Summary of LivaNova PLC Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $391 million, a 9.8% increase year-over-year on a constant currency basis.

Cardiopulmonary Segment Revenue: $222 million, up 10% from Q2 2025, with strong growth in Europe.

Epilepsy Segment Revenue: Increased 10%, with U.S. revenue up 8% and Europe/Rest of World up 15%.

Adjusted Gross Margin: 71%, improved from 69% in Q2 2025, aided by a $6 million tariff refund.

Adjusted Operating Income: $91 million, a 18% increase year-over-year.

Adjusted Diluted EPS: $1.26, up from $1.05 in Q2 2025.

Cash Position: $517 million, down from $636 million at year-end 2025; total debt reduced to $293 million.

Adjusted Free Cash Flow: $46 million, slightly down from $48 million in the prior year.

2Strategic Updates and Business Highlights

Leadership Changes: New appointments include Stefano Folli as President of Cardiopulmonary and Anne Liddy as Chief Legal Officer.

Thermo Fisher Partnership: A long-term agreement to secure critical components for oxygenators, enhancing manufacturing capacity and market share.

Innovation Focus: Advancements in next-generation oxygenators and cloud-based clinician portals for epilepsy treatment.

Market Share Gains: Cardiopulmonary market share in oxygenators increased from 30% to 40% over the past few years.

3Forward Guidance and Outlook

Cardiopulmonary Revenue Growth: Revised to 9.5% - 10.5% for 2026, up from 8.5% - 9.5%.

Epilepsy Revenue Growth: Increased guidance to 7% - 8%, up from 6% - 7%.

Overall Revenue Growth: Full-year 2026 guidance raised to 8% - 9%, up from 7% - 8%.

Adjusted Diluted EPS Guidance: Projected in the range of $4.30 to $4.40 for 2026.

Adjusted Free Cash Flow Guidance: Lowered to $140 million - $160 million from $160 million - $180 million due to increased capital expenditures.

4Bad News, Challenges, or Points of Concern

Cash and Debt Reduction: Cash decreased significantly, raising concerns about liquidity, although debt levels also fell.

Tariff Refund: The $6 million tariff refund is a one-time benefit, which may not recur in future periods.

U.S. Cardiopulmonary Growth: Some softness noted in U.S. growth, attributed to the maturation of the Essenz rollout and slower growth in certain consumables.

Ongoing Competitive Pressures: The cannula market remains competitive, and recent recalls from competitors could impact market dynamics.

5Notable Q&A Insights

Thermo Fisher Partnership: The partnership is expected to alleviate supply constraints and enhance growth confidence in the Cardiopulmonary segment.

Epilepsy Pricing Strategy: The company noted a significant increase in realized prices due to reduced volume discounting, which is expected to continue benefiting revenue.

Ongoing Engagement with CMS: The company is actively engaging with CMS regarding reimbursement for VNS Therapy, with strong clinical data expected to support future discussions.

Oxygenator Growth: Confidence remains high for continued growth in oxygenators, with new manufacturing capabilities expected to come online in 2027. Overall, LivaNova reported a strong quarter with record revenues and EPS, driven by growth in both the Cardiopulmonary and Epilepsy segments, while also navigating challenges related to cash flow and competitive pressures.