Good day, ladies and gentlemen, and welcome to the LevaNova PLC third quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. As a reminder, this conference call is being recorded. I would now like to introduce you to our host for today's conference, Ms. Briana Gotlin, LevaNova's vice president of investor relations. Briana, please go ahead.

Thank you and welcome to our conference call and webcast discussing LevaNova's financial results for the third quarter of 2026. Joining me on today's call are Vladimir Makatsaria, our Chief Executive Officer and member of the Board of Directors, Alex Shvartsburg, our Chief Financial Officer, and Ahmet Tezel, our Chief Innovation Officer. Before we begin, I would like to remind you that discussions during this call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent filings and documents furnished to the SEC, including today's press release that is available on our website. We do not undertake to update any forward-looking statement. Also, the discussions will include certain non-GAAP financial measures with respect to performance, including but not limited to revenue results, which will be stated on a constant currency basis. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website. We have also posted a presentation to our website that summarizes the points of today's calls. This presentation is complementary to the other call materials and should be used as an enhanced communication tool. You can find the presentation and the press release in the investor section of our website under news, events, and presentations at investor.Levanova.com. With that, I'll turn the call over to Vlad.

Thank you, Briana, and thank you everyone for joining us today. Welcome to Levanova's conference call for the third quarter of 2026. Livanova delivered another quarter of double-digit revenue growth with strength across all regions, driven by commercial execution and healthy demand for our cardiopulmonary and epilepsy technologies. The core businesses continue to fuel both current performance and discipline investment, enabling us to further strengthen our existing franchises while advancing new growth opportunities such as obstructive sleep apnea or OSA. As we prepare to enter this attractive, high-growth, high-margin market, our team is focused on building a strong foundation for long-term success in OSA. Importantly, we're not building from the ground up. We're leveraging our neuromodulation capabilities developed through our epilepsy business, including product development expertise, established supply chain infrastructure, a global footprint, and market access competencies. To complement this existing strengths, we have also made key hires across the OSA commercial leadership team, adding targeted expertise as we prepare for commercialization. The strength of LevaNova's capabilities supports future market access for proximal hypoglossal nerve stimulation or PHGNS. Recently, LevaNova contributed its robust clinical evidence to the CPT code application reviewed by the AMA editorial panel. Our Osprey randomized control trial provided level one evidence to support this application. We're pleased with the decision to establish new category one codes that will include LevaNova's technology. Subject to finalization, the new codes are expected to take effect on January 1st, 2028. We believe this decision is an important development that further bolsters our ability to achieve appropriate reimbursement. We're proud to have supported efforts to improve patient access to care and look forward to leveraging this new category codes once effective in the commercialization of our OSA technology. With PAGNS, we believe we have a clear right to win supported by rigorous clinical evidence, a differentiated technology designed for a broader and more complex patient population and leading neuromodulation capabilities across liver nodes. For the remainder of the call, I will discuss the third quarter results and provide updated top line guidance for 2026. After my comments, Ahmet will discuss key innovation updates and Alex will then