolutely supports a gross margin improvement. We're expecting a modest gross margin improvement of about, call it 100 basis points year-over-year, overall as a company. So Essenz plays a major role in that. Okay, got it. Thank you. You're welcome. Our next question comes from David Rescott with Baird. Please go ahead. Hey, guys. Thanks for taking the questions. I wanted to start on the Neuromodulation segment. I think the guide that you called out maybe was this mid-single digit new patient growth and low single digit replacement, but ultimately getting to, I think, the 6%-7% guide for the segment as a whole. So just I think if you do the math, you're getting to something at or below that 6%-7%. So wondering if pricing is a piece there, if I'm understanding the way in which you laid out guidance for Neuromodulation specifically. And then, you know, I think the segment itself has done better in 2023, and you've talked about, you know, the inability for that kind of higher level of growth to be sustainable. So just wondering where we stand, from that point, you know? Are we at a point at which Neuromod, you know, is seeing some structural changes to the replacement cycle or to the new implant cycle, where we can start to think about better growth in Neuromod? Just any color there would be helpful. Take that. Steph will take that. Hi, David. I'll take that. So, in regards to the epilepsy business for U.S. NPI, so we're continuing to forecast that we'll be mid-single digit. You're right when you talk about the U.S. sort of end-of-service elements. So we expect to return to a more normalized low single-digit rate. But we still expect to see the international region continuing to grow low double-digits, so that's why you've got the sort of 6%-7% there. We do continue to model end of service, and every quarter, we do a bit of a refresh on some of our expectations there. And as I say, our latest data tells us that we'll be experiencing more normalized end of service in 2024. As a reminder, 2022 was a really favorable comparison to 2023, and our performance in 2023 has been very positive. So we do expect to see the growth rate become much more normalized as we move through 2024. Okay. Just to follow up, I know it's been a while since we talked about the Italian reserve, so just wondering, you know, where we stand, and can you give us an update around what the timeline is there? And then maybe what you're potentially thinking about longer term around the flexibility and the balances that could open up if and when that kind of moves to the rear view. Thank you. Hey, David, it's Alex. So with regard to the SNIA litigation, we're awaiting a binding decision from the European Court of Justice. We actually expect that readout in 2024. That will then funnel its way into the Italian Supreme Court, and so we expect the Italian Supreme Court to incorporate and issue a decision in response to all the appeals of LivaNova and the counter appeals. So that may make its way into 2025. With regards to the capital structure around this, as you know, we took on the Term Loan A in 2022. That was the funding that we kind of ring-fenced to serve a potential liability. At this point in time, from an accounting perspective, we haven't booked a liability because we do not have any indication that we will be liable. But we have the appropriate funding and cash to support a negative judgment against us. Okay, thank you. The next question comes from Matt Miksic with Barclays. Please go ahead. Hey, good morning, and thanks for taking the questions, and congrats on a great finish to 2023. I had one follow-up on the neuro neuromodulation business, and epilepsy. I'm just wondering if you could give any sense on, you know, following up on the comments on market trends and sort of market sort of stabilization, I guess, normalization in twenty-- in 2024. You know, where are we or how are you feeling about the changes that you've made to the sales organization, to the selling process, to the way in which you're focusing your folks on different centers around epilepsy in the U.S. and the benefits that you're seeing there, how sustainable they are? And then one follow-up. Sure. Thanks for that, Matt. I continue to be really pleased around the consistent execution, and our financial performance certainly reflects that. I think when we look towards how we're structured, it's, I've dug in a lot over the past nine months since being in this role, and where we are fully staffed and disciplined in our execution, we do see consistent growth over the base business with our key accounts and how we've structured ourselves over the past couple of years. So I'm really pleased to see that, that group continuing to perform well and perform over the base. But one point I would like to make is our strategy is sort of broader than the salesforce structure, and in combination with our territory design, we've been making big efforts around expanding our partnership with our physician base. In fact, we have our first scientific advisory board coming together for the first time over this coming weekend. And you'd be highly impressed by the caliber of those members. So more to come. So consistent execution is the way forward for us in the epilepsy side of the business. But also, more to come in regards to our partnership with our physician base as well. Thanks for that. I've been hopping back and forth here between a couple of calls, so I apologize, Bill and Alex, if you've already kind of talked about it. But would love to get a sense of where things stand with the strat plan as Vlad gets ready to step into his new role. Is that a first quarter, you know, call kind of communication for us, or is that a second quarter, you know, any kind of update? Again, apologies if you've already gone through that, so. No, no, Matt, glad to take that call. At this point, with you know, Jim, we're just a little over a week away from Vlad starting. All the orientation discussions we've had, he seems pretty comfortable with the current state of the company, but he will, of course, be fully encouraged by the board and personally by me to bring any and all ideas forward. The company would traditionally, you know, go a little deeper on its strategic planning, you know, effort as the early summer approaches. So the timing for him is great. He gets here in May. He's got a couple of months to get grounded. That process starts up pretty active in June, July. And to be clear, he has full CEO responsibility, including, you know, strategy. And so the process and the approach that he wants to bring on March first is gonna get full support from the board. Got it. I'll look forward to that. Thanks so much. Sure. Thanks. We have no further questions. I'll turn the call back to Bill Kozy for closing remarks. Thank you. We thank everyone for joining us on today's call. On behalf of the entire team, we appreciate your support, your interest in LivaNova. Thanks again. Thank you everyone for joining us today. This concludes our call, and you may now disconnect your lines.