LivaNova PLC (Nasdaq: LIVN), a market-leading medical technology
company, today reported results for the quarter ended June 30, 2024
and raised full-year 2024 revenue and adjusted diluted earnings per
share guidance.
Financial Summary and
Highlights(1)
- Second-quarter revenue of $318.6 million increased 8.4% on a
reported basis and 9.6% on a constant-currency basis, as compared
to the prior-year period. Excluding the impact of the Advanced
Circulatory Support (ACS) segment wind down, revenue increased
10.8% on a constant-currency basis.
- Second-quarter U.S. GAAP diluted earnings per share of $0.30
and adjusted diluted earnings per share of $0.93.
- Franco Poletti named President of Cardiopulmonary (CP) Business
Unit, effective August 1, 2024. Poletti has more than 40 years of
LivaNova service, most recently as Interim General Manager of CP
and Vice President of CP for Europe.
- Announced the preliminary results for the unipolar patient
cohort of the RECOVER clinical study on June 6, 2024. Following
additional in-depth analyses of the data, intends to pursue U.S.
Centers for Medicare and Medicaid Services coverage for VNS
Therapy™ for the RECOVER patient population, while reducing
investment in the difficult-to-treat depression program in
2025.
"In the second quarter, LivaNova achieved strong revenue and
operating income growth,” said Vladimir Makatsaria, Chief Executive
Officer of LivaNova. "Capitalizing on this momentum to achieve
sustainable above-market growth over the long-term remains a key
priority. I want to recognize our teams around the world for their
continued execution and unwavering commitment to serving patients
and customers. I also want to thank the consortium of independent
experts who conducted an in-depth review of the RECOVER unipolar
study results and supported the development of the path forward for
the difficult-to-treat depression program."
____________________
(1)
Constant-currency percent change, total
revenue excluding revenue from the ACS segment wind down, adjusted
operating income, adjusted diluted earnings per share and adjusted
free cash flow are non-GAAP measures. Constant-currency percent
change excludes the impact from fluctuations in the various
currencies in which the Company operates as compared to reported
percent change. For an explanation of these and other non-GAAP
measures used in this news release, see the section entitled "Use
of Non-GAAP Financial Measures." For reconciliations of certain
non-GAAP measures, see the tables that accompany this news
release.
Second-Quarter 2024
Results
The following table summarizes revenue by segment (in
millions):
Three Months Ended June
30,
% Change
Constant- Currency %
Change
2024
2023
Cardiopulmonary
$173.7
$154.1
12.7 %
14.5 %
Neuromodulation
142.9
133.2
7.3 %
7.8 %
Other (1)
2.0
6.6
(69.9) %
(69.9) %
Total Net Revenue
318.6
293.9
8.4 %
9.6 %
Less: ACS (2)
3.0
5.9
(49.7) %
(49.7) %
Total Net Revenue, Excluding ACS
$315.6
$288.0
9.6 %
10.8 %
(1)
Includes revenue from the Company’s former
ACS reportable segment, as well as rental and site services income
not allocated to segments.
(2)
Includes the results from the wind down
portion of the Company's former ACS reportable segment.
•
Numbers may not add precisely due to
rounding. Segment financial information presented herein reflects
LivaNova's change in segments, effective in the first quarter 2024,
for all periods presented.
Cardiopulmonary revenue increased 12.7% on a reported
basis and 14.5% on a constant-currency basis versus the second
quarter of 2023, driven by EssenzTM Perfusion System sales and
strong consumables demand.
Neuromodulation revenue increased 7.3% on a reported
basis and 7.8% on a constant-currency basis versus the second
quarter of 2023 with growth across all regions, driven by an
increase in total implants.
Earnings Analysis
On a U.S. GAAP basis, second-quarter 2024 operating income was
$40.2 million, as compared to operating income of $17.4 million for
the second quarter of 2023. Adjusted operating income for the
second quarter of 2024 was $66.9 million, as compared to adjusted
operating income of $49.5 million for the second quarter of
2023.
On a U.S. GAAP basis, second-quarter 2024 diluted earnings per
share was $0.30, as compared to diluted earnings per share of $0.02
in the second quarter of 2023. Second-quarter 2024 adjusted diluted
earnings per share was $0.93, as compared to adjusted diluted
earnings per share of $0.78 in the second quarter of 2023.
Additional Events
On July 22, 2024, the Constitutional Court of Italy determined
that a payback law, which requires companies selling medical
devices in Italy to repay a percentage of healthcare expenditures
exceeding regional maximum caps for medical devices, is compliant
with the Italian Constitution. As a result of the recent ruling by
the Constitutional Court, the Company increased its reserve for the
payback law by $6.6 million. The amount recognized was recorded as
a reduction to net revenue in the condensed consolidated statements
of income and as accrued liabilities and other in the condensed
consolidated balance sheets.
On July 29, 2024, the European Court of Justice (ECJ) issued a
judgment in response to a question raised by the Italian Supreme
Court in connection with the SNIA litigation. The ECJ judgment
states that a demerged company can be held responsible for
liabilities not established prior to a demerger as long as the
liabilities derive from the conduct of a demerged company prior to
the demerger. However, the ECJ judgment also states that national
law should determine whether liability for damages stemming from
conduct after a demerger can be assigned to a demerged company. The
matter will now return to the Italian Supreme Court where the ECJ
judgment will be incorporated into a decision in conjunction with
all of LivaNova's appeals, and counter-appeals submitted by the
Italian Ministry of the Environment and other Italian government
agencies. While the timing of the decision by the Italian Supreme
Court is uncertain, LivaNova does not expect a decision until at
least 2025.