provide additional details on our results and updated 2026 guidance. I will wrap up with closing remarks before moving on to Q&A. Now turning to segment results. For the cardiopulmonary segment, revenue was $225 million in the quarter, an increase of 11% versus the third quarter of 2025, led by double-digit growth in both Europe and the US. Heart-lung machine revenue grew low double digits in the quarter, marked by quarterly record essence placements and sustained favorable price premiums. Cardiopulmonary consumables revenue, which encompasses all non-HLM products in our cardiopulmonary portfolio, grew low double digits in the quarter. This was led by strength in oxygenators and perfusion tubing kits. Improvements in third-party component availability and internal manufacturing optimization drove significant year-over-year increases in oxygenator output. supporting strong performance year-to-date. Oxygenator market demand continues to exceed the industry's ability to supply, which represents a significant opportunity to expand our market position. As a reminder, our three key operational initiatives to capture this opportunity are optimizing processes across our supply chain network, The operational launch of the new dedicated oxygenator manufacturing line marks another key milestone in the execution of our strategy. Together with the Thermo Fisher component agreement announced last quarter represents significant progress across this three and positions us to drive double digit capacity expansion in 2027. Strong performance across our leading product lines combined with healthy underlying global demand and operational execution reinforces our confidence in the durability of growth in the cardiopulmonary business. As the market leader in HLM with a global installed base of more than 10,000 systems, and Essence representing only about 20% of that base today, we see a significant multi-year upgrade opportunity ahead. For the full year 2026, we now expect cardiopulmonary revenue to grow 10.5% to 11.5% up from 9.5% to 10.5% previously. We continue to expect Essence to represent approximately 80% of annual HLM units placements in 2026, up from 55% in 2025. This forecast also assumes continued market share gains in consumables as we execute on our manufacturing expansion plans. Turning to epilepsy, revenue increased 11% versus the third quarter of 2025 with double digit growth across all regions. U.S. epilepsy revenue increased 10% versus the prior year period, while epilepsy revenue in the Europe and rest of world regions increased a combined 14% year over year. Performance was driven by volume and favorable realized price. supported by impactful clinical evidence, improved reimbursement, and sustained commercial excellence. Similar to the prior quarter, improved realized price in the third quarter benefited from reduced volume discounting, in addition to our standard annual list price increase. The long-term clinical evidence from our core VNS study is strengthening physician confidence, accelerating referrals, and will support earlier adoption of VNS therapy in the patient care pathway. At the same time, improved US reimbursement is translating into stronger provider economics and broader access, driving higher procedure volumes. As a result, we're raising full year 2026 epilepsy revenue growth outlook to 8-9%, up from 7-8% previously. In summary, our third quarter performance reflects the strength of growth drivers across our portfolio, including the ongoing essence upgrade cycle and continued oxygenator market share gains in cardiopulmonary, as well as favorable U.S. reimbursement dynamics and growing clinical evidence supporting VNS therapy in epilepsy. We expect the strands to continue supporting sustainable growth while positioning us to advance our OSA strategy. As a result, we are now guiding full year 2026 revenue growth between 9% to 10%, up from 8% to 9% previously. Alex will provide additional details on our 2026 guidance later in the call. With that, I'll hand the call over to Ahmet to cover key innovation updates across the portfolio.

