Thank you and welcome to our conference call and webcast discussing LivaNova's financial results for the first quarter of 2016. My name is Karen King and I'm the Vice President of Investor Relations and Communications for LivaNova. I'm excited to be part of such a great Company and a great team. Joining me from Houston today are Andre-Michel Ballester, our Chief Executive Officer; and Vivid Sehgal, our Chief Financial Officer. This morning's press release and conference call include forward-looking statements. Forward-looking statements may be identified by the use of forward-looking terminology including, but not limited to, may, believe, will expect, anticipate, estimate, plan, intend and forecast or other similar words. Statements are based on information presently available to us and assumptions that we believe to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties. Our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements which are not guarantees of future performance and involve known and unknown risks and uncertainties and other factors that are, in some cases, beyond the Company's control. For detailed discussions of the factors that may cause our actual results to differ, please refer to our most recent filing with the SEC, including our 10-K dated March 4 and other regulatory filings. Included in the press release today are selected non-GAAP operating results for 2015 and first quarter of 2016. In this press release management has disclosed financial measurements that present financial information not necessarily in accordance with Generally Accepted Accounting Principles or GAAP. Company management uses these measurements as aides in monitoring the Company's ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measured as prescribed per GAAP. With that, we will be ending the call at the top of the hour this morning and I'll turn the call over to Andre-Michel.

Thank you, Karen. Welcome to our first-quarter 2016 conference call. I will begin the call by providing highlights of our key initiatives during the quarter and then discuss our sales results by business unit. After my comments Vivid will give you some more color on the financials and I will then wrap up with closing comments before moving on to Q&A. The first quarter was one of great progress in many key initiatives, starting with cardiac surgery. In early January we announced we received approval from the US Federal Drug Administration, or FDA, for our Perceval sutureless heart valve for the treatment of aortic valve disease. In March, we started to implant commercially patients in the US and are pleased with the early adoption of the device. Perceval has numerous benefits to traditional surgical valves and can be implanted minimally invasively with a significantly reduced procedure time. To date 136 scientific papers have been published on Perceval confirming reduced complication rates, shorter hospitalization time and ultimately reduced total procedure cost. In late January in CRM we announced that we received approval from Japan's Pharmaceutical and Medical Devices Agency, or PMDA, for our next generation of full-body MRI compatible pacemakers, the KORA 250. KORA 250 features a unique automatic MRI mode automatically detecting the MRI scanner's magnetic field and ensuring appropriate pacemaker operation during the scan. With its small size, extended longevity and therapeutic solutions, it's an ideal option for patients and physicians. In February we received two additional approvals for tissue valves which will enhance our cardiac surgery portfolio. In early February we received approval by the FDA for our CROWN PRT stented valve. The CROWN PRT is the latest advancement in stented aortic tissue valve technology and is an ideal valve replacement option for aortic surgery. In late February…

Thank you, Andre-Michel. Before I walk you through the financials, I want to take a minute to draw your attention to the press release schedules. We received feedback from many of you after our year-end call that we had opportunities to improve the clarity of our disclosures. As a result, we have added several one-time schedules to provide you with some historical context. We disclosed sales by both product line and by region for five quarters starting in the first quarter of 2015. We also disclosed five quarters of an adjusted P&L. The data shows selected lines on a non-GAAP basis and should provide some context to the progress of the business. Moving to the financials. Andre-Michel discussed our sales performance so I will start with gross margin, work my way down the P&L and then touch upon other financial statements. Adjusted gross margin as a percentage of net sales in the quarter was approximately 64.5%, up 40 basis points from the first quarter of 2015 and a substantial improvement sequentially. R&D expense in the first quarter was $31 million. R&D as a percentage of net sales was 10.9% compared to 12.9% in the first quarter of 2015. This reflects a combination of lower absolute levels of spending which are associated with a reprioritization of projects and an initial impact of merger synergies. In addition, in March we announced a restructuring of our CRM business to improve profitability. This included the closure of an R&D facility in France and the consolidation of R&D capabilities for both CRM and New Ventures in our Clamart facility. We expect to see improvements from this effort in the latter part of the year. SG&A expense for the first quarter was $110 million, an increase of 1.8% versus the first quarter of 2015. As we…

