LivaNova PLC (NASDAQ:LIVN; LSE: LIVN) (“LivaNova” or the
“Company”), a market-leading medical technology and innovation
company, today reported results for the fourth quarter and full
year ended December 31, 2016.
For the fourth quarter of 2016, worldwide sales were $311
million, a decrease of 2.3 percent on a reported basis and a
decrease of 1.6 percent on a constant-currency basis, as compared
to the previous year. On a U.S. Generally Accepted Accounting
Principles (GAAP) basis, fourth quarter 2016 loss per share was
($0.61). Fourth quarter 2016 adjusted diluted earnings per share
were $0.85. For full-year 2016, worldwide sales were $1.2 billion,
an increase of 0.8 percent on a reported basis and increase of 1.0
percent on a constant-currency basis, as compared to the previous
year. On a GAAP basis, full-year 2016 loss per share was ($1.29).
Full-year 2016 adjusted diluted earnings per share were $3.05.
"Despite it being a challenging year for top-line growth, we
were able to deliver adjusted earnings per share at the high end of
our projected range," said Damien McDonald, chief executive
officer. “2016 was LivaNova's first full year as a public company
and we made significant progress in many areas – launching several
key products, driving merger and restructuring synergies, aligning
inventory levels and consolidating balance sheet strength. We
implemented numerous measures to reinforce our foundation and
simplify our business model. This positions LivaNova for a stronger
future, driving sustainable growth, continued financial leverage
and value to our shareholders.”
Fourth Quarter 2016 Results
The following table highlights worldwide sales for the fourth
quarter of 2016 compared to the same period in 2015:
Three Months EndedDecember 31,
% Change
ConstantCurrency %Change
In $ millions 2016 2015
Cardiopulmonary $124.7 $130.0 (4.0 %)
(3.4 %) Heart Valves 34.0 34.9
(2.6 %) (2.2 %) Cardiac Surgery 158.7
164.9 (3.7 %) (3.2 %) Cardiac Rhythm Management
61.0 60.7 0.6 % 1.3 %
Neuromodulation 90.5 91.5 (1.1 %)
(0.3
%)
Other 0.4 0.9 (54.7 %) (53.5 %)
Total Net Sales $310.6 $318.0 (2.3 %)
(1.6 %)
- Numbers may not add due to rounding.
Constant currency % change is considered a non-GAAP metric.
For discussion purposes, all sales growth rates below reflect
comparable, constant currency growth. The difference between
constant currency growth and reported growth reflects the impact
from currency fluctuations in the various currencies in which we
operate.
Three months ended December 31,
2016
Worldwide sales for the fourth quarter were $311 million, down
1.6 percent compared to the fourth quarter of 2015.
For the three business franchises, sales were as follows:
Cardiac Surgery
Cardiac Surgery sales, which include cardiopulmonary products
and heart valves, were $159 million, representing a 3.2 percent
decrease versus the comparable period in 2015.
Sales in cardiopulmonary products were $125 million, down 3.4
percent from the fourth quarter of 2015. A decline in the Company’s
3T Heater-Cooler devices, as a result of import restrictions in the
U.S., the introduction of our loaner program across geographies and
the timing of heart-lung machine orders in Europe offset share
gains and strong demand in Europe and emerging markets for
oxygenators.
Heart valve sales, including tissue and mechanical heart valves,
were $34 million, a decrease of 2.2 percent compared to the same
period the previous year. Strength in tissue valves, driven by
strong demand for Perceval in both the U.S. and Europe was offset
by declines in mechanical valves globally, with on-going inventory
alignment in emerging markets, particularly China.
Cardiac Rhythm Management
(CRM)
CRM sales for the period totaled $61 million, an increase of 1.3
percent as compared to the fourth quarter of 2015, primarily due to
the launch of our KORA 250 pacemaker in Japan.
Neuromodulation
Neuromodulation sales were $91 million in the fourth quarter, a
slight decline from the prior year period, primarily due to four
less selling days this quarter and inventory alignment in our
European business, which offset favorable results from the
continued adoption of the Company’s newest VNS Therapy device,
AspireSR, in the U.S.
Financial Performance
On a U.S. GAAP basis, fourth quarter 2016 net loss from
operations was $37 million, primarily due to costs related to the
3T Heater-Cooler Remediation Plan, impairment of goodwill in our
CRM business franchise and restructuring expenses. Adjusted income
from operations for the fourth quarter of 2016 was $57 million, an
increase of 27.9% as compared to the fourth quarter of 2015,
primarily driven by improvements in gross margin and a significant
reduction in operating expenses resulting from merger synergy and
restructuring activities.
Full-Year 2016 Results
The following table highlights selected financial worldwide
sales for the full-year 2016 compared to the same period in
2015:
Twelve Months EndedDecember 31,
% Change
ConstantCurrency %Change
In $ millions 2016 2015
Cardiopulmonary $474.4 $476.4 (0.4 %)
(0.1 %) Heart Valves 137.3 140.2
(2.1 %) (1.6 %) Cardiac Surgery 611.7
616.6 (0.8
%)
(0.5 %) Cardiac Rhythm Management 249.1
260.5 (4.4 %) (4.7 %) Neuromodulation
351.4 324.3 8.3 % 8.8 % Other
1.7 3.2 (45.4 %) (42.6 %) Total Net Sales
$1,213.9 $1,204.6 0.8 % 1.0 %
- Numbers may not add due to rounding.
Constant currency % change is considered a non-GAAP metric.
For discussion purposes, all sales growth rates below reflect
comparable, constant currency growth. The difference between
constant currency growth and reported growth reflects the impact
from currency fluctuations in the various currencies in which we
operate.