Thank you, Vlad. Livanova's innovation engine continues to drive growth today while building the foundation for sustained long-term value creation. Starting with cardio-pulmonary, We're excited to announce that the new dedicated manufacturing line for Livanova's oxygenators is now live and operational. The new line will increase output for this critical product where demand continues to outpace supply. Combined with the additional component supply unlocked from the Thermo Fisher Agreement, We are accelerating production of this life-saving product to better serve our customers and patients and are eager to ramp up further. Turning to the next generation oxygenator, we are now in the design verification and validation phase of product development. As a reminder, our next generation product will have its own dedicated manufacturing line separate from and incremental to the line supporting our current generation product. The next-gen oxygenator is designed to deliver best-in-class performance through enhanced gas transfer efficiency, low pressure drop, and strong platelet preservation, helping reduce blood trauma and supporting better patient outcomes. We believe these attributes represent important advancement in oxygenator technology with launch still expected in 2028. In epilepsy, the journal Neuromodulation recently published the full 36-month results from CoreVNS, the largest prospective, multinational, real-world study of VNS therapy devices in people with drug-resistant epilepsy or DRE. Across more than 60 sites in 16 countries, and over 800 patients, the study showed a 76% median reduction in seizure frequency at three years with 64% of participants achieving at least a 50% reduction and nearly half seeing a reduction of 80% or more. Benefits appeared as early as three months after implantation were sustained through 36 months and continue to improve over time. The study also showed meaningful improvements beyond seizure reduction, including better quality of life, less use of rescue medication, and a 73% reduction in seizure-related hospital stays. This evidence reinforces the durability of BNS therapy in managing DRE and continues to demonstrate the benefits of BNS therapy as a less invasive treatment option with strong efficacy for patients. Additionally, the limited market release of our cloud-based clinician portal and application continues to progress well with excellent clinician feedback and a high engagement from early users. Physicians have used this technology with more than 1,000 patients to date. The digital health platform is already delivering meaningful workflow and connectivity benefits for patients and clinicians while establishing the foundation for future capabilities, including remote titration enabled by our next generation IPG platform. As a reminder, the next generation IPG and digital health platform market release are both expected in 2027. Turning to OSA. We continue to advance our next generation platform which adds digital features and utilizes our Polysync algorithm. This device is designed to support a strong competitive entry in a commercial launch. We are pleased with how design verification and validation have progressed. We are confident in the previously communicated timeline for PMA supplement submission and look forward to updating you once we have submitted. As we prepare to launch, we continue to strengthen the clinical evidence supporting PHGNS highlighted by multiple presentations at the International Surgical Sleep Society or ISSS and American Academy of Otolaryngology meetings in October. Notably, A new subgroup analysis from the Osprey Randomized Control Trial earned first place poster honors at ISSS and demonstrated consistent clinically meaningful benefit across all patient subgroups evaluated, including those with severe OSA, elevated BMI, high hypoxic burden, and higher predicted risk of complete concentric collapse, or CCC. Importantly, the versatility of our six-contact electrode architecture with our polysync algorithm offers simultaneous contact stimulation to convert most initial non-responders into responders, increasing the cumulative AHI response rate from 65% to 85% and demonstrating the flexibility to customize therapy to patients with more complex needs. As a reminder, PolySync will be available for all patients at therapy initiation, starting with their first titration. Together, these findings reinforce the broad applicability of PHGNS, combining strong efficacy, therapy optimization flexibility, and the absence of a triple C contraindication. We believe this differentiated approach has the potential to address a broader patient population than currently available HGNS therapies. As we prepare for launch, physician feedback remains highly encouraging, with clinicians highlighting the potential for policy to further improve patient outcomes. We believe the growing body of evidence and continued innovation further strengthens Livanova's competitive position in this large and underserved market. Now turning to difficult-to-treat depression, we have submitted the 36-month recover data to a peer-reviewed journal, which has also been shared with CMS. BNS Therapy for DTD continues to gain support from the clinical community and the unmet need among these patients continues to drive our work. We believe VNS therapy is a differentiated option for this severely ill population. We remain in active dialogue with CMS and will continue to keep investors updated on developments as appropriate. In summary, we are pleased with our progress across the portfolio. Together, these milestones underscore the depth of our innovation pipeline and the opportunity to continue raising the standard of care. With that, I will turn the call over to Alex to discuss additional details on the third quarter results and updated 2026 guidance. Thanks, Ahmet.

