LivaNova Reports Fourth-Quarter and Full-Year 2023 Results
- Strong revenue growth reported for Q4 and full-year 2023.
- Initiation of wind down of the Advanced Circulatory Support segment.
- Appointment of a new CEO, Vladimir A. Makatsaria.
- Q4 2023 revenue was $310.1 million, up 12.8% YoY.
- Full-year 2023 revenue was $1.15 billion, up 12.9% YoY.
- Q4 2023 U.S. GAAP diluted earnings per share was $0.30.
- Full-year 2023 U.S. GAAP diluted earnings per share was $0.32.
- Revenue growth expected to be between 4-5% for full-year 2024.
- None.
Insights
The reported revenue and earnings growth for LivaNova PLC indicate a robust financial performance in the medical technology sector. The double-digit revenue growth across all regions, particularly in the Cardiopulmonary and Neuromodulation segments, suggests a strong market demand for the company's products. Notably, the EssenzTM Perfusion System has been a significant contributor to this growth, reflecting successful product adoption and possibly an increase in market share.
From a financial perspective, the improvement in adjusted operating margin and a 17% increase in adjusted diluted earnings per share are key indicators of operational efficiency and profitability. Investors may view these results positively, as they suggest that the company's strategic initiatives are translating into financial gains. The wind down of the Advanced Circulatory Support segment is a strategic decision that could streamline operations and potentially improve financial outcomes further, as indicated by the expected positive contribution to adjusted operating income in 2024.
The appointment of a new CEO with experience from a leading global medical technology company could bring fresh perspectives and drive further growth. However, it is essential to monitor the transition for stability and continuity in leadership.
The medical technology industry is highly competitive and LivaNova's significant revenue growth in its core segments indicates that the company is effectively leveraging industry trends, such as the rising demand for advanced medical devices and therapies. The focus on the Cardiopulmonary and Neuromodulation segments aligns with broader industry shifts towards specialized and targeted medical solutions. The decision to wind down the Advanced Circulatory Support segment suggests a refined focus on areas with higher growth potential or better strategic fit.
Looking ahead, the projected revenue growth for 2024, excluding the impact of the ACS segment wind down, signals confidence in the company's core business. The forecasted increase in adjusted diluted earnings per share and adjusted free cash flow for 2024 also provides a positive outlook for the company's financial health and its ability to invest in future growth opportunities or return value to shareholders.
LivaNova's performance in the Cardiopulmonary segment, particularly with the EssenzTM Perfusion System, highlights the company's innovation and the market's receptivity to new technologies in critical care. In the Neuromodulation segment, growth across all regions suggests effective market penetration and the potential for expansion in treatments for neurological disorders. These segments are at the forefront of medical technology, where innovation can lead to significant improvements in patient outcomes and healthcare efficiency.
The company's strategic decision to wind down the Advanced Circulatory Support segment may reflect a realignment with market demands and core competencies. Such moves are common in the industry to optimize the product portfolio and resources. The anticipated positive financial impact of this decision will need to be evaluated against the potential loss of market presence in the ACS space.
Financial Summary and Highlights1
-
Fourth-quarter revenue of
$310.1 million -
Fourth-quarter
U.S. GAAP diluted earnings per share was$0.30 $0.87 -
Full-year 2023 revenue of
$1.15 billion -
Full-year 2023 U.S. GAAP diluted earnings per share was
$0.32 $2.80 - In January 2024, LivaNova initiated a wind down of the Advanced Circulatory Support segment
- In February 2024, LivaNova's Board of Directors named Vladimir A. Makatsaria the Company's Chief Executive Officer (CEO) and member of the Board of Directors, effective March 1, 2024
"We delivered strong revenue growth in both the fourth quarter and full year," said Bill Kozy, Interim Chief Executive Officer and Board Chair of LivaNova. "Our 2023 performance reflects double-digit revenue growth across all regions, an improvement in adjusted operating margin and a
Fourth-Quarter 2023 Results
The following table summarizes revenue for the fourth quarter of 2023 by segment (in millions):
|
|
Three Months Ended
|
|
% Change |
|
Constant-Currency
|
||
|
|
2023 |
|
2022 |
|
|
||
Cardiopulmonary |
|
|
|
|
|
|
|
|
Neuromodulation |
|
136.9 |
|
127.1 |
|
|
|
|
Advanced Circulatory Support |
|
10.1 |
|
9.6 |
|
|
|
|
Other |
|
1.6 |
|
1.6 |
|
(1.8)% |
|
(6.3)% |
Total Net Revenue |
|
|
|
|
|
|
|
|
|
Cardiopulmonary revenue increased 18.3 percent on a reported basis and increased 17.0 percent2 on a constant-currency basis versus the fourth quarter 2022 driven primarily by EssenzTM Perfusion System sales in the
Neuromodulation revenue increased 7.7 percent on a reported basis and increased 7.1 percent2 on a constant-currency basis versus the fourth quarter 2022 with strength in the
Advanced Circulatory Support (ACS) revenue increased 5.0 percent on a reported basis and increased 4.9 percent2 on a constant-currency basis versus the fourth quarter 2022 driven by an increase in case volumes.
