LivaNova PLC (Nasdaq: LIVN), a market-leading medical technology company, today reported results for the quarter ended September 30, 2024 and raised full-year 2024 guidance.
Financial Summary and Highlights(1)
- Third-quarter revenue of $318.1 million increased 11.2% on both a reported and constant-currency basis, as compared to the prior-year period. Excluding the impact of the Advanced Circulatory Support (ACS) segment wind down, revenue increased 12.3% on a constant-currency basis.
- Third-quarter U.S. GAAP diluted earnings per share of $0.60 and adjusted diluted earnings per share of $0.90.
- In October 2024, LivaNova announced the appointment of Susan Podlogar to the Board. Podlogar serves on the Compensation and Human Capital Management Committee.
"LivaNova delivered strong revenue and operating income growth in the third quarter," said Vladimir Makatsaria, Chief Executive Officer of LivaNova. "This performance reflects the strength of our team's ongoing execution and steadfast commitment to serving customers and their patients. We look forward to building on this momentum in the fourth quarter and in 2025, driven by our continued focus on performance, innovation, and talent."
| ____________________ |
(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. |
Third-Quarter 2024 Results
The following table summarizes revenue by segment (in millions):
Three Months Ended September 30, | % Change | Constant-
% Change | |||||||
2024 | 2023 | ||||||||
Cardiopulmonary | $172.2 | $149.0 | 15.6 | 15.4 | |||||
Neuromodulation | 139.9 | 128.9 | 8.5 | 8.8 | |||||
Other (1) | 6.0 | 8.3 | (27.3) | (27.5) | |||||
Total Net Revenue | 318.1 | 286.1 | 11.2 | 11.2 | |||||
Less: ACS (2) | 4.4 | 6.8 | (35.2) | N/A | |||||
Total Net Revenue, Excluding ACS | $313.7 | $279.3 | 12.3 | 12.3 | |||||
(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. | |
| ||
Cardiopulmonary revenue increased 15.6% on a reported basis and 15.4% on a constant-currency basis versus the third quarter of 2023 with growth across all regions, driven by EssenzPerfusion System sales and strong consumables demand.
Neuromodulation revenue increased 8.5% on a reported basis and 8.8% on a constant-currency basis versus the third quarter of 2023 with growth in the U.S. and Rest of World regions, partially offset by a decline in Europe.
Earnings Analysis
On a U.S. GAAP basis, third-quarter 2024 operating income was $35.6 million, as compared to operating income of $4.5 million for the third quarter of 2023. Adjusted operating income for the third quarter of 2024 was $63.6 million, as compared to adjusted operating income of $45.0 million for the third quarter of 2023.
On a U.S. GAAP basis, third-quarter 2024 diluted earnings per share was $0.60, as compared to diluted loss per share of $0.14 in the third quarter of 2023. Third-quarter 2024 adjusted diluted earnings per share was $0.90, as compared to adjusted diluted earnings per share of $0.73 in the third quarter of 2023.
Full-Year 2024 Guidance
LivaNova now expects revenue for full-year 2024 to grow between 8.5% and 9.5% 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 10% and 11% on a constant-currency basis. Foreign currency is now expected to be negligible based on current exchange rates.
Adjusted diluted earnings per share for 2024 is now expected to be in the range of $3.30 to $3.40, assuming a share count of approximately 55 million for full-year 2024. For 2024, the Company now estimates that adjusted free cash flow will be in the range of $110 to $130 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 12 p.m. London time (8 a.m. Eastern Time) on Wednesday, October 30, 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 881946. 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, forward-looking statements can be identified 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 invasion of Ukraine, 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; the risk of quality issues and the impacts thereof; risks relating to recalls, replacement of inventory, 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 lawsuits and governmental investigations, including in the case of the Company's 3T Heater-Cooler and SNIA environmental 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 environmental, social, and governance pressures from internal and external stakeholders; 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.
VNS Therapy and Essenz are trademarks of LivaNova USA, Inc.
