LivaNova Reports Second-Quarter 2023 Results
Financial Summary and Highlights1
- Second-quarter revenue of
$293.9 million increased 15.6% on a reported basis and increased 16.4% on a constant-currency basis, as compared to the prior-year period
- Second quarter
U.S. GAAP diluted earnings per share was$0.02 and adjusted diluted earnings per share was$0.78
- Randomized 150th bipolar depression patient in RECOVER clinical study and initiated interim analyses
- Effective
May 12 ,Stephanie Bolton named President of Global Epilepsy following 12 years ofLivaNova service, most recently as President ofLivaNova's International Region
“In the second quarter,
Second-Quarter 2023 Results
The following table summarizes revenue for the second quarter of 2023 by segment (in millions):
|
|
Three Months Ended |
|
% Change |
|
Constant-Currency |
||||||
|
|
2023 |
|
2022 |
|
|
||||||
| Cardiopulmonary |
|
|
|
|
|
19.7 |
% |
|
20.9 |
% |
|
| Neuromodulation |
|
133.2 |
|
117.8 |
|
13.1 |
% |
|
13.5 |
% |
|
| Advanced Circulatory Support |
|
9.4 |
|
9.4 |
|
0.7 |
% |
|
0.7 |
% |
|
| Other |
|
0.7 |
|
1.2 |
|
(42.5 |
)% |
|
(43.7 |
)% |
|
| Total Net Revenue |
|
|
|
|
|
15.6 |
% |
|
16.4 |
% |
|
|
• Numbers may not add precisely due to rounding. |
|||||||||||
Cardiopulmonary revenue increased 20.9%2 versus the second quarter of 2022 with growth across all regions, driven by strong oxygenator demand and increased heart-lung machine placements.
Neuromodulation revenue increased 13.5%2 versus the second quarter of 2022. This increase was driven by growth in new and replacement implants across all regions.
Advanced Circulatory Support (ACS) revenue increased 0.7%2 compared to the second quarter of 2022.
Earnings Analysis
On a
On a
Full-Year 2023 Guidance
Adjusted diluted earnings per share for 2023 are now expected to be in the range of
As discussed further 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
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____________________ |
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|
1 |
Constant-currency percent change, adjusted operating income, adjusted diluted earnings per share and adjusted free cash flow are non-GAAP measures. For an explanation of these and other non-GAAP measures used in this release, see the section entitled "Use of Non-GAAP Financial Measures." For reconciliations of certain non-GAAP measures, see the tables that accompany this press release. |
|
2 |
Constant-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 release, see the section entitled "Use of Non-GAAP Financial Measures." |
About
Use of Non-GAAP Financial Measures
In this press 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.
Unless otherwise noted, all revenue growth rates in this release reflect comparable, constant-currency percent change. 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 gross profit percentage, adjusted selling, general and administrative expense, adjusted research and development expense, adjusted other operating expense, adjusted operating income, adjusted income tax expense, adjusted net income and adjusted diluted earnings per share, are measures by which
Safe Harbor Statement
