Good day, ladies and gentlemen, and welcome to the LivaNova PLC Second Quarter 2018 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Matthew Dodds, LivaNova's Senior Vice President of Corporate Development.

Thank you, Matthew, and welcome to our conference call and webcast discussing LivaNova's financial results for the second quarter of 2018. Joining me on today's call are Damien McDonald, our Chief Executive Officer; Thad Huston, our Chief Financial Officer; and Melissa Farina, our new Vice President of Investors Relations. Just yesterday, Melissa was promoted to her new role having previously served as the CFO of our North America region. Before I begin, I would like to remind you that the discussions during this call will include forward-looking statements. Factors that can cause actual results to differ materially are discussed in the company's most recent filings with the SEC. Also the discussions will include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to LivaNova's current report on Form 8-K, filed today with the SEC. We have posted a presentation to our website that summarizes the points of today's call. This presentation is complementary to the other call materials and should be used as an [Technical Difficulty] under News and Events, Presentations at www.livanova.com. With that, I will now turn the call over to Damien.

Thanks, Matt. Welcome to our second quarter 2018 conference call. The results from this quarter reflect the initial success of our growth strategy, which is centered on our Cardiac Surgery and Neuromodulation portfolios. We saw acceleration in our underlying sales growth and grew earnings, while making significant commercial and R&D investments. I'm going to provide some highlights and then discuss their sales results by business, and after my comments, Thad will provide you with additional color on the financials, and I'll wrap up with closing comments before moving to Q&A. Starting with the quarterly highlights and recent events. At the end of May, the U.S. Centers for Medicare and Medicaid Services published a tracking sheet to reconsider its National Coverage Determination or NCD for our VNS Therapy System for treatment-resistant depression. The tracking sheet within response to a letter that we've submitted to CMS requesting a formal reconsideration of the NCD. We requested this review after a significant body of new evidence emerged about TRD and the role of VNS Therapy in its treatment. We are encouraged that CMS is taking the step, and we were pleased with the comments received during the initial 30-day public comment period, which closed at the end of June. The process to release a proposed decision memorandum can take up to 6 months. Once that occurs, CMS will have another 30-day public comment period. By the end of February 2019, the agency will render a final decision. Depression affects more than 300 million people worldwide and it is the leading cause of disability in the U.S. TRD is a smaller subset comprised of patients who have tried four or more treatments for the depression and failed. This is an area of high-unmet need and one where LivaNova can make a difference. We're hopeful that…

Thank you, Damien. I'm going to discuss the second quarter financials in greater detail and speak further about guidance. As Damien mentioned, sales growth in the second quarter accelerated to 10.2% versus second quarter of 2017, due to strong sales in all of our growth drivers in each region. Adjusted gross margin as a percent of net sales in the quarter was 68.3%, up 70 basis points from the second quarter of 2017. The margin improvement was primarily driven by pricing mix, partially offset by a 30 basis point foreign currency headwind. Adjusted R&D expense in the second quarter was $33 million compared to $23 million in the second quarter of 2017. R&D as a percentage of net sales was 11.3% versus 8.9% in the second quarter of 2017. This 240 basis point increase equates to approximately $0.15 in EPS and represents an increase of 43% over the prior year. As we previously discussed, R&D is increasing behind our development of next-generation products including HLM, SenTiva and TandemLife, and clinical trials and investments in TRD, TMVR, sleep apnea and heart failure. Adjusted SG&A expense for the second quarter was $104 million compared to $86 million in the second quarter of 2017. SG&A as a percentage of net sales was 36.2%, up 260 basis points versus the second quarter of 2017. The increase is due to a number of factors including foreign currency exchange headwinds of 70 basis points, investments in our key growth drivers including DTC for epilepsy, TandemLife and strengthening our go-to-market capabilities in emerging markets as well as building organizational capabilities to support our future growth, including investments in our IT infrastructure. Adjusted operating income from continuing operations was $60 million compared to $64 million in the second quarter of last year, which reflects an improvement in gross…

