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    LIVN
    Earnings call· Jun 2026(Q2 FY26)

    LivaNova Q2 FY26 earnings call LIVN

    Aug 5, 2026 Source

    Executive summary

    LivaNova Q2 FY26 — Record Revenue & EPS Driven by CP and Epilepsy Strength

    LivaNova delivered a strong second quarter, achieving record revenue and EPS, driven by robust performance in its Cardiopulmonary and Epilepsy segments. The company raised its full-year revenue and EPS guidance, reflecting confidence in its operational execution and strategic investments, despite a lowered free cash flow outlook due to increased capital expenditures and a slight delay in the next-gen OSA system submission.

    Highlights

    5

    • Record quarterly revenue of $391 million, up 9.8% constant currency YoY.

    • Record adjusted diluted EPS of $1.26, up from $1.05 in Q2 FY25.

    • Full-year 2026 revenue growth guidance raised to 8%-9% (constant currency) from 7%-8%.

    • Cardiopulmonary revenue grew 10% YoY to $222 million, with HLM revenue up mid-teens and consumables up high single-digits.

    • Epilepsy revenue increased 10% YoY, driven by improved realized price, volume, and clinical evidence.

    Concerns

    4

    • Adjusted free cash flow guidance lowered to $140M-$160M from $160M-$180M due to increased capital spending and funding for Thermo Fisher agreement.

    • PMA supplement submission for next-gen OSA system adjusted to H2 2026 - H1 2027, from prior expectation of H2 2026.

    • Autotransfusion systems and cannula experienced lower growth, partially offsetting Cardiopulmonary consumables.

    • Cash balance decreased to $517 million at June 30 from $636 million at year-end 2025, primarily due to debt repayment.

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year 2026 Revenue Growth (constant currency)
    8% to 9%
    high materiality
    High
    Full-year 2026 Adjusted Diluted EPS
    $4.30 to $4.40
    high materiality
    High
    Full-year 2026 Cardiopulmonary Revenue Growth
    9.5% to 10.5%
    medium materiality
    High
    Full-year 2026 Epilepsy Revenue Growth
    7% to 8%
    medium materiality
    High
    Full-year 2026 Adjusted Operating Income Margin
    20% to 21%
    medium materiality
    High
    Full-year 2026 Adjusted Effective Tax Rate
    approximately 23%
    low materiality
    High
    Full-year 2026 Capital Spending
    $135 million
    medium materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $140 million to $160 million
    high materiality
    Medium
    Essenz HLM Units as % of Annual HLM Units
    approximately 80%
    medium materiality
    High
    Essenz HLM Units as % of Annual HLM Units
    100%
    medium materiality
    High
    Next-generation oxygenator launch
    Launch
    medium materiality
    High
    Next-generation IPG launch
    Launch
    low materiality
    High
    OSA 2030 Revenue Target
    $200 million to $400 million
    high materiality
    High
    OSA Next-generation MRI-compatible system PMA supplement submission
    Between H2 2026 and H1 2027
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Cardiopulmonary
    Led by strength in Europe, with Essenz placements and favorable price premiums driving HLM growth. Consumables growth supported by improved component availability and manufacturing optimization.
    Heart-lung machine revenue: mid-teens growthCardiopulmonary consumables revenue: high single digits growthOxygenators and perfusion tubing kits growth: low double-digitsEssenz HLM placements: increased sequentially and year-over-yearEssenz HLM units as % of annual HLM units: 80% (expected 2026), 55% (2025)
    		$222 million10%——
    Epilepsy
    Performance driven by favorable realized price and volume, supported by impactful clinical evidence (CORE data), improved reimbursement, and sustained commercial excellence.
    Europe and Rest of World Epilepsy revenue growth: 15%U.S. Epilepsy revenue growth: 8%Realized price: improved roughly twofold vs. normal annual increasesNew patient implant funnel: strongest levels ever
    		—10%——

    Operational metrics

    13
    Adjusted Gross Margin
    71%vs 69% in Q2 FY25
    Q2 FY26

    Benefit from tariff refund and improved pricing, partially offset by unfavorable currency.

    Adjusted SG&A Expense
    $137 millionvs $121 million in Q2 FY25
    Q2 FY26

    Increased as a percent of net revenue due to planned IT infrastructure spend.

    Adjusted R&D Expense
    $50 millionvs $44 million in Q2 FY25
    Q2 FY26

    In line with prior year as a percentage of net revenue.

    Adjusted Operating Income
    $91 millionvs $77 million in Q2 FY25
    Q2 FY26

    Increase reflects higher revenue and tariff refund benefit, partially offset by planned investments.

    Capital Spend
    $46 millionvs $26 million in prior year period
    H1 FY26

    Year-over-year increase driven by strategic investments.

    Total Debt
    $293 millionvs $377 million at year-end 2025
    as of June 30, 2026

    Reduction due to early repayment of Term Facilities.

    Cash Balance
    $517 millionvs $636 million at year-end 2025
    as of June 30, 2026

    Reduction due to early repayment of Term Facilities.

    Foreign Exchange Impact on Revenue
    $3 million1% favorable year-over-year impact
    Q2 FY26

    FX had a favorable year-over-year impact on revenue.

    VNS Therapy Realized Price Improvement
    roughly twofoldvs normal annual price increases
    Q2 FY26

    Driven by reduced volume discounting in addition to standard annual list price increase.

    Oxygenator Market Share
    40%up from 30% a couple of years ago
    current

    Progress in market share driven by innovation and manufacturing output expansion.

    PolySync AHI Response Rate
    approximately 85%
    cumulative

    New data showing increased response rate in patients treated with pHGNS technology.

