England and Wales (State or Other Jurisdiction of Incorporation) | 001-37599 (Commission File Number) | 98-1268150 (IRS Employer Identification No.) |
Emerging growth company | o |
o |
Exhibit | Description | |
99.1 |
LivaNova PLC | |
Date: July 31, 2019 | By:/s/ Catherine Moroz |
Name: Catherine Moroz | |
Title: Company Secretary | |
$ in millions | Three months ended June 30, | % Change | Constant-Currency % Change | |||||||
Business / Product Line: | 2019 | 2018 | ||||||||
Cardiopulmonary | $130.6 | $136.6 | (4.4 | %) | (1.3 | %) | ||||
Heart Valves | 33.4 | 33.8 | (1.3 | %) | 4.6 | % | ||||
Advanced Circulatory Support | 8.3 | 6.0 | 38.2 | % | 38.3 | % | ||||
Cardiovascular | 172.2 | 176.5 | (2.4 | %) | 1.2 | % | ||||
Neuromodulation | 104.3 | 110.7 | (5.8 | %) | (4.8 | %) | ||||
Other | 0.7 | 0.4 | — | % | — | % | ||||
Total Net Sales | $277.2 | $287.5 | (3.6 | %) | (1.0 | %) |
• | Note: Numbers may not add up precisely due to rounding. Constant-currency percent change is considered a non-GAAP metric. |
Melissa Farina Vice President, Investor Relations Phone: +1 (281) 228 7262 e-mail: investorrelations@LivaNova.com |
LIVANOVA PLC | |||||||||||||||
QUARTERLY SALES | |||||||||||||||
(U.S. dollars in millions) | |||||||||||||||
Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | % Change at Actual Currency Rates | % Change at Constant-Currency Rates(1) | ||||||||||||
Cardiopulmonary | |||||||||||||||
US | $41.4 | $42.1 | (1.7 | %) | (1.7 | %) | |||||||||
Europe | 34.3 | 35.9 | (4.4 | %) | 1.2 | % | |||||||||
Rest of world | 54.9 | 58.6 | (6.4 | %) | (2.5 | %) | |||||||||
Total | 130.6 | 136.6 | (4.4 | %) | (1.3 | %) | |||||||||
Heart Valves | |||||||||||||||
US | 4.7 | 6.1 | (23.9 | %) | (23.9 | %) | |||||||||
Europe | 10.7 | 11.9 | (10.0 | %) | (4.9 | %) | |||||||||
Rest of world | 18.0 | 15.8 | 14.0 | % | 22.9 | % | |||||||||
Total | 33.4 | 33.8 | (1.3 | %) | 4.6 | % | |||||||||
Advanced Circulatory Support | |||||||||||||||
US | 7.9 | 5.5 | 45.3 | % | 45.3 | % | |||||||||
Europe | 0.2 | 0.4 | (45.6 | %) | (44.5 | %) | |||||||||
Rest of world | 0.2 | 0.2 | (8.2 | %) | (7.7 | %) | |||||||||
Total | 8.3 | 6.0 | 38.2 | % | 38.3 | % | |||||||||
Cardiovascular | |||||||||||||||
US | 54.0 | 53.8 | 0.5 | % | 0.5 | % | |||||||||
Europe | 45.2 | 48.1 | (6.1 | %) | (0.7 | %) | |||||||||
Rest of world | 73.0 | 74.6 | (2.1 | %) | 2.8 | % | |||||||||
Total | 172.2 | 176.5 | (2.4 | %) | 1.2 | % | |||||||||
Neuromodulation | |||||||||||||||
US | 80.6 | 89.4 | (9.9 | %) | (9.9 | %) | |||||||||
Europe | 13.0 | 11.9 | 8.8 | % | 15.5 | % | |||||||||
Rest of world | 10.7 | 9.3 | 15.1 | % | 18.5 | % | |||||||||
Total | 104.3 | 110.7 | (5.8 | %) | (4.8 | %) | |||||||||
Other | |||||||||||||||
US | — | — | N/A | N/A | |||||||||||
Europe | — | — | N/A | N/A | |||||||||||
Rest of world | 0.7 | 0.4 | N/A | N/A | |||||||||||
Total | 0.7 | 0.4 | N/A | N/A | |||||||||||
Totals | |||||||||||||||
US | 134.6 | 143.1 | (6.0 | %) | (6.0 | %) | |||||||||
Europe | 58.2 | 60.1 | (3.2 | %) | 2.5 | % | |||||||||
Rest of world | 84.4 | 84.3 | 0.2 | % | 4.9 | % | |||||||||
Total | $277.2 | $287.5 | (3.6 | %) | (1.0 | %) | |||||||||
(1) | Constant-currency growth, a non-GAAP financial measure, measures the change in sales between current and prior-year periods using average exchange rates in effect during the applicable prior-year period. | ||||||||||||||
* | The sales results presented are unaudited. Numbers may not add up precisely due to rounding. |
