Livanova Plc · NASDAQ:LIVN
Livanova — Investor Presentation (December 2017)
41 slides from Livanova's investor presentation, Dec 5, 2017
Slide 1: LivaNova Investor Presentation
NEUROMODULATION LivaNova Investor Heart Valves Presentation December 5, 2017 CARDIAC SURGERY
Slide 2: Safe Harbor Statement – Forward Looking Statements
Safe Harbor Statement – Forward Looking Statements Certain statements in this presentation, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the
Slide 3: Safe Harbor Statement – Intellectual Property
Safe Harbor Statement – Intellectual Property In this presentation, “LivaNova,” “the Company,” “we,” “us” and “our” refer to LivaNova PLC and its consolidated subsidiaries. This report may contain references to our proprietary intellectual property, including among others: • Trademarks for our VNS t
Slide 4: We are a $1.2B focused medical innovator
We are a $1.2B focused medical innovator Strong leadership Targeting underserved Improving quality of position in and high-growth patients’ lives Neuromodulation and market segments Cardiac Surgery 4
Slide 5: Leading positions in critical areas of treatment
Leading positions in critical areas of treatment Sales through Q3 2017 Total: $916M 80% Vagus Nerve Stimulation Cardiopulmonary (CP) (VNS Therapy®) Drug Resistant Epilepsy Heart-lung machines (HLM) Treatment Resistant Depression 30% Oxygenators Neuromodulation Autotransfusion systems (ATS) Hypogloss
Slide 6: Transforming the company with a sense of urgency
Transforming the company with a sense of urgency Divesting CRM business unlocks significant shareholder value Great outcome for all stakeholders; the result of a thorough and competitive process Allows company to focus on faster-growing and more profitable areas LivaNova: An Improves top-line growth
Slide 7: Focusing portfolio on “Head & Heart”
Focusing portfolio on “Head & Heart” CARDIAC SURGERY NEUROMODULATION CARDIOPULMONARY HEART VALVES Creator, leader of VNS Only sutureless valve on Market-leading positions Therapy the market Global Market $4.1B $2.0B $1.7B (2016)* Market Growth Low-double-digit Low-single-digit Low-single-digit Sales
Slide 8: Near-term Growth Drivers
Near-term Growth Drivers
Slide 9: Our portfolio has multiple near-term growth drivers
Our portfolio has multiple near-term growth drivers NEUROMODULATION CARDIAC SURGERY Perceval® optimizes the S5® HLM reduces Inspire® oxygenator surgical approach to SenTiva™ advances the transfusions and provides personalized sutureless aortic science of VNS Therapy improves recovery perfusion valve
Slide 10: Significant referral and treatment gap for drug resistant epilepsy
There is a significant referral and treatment gap for drug resistant epilepsy ~35% of patients need treatment beyond medication Epilepsy patients ~10M Drug resistant ~3M Referral Gap Evaluated at EMU ~300K/yr Surgery/Other ~7K/yr Treatment Gap Treated VNS ~8K/yr Source: Prevalence data and approxima
Slide 11: Developing customer-driven innovation
Developing customer-driven innovation Patient quality of life Provides ease of use, SenTiva VNS Therapy better patient care and • Smallest and lightest • Innovation driven from customer inputs cost effectiveness responsive therapy for epilepsy • Reduce seizure severity and improved seizure • Senses
Slide 12: Our S5 HLM is the market leader
Our S5 HLM is the market leader 30 percent of Cardiac Surgery sales are in capital equipment 70% market share 100% customizable, flexible and easy to use Proven safety over 40 years Near-term: Focus on commercial execution and S5 enhancements Mid- to long-term: Next-generation device 12
Slide 13: Inspire ignited the fastest adoption of oxygenators
Inspire ignited the fastest adoption of oxygenators 70 percent of Cardiac Surgery sales are in disposable equipment 30% market share, market leader Broad choice from complete family of products Fastest adoption ever, with over 1 million patients treated Near-term: Commercial execution and leverage H
Slide 14: CONNECTing the cardiopulmonary workflow