LIVANOVA PLC | |||||||||
NET REVENUE UNAUDITED | |||||||||
(U.S. dollars in millions) | |||||||||
Three Months Ended September 30, | |||||||||
2024 | 2023 | % Change | Constant-Currency
| ||||||
Cardiopulmonary | |||||||||
U.S. | $62.5 | $52.3 | 19.6 | 19.6 | |||||
Europe (1) | 40.9 | 35.5 | 15.2 | 13.4 | |||||
Rest of World | 68.8 | 61.2 | 12.5 | 13.0 | |||||
172.2 | 149.0 | 15.6 | 15.4 | ||||||
Neuromodulation | |||||||||
U.S. | 112.9 | 102.5 | 10.2 | 10.2 | |||||
Europe (1) | 11.9 | 12.7 | (5.8) | (7.7) | |||||
Rest of World | 15.0 | 13.7 | 9.4 | 13.6 | |||||
139.9 | 128.9 | 8.5 | 8.8 | ||||||
Other Revenue (2) | 6.0 | 8.3 | (27.3) | (27.5) | |||||
Totals | |||||||||
U.S. | 179.8 | 161.6 | 11.3 | 11.3 | |||||
Europe (1) | 52.8 | 48.1 | 9.7 | 7.9 | |||||
Rest of World | 85.5 | 76.4 | 11.9 | 13.0 | |||||
$318.1 | $286.1 | 11.2 | 11.2 | ||||||
(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 |
LIVANOVA PLC | |||||||||
NET REVENUE UNAUDITED | |||||||||
(U.S. dollars in millions) | |||||||||
Nine Months Ended September 30, | |||||||||
2024 | 2023 | % Change | Constant-Currency Change | ||||||
Cardiopulmonary | |||||||||
U.S. | $178.0 | $141.9 | 25.4 | 25.4 | |||||
Europe (1) | 120.4 | 111.2 | 8.3 | 7.2 | |||||
Rest of World | 203.5 | 185.7 | 9.6 | 12.1 | |||||
501.8 | 438.8 | 14.4 | 15.2 | ||||||
Neuromodulation | |||||||||
U.S. | 330.5 | 301.0 | 9.8 | 9.8 | |||||
Europe (1) | 40.9 | 41.1 | (0.4) | (1.6) | |||||
Rest of World | 45.2 | 40.7 | 11.0 | 15.3 | |||||
416.6 | 382.8 | 8.8 | 9.2 | ||||||
Other Revenue (2) | 13.2 | 21.8 | (39.7) | (39.8) | |||||
Totals | |||||||||
U.S. | 520.0 | 461.8 | 12.6 | 12.6 | |||||
Europe (1) | 158.4 | 152.2 | 4.1 | 2.9 | |||||
Rest of World | 253.2 | 229.4 | 10.4 | 13.2 | |||||
$931.6 | $843.4 | 10.5 | 11.0 | ||||||
(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 September 30, | ||||
2024 | 2023 | |||
Net revenue | $318.1 | $286.1 | ||
Cost of sales | 92.9 | 84.3 | ||
Gross profit | 225.3 | 201.8 | ||
Operating expenses: | ||||
Selling, general, and administrative | 131.7 | 134.8 | ||
Research and development | 48.8 | 46.5 | ||
Other operating expense | 9.2 | 16.0 | ||
Operating income | 35.6 | 4.5 | ||
Interest expense | (15.9) | (15.0) | ||
Foreign exchange and other income/(expense) | 24.7 | 8.6 | ||
Income (loss) before tax | 44.4 | (2.0) | ||
Income tax expense | 11.5 | 5.3 | ||
Net income (loss) | $33.0 | ($7.3) | ||
Basic income (loss) per share | $0.61 | ($0.14) | ||
Diluted income (loss) per share | $0.60 | ($0.14) | ||
Weighted average common shares outstanding: | ||||
Basic | 54.4 | 54.0 | ||
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 September 30, | |||||
2024 | 2023 | ||||
Adjusted SG&A | $116.1 | $114.7 | |||
Adjusted R&D | 46.8 | 42.0 | |||
Adjusted operating income | 63.6 | 45.0 | |||
Adjusted net income | 49.3 | 39.5 | |||
Adjusted diluted earnings per share | $0.90 | $0.73 | |||
Statistics (as a of net revenue, except for income tax rate) Unaudited
GAAP Three Months Ended September 30, | Adjusted Three Months Ended September 30, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||
Gross profit | 70.8 | 70.5 | 71.2 | 70.5 | |||||
SG&A | 41.4 | 47.1 | 36.5 | 40.1 | |||||