LIVANOVA PLC | |||||||||||||||
SIX MONTH SALES | |||||||||||||||
(U.S. dollars in millions) | |||||||||||||||
Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | % Change at Actual Currency Rates | % Change at Constant-Currency Rates(1) | ||||||||||||
Cardiopulmonary | |||||||||||||||
US | $80.5 | $80.6 | (0.1 | %) | (0.1 | %) | |||||||||
Europe | 69.9 | 72.8 | (4.0 | %) | 2.8 | % | |||||||||
Rest of world | 101.7 | 108.4 | (6.1 | %) | (0.5 | %) | |||||||||
Total | 252.1 | 261.8 | (3.7 | %) | 0.5 | % | |||||||||
Heart Valves | |||||||||||||||
US | 9.0 | 12.7 | (28.8 | %) | (28.8 | %) | |||||||||
Europe | 21.2 | 24.0 | (11.7 | %) | (5.5 | %) | |||||||||
Rest of world | 28.8 | 28.2 | 2.2 | % | 10.9 | % | |||||||||
Total | 59.0 | 64.8 | (9.0 | %) | (2.9 | %) | |||||||||
Advanced Circulatory Support | |||||||||||||||
US | 16.0 | 5.5 | 192.2 | % | 192.2 | % | |||||||||
Europe | 0.3 | 0.4 | (11.9 | %) | (9.4 | %) | |||||||||
Rest of world | 0.3 | 0.2 | 41.2 | % | 41.9 | % | |||||||||
Total | 16.6 | 6.0 | 175.3 | % | 175.5 | % | |||||||||
Cardiovascular | |||||||||||||||
US | 105.5 | 98.7 | 6.9 | % | 6.9 | % | |||||||||
Europe | 91.4 | 97.1 | (5.9 | %) | 0.7 | % | |||||||||
Rest of world | 130.8 | 136.8 | (4.4 | %) | 1.9 | % | |||||||||
Total | 327.7 | 332.6 | (1.5 | %) | 3.0 | % | |||||||||
Neuromodulation | |||||||||||||||
US | 157.4 | 167.4 | (5.9 | %) | (5.9 | %) | |||||||||
Europe | 23.7 | 22.2 | 6.4 | % | 13.9 | % | |||||||||
Rest of world | 17.8 | 14.9 | 19.8 | % | 25.1 | % | |||||||||
Total | 198.9 | 204.5 | (2.7 | %) | (1.5 | %) | |||||||||
Other | |||||||||||||||
US | — | — | N/A | N/A | |||||||||||
Europe | — | — | N/A | N/A | |||||||||||
Rest of world | 1.3 | 0.8 | N/A | N/A | |||||||||||
Total | 1.3 | 0.8 | N/A | N/A | |||||||||||
Totals | |||||||||||||||
US | 263.0 | 266.1 | (1.2 | %) | (1.2 | %) | |||||||||
Europe | 115.0 | 119.4 | (3.6 | %) | 3.1 | % | |||||||||
Rest of world | 150.0 | 152.4 | (1.6 | %) | 4.6 | % | |||||||||
Total | $528.0 | $537.9 | (1.8 | %) | 1.4 | % | |||||||||
(1) | Constant-currency growth, a non-GAAP financial measure, measures the change in sales between current and prior-year periods using average exchange rates in effect during the applicable prior-year period. | ||||||||||||||
* | The sales results presented are unaudited. Numbers may not add up precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||
Three Months Ended June 30, | ||||||||||||
2019 | 2018 | % Change | ||||||||||
Net sales | $277.2 | $287.5 | ||||||||||
Costs and expenses: | ||||||||||||
Cost of sales - exclusive of amortization | 74.9 | 92.0 | ||||||||||
Product remediation | 5.1 | 1.5 | ||||||||||
Selling, general and administrative | 127.2 | 123.4 | ||||||||||
Research and development | 34.5 | 34.2 | ||||||||||
Merger and integration expenses | 4.4 | 4.4 | ||||||||||
Restructuring expenses | 1.3 | 0.5 | ||||||||||
Impairment of intangible assets | 50.3 | — | ||||||||||
Amortization of intangibles | 9.2 | 9.8 | ||||||||||
Operating (loss) income from continuing operations | (29.9 | ) | 21.6 | (238.4 | %) | |||||||
Interest expense, net | (3.8 | ) | (2.8 | ) | ||||||||
Foreign exchange and other losses | (1.9 | ) | (0.1 | ) | ||||||||
(Loss) income from continuing operations before tax | (35.6 | ) | 18.8 | (289.4 | %) | |||||||
Income tax benefit | (6.2 | ) | (1.0 | ) | ||||||||
Losses from equity method investments | — | (0.3 | ) | |||||||||