Thanks, Thad. As we ramp the turn into the back half of the year, I'm very pleased with our results to date. We have delivered sales growth towards the upper end of our guidance and solid earnings growth. We are improving our gross margins through price discipline, product mix and cost efficiencies, while also making significant investments in our future, expanding our pipeline, innovating next generation of products to funding clinical trials for our growth drivers and strategic portfolio initiatives, which include treatment-resistant depression, TMVR, obstructive sleep apnea and heart failure. In Cardiac Surgery, double-digit growth in our heart-lung machine is well above market rates, and we are starting to see positive momentum in oxygenators. Perceval continues to grow north of 20% and now represents over 50% of our surgical Heart valve replacement sales. TandemLife is off to a good start post-closing, and we expect the business to accelerate in the back half of the year behind our planned commercial expansion. In Neuromodulation, we're seeing strong demand for our SenTiva, VNS system in the U.S. and now Europe. We look forward to updating you on our continued progress and delivering on our commitments to drive shareholder value. And with that, Matthew, we're ready for questions.

[Operator Instructions] Your first question comes from Rick Wise of Stifel.

Maybe just starting off with guidance. Obviously, a nice step up on multiple fronts in the second quarter versus the first, but if I just step back and think about the first half ex-FX, you grew top line 7.9%. Maintaining your 6% to 8% guidance for the year would imply a 4% to 8% guidance that can have growth range, if I am doing the math right, at the upper end, sort of second half basically doing what you did in the first half overall. Maybe just help us think through some of the variables that would drive the lower or the upper end of that range. I assume that there's no particular reason we should assume you decelerate in the second half. And I think you'll feel, frankly, more confident about the upper end of that range. Again, just talk us through those -- some of those factors.

Thanks Rick, and great question. And clearly, we're very, very pleased with the first half performance. And as you know, the comparisons vary kind of quarter-by-quarter, and we definitely feel very comfortable with this range, given where we are and how we're progressing. And I think one of the thing to consider is that we do have somewhat of a difficult comp in the Q4 due to the strong results for SenTiva and in particular HLMs. But again, we're very pleased with the momentum that we have, and, again, excited about where we are in this range.

Turning to Neuromod. Obviously, second quarter much better than the first. Maybe talk us through some of the factors that drove that, you mentioned a couple of points. But do we think about second quarter Neuromod growth as representing more sustainable growth? Is this how it should grow? And maybe talk us through where you are in the SenTiva rollout?

Yes, look, I think that Neuromod really proved itself, not just in the U.S., I mean, those results in Europe and international were really fabulous, and again the go-to-market strategy starting to read through in all the regions. So the first half performance I think was great. In the U.S., I think there are things that really drove it here, the new patient implants. We saw our continued growth there, improved end of service versus Q1, which we spoke about. The mix to SenTiva, I think, is continuing well. More than 51% of the units were in SenTiva. And as I mentioned, EU Rest of World growth really kicked. And so overall, I think that the numbers we've been talking about is high single-digit for the portfolio, and I think we're continuing to see that.

Great. And just one last one for me on treatment-resistant depression. As you highlighted, we'll wait for the CMS decision, but maybe talk us through a couple of points, and particularly on the commercialization front. What kind of investments have you made, are you making, will you make? What needs to be done? When will you do it in terms of expanding, if you're going to expand the sales force? And really, the bottom-line, how quickly, if assuming and hoping for a favorable ruling, how quickly can you capitalize on that commercially? Do we expect you to have a -- again assuming reasonable timelines, a favorable impact in '19, or no it's more like 2020.

That was a really comprehensive question, Rick. Look, there's a whole bunch of things there. Look, I think the take we had on the 30-day comments was really positive, and there's a lot of pent-up demand we believe, and we're continuing to hope that CMS can find a way to make this available to more broad set of patients. We're really going to wait for the CMS result. That's the single largest gaining item for us in the U.S. Having said that, at the same time, I think we have talked about this a little bit before. We're really working on understanding the patient pathway, how you move from a psychiatrist to an implanting surgeon, which is a neurosurgeon or ENT, and then back to the psychiatrist. And the German team with the European leadership is really taking the lead on that. So we'll, in the U.S., wait until we see where we get to with CMS. In the meantime, we're learning from the German team about how to move patients through this pipeline. Did you get it? I think that's more or less covered. So clearly a long conversation that we're not waiting around, we're trying to learn and understand the ramp, and then we'll come back with CMS.