R&D | 15.3 | 16.3 | 14.7 | 14.7 | |||||
Operating income | 11.2 | 1.6 | 20.0 | 15.7 | |||||
Net income (loss) | 10.4 | (2.6) | 15.5 | 13.8 | |||||
Income tax rate | 25.9 | (268.4) | 22.5 | 10.4 | |||||
LIVANOVA PLC AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNAUDITED | ||||
(U.S. dollars in millions, except per share amounts) | ||||
Nine Months Ended September 30, | ||||
2024 | 2023 | |||
Net revenue | $931.6 | $843.4 | ||
Cost of sales | 280.1 | 262.3 | ||
Gross profit | 651.5 | 581.1 | ||
Operating expenses: | ||||
Selling, general, and administrative | 390.6 | 384.8 | ||
Research and development | 139.2 | 147.7 | ||
Other operating expense | 29.6 | 29.1 | ||
Operating income | 92.0 | 19.5 | ||
Interest expense | (47.3) | (43.2) | ||
Loss on debt extinguishment | (25.5) | |||
Foreign exchange and other income/(expense) | 12.6 | 36.8 | ||
Income before tax | 31.8 | 13.1 | ||
Income tax expense | 24.5 | 11.8 | ||
Loss from equity method investments | (0.1) | |||
Net income | $7.3 | $1.2 | ||
Basic income per share | $0.14 | $0.02 | ||
Diluted income per share | $0.13 | $0.02 | ||
Weighted average common shares outstanding: | ||||
Basic | 54.2 | 53.8 | ||
Diluted | 54.5 | 54.1 | ||
Numbers may not add precisely due to rounding. |
Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) Unaudited
Nine Months Ended September 30, | |||||
2024 | 2023 | ||||
Adjusted SG&A | $342.1 | $336.1 | |||
Adjusted R&D | 130.9 | 136.1 | |||
Adjusted operating income | 183.6 | 121.3 | |||
Adjusted net income | 140.1 | 104.7 | |||
Adjusted diluted earnings per share | $2.57 | $1.94 | |||
Statistics (as a of net revenue, except for income tax rate) Unaudited
GAAP Nine Months Ended September 30, | Adjusted Nine Months Ended September 30, | ||||||||
2024 | 2023 | 2024 | 2023 | ||||||
Gross profit | 69.9 | 68.9 | 70.5 | 70.4 | |||||
SG&A | 41.9 | 45.6 | 36.7 | 39.8 | |||||
R&D | 14.9 | 17.5 | 14.0 | 16.1 | |||||
Operating income | 9.9 | 2.3 | 19.7 | 14.4 | |||||
Net income | 0.8 | 0.1 | 15.0 | 12.4 | |||||
Income tax rate | 76.9 | 90.1 | 21.4 | 9.1 | |||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES UNAUDITED (U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||
Specified Items | ||||||||||||||||||||
Three Months Ended September 30, 2024 | GAAP Financial Measures | Restructuring Expenses (1) | Depreciation and Amortization Expenses (2) | Financing Transactions (3) | Contingent Consideration (4) | Certain Legal Regulatory Costs (5) | Stock-based Compensation Costs (6) | Certain Tax Adjustments (7) | Certain Interest Adjustments (8) | Adjusted Financial Measures | ||||||||||
Cost of sales | $92.9 | ($1.8 | $0.2 | $0.7 | ($0.4 | $91.7 | ||||||||||||||
Gross profit percent | 70.8 | 0.6 | (0.1 | (0.2 | 0.1 | 71.2 | ||||||||||||||
Selling, general, and administrative | 131.7 | (2.6 | (6.3 | (6.6 | 116.1 | |||||||||||||||
Selling, general, and administrative as a percent of net revenue | 41.4 | (0.8 | (2.0 | (2.1 | 36.5 | |||||||||||||||
Research and development | 48.8 | (0.3 | (0.3 | (1.5 | 46.8 | |||||||||||||||
Research and development as a percent of net revenue | 15.3 | (0.1 | (0.1 | (0.5 | 14.7 | |||||||||||||||