Net (loss) income from continuing operations | (29.4 | ) | 19.5 | (250.8 | %) | |||||||
Net income (loss) from discontinued operations, net of tax | 0.2 | (4.5 | ) | |||||||||
Net (loss) income | ($29.2 | ) | $15.1 | (293.4 | %) | |||||||
Basic (loss) income per share: | ||||||||||||
Continuing operations | ($0.61 | ) | $0.40 | |||||||||
Discontinued operations | 0.01 | (0.09 | ) | |||||||||
($0.60 | ) | $0.31 | ||||||||||
Diluted (loss) income per share: | ||||||||||||
Continuing operations | ($0.61 | ) | $0.40 | |||||||||
Discontinued operations | 0.01 | (0.09 | ) | |||||||||
($0.60 | ) | $0.31 | ||||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 48.3 | 48.5 | ||||||||||
Diluted | 48.3 | 49.3 | ||||||||||
* | Numbers may not add up precisely due to rounding. |
Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | ||||||||||||
Three Months Ended June 30, | ||||||||||||
2019 | 2018 | % Change (1) | ||||||||||
Adjusted SG&A (1) | $108.1 | $104.1 | 3.8 | % | ||||||||
Adjusted R&D (1) | 39.7 | 32.5 | 22.2 | % | ||||||||
Adjusted operating income from continuing operations (1) | 44.2 | 59.9 | (26.2 | %) | ||||||||
Adjusted income from continuing operations, net of tax (1) | 34.3 | 47.5 | (27.8 | %) | ||||||||
Adjusted diluted earnings per share from continuing operations (1) | $0.70 | $0.96 | (27.1 | %) | ||||||||
(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 sales, except for income tax rate) | |||||||||||||
GAAP Three Months Ended June 30, | Adjusted (1) Three Months Ended June 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Gross profit | 71.1 | % | 67.5 | % | 69.3 | % | 68.3 | % | |||||
SG&A | 45.9 | % | 42.9 | % | 39.0 | % | 36.2 | % | |||||
R&D | 12.5 | % | 11.9 | % | 14.3 | % | 11.3 | % | |||||
Operating (loss) income from continuing operations | (10.8 | %) | 7.5 | % | 15.9 | % | 20.8 | % | |||||
Net (loss) income from continuing operations, net of tax | (10.6 | %) | 6.8 | % | 12.4 | % | 16.5 | % | |||||
Income tax rate | 17.3 | % | (5.5 | %) | 15.4 | % | 17.4 | % | |||||
(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. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||
Six Months Ended June 30, | ||||||||||||
2019 | 2018 | % Change | ||||||||||
Net sales | $528.0 | $537.9 | ||||||||||
Costs and expenses: | ||||||||||||
Cost of sales - exclusive of amortization | 159.2 | 176.6 | ||||||||||
Product remediation | 8.1 | 5.3 | ||||||||||
Selling, general and administrative | 252.9 | 227.6 | ||||||||||
Research and development | 78.1 | 66.0 | ||||||||||
Merger and integration expenses | 7.6 | 7.4 | ||||||||||
Restructuring expenses | 3.9 | 2.4 | ||||||||||
Impairment of intangible assets | 50.3 | — | ||||||||||
Amortization of intangibles | 18.5 | 18.6 | ||||||||||
Operating (loss) income from continuing operations | (50.7 | ) | 34.1 | (248.7 | %) | |||||||
Interest expense, net | (5.2 | ) | (4.4 | ) | ||||||||
Gain on acquisition | — | 11.5 | ||||||||||
Foreign exchange and other losses | (1.1 | ) | (0.3 | ) | ||||||||
(Loss) income from continuing operations before tax | (57.0 | ) | 40.8 | (239.7 | %) | |||||||
Income tax (benefit) expense | (12.8 | ) | 2.9 | |||||||||
Losses from equity method investments | — | (0.6 | ) | |||||||||
Net (loss) income from continuing operations | (44.2 | ) | 37.4 | (218.2 | %) | |||||||
Net income (loss) from discontinued operations, net of tax | 0.2 | (9.0 | ) | |||||||||
Net (loss) income | ($44.1 | ) | $28.3 | (255.8 | %) | |||||||
Basic (loss) income per share: | ||||||||||||