During my portion of the call, I'll share a brief recap of the third quarter results and provide commentary on our updated full year 2026 guidance, which reflects solid execution year to date and improved business outlook. Turning to results, third quarter revenue was $393 million, an increase of 10% versus the prior year. As a reminder, the prior year quarter benefited from a $3.1 million reduction to our reserve for the Italian MedTech payback measure. This was reflected in other revenue related to product sales of previously divested businesses. Foreign exchange in the quarter had a negligible year over year impact. Adjusted gross margin as a percent of net revenue was 69% in line with prior year period. Adjusted SG&A expense for the third quarter was $136 million In line with the third quarter of 2025. R&D as a percentage of net revenue was 11%, compared to nearly 13% in the third quarter of 2025. The decrease as a percent of net revenue primarily reflects the timing of planned OSA R&D investments, with certain spending shifting from the third quarter of 2026 into the fourth quarter of 2026. Adjusted operating income was $92 million. compared to $80 million in the third quarter of 2025. Adjusted operating income margin was approximately 24% compared to 23% in the third quarter of 2025. Compared to the prior year, the increase reflects higher revenue. Adjusted effective tax rate for the quarter was 23%, up modestly from 22% in the prior year period, reflecting geographic mix of income. Adjusted diluted earnings per share was $1.23 compared to $1.11 in the third quarter of 2025. The increase was primarily driven by higher revenue, reflecting strong growth across both the cardiopulmonary and epilepsy businesses. Moving to cash balance at September 30th, cash was $563 million compared to $636 million at year-end 2025. Total debt at September 30th was $299 million compared to $377 million at year end 2025. The reduction in both cash and total debt was a result of the early repayment of the outstanding term facilities in the amount of $98 million inclusive of accrued interest. Adjusted free cash flow for the quarter was $56 million compared to $62 million in the prior year period. The year-over-year decline reflects increased planned capital investments and higher working capital requirements associated with revenue growth. Capital spend in the first nine months of 2026 was $77 million compared to $49 million in the prior year period. The year-over-year increase was driven by the next-generation oxygenator manufacturing scale-up, investments in the digital health platform, cardiopulmonary capacity expansion initiatives, as well as investments in IT infrastructure. Now turning to our updated 2026 guidance. As Vlad mentioned, based on performance to date, we are raising full-year 2026 revenue and adjusted earnings per share guidance. At the same time, we're maintaining adjusted free cash flow guidance. We now forecast 2026 revenue growth between 9 and 10% on a constant currency basis, up from 8 to 9% previously. We continue to expect the impact of foreign currency to be a tailwind of approximately 1% based on current exchange rates. Consistent with prior guidance, we estimate a net impact from tariffs of less than $5 million on the full-year adjusted operating income, inclusive of current and anticipated future tariffs. Full-year adjusted operating income margin is still expected to be in the range of 20 to 21%. As a reminder, this outlook reflects increased investment in the fourth quarter to support OSA product development Cardiopulmonary Capacity Expansion Initiatives, and Next Generation Oxygenator Manufacturing Scala, along with phasing of certain planned investments from the third quarter of 2026 into the fourth quarter of 2026. Adjusted effective tax rate is still forecasted at approximately 23%. To reflect stronger operational performance, we raised EPS guidance 10 cents at midpoint and now project adjusted diluted earnings per share in the range of $4.40 to $4.50. We continue to expect adjusted diluted weighted average shares outstanding to be approximately 56 million for the full year. The CPS range represents approximately 14% growth at midpoint relative to 2025. This range now reflects a shift in our assumed timing of the approximately $400 million SNEA payment from the third quarter of 2026 to the fourth quarter of 2026, resulting in a $0.03 benefit to EPS this year. We believe the amount reserved for SNEA remains our best estimate of the liability and we have sufficient resources to satisfy the liability. Adjusted free cash flow is still expected to be in the range of $140 to $160 million. This range includes $135 million in capital spending consistent with prior guidance. This level of investment remains aligned with the initiatives discussed throughout the year, including cardiopulmonary capacity expansion, Next-generation oxygenator manufacturing scale-up and investments in IT infrastructure to support the company's growth strategy. With the successful operational launch of our new oxygenator manufacturing line, we are seeing tangible returns on these investments, positioning us to support future growth and meet customer demand. In summary, our third quarter results underscored the strength of the business. Our updated guidance implies 2026 performance at or above the 2025 to 2028 financial framework outlined at investor day. With that, I'll turn the call back over to Vlad for his closing remarks.