Full-Year 2024 Guidance
LivaNova now expects revenue for full-year 2024 to grow between
7% and 8% on a constant-currency basis. When excluding the impact
of the ACS segment wind down, the Company now expects revenue for
full-year 2024 to grow between 9% and 10% on a constant-currency
basis. Foreign currency is expected to be a 1% headwind based on
current exchange rates.
Adjusted diluted earnings per share for 2024 is now expected to
be in the range of $3.10 to $3.20, assuming a share count of
approximately 55 million for full-year 2024. For 2024, the Company
continues to estimate that adjusted free cash flow will be in the
range of $95 to $115 million.
As discussed in the section entitled "Use of Non-GAAP Financial
Measures" below, the Company is unable to predict with a reasonable
degree of certainty the type and extent of certain items that would
be expected to impact GAAP measures but would not impact the
non-GAAP measures. Accordingly, the Company is unable to reconcile
the forward-looking non-GAAP financial measures included in this
section to their most directly comparable forward-looking GAAP
financial measures without unreasonable efforts.
Webcast and Conference Call
Instructions
The Company will host a live audiocast at 1 p.m. London time (8
a.m. Eastern Time) on Wednesday, July 31, 2024 that will be
accessible at www.livanova.com/events. Listeners should register in
advance and log on approximately 10 minutes early to ensure proper
setup. To listen to the conference call by telephone, dial +1 833
470 1428 (if dialing from within the U.S.) or +1 929 526 1599 (if
dialing from outside the U.S.). The conference call access code is
926038. Within 24 hours of the audiocast, a replay will be
available at www.livanova.com/events, where it will be archived and
accessible for approximately 90 days.
About LivaNova
LivaNova PLC is a global medical technology company built on
nearly five decades of experience and a relentless commitment to
provide hope for patients and their families through medical
technologies, delivering life-changing solutions in select
neurological and cardiac conditions. Headquartered in London,
LivaNova employs approximately 2,900 employees and has a presence
in more than 100 countries for the benefit of patients, healthcare
professionals, and healthcare systems worldwide. For more
information, please visit www.livanova.com.
Use of Non-GAAP Financial Measures
To supplement financial measures presented in accordance with
generally accepted accounting principles in the United States (U.S.
GAAP or GAAP), management has disclosed certain additional measures
not presented in accordance with GAAP known as “non-GAAP financial
measures” or “adjusted financial measures.” Company management uses
these non-GAAP measures to monitor the Company’s operational
performance 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, operational performance measures as
prescribed by GAAP.
In this news release, the Company refers to comparable,
constant-currency percent change in revenue. Company management
believes that referring to comparable, constant-currency percent
change is the most useful way to evaluate the revenue performance
of LivaNova and to compare the revenue performance of current
periods to prior periods on a consistent basis. Constant-currency
percent change, a non-GAAP financial measure, measures the change
in revenue between current and prior-year periods using average
exchange rates in effect during the applicable prior-year
period.
LivaNova calculates forward-looking non-GAAP financial measures
based on internal forecasts that omit certain amounts that would be
included in GAAP financial measures. For example, forward-looking
net revenue growth projections are estimated on a constant-currency
basis and exclude the impact of foreign currency fluctuations.
Forward-looking non-GAAP adjusted diluted earnings per share
guidance exclude items such as, but not limited to, changes in fair
value of derivatives and contingent consideration arrangements and
asset impairment charges that would be included in comparable GAAP
financial measures. The most directly comparable GAAP measure for
adjusted free cash flow is net cash provided by operating
activities. Adjusted free cash flow is defined as net cash provided
by operating activities less cash used for the purchase of
property, plant, and equipment excluding the impact of 3T
litigation settlement payments, CARES Act tax stimulus benefits,
SNIA financing costs, and gains related to dividends received from
investments and further adjusted as needed for other charges,
expenses or gains that may not be indicative of the Company's
operational performance. However, non-GAAP financial adjustments on
a forward-looking basis are subject to uncertainty and variability
as they are dependent on many factors, including but not limited
to, the effect of foreign currency exchange fluctuations, impacts
from potential acquisitions or divestitures, the ultimate outcome
of legal proceedings, gains or losses on the potential sale of
businesses or other assets, restructuring costs, merger and
integration activities, changes in fair value of derivatives, and
contingent consideration arrangements, asset impairment charges and
the tax impact of the aforementioned items, tax law changes, or
other tax matters. Accordingly, the Company does not reconcile
non-GAAP financial measures on a forward-looking basis as it is
impractical to do so without unreasonable effort.
The Company also believes adjusted financial measures such as
adjusted cost of sales, adjusted gross profit, adjusted selling,
general, and administrative expense, adjusted research and
development expense, adjusted other operating expenses, adjusted
operating income, adjusted income before tax, adjusted income tax
expense, adjusted net income, and adjusted diluted earnings per
share, are measures that LivaNova generally uses to facilitate
management review of the operational performance of the company, to
serve as a basis for strategic planning, and in the design of
incentive compensation plans. Additionally, the Company uses the
non-GAAP liquidity measure adjusted free cash flow. Furthermore,
adjusted financial measures allow investors to evaluate the
Company’s operational performance for different periods on a more
comparable and consistent basis, and with other medical technology
companies by adjusting for items that are not related to the
operational performance of the Company or incurred in the ordinary
course of business.