Other operating expense | 9.2 | (1.5 | (7.7 | |||||||||||||||||
Operating income | 35.6 | 1.5 | 4.4 | 0.1 | 13.5 | 8.6 | 63.6 | |||||||||||||
Operating margin percent | 11.2 | 0.5 | 1.4 | 4.2 | 2.7 | 20.0 | ||||||||||||||
Net income | 33.0 | 1.5 | 4.4 | (17.1 | 0.1 | 13.5 | 8.6 | (2.7 | 8.3 | 49.3 | ||||||||||
Net income as a percent of net revenue | 10.4 | 0.5 | 1.4 | (5.4 | 4.2 | 2.7 | (0.9 | 2.6 | 15.5 | |||||||||||
Diluted EPS | $0.60 | $0.03 | $0.08 | ($0.31 | $0.25 | $0.16 | ($0.05 | $0.15 | $0.90 | |||||||||||
GAAP results for the three months ended September 30, 2024 include:
(1) | Restructuring expenses related to organizational changes | |
(2) | Depreciation and amortization associated with purchase price accounting | |
(3) | Mark-to-market adjustments for the 2025 and 2029 Notes embedded and capped call derivatives | |
(4) | Remeasurement of contingent consideration related to the ImThera acquisition | |
(5) | Legal expenses primarily related to 3T Heater-Cooler defense, cybersecurity incident costs, 3T Heater-Cooler litigation provision, and Medical Device Regulation ("MDR") costs | |
(6) | Non-cash expenses associated with stock-based compensation costs | |
(7) | The impact of valuation allowances, discrete tax items, the tax impact of intercompany transactions, and the tax impact on non-GAAP adjustments | |
(8) | 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 September 30, 2023 | GAAP Financial Measures | Restructuring Expenses (1) | Depreciation and Amortization Expenses (2) | Financing Transactions (3) | Contingent Consideration (4) | Certain Legal Regulatory Costs (5) | Stock-based Compensation Costs (6) | Certain Tax Adjustments (7) | Certain Interest Adjustments (8) | Adjusted Financial Measures | ||||||||||
Cost of sales | $84.3 | ($3.7 | $4.2 | ($0.3 | $84.4 | |||||||||||||||
Gross profit percent | 70.5 | 1.3 | (1.5 | 0.1 | 70.5 | |||||||||||||||
Selling, general, and administrative | 134.8 | (2.9 | (7.9 | (9.3 | 114.7 | |||||||||||||||
Selling, general, and administrative as a percent of net revenue | 47.1 | (1.0 | (2.8 | (3.2 | 40.1 | |||||||||||||||
Research and development | 46.5 | (1.4 | (1.0 | (2.2 | 42.0 | |||||||||||||||
Research and development as a percent of net revenue | 16.3 | (0.5 | (0.4 | (0.8 | 14.7 | |||||||||||||||
Other operating expense | 16.0 | (0.1 | (15.9 | |||||||||||||||||
Operating income | 4.5 | 0.1 | 6.6 | (2.8 | 24.8 | 11.8 | 45.0 | |||||||||||||
Operating margin percent | 1.6 | 2.3 | (1.0 | 8.7 | 4.1 | 15.7 | ||||||||||||||
Net (loss) income | (7.3 | 0.1 | 6.6 | (2.0 | (2.8 | 24.8 | 11.8 | 0.7 | 7.6 | 39.5 | ||||||||||
Net (loss) income as a percent of net revenue | (2.6 | 2.3 | (0.7 | (1.0 | 8.7 | 4.1 | 0.3 | 2.6 | 13.8 | |||||||||||
Diluted EPS | ($0.14 | $0.12 | ($0.04 | ($0.05 | $0.46 | $0.22 | $0.01 | $0.14 | $0.73 | |||||||||||
GAAP results for the three months ended September 30, 2023 include:
(1) | Restructuring expenses related to organizational changes | |
(2) | Depreciation and amortization associated with purchase price accounting | |
(3) | Mark-to-market adjustment for the embedded and capped call derivatives associated with the 2025 Notes | |
(4) | Remeasurement of contingent consideration related to acquisitions | |