Our next question comes from the line of Raj Denhoy with Jefferies.

What if I can maybe just ask a couple of follow-ups to Rick's questions? So on the VNS results in the quarter, particularly in the United States, the rebound from the first quarter. How much of that could you maybe say was catch up from the first quarter in the sense that maybe some of the procedures got delayed and then recognized during the second quarter?

Yes, I wouldn't say a lot of it’s catch up, I would point a lot to sales force execution. There was an uptick for sure in the end of service, but we wouldn't really characterize it as catch up. I think last quarter, we talked about some contract movement, really saw a minimum benefit from that in the quarter, I mean, it was a -- it's a full year contract. So really it's just about continued focus of the U.S. team, and again I'm really pleased that their efforts read through.

Okay, that's fair. And maybe I can ask about the initial TandemLife contribution of the $6-ish million in the quarter was probably a little better than we were expecting. What's been the initial receptivity there? Does that represent a case we can expect going forward? How has that rollout been now that you own that product? Maybe just a little more detail will be helpful.

Raj, look, I think this is, I think, a really great example of good portfolio management, and a business that, the more that we learn about it, we get even more excited about the opportunity. I think we're off to a really good start, the team's highly engaged. The leadership team went out and spent some time, and Damien and others are going back out again to Pittsburgh. The team is highly engaged about the opportunity. We feel really confident about the 30% sales growth target for the full year as we continue to expand and ramp up the resource to support that business.

Okay, and that sort of segues to my other question. So the spending in the quarter, again, I think you've sort of conditioned us to expect the spending is going to be higher over the short term as you invest in the business and things, but on an absolute dollar basis, SG&A did tick up pretty significantly, $104 million here in the quarter, R&D was up as well. How do we think about those numbers on sort of an absolute spending level? Could you see the 104 million in SG&A, for instance, still going higher or the additional areas that you're planning on investing in over the near term?

Yes, I mean, we're clearly investing to grow. And I think as the growth results are coming through, we're very pleased with the top line performance, but we're also very confident that we will deliver the SG&A expense for the full year within our guidance range. There is, kind of, a bit of a phasing of sales and a phasing of expenses, and so the way I would think about it is, overall, SG&A should remain relatively flat at this level on an absolute dollar basis, but in the back half, the sales start to rise. And in addition, we had in the front half of the year FX that basically added about 100 basis points of headwind to SG&A. So when you look at the back half, we're not expecting that. So again, I believe we'll be within the ranges.

Our next question comes from the line of Matthew O'Brien with Piper Jaffray.

Just to put a little bit of finer point on the Neuromodulation commentary. I think, Damien, you've talked about a lot of new physicians that you've been able to capture since the SenTiva launch. Can you talk about where we are in that process as far as some of those new clinicians go, their utilization and how that's trending? And how would you think about that, this is specific to the U.S., throughout the course of the year? And then layered on top of that question, the OUS business, I know it's smaller as a percentage of the total Neuromod business, but the numbers there are eye-popping, especially Rest of World. Can you just provide a little bit more detail on some areas of strength, Rest of World and growth opportunities in those regions?