Safe Harbor Statement
Certain statements in this news release, other than statements
of historical or current fact, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act and Section 21E of the
Exchange Act. These statements include, but are not limited to,
LivaNova’s plans, objectives, strategies, financial performance and
outlook, trends, the amount and timing of future cash
distributions, prospects or future events and involve known and
unknown risks that are difficult to predict. As a result, the
Company’s actual financial results, performance, achievements or
prospects may differ materially from those expressed or implied by
these forward-looking statements. Generally, you can identify
forward-looking statements by the use of words such as “may,”
“could,” “seek,” “guidance,” “predict,” “potential,” “likely,”
“believe,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“plan,” “intend,” “forecast,” “foresee” or variations of these
terms and similar expressions, or the negative of these terms or
similar expressions. Such forward-looking statements are
necessarily based on estimates and assumptions that, while
considered reasonable by LivaNova and its management based on their
knowledge and understanding of the business and industry, are
inherently uncertain. These statements are not guarantees of future
performance, and stockholders should not place undue reliance on
forward-looking statements. There are a number of risks,
uncertainties and other important factors, many of which are beyond
the Company’s control, that could cause the Company’s actual
results to differ materially from the forward-looking statements
contained in this news release, and include, but are not limited
to, the following risks and uncertainties: volatility in the global
market and worldwide economic conditions, including as caused by
the Ukraine war, the evolving instability in the Middle East,
inflation, changing interest rates, foreign exchange fluctuations,
changes to existing trade agreements and relationships between the
U.S. and other countries including the implementation of sanctions;
cyber-attacks or other disruptions to the Company’s information
technology systems or those of third parties with which the Company
interacts; costs of complying with privacy and security of personal
information requirements and laws; risks relating to supply chain
pressures; changes in technology, including the development of
superior or alternative technology or devices by competitors and/or
competition from providers of alternative medical therapies;
failure to obtain approvals or reimbursement in relation to the
Company’s products; failure to establish, expand or maintain market
acceptance of the Company’s products for the treatment of the
Company’s approved indications; failure to develop and
commercialize new products and the rate and degree of market
acceptance of such products; unfavorable results from clinical
studies or failure to meet milestones; failure to comply with, or
changes in, laws, regulations or administrative practices affecting
government regulation of the Company’s products; risks relating to
recalls, enforcement actions or product liability claims; changes
or reduction in reimbursement for the Company’s products or failure
to comply with rules relating to reimbursement of healthcare goods
and services; failure to comply with anti-bribery laws; losses or
costs from pending or future litigation and governmental
investigations, including in the case of the Company’s 3T
Heater-Cooler and SNIA litigations; risks associated with
environmental laws and regulations as well as environmental
liabilities, violations, protest voting and litigation; product
liability, intellectual property, shareholder-related,
environmental-related, income tax and other litigation, disputes,
losses and costs; failure to retain key personnel, prevent labor
shortages, or manage labor costs; the failure of the Company’s
R&D efforts to keep up with the rapid pace of technological
development in the medical device industry; the risks relating to
the impact of climate change and the risk of ESG pressures from
internal and external stakeholders; the risk of quality
deficiencies and the impacts thereof; failure to protect the
Company’s proprietary intellectual property; failure of new
acquisitions to further the Company’s strategic objectives or
strengthen the Company’s existing businesses; the potential for
impairments of intangible assets, goodwill and other long-lived
assets; risks relating to the Company’s indebtedness; effectiveness
of the Company’s internal controls over financial reporting;
changes in the Company’s profitability and/or failure to manage
costs and expenses; fluctuations in future quarterly operating
results and/or variations in revenue and operating expenses
relative to estimates; changes in tax laws and regulations,
including exposure to additional income tax liabilities; and other
unknown or unpredictable factors that could harm the Company’s
financial performance.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties that affect the Company’s business, including those
described in the “Risk Factors” section of the Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and other documents filed from time to time with the United
States Securities and Exchange Commission by LivaNova.
Readers are cautioned not to place undue reliance on the
Company's forward-looking statements, which speak only as of the
date of this news release. The Company undertakes no obligation to
update publicly any of the forward-looking statements in this news
release to reflect actual results, new information or future
events, changes in assumptions or changes in other factors
affecting forward-looking statements, except to the extent required
by applicable law. If LivaNova updates one or more forward-looking
statements, no inference should be drawn that the Company will make
additional updates with respect to those or other forward-looking
statements.
Essenz is a trademark of LivaNova USA, Inc.
LIVANOVA PLC
NET REVENUE - UNAUDITED
(U.S. dollars in millions)
Three Months Ended June
30,
2024
2023
% Change
Constant-Currency %
Change
Cardiopulmonary
U.S.
$64.9
$50.0
29.7 %
29.7 %
Europe (1)
38.6
39.3
(2.0) %
(1.3) %
Rest of World
70.3
64.8
8.5 %
12.3 %
173.7
154.1
12.7 %
14.5 %
Neuromodulation
U.S.