(5) | 3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, the Saluggia site provision, costs related to the SNIA matter, and MDR costs | |
(6) | Non-cash expenses associated with stock-based compensation costs | |
(7) | Discrete tax items, R&D tax credits, the tax impact of intercompany transactions, and the tax impact on non-GAAP adjustments | |
(8) | 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 | ||||||||||||||||||||||
Nine Months Ended September 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 | $280.1 | ($5.2 | $0.3 | $0.7 | ($0.9 | $275.1 | ||||||||||||||||
Gross profit percent | 69.9 | 0.6 | (0.1 | 0.1 | 70.5 | |||||||||||||||||
Selling, general, and administrative | 390.6 | (7.9 | (20.1 | (20.6 | 342.1 | |||||||||||||||||
Selling, general, and administrative as a percent of net revenue | 41.9 | (0.8 | (2.2 | (2.2 | 36.7 | |||||||||||||||||
Research and development | 139.2 | 0.1 | (0.7 | (2.3 | (5.5 | 130.9 | ||||||||||||||||
Research and development as a percent of net revenue | 14.9 | (0.1 | (0.2 | (0.6 | 14.0 | |||||||||||||||||
Other operating expense | 29.6 | (12.8 | (16.8 | |||||||||||||||||||
Operating income | 92.0 | 12.8 | 12.9 | 0.3 | 38.4 | 27.0 | 183.6 | |||||||||||||||
Operating margin percent | 9.9 | 1.4 | 1.4 | 4.1 | 2.9 | 19.7 | ||||||||||||||||
Net income | 7.3 | 12.8 | 12.9 | 5.8 | 25.7 | 0.3 | 38.4 | 27.0 | (13.7 | 23.5 | 140.1 | |||||||||||
Net income as a percent of net revenue | 0.8 | 1.4 | 1.4 | 0.6 | 2.8 | 4.1 | 2.9 | (1.5 | 2.5 | 15.0 | ||||||||||||
Diluted EPS | $0.13 | $0.24 | $0.24 | $0.11 | $0.47 | $0.01 | $0.70 | $0.49 | ($0.25 | $0.43 | $2.57 | |||||||||||
GAAP results for the nine months ended September 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 and capped call derivatives | |
(5) | Remeasurement of contingent consideration related to the 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 | ||||||||||||||||||||||
Nine Months Ended September 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 | $262.3 | ($11.1 | ($0.4 | ($0.8 | $250.0 | |||||||||||||||||
Gross profit percent | 68.9 | 1.3 | 0.1 | 0.1 | 70.4 | |||||||||||||||||
Selling, general, and administrative | 384.8 | (8.6 | (17.7 | (22.4 | 336.1 | |||||||||||||||||
Selling, general, and administrative as a percent of net revenue | 45.6 | (1.0 | (2.1 | (2.7 | 39.8 | |||||||||||||||||
Research and development | 147.7 | 0.1 | (4.1 | (2.7 | (4.9 | 136.1 | ||||||||||||||||
Research and development as a percent of net revenue | 17.5 | (0.5 | (0.3 | (0.6 | 16.1 | |||||||||||||||||
Other operating expense | 29.1 | (0.1 | (1.1 | (28.0 | ||||||||||||||||||
Operating income | 19.5 | 0.1 | 1.1 | 19.6 | 4.5 | 48.5 | 28.1 | 121.3 | ||||||||||||||
Operating margin percent | 2.3 | 0.1 | 2.3 | 0.5 | 5.7 | 3.3 | 14.4 | |||||||||||||||
Net income | 1.2 | 0.1 | 1.1 | 19.6 | (21.7 | 4.5 | 48.5 | 28.1 | 1.3 | 22.2 | 104.7 | |||||||||||
Net income as a percent of net revenue | 0.1 | 0.1 | 2.3 | (2.6 | 0.5 | 5.7 | 3.3 | 0.1 | 2.6 | 12.4 | ||||||||||||
Diluted EPS | $0.02 | $0.02 | $0.36 | ($0.40 | $0.08 | $0.90 | $0.52 | $0.02 | $0.41 | $1.94 | ||||||||||||