Thank you, Alex. In closing, our third quarter results reflect the focus, dedication, and execution of teams across Livanova. I want to thank our colleagues for their commitment to our patients, customers, and one another. We're encouraged by the opportunities ahead and remain confident in our ability to create long-term value. We continue to strengthen Livanova's core businesses, expand the capabilities needed to serve customers more effectively, and invest in innovation that addresses unmet patient needs. With that, We're ready to open the call for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Adam Mader with Piper Sandler. Your line is open. Please go ahead.

Hey, good morning. Thank you for taking the questions and congrats on the nice print and broad-based results. Maybe to start, I would like to spend a little bit of time on cardiopulmonary, specifically as it relates to next year, and was hoping you could talk about some of the kind of key puts and takes. things like the new dedicated manufacturing line for oxys. How quickly could that potentially show up in numbers? And then maybe just remind us on timing for the new heater, cooler and air management products and kind of how you're thinking about impact to growth. Thanks.

Adam, good morning. Thank you for the question. So maybe before I go to specifically to kind of some of the things you asked about, I just want to step back and talk a little bit about overall cardiopulmonary performance over the past period. We've raised this year 350 bibs since the beginning of the year. This is now 15 consecutive quarters of double-digit growth for our cardiopulmonary business and six consecutive quarters of double-digit growth in disposables. So we're very pleased with where we are. I mean, the other thing that We're really pleased in our cardiopulmonary business is that the quality of growth is improving. And that means that the growth is well balanced across the portfolio within the cardiopulmonary business. So both coming from price, upgrade of essence, which continues to be a strong driver, and now significant growth coming from the disposables. So that is a little bit of a background. In terms of significant events that happened recently, We are now live in production and we will see impact in significant improvement in the output early next year. We are looking at double digit growth improvement in output for 2027 versus 2026. So that's number one. Number two, I just want to remind everybody that we are on track to launch a new oxygenator in 2028. That new generation oxygenator will be clinically differentiated from anything on the market today. And then finally, you know, the heater, cooler and air manager will continue to be on track in terms of development. And we're planning a phased launch This is going to be governed by regulatory approvals across the world, and the first in line will be EMEA or EU. But I think the significant impact or material impact in terms of revenue will be beyond 2027, so starting in 2020.

Okay, perfect. That's a great color, Vlad. Thanks for all that. And, you know, maybe for the follow-up, just one kind of more near-term focus question. It looks like, you know, with the guidance raised, the implied Q4 outlook, at least on the top line, suggests maybe a little bit of a decel. Is there anything to call out there or perhaps maybe just some conservatism, but wanted to ask about kind of implied 4Q guide on the top line. Thank you.

Hi Adam, it's Alex. So first of all, again, pleased with our performance on both businesses year to date and our confidence in the year continues to increase. Despite the difficult comps in Q4, the underlying drivers of the business are strong. As we said in our prepared remarks, we continue to trend sort of at the upper end of our investor day targets. Increase Guide is really in line with our philosophy on prudent guidance and our performance year to date and our expectations for Q4. This is more from an OPEX perspective, just enables us to invest from a position of strength. So that's kind of the story on Q4. And again, really pleased with how the year is shaping up.

Thanks for the call there, Alex.

Your next question comes from the line of Matt Taylor with Jefferies. Your line is open. Please go ahead.

Hey, good morning. This is Mike Sarcona for Matt Taylor. Thanks for taking the question. I guess just to start, you know, Vlad, you opened up the prepared commentary highlighting, you know, your excitement and confidence in the OSA market and your opportunity there. I guess, can you just kind of remind us around commercialization timelines and the size of the commercial organization that you think you're going to need to at least start addressing the market?

Yeah, so what we are planning to do is Thank you very much. The real increase in commercial investment starts in 2028, but we continue to plan a limited launch in 2027. Okay, thanks for that.

One more follow-up on the OSA market. Given where things stand today, do you have a rough sense or outlook for Growth in the market today and how that might look in 2027?