Twelve months ended December 31,
2016
Worldwide sales for full-year 2016 were $1.2 billion, up 1.0
percent compared to full-year net sales in 2015, primarily due to
strong adoption of AspireSR and the U.S. launch of Perceval, our
sutureless valve.
For the three business franchises, sales were as follows:
Cardiac Surgery
Cardiac Surgery sales, which include cardiopulmonary products
and heart valves, were $612 million, down slightly versus full-year
2015.
Sales in cardiopulmonary products were $474 million, relatively
flat with the full-year 2015, primarily due to a decline in the
Company’s 3T Heater-Cooler devices, as a result of import
restrictions in the U.S. and more recently, the loaner program,
offset by strong sales and share gains in INSPIRE, our newest
oxygenator.
Heart valve sales, including tissue and mechanical heart valves,
were $137 million, a decrease of 1.6 percent compared to the
previous year. Strength in tissue valves, driven by strong demand
for Perceval in both the U.S. and Europe, was offset by declines in
mechanical valves.
Cardiac Rhythm Management
(CRM)
CRM sales totaled $249 million, a decrease of 4.7 percent as
compared to full-year 2015. Positive performance of the Company’s
newest high-voltage device PLATINIUM and favorable year-over-year
results with its KORA 250 pacemaker were offset by declines in our
Europe low-voltage business, as a result of continued pricing
pressure and delayed product launches.
Neuromodulation
Neuromodulation sales were $351 million for the full-year 2016,
an increase of 8.8 percent over the prior year period, driven
primarily by continued adoption of the Company’s newest VNS Therapy
device, AspireSR, and strong new patient growth in the U.S.
Financial Performance
On a U.S. GAAP basis, loss from operations for full-year 2016
was $28 million. Adjusted income from operations for full-year 2016
was $219 million, an increase of 26.9 percent as compared to
full-year 2015.
2017 Projections
LivaNova expects worldwide net sales for full-year 2017 to grow
between 1 and 3 percent on a constant-currency basis. Adjusted
diluted earnings per share for 2017 are expected to be in the range
of $3.25 to $3.45.
Key non-GAAP reconciliation items to the projected 2017 adjusted
diluted earnings per share are as follows:
Earnings Per Share
Estimated merger and integration charges $0.05 -
$0.08 Estimated charges for restructuring $0.29 -
$0.33 Amortization of intangible assets related to purchase price
accounting $0.80 Estimated charges related to equity
compensation $0.29 - $0.33
In 2017, the company estimates that adjusted cash flow from
operations, excluding integration, restructuring and 3T remediation
payments, will be in the range of $190 to $210 million. Capital
expenditures are projected to range between $40 million to $50
million. Depreciation and amortization is expected to be in the
mid-$30 million range.
"We have created a solid foundation and are on track for
continued progress in 2017 with initiatives to advance our growth,
drive product launches and fund our equity investments, which
remain exciting opportunities for the company," said McDonald. "We
expect continued progress as we execute on our synergy targets and
retain our focus, energy and discipline as a company. Together, we
believe these efforts will enable LivaNova to most effectively
serve the needs of our customers and patients, and deliver strong
value to our shareholders."
Webcast and Conference Call
Instructions
The conference call will be available to interested parties
through a live audio webcast commencing at 8:00 a.m. Central time
(9:00 a.m. Eastern time, 2:00 p.m. UK time) and accessible through
the Investor Relations section of the LivaNova corporate website at
www.LivaNova.com. To listen to the
conference call live by telephone, dial (844) 239-5285 (if dialing
from within the U.S.) or (512) 961-6524 (if dialing from outside
the U.S.). The conference ID is 40640458.
Within 24 hours of the webcast, a replay will be available under
the "News & Events / Presentations" section of the Investor
Relations portion of the LivaNova website, where it will be
archived and accessible for approximately 12 months.
About LivaNova
LivaNova PLC is a global medical technology company built on
nearly five decades of experience and a relentless commitment to
improve the lives of patients around the world. LivaNova’s advanced
technologies and breakthrough treatments provide meaningful
solutions for the benefit of patients, healthcare professionals and
healthcare systems. Headquartered in London and with a presence in
more than 100 countries worldwide, the company employs more than
4,500 employees. LivaNova operates as three business
franchises: Cardiac Surgery, Neuromodulation and Cardiac Rhythm
Management, with operating headquarters in Mirandola
(Italy), Houston (U.S.A.) and Clamart (France),
respectively.
Financial Alignment, Combined Sales & Operating Results,
Business Franchise Structure and Constant Currency
Cyberonics Inc., the predecessor company to LivaNova, previously
reported on a 52/53 week fiscal year calendar ending in April. With
the formal change in the fiscal calendar to a fiscal year ended
December 31, the historical Neuromodulation business franchise
sales have been aligned to correspond as closely as possible to
calendar quarters.
Although LivaNova was a shell company with no business
operations until the closing date of the merger on October 19,
2015, the sales results disclosed for periods up to and beyond that
date are being provided on a combined basis, a non-GAAP formulation
that combines the results of legacy Sorin Group S.p.A. (Sorin) and
Cyberonics for the periods completed prior to the merger and
periods that include results both before and after the closing of
the merger. The Company believes that presenting the results of
Sorin and Cyberonics in such a manner offers a meaningful
representation to investors of the combined company’s sales for
these periods.