Continuing operations | ($0.92 | ) | $0.77 | |||||||||
Discontinued operations | 0.01 | (0.18 | ) | |||||||||
($0.91 | ) | $0.59 | ||||||||||
Diluted (loss) income per share: | ||||||||||||
Continuing operations | ($0.92 | ) | $0.76 | |||||||||
Discontinued operations | 0.01 | (0.18 | ) | |||||||||
($0.91 | ) | $0.58 | ||||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 48.3 | 48.4 | ||||||||||
Diluted | 48.3 | 49.3 | ||||||||||
* | Numbers may not add up precisely due to rounding. |
Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | ||||||||||||
Six Months Ended June 30, | ||||||||||||
2019 | 2018 | % Change (1) | ||||||||||
Adjusted SG&A (1) | $212.6 | $200.9 | 5.8 | % | ||||||||
Adjusted R&D (1) | 76.5 | 61.6 | 24.2 | % | ||||||||
Adjusted operating income from continuing operations (1) | 76.6 | 101.4 | (24.5 | %) | ||||||||
Adjusted income from continuing operations, net of tax (1) | 60.9 | 81.1 | (24.9 | %) | ||||||||
Adjusted diluted earnings per share from continuing operations (1) | $1.25 | $1.65 | (24.2 | %) | ||||||||
(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 sales, except for income tax rate) | |||||||||||||
GAAP Six Months Ended June 30, | Adjusted (1) Six Months Ended June 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Gross profit | 68.3 | % | 66.2 | % | 69.3 | % | 67.7 | % | |||||
SG&A | 47.9 | % | 42.3 | % | 40.3 | % | 37.4 | % | |||||
R&D | 14.8 | % | 12.3 | % | 14.5 | % | 11.5 | % | |||||
Operating (loss) income from continuing operations | (9.6 | %) | 6.3 | % | 14.5 | % | 18.8 | % | |||||
Net (loss) income from continuing operations, net of tax | (8.4 | %) | 6.9 | % | 11.5 | % | 15.1 | % | |||||
Income tax rate | 22.4 | % | 7.0 | % | 15.4 | % | 16.7 | % | |||||
(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 press release. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||
Specified Items | |||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Impairments (D) | Product Remediation Expenses (E) | Acquisition Costs (F) | Non-recurring Legal, Contingent Consideration and Other Reserves (G) | Stock-based Compensation Costs (H) | Certain Tax Adjustments (I) | Certain Interest Adjustments (J) | Adjusted Financial Measures | |||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $74.9 | $— | $— | ($0.7 | ) | $— | $— | $— | $11.7 | ($0.7 | ) | $— | $— | $85.2 | |||||||||||||||||||||||
Product remediation | 5.1 | — | — | — | — | (5.1 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 71.1 | % | — | % | — | % | 0.3 | % | — | % | 1.8 | % | — | % | (4.2 | )% | 0.3 | % | — | % | — | % | 69.3 | % | |||||||||||||
Selling, general and administrative | $127.2 | $— | $— | ($0.1 | ) | $— | $— | ($0.3 | ) | ($12.4 | ) | ($6.3 | ) | $— | $— | $108.1 | |||||||||||||||||||||
Research and development | 34.5 | — | — | (0.1 | ) | (0.9 | ) | — | (0.2 | ) | 7.9 | (1.7 | ) | — | — | 39.7 | |||||||||||||||||||||
Other operating expenses | 65.2 | (4.4 | ) | (1.3 | ) | (9.2 | ) | (50.3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||
Operating (loss) income from continuing operations | (29.9 | ) | 4.4 | 1.3 | 10.1 | 51.2 | 5.1 | 0.5 | (7.3 | ) | 8.7 | — | — | 44.2 | |||||||||||||||||||||||
Income tax (benefit) expense | (6.2 | ) | 1.1 | 0.4 | 2.6 | 12.4 | 1.7 | 0.1 | 2.3 | 2.0 | (10.6 | ) | 0.4 | 6.2 | |||||||||||||||||||||||
Net (loss) income from continuing operations | (29.4 | ) | 3.3 | 1.0 | 7.5 | 38.8 | 3.4 | 0.4 | (9.6 | ) | 6.7 | 10.6 | 1.6 | 34.3 | |||||||||||||||||||||||
