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 ofSusan Podlogar to the Board. Podlogar serves on theCompensation and Human Capital Management Committee .
"
____________________ |
(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
|
|
% Change |
|
Constant-
% Change |
||
|
|
|
2024 |
|
2023 |
|
|
||
Cardiopulmonary |
|
|
|
|
|
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 |
|
|
|
|
|
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 Essenz™Perfusion 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
Earnings Analysis
On a
On a
Full-Year 2024 Guidance
Adjusted diluted earnings per share for 2024 is now expected to be in the range of
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
About
Use of Non-GAAP Financial Measures
To supplement financial measures presented in accordance with generally accepted accounting principles in
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
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
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
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
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
VNS Therapy and Essenz are trademarks of
|
|||||||||
NET REVENUE - UNAUDITED |
|||||||||
( |
|||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
2024 |
|
2023 |
|
% Change |
|
Constant-Currency
|
Cardiopulmonary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.6 % |
|
19.6 % |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
112.9 |
|
102.5 |
|
10.2 % |
|
10.2 % |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
179.8 |
|
161.6 |
|
11.3 % |
|
11.3 % |
|
|
|
52.8 |
|
48.1 |
|
9.7 % |
|
7.9 % |
|
Rest of World |
|
85.5 |
|
76.4 |
|
11.9 % |
|
13.0 % |
|
|
|
|
|
|
|
11.2 % |
|
11.2 % |
(1) |
Includes countries in |
|
(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 |
|
|||||||||
NET REVENUE - UNAUDITED |
|||||||||
( |
|||||||||
|
|
|
Nine Months Ended |
||||||
|
|
|
2024 |
|
2023 |
|
% Change |
|
Constant-Currency % Change |
Cardiopulmonary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.4 % |
|
25.4 % |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
330.5 |
|
301.0 |
|
9.8 % |
|
9.8 % |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
520.0 |
|
461.8 |
|
12.6 % |
|
12.6 % |
|
|
|
158.4 |
|
152.2 |
|
4.1 % |
|
2.9 % |
|
Rest of World |
|
253.2 |
|
229.4 |
|
10.4 % |
|
13.2 % |
|
|
|
|
|
|
|
10.5 % |
|
11.0 % |
(1) |
Includes countries in |
|
(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 |
|
||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
||||
( |
||||
|
||||
|
|
Three Months Ended |
||
|
|
2024 |
|
2023 |
Net revenue |
|
|
|
|
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) |
|
|
|
( |
|
|
|
|
|
Basic income (loss) per share |
|
|
|
( |
Diluted income (loss) per share |
|
|
|
( |
|
|
|
|
|
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 (
|
|
|
Three Months Ended |
||
|
|
|
2024 |
|
2023 |
Adjusted SG&A |
|
|
|
|
|
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 |
|
|
|
|
Statistics (as a % of net revenue, except for income tax rate) - Unaudited
|
|
|
GAAP Three Months Ended
|
|
Adjusted Three Months Ended
|
||||
|
|
|
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 % |
|
|
|
||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
||||
( |
|
|
||
|
|
|
|
|
|
|
Nine Months Ended |
||
|
|
2024 |
|
2023 |
Net revenue |
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
Basic income per share |
|
|
|
|
Diluted income per share |
|
|
|
|
|
|
|
|
|
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 (
|
|
|
Nine Months Ended |
||
|
|
|
2024 |
|
2023 |
Adjusted SG&A |
|
|
|
|
|
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 |
|
|
|
|
Statistics (as a % of net revenue, except for income tax rate) - Unaudited
|
|
|
GAAP Nine Months Ended
|
|
Adjusted Nine Months Ended
|
||||
|
|
|
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
( |
||||||||||||||||||||
|
|
Specified Items |
|
|||||||||||||||||
Three Months Ended
|
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 |
|
|
$— |
|
( |
) |
$— |
|
|
|
|
|
( |
) |
$— |
|
$— |
|
|
|
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 |