    PolySync Non-responder Reduction
    1 in 7 patientsvs 1 in 3 for current standard of care
    current

    Substantial improvement in successful clinical outcomes, strengthening competitive positioning.

    Government Payers
    80%
    current

    Majority of Epilepsy payer mix is government payers, benefiting from CMS reimbursement improvements.

    Industry KPIs

    11
    MetricValueDetails
    Tariff impact$6 millionUSD
    Pricing realized priceroughly twofold
    New product launch ramp—
    Procedure volume growth—
    FCF conversion leverage guidance$140 million to $160 millionUSD
    Installed base system placementsapproximately 80%%
    Segment franchise organic growth10%%
    Consumables recurring revenue mixhigh single-digits%
    Sales force commercial capacity build—
    Indicated addressable patient population$200 million to $400 millionUSD
    Pivotal trial clinical evidence milestonesapproximately 85%%

    Deals & partnerships

    1
    Thermo Fisher ScientificLong-term agreement to secure access to a critical oxygenator component.long-term

    Recently, we advanced that strategy by entering into a long-term agreement with Thermo Fisher Scientific, securing access to a critical oxygenator component.

    Risks & headwinds

    4
    Lower growth in autotransfusion systems and cannulaQ2 FY26

    partially offset by lower growth

    Mitigation: Alex Shvartsburg noted it was 'expected sort of phasing of orders.'

    Increased capital spending and funding for Thermo Fisher agreementFull year 2026

    Lowered adjusted free cash flow guidance to $140M-$160M from $160M-$180M. Increased capital spending to $135M from $120M.

    Mitigation: Strategic investments to support growth and long-term value creation.

    PMA supplement submission for next-gen OSA system delayedH2 2026 - H1 2027

    Expected between H2 2026 and H1 2027 (previously H2 2026).

    Mitigation: Reflects work for final design verification and validation; does not impact long-term commercial opportunity or 2030 revenue target.

    Tougher year-over-year comparison for Epilepsy in H2 FY26H2 FY26

    Due to lapping prior year's field safety notice.

    Mitigation: Management expects continued strong new patient funnel trajectory.

    What to watch in Q3 FY26

    5

    Oxygenator new production line go-live

    H2 FY26
    CurrentOn track
    TargetLive

    Why it matters

    This new line is expected to materially increase oxygenator output, supporting market share gains and addressing demand.

    Second, we have invested in expanding our internal manufacturing capacity with a new production line on track to go live in the second half of this year.

    Q&A highlights

    7

    Inquired about the duration of the Thermo Fisher partnership in the works and its impact on future CP growth, especially oxygenators.

    Management stated the partnership was in the works for some time, ensuring reliable critical component supply mid- to long-term, removing growth bottlenecks. This builds on internal process improvements and a new production line (H2 2026). It increases confidence in market share gains and ensures product availability for life-saving procedures.

    “So we've signed an agreement with Thermo Fisher. We've been working on it for some time. And that agreement basically ensures that mid- to long term, we will have reliable supply of the critical component and kind of completely remove the bottleneck from manufacturing output.”

    asked by Michael Sarcone · answered by Vladimir Makatsaria

    2 min read6 chapters

    Detailed Narrative

    01

    Cardiopulmonary Business Momentum

    LivaNova's Cardiopulmonary segment reported $222 million in revenue, a 10% increase year-over-year, primarily driven by strong performance in Europe. Heart-lung machine revenue grew in the mid-teens, fueled by increased Essenz placements and favorable price premiums. Consumables saw high single-digit growth, with oxygenators and perfusion tubing kits growing low double-digits, supported by improved component availability and manufacturing optimization.

    02

    Oxygenator Output Expansion Strategy

    The company is actively expanding its oxygenator output to capitalize on unmet market demand. This involves internal manufacturing process improvements, a new production line going live in the second half of 2026, and a long-term agreement with Thermo Fisher Scientific to secure critical component supply. These initiatives are expected to strengthen the growth outlook for the oxygenator business, with a next-generation oxygenator planned for launch in 2028.

    03

    Epilepsy Segment Strength

    Epilepsy revenue increased 10% year-over-year, with Europe and Rest of World regions growing 15% and the U.S. growing 8%. This performance was attributed to favorable realized pricing (due to reduced volume discounting and annual price increases), increased volume, impactful clinical evidence from the CORE data, and improved reimbursement. CMS' preliminary recommendation to maintain VNS Therapy in the New Tech APC and propose an additional increase in end-of-service APC reimbursement for 2027 further supports the business trajectory.

    04

    OSA Program Updates and PolySync Data

    The PMA supplement submission for the next-generation MRI-compatible OSA system is now expected between the second half of 2026 and the first half of 2027, a slight adjustment due to design verification. Despite this, the long-term 2030 revenue target of $200 million to $400 million remains unchanged. New data on the PolySync algorithm showed an increased cumulative AHI response rate to approximately 85%, significantly reducing non-responders and strengthening the competitive profile.

    05

    Depression Trial Progress and CMS Engagement

    The 36-month data from the RECOVER trial for difficult-to-treat depression has been submitted to a preprint server, demonstrating sustained improvements in depressive symptoms, function, and quality of life for patients on VNS Therapy. The company remains in active engagement with CMS regarding reimbursement, awaiting peer-reviewed publication of the data for formal consideration.

    06

    Capital Allocation and Investments

    LivaNova increased its full-year capital spending guidance to $135 million to support Cardiopulmonary capacity expansion, next-generation oxygenator manufacturing scale-up, and IT infrastructure investments. This increased investment, along with funding for the Thermo Fisher agreement, led to a revised (lower) adjusted free cash flow guidance for the year.

    AI-generated summary of the company’s earnings call. Not investment advice.