Yes, look, great trend there Matt. And a few things. So the implanting physicians, I think there's two things happening here. We've seen a number of new physicians come on. That's important. What we've seen is that they come on quickly, which is unusual, normally our conversion time is -- has been longer, but I think the SenTiva upgrade has really given new implanting physicians more reasons -- as we will talk about, in fact, let's remove the barriers. So making it smaller, it's got the responsive technology, the MRI, and then the age indication. I think it has removed a number of barriers for new physicians. So the speed with which that come on has been really important to us. I think the other thing is there's been a number of returning physicians, and these are people that have not implanted for greater than 12 months. And there's a group of people who've come back to VNS as a result of SenTiva. So I think those two things have been really important. Look it's -- again, it's still pretty early days, but I think what we're encouraged by is some other metrics that we've been tracking like the average age of a patient, which is continuing to come down quarter-on-quarter. So I'm really pleased with how the U.S. team have leaned into that. We still have an enormous upside here, not getting to the physician numbers. But let's talk about the patient opportunity that's in round figures, 5,000 new patient implants a year, out of a patient pool of about 100,000 new DRE patients every year. So we just see a tremendous upside for us as we continue to do our go-to-market activities. Now internationally, look, I would say there's a number of things there. Firstly, as a combined entity now, I think we've put much more emphasis on international growth and I mean Europe and the Rest of World. And it shows the teams there have been significantly upgraded. The drive and the focus has been changed, and we've changed the business model in a number of markets, in Japan, and Latin American and Australia. Japan, particularly, early days, but going to this hybrid model where we have direct feet on the street now. I think it is critical. This is a complex cell. You need to be hand-in-hand with the physicians and it's hard to do that in the alternative structures. So putting feet on the street I think has really started to make a difference, and I'm thrilled for the teams there because we've asked a lot of them and to see these results pull through in Europe and international is really tremendous.

And in addition having CE Mark for SenTiva in Europe I think is really a key driver for our growth in Europe. And as Damien said, we're really investing in globalizing our Neuromod portfolio. So it's an exciting time. And one of the reasons our SG&A is higher is that we're investing to go direct in many markets.

And that was one of the highlights of our Investor Day last year, as we said, we really want to focus on international growth of the Neuromod, with 85% of the revenue came from the U.S., and that's where we saw a real opportunity to drive growth.

Got it. And then to follow-up on Rick's question on TRD. We're all trying to get a little bit better sense of the potential outcomes from this reexamination by CMS. So how do we think about the potential variance in terms of coverage that the agency could put on VNS for depression? And then back when you had the clearance plus coverage, it was basically drug in VNS, now you have another layer in there of some less invasive approaches like TMS Therapy. So just within the treatment paradigm, where does VNS fit assuming that there is some coverage that's provided sometime next year?

Yes, look, I think coming back to the options. One is I could reaffirm the non-coverage decision, which still remains a possibility. There's the other end of the pendulum, which is they completely open up the -- and reverse the non-coverage, so that there is a national coverage decision. And as variations of that, it could be national coverage decision or just a regional coverage to allowing the 12 regional MECs to get into a MEC-by-MEC coverage, all this sort of a middle ground which is a coverage with evidence, and in that, there's variations on that, could get clinical trial or a registry. I think we've signaled to CMS, we're really interested in working with them to make sure we answer all the questions. We've had tremendous interaction with them up till now. And I think we continue to believe that we've got a great therapy that I think can meet some of these incredible unmet patient needs. So as I think about -- like those are the four -- more or less the four outcomes. I'd love to handicap it for you expect that there's no real precedent for this, and so handicapping is not particularly useful, but we're hopeful that we can come to a positive decision. In terms of the other approaches. There's a couple of ways to think of this. One is that this market is just absolutely huge, I mean, there is clearly a pent-up demand, and you could see that in the last time when we had coverage, the sort of ramp that occurred. I look at these other things like TMSs, slightly earlier for treating treatment-resistant depression. And they have merit, and we've seen results of some of these approaches, and I think they've definitely got merit in the treatment pathway. Nevertheless, there -- this treatment-resistant depression is quite refractory, and we believe that the market is an enormous opportunity for us, and again that's why we're trying to learn from the German market about where this occurs and how to make the patient flow work. And I was with a group of level 2 and level 3 clinic psychiatrists in the UK a couple of weeks back, and what really intrigued me is the discussion wasn't about, does this work, yes, no. I was really encouraged by the focus of the discussion, which is how do we make this accessible to patients, and what do we have to do to convince payers to get at this. So I'm really encouraged by this pent-up demand for something that is just desperately debilitating for patients.

Okay, last one for me, and I really appreciate all the detail, so far it's been very helpful. But just specifically on TRD, are you starting to put some more resource in place because I see a little bit of a spike in SG&A like Raj mentioned. But are you starting to put some resource in place be it reimbursement folks or sales force specifically to TRD at this point? Or are you going to wait until you get clarity before doing that?