Earnings Analysis
On a
On a
Full-Year 2023 Results
The following table summarizes revenue for full year 2023 by segment (in millions):
|
|
Year Ended
|
|
% Change |
|
Constant-Currency
|
||
|
|
2023 |
|
2022 |
|
|
||
Cardiopulmonary |
|
|
|
|
|
|
|
|
Neuromodulation |
|
519.7 |
|
477.0 |
|
|
|
|
Advanced Circulatory Support |
|
40.3 |
|
39.3 |
|
|
|
|
Other |
|
4.5 |
|
5.2 |
|
(12.8)% |
|
(15.8)% |
Total Net Revenue |
|
|
|
|
|
|
|
|
|
Cardiopulmonary revenue increased 17.7 percent on a reported basis and increased 18.4 percent2 on a constant-currency basis versus 2022 with growth across all regions, driven by increased heart-lung machine sales, including EssenzTM Perfusion System installations, and strong oxygenator demand.
Neuromodulation revenue increased 9.0 percent on a reported basis and increased 9.1 percent2 on a constant-currency basis versus 2022 with growth across all regions, including new and replacement implants in the
ACS revenue increased 2.6 percent on a reported basis and increased 2.5 percent2 on a constant-currency basis versus 2022 driven by an increase in case volumes.
Earnings Analysis
On a
On a
Subsequent Events
On January 8, 2024, LivaNova announced its plan to wind down the ACS segment to increase the Company's strategic focus on its core Cardiopulmonary and Neuromodulation segments. The wind down is anticipated to be substantially complete by the end of 2024. During the first quarter of 2024, the Company intends to transition all ACS standalone cannulae products and related accessories into the Cardiopulmonary segment. The Company expects the wind down to result in a positive contribution to adjusted operating income in 2024 as compared to 2023.
On February 5, 2024, LivaNova announced its Board of Directors named Vladimir A. Makatsaria as the Company's CEO and a member of the Board of Directors, effective March 1, 2024. Makatsaria most recently served as Company Group Chairman at Johnson & Johnson MedTech, leading its global Ethicon surgery business. Makatsaria will succeed Kozy, who has served as Interim CEO since April 2023. Kozy will continue in his role as LivaNova Board Chair.
Full-Year 2024 Guidance
LivaNova expects revenue for full-year 2024 to grow between 4 and 5 percent on a constant-currency basis. When excluding the impact of the ACS segment wind down, the Company expects revenue for full-year 2024 to grow between 6 and 7 percent on a constant-currency basis. Foreign currency is expected to be negligible based on current exchange rates.
Adjusted diluted earnings per share for 2024 are expected to be in the range of
Webcast and Conference Call Instructions
The Company will host a live audiocast for interested parties commencing at 1 p.m.
1 Constant-currency percent change and adjusted diluted earnings per share are non-GAAP measures. 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. |
2Constant-currency percent change excludes the impact from fluctuations in the various currencies in which the Company operates as compared to reported percent change. Constant-currency percent change is a non-GAAP metric. For an explanation of this and other non-GAAP metrics used in this news release, see the section entitled "Use of Non-GAAP Financial Measures." |
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 improvements for both the Head and Heart. Headquartered in
Use of Non-GAAP Financial Measures
In this news release, management has disclosed financial measurements that present financial information not in accordance with 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, operating performance measures as prescribed by GAAP.
In this news release, the Company refers to comparable, constant-currency percent change in revenue. 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 other 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 constant-currency net revenue, non-GAAP adjusted tax rate and adjusted diluted earnings per share are net revenue, the effective tax rate and earnings per share, respectively. 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 and gains related to dividends received from investments and further adjusted as needed for other one-time, nonrecurring, unusual or infrequent charges, expenses or gains, including associated expenses, that may not be indicative of the Company's core business. 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, forward-looking non-GAAP financial measures and reconciliations to the most directly comparable forward-looking GAAP financial measures are not available without unreasonable effort.
The Company also believes adjusted financial measures such as adjusted gross profit percentage, adjusted selling, general and administrative expense, adjusted research and development expense, adjusted other operating expenses, adjusted operating income, adjusted income tax expense, adjusted net income and adjusted diluted earnings per share, are measures by which LivaNova generally uses to facilitate management review of the operational performance of the company, to serve as a basis for strategic planning and to assist in the design of compensation incentive plans. Additionally, the Company also uses the non-GAAP liquidity measure adjusted free cash flow. Furthermore, adjusted financial measures allow investors to evaluate the Company’s core performance for different periods on a more comparable and consistent basis, and with other entities in the medical technology industry by adjusting for items that are not related to the ongoing operations of the Company or incurred in the ordinary course of business.