111.7
104.1
7.3 %
7.3 %
Europe (1)
15.6
15.1
3.1 %
3.2 %
Rest of World
15.6
14.0
11.5 %
16.7 %
142.9
133.2
7.3 %
7.8 %
Other Revenue (2)
2.0
6.6
(69.9) %
(69.9) %
Totals
U.S.
179.5
160.0
12.2 %
12.2 %
Europe (1)
51.3
54.5
(5.9) %
(5.4) %
Rest of World
87.8
79.5
10.5 %
14.5 %
$318.6
$293.9
8.4 %
9.6 %
(1)
Includes countries in Europe where the
Company has a direct sales presence. Countries in Europe where
sales are made through distributors are included in “Rest of
World.”
(2)
"Other Revenue" includes revenue from the
Company’s former ACS reportable segment, as well as rental and site
services income not allocated to segments.
•
Numbers may not add precisely due to
rounding. Segment financial information presented herein reflects
LivaNova's change in segments, effective in the first quarter 2024,
for all periods presented.
LIVANOVA PLC
NET REVENUE - UNAUDITED
(U.S. dollars in millions)
Six Months Ended June
30,
2024
2023
% Change
Constant-Currency %
Change
Cardiopulmonary
U.S.
$115.5
$89.6
28.8 %
28.8 %
Europe (1)
79.5
75.7
5.0 %
4.3 %
Rest of World
134.7
124.5
8.1 %
11.6 %
329.6
289.9
13.7 %
15.0 %
Neuromodulation
U.S.
217.6
198.6
9.6 %
9.6 %
Europe (1)
29.0
28.4
2.1 %
1.0 %
Rest of World
30.1
26.9
11.9 %
16.2 %
276.7
253.9
9.0 %
9.3 %
Other Revenue (2)
7.1
13.5
(47.3) %
(47.4) %
Totals
U.S.
340.2
300.2
13.3 %
13.3 %
Europe (1)
105.6
104.1
1.4 %
0.6 %
Rest of World
167.7
153.0
9.7 %
13.3 %
$613.5
$557.3
10.1 %
10.9 %
(1)
Includes countries in Europe where the
Company has a direct sales presence. Countries in Europe where
sales are made through distributors are included in “Rest of
World.”
(2)
"Other Revenue" includes revenue from the
Company’s former ACS reportable segment, as well as rental and site
services income not allocated to segments.
•
Numbers may not add precisely due to
rounding. Segment financial information presented herein reflects
LivaNova's change in segments, effective in the first quarter 2024,
for all periods presented.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Three Months Ended June
30,
2024
2023
% Change
Net revenue
$318.6
$293.9
Cost of sales
99.7
88.7
Gross profit
218.9
205.2
6.7 %
Operating expenses:
Selling, general, and administrative
129.1
125.9
Research and development
44.7
51.1
Other operating expense
4.8
10.8
Operating income
40.2
17.4
131.2 %
Interest expense
(15.5)
(14.8)
Foreign exchange and other
income/(expense)
(3.0)
2.7
Income before tax
21.6
5.3
308.9 %
Income tax expense
5.2
4.1
Net income
$16.3
$1.2
1,314.1 %
Basic income per share
$0.30
$0.02
Diluted income per share
$0.30
$0.02
Weighted average common shares
outstanding:
Basic
54.2
53.8
Diluted
54.6
54.0
•
Numbers may not add precisely due to
rounding.
Adjusted Financial Measures (U.S.
dollars in millions, except per share amounts) - Unaudited
Three Months Ended June
30,
2024
2023
% Change
Adjusted SG&A
$112.7
$113.1
(0.4) %
Adjusted R&D
41.3
47.9
(13.9) %
Adjusted operating income
66.9
49.5
35.1 %
Adjusted net income
50.8
41.9
21.1 %
Adjusted diluted earnings per share
$0.93
$0.78
19.7 %
Statistics (as a % of net revenue, except for income tax
rate) - Unaudited
GAAP Three Months Ended
June 30,
Adjusted Three Months
Ended June 30,
2024
2023
2024
2023
Gross profit
68.7 %
69.8 %
69.3 %
71.6 %
SG&A
40.5 %
42.8 %
35.4 %
38.5 %
R&D
14.0 %
17.4 %
12.9 %
16.3 %
Operating income
12.6 %
5.9 %
21.0 %
16.8 %
Net income
5.1 %
0.4 %
15.9 %
14.3 %
Income tax rate
24.2 %
77.6 %
20.8 %
9.5 %
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Six Months Ended June
30,
2024
2023
% Change
Net revenue
$613.5
$557.3
Cost of sales
187.2
178.0
Gross profit
426.3
379.3
12.4 %
Operating expenses:
Selling, general, and administrative
259.0
250.0
Research and development
90.4
101.1
Other operating expense
20.5
13.1
Operating income
56.4
15.0
275.2 %
Interest expense
(31.4)
(28.2)
Loss on debt extinguishment
(25.5)
—
Foreign exchange and other
income/(expense)
(12.1)
28.3
(Loss) income before tax
(12.6)
15.0
(183.8) %
Income tax expense
12.9
6.5
Loss from equity method investments
(0.1)
(0.1)
Net (loss) income
($25.6)
$8.5
(400.4) %
Basic (loss) income per share
($0.47)
$0.16
Diluted (loss) income per share
($0.47)
$0.16
Weighted average common shares
outstanding:
Basic
54.2
53.7
Diluted
54.2
53.9
•
Numbers may not add precisely due to
rounding.