Non-GAAP operating results, unaudited, have been included for
2015. These results have been prepared by management and adjusted
for non-GAAP items as if the merger had occurred on January 1, 2015
but should not be considered as an alternative to Proforma Income
Statements to be provided in accordance with SEC filings. Certain
adjustments to legacy Sorin operating results have occurred in
order to present the results in U.S. dollars and to align these
results as closely as possible to the presentation of LivaNova
financial results. Company management uses these measurements as
aids 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. Management
believes that the presentation of these results provides a
meaningful representation of the combined company’s operating
results for the periods presented.
The sales and operating results for legacy Cyberonics for the
quarters ended March 31, June 30 and September 30 were aligned to
provide comparative information. The actual periods ended on March
27, June 26 and September 25 respectively.
LivaNova (as the successor to Sorin and Cyberonics on a combined
basis) operates under a Business Franchise structure with Cardiac
Surgery, CRM and Neuromodulation accounting for substantially all
of the sales during the periods referred to herein. The combined
company also operates a New Ventures group, dedicated to developing
new technologies.
Use of Non-GAAP Financial Measures
In this press release, management has disclosed financial
measurements that present financial information not necessarily in
accordance with Generally Accepted Accounting Principles (GAAP).
Company management uses these measurements as aids 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 measure as prescribed by GAAP.
Unless otherwise noted, all sales growth rates in this release
reflect comparable, constant currency growth. Management believes
that referring to comparable, constant currency growth is the most
useful way to evaluate the sales performance of LivaNova and to
compare the sales performance of current periods to prior periods
on a consistent basis. Constant currency growth, a non-GAAP
financial measure, measures the change in sales between current and
prior year periods using average exchange rates in effect during
the applicable prior year period.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the United States Securities Act of
1933, as amended, and Section 21E of the United States Securities
Exchange Act of 1934, as amended. Forward-looking statements are
not historical facts but are based on certain assumptions of
management and describe the Company’s future plans, strategies and
expectations. Forward-looking statements can generally be
identified by the use of forward-looking terminology, including,
but not limited to, "may," “could,” “seek,” “guidance,” “predict,”
“potential,” “likely,” "believe," "will," "expect," "anticipate,"
"estimate," "plan," "intend," "forecast," or variations of these
terms and similar expressions, or the negative of these terms or
similar expressions. Forward-looking statements contained in this
press release are based on information presently available to
LivaNova and assumptions that the Company believes to be
reasonable, but are inherently uncertain. As a result, the
Company’s 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, uncertainties and other factors
that are, in some cases, beyond the Company’s control. Investors
are cautioned that all such statements involve risks and
uncertainties, including without limitation, statements concerning
achieving a stronger future, driving sustainable growth and value
to our shareholders, projected net sales, adjusted diluted earnings
per share, cash flow from operations, capital expenditures and
depreciation and amortization for 2017, advancing our growth,
driving product launches and funding our equity investments,
executing on our synergy targets and retaining our focus, energy
and discipline as a company, serving the needs of our customers and
patients, and delivering strong value to our shareholders.
Important factors that may cause actual results to differ include,
but are not limited to: (i) risks that the legacy businesses of
Cyberonics, Inc. and Sorin S.p.A. (together, the “combined
companies”) will not be integrated successfully or that the
combined companies will not realize estimated cost savings, value
of certain tax assets, synergies and growth, or that such benefits
may take longer to realize than expected; (ii) the inability of
LivaNova to meet expectations regarding the timing, completion and
accounting of tax treatments; (iii) risks relating to unanticipated
costs of integration, including operating costs, customer loss or
business disruption being greater than expected; (iv)
organizational and governance structure; (v) reductions in customer
spending, a slowdown in customer payments and changes in customer
demand for products and services; (vi) unanticipated changes
relating to competitive factors in the industries in which LivaNova
operates; (vii) the ability to hire and retain key personnel;
(viii) the ability to attract new customers and retain existing
customers in the manner anticipated; (ix) the reliance on and
integration of information technology systems; (x) changes in
legislation or governmental regulations affecting LivaNova; (xi)
international, national or local economic, social or political
conditions that could adversely affect LivaNova, its partners or
its customers; (xii) conditions in the credit markets; (xiii)
business and other financial risks inherent to the industries in
which LivaNova operates; (xiv) risks associated with assumptions
made in connection with critical accounting estimates and legal
proceedings; (xv) LivaNova’s international operations, which are
subject to the risks of currency fluctuations and foreign exchange
controls; (xvi) and the potential of international unrest, economic
downturn or effects of currencies, tax assessments, tax
adjustments, anticipated tax rates, raw material costs or
availability, benefit or retirement plan costs, or other regulatory
compliance costs. 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 Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, the Registration Statement on Form S-4 and
other documents filed from time to time with the United States
Securities and Exchange Commission by LivaNova. LivaNova does not
give any assurance (1) that LivaNova will achieve its expectations,
or (2) concerning any result or the timing thereof, in each case,
with respect to any regulatory action, administrative proceedings,
government investigations, litigation, warning letters, consent
decree, cost reductions, business strategies, earnings or revenue
trends or future financial results.
All information in this press release is as of the date of its
release. The Company does not undertake or assume any obligation to
update publicly any of the forward-looking statements in this press
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 we update one or more forward-looking
statements, no inference should be drawn that we will make
additional updates with respect to those or other forward-looking
statements. We caution you not to place undue reliance on any
forward-looking statements, which are made only as of the date of
this press release.
For more information, please visit
www.LivaNova.com.