Safe Harbor Statement
Certain statements in this news release, other than statements of historical or current fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements include, but are not limited to, LivaNova’s plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, the Company’s actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. Generally, you can identify forward-looking statements by the use of words such as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” “foresee” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by LivaNova and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond the Company’s control, that could cause the Company’s actual results to differ materially from the forward-looking statements contained in this Report 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
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 and other documents filed from time to time with the United States Securities and Exchange Commission by LivaNova.
Readers are cautioned not to place undue reliance on the Company's forward-looking statements, which speak only as of the date of this news release. The Company undertakes no obligation to update publicly any of the forward-looking statements in this news release to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If LivaNova updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.
Essenz is a trademark of LivaNova
LIVANOVA PLC |
|||||||
NET REVENUE |
|||||||
( |
|||||||
|
Three Months Ended December 31, |
||||||
|
2023 |
2022 |
% Change |
Constant-Currency
|
|||
Cardiopulmonary |
|
|
|
|
|||
US |
|
|
|
|
|||
|
46.0 |
33.1 |
|
|
|||
Rest of World |
58.6 |
58.3 |
|
|
|||
Total |
161.5 |
136.5 |
|
|
|||
Neuromodulation |
|
|
|
|
|||
US |
106.5 |
99.4 |
|
|
|||
|
16.4 |
13.0 |
|
|
|||
Rest of World |
14.1 |
14.7 |
(4.4)% |
(4.1)% |
|||
Total |
136.9 |
127.1 |
|
|
|||
Advanced Circulatory Support |
|
|
|
|
|||
US |
9.8 |
9.3 |
|
|
|||
|
0.2 |
0.2 |
NM |
NM |
|||
Rest of World |
0.1 |
0.1 |
NM |
NM |
|||
Total |
10.1 |
9.6 |
|
|
|||
Other Revenue (3) |
1.6 |
1.6 |
(1.8)% |
(6.3)% |
|||
Totals |
|
|
|
|
|||
US |
173.2 |
153.8 |
|
|
|||
|
62.6 |
46.3 |
|
|
|||
Rest of World |
74.4 |
74.8 |
(0.6)% |
|
|||
Total |
|
|
|
|
|||
(1) |
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. |
|
(2) |
Includes countries in |
|
(3) |
Other revenue primarily includes rental income not allocated to segments. |
|
NM |
Indicates that variance as a percentage is not meaningful. |
|
• |
The revenue results presented are unaudited. Numbers may not add precisely due to rounding. |
LIVANOVA PLC |
|||||||||
NET REVENUE |
|||||||||
( |
|||||||||
|
|
|
Year Ended December 31, |
||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
Constant-Currency
|
Cardiopulmonary |
|
|
|
|
|
|
|
|
|
US |
|
|
|
|
|
|
|
|
|
|
|
156.6 |
|
127.1 |
|
|
|
|
|
Rest of World |
|
244.1 |
|
213.8 |
|
|
|
|
|
Total |
|
589.0 |
|
500.3 |
|
|
|
|
|
Neuromodulation |
|
|
|
|
|
|
|
|
|
US |
|
407.5 |
|
374.5 |
|
|
|
|
|
|
|
57.4 |
|
50.3 |
|
|
|
|
|
Rest of World |
|
54.8 |
|
52.2 |
|
|
|
|
|
Total |
|
519.7 |
|
477.0 |
|
|
|
|
|
Advanced Circulatory Support |
|
|
|
|
|
|
|
|
|
US |
|
39.3 |
|
37.5 |
|
|
|
|
|
|
|
0.8 |
|
1.4 |
|
NM |
|
NM |
|
Rest of World |
|
0.3 |
|
0.3 |
|
NM |
|
NM |
|
Total |
|
40.3 |
|
39.3 |
|
|
|
|
|
Other Revenue (3) |
|
4.5 |
|
5.2 |
|
(12.8)% |
|
(15.8)% |
|
Totals |
|
|
|
|
|
|
|
|
|
US |
|
635.0 |
|
571.6 |
|
|
|
|
|
|
|
214.8 |
|
178.8 |
|
|
|
|
|
Rest of World |
|
303.7 |
|
271.4 |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
(1) |
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. |
|
(2) |
Includes countries in |
|
(3) |
Other revenue primarily includes rental income not allocated to segments. |
|
NM |
Indicates that variance as a percentage is not meaningful. |
|
• |
The revenue results presented are unaudited. Numbers may not add precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES |
||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
||||||
( |
||||||
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
||
|
|
2023 |
|
2022 |
|
% Change |
Net revenue |
|
|
|
|
|
|
Cost of sales |
|
120.0 |
|
91.4 |
|
|
Gross profit |
|
190.2 |
|
183.5 |
|
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
133.3 |
|
119.6 |
|
|
Research and development |
|
46.2 |
|
44.9 |
|
|
Impairment of long-lived assets |
|
90.0 |
|
— |
|
|
Other operating expenses |
|
8.7 |
|
5.0 |
|
|
Operating (loss) income |
|
(88.0) |
|
14.0 |
|
NM |
Interest expense |
|
(15.6) |
|
(13.4) |
|
|
Foreign exchange and other income/(expense) |
|
9.3 |
|
5.8 |
|
|
(Loss) income before tax |
|
(94.3) |
|
6.4 |
|
NM |
Income tax (benefit) expense |
|
(110.7) |
|
4.7 |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share |
|
|
|
|
|
|
Diluted income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
Basic |
|
54.0 |
|
53.5 |
|
|
Diluted |
|
54.3 |
|
53.8 |
|
|
NM Indicates that variance is not meaningful. |
• Numbers may not add precisely due to rounding. |
Adjusted Financial Measures ( |
||||||
|
|
|
|
|
|
|
|
|
Adjusted (1) Three Months Ended
|
|
|
||
|
|
2023 |
|
2022 |
|
% Change |
Adjusted SG&A |
|
|
|
|||
Adjusted R&D |
42.1 |
42.9 |
(2.0)% |
|||
Adjusted operating income |
48.0 |
46.8 |
|
|||
Adjusted net income |
47.3 |
43.6 |
|
|||
Adjusted diluted earnings per share |
|
|
|
|||
(1) |
Adjusted financial measures are non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the news release. |
Statistics (as a % of net revenue, except for income tax rate) |
||||||||
|
|
|
|
|
|
|
||
|
|
GAAP Three Months Ended December 31, |
|
Adjusted (1) Three Months Ended December 31, |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Gross profit |
|
|
|
|
|
|
|
|
SG&A |
|
|
|
|
|
|
|
|
R&D |
|
|
|
|
|
|
|
|
Operating (loss) income |
(28.4)% |
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
Income tax rate |
|
|
|
|
(2.9)% |
|
(2.7)% |
|
(1) |
Adjusted financial measures are non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the news release. |
LIVANOVA PLC AND SUBSIDIARIES |
|
|
|
|
||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|
|
||||
( |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
||
|
|
2023 |
|
2022 |
|
% Change |
Net revenue |
|
|
|
|
|
|
Cost of sales |
|
382.3 |
|
314.6 |
|
|
Gross profit |
|
771.3 |
|
707.2 |
|
|
Operating expenses: |
|
|
|
|
|
|
Selling, general and administrative |
|
518.1 |
|
469.2 |
|
|
Research and development |
|
193.8 |
|
155.8 |
|
|
Impairment of goodwill |
|
— |
|
129.4 |
|
|
Impairment of long-lived assets |
|
90.0 |
|
— |
|
|
Other operating expenses |
|
37.8 |
|
29.5 |
|
|
Operating loss |
|
(68.5) |
|
(76.8) |
|
(10.8)% |
Interest expense |
|
(58.9) |
|
(48.3) |
|
|
Foreign exchange and other income/(expense) |
|
46.1 |
|
49.9 |
|
|
Loss before tax |
|
(81.2) |
|
(75.1) |
|
|
Income tax (benefit) expense |
|
(98.9) |
|
11.1 |
|
|
Losses from equity method investments |
|
(0.1) |
|
(0.1) |
|
|
Net income (loss) |
|
|
|
( |
|
NM |
|
|
|
|
|
|
|
Basic income (loss) per share |
|
|
|
( |
|
|
Diluted income (loss) per share |
|
|
|
( |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
Basic |
|
53.9 |
|
53.5 |
|
|
Diluted |
|
54.2 |
|
53.5 |
|
|
NM Indicates that variance is not meaningful. |
• Numbers may not add precisely due to rounding. |
Adjusted Financial Measures ( |
||||||
|
|
|
|
|
|
|
|
|
Adjusted (1) Year Ended
|
|
|
||
|
|
2023 |
|
2022 |
|
% Change |
Adjusted SG&A |
|
|
|
|
|
|
Adjusted R&D |
178.1 |
|
166.2 |
|
|
|
Adjusted operating income |
169.3 |
|
145.1 |
|
|
|
Adjusted net income |
152.0 |
|
129.2 |
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
(1) |
Adjusted financial measures are non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the news release. |
Statistics (as a % of net revenue, except for income tax rate) |
||||||||
|