Adjusted Financial Measures (U.S.
dollars in millions, except per share amounts) - Unaudited
Six Months Ended June
30,
2024
2023
% Change
Adjusted SG&A
$226.0
$221.4
2.1 %
Adjusted R&D
84.1
94.1
(10.6) %
Adjusted operating income
120.0
76.3
57.3 %
Adjusted net income
90.8
65.3
39.1 %
Adjusted diluted earnings per share
$1.66
$1.21
37.4 %
Statistics (as a % of net revenue,
except for income tax rate) - Unaudited
GAAP Six Months Ended
June 30,
Adjusted Six Months
Ended
June 30,
2024
2023
2024
2023
Gross profit
69.5 %
68.1 %
70.1 %
70.3 %
SG&A
42.2 %
44.9 %
36.8 %
39.7 %
R&D
14.7 %
18.1 %
13.7 %
16.9 %
Operating income
9.2 %
2.7 %
19.6 %
13.7 %
Net (loss) income
(4.2) %
1.5 %
14.8 %
11.7 %
Income tax rate
(102.6) %
43.0 %
20.8 %
8.4 %
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Three Months Ended
June 30, 2024
GAAP Financial
Measures
Restructuring Expenses
(1)
Depreciation and Amortization
Expenses (2)
Impairment (3)
Financing Transactions
(4)
Contingent Consideration
(5)
Certain Legal & Regulatory
Costs (6)
Stock-based Compensation Costs
(7)
Certain Tax Adjustments
(8)
Certain Interest Adjustments
(9)
Adjusted Financial
Measures
Cost of sales
$99.7
$—
($1.7
)
$—
$—
($0.1
)
$—
($0.1
)
$—
$—
$97.8
Gross profit percent
68.7
%
—
%
0.5
%
—
%
—
%
—
%
—
%
—
%
—
%
—
%
69.3
%
Selling, general, and administrative
129.1
—
(2.6
)
—
—
—
(7.7
)
(6.1
)
—
—
112.7
Selling, general, and administrative as a
percent of net revenue
40.5
%
—
%
(0.8
)%
—
%
—
%
—
%
(2.4
)%
(1.9
)%
—
%
—
%
35.4
%
Research and development
44.7
—
—
—
—
(0.3
)
(1.3
)
(2.0
)
—
—
41.3
Research and development as a percent of
net revenue
14.0
%
—
%
—
%
—
%
—
%
(0.1
)%
(0.4
)%
(0.6
)%
—
%
—
%
12.9
%
Other operating expense
4.8
(2.1
)
—
—
—
—
(2.7
)
—
—
—
—
Operating income
40.2
2.1
4.3
—
—
0.4
11.7
8.2
—
—
66.9
Operating margin percent
12.6
%
0.7
%
1.3
%
—
%
—
%
0.1
%
3.7
%
2.6
%
—
%
—
%
21.0
%
Net income
16.3
2.1
4.3
5.8
2.6
0.4
11.7
8.2
(8.1
)
7.6
50.8
Net income as a percent of net revenue
5.1
%
0.7
%
1.3
%
1.8
%
0.8
%
0.1
%
3.7
%
2.6
%
(2.5
)%
2.4
%
15.9
%
Diluted EPS
$0.30
$0.04
$0.08
$0.11
$0.05
$0.01
$0.21
$0.15
($0.15
)
$0.14
$0.93
GAAP results for the three months ended June 30, 2024 include:
(1)
Restructuring expenses related to
organizational changes
(2)
Depreciation and amortization associated
with purchase price accounting
(3)
Impairment of investment in ShiraTronics,
Inc.