LIVANOVA PLC QUARTERLY SALES TREND BY
BUSINESS UNIT
U.S. dollars in millions, CONSTANT
CURRENCY
1Q15
2Q15 3Q15
4Q15 FY15 1Q16
2Q16 3Q16
4Q16 FY16
4Q16 vs.4Q15
FY16 vs.FY15
Net Sales
Cardio Pulmonary $107.5 $125.9 $113.0 $130.0
$476.4 $113.4 $123.6 $113.3
$125.5 $475.8 (3.4 %) (0.1 %) Heart
Valves 34.7 36.4 34.2
34.9 140.2 33.4 37.0
33.4 34.2 137.9
(2.2 %) (1.6 %) Cardiac Surgery Total
142.2 162.3 147.2 164.9 616.6 146.8 160.7 146.6 159.6 613.7 (3.2 %)
(0.5 %) CRM 70.4 75.6 53.9 60.7 260.5 62.9 68.1 55.8 61.4 248.2 1.3
% (4.7 %) Neuromodulation 70.1 78.4 84.3 91.5 324.3 81.6 90.1 90.0
91.2 353.0 (0.3 %) 8.8 % Other 0.7 0.7
0.8 0.9 3.2 0.5
0.4 0.5 0.4
1.8 (53.5 %) (42.6 %)
Total
$283.4 $317.1 $286.1
$318.0 $1,204.6 $291.8
$319.3 $292.9 $312.8
$1,216.8 (1.6 %) 1.0 %
LIVANOVA PLC QUARTERLY SALES TREND BY BUSINESS UNIT
U.S. dollars in millions,
REPORTED
1Q15 2Q15 3Q15
4Q15 FY15
1Q16 2Q16 3Q16
4Q16 FY16
4Q16 vs.4Q15
FY16 vs.FY15
Net Sales
Cardio Pulmonary $107.5 $125.9 $113.0
$130.0 $476.4 $110.9
$124.0 $114.8 $124.7
$474.4 (4.0 %) (0.4 %)
Heart Valves 34.7 36.4 34.2
34.9 140.2 32.5
37.1 33.7 34.0 137.3
(2.6 %) (2.1 %) Cardiac Surgery
Total 142.2 162.3 147.2 164.9 616.6 143.4 161.1 148.5 158.7 611.7
(3.7 %) (0.8 %) CRM 70.4 75.6 53.9 60.7 260.5 61.7 69.6 56.8 61.0
249.1 0.6 % (4.4 %) Neuromodulation 70.1 78.4 84.3 91.5 324.3 81.4
90.0 89.5 90.5 351.4 (1.1 %) 8.3 % Other 0.7
0.7 0.8 0.9 3.2
0.4 0.4 0.5 0.4
1.7 (54.7 %) (45.4 %)
Total $283.4 $317.1 $286.1
$318.0 $1,204.6 $287.0
$321.0 $295.3 $310.6
$1,213.9 (2.3 %) 0.8 %
* The sales results presented are unaudited. Numbers may not
add due to rounding.
LIVANOVA
PLC QUARTERLY SALES TREND BY REGION
U.S. dollars in millions,
REPORTED
1Q15 2Q15
3Q15 4Q15 FY15
1Q16 2Q16
3Q16 4Q16 FY16
4Q16 vs.4Q15
FY16 vs.FY15
Cardio Pulmonary US $32.9 $43.0 $39.8 $45.9 $161.7 $34.5
$39.2 $39.4 $41.3 $154.4 (10.0 %) (4.5 %) Europe 33.6 37.1 31.7
35.6 137.9 31.5 34.9 28.3 33.8 128.5 (4.9 %) (6.8 %) Rest of World
41.0 45.9 41.5 48.5
176.9 45.0 49.9
47.2 49.5 191.5
2.2 % 8.3 % Total 107.5 125.9
113.0 130.0 476.4
110.9 124.0 114.8 124.7
474.4 (4.0 %) (0.4 %)
Heart Valve US 6.7 6.7 6.1 5.8 25.2 6.5 7.1 7.4 6.8
27.7 17.4 % 9.8 % Europe 12.8 13.0 10.3 10.9 46.9 11.4 12.5 9.7
10.7 44.3 (1.6 %) (5.5 %) Rest of World 15.2 16.8
17.8 18.2 68.1
14.7 17.5 16.6
16.5 65.3 (9.6 %) (4.1 %)
Total 34.7 36.4 34.2 34.9
140.2 32.5 37.1
33.7 34.0 137.3
(2.6 %) (2.1 %)
Cardiac Surgery US 39.6
49.6 45.9 51.7 186.9 40.9 46.3 46.8 48.1 182.1 (6.9 %) (2.5 %)
Europe 46.3 50.0 41.9 46.5 184.8 42.9 47.4 38.0 44.5 172.8 (4.1 %)
(6.5 %) Rest of World 56.2 62.7 59.3
66.7 245.0 59.7
67.4 63.7 66.1
256.8 (1.0 %) 4.8 % Total 142.2
162.3 147.2 164.9
616.6 143.4 161.1 148.5
158.7 611.7 (3.7 %)
(0.8 %)
CRM US 4.5 3.9 3.9 3.1 15.5 3.0
2.3 2.2 2.5 9.9 (20.9 %) (36.0 %) Europe 51.0 52.3 44.8 50.5 198.6
50.0 54.4 44.7 48.1 197.2 (4.8 %) (0.7 %) Rest of World 14.9
19.4 5.1 7.0 46.4
8.7 12.9 9.8
10.5 41.9 49.1 %
(9.7 %) Total 70.4 75.6 53.9
60.7 260.5 61.7
69.6 56.8 61.0 249.1
0.6 % (4.4 %)
Neuromodulation US 57.5 63.6 70.9 76.8 268.8 70.2 75.8 74.9
77.6 298.5 1.0 % 11.0 % Europe 8.7 8.9 8.4 9.2 35.2 6.4 9.4 8.5 7.7
31.9 (15.8 %) (9.2 %) Rest of World 3.9 6.0
4.9 5.5 20.3 4.8
4.9 6.2 5.2
21.0 (5.2 %) 3.3 % Total 70.1
78.4 84.3 91.5
324.3 81.4 90.0 89.5
90.5 351.4 (1.1 %)
8.3 %
Other US — — — — — — — — — —
N/A
N/A
Europe — — — 0.2 0.3 0.1 0.1 — — 0.1
N/A
N/A
Rest of World 0.7 0.7 0.8
0.7 2.9 0.4 0.3
0.5 0.4 1.6 (36.2
%) (44.1 %) Total 0.7 0.7
0.8 0.9 3.2 0.4
0.4 0.5 0.4 1.7
(54.7 %) (45.4 %)
Total
US 101.6 117.1 120.8 131.6 471.2 114.1 124.4 123.8 128.1 490.5 (2.7
%) 4.1 % Europe 106.1 111.2 95.2 106.4 418.8 99.3 111.2 91.2 100.3
402.1 (5.7 %) (4.0 %) Rest of World 75.7 88.8
70.2 79.9 314.6
73.5 85.4 80.2 82.2
321.4 2.8 % 2.1 % Total
$283.4 $317.1 $286.1
$318.0 $1,204.6 $287.0
$321.0 $295.3 $310.6
$1,213.9 (2.3 %) 0.8 %
* The sales results presented are
unaudited. Numbers may not add due to rounding.