Certain statements in this press 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
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
We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release. The Company does not undertake or assume any obligation to update publicly any of the forward-looking statements in this press release to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
|
|
||||||||||
|
NET REVENUE |
||||||||||
|
( |
||||||||||
|
|
|
Three Months Ended |
||||||||
|
|
|
|
|
|
|
|
|
Constant-Currency |
||
|
2023 |
|
2022 |
|
% Change |
% Change (1) |
|||||
|
Cardiopulmonary |
|
|
|
|
|
|
|
|
||
|
US |
|
|
|
|
|
23.4 |
% |
|
23.4 |
% |
|
|
|
39.2 |
|
33.2 |
|
18.1 |
% |
|
15.7 |
% |
|
Rest of World |
|
64.7 |
|
54.8 |
|
18.1 |
% |
|
22.3 |
% |
|
Total |
|
150.6 |
|
125.8 |
|
19.7 |
% |
|
20.9 |
% |
|
Neuromodulation |
|
|
|
|
|
|
|
|
||
|
US |
|
104.1 |
|
91.4 |
|
13.8 |
% |
|
13.8 |
% |
|
|
|
15.1 |
|
13.7 |
|
10.3 |
% |
|
10.2 |
% |
|
Rest of World |
|
14.0 |
|
12.7 |
|
10.6 |
% |
|
14.6 |
% |
|
Total |
|
133.2 |
|
117.8 |
|
13.1 |
% |
|
13.5 |
% |
|
Advanced Circulatory Support |
|
|
|
|
|
|
|
|
||
|
US |
|
9.2 |
|
8.8 |
|
4.6 |
% |
|
4.6 |
% |
|
|
|
0.2 |
|
0.5 |
|
NM |
|
|
NM |
|
|
Rest of World |
|
0.1 |
|
0.1 |
|
NM |
|
|
NM |
|
|
Total |
|
9.4 |
|
9.4 |
|
0.7 |
% |
|
0.7 |
% |
|
Other Revenue (3) |
|
|
|
|
|
|
|
|
||
|
US |
|
— |
|
— |
|
N/A |
|
|
N/A |
|
|
|
|
— |
|
— |
|
N/A |
|
|
N/A |
|
|
Rest of World |
|
0.7 |
|
1.2 |
|
(42.5 |
)% |
|
(43.7 |
)% |
|
Total |
|
0.7 |
|
1.2 |
|
(42.5 |
)% |
|
(43.7 |
)% |
|
Totals |
|
|
|
|
|
|
|
|
||
|
US |
|
160.0 |
|
138.1 |
|
15.9 |
% |
|
15.9 |
% |
|
|
|
54.5 |
|
47.4 |
|
15.0 |
% |
|
13.2 |
% |
|
Rest of World |
|
79.5 |
|
68.7 |
|
15.7 |
% |
|
19.7 |
% |
|
Total |
|
|
|
|
|
15.6 |
% |
|
16.4 |
% |
|
(1) |
Constant-currency growth, 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. |
|
NET REVENUE |
||||||||||
|
( |
||||||||||
|
|
|
Six Months Ended |
||||||||
|
|
|
2023 |
|
2022 |
|
% Change |
|
Constant-Currency |
||
|
Cardiopulmonary |
|
|
|
|
|
|
|
|
||
|
US |
|
|
|
|
|
9.0 |
% |
|
9.0 |
% |
|
|
|
75.5 |
|
65.2 |
|
15.7 |
% |
|
17.4 |
% |
|
Rest of World |
|
124.4 |
|
101.7 |
|
22.3 |
% |
|
28.1 |
% |
|
Total |
|
282.7 |
|
242.9 |
|
16.4 |
% |
|
19.3 |
% |
|
Neuromodulation |
|
|
|
|
|
|
|
|
||
|
US |
|
198.6 |
|
178.6 |
|
11.1 |
% |
|
11.1 |
% |
|
|
|
28.4 |
|
26.2 |
|
8.6 |
% |
|
12.1 |
% |
|
Rest of World |
|
26.9 |
|
23.2 |
|
16.1 |
% |
|
21.5 |
% |
|
Total |
|
253.9 |
|
228.0 |
|
11.4 |
% |
|
12.3 |
% |
|
Advanced Circulatory Support |
|
|
|
|
|
|
|
|
||
|
US |
|
18.9 |
|
19.8 |
|
(4.5 |
)% |
|
(4.5 |
)% |
|
|
|
0.2 |
|
1.1 |
|
NM |
|
|
NM |
|
|
Rest of World |
|
0.2 |
|
0.2 |
|
NM |
|
|
NM |
|
|
Total |
|
19.3 |
|
21.0 |
|
(8.4 |
)% |
|
(8.4 |
)% |
|
Other Revenue (3) |
|
|
|
|
|
|
|
|
||
|
US |
|
— |
|
— |
|
N/A |
|
|
N/A |
|
|
|
|
— |
|
— |
|
N/A |
|
|
N/A |
|
|
Rest of World |
|
1.5 |
|
2.4 |
|
(38.4 |
)% |
|
(37.5 |
)% |
|
Total |
|
1.5 |
|
2.4 |
|
(38.4 |
)% |
|
(37.5 |
)% |
|
Totals |
|
|
|
|
|
|
|
|
||
|
US |
|
300.2 |
|
274.4 |
|
9.4 |
% |
|
9.4 |
% |
|
|
|
104.1 |
|
92.5 |
|
12.5 |
% |
|
14.7 |
% |
|
Rest of World |
|
153.0 |
|
127.5 |
|
20.0 |
% |
|
25.6 |
% |
|
Total |
|
|
|
|
