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LivaNova PLC (LIVN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered double-digit revenue growth and margin expansion: net revenue $352.5M (+10.7% reported; +9.3% CC; +10.3% organic), adjusted EPS $1.05, and adjusted operating margin 21.9% .
  • Results beat S&P Global consensus on both revenue and EPS; guidance was raised for 2025 revenue (CC: 8–9%; organic: 9–10%), adjusted EPS ($3.70–$3.80), and adjusted FCF ($140–$160M)* .
  • Strength was broad-based: Cardiopulmonary +14.7% to $199.3M, driven by consumables and Essenz heart-lung machine sales; Neuromodulation +6.2% to $151.7M, with growth across regions .
  • Strategic catalysts: CMS reconsideration process initiated for VNS Therapy in treatment‑resistant depression; CORE‑VNS 24/36‑month data reinforced long‑term efficacy in epilepsy, supporting the neuromodulation thesis .

What Went Well and What Went Wrong

What Went Well

  • Broad-based top-line outperformance with operating leverage: revenue +10.7% reported/+10.3% organic; adjusted operating income $77.4M (vs $66.9M) and adjusted EPS $1.05 (vs $0.93) .
  • Cardiopulmonary momentum: +14.7% with strong consumables demand and Essenz system sales across all regions .
  • Management confidence and clinical/regulatory progress: “strong revenue growth… continued operating margin expansion and strong cash generation,” with investments behind core businesses; milestones in OSA and difficult‑to‑treat depression (DTD) per CEO Vladimir Makatsaria .

What Went Wrong

  • Legal and regulatory burdens remain elevated, including SNIA environmental liability and 3T Heater‑Cooler/cybersecurity/MDR-related costs captured in non-GAAP adjustments .
  • DTD revenue outlook reduced to ~$10M for FY25 (from $11.5–$12.5M prior), implying a slower near-term revenue ramp in TRD pending reimbursement progress .
  • “Other Revenue” declined to $1.6M (from $2.0M) as ACS wind-down fully laps, a minor headwind to total growth .

Financial Results

Headline results versus prior quarters

MetricQ4 2024Q1 2025Q2 2025
Revenue ($M)$321.8 $316.9 $352.5
GAAP Diluted EPS ($)$1.02 ($6.01) $0.50
Adjusted Diluted EPS ($)$0.81 $0.88 $1.05
Adjusted Gross Margin %69.3% 70.3% 68.9%
Adjusted Operating Margin %17.3% 20.4% 21.9%
  • YoY: Q2 revenue +10.7% reported/+9.3% CC/+10.3% organic; adjusted EPS $1.05 vs $0.93 .
  • Drivers: CP up low‑double‑digits in consumables and HLMs (Essenz); Neuromodulation up mid‑single‑digits with growth across regions .

Versus S&P Global consensus (last three quarters)

MetricQ4 2024Q1 2025Q2 2025
Revenue Actual ($M)321.83*316.86*352.52*
Revenue Consensus ($M)324.11*302.40*332.19*
Revenue Surprise ($M)(2.28)*14.46*20.33*
EPS Actual ($)0.81*0.88*1.05*
EPS Consensus ($)0.80*0.76*0.87*
EPS Surprise ($)0.01*0.12*0.18*

Values retrieved from S&P Global.*

Segment breakdown

Segment Revenue ($M)Q2 2024Q1 2025Q2 2025
Cardiopulmonary$173.7 $176.3 $199.3
Neuromodulation$142.9 $138.9 $151.7
Other$2.0 $1.6 $1.6
Total$318.6 $316.9 $352.5
  • Q2 2025 regional details: CP U.S. $71.2 (+9.8%), Europe $49.0 (+27.2% reported/+20.3% CC), ROW $79.0 (+12.4% reported/+11.3% CC); Neuromod U.S. $117.2 (+5.0%), Europe $17.7 (+13.7% reported/+7.3% CC), ROW $16.7 (+7.1% reported/+8.2% CC) .

KPIs and Cash Flow

KPIQ1 2025Q2 2025
Net Cash from Operating Activities ($M)$24.0 $62.9
Adjusted Free Cash Flow ($M)$20.0 $47.8
LTM Adjusted FCF ($M)—$177.4
LTM Adjusted FCF Conversion (%)—89%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue Growth (CC)FY 20256.0%–7.0% (May 7) 8.0%–9.0% (Aug 6) Raised
Organic Revenue GrowthFY 20257.0%–8.0% (May 7) 9.0%–10.0% (Aug 6) Raised
FX ImpactFY 20250.0%–1.0% headwind (May 7) ~1.0% tailwind (Aug 6) Improved
Adjusted Diluted EPSFY 2025$3.60–$3.70 (May 7) $3.70–$3.80 (Aug 6) Raised
Adjusted Free Cash FlowFY 2025$135–$155M (May 7) $140–$160M (Aug 6) Raised
Cardiopulmonary Revenue Growth (Org)FY 20259%–10% prior assumption 12%–13% Raised
Epilepsy Revenue Growth (Org)FY 20254%–5% prior assumption 4.5%–5.5% Raised
DTD RevenueFY 2025$11.5–$12.5M prior assumption ~$10M Lowered