(4)
Mark-to-market adjustments for the 2025
and 2029 Notes embedded derivative features and associated capped
call derivatives
(5)
Remeasurement of contingent consideration
related to ImThera acquisition
(6)
Legal expenses primarily related to 3T
Heater-Cooler defense, cybersecurity incident costs, 3T
Heater-Cooler litigation provision, and Medical Device Regulation
("MDR") costs
(7)
Non-cash expenses associated with
stock-based compensation costs
(8)
The impact of valuation allowances,
discrete tax items, the tax impact of intercompany transactions,
and the tax impact on non-GAAP adjustments
(9)
Interest expense on the Term Facilities,
non-cash interest expense on the 2025 & 2029 Notes and
Revolving Credit Facility, and interest income on the collateral
for the SNIA litigation guarantee and delayed draw on Term
Facilities
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Three Months Ended
June 30, 2023
GAAP Financial
Measures
Merger and Integration
Expenses (1)
Restructuring Expenses
(2)
Depreciation and Amortization
Expenses (3)
Financing Transactions
(4)
Contingent Consideration
(5)
Certain Legal & Regulatory
Costs (6)
Stock-based Compensation Costs
(7)
Certain Tax Adjustments
(8)
Certain Interest Adjustments
(9)
Adjusted Financial
Measures
Cost of sales
$88.7
$—
$—
($3.7
)
$—
($1.5
)
$—
$—
$—
$—
$83.4
Gross profit percent
69.8
%
—
%
—
%
1.3
%
—
%
0.5
%
—
%
—
%
—
%
—
%
71.6
%
Selling, general, and administrative
125.9
—
—
(2.9
)
—
—
(5.3
)
(4.6
)
—
—
113.1
Selling, general, and administrative as a
percent of net revenue
42.8
%
—
%
—
%
(1.0
)%
—
%
—
%
(1.8
)%
(1.6
)%
—
%
—
%
38.5
%
Research and development
51.1
—
—
—
—
(1.0
)
(1.2
)
(1.1
)
—
—
47.9
Research and development as a percent of
net revenue
17.4
%
—
%
—
%
—
%
—
%
(0.3
)%
(0.4
)%
(0.4
)%
—
%
—
%
16.3
%
Other operating expense
10.8
0.2
(0.2
)
—
—
—
(10.8
)
—
—
—
—
Operating income
17.4
(0.2
)
0.2
6.6
—
2.5
17.3
5.7
—
—
49.5
Operating margin percent
5.9
%
(0.1
)%
0.1
%
2.2
%
—
%
0.9
%
5.9
%
1.9
%
—
%
—
%
16.8
%
Net income
1.2
(0.2
)
0.2
6.6
1.4
2.5
17.3
5.7
(0.3
)
7.6
41.9
Net income as a percent of net revenue
0.4
%
(0.1
)%
0.1
%
2.2
%
0.5
%
0.9
%
5.9
%
1.9
%
(0.1
)%
2.6
%
14.3
%
Diluted EPS
$0.02
$—
$—
$0.12
$0.03
$0.05
$0.32
$0.11
($0.01
)
$0.14
$0.78
GAAP results for the three months ended June 30, 2023 include:
(1)
Merger and integration expenses related to
the acquisition of ALung Technologies, Inc.
(2)
Restructuring expenses related to
organizational changes
(3)
Depreciation and amortization associated
with purchase price accounting
(4)
Mark-to-market adjustment for the 2025
Notes conversion option feature and associated capped call
derivatives
(5)
Remeasurement of contingent consideration
related to acquisitions
(6)
3T Heater-Cooler litigation provision,
legal expenses primarily related to 3T Heater-Cooler defense, costs
related to the SNIA matter, and MDR costs
(7)
Non-cash expenses associated with
stock-based compensation costs
(8)
Discrete tax items, R&D tax credits,
the tax impact of intercompany transactions, and the tax impact on
non-GAAP adjustments
(9)
Non-cash interest expense on the 2025
Notes and Revolving Credit Facility, interest expense on the Term
Facilities, and interest income on the collateral for the SNIA
litigation guarantee and delayed draw on Term Facilities
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Six Months Ended
June 30, 2024
GAAP Financial
Measures
Restructuring Expenses
(1)
Depreciation and Amortization
Expenses (2)
Impairment (3)
Financing Transactions
(4)
Contingent Consideration
(5)
Certain Legal & Regulatory
Costs (6)
Stock-based Compensation Costs
(7)
Certain Tax Adjustments
(8)
Certain Interest Adjustments
(9)
Adjusted Financial
Measures
Cost of sales
$187.2
$—
($3.4
)
$—
$—
$0.1
$—
($0.5
)
$—
$—
$183.4
Gross profit percent
69.5
%
—
%
0.6
%
—
%
—
%
—
%
—
%
0.1
%
—
%
—
%
70.1
%
Selling, general, and administrative
259.0
—
(5.3
)
—
—
—
(13.8
)
(13.9
)
—
—
226.0
Selling, general, and administrative as a
percent of net revenue
42.2
%
—
%
(0.9
)%
—
%
—
%
—
%
(2.3
)%
(2.3
)%
—
%
—
%
36.8
%
Research and development
90.4
—
0.1
—
—
(0.4
)
(2.0
)
(4.0
)
—
—
84.1
Research and development as a percent of
net revenue
14.7
%
—
%
—
%
—
%
—
%
(0.1
)%
(0.3
)%
(0.6
)%
—
%
—
%
13.7
%
Other operating expense
20.5
(11.4
)
—
—
—
—
(9.1
)
—
—
—
—
Operating income
56.4
11.4
8.6
—
—
0.3
24.9
18.4
—
—
120.0
Operating margin percent
9.2
%
1.9
%
1.4
%
—
%
—
%
—
%
4.1
%
3.0
%
—
%
—
%
19.6
%
Net (loss) income
(25.6
)
11.4
8.6
5.8
42.8
0.3
24.9
18.4
(10.9
)
15.1
90.8
Net (loss) income as a percent of net
revenue
(4.2
)%
1.9
%
1.4
%
0.9
%
7.0
%
—
%
4.1
%
3.0
%
(1.8
)%
2.5
%
14.8
%
Diluted EPS
($0.47
)
$0.21
$0.16
$0.11
$0.78
$—
$0.46
$0.34
($0.20
)
$0.28
$1.66
GAAP results for the six months ended June 30, 2024 include:
(1)
Restructuring expenses related to
organizational changes
(2)
Depreciation and amortization associated
with purchase price accounting
(3)
Impairment of investment in ShiraTronics,
Inc.