LIVANOVA
PLC QUARTERLY SALES TREND BY REGION
U.S. dollars in millions, CONSTANT
CURRENCY
1Q15 2Q15
3Q15 4Q15 FY15
1Q16 2Q16
3Q16 4Q16 FY16
4Q16 vs.4Q15
FY16 vs.FY15
Cardio Pulmonary US $32.9 $43.0 $39.8 $45.9 $161.7 $34.5
$39.2 $39.4 $41.3 $154.4 (10.0 %) (4.5 %) Europe 33.6 37.1 31.7
35.6 137.9 32.4 34.6 28.8 35.4 131.1 (0.5 %) (4.9 %) Rest of World
41.0 45.9 41.5 48.5
176.9 46.6 49.8
45.1 48.8 190.3
0.6 % 7.6 % Total 107.5 125.9
113.0 130.0 476.4
113.4 123.6 113.3 125.5
475.8 (3.4 %) (0.1 %)
Heart Valve US 6.7 6.7 6.1 5.8 25.2 6.5 7.1 7.4 6.8
27.7 17.4 % 9.8 % Europe 12.8 13.0 10.3 10.9 46.9 11.7 12.4 9.9
11.1 45.0 1.7 % (4.0 %) Rest of World 15.2 16.8
17.8 18.2 68.1
15.2 17.6 16.1
16.3 65.2 (10.6 %) (4.3
%) Total 34.7 36.4 34.2
34.9 140.2 33.4 37.0
33.4 34.2 137.9
(2.2 %) (1.6 %)
Cardiac Surgery
US 39.6 49.6 45.9 51.7 186.9 40.9 46.3 46.8 48.1 182.1 (6.9 %) (2.5
%) Europe 46.3 50.0 41.9 46.5 184.8 44.0 47.0 38.7 46.5 176.1 0.0%
(4.7 %) Rest of World 56.2 62.7 59.3
66.7 245.0 61.8
67.4 61.2 65.1
255.5 (2.5 %) 4.3 % Total 142.2
162.3 147.2 164.9
616.6 146.8 160.7 146.6
159.6 613.7 (3.2 %)
(0.5 %)
CRM US 4.5 3.9 3.9 3.1 15.5 3.0
2.3 2.2 2.5 9.9 (20.9 %) (36.0 %) Europe 51.0 52.3 44.8 50.5 198.6
51.2 53.5 44.8 49.2 198.7 (2.7 %) 0.1 % Rest of World 14.9
19.4 5.1 7.0 46.4
8.7 12.3 8.8
9.8 39.6 39.7 %
(14.7 %) Total 70.4 75.6 53.9
60.7 260.5 62.9
68.1 55.8 61.4 248.2
1.3 % (4.7 %)
Neuromodulation US 57.5 63.6 70.9 76.8 268.8 70.2 75.8 74.9
77.6 298.5 1.0 % 11.0 % Europe 8.7 8.9 8.4 9.2 35.2 6.6 9.4 9.0 8.4
33.5 (8.2 %) (4.9 %) Rest of World 3.9 6.0
4.9 5.5 20.3 4.8
4.9 6.1 5.2
21.1 (4.5 %) 3.6 % Total 70.1
78.4 84.3 91.5
324.3 81.6 90.1 90.0
91.2 353.0 (0.3 %)
8.8 %
Other US — — — — — — — — — — N/A N/A
Europe — — — 0.2 0.3 0.1 0.1 — — 0.1
N/A
N/A Rest of World 0.7 0.7 0.8
0.7 2.9 0.5 0.3
0.5 0.4 1.7
(34.7 %) (41.1 %) Total 0.7 0.7
0.8 0.9 3.2 0.5
0.4 0.5 0.4
1.8 (53.5 %) (42.6 %)
Total US 101.6 117.1 120.8 131.6 471.2 114.1 124.4 123.8
128.1 490.5 (2.7 %) 4.1 % Europe 106.1 111.2 95.2 106.4 418.8 101.9
110.0 92.5 104.0 408.4 (2.2 %) (2.5 %) Rest of World 75.7
88.8 70.2 79.9
314.6 75.8 84.9 76.6
80.6 317.9 0.8 %
1.0 % Total $283.4 $317.1 $286.1
$318.0 $1,204.6 $291.8
$319.3 $292.9 $312.8
$1,216.8 (1.6 %) 1.0 %
* The sales results presented are
unaudited. Numbers may not add due to rounding.