First of all, we're closely monitoring everything that's happening in the market. We believe that the market remains a very attractive space for us to compete. And that is driven by a number of things. Number one is there is a significant unmet need From patient point of view, you know, up to 1 million patients discontinue CPAP therapy annually and HGNS penetration within that population remains below 5%. So that gives us, you know, still significant opportunity from patient point of view. You know, while there are currently challenges and reimbursement uncertainty in the HGNS market, In the near term, we believe that these dynamics are going to improve and the challenges in these dynamics are temporary. And you already saw some of the positive news from new codes being established for 2028. And then finally, when we enter the market, As a reminder, we don't have counterindication for CCC patients. And so by design, that is going to increase the market size when we enter the market. So we still believe in the... Attractiveness of this market both from growth point of view but also the margin opportunity on our business we have strong confidence in our ability to win in this marketplace.

And maybe I'll just add one comment around the clinical differentiation. As Vlad said, we do not have a contraindication, which is about 25% of the patient population. So the market is growing, but we also have a strong clinical differentiation through Polysync where we have cumulatively 85% responder rates. So what that effectively translates into is today, one in three patients Your next question comes from the line of David Rescott with Baird. Your line is open. Please go ahead.

Great, thanks for taking the questions here and congrats on the really strong results. You know, I appreciate the comments on, you know, U.S. cardio palm already. I recall last quarter, you know, when you talked about that kind of first half high single-digit growth, you know, there's a thought that that's kind of the way we should be thinking about that in the second half. Obviously, you delivered something above that. So when we think about what's baked into the guide for Q4, I feel like we typically think there's a stronger capital placement cycle maybe in the fourth quarter. Obviously, the comps are a little bit different versus Q3. You know, you've got this oxygen air line that's now ramping. Maybe there's some level of increased contribution baked into Q4 as well. But just trying to think through the pieces, you know, around some of the U.S. cardiopalm segments, specifically on that, you know, typically stronger capital Q4, plus maybe some of the pieces on the expanding oxygen air side.

Hey, David. Yeah, you're right. So our capital is a significant component of our growth. But just to remind you that we launched Essence in Q4 of 2023. So it's been a challenging comp for us for the last couple of years and will continue to be so in Q4. So consumables are going to play a larger part in our growth story in Q4. Again, I think our story around essence conversion continues to play out. Still expect for the full year essence to represent 80% of placements up from about 55% last year. which is pretty strong so that we're going to continue to benefit from the price mix effect and our funnel continues to be strong going into 2027.

Maybe on the VNS business, the epilepsy business, it looks like, again, that's been accelerating through the year, maybe 200 basis points or so in the U.S. this quarter. So wondering if maybe you could unpack how that contribution of price Thank you very much. Product, you know, it sounds like maybe some of these workflow improvements are a little bit better than what we had assumed and wondering if at all beyond maybe potential price contribution from that product as well that maybe that's something that could pull through some additional utilization as well. Thank you.

David, thank you for this question. Let me start me on overall growth drivers and then I'll turn over to Alex to talk about kind of financial components this year. So if you look at our epilepsy business, we have three tailwinds or three important drivers of growth. Number one is the score VNS clinical data that is coming out and recently it was published and the clinical evidence is being disseminated throughout the clinical community is receiving very strong, positive reviews from the clinical community. And so that's number one. Number two is, as you know, is this increase in Medicare reimbursement, approximately by 50% increase. So that's helping with the economics of the providers and again, very positive impact. And then the third one is more the future one. So as we launch new innovation with the next generation IPG and the digital health platform, which will enable remote titration, this has been a significant barrier for patients and caregivers. And unlocking that opportunity with remote titration is going to be a very important road driver. So the clinical data, and the reimbursement already happened this year. And then the innovation we expect becoming the third positive driver next year. So overall, again, we're very pleased with the momentum of the business. And then maybe now to Alex to kind of talk a little bit about components this year.

Yeah, so we're seeing consistent with what we saw in the first half of the year. We're seeing improvement in both volume and price on volumes. We're seeing increase in new patient implants. Our funnel continues to be strong. And that's reading through. On the pricing, we still are seeing consistently seeing that our realized price is reading through at about 2x what we normally expect from the annual price increases. Really driven by lower discounting. So both reimbursements and as Vlad said, the clinical outcomes continue to increase access for patients and drive strong revenue, both from a volume and a realized price perspective.