We've made some investments clearly also in registries globally around TRD to both support more data but also preparing scenarios at this point, and we haven't really fully ramped up until we have more clarity around CMS's decision.

Yes, but specifically about sales force, we haven't started hiring sales force in the U.S.

Our next question comes from the line of Mike Matson with Needham & Company.

Just wanted to start with the ImThera trial issue that you mentioned. Wondering if you could provide a little bit more detail around that, and what it means for the timing of potential approval for that in the U.S.

Yes, look, thanks, I'm glad you raise that. We bought the asset when they were getting into a fundraising period. And in that diligence, we knew there were things we were going to learn as we went. And as we've learned about what's going on with the product, we've really felt that what we needed to do was make improvements to the product, we needed to make improvements with titration process, and we needed to make improvements to the trial design. And so we thought the enrollment really allow us to do that, and we think these are best implemented probably in a new cohort of patients, under one common set of conditions. And what that does will really optimize the way we look at the patient benefits and the approval and the reimbursement process. So I think this is a really prudent way of looking at this asset. You know we like fixing things, we've really taken a pretty deep look at this. So in terms of timeline, our original PMA submission was late '19, early '20. I think what you do is add at least 12 months to that timeline.

Okay. Good, that's helpful. And then just also wanted to ask about other pipeline product the [Technical Difficulty] mentioned finalizing the U.S. pivotal trial and completing the CE Mark enrollment by 2020. So with that, I guess, can you clarify what sort of time do you expect -- or when do you expect the trial to actually start and when do you expect to get a CE Mark potentially, I assume that [Technical Difficulty].

Yes, so I think the team has done a great job. The pause that we had on Caisson really set us up well for this back half of the PRELUDE trial. Having the additional size has really helped with enrollment, which is why we were able to bring it in a little earlier on completion. So now the focus on INTERLUDE in the U.S. and European sites, we are really assuming completion of this in 2020. And then depending on where we are in the year, 2020 or 2021 for CE Mark. But it's -- we're really excited about not only what happened PRELUDE but what the team learned, I think the way they built out their training and procedure development here has really been impressive. And we were up in Minneapolis a few weeks back, and I really like how these guys are progressing on therapy development.

And then just final question on Perceval's approved in Japan, so can you -- is that material enough that gets you an acceleration in Perceval growth given the launch there?

Yes, look, I mean, the first thing is Perceval growing north of 20%, in the past we've been a little more oblique in the transparency there. So hopefully, everyone likes the fact that we're a little more declarative of what solid double-digit means. And we do see Japan as a growth accelerant. First, we have to get through reimbursement. So we're going to work with the Japanese reimbursement authority to get that locked down, and then at the same time, put some more feet on the street to make sure that we can get after this. It's a great growth opportunity. So I would expect Perceval to accelerate.

[Operator Instructions] Our next question comes from the line of Scott Bardo with Berenberg.

So first question please, this relates to the gross margin. I appreciate you've had some gross margin progress this quarter, but I think you had 170 bps gross margin progress in the first quarter and 70 bps in the second quarter despite pretty strong mix effects from Neuromod, which were very robust in the second quarter and heart-lung machines. So I wonder if there's any particular negative effects. I think currency was even worse in the first quarter. Were there any other business related negative effects limiting your gross margin progression in the second quarter? That's first question, please. Second question, just relates to the cardiopulmonary business. Can you give us a status update on the progress of the oxygenator business, which I think is a more sustainable growth driver than the heart-lung machine upgrade cycle? Where are we with that and where are our plans to accelerate that? Last -- well, I'll give you another question and I have another follow-up, please. With respect to the ImThera delay, can you confirm then that the payout or the earn-out payments of this 225 million that you initially outlined, may now be less than initially expected to actually one end up paying this full sum.

