Executive Summary

Q3 delivered double‑digit revenue growth and further margin expansion, with revenue of $357.8M (+12.5% y/y; +11.0% cc) and adjusted EPS of $1.11, both above Street; management raised FY25 revenue, EPS, and FCF guidance .
Strength was broad‑based: Cardiopulmonary +18% y/y on Essenz placements and consumables; Neuromodulation +6.9% y/y; adjusted operating margin expanded to 22.5% (+250 bps y/y), driven by pricing, operating leverage, and disciplined spend .
FY25 guidance moved up across the board (revenue growth +50 bps, EPS +$0.10, FCF +$20M at midpoints); segment outlooks were also raised (Cardiopulmonary and Epilepsy) while tax rate (~23%) and tariff impact (<$5M AOI) were reiterated .
Key near‑term watch items: prudently conservative Q4 setup (PCBA upgrade ~$(0.10) EPS headwind), third‑party oxygenator components limiting output, and tariff cadence; offset by China Essenz launch, sustained consumables demand, and operating discipline .

What Went Well and What Went Wrong

What Went Well
- Cardiopulmonary outperformance: revenue +18% y/y on accelerated Essenz placements (HLM growth >20%) and “mid‑teens” consumables growth; pricing continues to hold a premium .
- Margin and cash execution: adjusted operating margin 22.5% (+250 bps y/y); Q3 net cash from ops $85.1M and adjusted FCF $62.0M; YTD adjusted FCF $130M vs $101M prior year .
- Strategic milestones: commercial launch of Essenz in China (second‑largest HLM market), positive early feedback; management raised FY revenue/EPS/FCF guidance .
What Went Wrong
- Supply constraints: third‑party oxygenator components capped output despite internal capacity expansions (+~15% capacity this year; new line in 2H26 to drive a “step‑change”) .
- Gross margin mix/currency/tariffs: adjusted GM 69.4% vs 69.9% y/y on FX, mix, oxygenator capacity investments, and tariff impacts, partly offset by pricing .
- Q4 implied EPS softness: management flagged a planned PCBA conversion in Q4 (~$0.10 headwind) and tougher HLM comp, guiding prudently for the quarter .

Financial Results

Overall P&L, margins, and EPS (oldest → newest)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$318.1	$316.9	$352.5	$357.8
GAAP Diluted EPS ($)	$0.60	($6.01)	$0.50	$0.49
Adjusted Diluted EPS ($)	$0.90	$0.88	$1.05	$1.11
Adjusted Gross Margin %	69.9%	70.3%	68.9%	69.4%
Adjusted Operating Margin %	20.0%	20.4%	21.9%	22.5%

Q3 2025 vs S&P Global consensus

Metric	Consensus*	Actual	Beat/Miss
Revenue ($M)	$342.3*	$357.8	Beat
Adjusted EPS ($)	$0.92*	$1.11	Beat
EBITDA ($M)	$74.8*	$70.1*	Miss

Values with asterisk (*) retrieved from S&P Global.

Segment revenue (y/y)

Segment ($M)	Q3 2024	Q3 2025	YoY %
Cardiopulmonary	$172.2	$203.2	18.0%
Neuromodulation	$139.9	$149.5	6.9%
Other	$6.0	$5.0	(16.8)%
Total	$318.1	$357.8	12.5%

KPIs and cash (YTD/quarterly)

KPI	Q1 2025	Q2 2025	Q3 2025
Net Cash from Ops ($M)	$24.0	$62.9	$85.1
Adjusted Free Cash Flow ($M)	$20.0	$47.8	$62.0
Cash & Cash Equivalents ($M)	$738.4	$593.6	$646.1
Current Debt Obligations ($M)	$79.6	$82.1	$85.4
Long‑Term Debt Obligations ($M)	$549.2	$348.5	$349.0
Adjusted Operating Income ($M)	$64.6	$77.4	$80.4

