LivaNova Earnings: Favorable Conditions Push Quarterly Results Ahead of Our Expectations

LivaNova’s second-quarter performance demonstrated a continuation of the strength seen in the first quarter, and after adjusting our full-year estimates upward, we plan to raise our fair value estimate modestly. The 16% organic revenue growth seen in the second quarter was broad-based both in terms of product lines and geography. Though we anticipate some factors contributing to the outsized performance in the first half of 2023 to moderate—such as easy comparable quarters, the temporary absence of an oxygenator competitor on the market—we think underlying demand should remain solid thanks to the resumption of the procedure referral pipeline, the rollout of Essenz heart-lung machine in Europe and the U.S., and the replacement cycle for its vagus nerve stimulation to address treatment-resistant epilepsy. We saw little to change our view of LivaNova’s narrow economic moat in second quarter.