LIVANOVA PLC QUARTERLY SALES
U.S. dollars in millions
Three
Months Ended December 31, 2016 2016 2015
% Change atActual
CurrencyRates
% Change atConstant
CurrencyRates
Cardio Pulmonary US $41.3 $45.9 (10.0 %) (10.0 %) Europe
33.8 35.6 (4.9 %) (0.5 %) Rest of World 49.5 48.5 2.2 % 0.6 % Total
124.7 130.0
(4.0 %) (3.4 %)
Heart Valve US 6.8 5.8 17.4 % 17.4 % Europe 10.7 10.9 (1.6
%) 1.7 % Rest of World 16.5 18.2 (9.6 %) (10.6 %) Total 34.0 34.9
(2.6 %) (2.2 %) Cardiac
Surgery US 48.1 51.7 (6.9 %) (6.9 %) Europe 44.5 46.5 (4.1 %)
0.0 % Rest of World 66.1 66.7 (1.0 %) (2.5 %) Total 158.7 164.9
(3.7 %) (3.2 %) CRM US
2.5 3.1 (20.9 %) (20.9 %) Europe 48.1 50.5 (4.8 %) (2.7 %) Rest of
World 10.5 7.0 49.1 % 39.7 % Total 61.0 60.7
0.6 %
1.3 % Neuromodulation US 77.6 76.8 1.0
% 1.0 % Europe 7.7 9.2 (15.8 %) (8.2 %) Rest of World 5.2 5.5 (5.2
%) (4.5 %) Total 90.5 91.5
(1.1 %) (0.3
%) Other US — —
N/A
N/A Europe — 0.2 N/A N/A Rest of World 0.4 0.7 (36.2 %) (34.7 %)
Total 0.4 0.9
(54.7
%)
(53.5
%)
Total US 128.1 131.6 (2.7 %) (2.7 %) Europe 100.3
106.4 (5.7 %) (2.2 %) Rest of World 82.2 79.9 2.8 % 0.8 % Total
$310.6 $318.0
(2.3
%) (1.6 %) * The sales results
presented are unaudited. Numbers may not add due to rounding.
LIVANOVA PLC FY16 SALES
U.S. dollars in millions
Twelve Months Ended December 31,
2016
2016 2015
% Change atActual
CurrencyRates
% Change atConstant
CurrencyRates
Cardio Pulmonary US $154.4 $161.7 (4.5 %) (4.5 %) Europe
128.5 137.9 (6.8 %) (4.9 %) Rest of World 191.5 176.9 8.3 % 7.6 %
Total 474.4 476.4
(0.4 %) (0.1 %)
Heart Valve US 27.7 25.2 9.8 % 9.8 % Europe 44.3 46.9
(5.5 %) (4.0 %) Rest of World 65.3 68.1 (4.1 %) (4.3 %) Total 137.3
140.2
(2.1 %) (1.6 %) Cardiac
Surgery US 182.1 186.9 (2.5 %) (2.5 %) Europe 172.8 184.8 (6.5
%) (4.7 %) Rest of World 256.8 245.0 4.8 % 4.3 % Total 611.7 616.6
(0.8 %) (0.5 %) CRM US
9.9 15.5 (36.0 %) (36.0 %) Europe 197.2 198.6 (0.7 %) 0.1 % Rest of
World 41.9 46.4 (9.7 %) (14.7 %) Total 249.1 260.5
(4.4
%) (4.7 %) Neuromodulation US
298.5 268.8 11.0 % 11.0 % Europe 31.9 35.2 (9.2 %) (4.9 %) Rest of
World 21.0 20.3 3.3 % 3.6 % Total 351.4 324.3
8.3 %
8.8 % Other US — — N/A N/A Europe 0.1
0.3
N/A
N/A Rest of World 1.6 2.9 (44.1 %) (41.1 %) Total 1.7 3.2
(45.4
%)
(42.6
%)
Total US 490.5 471.2 4.1 % 4.1 % Europe 402.1 418.8
(4.0 %) (2.5 %) Rest of World 321.4 314.6 2.1 % 1.0 % Total
$1,213.9 $1,204.6 0.8 % 1.0
% * The sales results presented are unaudited.
Numbers may not add due to rounding.