(4)
Loss on debt extinguishment, as well as
mark-to-market adjustments for the 2025 & 2029 Notes embedded
derivative features and associated capped call derivatives
(5)
Remeasurement of contingent consideration
related to ImThera acquisition
(6)
3T Heater-Cooler litigation provision,
legal expenses primarily related to 3T Heater-Cooler defense,
cybersecurity incident costs, MDR costs, and costs related to the
SNIA matter
(7)
Non-cash expenses associated with
stock-based compensation costs
(8)
The impact of valuation allowances,
discrete tax items, the tax impact of intercompany transactions,
and the tax impact on non-GAAP adjustments
(9)
Interest expense on the Term Facilities,
non-cash interest expense on the 2025 & 2029 Notes and
Revolving Credit Facility, and interest income on the collateral
for the SNIA litigation guarantee and delayed draw on Term
Facilities
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Six Months Ended
June 30, 2023
GAAP Financial
Measures
Merger and Integration
Expenses (1)
Restructuring Expenses
(2)
Depreciation and Amortization
Expenses (3)
Financing Transactions
(4)
Contingent Consideration
(5)
Certain Legal & Regulatory
Costs (6)
Stock-based Compensation Costs
(7)
Certain Tax Adjustments
(8)
Certain Interest Adjustments
(9)
Adjusted Financial
Measures
Cost of sales
$178.0
$—
$—
($7.4
)
$—
($4.6
)
$—
($0.5
)
$—
$—
$165.6
Gross profit percent
68.1
%
—
%
—
%
1.3
%
—
%
0.8
%
—
%
0.1
%
—
%
—
%
70.3
%
Selling, general, and administrative
250.0
—
—
(5.8
)
—
—
(9.8
)
(13.1
)
—
—
221.4
Selling, general, and administrative as a
percent of net revenue
44.9
%
—
%
—
%
(1.0
)%
—
%
—
%
(1.8
)%
(2.4
)%
—
%
—
%
39.7
%
Research and development
101.1
—
—
0.1
—
(2.7
)
(1.7
)
(2.7
)
—
—
94.1
Research and development as a percent of
net revenue
18.1
%
—
%
—
%
—
%
—
%
(0.5
)%
(0.3
)%
(0.5
)%
—
%
—
%
16.9
%
Other operating expense
13.1
(0.1
)
(0.9
)
—
—
—
(12.2
)
—
—
—
—
Operating income
15.0
0.1
0.9
13.0
—
7.3
23.6
16.3
—
—
76.3
Operating margin percent
2.7
%
—
%
0.2
%
2.3
%
—
%
1.3
%
4.2
%
2.9
%
—
%
—
%
13.7
%
Net income
8.5
0.1
0.9
13.0
(19.6
)
7.3
23.6
16.3
0.5
14.6
65.3
Net income as a percent of net revenue
1.5
%
—
%
0.2
%
2.3
%
(3.5
)%
1.3
%
4.2
%
2.9
%
0.1
%
2.6
%
11.7
%
Diluted EPS
$0.16
$—
$0.02
$0.24
($0.36
)
$0.14
$0.44
$0.30
$0.01
$0.27
$1.21
GAAP results for the six months ended June 30, 2023 include:
(1)
Merger and integration expenses related to
the acquisition of ALung Technologies, Inc.
(2)
Restructuring expenses related to
organizational changes
(3)
Depreciation and amortization associated
with purchase price accounting
(4)
Mark-to-market adjustment for the 2025
Notes embedded derivative feature and associated capped call
derivatives
(5)
Remeasurement of contingent consideration
related to acquisitions
(6)
3T Heater-Cooler litigation provision,
legal expenses primarily related to 3T Heater-Cooler defense, costs
related to the SNIA matter, and MDR costs
(7)
Non-cash expenses associated with
stock-based compensation costs
(8)
Discrete tax items, R&D tax credits,
the tax impact of intercompany transactions, and the tax impact on
non-GAAP adjustments
(9)
Non-cash interest expense on the 2025
Notes and Revolving Credit Facility, interest expense on the Term
Facilities, and interest income on the collateral for the SNIA
litigation guarantee and delayed draw on Term Facilities
•
Numbers may not add precisely due to
rounding.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(U.S. dollars in millions)
June 30, 2024
December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents
$329.2
$266.5
Restricted cash
303.9
311.4
Accounts receivable, net of allowance
200.9
215.1
Inventories
154.7
147.9
Prepaid and refundable taxes
21.9
20.1
Prepaid expenses and other current
assets
36.0
27.2
Total Current Assets
1,046.7
988.2
Property, plant, and equipment, net
158.1
154.2
Goodwill
766.4
782.9
Intangible assets, net
248.2
261.2
Operating lease assets
49.7
50.8
Investments
17.2
22.8
Deferred tax assets
113.0
118.9
Long-term derivative assets
39.6
38.5
Other assets
14.4
12.1
Total Assets
$2,453.2
$2,429.6
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Current debt obligations
$19.7
$18.1
Accounts payable
81.3
80.8
Accrued liabilities and other
98.0
107.3
Current litigation provision liability
16.0
10.8
Taxes payable
23.3
23.3
Accrued employee compensation and related
benefits
64.7
94.6
Total Current Liabilities
303.0
335.0
Long-term debt obligations
605.4
568.5
Contingent consideration
81.2
80.9
Deferred tax liabilities
10.8
11.6
Long-term operating lease liabilities
43.5
45.4
Long-term employee compensation and
related benefits
16.4
17.3
Long-term derivative liabilities
105.4
45.6
Other long-term liabilities
44.9
47.7
Total Liabilities
1,210.6
1,151.9
Total Stockholders’ Equity
1,242.5
1,277.6
Total Liabilities and Stockholders’
Equity
$2,453.2
$2,429.6
•
Numbers may not add precisely due to
rounding.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS - UNAUDITED
(U.S. dollars in millions)
Six Months Ended June
30,
2024
2023
Operating Activities:
Net (loss) income
($25.6)
$8.5
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Loss on debt extinguishment
25.5
—
Stock-based compensation
18.4
16.3
Remeasurement of derivative
instruments
12.5
(25.3)
Depreciation
12.4
12.0
Amortization of debt issuance costs
10.2
9.5
Amortization of intangible assets
8.6
12.7
Impairment of investment in ShiraTronics,
Inc.