|
|
|
|
|
|
||
|
|
GAAP Year Ended December 31, |
|
Adjusted (1) Year Ended December 31, |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Gross profit |
|
|
|
|
|
|
|
|
SG&A |
|
|
|
|
|
|
|
|
R&D |
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(5.9)% |
|
(7.5)% |
|
|
|
|
Net income (loss) |
|
|
|
(8.4)% |
|
|
|
|
Income tax rate |
|
|
|
(14.7)% |
|
|
|
|
(1) |
Adjusted financial measures are non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the news release. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED
( |
|||||||||||
|
|
|
|
||||||||
Three Months Ended December 31, 2023 |
GAAP
|
Restructuring
|
Depreciation
|
Impairment
|
Financing
|
Contingent
|
Certain Legal &
|
Stock-based
|
Certain Tax
|
Certain
|
Adjusted
|
Cost of sales |
|
$— |
( |
( |
$— |
( |
$— |
( |
$— |
$— |
|
Gross profit percent |
|
—% |
|
|
—% |
|
—% |
|
—% |
—% |
|
Selling, general and administrative |
133.3 |
— |
(2.8) |
— |
— |
— |
(3.6) |
(7.0) |
— |
— |
119.9 |
Selling, general and administrative as a percent of net revenue |
|
—% |
(0.9)% |
—% |
—% |
—% |
(1.2)% |
(2.3)% |
—% |
—% |
|
Research and development |
46.2 |
— |
— |
— |
— |
(1.5) |
(1.6) |
(1.1) |
— |
— |
42.1 |
Research and development as a percent of net revenue |
|
—% |
—% |
—% |
—% |
(0.5)% |
(0.5)% |
(0.3)% |
—% |
—% |
|
Other operating expenses |
8.7 |
0.1 |
— |
— |
— |
— |
(8.8) |
— |
— |
— |
— |
Operating (loss) income |
(88.0) |
(0.1) |
6.4 |
102.6 |
— |
4.8 |
14.0 |
8.3 |
— |
— |
48.0 |
Operating margin percent |
(28.4)% |
—% |
|
|
—% |
|
|
|
—% |
—% |
|
Net income |
16.3 |
(0.1) |
6.4 |
102.6 |
(2.6) |
4.8 |
12.4 |
8.3 |
(109.3) |
8.3 |
47.3 |
Net income as a percent of net revenue |
|
—% |
|
|
(0.8)% |
|
|
|
(35.2)% |
|
|
Diluted EPS |
|
$— |
|
|
( |
|
|
|
( |
|
|
GAAP results for the three months ended December 31, 2023, include: |
||
(A) |
Restructuring expenses related to organizational changes |
|
(B) |
Includes depreciation and amortization associated with purchase price accounting |
|
(C) |
ACS Inventory obsolescence adjustment and impairment of long-lived assets |
|
(D) |
Mark-to-market adjustments for the exchangeable option feature and capped call derivatives |
|
(E) |
Remeasurement of contingent consideration related to acquisitions |
|
(F) |
3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, costs related to the SNIA matter, Medical Device Regulation ("MDR") costs and cybersecurity incident costs |
|
(G) |
Non-cash expenses associated with stock-based compensation costs |
|
(H) |
The impact of valuation allowances, discrete tax items, the tax impact of intercompany transactions and the tax impact on non-GAAP adjustments |
|
(I) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 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 |
|
||||||||
Three Months Ended December 31, 2022 |
GAAP
|
Merger and
|
Restructuring
|
Depreciation
|
Financing
|
Contingent
|
Certain Legal
|
Stock-based
|
Certain Tax
|
Certain
|
Adjusted
|
Cost of sales |
|
$— |
$— |
( |
$— |
( |
$— |
( |
$— |
$— |
|
Gross profit percent |
|
—% |
—% |
|
—% |
|
—% |
|
—% |
—% |
|
Selling, general and administrative |
119.6 |
— |
— |
(2.8) |
— |
— |
(5.6) |
(11.4) |
— |
— |
99.8 |
Selling, general and administrative as a percent of net revenue |
|
—% |
—% |
(1.0)% |
—% |
—% |
(2.0)% |
(4.2)% |
—% |
—% |
|
Research and development |
44.9 |
— |
— |
0.1 |
— |
(1.4) |
(0.1) |
(0.6) |
— |
— |
42.9 |
Research and development as a percent of net revenue |
|
—% |
—% |
—% |
—% |
(0.5)% |
—% |
(0.2)% |
—% |
—% |
|
Other operating expenses |
5.0 |
(0.7) |
(2.0) |
— |
— |
— |
(2.3) |
— |
— |
— |
— |
Operating income operations |
14.0 |
0.7 |
2.0 |
6.3 |
— |
3.5 |
8.0 |
12.3 |
— |
— |
46.8 |
Operating margin percent |
|
|
|
|
—% |
|
|
|
—% |
—% |
|
Net income |
1.7 |
0.7 |
2.0 |
6.3 |
(3.6) |
3.5 |
8.0 |
12.3 |
5.9 |
6.9 |
43.6 |
Net income as a percent of net revenue |
|
|
|
|
(1.3)% |