|
12.7 |
% |
|
14.6 |
% |
|
(1) |
Constant-currency growth, 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. |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|||||||||
|
( |
|||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
Three Months Ended |
|
|
|||||
|
|
|
2023 |
|
2022 |
|
% Change |
|||
|
Net revenue |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
88.7 |
|
|
69.8 |
|
|
|
|
|
Gross profit |
|
205.2 |
|
|
184.4 |
|
|
11.3 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|||
|
Selling, general and administrative |
|
125.9 |
|
|
116.5 |
|
|
|
|
|
Research and development |
|
51.1 |
|
|
34.2 |
|
|
|
|
|
Other operating expense |
|
10.8 |
|
|
1.9 |
|
|
|
|
|
Operating income |
|
17.4 |
|
|
31.8 |
|
|
(45.3 |
)% |
|
Interest expense |
|
(14.8 |
) |
|
(14.4 |
) |
|
|
|
|
Foreign exchange and other income/(expense) |
|
2.7 |
|
|
1.6 |
|
|
|
|
|
Income before tax |
|
5.3 |
|
|
19.0 |
|
|
(72.2 |
)% |
|
Income tax expense |
|
4.1 |
|
|
2.5 |
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
(93.0 |
)% |
|
|
|
|
|
|
|
|
|||
|
Basic income per share |
|
|
|
|
|
|
|
|
|
|
Diluted income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|||
|
Basic |
|
53.8 |
|
|
53.5 |
|
|
|
|
|
Diluted |
|
54.0 |
|
|
54.1 |
|
|
|
|
| • |
Numbers may not add precisely due to rounding. |
| Adjusted Financial Measures ( |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted (1) Three Months Ended |
|
|
|||
|
|
|
2023 |
|
2022 |
|
% Change |
|
|
Adjusted SG&A |
|
|
|
|
|
11.9 |
% |
|
Adjusted R&D |
|
47.9 |
|
41.8 |
|
14.8 |
% |
|
Adjusted operating income |
|
49.5 |
|
33.4 |
|
48.4 |
% |
|
Adjusted net income |
|
41.9 |
|
28.6 |
|
46.9 |
% |
|
Adjusted diluted earnings per share |
|
|
|
|
|
47.1 |
% |
|
|
|
|
|
|
|
|
|
|
(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 press release. |
| Statistics (as a % of net revenue, except for income tax rate) | ||||||||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
GAAP Three Months Ended |
|
Adjusted (1) Three Months Ended |
||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
Gross profit |
|
69.8 |
% |
|
72.5 |
% |
|
71.6 |
% |
|
69.3 |
% |
|
SG&A |
|
42.8 |
% |
|
45.8 |
% |
|
38.5 |
% |
|
39.8 |
% |
|
R&D |
|
17.4 |
% |
|
13.5 |
% |
|
16.3 |
% |
|
16.4 |
% |
|
Operating income |
|
5.9 |
% |
|
12.5 |
% |
|
16.8 |
% |
|
13.1 |
% |
|
Net income |
|
0.4 |
% |
|
6.5 |
% |
|
14.3 |
% |
|
11.2 |
% |
|
Income tax rate |
|
77.6 |
% |
|
13.2 |
% |
|
9.5 |
% |
|
4.8 |
% |
|
(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 press release. |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
|||||||||
|
( |
|||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
Six Months Ended |
|
|
|||||
|
|
|
2023 |
|
2022 |
|
% Change |
|||
|
Net revenue |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
178.0 |
|
|
141.5 |
|
|
|
|
|
Gross profit |
|
379.3 |
|
|
352.8 |
|
|
7.5 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|||
|
Selling, general and administrative |
|
250.0 |
|
|
235.0 |
|
|
|
|
|
Research and development |
|
101.1 |
|
|
75.1 |
|
|
|
|
|
Other operating expenses |
|
13.1 |
|
|
1.4 |
|
|
|
|
|
Operating income |
|
15.0 |
|
|
41.3 |
|
|
(63.6 |
)% |
|
Interest expense |