5.8
—
Deferred income tax expense
5.6
0.1
Amortization of operating lease assets
4.4
5.1
Remeasurement of contingent consideration
to fair value
0.3
7.3
Other
0.7
0.1
Changes in operating assets and
liabilities:
Accounts receivable, net
8.4
(0.7)
Inventories
(10.9)
(25.4)
Other current and non-current assets
(3.4)
(8.3)
Accounts payable and accrued current and
non-current liabilities
(25.4)
(4.6)
Taxes payable
0.8
2.7
Litigation provision liability
5.1
(7.3)
Net cash provided by operating
activities
53.3
2.8
Investing Activities:
Purchases of property, plant, and
equipment
(18.6)
(13.3)
Purchase of investments
(0.4)
(5.4)
Other
—
0.6
Net cash used in investing
activities
(18.9)
(18.1)
Financing Activities:
Proceeds from long-term debt
obligations
335.5
50.0
Repayment of long-term debt
obligations
(238.8)
(11.8)
Payment of debt extinguishment costs
(39.0)
—
Purchase of capped calls
(31.6)
—
Proceeds from unwind of capped calls
22.5
—
Payment of contingent consideration
(13.8)
—
Shares repurchased from employees for
minimum tax withholding
(8.1)
(5.8)
Proceeds from exercise of stock
options
3.7
—
Payment of debt issuance costs
(5.7)
—
Repayments of short-term borrowings
(maturities greater than 90 days)
—
(2.0)
Other
0.5
0.4
Net cash provided by financing
activities
25.3
30.8
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(4.4)
3.3
Net increase in cash, cash equivalents,
and restricted cash
55.2
18.7
Cash, cash equivalents, and restricted
cash at beginning of period
577.9
515.6
Cash, cash equivalents, and restricted
cash at end of period
$633.1
$534.4
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions)
Three Months Ended June
30,
2024
2023
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
Income before tax
$21.6
$—
$64.1
$5.3
$—
$46.4
Income tax expense
5.2
8.1
13.3
4.1
0.3
4.4
Net income
$16.3
($8.1
)
$50.8
$1.2
($0.3
)
$41.9
Income tax rate
24.2
%
20.8
%
77.6
%
9.5
%
Six Months Ended June
30,
2024
2023
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
(Loss) income before tax
($12.6
)
$—
$114.7
$15.0
$—
$71.3
Income tax expense
12.9
10.9
23.9
6.5
(0.5
)
6.0
Loss from equity method investments
(0.1
)
—
(0.1
)
(0.1
)
—
(0.1
)
Net (loss) income
($25.6
)
($10.9
)
$90.8
$8.5
$0.5
$65.3
Income tax rate
(102.6
)%
20.8
%
43.0
%
8.4
%
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions)
Three Months Ended June
30,
% Change
Constant- Currency %
Change
2024
2023
GAAP net revenue
$318.6
$293.9
8.4 %
9.6 %
Less: ACS (1)
3.0
5.9
(49.7) %
(49.7) %
Net revenue excluding ACS
$315.6
$288.0
9.6 %
10.8 %
Six Months Ended June
30,
% Change
Constant- Currency %
Change
2024
2023
GAAP net revenue
$613.5
$557.3
10.1 %
10.9 %
Less: ACS (1)
7.1
12.1
(41.2) %
(41.2) %
Net revenue excluding ACS
$606.4
$545.2
11.2 %
12.1 %
(1)
Includes net revenue from the Company's
former ACS reportable segment.
•
Numbers may not add precisely due to
rounding.
The following table presents the reconciliation of GAAP diluted
weighted average shares outstanding, used in the computation of
GAAP diluted net loss per common share, to adjusted diluted
weighted average shares outstanding, used in the computation of
adjusted diluted earnings per common share (in millions of
shares):
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(shares in millions)
Six Months Ended June
30, 2024
GAAP diluted weighted average shares
outstanding
54.2
Add: Effects of stock-based compensation
instruments
0.4
Adjusted diluted weighted average shares
outstanding
54.6
•
Numbers may not add precisely due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731063839/en/
Zach Glazier Manager, Investor Relations Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
LivaNova (NASDAQ:LIVN)
Historical Stock Chart
From Jul 2024 to Jul 2024
LivaNova (NASDAQ:LIVN)
Historical Stock Chart
From Jul 2023 to Jul 2024