|
|
|
|
|
|
( |
) |
$— |
|
|
|
|
|
( |
) |
|
|
|
|
GAAP results for the three months ended
(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
( |
|
|||||||||||||||||||
|
|
Specified Items |
|
|||||||||||||||||
Three Months Ended
|
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 |
|
|
$— |
|
( |
) |
$— |
|
|
|
$— |
|
( |
) |
$— |
|
$— |
|
|
|
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 |
( |
) |
$— |
|
|
|
( |
) |
( |
) |
|
|
|
|
|
|
|
|
|
|
GAAP results for the three months ended
(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
( |
||||||||||||||||||||||
|
|
Specified Items |
|
|||||||||||||||||||
Nine Months Ended
|
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 |
|
|
$— |
|
( |
) |
$— |
|
$— |
|
|
|
|
|
( |
) |
$— |
|
$— |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
GAAP results for the nine months ended
(1) |
Restructuring expenses related to organizational changes |
|
(2) |
Depreciation and amortization associated with purchase price accounting |
|
(3) |
Impairment of investment in |
|
(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
( |
|
|||||||||||||||||||||
|
|
Specified Items |
|
|||||||||||||||||||
Nine Months Ended
|
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 |
|
|
$— |
|
$— |
|
( |
) |
$— |
|
( |
) |
$— |
|
( |
) |
$— |
|
$— |
|
|
|
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 |
|
|
$— |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the nine months ended
(1) |
Merger and integration expenses related to the acquisition of |
|
(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. |
|
||||
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED |
||||
( |
||||
|
|
|
|
|
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
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 |
|
|
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 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Current debt obligations |
|
|
|
|
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 |
|
|
|
|
• |
Numbers may not add precisely due to rounding. |
|
|
|
||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED |
|
|
|
|
( |
|
Nine Months Ended |
||
|
|
2024 |
|
2023 |
Operating Activities: |
|
|
|
|
Net income |
|
|
|
|
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 |
|
|
|
|
• |
Numbers may not add precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED
( |
|||||||||||||
|
|
|
Three Months Ended |
||||||||||
|
|
|
2024 |
|
2023 |
||||||||
|
|
|
GAAP Financial Measures |
|
Certain Tax Adjustments |
|
Adjusted Financial Measures |
|
GAAP Financial Measures |
|
Certain Tax Adjustments |
|
Adjusted Financial Measures |
Income (loss) before tax |
|
|
|
$— |
|
|
|
( |
|
$— |
|
|
|
Income tax expense |
|
11.5 |
|
2.7 |
|
14.3 |
|
5.3 |
|
(0.7) |
|
4.6 |
|
Net income (loss) |
|
|
|
( |
|
|
|
( |
|
|
|
|
|
Income tax rate |
|
25.9 % |
|
|
|
22.5 % |
|
(268.4) % |
|
|
|
10.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||||
|
|
|
2024 |
|
2023 |
||||||||
|
|
|
GAAP Financial Measures |
|
Certain Tax Adjustments |
|
Adjusted Financial Measures |
|
GAAP Financial Measures |
|
Certain Tax Adjustments |
|
Adjusted Financial Measures |
Income before tax |
|
|
|
$— |
|
|
|
|
|
$— |
|
|
|
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 |
|
|
|
( |
|
|
|
|
|
|
|
|
|
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
( |
|||||||||
|
|
|
Three Months Ended |
|
% Change |
|
Constant-Currency % Change |
||
|
|
|
2024 |
|
2023 |
|
|
||
GAAP net revenue |
|
|
|
|
|
11.2 % |
|
11.2 % |
|
Less: ACS (1) |
|
4.4 |
|
6.8 |
|
(35.2) % |
|
N/A |
|
Net revenue excluding ACS |
|
|
|
|
|
12.3 % |
|
12.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
% Change |
|
Constant-Currency % Change |
||
|
|
|
2024 |
|
2023 |
|
|
||
GAAP net revenue |
|
|
|
|
|
10.5 % |
|
11.0 % |
|
Less: ACS (1) |
|
11.5 |
|
18.9 |
|
(39.1) % |
|
N/A |
|
Net revenue excluding ACS |
|
|
|
|
|
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. |
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Director, Investor Relations
Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
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