|
(28.2 |
) |
|
(22.2 |
) |
|
|
|
|
Foreign exchange and other income/(expense) |
|
28.3 |
|
|
5.5 |
|
|
|
|
|
Income before tax |
|
15.0 |
|
|
24.6 |
|
|
(38.8 |
)% |
|
Income tax expense |
|
6.5 |
|
|
5.1 |
|
|
|
|
|
Losses from equity method investments |
|
(0.1 |
) |
|
(0.1 |
) |
|
|
|
|
Net income |
|
|
|
|
|
|
|
(56.1 |
)% |
|
|
|
|
|
|
|
|
|||
|
Basic income per share |
|
|
|
|
|
|
|
|
|
|
Diluted income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|||
|
Basic |
|
53.7 |
|
|
53.4 |
|
|
|
|
|
Diluted |
|
53.9 |
|
|
54.1 |
|
|
|
|
| • |
Numbers may not add precisely due to rounding. |
| Adjusted Financial Measures ( |
||||||
|
|
|
|
|
|||
|
|
Adjusted (1) Six Months Ended |
|
||||
|
|
2023 |
2022 |
% Change |
|||
|
Adjusted SG&A |
|
|
9.0 |
% |
||
|
Adjusted R&D |
94.1 |
81.8 |
15.0 |
% |
||
|
Adjusted operating income |
76.3 |
61.7 |
23.6 |
% |
||
|
Adjusted net income |
65.3 |
54.6 |
19.6 |
% |
||
|
Adjusted diluted earnings per share |
|
|
20.1 |
% |
||
|
|
|
|
|
|||
|
(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 press release. |
| Statistics (as a % of net revenue, except for income tax rate) | ||||||||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
GAAP Six Months Ended |
|
Adjusted (1) Six Months Ended |
||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
Gross profit |
|
68.1 |
% |
|
71.4 |
% |
|
70.3 |
% |
|
70.1 |
% |
|
SG&A |
|
44.9 |
% |
|
47.5 |
% |
|
39.7 |
% |
|
41.1 |
% |
|
R&D |
|
18.1 |
% |
|
15.2 |
% |
|
16.9 |
% |
|
16.6 |
% |
|
Operating income |
|
2.7 |
% |
|
8.3 |
% |
|
13.7 |
% |
|
12.5 |
% |
|
Net income |
|
1.5 |
% |
|
3.9 |
% |
|
11.7 |
% |
|
11.0 |
% |
|
Income tax rate |
|
43.0 |
% |
|
20.6 |
% |
|
8.4 |
% |
|
6.0 |
% |
|
|
||||||||||||
|
(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 press release. |
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED
( |
||||||||||||||||||||||
|
|
|
Specified Items |
|
|
||||||||||||||||||
|
Three Months Ended |
GAAP |
Merger and |
Restructuring |
Depreciation |
Financing |
Contingent |
Certain Legal |
Stock-based |
Certain Tax |
Certain |
Adjusted |
|||||||||||
|
Cost of sales |
|
|
$— |
|
$— |
|
$(3.7 |
) |
$— |
|
$(1.5 |
) |
$— |
|
|
|
$— |
|
$— |
|
|
|
|
Gross profit percent |
69.8 |
% |
— |
% |
— |
% |
1.3 |
% |
— |
% |
0.5 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
71.6 |
% |
|
Selling, general and administrative |
125.9 |
|
— |
|
— |
|
(2.9 |
) |
— |
|
— |
|
(5.3 |
) |
(4.6 |
) |
— |
|
— |
|
113.1 |
|
|
Selling, general and administrative as a percent of net revenue |
42.8 |
% |
— |
% |
— |
% |
(1.0 |
)% |
— |
% |
— |
% |
(1.8 |
)% |
(1.6 |
)% |
— |
% |
— |
% |
38.5 |
% |
|
Research and development |
51.1 |
|
— |
|
— |
|
— |
|
— |
|
(1.0 |
) |
(1.2 |
) |
(1.1 |
) |
— |
|
— |
|
47.9 |
|
|
Research and development as a percent of net revenue |
17.4 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
(0.3 |
)% |
(0.4 |
)% |
(0.4 |
)% |
— |
% |
— |
% |
16.3 |
% |
|
Other operating expense |
10.8 |
|
0.2 |
|
(0.2 |
) |
— |
|
— |
|
— |
|
(10.8 |
) |
— |
|
— |
|
— |
|
— |
|
|
Operating income |
17.4 |
|
(0.2 |
) |
0.2 |
|
6.6 |
|
— |
|
2.5 |
|
17.3 |
|
5.7 |
|
— |
|
— |
|
49.5 |
|
|
Operating margin percent |
5.9 |
% |
(0.1 |
)% |