Anthony Patron, Mizuho

You have the thermal fissure agreement in place. How sustainable is that competitive advantage for oxygenators? And hence, what is the normalized growth rate of that business going forward now that you have that advantage? And then in terms of depression, maybe any updates you can share with respect to CMS discussions on potentially accepting a formal NCD review process. Just any updates you can provide there would be helpful. Thanks.

Anthony, good morning. Thank you for the question. So I'll start with oxygenated and then I'll turn it over to Ahmet to make comments on depression. So maybe a couple of points to start with. Number one, as a reminder, this is a very mature market, obviously growing in mid-single digits. And we were able to increase our market share from approximately 30% Thank you very much. The market is still operating in the environment where the demand is outpacing supply and we're still operating in a backlog. And so there's still a short-term opportunity just by purely improving output to gain significant share. In our strategy, we have three important components. Number one is just continuously improving our operations. And so this has been the driver of our output growth over the last couple of years. So doing better with the current network that we have. Thermo Fisher agreement was important because it unlocks this availability of critical component over the long term. And gives us an ability to kind of continue grow market share in consistent manner over the next several years. And number three is our own ability to increase our manufacturing output. And so this launch of this new manufacturing line that is live now has been a very important milestone from that point of view. So I would say a combination of those three gives us Confidence in double-digit improvement and output next year. And you will see that in our guide when we kind of, we will be more precise in our guide when we guide next year.

And maybe on depression, one of the key developments is that CMS has been inquiring about the three-year data, the 36-month data, and we got that data middle of this year, submitted to a peer-reviewed journal, and we have shared the data with CMS. We're actually very excited about the data because the durability of the therapy is very strong. And that's not atypical with neuromodulation. Generally, neuromodulation, the longer you use the device, the better the therapy outcomes are. So it was not a surprise to us, but having a validation was important. Thank you. Your next question comes from the line of Mike Mattson with Needham. Your line is open. Please go ahead.

Yeah, thanks. So just want to ask one on epilepsy with regard to pricing. So I understand kind of the drivers there, but, you know, looking beyond 26, do you expect these tailwinds to remain in place for pricing? And then, you know, with the new IPG and digital platform coming next year, is that another opportunity to raise prices as well?

Yeah, so thanks for the question, Mike. Yeah, the realized price, as we've said throughout the year, when the reimbursement guidance improved, when we started renegotiating contracts with a number of accounts, which we were successful in doing and really that resulted in a reduction in discounting, We weren't able to capture all of the accounts, so there will be some residual effect going into 2027. So there will be some incremental realized price benefit going into next year. In terms of opportunities on the new product, we expect, because of the significant value proposition, we think that the product will be premium priced. We're not disclosing what that is at this point, but we do believe there's an opportunity there.

Okay, got it. And then just in terms of the OSA device, from a manufacturing perspective, I assume you're going to have adequate capacity to meet any demand there and that's not going to be a potential bottleneck.

Yeah, we have adequate capacity for the OSA launch and to scale the business. So no issue there.

Okay, great. Thanks.

Your next question comes from the line of Brett Fishbin with KeyBank Capital Markets. Your line is open. Please go ahead.

Hey, this is Will on for Brett. With respect to the new line, I was just wondering if you could parse out how additive that was to the quarter in terms of growth. And then given the fact that it is a new line, could you maybe just speak to any margin opportunities with that going forward?