Note: Initial 2025 guide on Feb 25 set 5%–6% CC, 6%–7% organic, EPS $3.65–$3.75, FCF $135–$155M .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Cardiopulmonary demand + EssenzQ4: CP +9.9% on consumables/Essenz; FY24 CP +13.1% . Q1: CP +13.1% on Essenz + consumables .CP +14.7% with consumables strength and Essenz HLM growth across regions .Improving
Epilepsy (VNS Therapy)Q4: Neuromod flat QoQ; FY growth 6.6% . Q1: Region strength ex‑U.S. .Neuromod +6.2%; U.S. +5.0%; smooth SenTiva generator transition .Improving
DTD reimbursement (CMS)Q4: RECOVER publications; groundwork for TRD . Q1: Ongoing clinical progress; updating guide to include SNIA/tariffs .Initiated CMS NCD reconsideration supported by five RECOVER papers and 24‑month durability data .Improving medium‑term
OSA (aura6000)Q4: OSPREY met endpoints . Q1: PMA submission completed; strong 12‑month OSPREY data .Continued investment in next‑gen p‑HGNS portfolio; accelerated OSA development in 2025 assumptions .Advancing
Pricing/Supply chainQ1/Q4: Gross margin expansion; pricing cited in slides historically .Adjusted GM 68.9% (+80 bps YoY) with pricing and mix tailwinds per slides .Stable to improving
Legal/regulatory (SNIA, 3T, MDR)Q4: Ongoing legal/MDR/cyber costs in adjustments . Q1: SNIA liability recorded; debt actions disclosed .Adjustments continue to include SNIA/legal/MDR/cyber costs .Ongoing headwind

Management Commentary

  • “LivaNova delivered another quarter of strong revenue growth, driven by continued momentum in our Cardiopulmonary business and solid Neuromodulation performance across all regions… meaningful operating margin expansion and strong cash generation… investing behind our core businesses” — CEO Vladimir Makatsaria .
  • Strategic focus highlighted: leveraging Neuromodulation into high‑growth markets (OSA, TRD) while maintaining leadership and clinical excellence .
  • Slides emphasized operating leverage from higher revenue and optimization of DTD program spend supporting adjusted EPS and margin expansion .

Q&A Highlights

  • Analysts focused on: RECOVER long‑term data and implications for Medicare coverage; DTD commercialization timing; OSA program pathway and differentiation; Cardiopulmonary growth drivers and pricing/mix dynamics; and cadence of margin expansion amid legal cost normalization .
  • Operator/IR framing and participant list corroborated by public transcript postings (Seeking Alpha, Yahoo/Quartr) .

Estimates Context

  • Q2 2025 beat: revenue $352.52M vs $332.19M consensus (+$20.33M) and EPS $1.05 vs $0.87 (+$0.18). Q1 2025 also beat on both; Q4 2024 was roughly in line/slight miss on revenue and in line on EPS.
  • Raised FY25 guidance (revenue growth, EPS, FCF) implies upward estimate revisions for the back half, particularly in CP and core Neuromodulation, with a modest reduction in DTD revenue assumption near term .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat with broad‑based growth and margin expansion; CP remains the flywheel with Essenz adoption and consumables strength .
  • Neuromodulation beat underpinned by resilient epilepsy demand and a managed U.S. SenTiva update; DTD trimmed for 2025 but medium‑term TRD optionality strengthened by CMS reconsideration filing .
  • Guidance raised across revenue/EPS/FCF; FX flips to a ~1% tailwind; operating leverage intact while legal/regulatory costs remain a watch item .
  • Clinical momentum: CORE‑VNS 24/36‑month data continue to validate long‑term efficacy, supporting sustained Neuromod growth and HCP adoption .
  • Cash generation improving (Q2 CFO $62.9M; adj. FCF $47.8M) with LTM adj. FCF conversion at 89%—supports investment in OSA and balance sheet flexibility .
  • Post‑print trading saw a positive reaction alongside beats/guidance raise (external coverage reported strong pre‑market move) .

Supporting Events and Releases (Q2 context)

  • CMS reconsideration initiated for national Medicare coverage for VNS Therapy in unipolar TRD; supported by five RECOVER publications and 24‑month durability data showing increasing response rates .
  • CORE‑VNS real‑world evidence: 36‑month CSR completed; durable seizure reductions across severe focal seizure types; 24‑month Epilepsia publication reports 77% median reduction in generalized tonic‑clonic seizures and 43% seizure freedom at 24 months .

Disclosures on Non‑GAAP: Company reports adjusted metrics including adjusted operating income, adjusted EPS, and adjusted FCF; reconciliations and definitions provided in Q2 materials –.