CMS vote on reimbursement could be win for LivaNova, says Baird

Baird says a Centers for Medicare and Medicaid Services advisory panel on hospital outpatient payment evaluated Momaday a potential increase U.S. vagus nerve stimulation reimbursement, which represents 34% of LivaNova sales, by about 40%. The firm believes the vote was favorable for an increase. If the CMS were to grant LivaNova an increase to reimbursement, not only would this likely enable the company to leverage price, but also offer a more financially amendable value proposition for vagus nerve stimulation versus deep brain stimulation, which had been gaining incremental market share over the past several years given price and clinical efficacy, the analyst tells investors in a research note. Baird, however, says it remains early to tell how updated reimbursement would influence physicians’ decisions and notes that LivaNova still has to contend with Italian litigation overhangs. Nonetheless, a meaningful increase to vagus nerve stimulation reimbursement “at face value should be a tailwind,” says Baird. It keeps a Neutral rating on the shares with a $55 price target.