GAAP results for the nine months ended September 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 embedded and capped call derivatives associated with the 2025 Notes | |
(5) | Remeasurement of contingent consideration related to acquisitions | |
(6) | 3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, the Saluggia site provision, 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) | ||||
September 30, 2024 | December 31, 2023 | |||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $346.4 | $266.5 | ||
Restricted cash | 320.2 | 311.4 | ||
Accounts receivable, net of allowance | 197.2 | 215.1 | ||
Inventories | 162.3 | 147.9 | ||
Prepaid and refundable taxes | 23.9 | 20.1 | ||
Prepaid expenses and other current assets | 43.3 | 27.2 | ||
Total Current Assets | 1,093.1 | 988.2 | ||
Property, plant, and equipment, net | 169.3 | 154.2 | ||
Goodwill | 781.6 | 782.9 | ||
Intangible assets, net | 248.5 | 261.2 | ||
Operating lease assets | 51.6 | 50.8 | ||
Investments | 18.1 | 22.8 | ||
Deferred tax assets | 110.0 | 118.9 | ||
Long-term derivative assets | 35.4 | 38.5 | ||
Other assets | 14.4 | 12.1 | ||
Total Assets | $2,522.0 | $2,429.6 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities: | ||||
Current debt obligations | $22.0 | $18.1 | ||
Accounts payable | 77.9 | 80.8 | ||
Accrued liabilities and other | 104.5 | 107.3 | ||
Current litigation provision liability | 16.1 | 10.8 | ||
Taxes payable | 26.5 | 23.3 | ||
Accrued employee compensation and related benefits | 77.4 | 94.6 | ||
Total Current Liabilities | 324.4 | 335.0 | ||
Long-term debt obligations | 604.3 | 568.5 | ||
Contingent consideration | 81.2 | 80.9 | ||
Deferred tax liabilities | 11.8 | 11.6 | ||
Long-term operating lease liabilities | 44.1 | 45.4 | ||
Long-term employee compensation and related benefits | 14.9 | 17.3 | ||
Long-term derivative liabilities | 84.2 | 45.6 | ||
Other long-term liabilities | 47.0 | 47.7 | ||
Total Liabilities | 1,211.9 | 1,151.9 | ||
Total Stockholders' Equity | 1,310.0 | 1,277.6 | ||
Total Liabilities and Stockholders' Equity | $2,522.0 | $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) | Nine Months Ended September 30, | |||
2024 | 2023 | |||
Operating Activities: | ||||
Net income | $7.3 | $1.2 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Stock-based compensation | 27.0 | 28.1 | ||
Loss on debt extinguishment | 25.5 | |||
Depreciation | 18.7 | 18.6 | ||
Amortization of debt issuance costs | 15.7 | 14.2 | ||
Amortization of intangible assets | 13.0 | 19.1 | ||
Deferred income tax expense | 9.1 | 1.9 | ||
Amortization of operating lease assets | 6.9 | 7.3 | ||
Impairment of investments | 5.8 | |||
Remeasurement of derivative instruments | 0.4 | (25.7) | ||
Remeasurement of contingent consideration to fair value | 0.3 | 4.5 | ||
Other | 1.5 | 0.6 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | 17.4 | (8.2) | ||
Inventories | (13.9) | (33.0) | ||
Other current and non-current assets | (14.8) | (3.0) | ||
Accounts payable and accrued current and non-current liabilities | (23.4) | (8.1) | ||
Taxes payable | 2.6 | 6.3 | ||
Litigation provision liability | 5.3 | (2.9) | ||
Net cash provided by operating activities | 104.3 | 21.0 | ||
Investing Activities: | ||||