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
( |
|
|
|
|
|
|
GAAP results for the three months ended December 31, 2022, include: |
||
(A) |
Merger and integration expenses related to the acquisition of ALung Technologies, Inc. |
|
(B) |
Restructuring expenses related to organizational changes |
|
(C) |
Includes depreciation and amortization associated with purchase price accounting |
|
(D) |
Mark-to-market adjustments for the exchangeable option feature and capped call derivatives |
|
(E) |
Remeasurement of contingent consideration related to acquisitions |
|
(F) |
3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, costs related to the SNIA matter and MDR costs |
|
(G) |
Non-cash expenses associated with stock-based compensation costs |
|
(H) |
Discrete tax items, the tax impact of intercompany transactions and the tax impact on non-GAAP adjustments |
|
(I) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility, interest expense on the Term Facilities |
|
• Numbers may not add precisely due to rounding. |
||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED
( |
||||||||||||
|
|
Specified Items |
|
|||||||||
Year Ended December 31, 2023 |
GAAP
|
Merger and
|
Restructuring
|
Depreciation
|
Impairment
|
Financing
|
Contingent
|
Certain
|
Stock-based
|
Certain Tax
|
Certain
|
Adjusted
|
Cost of sales |
|
$— |
$— |
( |
( |
$— |
( |
$— |
( |
$— |
$— |
|
Gross profit percent |
|
—% |
—% |
|
|
—% |
|
—% |
|
—% |
—% |
|
Selling, general and administrative |
518.1 |
— |
— |
(11.5) |
— |
— |
— |
(21.3) |
(29.4) |
— |
— |
456.0 |
Selling, general and administrative as a percent of net revenue |
|
—% |
—% |
(1.0)% |
—% |
—% |
—% |
(1.8)% |
(2.6)% |
—% |
—% |
|
Research and development |
193.8 |
— |
— |
0.2 |
— |
— |
(5.6) |
(4.3) |
(6.0) |
— |
— |
178.1 |
Research and development as a percent of net revenue |
|
—% |
—% |
—% |
—% |
—% |
(0.5)% |
(0.4)% |
(0.5)% |
—% |
—% |
|
Other operating expenses |
37.8 |
(0.1) |
(1.0) |
— |
— |
— |
— |
(36.8) |
— |
— |
— |
— |
Operating (loss) income |
(68.5) |
0.1 |
1.0 |
26.0 |
102.6 |
— |
9.4 |
62.4 |
36.4 |
— |
— |
169.3 |
Operating margin percent |
(5.9)% |
—% |
|
|
|
—% |
|
|
|
—% |
—% |
|
Net income |
17.5 |
0.1 |
1.0 |
26.0 |
102.6 |
(24.2) |
9.4 |
60.9 |
36.4 |
(108.1) |
30.5 |
152.0 |
Net income as a percent of net revenue |
|
—% |
|
|
|
(2.1)% |
|
|
|
(9.4)% |
|
|
Diluted EPS |
|
$— |
|
|
|
( |
|
|
|
( |
|
|
GAAP results for the year ended December 31, 2023, include: |
||
(A) |
Merger and integration expenses related to the acquisition of ALung Technologies, Inc. |
|
(B) |
Restructuring expenses related to organizational changes |
|
(C) |
Includes depreciation and amortization associated with purchase price accounting |
|
(D) |
ACS Inventory obsolescence adjustment and impairment of long-lived assets |
|
(E) |
Mark-to-market adjustments for the exchangeable option feature and capped call derivatives |
|
(F) |
Remeasurement of contingent consideration related to acquisitions |
|
(G) |
3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, costs related to the SNIA matter, MDR costs and cybersecurity incident costs |
|
(H) |
Non-cash expenses associated with stock-based compensation costs |
|
(I) |
The impact of valuation allowances, discrete tax items, R&D tax credits, the tax impact of intercompany transactions and the tax impact on non-GAAP adjustments |
|
(J) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 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 |
|
|||||||||
Year Ended December 31, 2022 |
GAAP
|
Merger and
|
Restructuring
|
Depreciation
|
Impairment
|
Financing
|
Contingent
|
Certain Legal &
|
Stock-based
|
Certain Tax
|
Certain
|
Adjusted
|
Cost of sales |
|
$— |
$— |
( |
$— |
$— |
|
$— |
( |
$— |
$— |
|
Gross profit percent |
|
—% |
—% |
|
—% |
—% |
(1.0)% |
—% |
|
—% |
—% |
|
Selling, general and administrative |
469.2 |
— |
— |
(11.3) |
— |
— |
— |
(20.9) |