Non‑GAAP adjustments in Q3 primarily included legal/regulatory costs, financing marks, stock‑based comp, and tax adjustments; per‑share bridge contributions included +$0.22 (legal/regulatory), +$0.18 (financing), +$0.18 (stock‑comp), and (‑$0.19) tax adjustments to arrive at $1.11 adjusted EPS .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth (cc)	FY 2025	8.0%–9.0%	8.5%–9.5%	Raised
Revenue Growth (organic)	FY 2025	9.0%–10.0%	9.5%–10.5%	Raised
Adjusted Diluted EPS ($)	FY 2025	$3.70–$3.80	$3.80–$3.90	Raised
Adjusted Free Cash Flow ($M)	FY 2025	$140–$160	$160–$180	Raised
Adjusted Effective Tax Rate	FY 2025	—	~23%	New/maintained
Capital Expenditures ($M)	FY 2025	~95	~80	Lowered
Tariff Net Impact (AOI)	FY 2025	—	< $5M; fully incorporated	Maintained (qualitative)
Cardiopulmonary Revenue Growth	FY 2025	12%–13%	12.5%–13.5%	Raised
Epilepsy Revenue Growth	FY 2025	4.5%–5.5%	5%–6%	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q1)	Current Period (Q3)	Trend
Essenz HLM rollout & pricing	Q2: Global Essenz driving CP growth; premium pricing sustained . Q1: Essenz rollout success; CP +13.1% y/y .	HLM revenue >20% y/y; 2025 placements ~60% Essenz; 2026 driver: China launch ramp .	Positive acceleration (2026 catalyst).
Oxygenator capacity/supply	Q2: Incremental investments; demand robust .	Internal capacity +~15% in 2025 but output <10% due to third‑party components; new line in 2H26; market demand > supply .	Structural supply constraint; disciplined expansion.
Epilepsy (VNS) execution & data	Q2: CORE‑VNS 24/36‑mo data; CMS TRD reconsideration initiated . Q1: OSPREY 12‑mo data; aura6000 PMA filed .	Global epilepsy +6%; Level 5 reimbursement for replacements from 2026; CORE‑VNS strengthens early‑use case .	Steady; improving access/data.
Tariffs/Macro	Q1: FY guide incorporates current tariffs; manageable .	FY guide includes tariffs; net AOI impact < $5M; mitigation plan active .	Managed risk.
Cash, debt & capital deployment	Q1: SNIA liability booked; $200M term debt repaid post‑restriction release .	Cash $646M; total debt cut vs YE; FCF up; M&A optionality post‑SNIA .	Balance sheet strengthening.
Q4 guide posture	—	Q4 EPS prudently set given PCBA upgrade (~$0.10 hit) and tough HLM comp .	Conservative near‑term setup.

Management Commentary

“LivaNova delivered another quarter of double‑digit revenue growth… Disciplined execution, enhanced productivity, and operational excellence are driving operating margin expansion and cash generation.” — Vladimir Makatsaria, CEO .
“Adjusted operating income was $80M… Adjusted diluted EPS was $1.11… Cash balance at September 30th was $646M… reduction in total debt was a result of the $200M early repayment.” — Alex Shvartsburg, CFO .
“We now expect cardiopulmonary revenue to grow 12.5%–13.5%… ESSENZ to represent ~60% of annual HLM unit placements in 2025, up from 40% in 2024.” — CEO .
“We continue to forecast a full‑year adjusted effective tax rate of ~23%… guidance fully incorporates the impact from currently applicable tariffs… estimate a tariff net impact of < $5M on adjusted operating income.” — CFO .

Q&A Highlights

Q4 conservatism: PCBA conversion for Essenz will cost ~$(0.10) EPS in Q4; sales force not distracted (service executes the upgrade) .
Cardiopulmonary cadence: Big Q4 comp for HLM explains implied deceleration; China launched early with positive feedback but major impact expected in 2026 .
Oxygenators: Internal capacity +~15% in 2025, but third‑party components constrain output; new line in 2H26; competitors show limited capacity/innovation; demand > supply supports share gains .
Epilepsy outlook: Growth stabilizing with CORE‑VNS evidence, early‑use emphasis, and 2026 reimbursement uplift (Level 5) for replacements; CMS TRD timeline broadly ~1 year from formal application post‑shutdown pause .

Estimates Context

Q3 beat: Revenue $357.8M vs $342.3M consensus (+4.5%); adjusted EPS $1.11 vs $0.92; EBITDA $70.1M vs $74.8M (below) . Values with asterisk (*) retrieved from S&P Global.
FY25: Company raised EPS to $3.80–$3.90 vs S&P Global consensus $3.86*, centering consensus within the new range; raised FCF and revenue bands support potential upward revisions to Q4 assumptions . Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Quality beat with guidance raise: Broad‑based revenue strength and margin expansion drove an above‑consensus quarter; FY25 revenue/EPS/FCF guidance all increased, a positive setup into Investor Day .
Structural CP tailwinds: Essenz penetration, premium pricing, and consumables strength underpin CP; China launch adds a 2026 growth catalyst .
Supply‑side watch: Oxygenator third‑party components limit near‑term upside; new internal line in 2H26 is the inflection lever; monitor supplier progress .
Q4 prudence is intentional: Expect a softer Q4 EPS print due to planned PCBA upgrade and tough HLM comp—this is investment for future software capabilities, not demand weakness .
Cash and flexibility improving: Cash build and debt reduction post‑SNIA restriction release enhance optionality (including M&A) while funding capacity and R&D priorities .
Neuromodulation steady‑to‑better: CORE‑VNS and reimbursement changes support sustained growth; watch CMS pathway for TRD and aura6000 OSA PMA progress for medium‑term optionality .

Values with asterisk (*) in the Estimates tables are retrieved from S&P Global.

LivaNova PLC (LIVN)·Q3 2025 Earnings Summary