Thanks, Vivid. 2015 was in exciting euros a merged two quality companies together to create an even stronger market leading medical device company. While we initially focused on the transaction, we have now turned our efforts to execution. Looking forward, the regulatory approvals I discussed earlier will be instrumental in driving future growth. We are implementing detailed roll-out plans for each of the new products and expect that many of the devices will gain momentum as we progress through the year. We are finding synergies, managing our operating expenses and restructuring parts of the business, all to create greater efficiencies, greater flexibility to fund growth initiatives and deliver sustainable growth and shareholder value. Looking across our three businesses, neuromodulation has performed well with the launch of AspireSR last year, and we expect to see continued growth in the latter half of the year. In cardiac surgery we are seeing progress, with Perceval in Europe and anticipate that it will be an exciting year for Perceval in the U.S. In our CRM business we announced a restructuring earlier in the quarter to improve profitability, and are starting to see sequential improvement in sales with share gains in high-voltage in Europe and pacemakers in Japan. We made several commitments to you on our year end call to generate 3% to 5% top-line growth and $2.95 to $3.50 in earnings per share. We are on track and working diligently to deliver on these commitments and to build on our position as an innovative medical device company. We look forward to updating you on our continued progress next quarter. With that, operator, we are now ready for questions.

[Operator Instructions] Your first question comes from the line of Brooks West from Piper Jaffrey. Your line is open.

Hey guys, good morning, this is Tom Bakas on for Brooks. Thanks for taking my question. Two, if I may. The first one I was hoping you could help us with the dynamics of the valve market. Particularly mechanical valves in China and maybe what's happening with tissue valves. We've heard from PAVR players that volumes have actually increased due to increased awareness of aortic stenosis. I'm hoping if you can help us reconcile that with what you are seeing?

Tom, you said you had two questions. Is this the first one and you'll get the second one later, is that what you are saying?

Yes, please.

Okay. So this is Andre Michel. First of all, going back to your last statement about the perception that some players in the market have about the surgical valve market. We have the same perception actually. We have seen an increased referral of patients to cardiac surgery centers because now aortic valve disease is more publicly known. It attracts patients to be diagnosed and then a lot of these patients are actually great candidates for surgery and they get a surgical valve. So what we are seeing here in the dynamics of our valve business is we are seeing great progress on Perceval, but we're actually seeing some headwind on the two traditional products. On mechanical valves, the situation as China is really one that I believe most medical device companies are encountering today. The economic situation there is driving distributors to reduce significantly their inventory. We have seen also a market for valves in China that has not been as dynamic in terms of growth as it has been historically. We see a very flattish market in 2015 and at the beginning of 2016. We see that as more of an operational issue, it's not necessarily a market issue. And we will recover in China over time, particularly in the second half of the year. In terms of the traditional tissue valves, globally I think we've said that in the past quarter that we've been under attack and we have lost some share. Globally we believe that, thanks to Perceval, we are able to maintain or grow share in markets in Europe in particular. Very excited about the opportunity we have with Perceval in the US now, so we believe that the second half of this year we're going to turn the corner on the valve business with the impact of Perceval globally, but in particular in the US.

Thank you very much and one follow up, if I may. Hearing about Perceval in the back half of the year, could you help us bridge, how do you get to the upper half of your revenue guidance given the start in Q1? What the drivers are, is it the valve business returning? What else can we expect to see?