LIVANOVA PLC AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
INCOME (LOSS) U.S. dollars in millions, except per share
amounts
Three Months EndedDecember 31,
2016
Net sales $310.6 Cost of sales 111.3 Product remediation 35.3
Gross Profit 164.0 Operating expenses Selling,
general and administrative 123.5 Research and development 28.4
Merger and integration expense — Restructuring expense 18.7
Amortization of intangibles 11.6 Goodwill Impairment 18.3
Total operating expenses 200.5 Income (loss) from
operations (36.5
)
Interest income (expense), net (3.4 ) Foreign exchange and
other - gain (loss) 3.5 Income (loss) before income taxes
(36.3 ) Loss from equity method investments (3.2 ) Income
tax expense (benefit)
(9.8
)
Net (loss) income
($29.8
)
Earnings (Loss) Per Common Share: Basic
($0.61
)
Diluted
($0.61
)
Weighted Average Common Shares Outstanding Basic 48.5
Diluted 48.5 Adjusted Gross Profit (1) $200.1 Adjusted
SG&A (1) $115.0 Adjusted R&D (1) $28.0 Adjusted Income from
Operations (1) $57.1 Adjusted Net Income (1) $41.5 Adjusted Diluted
Earnings Per Share (1) $0.85
Statistics (as a % of net
sales, except for income tax rate)
GAAP ThreeMonths
EndedDecember 31,
Adjusted (1) Three Months
EndedDecember 31,
2016 2016 2015 Gross Profit 52.8 % 64.4 %
61.9 % SG&A 39.8 % 37.0 % 36.8 % R&D 9.1 % 9.0 %
11.1 % Income (loss) from Operations (11.7 %) 18.4 % 14.0 % Net
(loss) income (9.6 %) 13.4 % n/a Income Tax Rate (26.9
%)
21.0 % n/a
(1)
Adjusted financial measures are Non-GAAP
measures and exclude specified items as described and reconciled to
compare GAAP financial measures in the Reconciliation of GAAP to
non-GAAP Financial Measures contained in the press release.
*
Numbers may not add due to rounding. n/a
is not applicable; there is no applicable adjusted net income or
tax rate reported for 4Q15.
LIVANOVA PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (LOSS) U.S. dollars in
millions, except per share amounts
Twelve Months EndedDecember 31,
2016
Net sales $1,213.9 Cost of sales 472.0 Product remediation 37.5
Gross Profit 704.4 Operating expenses Selling,
general and administrative 469.2 Research and development 122.5
Merger and integration expense 20.5 Restructuring expense 55.9
Amortization of intangibles 45.5 Goodwill impairment 18.3
Total operating expenses 732.0 Income (loss) from
operations (27.6 ) Interest income (expense), net (8.9 )
Foreign exchange and other - gain (loss) 3.5 Income (loss)
before income taxes (33.0 ) Loss from equity method
investments (22.6 ) Income tax expense (benefit) 7.1 Net
(loss) income
($62.8
)
Earnings (Loss) Per Common Share: Basic
($1.29
)
Diluted
($1.29
)
Weighted Average Common Shares Outstanding Basic 48.9
Diluted 48.9 Adjusted Gross Profit (1) $784.6 Adjusted
SG&A (1) $445.5 Adjusted R&D (1) $120.5 Adjusted Income
from Operations (1) $218.6 Adjusted Net Income (1)
$149.3
Adjusted Diluted Earnings Per Share (1) $3.05
Statistics
(as a % of net sales, except for income tax rate)
GAAP TwelveMonths
EndedDecember 31,
Adjusted (1) Twelve Months
EndedDecember 31,
2016 2016 2015 Gross Profit 58.0 % 64.6 %
63.1 % SG&A 38.7 % 36.7 % 36.9 % R&D 10.1 % 9.9 %
11.9 % Income (loss) from Operations (2.3 %) 18.0 % 14.3 % Net
(loss) income (5.2 %)
12.3
% n/a Income Tax Rate 21.6 % 24.9 % n/a
(1)
Adjusted financial measures are Non-GAAP
measures and exclude specified items as described and reconciled to
compare GAAP financial measures in the Reconciliation of GAAP to
non-GAAP Financial Measures contained in the press release.
*
Numbers may not add due to rounding. n/a
is not applicable; there is no applicable adjusted net income or
tax rate reported for FY15.
LIVANOVA PLC AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
U.S. dollars in millions, except per share amounts
Three Months Ended December 31, 2016 Sales
Gross Profit
Income FromOperations
Net Income(Loss)
Diluted EPS GAAP Financial Measures $310.6
$164.0
($36.5
)
($29.8
)
($0.61
)
Specified Items Merger and integration expense (A) —
— — — Restructuring expense (B) — 18.7 12.1 0.25 Amortization of
intangible assets (C) 0.9 12.9 13.4 0.27 Impairment of goodwill (D)
— 18.3 18.3 0.38 3T product remediation (E) 35.3 35.3 23.8 0.49
Other Income Expenses & Litigations (F) — 4.3 3.6 0.07 Impact
of inventory step-up (G) — — — — Equity compensation (H) (0.1
)
4.0 1.7 0.03 Certain tax adjustments (I) —
— (1.6
)
(0.03
)
Adjusted financial measures $310.6 $200.1
$57.1 $41.5 $0.85
GAAP
results for the three months ended December 31, 2016 include:
(A) Expenses related to merger and integration activities (B)
Corporate-related severance, shared-service synergies and recent
organizational changes (C) Amortization expense associated with
intangible assets recorded at fair value in purchase accounting (D)
Impairment of CRM segment goodwill (E) Costs related to the 3T
Heater-Cooler Remediation Plan (F) Cost of $2.6M related to the
reassessment of earn-out provisions for two legacy distributor
acquisitions; $0.7M related to a provision for a tax penalty for
previous years under audit in a foreign jurisdiction (G) Includes
amortization of inventory step-up associated with purchase
accounting (H) Includes $4.0M related to SG&A, $0.1M related to
R&D, and $0.1M related to Cost of Sales (I) Relates to the
impact of restructuring initiatives, including IP migration
Twelve Months Ended December 31, 2016 Sales
Gross Profit
Income FromOperations
Net Income(Loss)
Diluted EPS GAAP Financial Measures $1,213.9 $704.4
($27.6
)
($62.8
)
($1.29
)