CONNECTing the cardiopulmonary workflow Data is the driver for Goal Directed Perfusion HLM • One system connects data from all devices • Automatic integration of perfusion data, patient parameters and S5® product information • Allows user to tailor perfusion to individual patient factors OXYGENATOR
Slide 15: Driving expansion and penetration of Perceval
Driving expansion and penetration of Perceval Near-term Goal: $80 million global Medium-term sales by 2018 • Focusing on $200M • Larger sizes to MICS segment increase addressable market • Sales force effectiveness • Continued clinical and economic • Proctorship evidence to support expansion efficacy
Slide 16: Strategic Portfolio Initiatives
Strategic Portfolio Initiatives
Slide 17: Mid- to long-term growth drivers: strategic portfolio initiatives
Our portfolio has multiple mid- to long-term growth drivers: strategic portfolio initiatives TRANSCATHETER MITRAL TREATMENT-RESISTANT HEART FAILURE VALVE REPLACEMENT DEPRESSION (TRD) (HF) (TMVR) Novel delivery of Autonomic VNS Therapy may provide Unique transseptal Regulation Therapy (ART) may bette
Slide 18: VNS: Leveraging the technology
VNS: Leveraging the technology A universal platform is the foundation for additional indications Psychiatric Disorders VNS for Chronic VNS for Heart Failure Epilepsy Patient Data and analytics Movement Universal Rheumatoid clinician Disorders Platform Arthritis and diagnostic processing tools Genito
Slide 19: Exploring options for LivaNova’s Treatment Resistant Depression therapy
Exploring options for LivaNova’s Treatment Resistant Depression therapy Received CE Mark in 2001 Received FDA approval in 2005 Currently have 4,000 devices implanted over ~18-month period Started pilot trial in Germany in 1Q17 Planning scaled launch in European countries where we have approval and r
Slide 20: Depression affects patients in the prime of their life
Depression affects patients in the prime of their life and burdens families and society • 300M+ patients globally • Median age of onset: 25 years Depression • Fewer than half of patients receive treatment • Leading cause of disability and major burden • ~10-30% of patients with depression Treatment-
Slide 21: Implantable Therapy for Obstructive Sleep Apnea (OSA)
Implantable Therapy for Obstructive Sleep Apnea (OSA) Obstructive Sleep Apnea (OSA) is a disorder in which breathing repeatedly stops and starts due to the throat muscles relaxing and blocking the airway during sleep Illustration Overview Stimulation expands • Restoration of normal sleep patterns th
Slide 22: Significant unmet clinical need for OSA patients who stop or refuse CPAP
Significant unmet clinical need for the approximately 40-50% of OSA patients who stop or refuse CPAP US Prevalence of Obstructive Sleep Apnea ~44M Moderate to Severe ~16M Referral Gap Diagnosed ~9M Treated with CPAP ~4M Treatment Gap Treated HGNS ~1M Potential Patients Source: Health Advances. HGNS
Slide 23: Obstructive Sleep Apnea - ImThera Rationale
Obstructive Sleep Apnea - ImThera Rationale • Opportunity to disrupt current treatment paradigm and fill significant unmet clinical need for new therapy: Market Potential - 40-50% of OSA patients stop or refuse CPAP - U.S. CPAP market estimated at $4 billion annually, growing low- to mid-double digi
Slide 24: LivaNova TMVR Concept
LivaNova TMVR Concept • Delivery System – Completely transvenous percutaneous approach – 2-step implant – Fully reversible • Anchor – 4 sub-annular anchoring feet – SAM management feature – Nitinol self-expanding frame – Covered with polyester and ePTFE • Valve – Porcine pericardium – 3 leaflet circ
Slide 25: Competitive advantage in TMVR and opportunity to lead the transseptal market
Competitive advantage in TMVR and opportunity to lead the transseptal market LivaNova Caisson Edwards CardiAQ TRANSSEPTAL Abbott Cephea Edwards Valtech Edwards CardiAQ Abbott Tendyne Medtronic Twelve MValve TRANSAPICAL Neovasc HighLife Sinomed Direct Flow 25
Slide 26: Executing on a clinical data development plan
