LivaNova (LIVN) Q1 FY26 earnings call: guidance and Q&A

How will the improved Medicare reimbursement impact the epilepsy business, commercially and competitively, and what is the outlook?

The improved reimbursement will lead to immediate pricing improvements through reduced volume discounts and an opportunity for increased procedure volume over time as economic barriers are removed. Volume-driven growth from new and reopened accounts is expected to materialize in the second half of 2026.

“We see an opportunity for improved penetration of VNS procedures in epilepsy, basically, the volume increase of procedures, and that is going to be driven by this changing algorithm within practice of current epileptologists that are doing already VNS procedures and potentially opening new centers that will do BNS procedures because now the economic barrier has been removed.”

asked by Rick Wise · answered by Unknown Executive

What is the update on cardiopulmonary consumables, oxygenator capacity expansion, and the potential for more dramatic supply expansion?

The company is pleased with recent progress in manufacturing output, guiding to a low double-digit increase in oxygenator output for FY26, with a new manufacturing line coming online in H2. Market share has improved from 30% to 40%, and the long-term target is a 60% capacity increase and 800 bps market share improvement by 2030.

“We're very pleased with our recent progress in manufacturing output. And it comes from both improvements within LivaNova and improvements with third-party suppliers. One, as we said in the opening remarks, we're guiding to a low double-digit increase in output of oxygenated production this year.”

asked by Rick Wise · answered by Unknown Executive

Did the [Wiser] program impact VNS, and was Q1 epilepsy growth solely price-driven or also volume-driven?

The [Wiser] program has had no material impact so far, with successful management of submissions and most Medicare patients already in Medicare Advantage plans. Q1 epilepsy growth was driven by improved realized pricing from reduced volume discounting and annual list price increases, with volume-driven assumptions from new/expanded/reopened accounts expected in H2.

“Early indications suggest that the program has had no material impact on us so far. And as we continue -- we'll continue to monitor the pilots that are ongoing across the 6 states.”

asked by David Rescott · answered by Alex Shvartsburg

How is the longer-term OSA strategy progressing, especially regarding reimbursement challenges and the intermediate-term rollout?

The company views current reimbursement challenges as temporary and remains confident in the market's attractiveness due to a large patient population and differentiated technology. They expect reimbursement issues to be more settled by the time of launch and are leveraging their strong market access team.

“Our view on the market has not changed, and we're learning as we are preparing for launch on how to deal with some of the challenges that we believe are mainly driven by the coding and reimbursement.”

asked by David Rescott · answered by Unknown Executive

What drove strong HLM performance in Q1, specifically the Essenz launch in China, and how does this relate to the revised CP guidance?

The HLM launch in China is progressing well, with LivaNova being the market leader and optimistic about the region. Essenz penetration is targeted at 80% of annual HLM unit placements in 2026 (up from 55% in 2025), with China playing a significant role. High teens HLM growth is driven by healthy volumes and customer recognition of clinical value, allowing for sustained price upside.

“The launch of HLM is progressing well in the first quarter. It's progressing as planned. we're the market leader there, and we continue to be very optimistic about that market for us.”

asked by Adam Maeder · answered by Unknown Executive

Are competitors investing in oxygenator capacity, or is LivaNova alone in these investments?

The company observes a competitor ([indiscernible]) exiting the space, with sales expected to decline from $27 million in 2025 to ~$5 million in 2026. There is no evidence of other competitors expanding capacity or investing in innovation, while LivaNova is focused on both output expansion and developing a clinically differentiated next-gen oxygenator.

“Number one, we observed [indiscernible] that's continuing to exit from this space. They recently commented that they expect sales to decline from $27 million in 2025 to approximately $5 million in 2026.”

asked by Michael Polark · answered by Unknown Executive

What is the base case for the VNS reimbursement code (1580) for epilepsy – will it remain at Level 50 or is a Level 6 creation elevated this year?

The market access team continues to work towards a Level 6 reimbursement code. However, for current assumptions, the company anticipates that the 1580 code will roll over into 2027.

“As far as our assumptions go at this point, we anticipate that the 1580 will roll over into 2027.”

asked by Michael Polark · answered by Alex Shvartsburg

What is the timing and investment plan for OSA sales force hiring and other commercialization efforts?

This year's focus is on product development for the next-gen device, with investments primarily in R&D and a small portion for market development. Sales representatives are expected to be hired late this year or early next year, in preparation for a full market release in H2 2027.

“We'll start hiring reps probably late this year, early next year as we get ready for a full market release in the second half?”

asked by Michael Matson · answered by Alex Shvartsburg