Thank you all for joining today. My name is Neha Begwani, and I'm part of our MedTech Investment Banking coverage team. There's an important disclosure that you can find on our website as well. If you have any questions, please reach out to a Morgan Stanley representative. I'm very pleased to have the LivaNova team here today: CEO Vlad, CFO Alex, and VP of IR, Briana. It's going to be a good discussion. Maybe to start us off, for those who are newer to the story, can you frame LivaNova today and where you all are headed? Yeah. Neha, first of all, thank you for the opportunity to join you, and thank you all for your interest in the company. I would say, three things about LivaNova that are important to know. One is that we have strong and durable growth in our core businesses, and we have a diversified portfolio. On one side, it's neuromodulation treatment of epilepsy. On the other side, it's cardiopulmonary business. Those businesses take a leadership role in their spaces and continue to grow very strong. At the same time, we believe that moving forward, we need to expand into the markets with significant unmet needs from a patient point of view, markets with high growth, and markets where we have the right to win. We believe neuromodulation creates that opportunity for us. The next step for us is expansion into obstructive sleep apnea. We have submitted PMA approval to the FDA, and then beyond that is getting to the next wave of potential neuromodulation indication. We have an optionality with the difficult-to-treat depression business that is currently under reimbursement review with CMS. Strong foundation in terms of core businesses and some significant opportunities for expanding markets in which we compete. As a consequence, it is accelerating our growth profile. That's great. Maybe we'll start with the core business, cardiopulmonary. This business has been growing sustainably, double digits for 10 straight quarters, and most recently was a 13% grower. You guys raised guidance 300 basis points for 12%- 13% full-year growth. What do you think are the drivers behind the sustained growth profile? Yeah, thank you for that question. First of all, the growth of procedures in open heart surgery has been elevated versus the historic rates. We estimate it to be in the area of 4% -5% now. At the same time, within our own business, we have a number of growth drivers that have been performing well. First of all, we are continuing to gain market share in oxygenators. Over the last two years, we went from 30% to approximately 40% share, and we see that trend continue. We launched a new piece of equipment in heart-lung machines in 2023, and now we're in the upgrade cycle of our heart-lung machine. That cycle will continue to deliver double-digit or high single-digit growth for the next two and a half years. Finally, LivaNova has very strong pricing capabilities. Last year, for example, 300 basis points of our growth was contributed due to price increases, and pricing continues to be a strong growth driver for us. Great. Essenz, which I think is the technology you were referencing, can you talk to us about the progression of the rollout and the penetration across different geographies? Yeah. So, think about it with the worldwide market for heart-lung machines. We have about 8,000 units placed around the world, and that represents approximately 70% market share. The previous generation of heart-lung machine called S5 was launched approximately 18 years ago, so we are well overdue in terms of upgrade. We estimate that since the beginning of our, since the launch in 2023, it should take us about eight years to upgrade all the machines around the world. In year one, 20% of our installed base in that year came from Essenz, the new machine. Last year, 40% came from Essenz. This year, we estimate that 60% of all our placements came from Essenz, then 80% next year, and then 100% in 2027. That has been an upgrade cycle. Obviously, the new machine has significantly broader functionality and has digital platforms, has software upgrade opportunities. Ultimately, the goal is to shift from a smart machine that kind of is guided by perfusionists into a smart machine that actually guides the perfusionist. Building that AI capability, learning capability, that is an important vision for the future innovation. Right. You recently launched Essenz in China. How do you view the opportunity there? How are you navigating the geopolitical dynamics and the tender process? How do you think about being able to protect that price premium that you guys garner in other regions? Yeah. China is a very important market for us because there's a huge patient population, significant unmet need in cardiovascular disease. We focus on health versus geopolitics. Six months ago, we received approval from CFDA on Essenz. That was six months before the expected date, which by itself is a very positive indicator for us in terms of demand for this innovation in China. We then spend our time preparing for a launch. Two weeks ago was the launch event in China. Obviously, there's a lot of excitement in the medical community about the launch. We're doing our best to make sure that it's an impactful launch. We yet have to see how we execute it. Okay. Maybe if we turn to oxygenators, you know, a lot of recent success in taking share. How are you thinking about manufacturing capacity, and are there any expansion initiatives underway? I'll take this one, Neha. We start off by saying our team has done a great job of managing the supply chain under a difficult situation where market demand exceeds the supply in the overall marketplace. We've been gaining share by way of just being able to supply our customers. You know, that