(35.6) |
— |
— |
401.4 |
Selling, general and administrative as a percent of net revenue |
|
—% |
—% |
(1.1)% |
—% |
—% |
—% |
(2.0)% |
(3.5)% |
—% |
—% |
|
Research and development |
155.8 |
— |
— |
0.2 |
— |
— |
19.4 |
(1.5) |
(7.7) |
— |
— |
166.2 |
Research and development as a percent of net revenue |
|
—% |
—% |
—% |
—% |
—% |
|
(0.1)% |
(0.8)% |
—% |
—% |
|
Other operating expenses |
29.5 |
(1.1) |
(6.6) |
— |
— |
— |
— |
(21.8) |
— |
— |
— |
— |
Operating (loss) income |
(76.8) |
1.1 |
6.6 |
25.6 |
129.4 |
— |
(29.9) |
44.2 |
44.8 |
— |
— |
145.1 |
Operating margin percent |
(7.5)% |
|
|
|
|
—% |
(2.9)% |
|
|
—% |
—% |
|
Net (loss) income |
(86.2) |
1.1 |
6.6 |
25.6 |
129.4 |
(44.1) |
(29.9) |
44.2 |
44.8 |
5.9 |
31.7 |
129.2 |
Net (loss) income as a percent of net revenue |
(8.4)% |
|
|
|
|
(4.3)% |
(2.9)% |
|
|
|
|
|
Diluted EPS |
( |
|
|
|
|
( |
( |
|
|
|
|
|
GAAP results for the year ended December 31, 2022, include: |
||
(A) |
Merger and integration expenses related to the acquisition of ALung Technologies, Inc. |
|
(B) |
Restructuring expenses related to organizational changes |
|
(C) |
Includes depreciation and amortization associated with purchase price accounting |
|
(D) |
Goodwill impairment associated with the Company's ACS business |
|
(E) |
Mark-to-market adjustments for the exchangeable option feature and capped call derivatives |
|
(F) |
Remeasurement of contingent consideration related to acquisitions |
|
(G) |
3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, costs related to the SNIA matter and MDR costs |
|
(H) |
Non-cash expenses associated with stock-based compensation costs |
|
(I) |
Discrete tax items, R&D tax credits, the tax impact of intercompany transactions and the tax impact on non-GAAP adjustments |
|
(J) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility, interest expense on the 2022 Bridge Loan and Term Facilities |
|
• Numbers may not add precisely due to rounding. |
||
LIVANOVA PLC AND SUBSIDIARIES |
||||
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED |
||||
( |
||||
|
|
December 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Restricted cash |
|
311.4 |
|
301.4 |
Accounts receivable, net of allowance |
|
215.1 |
|
183.1 |
Inventories |
|
147.9 |
|
129.4 |
Prepaid and refundable taxes |
|
20.1 |
|
31.7 |
Prepaid expenses and other current assets |
|
27.2 |
|
26.3 |
Total Current Assets |
|
988.2 |
|
886.1 |
Property, plant and equipment, net |
|
154.2 |
|
147.2 |
Goodwill |
|
782.9 |
|
768.8 |
Intangible assets, net |
|
261.2 |
|
368.6 |
Operating lease assets |
|
50.8 |
|
35.8 |
Investments |
|
22.8 |
|
16.3 |
Deferred tax assets |
|
118.9 |
|
1.4 |
Long-term derivative assets |
|
38.5 |
|
54.4 |
Other assets |
|
12.1 |
|
16.2 |
Total Assets |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Current debt obligations |
|
|
|
|
Accounts payable |
|
80.8 |
|
74.3 |
Accrued liabilities and other |
|
107.3 |
|
81.5 |
Current litigation provision liability |
|
10.8 |
|
29.5 |
Taxes payable |
|
23.3 |
|
16.5 |
Accrued employee compensation and related benefits |
|
94.6 |
|
72.2 |
Total Current Liabilities |
|
335.0 |
|
297.4 |
Long-term debt obligations |
|
568.5 |
|
518.1 |
Contingent consideration |
|
80.9 |
|
85.3 |
Deferred tax liabilities |
|
11.6 |
|
8.5 |
Long-term operating lease liabilities |
|
45.4 |
|
29.5 |
Long-term employee compensation and related benefits |
|
17.3 |
|
16.8 |
Long-term derivative liabilities |
|
45.6 |
|
85.7 |
Other long-term liabilities |
|
47.7 |
|
45.8 |
Total Liabilities |
|
1,151.9 |
|
1,087.1 |
Total Stockholders’ Equity |
|
1,277.6 |
|
1,207.6 |
Total Liabilities and Stockholders’ Equity |
|
|
|
|
• |
Numbers may not add precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES |
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED |
|
|
|
|
( |
|
Year Ended December 31, |
||
|
|
2023 |
|
2022 |
Operating Activities: |
|
|
|
|
