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LivaNova PLC (LIVN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered double-digit organic growth with revenue of $316.9M (+7.4% reported, +10.4% organic) and adjusted diluted EPS of $0.88, both above Street; GAAP EPS was -$6.01 due to a €333.3M ($360.4M) SNIA environmental liability charge .
  • Revenue and EPS beat S&P Global consensus: $316.9M vs $302.4M and $0.88 vs $0.76; 8–9 estimates were in the panel, implying a clean beat on top line and profitability* [GetEstimates Q1 2025].
  • Full-year 2025 guidance raised on revenue (constant-currency +100 bps to 6–7%; organic to 7–8%) but adjusted EPS trimmed to $3.60–$3.70 to incorporate SNIA interest and currently applicable tariffs; adjusted FCF unchanged at $135–$155M .
  • Cardiopulmonary strength (Essenz placements, oxygenator demand) and improved Neuromodulation execution ex-U.S. were key drivers; management cited China approval for Essenz and a manageable tariff impact (<$5M AOI hit) as incremental positives .
  • Stock reaction catalyst: a clear fundamental beat plus revenue guide raise, with overhang resolution progress on SNIA liability and OSA PMA submission completed; watch for tariff developments and Q2 ramp commentary at the next print .

What Went Well and What Went Wrong

  • What Went Well

    • Essenz rollout and consumables demand drove CP segment revenue +13.1% reported; heart-lung machine revenue grew ~30% y/y in Q1, with China regulatory approval for Essenz in April broadening runway .
    • Improved Neuromodulation performance in Europe and Rest of World; management highlighted notable commercial execution improvements and confidence in sustaining growth .
    • OSA program milestones: completed PMA submission; OSPREY 12-month top-line data showed a 65% responder rate and 68% median reductions in AHI and ODI; “rapid and sustained improvement” per management .

  • What Went Wrong

    • GAAP loss per share (-$6.01) driven by recording the SNIA environmental liability; net loss was -$327.3M .
    • U.S. Epilepsy saw procedure deferrals tied to a voluntary field safety notification (estimated <$2M revenue impact), and disclosure cadence shifted away from quarterly U.S. implant metrics, reducing near-term transparency .
    • Adjusted EPS guide lowered vs prior ($3.60–$3.70 from $3.65–$3.75) to include SNIA interest; tariffs remain an external uncertainty despite small estimated impact (<$5M AOI) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 ConsensusBeat/(Miss)
Revenue ($USD Millions)$318.1 $321.8 $316.9 $302.4*+$14.5M
GAAP Diluted EPS ($USD)$0.60 $1.02 ($6.01) N/AN/A
Adjusted Diluted EPS ($USD)$0.90 $0.81 $0.88 $0.76*+$0.12
Adjusted Gross Margin %71.2% 69.3% 70.3% N/AN/A
Adjusted Operating Margin %20.0% 17.3% 20.4% N/AN/A
  • Values with asterisks were retrieved from S&P Global.
  • Segment Revenue ($USD Millions)
SegmentQ3 2024Q4 2024Q1 2025
Cardiopulmonary$172.2 $181.7 $176.3
Neuromodulation$139.9 $137.6 $138.9
Other Revenue$6.0 $2.5 $1.6
Total Net Revenue$318.1 $321.8 $316.9
  • KPIs and Balance Sheet
KPIQ3 2024Q4 2024Q1 2025
Adjusted Free Cash Flow ($USD Millions)N/A$62.0 $20.0
Cash & Equivalents ($USD Millions)$346.4 $428.9 $738.4
Total Debt ($USD Millions)~$626.3 (22.0+604.3) ~$628.0 ~$628.8 (79.6+549.2)
GAAP Gross Margin %70.8% 68.2% 69.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue Growth (constant-currency)FY 20255.0%–6.0% 6.0%–7.0% Raised
Revenue Growth (organic)FY 20256.0%–7.0% 7.0%–8.0% Raised
FX HeadwindFY 20251.5%–2.0% 0.0%–1.0% Less headwind
Adjusted Diluted EPSFY 2025$3.65–$3.75 $3.60–$3.70 Lowered (SNIA/interest)
Adjusted Free Cash FlowFY 2025$135M–$155M $135M–$155M Maintained
Cardiopulmonary Revenue GrowthFY 20257%–8% 9%–10% Raised
Epilepsy Revenue GrowthFY 20254%–5% 4%–5%; U.S. low-single-digit (from mid-single-digit), Europe+RoW low-double-digit (from high-single-digit) Mix update
Tariff Impact (Adj. Operating Income)Balance of 2025Not included < $5M included Newly included
Adjusted Effective Tax RateFY 2025~24% ~24% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Essenz rollout & pricingStrong adoption; CP +15.6% y/y, pricing tailwinds Essenz ~40% of 2024 HLM units; 2025 target ~60% ~30% HLM growth in Q1; China approval; maintain price premium Strengthening
Oxygenator capacity & supplyDemand outpacing supply; capacity actions +10% capacity in 2024; expanding further Investing in additional line; path to higher output mid-2026 Improving capacity
Neuromod ex-U.S. executionEurope declined; RoW growth OUS execution issues; remediation planned Europe/RoW strong; commercial execution improved Improving
OSA program (aura6000/OSPREY)Pivotal met primary endpoints PMA planned H1 2025; market ~$2B by decade-end PMA submitted; 12-month data: 65% responders; 68% AHI/ODI reduction Advancing
Tariffs & supply chainN/AExpect immaterial impact; not in guide < $5M AOI impact included; mitigation/pricing actions planned Managed headwind
SNIA litigationOngoing; decision expected H1 2025 EPS sensitivity discussed Liability recorded $360.4M; interest included prospectively (~$0.20 EPS headwind) Overhang addressed
DTD program (CMS)N/AFive critical publications; CMS reconsideration plan Additional publications; national coverage request after final paper Progressing