has contributed to our ability to continue to grow. It also has enabled us to take price in the oxygenator segment. You know, last year, we focused primarily on process improvements to drive about a 10% capacity increase. It translated into a 10% output increase as well. We're doing much of the same again this year. We're going to multiple shifts, 24/7 shifts, so we're able to continue to expand our own capacity. Our biggest governor on growth today is our third-party suppliers scaling with us and their ability to supply critical components. We're working with them. Our operations team is doing a really good job of working with them. You know, we feel like we have a path to continue to expand our own capacity. We just have to get our suppliers to scale with us. Okay. It looks like the recent growth drivers provide great visibility for growth for the next couple of years. How are you thinking about that, the durability of that growth beyond that two-year period? Yeah, in cardiopulmonary or? In cardiopulmonary. Yeah. The way I would think about this is, on the heart-lung machine front, the next two, two and a half years are about upgrade. Then once all the units during the year are, and when it was phased out, the old units, the S5, the growth is going to come from software upgrades, from service, and from additional equipment that is used during the procedure. On the oxygenator front, growth over the next two years, we expect to continue market share gains, obviously. Over the next two years, this will be driven by improvements in our manufacturing practices, what Alex referred to. Beyond that, we plan to launch a new oxygenator that is, from a clinical performance point of view, at least what we see in the preclinical testing, performs better than anything on the market today. We believe that is going to be a truly differentiated innovation. That will be an additional growth driver for us moving forward. I feel confident about the short-term and long-term durability of our cardiopulmonary business. Great. Maybe we'll move to your other core business, which is on the epilepsy side. You know, grew mid-single digits in Q2 with a lot of positive recent news flow, including strong real-world evidence with CORE-VNS. How is CORE changing behavior in the market, and what do you think that will do for the growth trajectory of the business? Great question. I'll take that one. CORE-VNS is our largest global prospective VNS Therapy study to date. The impressive outcomes demonstrate early, durable, and impressive seizure freedom rates and seizure reduction rates in a wide variety of seizures and in children and adults. We're confident that this will improve the foundation of our epilepsy business. Early feedback from the field suggests that KOLs are saying, based on the strength and the quality of the data, that this will change the way that they counsel patients and consider VNS Therapy earlier in their treatment algorithm. We're excited about this data. That's great. Very impressive data. Switching to reimbursement, your reimbursement procedures are moving from a Level 4 to Level 5 APC, and the primary ruling from CMS for 2026 is finalized. How could that influence the growth trajectory of this business? How do you think about reimbursement dynamics for this business more broadly? Yeah, I'll take that one. We were really encouraged to see CMS include in their proposal in July, replacements being moved into a Level 5 versus Level 4. That incorporates a 48% increase in reimbursement for Medicare therapy patients. As a reminder, about 70% of U.S. implants are replacements. 40% of DRE patients are Medicare, and 30% are Medicaid. We believe that this would create a more sustainable, financial profile for a provider to establish and maintain a VNS Therapy practice. We've strengthened our capabilities in market access and health economics with key talent, and we're really pleased to see this coming to life. Also, this is the second straight year that the independent HOPs advisory panel recommended that new patient implants be included in a Level 6 or establish a Level 6 code. We're also excited about that. Great. I mean, those are a couple of really strong levers to help drive the business and the growth trajectory. What do you think are some other levers that could exist to accelerate adoption in this very underpenetrated drug-resistant epileptic market? Great question. Our strategy here is multifaceted. Of course, it's market access, which we just described. It's clinical evidence as demonstrated in the CORE-VNS data. Beyond that, it's commercial excellence and innovation. On innovation, we'll touch a bit more on this on investor day, but at a very high level, here we're focused on connectivity and enabling remote programming, which would create value for patients and providers. Beyond that, collecting data and analytics and combining that with treatment, detection, and even seizure prevention is where this is going at some points. Right. Vlad, you touched on OSA, and you commented this will be an important long-term driver for the business. You had very competitive data come out with the OSPREY Clinical Study, but it will be third to market. How do you expect yourself to be positioned within the market, and how does the strength of that data help you in that positioning? Yeah, no, thank you for this question. Look, to recap why this is an important opportunity for us. I mean, outside of, I think it's important to have more competitors in this very important space. For us, it's an opportunity to get into a faster growth market and accelerate our growth and ultimately expand our margin creation opportunity. We are very pleased with the outcomes of the OSPREY Clinical Study, and