0.1 |
% |
2.2 |
% |
— |
% |
0.9 |
% |
5.9 |
% |
1.9 |
% |
— |
% |
— |
% |
16.8 |
% |
|
Income tax expense |
4.1 |
|
— |
|
— |
|
0.4 |
|
— |
|
— |
|
0.1 |
|
(0.3 |
) |
0.2 |
|
(0.2 |
) |
4.4 |
|
|
Income tax rate |
77.6 |
% |
— |
% |
— |
% |
6.6 |
% |
— |
% |
— |
% |
0.7 |
% |
(4.5 |
)% |
N/A |
|
(2.1 |
)% |
9.5 |
% |
|
Net income |
1.2 |
|
(0.2 |
) |
0.2 |
|
6.1 |
|
1.4 |
|
2.5 |
|
17.2 |
|
6.0 |
|
(0.2 |
) |
7.8 |
|
41.9 |
|
|
Net income as a percent of net revenue |
0.4 |
% |
(0.1 |
)% |
0.1 |
% |
2.1 |
% |
0.5 |
% |
0.9 |
% |
5.9 |
% |
2.0 |
% |
(0.1 |
)% |
2.6 |
% |
14.3 |
% |
|
Diluted EPS |
|
|
$— |
|
$— |
|
|
|
|
|
|
|
|
|
|
|
$— |
|
|
|
|
|
|
GAAP results for the three months ended |
|
|
(A) |
Merger and integration expenses related to the acquisition of |
|
(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 Medical Device Regulation ("MDR") costs |
|
(G) |
Non-cash expenses associated with stock-based compensation costs |
|
(H) |
Discrete tax items, R&D tax credits and the tax impact of intercompany transactions |
|
(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 |
GAAP |
Merger and |
Restructuring |
Depreciation |
Financing |
Contingent |
Certain Legal |
Stock-based |
Certain Tax |
Certain |
Adjusted |
|||||||||||
|
Cost of sales |
|
|
$— |
|
$— |
|
$(3.7 |
) |
$— |
|
|
|
$— |
|
$(0.6 |
) |
$— |
|
$— |
|
|
|
|
Gross profit percent |
72.5 |
% |
— |
% |
— |
% |
1.5 |
% |
— |
% |
(4.9 |
)% |
— |
% |
0.2 |
% |
— |
% |
— |
% |
69.3 |
% |
|
Selling, general and administrative |
116.5 |
|
— |
|
— |
|
(2.9 |
) |
— |
|
— |
|
(4.8 |
) |
(7.8 |
) |
— |
|
— |
|
101.1 |
|
|
Selling, general and administrative as a percent of net revenue |
45.8 |
% |
— |
% |
— |
% |
(1.1 |
)% |
— |
% |
— |
% |
(1.9 |
)% |
(3.1 |
)% |
— |
% |
— |
% |
39.8 |
% |
|
Research and development |
34.2 |
|
— |
|
— |
|
— |
|
— |
|
11.1 |
|
(0.5 |
) |
(3.2 |
) |
— |
|
— |
|
41.8 |
|
|
Research and development as a percent of net revenue |
13.5 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
4.4 |
% |
(0.2 |
)% |
(1.2 |
)% |
— |
% |
— |
% |
16.4 |
% |
|
Other operating expense |
1.9 |
|
(0.2 |
) |
(0.6 |
) |
— |
|
— |
|
— |
|
(1.1 |
) |
— |
|
— |
|
— |
|
— |
|
|
Operating income |
31.8 |
|
0.2 |
|
0.6 |
|
6.6 |
|
— |
|
(23.6 |
) |
6.3 |
|
11.5 |
|
— |
|
— |
|
33.4 |
|
|
Operating margin percent |
12.5 |
% |
0.1 |
% |
0.2 |
% |
2.6 |
% |
— |
% |
(9.3 |
)% |
2.5 |
% |
4.5 |
% |
— |
% |
— |
% |
13.1 |
% |
|
Income tax expense |
2.5 |
|
— |
|
— |
|
0.4 |
|
— |
|
— |
|
0.4 |
|
0.1 |
|
(2.1 |
) |
— |
|
1.4 |
|
|
Income tax rate |
13.2 |
% |
— |
% |
3.3 |
% |
6.6 |
% |
— |
% |
— |
% |
6.8 |
% |
1.2 |
% |
N/A |
|
— |
% |
4.8 |
% |
|
Net income |
16.4 |
|
0.2 |
|
0.6 |
|
6.1 |
|
(1.5 |
) |
(23.6 |
) |
5.9 |
|
11.4 |
|
2.1 |
|
10.9 |
|
28.6 |
|
|
Net income as a percent of net revenue |
6.5 |
% |
0.1 |
% |
0.2 |
% |
2.4 |
% |
(0.6 |
)% |
(9.3 |
)% |
2.3 |
% |
4.5 |
% |
0.8 |
% |
4.3 |
% |
11.2 |
% |
|
Diluted EPS |
|
|
$— |
|
|
|
|
|
$(0.03 |
) |
$(0.44 |
) |
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the three months ended |
|
|
(A) |
Merger and integration expenses related to the acquisition of |
|
(B) |
Restructuring expenses related to organizational changes |