We said previously that we expected a stronger second half than a first half in 2016 and that's exactly what we are seeing. Q1 is in line with our expectation in terms of growth. In the second half of the year we're going to have a favorable quarter-over-quarter comparison in CRM so you're going to see the CRM business much more favorable and if you look at our guidance on a per-business basis you will see that the CRM business is expected to grow 1% to 2% for the full year. Therefore, mathematically you have to assume it's going to be in the second half of the year. And we're very confident now with the Platinium in Europe gaining momentum and our KORA 250 in Japan gaining momentum as well, that we will be there in the second half of the year. Then the rest of the business, I think, is also going to benefit on the cardiac surgery side with the roll out of Perceval in the US. It's certainly a challenge but also a big opportunity for us as we are rolling out the product in a very disciplined manner now. The only signs we have, and it's early in the game, are very, very positive and we are confident that the second half of the year will demonstrate that. In terms of neuromodulation, actually we're going to face tougher quarter-over-quarter comparisons in the second half of the year compared to what we have seen in the first half of the year. But the underlying growth of the business, particularly the new patients' growth that we are seeing now for the second quarter in a row -- actually the third quarter in a row -- is very, very encouraging and bodes well for the long-term growth of this business.

Tom, it's Vivid here. If I can just add one more point to that. I think what's also important is that you've seen in terms of the first quarter, we committed pretty much to holding operating expenses flat to this year, versus the prior year. But what we're doing, and we're doing a lot of, is reallocating resources towards higher potential growth parts of our business. So what we're doing is that we are putting expense and resources in investment, behind all of our launches. Andre-Michel talked about KORA, Platinium, Perceval U.S. and Perceval Japan. But also what's important is that we are putting additional monies into the emerging markets. We're doing that in a way that we are reallocating sensibly within a relatively flat cost base. And that's going to help drive a lot of our growth in the second half as well as the launches that we have to date.

Your next question comes from the line of Scott Bardo from Berenberg. Your line is open.

Thanks very much for taking my questions. I have three, please. Firstly, following on from this TAVI discussion. I think there's been a lot of focus about the continued progress of TAVI in the immediate population, also with large chemical studies running in the low risk population. I'd like you to please share some thoughts about how you think this could impact not only your heart valve business but also your core cardiac business, particularly if TAVI starts to make some penetration in the low risk segment? Just following on from that please, you mentioned the different dynamics in the tissue valve business. It would be helpful if you could give us some sense of what Perceval is now annualizing on a full year basis in dollar terms so we can model that effectively. Second question, please. Just relates to litigation or the legacy legal challenge from Snia. I think by reading the annual report, there's been some relative positive progress in this regard. This has obviously been a large overhang on legacy Sorin for many years. Just wondered if you could give us a status update here and some feeling for if and when this ever goes away. Last part of the question, directly for Vivid, please. It seems quite a lot of one-off items in this quarter. I think some 56 million or so in restructuring and integration and inventory write-off costs. Can we have a feeling for what that's going to be on a full year basis? Whether we're front-end loading all of that or whether there is still some more one-off items to come? Thank you.

All right, Scott, let me take one question at a time. First of all, to the question on the impact of TAVI on our valve business, and I guess what we have seen the last few weeks is that the results of percutaneous valves were comparable with surgical valves, but it was only after two years. We believe the real durability results are still unknown at this stage. And we believe that cardiac surgeons will want to see longer-term results as they have in the past, so five-plus years result to change their practice in the long run. Having said that, if you look at aortic surgical market in the U.S. alone, it's approximately 500 million. It's a large market. We have today a small portion of this market so we believe that with Perceval we have a unique opportunity to gain momentum in this market. Now, if you look at a longer-term view -- and based on the data we have today, the population that is where results of percutaneous valve is comparable to surgical valve again, with a pretty short fall out time of two years is probably roughly one-third of the total valve population. And I'm talking about the high and intermediate risk patient. But now 65% or 70% of the patients are actually called low risk patients. They are still, let's say, patients that are primarily indicated for surgical intervention. So as mentioned before, we believe the surgical valve market will grow low single-digits. As we said during our Analyst Day we expect it to grow low single-digits. We will see what the impact of the cost curve will be. We are certainly interested in seeing the economic results of surgical valves against percutaneous valves and we believe also that with the trial that we're doing…

Yes, hi, Scott. So I think from our perspective here, all of the so called one-time costs are exactly in line with where we expected them to be. It's an important part of our business strategy, it's an important part of actually realigning our cost base and our business structure to provide long term shareholder value. Right now in the quarter one range, our combined merger integration and restructuring costs were pretty much in the mid-$30 million range, or about $34 million to $35 million. We expect a lot of the costs in terms of integration merger to have already bled through already in the Q1 time frame. But we will continue to look at our cost base and we will continue to look at restructuring our business for the full year. Right now our estimate for the full year in terms of the combined integration and restructuring costs, on a one-time basis, will be in the $45 million to $50 million range for this year. Like I said, that's pretty much in line with our expectations that we had at the beginning of the year and we will continue to look for opportunities to streamline our business for long term shareholder value.