Let me first take the gross margin. I could also probably comment a bit on the earn-out as well. First of all on gross margin, we're extremely pleased with the progress. First of all, as you know, we have been very focused on pricing discipline, also improving the mix of our portfolio, both regionally and in overall sales trying to drive more profitable sales. And so we're definitely trending towards the high end of the range, given the pricing discipline and the cost improvements that we've seen quarter-on-quarter. And as you rightly point out, we had currency headwinds in Q1. We had currency headwinds in Q2, that in Q3, Q4 should be less of a factor for us going forward. When you look at it quarter-by-quarter though, we do typically see slightly lower gross margin in Q3 due to plant absorption issues in Europe. There was a lot of holidays going on and things like that. And also we're starting to see our Rest of World business grow at a higher level than our overall growth. So to me the mix of, kind of, regional gross margin changes as Rest of World is a bit lower than the U.S.

Although improving.

But improving, it's improved significantly over the last year. So I think, again, we promised and communicate very clearly at Investor Day that we would see 100 basis points of improvement per year. We're on track to do that this year, and we think that, that will continue.

Do you want me to do [indiscernible]?

Sure, you do.

Look, the CP and the oxy business is really tremendous what the team has done. Again, you consider where we were 18 months ago, the ramp here has been phenomenal. And I'm really pleased on what they've done, and what we asked people to focus on first, which was heart-lung machines. We saw that as critical given that the selling cycle for that is quite long, 10 to 12 years, shoring up our customer base on heart-lung machine was the first critical step. And related to that getting something new into the pipeline, which we talked again about Investor Day, was one of the more pressing needs to ramp. And so we've come a really long way in 15 months on that pipeline product. The next thing we asked people to do was to focus on oxygenator. That effort is just really kicking off in Europe and the U.S. What we're seeing early on is some recent account wins in the U.S., at some really big accounts. And we're continuing to focus on that. It's still early days. The trial period for that is a bit longer than I think people anticipated, but nevertheless, we've leaned into that and put in place essentially what we've talked about with heart-lung machine, which is the funnel management. We're now putting the same process in place for account conversion. And we see a long runway with this, both in the U.S. and Europe. In international market, it's a slightly different approach, it's very candid driven. And the international team have really leaned into that by putting investment into that the tender management processes. And again, we're starting to see some portfolio simplification, and better tender management read through. So early days in oxygenators, as you say it's got a long tail, and we're pleased with how people have leaned into it. We really did it that way because there's only so much you can throw at a sales organization in one go, and I think we picked the right rhythm here going up the heart-lung first and then coming in oxygenators second. And I think you can expect to see that to ramp.

And then on ImThera, clearly, the earn-outs are related to the sales levels. So of course if sales change, then obviously the level of earn-outs are tied to that.

Damien, just last question for me. Just with respect to treatment-resistant depression, I appreciate you guys must be doing your scenario analyses as well. But just to understand, I think your Investor Day, you also outlined treatment-resistant depression as a potential opportunity. And can you confirm then that in the event of a coverage with evidence recommendation from CMS that you would expect some acceleration to your Neuromodulation targets of 9% to 10% or so. Or are those targets -- do they then captivate a scenario where you get coverage with evidence for TRD?

Yes, if you look -- if we had coverage with evidence, that would accelerate beyond what we had highlighted at Investor Day.

And we have a question from Jason Mills with Canaccord Genuity.

I wanted to go back to TRD, and I appreciate, Damien, that we're all sort of talking in hypotheticals here. But going back to a previous question with respect to how you see TRD fitting within the treatment continuum, and it’s gratifying to hear that clinicians in Europe are talking about when not if. Just curious as CMS works through its -- does its work on this and ultimately comes to a conclusion, it seems like they're obviously working down on a path toward trying to provide perhaps some reimbursement for this. Within your models, and again appreciating we're talking in hypotheticals, do you need to see or do you expect to see the same sort of reimbursement levels that were established initially or are there ranges -- obviously, higher would be better, but are there ranges lower than previous that would fit comfortably within your pricing scheme and still provide the gross margin growth infrastructure that you would require for this to be a good business for you. Can you speak at all about the sort of the range of potential outcomes there?