|
(C) |
Includes depreciation and amortization associated with purchase price accounting |
|
(D) |
Mark-to-market adjustment 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, R&D tax credits and the tax impact of intercompany transactions |
|
(I) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility, and interest expense on the 2022 Bridge Loan |
|
• Numbers may not add precisely due to rounding. |
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED ( |
||||||||||||||||||||||
|
|
|
Specified Items |
|
|
||||||||||||||||||
|
Six Months Ended |
GAAP |
Merger and |
Restructuring |
Depreciation |
Financing |
Contingent |
Certain Legal |
Stock-based |
Certain Tax |
Certain |
Adjusted |
|||||||||||
|
Cost of sales |
|
|
$— |
|
$— |
|
$(7.4 |
) |
$— |
|
$(4.6 |
) |
$— |
|
$(0.5 |
) |
$— |
|
$— |
|
|
|
|
Gross profit percent |
68.1 |
% |
— |
% |
— |
% |
1.3 |
% |
— |
% |
0.8 |
% |
— |
% |
0.1 |
% |
— |
% |
— |
% |
70.3 |
% |
|
Selling, general and administrative |
250.0 |
|
— |
|
— |
|
(5.8 |
) |
— |
|
— |
|
(9.8 |
) |
(13.1 |
) |
— |
|
— |
|
221.4 |
|
|
Selling, general and administrative as a percent of net revenue |
44.9 |
% |
— |
% |
— |
% |
(1.0 |
)% |
— |
% |
— |
% |
(1.8 |
)% |
(2.4 |
)% |
— |
% |
— |
% |
39.7 |
% |
|
Research and development |
101.1 |
|
— |
|
— |
|
0.1 |
|
— |
|
(2.7 |
) |
(1.7 |
) |
(2.7 |
) |
— |
|
— |
|
94.1 |
|
|
Research and development as a percent of net revenue |
18.1 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
(0.5 |
)% |
(0.3 |
)% |
(0.5 |
)% |
— |
% |
— |
% |
16.9 |
% |
|
Other operating expense |
13.1 |
|
(0.1 |
) |
(0.9 |
) |
— |
|
— |
|
— |
|
(12.2 |
) |
— |
|
— |
|
— |
|
— |
|
|
Operating income |
15.0 |
|
0.1 |
|
0.9 |
|
13.0 |
|
— |
|
7.3 |
|
23.6 |
|
16.3 |
|
— |
|
— |
|
76.3 |
|
|
Operating margin percent |
2.7 |
% |
— |
% |
0.2 |
% |
2.3 |
% |
— |
% |
1.3 |
% |
4.2 |
% |
2.9 |
% |
— |
% |
— |
% |
13.7 |
% |
|
Income tax expense |
6.5 |
|
— |
|
— |
|
0.9 |
|
— |
|
— |
|
0.5 |
|
0.2 |
|
(2.1 |
) |
— |
|
6.0 |
|
|
Income tax rate |
43.0 |
% |
— |
% |
— |
% |
6.6 |
% |
— |
% |
— |
% |
2.3 |
% |
1.0 |
% |
N/A |
|
— |
% |
8.4 |
% |
|
Net income |
8.5 |
|
0.1 |
|
0.9 |
|
12.2 |
|
(19.6 |
) |
7.3 |
|
23.1 |
|
16.1 |
|
2.1 |
|
14.6 |
|
65.3 |
|
|
Net income as a percent of net revenue |
1.5 |
% |
— |
% |
0.2 |
% |
2.2 |
% |
(3.5 |
)% |
1.3 |
% |
4.1 |
% |
2.9 |
% |
0.4 |
% |
2.6 |
% |
11.7 |
% |
|
Diluted EPS |
|
|
$— |
|
|
|
|
|
$(0.36 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the six months ended |
|
|
(A) |
Merger and integration expenses related to the acquisition of |
|
(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, R&D tax credits and the tax impact of intercompany transactions |
|
(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 |
|
|||||||||||||||||||
|
Six Months Ended |
GAAP |
Merger and |
Restructuring |
Depreciation |
Financing |
Contingent |
Certain Legal |
Stock-based |
Certain Tax |
Certain |
Adjusted |
|||||||||||
|
Cost of sales |
|
|
$— |
|
$— |
|
$(7.4 |
) |
$— |
|
|
|
$— |
|
$(0.8 |
) |
$— |
|
$— |
|
|
|
|
Gross profit percent |
71.4 |
% |
— |
% |
— |
% |
1.5 |
% |
— |
% |
(2.9 |
)% |
— |
% |
0.2 |
% |
— |
% |
— |
% |
70.1 |
% |
|
Selling, general and administrative |