Executing on a clinical data development plan designed to enable commercialization Patients Centers Objective Status FIH study proving Continuing 20 8-10 TMVR concept enrollment Confirmatory study 75* 15-25 to secure CE Mark Started to enroll in Europe U.S. IDE study to build on FIH and Finalizing p
Slide 27: Advancing heart failure treatment options
Advancing heart failure treatment options Heart failure prevalence of almost 6 million in the United States and more than 23 million worldwide By 2030, the cost of heart failure will exceed $70B in the U.S. alone Specialized forms of VNS Therapy result in improved regulation of cardiovascular functi
Slide 28: Financials and M&A
Financials and M&A
Slide 29: Clear roadmap for value creation
Clear roadmap for value creation 2017-2018 2019-2020 2021+ Invest & Grow Accelerate Growth Positioned for Success • Global leader in VNS Therapy • Operational excellence • Global leader in cardiopulmonary • Global expansion of VNS • Global leader in sutureless valves Therapy leadership • Increasing
Slide 30: M&A strategy targets growth and margin expansion
M&A strategy targets growth and margin expansion TMVR & HF: High- mainly growth single- potential HF digit TMVR Neuromodulation: Growth Mid- NM margin and growth potential single- digit Cardiac Surgery: Low- mainly margin CS single- expansion digit Profitability improvement Illustrative only and not
Slide 31: Building a strong future through top line growth
Building a strong future through top line growth 2017-2022 CAGR Mid- Mid- to High- single-digit high- single-digit single-digit M&A SPI* Neuromodulation High-single-digit Cardiac Surgery Low-single-digit 2017E 2022E SPI = Strategic Portfolio Initiatives, which include Transcatheter Mitral Valve Repl
Slide 32: Expanding our gross margins
Expanding our gross margins Gross margin* as a percentage of revenues 70%+ Mid 60% 2017E Price Lean Business SKU Inflation / FX 2022E Manufacturing Mix Rationalization * Gross margin is an adjusted non-GAAP measure; all numbers include CRM business 32
Slide 33: Invest in R&D today to drive growth tomorrow
Invest in R&D today to drive growth tomorrow R&D* as a percentage of revenues 12-13% 11-12% • In 2016/2017, prior to 10-11% Caisson acquisition, R&D* expense was 9-11% of net sales • R&D profile will increase mid- term to support investment in portfolio expansion • Expanding margins enable longer-te
Slide 34: Expanding operating margins
Expanding operating margins Operating income* as percentage of revenues 20%+ Gross margin expansion High- teens SG&A reduction R&D investment 2017E 2022E * Operating Income is an adjusted non-GAAP measure; all numbers include CRM business 34
Slide 35: Projecting strong growth in earnings per share
Projecting strong growth in earnings per share 2017 - 2022 CAGR Low- to EPS* mid-teens * EPS is an adjusted non-GAAP measure; all numbers include CRM business 35
Slide 36: Focused capital allocation strategy
Focused capital allocation strategy PRIORITIES Organic growth Liquidity to support the strategy Investment Capital enhancements Capital structure that adapts to business needs Focused M&A on core competencies Operating CF Drive increased shareholder returns Share repurchase program Target leverage*
Slide 37: Driving shareholder value creation
Driving shareholder value creation • Large, globally expanding markets REVENUE Mid- to high- • Broad geographic presence GROWTH single-digit CAGR • Accelerating growth through execution, innovation and M&A • Executing initiatives to improve profitability EPS Low- to mid- • R&D investments drive futu
Slide 38: LivaNova - Health innovation that matters
| ivaNova Health innovation that matters 38
Slide 39: Appendix
Appendix RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) * Numbers may not add up precisely due to rounding 39
Slide 40: Appendix
Appendix RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED) * Numbers may not add up precisely due to rounding 40
Slide 41: LivaNova - Health innovation that matters
| ivaNova Health innovation that matters 41