Weak sales from LivaNova’s Neuromodulation business could be one of the main culprits behind the company posting disappointing earnings for 1Q19.

The London-based company posted revenues of $250.8 million, vs. the consensus estimate of $255.87 million. As a result, the firm slashed its 2019 outlook. In addition, LivaNova said its 2019 earnings per share came in between $3 and $3.10 vs. the consensus of $3.41.

“We are disappointed by our first quarter performance in U.S. Neuromodulation and Perceval sales. As a leadership team, we are implementing a series of actions to counteract the market dynamic and salesforce retention issues we experienced," Damien McDonald LivaNova CEO said in a release.

The top reasons behind the “disappointing” earnings are the turnover in LivaNova’s sales team and GW Pharmaceuticals’ Epidiolex a new epilepsy treatment drug derived from cannabis, said Mike Matson an analyst with Needham and Company LLC.

Neuromodulation sales of $94.4 million (up 2.3% vs. 14.5% in 4Q18), were below Needham and Company’s estimate of $104.2 million.

“Neuromodulation was hurt as patients trialed the new drug Epidiolex, Matson, wrote in research notes. “This likely caused some patients to delay VNS implants as they try out Epidiolex. And the sales turnover occurred as reps left for Epidiolex maker GW Pharmaceuticals and other implantable companies. Livanova has implemented changes to address these issues but the Epidiolex headwind is expected to continue in 2Q19.”

Cardiovascular sales were $155.5 million (up 5.1% vs. 6.1% in 4Q18), below Needham and Company’s estimate of $162.4 million. Matson also noted that Cardiovascular earnings slowed “due to softness” in Perceval sales from poor sales execution.

The device maker’s earnings’ story was very different a year ago. At the time, LivaNova toppled Wall Street consensus on sales and earnings. Just coming off the divestiture of its cardiac rhythm management (CRM) unit to Shanghai-based Microport for $190 million and the $225 million ImThera acquisition, LivaNova was touting a new refined focus.

Instead of continuing to pour into CRM – the company changed its position to now focus on neuromodulation and cardiac surgery.

LivaNova recently took steps to have a greater impact on the heart failure market in the U.S. The company launched a pivotal study set to enroll up to 800 patients that will look at how stimulation of the vagus nerve with the VITARIA device can help treat HF.

VITARIA has had CE mark since 2015 but is building strong and compelling clinical evidence before it launches the device.