Look, I'd love to, I could just come back to handicapping CMS. Honestly, I think it's too early for us to speculate, and we really probably have to wait on CMS. Having said that, we know how to make this device and we have a really competent team in Houston. So scaling this in our existing infrastructure is going to be relatively simple. So we think within the infrastructure we have that we could ramp up to meet any demand. So we're not going to be adding additional manufacturing costs to really ramp here. So -- but in terms of the top line pricing, it's really too early to get into that with any specificity.

Okay. Fair enough. Let me ask in a different way. Based on your analysis and the public comments, does it seem to you that the -- and as you look at over the period of the era of non-coverage, juxtaposed to the data that you -- we saw originally and that you've seen in most recent study you've done in Europe and the trials you've talked about, it would seem that from a clinical evidence standpoint, there is a place for VNS therapy for TRD. Do you get the sense that payers around the world and specifically CMS in this country are apprehensive about the level of reimbursement or the exposure that they could have to what you rightly characterize as a very, very large market. Do you get the sense that, that's what they're -- for lack of a better way to put it, scared about, and that's why I asked the question is to, so what would fit well within your model and still represent a really good opportunity for you?

Okay, without getting into the number, I think our health economics discussions have really shown the benefit of VNS Therapy in TRD. And, look, again, the pivotal discussion here is really centered around the [indiscernible] study, which is a really large trial, 800 patient cohort is a pretty significant trial size for a medical device. It's 4-plus drugs, 5 years of failed therapy, I mean the cohort was really quite extraordinary. And the response rate was a very significant shift from 41% to 68%. The remission rate from 26% to 43%. When you package all that up and go back and talk about the total cost to the health system, when you consider how debilitating TRD is, how it incompletely incapacitates people. We believe that the discussions have really centered on how it is impossible to make this available because for some health systems, it might seem like a scary number, but only if you look at it in isolation, you've got to look at its terms of the total health care costs.

Yes, the suicidal cost is very high of treatment-resistant depression.

Yes. And the fact that we have such solid data, and not just in response, but remission, I think that's what really has crafted a lot of the reaction from psychiatrists and the payers so far. So again, you go step by step with this, but we really believe we can help people understand how this is a really positive effect for the healthcare systems.

Okay, that's helpful commentary. Lastly, Thad maybe for you. Talk about portfolio management, you've done quite a lot, and obviously, the model is barring out the productivity that you and your team and Damien have put forward with respect to portfolio management and CRM divestiture. The question is, are there other things that we should expect to see you do over the course of the next, call it, 2 to 3 years, that would materially change the look of your business. And I suppose that's a question about what you could acquire, what your capacity is as much as it is about the potential that you see other opportunities or businesses that would fit better elsewhere.

We truly have transformed this company in, let's say, a year or 1.5 year from low single-digit growth company to the results that we've announced today. And it really is about great portfolio management. It's about focus. And so divesting CRM, taking those proceeds, acquiring three other businesses in little over a year, has really put us on a totally different trajectory for growth. And so we're investing behind those. TandemLife is a great example of near-term accretive deals that we want to do. We're looking for things that have revenue, that ideally are slightly profitable and where we can expand globally and invest around them. And so I'm super excited about TandemLife and where we can take that given the market size and the potential. We're going to look to do other deals, and certainly bringing Matt on board and his insights, we are looking at a number of different areas that are, I would say, complementary or tuck-in to our existing portfolio either the technologies that we know or the call point that we could leverage upon and really scale up. So I can't say by quarter, but clearly you should see more coming from us.

And the capacity is there. I mean, almost no debt.

Yes, exactly. And we're very focused on improving our cash position. And so even the fact that this past quarter we were able to essentially divest and get proceeds from the CRM business, but at the same time, acquire another business that's a high-growth asset, just shows you that we have more room to do more things, and we're going to continue to focus in that area.

There are no further questions. I'll turn the call back over to you.

Okay, Matthew. Look, thanks everyone for being with us this evening, this afternoon, this morning and we appreciate the attention. Thanks everyone for the great questions. Again, as always, you're really well prepared, and we'll look forward to the next call with you. And thanks very much for joining us today. Cheers.

This concludes today's conference call. You may now disconnect.