235.0 |
|
— |
|
— |
|
(5.8 |
) |
— |
|
— |
|
(10.5 |
) |
(15.6 |
) |
— |
|
— |
|
203.0 |
|
|
Selling, general and administrative as a percent of net revenue |
47.5 |
% |
— |
% |
— |
% |
(1.2 |
)% |
— |
% |
— |
% |
(2.1 |
)% |
(3.2 |
)% |
— |
% |
— |
% |
41.1 |
% |
|
Research and development |
75.1 |
|
— |
|
— |
|
0.1 |
|
— |
|
12.9 |
|
(1.1 |
) |
(5.3 |
) |
— |
|
— |
|
81.8 |
|
|
Research and development as a percent of net revenue |
15.2 |
% |
— |
% |
— |
% |
— |
% |
— |
% |
2.6 |
% |
(0.2 |
)% |
(1.1 |
)% |
— |
% |
— |
% |
16.6 |
% |
|
Other operating expense |
1.4 |
|
(0.2 |
) |
(0.5 |
) |
— |
|
— |
|
— |
|
(0.7 |
) |
— |
|
— |
|
— |
|
— |
|
|
Operating income |
41.3 |
|
0.2 |
|
0.5 |
|
13.1 |
|
— |
|
(27.4 |
) |
12.3 |
|
21.7 |
|
— |
|
— |
|
61.7 |
|
|
Operating margin percent |
8.3 |
% |
— |
% |
0.1 |
% |
2.6 |
% |
— |
% |
(5.5 |
)% |
2.5 |
% |
4.4 |
% |
— |
% |
— |
% |
12.5 |
% |
|
Income tax expense |
5.1 |
|
— |
|
— |
|
0.9 |
|
— |
|
— |
|
0.8 |
|
0.2 |
|
(3.5 |
) |
— |
|
3.5 |
|
|
Income tax rate |
20.6 |
% |
— |
% |
4.0 |
% |
6.8 |
% |
— |
% |
— |
% |
6.3 |
% |
1.0 |
% |
N/A |
|
— |
% |
6.0 |
% |
|
Net income |
19.4 |
|
0.2 |
|
0.5 |
|
12.2 |
|
(2.6 |
) |
(27.4 |
) |
11.5 |
|
21.5 |
|
3.5 |
|
15.7 |
|
54.6 |
|
|
Net income as a percent of net revenue |
3.9 |
% |
— |
% |
0.1 |
% |
2.5 |
% |
(0.5 |
)% |
(5.5 |
)% |
2.3 |
% |
4.4 |
% |
0.7 |
% |
3.2 |
% |
11.0 |
% |
|
Diluted EPS |
|
|
$— |
|
|
|
|
|
$(0.05 |
) |
$(0.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
GAAP results for the six months ended |
|
|
(A) |
Merger and integration expenses related to the acquisition of |
|
(B) |
Restructuring expenses related to organizational changes |
|
(C) |
Includes depreciation and amortization associated with purchase price accounting |
|
(D) |
Mark-to-market adjustment 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, R&D tax credits and the tax impact of intercompany transactions |
|
(I) |
Non-cash interest expense on the Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility, and interest expense on the 2022 Bridge Loan |
|
• Numbers may not add precisely due to rounding. |
|
|
|
||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED |
||||
|
( |
||||
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Restricted cash |
|
311.4 |
|
301.4 |
|
Accounts receivable, net of allowance |
|
185.9 |
|
183.1 |
|
Inventories |
|
156.4 |
|
129.4 |
|
Prepaid and refundable taxes |
|
26.3 |
|
31.7 |
|
Prepaid expenses and other current assets |
|
38.8 |
|
26.3 |
|
Total Current Assets |
|
941.8 |
|
886.1 |
|
Property, plant and equipment, net |
|
149.6 |
|
147.2 |
|
|
|
779.2 |
|
768.8 |
|
Intangible assets, net |
|
357.4 |
|
368.6 |
|
Operating lease assets |
|
34.2 |
|
35.8 |
|
Investments |
|
21.7 |
|
16.3 |
|
Deferred tax assets |
|
2.1 |
|
1.4 |
|
Long-term derivative assets |
|
42.0 |
|
54.4 |
|
Other assets |
|
13.5 |
|
16.2 |
|
Total Assets |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
Current debt obligations |
|
|
|
|
|
Accounts payable |
|
78.2 |
|
74.3 |
|
Accrued liabilities and other |
|
82.0 |
|
81.5 |
|
Current litigation provision liability |
|
22.4 |
|
29.5 |
|
Taxes payable |
|
19.8 |
|
16.5 |
|