we've learned a lot during the study. I mean, one is our patient population in the study was significantly more complex than in the previous studies in terms of BMI, ODI, AHI. We showed the big differentiator as well, the fact that the CCC patients, so complete concentric collapse patients, were not excluded. We estimate in our study, based on the algorithm that we've applied, we believe that about 40% of the patients in the study have complete concentric collapse. The fact that we can include patients with complete concentric collapse also changes patient flow. Now, patients will not be required to go into DISE procedure. They can go straight from prescription into the interventional procedure. That's, I think, a major improvement in the patient flow. We also think from the technology point of view, we have a differentiated technology. Our device has six electrodes, and it gives us opportunity to additionally improve potentially the clinical outcome through more options on how titration is done. Our device is implanted more proximally, so at the trunk of the nerve versus the branches. That gives us access to impact not only tongue, but also throat muscles and so broader spectrum of muscles. All of that together, and the other point is the procedure time has improved as well. All of that together gives us the right, I believe, to have a differentiated commercial model, and focused more on the clinical outcomes and science. Mm-hmm. We are confident in our ability to launch it. Yeah. What gives your confidence in your ability to treat more severe patients? If you could just unpack that a little bit. You mentioned patients with CCC in particular. How do you think about really addressing that patient population group? It is not scientifically correct to compare different trials. I will try to stay away from that. If you look at patient population, in some of the previous trials, CCC patients were excluded from the trials. In our case, the designers of the product believe that because we're treating the trunk of the nerve, we will be able to impact CCC patients. In the trial, we did not see a statistically significant difference between the patients with and without CCC. If you think about it, depending on the literature, I think the medical community kind of agrees that in the entire patient population, 25%- 30% of patients have CCC. That gives us, and today, these patients basically have to look at other options versus neuromodulation. I think that gives us a very interesting and significant opportunity to expand the patient population. That's great. Strategically, you've previously mentioned that you would entertain a partnership if it was the right fit. What's your latest thinking there? Is this something that you plan to provide additional details on during your upcoming Investor Day on November 12th, or is there something that you can give us as a preview? Yeah, I think during the Investor Day, we will frame our plans, including the long-term financial plan on OSA. We are confident, like I said, that, you know, to commercialize this ourselves, while doing it ourselves will require creating a sales force in the category in which we're not competing today. There are some key underlying capabilities that we can leverage across the organization: health economics, reimbursement, manufacturing, R&D, clinical, and so forth and so on. That gives us kind of an opportunity to plug in a new business and then focus on building commercial organization in the area of sleep. Right. Okay. You have, oh, sorry. Yeah, I think we are open to partnerships. The lens at which we're looking at is value creation for the business and for the shareholders. That makes sense. You have one more growth driver as well. If we switch to DTD, you initiated a CMS reconsideration process for VNS Therapy treatment in treatment-resistant depression. What do you think the key milestones are there? Yeah. We're excited about the totality of the clinical evidence generated through the RECOVER trial. That was, you know, despite the fact that we failed the primary endpoint, the data shows the totality of evidence, it makes it a compelling therapy for an underserved patient population today. They have no other treatment options at that point in time. We feel like, you know, the data is compelling enough, and we're cautiously optimistic about the opportunity. We've initiated the process, as you said, Neha, with CMS. It's preliminary discussions around the coverage statement. We expect that we'll get some sort of an indication in the near future. Then we'll submit our draft for a final sort of approval and expect that process. It will go into a backlog, essentially, of what CMS has at this point in time. Once they sort of elevate it from the backlog and raise the file, it's about a six-month process. Mm-hmm. That will then sort of, once after the six months, there's a 30-day comment period. Mm-hmm. Beyond that, it's 60 days for a reconsideration and sort of a final resolution on that. Got it. Okay. I want to build a little bit on what Alex said and focus on the clinical learning that we had. RECOVER was the largest randomized clinical study with the medical device to treat depression. We're still finding new learnings that came out of the trial. Now we have 24 months, remember. It was randomized, and some patients were in the control group, some patients were in the treatment group. At the end of year one, every patient was turned on, basically. Now we have 24 months' data. There are three things I want to point out. The first one is there was a 43% suicidality reduction in the group, and that reduction started to show first signs after three months of treatment. That is, in my mind, a very important clinical