LivaNova to Wind Down Advanced Circulatory Support Business Unit

Rhea-AI Summary

LivaNova PLC (Nasdaq: LIVN) to Wind Down Advanced Circulatory Support Business, Focus on Core Cardiopulmonary and Neuromodulation Units

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• None.

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• The wind down of the ACS business and transition of certain products into CP will result in a pre-tax non-cash impairment charge of up to approximately $110 million during the fourth quarter of 2023 and restructuring charges in the range of approximately $15 million to $20 million.

Insights

Financial Analyst

LivaNova PLC's decision to wind down its Advanced Circulatory Support (ACS) Business Unit reflects a strategic shift towards optimizing its portfolio for growth and profitability. The ACS unit's contribution of approximately 4% to net revenue indicates a relatively small scale within the company's overall business. The planned retention and transition of ACS standalone cannulae products into the Cardiopulmonary (CP) unit suggests a strategic move to capitalize on profitable and differentiated market segments.

The projected pre-tax non-cash impairment charge of up to $110 million, along with restructuring charges of approximately $15 million to $20 million, will impact short-term financials. However, the expected positive contribution to adjusted operating income in 2024 implies a favorable long-term outlook. Investors should monitor the company's future filings and earnings calls for additional details on the financial implications of this strategic realignment.

Market Research Analyst

By focusing on its core CP and Neuromodulation units, LivaNova is aligning with industry trends that favor specialization and leadership in specific medical technology areas. The transition of the ACS cannulae products to the CP unit could enhance the company's competitive edge in the cardiopulmonary space, which is critical given the high stakes of healthcare innovation.

Market dynamics, such as demand for advanced cardiopulmonary devices and neuromodulation therapies, will be key factors in determining the success of LivaNova's strategic pivot. The company's ability to smoothly integrate ACS products into the CP portfolio and to discontinue other ACS lines without disrupting service will be crucial in maintaining customer trust and market share.

Medical Device Industry Expert

The medical device industry is characterized by rapid innovation and stringent regulatory requirements. LivaNova's decision to discontinue certain ACS product lines like LifeSPARC™ and Hemolung™ Systems indicates a prioritization of resources towards areas with higher regulatory compliance and market demand.

The retention of profitable ACS cannulae products like ProtekDuo™ and TandemHeart™ suggests a strategic emphasis on products with established market positions and clinical value. The integration of these products into the CP unit could enhance the company's offerings in heart and lung support, which is a critical area of care for patients with severe cardiopulmonary conditions.

Move Reinforces Focus on Core Cardiopulmonary and Neuromodulation Businesses

ACS Standalone Cannulae Products and Accessories to Transition Into Cardiopulmonary Business Unit

LONDON--(BUSINESS WIRE)-- LivaNova PLC (Nasdaq: LIVN), a market-leading medical technology company, today announced that it will commence immediately with an orderly wind down of the Advanced Circulatory Support (ACS) Business Unit to increase the Company’s strategic focus on its core Cardiopulmonary (CP) and Neuromodulation Business Units. ACS generated approximately 4% of net revenue for the nine months ended September 30, 2023. The wind down is anticipated to be complete by the end of 2024.

The Company will retain all ACS standalone cannulae products and related accessories, including ProtekDuo™, transseptal (TandemHeart™), arterial and venous cannulae, along with corresponding insertion kits, which will all be transitioned into the CP Business Unit product portfolio during the first quarter of 2024. Operations and service for other ACS product lines, including LifeSPARC™ and Hemolung™ Systems, will be discontinued by the end of the year. The Company expects to support scheduled service for the LifeSPARC and Hemolung platforms through the end of 2024.

“LivaNova is committed to managing our portfolio and resources toward the highest growth and return opportunities for shareholders,” said William Kozy, Interim Chief Executive Officer and Chair of the Board. “We have worked steadily to generate enhanced value from the ACS business. After careful consideration, we determined that exiting ACS and focusing resources on our CP and Neuromodulation businesses creates greater innovation opportunities for our customers, their patients and shareholders. The ACS cannulae are profitable and enjoy a strong and differentiated market position, reinforcing our confidence that the transition of cannulae products and support will further strengthen the CP portfolio.”

Kozy added, “We value the ACS team’s efforts and commitment to helping improve the condition of patients and are grateful to have served customers who used the LifeSPARC platform to support their patients over the years. We will aim to make this transition as seamless as possible for our customers and employees.”

In connection with the wind down of the ACS business and transition of certain products into CP, the Company expects to record a pre-tax non-cash impairment charge of up to approximately $110 million during the fourth quarter of 2023. The Company also expects to incur restructuring charges in the range of approximately $15 million to $20 million. The majority of restructuring charges and related future cash payments are anticipated to be recognized and paid out during 2024. The Company expects the wind down to result in a positive contribution to adjusted operating income in 2024 as compared to 2023.

Additional details will be provided in a filing on Form 8-K today with the U.S. Securities and Exchange Commission and during the Company’s fourth-quarter and full-year 2023 earnings conference call scheduled for February 21, 2024.

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 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.

Safe Harbor Statement

This news release contains “forward-looking statements” concerning the Company’s goals, beliefs, expectations, strategies, objectives, plans, underlying assumptions and other statements that are not necessarily based on historical facts. These statements include, but are not limited to, statements regarding the Company’s Business Units. Actual events may differ materially from those indicated in our forward-looking statements as a result of various factors, including those factors set forth in Item 1A of the Company’s most recent Annual Report on Form 10-K, as supplemented by any risk factors contained in Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. LivaNova undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240108962289/en/

LivaNova Investor Relations and Media Contacts

+1 281-895-2382

Briana Gotlin

Director, Investor Relations

InvestorRelations@livanova.com

Deanna Wilke

VP, Corporate Communications

Corporate.Communications@livanova.com

Source: LivaNova PLC

FAQ

What is LivaNova PLC's ticker symbol?

LivaNova PLC's ticker symbol is LIVN.

What is the focus of LivaNova PLC's strategic move?

LivaNova PLC is focusing on its core Cardiopulmonary (CP) and Neuromodulation Business Units by winding down the Advanced Circulatory Support (ACS) Business Unit.

How much net revenue did ACS generate for LivaNova PLC for the nine months ended September 30, 2023?

ACS generated approximately 4% of net revenue for LivaNova PLC for the nine months ended September 30, 2023.

What will happen to ACS standalone cannulae products and related accessories?

ACS standalone cannulae products and related accessories, including ProtekDuo™, transseptal (TandemHeart™), arterial and venous cannulae, along with corresponding insertion kits, will be transitioned into the CP Business Unit product portfolio during the first quarter of 2024.

What are the expected charges due to the wind down of the ACS business?

The Company expects to record a pre-tax non-cash impairment charge of up to approximately $110 million during the fourth quarter of 2023 and incur restructuring charges in the range of approximately $15 million to $20 million.

When will the wind down of the ACS business be complete?

The wind down of the ACS business is anticipated to be complete by the end of 2024.