Accrued employee compensation and related benefits |
|
66.6 |
|
72.2 |
|
Total Current Liabilities |
|
288.2 |
|
297.4 |
|
Long-term debt obligations |
|
568.0 |
|
518.1 |
|
Contingent consideration |
|
92.6 |
|
85.3 |
|
Deferred tax liabilities |
|
8.9 |
|
8.5 |
|
Long-term operating lease liabilities |
|
27.2 |
|
29.5 |
|
Long-term employee compensation and related benefits |
|
16.7 |
|
16.8 |
|
Long-term derivative liabilities |
|
53.7 |
|
85.7 |
|
Other long-term liabilities |
|
45.6 |
|
45.8 |
|
Total Liabilities |
|
1,100.9 |
|
1,087.1 |
|
Total Stockholders’ Equity |
|
1,240.6 |
|
1,207.6 |
|
Total Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
• Numbers may not add precisely due to rounding. |
||||
|
|
||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED |
||||||
|
( |
|
Six Months Ended |
||||
|
|
|
2023 |
|
2022 |
||
|
Operating Activities: |
|
|
|
|
||
|
Net income |
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||
|
Remeasurement of derivative instruments |
|
(25.3 |
) |
|
(5.1 |
) |
|
Stock-based compensation |
|
16.3 |
|
|
21.8 |
|
|
Amortization |
|
12.7 |
|
|
12.9 |
|
|
Depreciation |
|
12.0 |
|
|
11.1 |
|
|
Amortization of debt issuance costs |
|
9.5 |
|
|
11.7 |
|
|
Remeasurement of contingent consideration to fair value |
|
7.3 |
|
|
(27.4 |
) |
|
Amortization of operating lease assets |
|
5.1 |
|
|
4.9 |
|
|
Other |
|
0.2 |
|
|
2.0 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
||
|
Accounts receivable, net |
|
(0.7 |
) |
|
(0.9 |
) |
|
Inventories |
|
(25.4 |
) |
|
(16.5 |
) |
|
Other current and non-current assets |
|
(8.3 |
) |
|
2.8 |
|
|
Accounts payable and accrued current and non-current liabilities |
|
(4.6 |
) |
|
(19.4 |
) |
|
Taxes payable |
|
2.7 |
|
|
0.1 |
|
|
Litigation provision liability |
|
(7.3 |
) |
|
(2.1 |
) |
|
Net cash provided by operating activities |
|
2.8 |
|
|
15.6 |
|
|
Investing Activities: |
|
|
|
|
||
|
Purchases of property, plant and equipment |
|
(13.3 |
) |
|
(11.3 |
) |
|
Purchase of investments |
|
(5.4 |
) |
|
(0.8 |
) |
|
Acquisition, net of cash acquired |
|
— |
|
|
(8.9 |
) |
|
Other |
|
0.6 |
|
|
(0.7 |
) |
|
Net cash used in investing activities |
|
(18.1 |
) |
|
(21.6 |
) |
|
Financing Activities: |
|
|
|
|
||
|
Proceeds from long-term debt obligations |
|
50.0 |
|
|
218.3 |
|
|
Repayment of long-term debt obligations |
|
(11.8 |
) |
|
(0.8 |
) |
|
Shares repurchased from employees for minimum tax withholding |
|
(5.8 |
) |
|
(8.2 |
) |
|
Repayments of short-term borrowings (maturities greater than 90 days) |
|
(2.0 |
) |
|
— |
|
|
Proceeds from share issuances under ESPP |
|
0.6 |
|
|
1.8 |
|
|
Payment of debt issuance costs |
|
— |
|
|
(2.9 |
) |
|
Other |
|
(0.2 |
) |
|
0.3 |
|
|
Net cash provided by financing activities |
|
30.8 |
|
|
208.6 |
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
3.3 |
|
|
(3.7 |
) |
|
Net increase in cash, cash equivalents and restricted cash |
|
18.7 |
|
|
198.8 |
|
|
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. |
||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230726612343/en/
Director, Investor Relations
Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
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