Specified Items Merger and integration expense (A) — 20.5 14.6 0.30
Restructuring expense (B) — 55.9 45.5 0.93 Amortization of
intangible assets (C) 6.8 52.4 42.5 0.87 Impairment of goodwill (D)
— 18.3 18.3 0.37 3T product remediation (E) 37.5 37.5 24.8 0.51
Other Income Expenses & Litigations (F) — 6.9 4.7 0.10
Write-off of investment in minorities (G) — — 9.2 0.19 Impact of
inventory step-up (H) 35.2 35.2 26.3 0.54 Equity compensation (I)
0.7 19.3 14.5 0.30 Certain tax adjustments (J) —
— 11.4
0.23 Adjusted financial measures $1,213.9
$784.6 $218.6 $149.3
$3.05
GAAP results for the twelve months ended
December 31, 2016 include: (A) Expenses related to merger and
integration activities (B) CRM restructuring announced March 10,
2016, corporate-related severance, shared-service synergies and
recent organizational changes (C) Amortization expense associated
with intangible assets recorded at fair value in purchase
accounting (D) Impairment of CRM segment goodwill (E) Costs related
to the 3T Heater-Cooler Remediation Plan (F)
Includes a gain recognized for the
reimbursement of $4.7M of earthquake damages incurred in Mirandola
(Italy) in 2012; $5.0M for the reserve of certain receivables from
a Greece distributor; $2.6M related to the reassessment of earn-out
provisions for two legacy distributor acquisitions; $0.8M related
litigation settlements with two independent sales agent; $0.7M
related to accruals for tax penalties related to previous years;
$2.5M related to other litigation
(G) $9.2M related to the impairment of a purchase option for
Respicardia (H) Includes amortization of inventory step-up
associated with purchase accounting (I) Includes $17.7M related to
SG&A, $0.9M related to R&D, and $0.7M related to Cost of
Sales (J) Relates to the impact of restructuring initiatives,
including IP migration
LIVANOVA PLC AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in millions December 31,
2016 December 31, 2015 ASSETS (Unaudited)
Current Assets: Cash and cash equivalents $39.8 $112.6
Short-term investments — 7.0 Accounts receivable, net 275.7 272.4
Inventories 183.5 212.4 Prepaid and refundable income taxes 60.6
42.4 Prepaid expenses and other current assets 60.5 26.6 Total
Current Assets 620.1 673.4 Property, plant and equipment, net 223.8
244.6 Goodwill 691.7 745.4 Intangible assets, net 609.2 658.9
Investments 61.1 77.5 Deferred tax assets net 6.0 153.5 Other
assets 130.7 5.4 Total Assets $2,342.6 $2,558.7
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities:
Current debt obligations $47.7 $82.5 Accounts payable 93.0 109.6
Accrued liabilities 75.6 63.0 Income taxes payable 22.3 26.7
Accrued employee compensation and related benefits liability 78.3
77.3 Total Current Liabilities 316.8 359.1 Long-term debt
obligations 75.2 91.8 Deferred income taxes liability 172.5 235.5
Long-term employee compensation and related benefits liability 31.7
31.1 Other long-term liabilities 39.5 29.7 Total Liabilities 635.7
747.3 Total Stockholders’ Equity 1,706.9 1,811.5 Total Liabilities
and Stockholders’ Equity $2,342.6 $2,558.7
* Numbers may not add due to rounding.
LIVANOVA PLC AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW U.S. dollars in
millions (Unaudited)
Twelve Months EndedDecember
31st, 2016
Cash Flows from Operating Activities: Net (loss) Income
($62.8
)
Non-cash items included in net (loss)
income:
Depreciation 39.9 Amortization 45.5 Stock-based compensation 19.6
Amortization of prepaid income taxes on intercompany transfers 26.0
Deferred income tax (benefit) expense (26.7 ) Impairment of
goodwill 18.3 Impairment of property, plant and equipment 6.0 Loss
from equity method investments 22.6 Other 10.2 Changes in operating
assets and liabilities: Accounts receivable, net (16.4 )
Inventories 26.7 Other current and non-current assets (32.7 )
Restructuring reserve 12.4 Accounts payable and accrued current and
non-current liabilities 1.6
Net cash provided by
operating activities 90.2 Cash Flow
from Investing Activities: Purchase of short-term investments
(7.1 ) Maturities of short-term investments 14.1 Purchase of
property, plant and equipment (35.3 ) Intangible assets purchases
(1.9 ) Purchase of Equity and Cost Method Investments (8.0 )
Net
cash used in investing activities (38.2 )
Cash Flow From Financing Activities: Short-term borrowing
(repayments) borrowing, net (33.7 ) Proceeds from long term debt
obligations 7.2 Repayment of long-term debt obligations (21.1 )
Repayment of trade receivable advances (23.8 ) Loans to equity
method investees (6.3 ) Proceeds from exercise of options for stock
8.3 Realized excess tax benefits - stock based compensation 2.1
Share repurchases (54.5 ) Cash settlement of compensation-based
stock units (2.7 ) Other financial assets and liabilities 0.1
Net cash used in financing activities (124.3
) Effect of exchange rate changes on cash and cash
equivalents (0.4 )
Net decrease in cash and cash equivalents
(72.8 ) Cash and cash equivalents at beginning
of period 112.6
Cash and cash equivalents at end of
period $39.8
* Numbers may not add due to rounding.
Supplementary disclosure of Cash Flow Information: Cash paid
for interest 7.4 Cash paid for income taxes 47.8
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170301005634/en/
LivaNova PLC Investor Relations and MediaKaren
King, +1 281-228-7262Vice President, Investor Relations &
Corporate CommunicationsCorporate.Communications@LivaNova.comFax:
+1 281-218-9332
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