Thanks very much, Vivid. Just so I understand that number then, also it correlates with your expectation to be broadly balance sheet neutral by year end?

What we said originally, Scott, was that we would expect to be somewhere between balance sheet neutral to somewhere with minimal debt in the balance sheet. And we are maintaining that expectation to date, yes.

[Operator Instructions] Your next question comes from the line of Maja Pataki from Kepler Cheuvreux.

Yes, thanks actually my questions have already been answered, so thank you.

Your next question comes from the line of Jason Mills from Canaccord Genuity

Hi, good morning, this is actually Jeff Chu filling in for Jason. I had two questions. First on gross margin. Your number this quarter came in a little bit above our expectation so I was wondering if you could help calibrate our expectations going forward. I appreciate you don't want to provide guidance beyond 2016 but I'm curious on your ability to improve gross margins here. I was hoping you could comment here in terms of in broad strokes and I have one follow up after that.

Sure, thanks, Jeff. I think our gross margin is something we spend a lot of time concentrating on. Since our gross margin mid-64% gross margin range is really a combination of a few factors that I think we will see for the rest of this year. We're seeing a favorable mix right now. Obviously AspireSR business is doing very well and that's providing us with some benefit. But we also should not forget that we are continually looking for opportunities in relation to our restructuring our business. And combining the Companies have given us a platform to look at a number of areas in terms of combined buying power, looking at supply agreements and really looking and focusing on cost efficiencies and lastly, we do have an element of synergy targets that we are delivering part of our $19 million. Some portion of that is actually coming through into the gross margin line. So really right now our gross margin for the year, we gave guidance on gross margin, we believe that we are maintaining that gross margin for the year and we are positive about that right now.

Great, thank you for the color. My second question is on your emerging markets. Appreciate your commentary on China. I was wondering if you could expand your commentary in terms of the mid-term and how you see that market overall -- emerging market -- overall developing. Are there markets outside of China that are growing slower or faster than expectation?

Actually, Jeff, when you look at the overall emerging markets, remembering China is a big part of it, we're doing very well overall. We are facing some I would say, more short term issues in China right now related to probably the combination of the economic situation, the strengthening of the regulatory and reimbursement rules. But overall we are very positive mid to long term on China and we're very positive mid to long term and even short term on emerging markets. So basically if you look at the emerging market piece of our business in Q1 that includes China, and it grew about 10% compared to last year which is really good, encouraging. It's the result of a strategy that we have built over the years, of strengthening our presence in various emerging countries. We are very selective about the countries that we invest in. China is on top of our list. Brazil. Although again, the economic situation in Brazil is challenging we are making very good progress there and we are committed to staying in the Brazilian market. We are becoming one of the key players in the Brazilian market, particularly in cardiac surgery. We also have the opportunity to start a focused strategy in India where we are making good progress on the high end of the market. We are not targeting the volume market there. There are countries also like Columbia, where we really have very, very good success. In addition to that and maybe on a different angle, we have a great opportunity in the emerging markets, where we lead with cardiac surgery but we also have a great opportunity in neuromodulation. We've just started to scratch the surface on the treatment of epilepsy in this part of the world, where actually the disease is prevalent and we have great opportunities. That was one of the strategic reasons why these two companies got together in the first place, is really to try to leverage the emerging market coverage that one Company had to benefit in particular the neuromodulation product. So, we feel pretty good where we are at today and we feel pretty good about where we are moving in the emerging markets. Vivid?

Jeff, I want to reemphasize again, we are building long term shareholder value. We are being pretty tough right now on credit limits and making sure that all receivables are collected and not taking risks with our revenue top line right now. So we took some pretty tough decisions in quarter one in line with economic conditions and ability for distributors to pay us. In a way, demand was perhaps higher than the revenue that we delivered but actually we are doing things in the right way and we're not going to take risks right now in terms of credit default and credit risk going forward.