Yeah, well, before I answer your question, I just want to go back to Anthony's question real quick on DTD and just add to what Ahmet said. If you are interested to learn a little bit more, there was an important article that was featured in the American Journal of Psychiatry and also an interview by Dr. Conway. It's kind of in a monthly podcast. So it gives a really nice flavor to the clinical data and how our care opinion leaders are viewing it. So Anthony, just to add to your question. And then Will, on your point, so the What I can tell you about the new manufacturing line is that it's obviously a complex process to launch a new manufacturing line. I think the team has done a wonderful job executing it in a timely manner and we start seeing production coming out of that new line. Because of the timing of the launch, we are building inventory still on that. We've guided our goals in terms of margin improvement on our CP business. Obviously, launch of that line is a component of that strategy. This is the business where scale matters. And so having larger scale gives us an opportunity to continuously improve our margin.

Yeah, as Vlad said, we have invested in this new capital equipment to scale the business. So obviously, the more market share we're able to gain and drive higher volumes through this fixed cost base, it will have a positive effect on our margins.

Understood. Thank you very much.

Your next question comes from the line of Keith Hinton with Freedom Capital Markets. Your line is open. Please go ahead.

Great. I wanted to start off with a question on 2027, specifically around the margin puts and takes. So when you did the Investor Day early last year, I think you talked about in the kind of 2027, 2028 timeframe, maintaining operating margins in the low 20s. And obviously a number of things have happened since then, some outperformance on margin this year, but also, you know, the new deals and the expanded CapEx and all those types of things. So just actually be thinking about operating margin next year in terms of up, down or flat. Verse 26, and what are the most important sort of puts and takes we should be thinking about? And then I have a follow-up as well.

Hi, Keith. So, look, our Investor Day financial framework continues to stay intact. Our long-range plan was comprised of two phases. The first phase was 25 through 28, and as we got it at that point in time, you know, our Operating margin will be at 20% to 21%, or I should say above 20% in the near term. So that's our expectation as we look at the near term outlook. We obviously have a big opportunity with the OSA launch next year. Possibly, I think at this point in time, we're not ready to talk about 2027 in terms of guidance, but we are kind of aligned with our framework that we communicated at Investor Day.

Great, thanks. And then just a follow-up on OSA, just kind of two questions here. Number one is, When should we expect to see the detailed policy sub-study data published in a journal? And then maybe just a broader question in terms of the market leader has been around this space for a long time and it's still a very under-penetrated market. So is it your view that kind of the market just needs additional competitors, additional commercial investment, or are some of the Advantages that you see with your products, do you see those as driving increased uptake as well?

Yeah, so I'll start and then I'll also ask Alex to add. So the subgroup analysis was actually presented in ISSS and it actually won the best poster award as well in that. And what is really exciting is that We did not see differences in subgroups. So the technology works homogeneously despite your BMI and your comorbidity. So that's the interesting part of it. What is really important for us is Polysync's ability to have a very high responder rate. I think earlier I alluded to it. Thank you very much. The technology has become more kind of mainstream. The fact that we don't have a contraindication grows the market by 25% on day one. So we feel very strong based on the clinical data, the technology differentiation and the fact that diagnosis is improving in terms of how the market will continue to grow.

I would just say, you know, our confidence in this market continues to build. We think we have a compelling value proposition with our technology and the clinical evidence that Ahmet just talked about. You know, historically, this market has grown at a double digit rate. And, you know, the kind of the The current slowdown in the market growth, I think, is a temporary phenomenon driven largely by the confusion around coding and reimbursement. But that will work itself out by the time we're out in the marketplace.

And I'll maybe add one more thing. In terms of the CMS CPT codes, we are very pleased on the panel's decision We did participate in the application. Actually, our RCT data, because we are the only RCT for FT approval in the United States, was utilized as the level one evidence for the CPT code. So we also think that, you know, once the reimbursement piece is more clear now with this recommendation of AMA, We have reached the end of the Q&A session. I will now turn the call back to Vladimir Makatsaria for closing remarks.

Thank you very much and thank you everyone for joining the call today. And on behalf of the entire Livanova team, we really appreciate your support and interest in Livanova and have a great day ahead.

This concludes today's call. Thank you for attending. You may now disconnect.