Net income (loss) |
|
|
|
( |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
Deferred tax expense |
|
(114.4) |
|
1.4 |
Impairment of long-lived assets |
|
90.0 |
|
— |
Stock-based compensation |
|
36.4 |
|
44.8 |
Amortization |
|
25.5 |
|
25.2 |
Depreciation |
|
24.7 |
|
22.4 |
Remeasurement of derivative instruments |
|
(22.9) |
|
(38.7) |
Amortization of debt issuance costs |
|
19.1 |
|
21.3 |
ACS inventory obsolescence adjustment |
|
12.6 |
|
— |
Amortization of operating lease assets |
|
10.6 |
|
10.2 |
Remeasurement of contingent consideration to fair value |
|
9.4 |
|
(29.9) |
Impairment of goodwill |
|
— |
|
129.4 |
Other |
|
1.1 |
|
1.7 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable, net |
|
(28.9) |
|
(4.8) |
Inventories |
|
(28.5) |
|
(25.7) |
Other current and non-current assets |
|
15.3 |
|
7.5 |
Accounts payable and accrued current and non-current liabilities |
|
19.2 |
|
(3.5) |
Taxes payable |
|
7.4 |
|
1.4 |
Litigation provision liability |
|
(19.1) |
|
(6.6) |
Net cash provided by operating activities |
|
74.9 |
|
69.9 |
Investing Activities: |
|
|
|
|
Purchases of property, plant and equipment |
|
(35.0) |
|
(26.5) |
Purchase of investments |
|
(6.5) |
|
(3.0) |
Acquisitions, net of cash acquired |
|
— |
|
(8.9) |
Other |
|
1.2 |
|
(0.1) |
Net cash used in investing activities |
|
(40.3) |
|
(38.4) |
Financing Activities: |
|
|
|
|
Proceeds from long-term debt obligations |
|
50.0 |
|
507.5 |
Repayment of long-term debt obligations |
|
(21.6) |
|
(223.5) |
Shares repurchased from employees for minimum tax withholding |
|
(7.5) |
|
(8.7) |
Repayments of short-term borrowings (maturities greater than 90 days) |
|
(2.0) |
|
— |
Proceeds from deferred consideration from sale of Heart Valves, net of working capital adjustments |
|
— |
|
4.6 |
Debt issuance costs |
|
— |
|
(3.3) |
Other |
|
2.6 |
|
3.5 |
Net cash provided by financing activities |
|
21.5 |
|
280.1 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
6.2 |
|
(4.0) |
Net increase in cash, cash equivalents and restricted cash |
|
62.3 |
|
307.6 |
Cash, cash equivalents and restricted cash at beginning of period |
|
515.6 |
|
208.0 |
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 December 31, |
||||||||||
|
|
2023 |
|
2022 |
||||||||
|
|
GAAP Financial
|
|
Certain Tax
|
|
Adjusted
|
|
GAAP Financial
|
|
Certain Tax
|
|
Adjusted
|
(Loss) income before tax |
( |
$— |
|
|
|
|
|
$— |
|
|
||
Income tax (benefit) expense |
(110.7) |
109.3 |
|
(1.3) |
|
4.7 |
|
(5.9) |
|
(1.2) |
||
Net income |
|
( |
|
|
|
|
|
|
|
|
||
Income tax rate |
|
|
|
(2.9)% |
|
|
|
|
|
(2.7)% |
||
• |
Numbers may not add precisely due to rounding. |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED |
||||||||||||
|
|
Year Ended December 31, |
||||||||||
|
|
2023 |
|
2022 |
||||||||
|
|
GAAP Financial
|
|
Certain Tax
|
|
Adjusted
|
|
GAAP Financial
|
|
Certain Tax
|
|
Adjusted
|
(Loss) income before tax |
( |
|
$— |
|
|
|
( |
|
$— |
|
|
|
Income tax (benefit) expense |
(98.9) |
|
108.1 |
|
9.2 |
|
11.1 |
|
(5.9) |
|
5.1 |
|
Net income (loss) |
|
|
( |
|
|
|
( |
|
|
|
|
|
Income tax rate |
|
|
|
|
|
|
(14.7)% |
|
|
|
|
|
• |
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) |
||
|
|
Year Ended December 31, |
|
|
2022 |
GAAP diluted weighted average shares outstanding |
|
53.5 |
Add effects of stock-based compensation instruments |
|
0.5 |
Adjusted diluted weighted average shares outstanding (1) |
|
54.0 |
(1) |
Adjusted diluted weighted average shares outstanding is a non-GAAP measure and includes the effects of stock-based compensation instruments, as reconciled in the above table. |
|
• |
Numbers may not add precisely due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221387429/en/
Briana Gotlin
Director, Investor Relations
Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
Source: LivaNova PLC
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