And I want to add one thing, to conclude on China, which is our position on China is a long term position. So what we decided to do in China is basically invest to become a local player. Vivid mentioned in his comments that we had invested, or were investing, in the build-up of a factory to manufacture oxygenators for the Chinese market, we are making good progress with that. You may recall we also have a joint venture with MicroPort, a leading medical device company in China to develop, manufacture and commercialize CRM products in China. And we are making really good progress there. We are very pleased with the way the joint venture is going. So all in all, I would say as I said before, positive about the short term, very positive about the long term in the emerging markets, including China.

Your next question comes from the line of Scott Bardo from Berenberg. Your line is open.

Thanks very much for taking the follow ups, actually. Lastly, on CRM, I see you discussed some very encouraging news in Europe in the high-voltage segment. But given that you've already flattered Europe, that would imply some pretty negative year on year growth in the low-voltage segment which perhaps appears a bit of a surprise given the KORA 250 launch. I wondered if you'd give us a feeling for that dynamic uptake of KORA 250 and why and then, you are not growing that business year-on-year? So that's question number one, please. And second question, please, relates to some development updates and debenture updates. I understand we've got some sonar data coming at HRS soon enough. Maybe into that result, and what your plans and expectations are to optimize the value from that technology? Very lastly, a very quick one. Vivid, running the numbers through, it appears to us that whilst you've broadly aligned with operational forecast, you're a little bit soft on EPS. It seems to us then that tax rate was a little bit higher than was guided for the full year. Can you help us understand the mechanistics in that and where tax rate was on an adjusted basis this quarter? Thanks

All right, Scott, let me start with the CRM. We are really encouraged by what we see in the high voltage platform we are building and also by the progress of KORA 250 in Japan. We have some headwind on the pacemaker business in Europe, you're absolutely right. This is mostly related to the fact that pacemakers is more of a commodity market. If we don't have today in some European countries the perfect combination of pacemaker and lead, we are launching a completely new line of leads in the second half of this year. So we expect that we're going to be able to regain momentum with these leads. In particular, some of these leads are associated with KORA 250 and to give more compatibility of the device. We are not, let's say, changing our view on the CRM market overall. It's still a very nervous, very difficult market but we are pleased on one side that we're gaining share on the high voltage and we believe we're going to be able to stabilize the situation on the low voltage side in the second half of 2016. On sonar, we are pretty excited because tomorrow we will see the results of the RESPOND clinical trial. You may remember the RESPOND trial a little over 1,000 patients, actually 1039 patients in Europe, US and Australia. The patients were randomized to either receive sonar optimization or a manual echograph, echocardiography optimization. It was really, the goal of the study was to show that sonar was not inferior to, let's say, the manual optimization of the patient knowing a few facts, that first of all, this manual optimization of the patient requires a lot of time and is not done in many institutions because of that. Second thing that the optimization provided by sonar is continuous and automatic. Automatic, you don't need to do anything and it's continue so it continues to evolve with the patient. This is an ID study which is supposed to give us access to the approval by the FDA of the product in 2017. So we are very excited. The timing is a little off because the results are going to be published tomorrow. As soon as the results are published, we will strongly share them with you and we will start building plans for the future of the business, for the CRM business in general, but particularly with the results from the RESPOND trial.

So moving on to your question on tax, Scott. First of all, just to confirm, we are still committed to our guidance on the full year of 24% to 26% effective tax rate, so no change there. Let me just remind you, we moved from a combined business tax rate in the mid-30%s and in Q1 we've shown it to be 28%. We still have ongoing tax initiatives that we will deliver for the full year. We are exactly where I expected the Company to be. As I have stated many times, we are building a long term sustainable tax structure for LivaNova and we will take time to evaluate all the progressing tax changes and the tax complexities. But we currently feel that we are on track and we will continue to do tax strategies to get us through to our full year guidance.

I am showing no further questions at this time. I would now like to turn the conference back to Karen King.