Purchases of property, plant, and equipment | (36.7) | (22.1) | ||
Purchase of investments | (0.8) | (6.6) | ||
Other | 0.1 | 0.4 | ||
Net cash used in investing activities | (37.5) | (28.2) | ||
Financing Activities: | ||||
Proceeds from long-term debt obligations | 335.5 | 50.0 | ||
Repayment of long-term debt obligations | (243.2) | (16.1) | ||
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) | (7.0) | ||
Payment of debt issuance costs | (5.9) | |||
Proceeds from exercise of stock options | 5.0 | |||
Repayments of short-term borrowings (maturities greater than 90 days) | (1.9) | |||
Other | 0.4 | 1.4 | ||
Net cash provided by financing activities | 22.0 | 26.5 | ||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (0.2) | (2.2) | ||
Net increase in cash, cash equivalents, and restricted cash | 88.7 | 17.1 | ||
Cash, cash equivalents, and restricted cash at beginning of period | 577.9 | 515.6 | ||
Cash, cash equivalents, and restricted cash at end of period | $666.6 | $532.7 | ||
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 September 30, | |||||||||||||
2024 | 2023 | ||||||||||||
GAAP Financial Measures | Certain Tax Adjustments | Adjusted Financial Measures | GAAP Financial Measures | Certain Tax Adjustments | Adjusted Financial Measures | ||||||||
Income (loss) before tax | $44.4 | $63.6 | ($2.0) | $44.1 | |||||||||
Income tax expense | 11.5 | 2.7 | 14.3 | 5.3 | (0.7) | 4.6 | |||||||
Net income (loss) | $33.0 | ($2.7) | $49.3 | ($7.3) | $0.7 | $39.5 | |||||||
Income tax rate | 25.9 | 22.5 | (268.4) | 10.4 | |||||||||
Nine Months Ended September 30, | |||||||||||||
2024 | 2023 | ||||||||||||
GAAP Financial Measures | Certain Tax Adjustments | Adjusted Financial Measures | GAAP Financial Measures | Certain Tax Adjustments | Adjusted Financial Measures | ||||||||
Income before tax | $31.8 | $178.3 | $13.1 | $115.3 | |||||||||
Income tax expense | 24.5 | 13.7 | 38.1 | 11.8 | (1.3) | 10.5 | |||||||
Loss from equity method investments | (0.1) | (0.1) | |||||||||||
Net income | $7.3 | ($13.7) | $140.1 | $1.2 | $1.3 | $104.7 | |||||||
Income tax rate | 76.9 | 21.4 | 90.1 | 9.1 | |||||||||
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 September 30, | % Change | Constant-Currency Change | |||||||
2024 | 2023 | ||||||||
GAAP net revenue | $318.1 | $286.1 | 11.2 | 11.2 | |||||
Less: ACS (1) | 4.4 | 6.8 | (35.2) | N/A | |||||
Net revenue excluding ACS | $313.7 | $279.3 | 12.3 | 12.3 | |||||
Nine Months Ended September 30, | % Change | Constant-Currency Change | |||||||
2024 | 2023 | ||||||||
GAAP net revenue | $931.6 | $843.4 | 10.5 | 11.0 | |||||
Less: ACS (1) | 11.5 | 18.9 | (39.1) | N/A | |||||
Net revenue excluding ACS | $920.1 | $824.5 | 11.6 | 12.2 | |||||
(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) | |||
Three Months Ended | |||
GAAP diluted weighted average shares outstanding | 54.0 | ||
Add: Effects of stock-based compensation instruments | 0.3 | ||
Adjusted diluted weighted average shares outstanding | 54.3 | ||
Numbers may not add precisely due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241030433587/en/
Contacts:
Briana Gotlin
Director, Investor Relations
Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