Management Commentary

  • “LivaNova delivered solid revenue growth, driven by the ongoing success of the Essenz rollout, demand for Cardiopulmonary consumables, and strong Neuromodulation performance in the Europe and Rest of World regions.” — Vladimir Makatsaria, CEO .
  • “We now expect Cardiopulmonary revenue to grow 9% to 10% for the full year 2025… we received regulatory approval for Essenz in China… and increased demand for consumables.” — Vladimir Makatsaria .
  • “In total, we estimate a tariff impact of less than $5 million on adjusted operating income for the balance of the year… our manufacturing footprint positions us well.” — Alex Shvartsburg, CFO .
  • “At 12 months of therapy, the treatment arm responder rate was 65%… demonstrating rapid therapeutic onset and durable benefit over time.” — Ahmet Tezel, Chief Innovation Officer .

Q&A Highlights

  • OSA competitiveness and commercialization: Management emphasized differentiated pHGNS six-electrode architecture enabling personalized titration, with modular PMA supporting faster review; commercialization strategies including potential partnerships to be detailed at Investor Day .
  • HLM/Essenz rollout lifecycle: Essenz placements expected to rise from ~60% toward ~80–100% over time; China approval ahead of schedule; maintained price premium; oxygenator output expanding with a new line mid next year .
  • Tariffs: Guidance includes < $5M AOI impact with mitigation and marginal pricing assumptions; teams monitoring the 90-day window for changes .
  • U.S. Epilepsy visibility: Confidence in long-term trajectory; large underpenetrated market; near-term deferrals tied to SenTiva component design change expected to impact timing rather than demand .
  • Capital allocation/leverage: Healthy leverage and cash; priorities include core growth, OSA launch preparation, and disciplined inorganic options; SNIA decision viewed as retiring a longstanding overhang .

Estimates Context

  • Q1 2025: Revenue $316.9M vs consensus $302.4M; Adjusted EPS $0.88 vs consensus $0.76 — both beats*. With 8–9 estimates in the panel, the quality of beat appears robust*.
  • FY 2025: Company guide $3.60–$3.70 adjusted EPS vs S&P Global normalized EPS consensus $3.86*, implying Street may need to adjust for the now-included SNIA-related interest expense ($0.20 headwind) and tariffs (albeit small) .
  • Forward consensus context: FY 2025 revenue ~$1.38B*, FY 2026 ~$1.47B*; normalized EPS FY 2026 ~$4.14*, consistent with margin expansion trajectory, contingent on execution in CP, OSA readiness, and epilepsy mix*.
  • Values with asterisks were retrieved from S&P Global.

Key Takeaways for Investors

  • Core drivers intact: Essenz adoption, pricing strategy, and consumables share gains continue to expand margins and cash generation; CP guide raised to 9–10% reflects durable momentum .
  • Beat-and-raise quarter: Top-line/EPS beat coupled with raised revenue guide should support near-term sentiment; EPS guide prudently incorporates SNIA and tariffs .
  • Overhang reduced: SNIA liability recorded and prospective interest now included in non-GAAP; balance sheet flexibility remains solid (cash $738M) .
  • OSA optionality: PMA filed; strong 12-month OSPREY data de-risks profile; commercialization strategy and pricing/coding work in progress; a potential medium-term growth leg .
  • Watch near-term: Tariff regime changes after the 90-day window, U.S. Epilepsy deferral normalization as updated SenTiva generators roll out mid-year, and Q2 ramp vs Street’s ~$331M/$0.97 markers discussed on the call .
  • Valuation lens: With Street FY25 normalized EPS above company guide due to now-included interest, estimate revisions likely converge; monitor Investor Day for OSA capital allocation and LT model implications .
  • Execution focus: Capacity expansion (oxygenators), Essenz global rollouts (incl. China), and Europe/RoW Neuromod improvements are key levers to sustain above-market growth .