outcome from the medical community. The second one is that the MADRS score continued to improve in 24 months versus 12 months. We can conclude at this point that the longer patients are on this therapy, the better they do. The third one is the compliance of the durability of the treatment in patients 24 months versus 12 months was above 80%. That is significantly higher than any other interventional treatment of difficult-to-treat depression patients. When we talk to our key opinion leaders in the space of interventional psychiatry, this is one metric that they're most excited about. Alex talked a little bit about the process, but I would say from the clinical point of view, these learnings give us more and more confidence of a potential outcome of this request. As you think about the data points that give you confidence around getting national coverage, how should investors think about DT as a bigger part of the broader LivaNova story, which, as we talked about, has many different growth facets? Yeah. I think for us, obviously, as we said, the superpower in our capability is neuromodulation, right? That's why we're building on our current capability in epilepsy. The goal is to maintain our leadership there, getting into OSA. We have a clinically differentiated product and the ability to launch the product in a very competitive manner. Obviously, we have optionality with depression. Now it's a little bit of switch on and off, right? Because without CMS reimbursement, we don't see that this business is long-term viable. But given some of the data points I gave you on the clinical learnings and the process that we're going through with CMS, again, there are reasons to believe that this technology could be reimbursed and then could become a very important part of our portfolio. Like I said, it's an optionality for us right now. Makes sense. I think we did a nice job of unpacking all of your different top-line growth opportunities, which, as I said, there are many of them. You've also been focused on margin expansion. How do you think about the margin trajectory? Is there still additional room for margin expansion in the business? How will that be a focus going forward for you all? Yeah, absolutely. We stand by a statement that we want to grow our top line faster than the markets in which we compete in and absolutely drive our bottom line at a faster pace than our top line. In our core business, there's still opportunities to do that, which gives us other opportunities to invest behind these exciting new assets that we talked about here. Yeah. Maybe I'll also just stick with you. The stock has performed nicely recently. Really been on a nice trajectory. At the same time, you really stepped up your game when it comes to passion. Do you think those two items are correlated with each other? Oh, no. I knew where this question was coming from. That was all Vlad. That was us. Model my fashion after I'm alive. Maybe just to refocus us. You know, you've meaningfully improved your free cash flow generation profile and raised your guidance last quarter to $140 million -$160 million. How do you prioritize the use of cash, and what are your capital allocation priorities going forward? Great question. Our top priority is to continue to support our core, right, as evidenced by our investments and our capacity increases. We're supporting our investments in IT and systems infrastructure, innovation for both cardiopulmonary and epilepsy. This is all to sustain the growth that we have in the great core, right? Number two is we're going to invest behind the OSA business, right? It's an exciting growth opportunity for the company. It presents a terrific return on investment for the company and for its shareholders. We obviously left the optionality on DTD. That could become an investment opportunity. Lastly, we're looking at external or M&A opportunities in large underserved markets where we have the ability to win. Okay. Great. Vlad, how would you say those capital allocation priorities support the long-term strategy of the company and vision, where you see LivaNova going over the next decade? Yeah. Yeah. Look, we are very excited to share the vision with the community, with investors, with the overall broader business community at the investor day. But I think that maybe the one thing that I would leave you with is we compete in two very important spaces. The cardiovascular market, you have huge patient population. You know, it's number one disease burden on our society. At the same time, the med tech market and cardiovascular disease is very large and significant. At the same time, with neurological disorders, you have a significant patient population. One of the large, fastest growing, actually, disease states. The market itself is not as large as the cardiovascular market. I think the gap between the patient population or the potential of this market and where it is today is innovation. It is under-researched territory. We believe we're very well positioned to continue to expand our neuromodulation capability. That gap, if you like, between where we need to be and where we are today creates significant growth opportunities for us. When we think about getting stronger in epilepsy, getting into the obstructive sleep apnea, an opportunity to get bigger in the depression space, I think ultimately that is in service of addressing those patients' needs where there's no, kind of, where there's no better alternatives today. Great. Thank you so much for taking the time to walk us through the story. I think, you know, I'll speak for everyone. I'm excited to see what November 12th brings and additional detail you can provide on that day. Thank you for great questions. All right, thank you.