Diluted EPS - Continuing Operations | ($0.61 | ) | $0.07 | $0.02 | $0.15 | $0.80 | $0.07 | $0.01 | ($0.20 | ) | $0.14 | $0.22 | $0.03 | $0.70 |
GAAP results for the three months ended June 30, 2019 include: | ||||||||||||||
(A) | Merger and integration expenses related to our legacy companies and recent acquisitions | |||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||
(D) | Impairment of ImThera intangible assets and other long-lived assets | |||||||||||||
(E) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||
(F) | Costs related to acquisitions | |||||||||||||
(G) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||
(H) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||
(I) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||
(J) | Primarily relates to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||
Specified Items | |||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Product Remediation Expenses (D) | Acquisition Costs (E) | CRM Disposal Costs (F) | Non-recurring Legal and Contingent Consideration (G) | Stock-based Compensation Costs (H) | Certain Tax Adjustments (I) | Certain Interest Adjustments (J) | Adjusted Financial Measures | |||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $92.0 | $— | $— | ($4.9 | ) | $— | ($0.1 | ) | $— | $4.2 | ($0.2 | ) | $— | $— | $91.0 | ||||||||||||||||||||||
Product remediation | 1.5 | — | — | — | (1.5 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 67.5 | % | — | % | — | % | 1.7 | % | 0.5 | % | — | % | — | % | (1.5 | )% | 0.1 | % | — | % | — | % | 68.3 | % | |||||||||||||
Selling, general and administrative | $123.4 | $— | $— | ($0.1 | ) | $— | ($3.4 | ) | ($1.2 | ) | ($8.6 | ) | ($6.0 | ) | $— | $— | $104.1 | ||||||||||||||||||||
Research and development | 34.2 | — | — | (0.1 | ) | — | (2.4 | ) | — | 2.1 | (1.3 | ) | — | — | 32.5 | ||||||||||||||||||||||
Other operating expenses | 14.7 | (4.4 | ) | (0.5 | ) | (9.8 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Operating income from continuing operations | 21.6 | 4.4 | 0.5 | 14.9 | 1.5 | 5.9 | 1.2 | 2.3 | 7.5 | — | — | 59.9 | |||||||||||||||||||||||||
Income tax (benefit) expense | (1.0 | ) | 1.1 | 0.1 | 3.3 | 0.4 | 1.4 | 0.4 | 2.6 | 1.5 | 0.4 | 0.2 | 10.1 | ||||||||||||||||||||||||
Net income from continuing operations | 19.5 | 3.3 | 0.4 | 11.6 | 1.2 | 4.5 | 0.9 | (0.2 | ) | 6.0 | (0.4 | ) | 0.6 | 47.5 | |||||||||||||||||||||||
Diluted EPS - Continuing Operations | $0.40 | $0.07 | $0.01 | $0.24 | $0.02 | $0.09 | $0.02 | $— | $0.12 | ($0.01 | ) | $0.01 | $0.96 |
GAAP results for the three months ended June 30, 2018 include: | ||||||||||||||
(A) | Merger and integration expenses related to our legacy companies | |||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||
(D) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||
(E) | Costs related to acquisitions | |||||||||||||
(F) | Corporate costs incurred to divest the CRM business not attributable to discontinued operations | |||||||||||||
(G) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||
(H) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||
(I) | Primarily related to discrete tax items and the tax impact of intercompany transactions | |||||||||||||
(J) | Primarily related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||
Specified Items | |||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Impairments (D) | Product Remediation Expenses (E) | Acquisition Costs (F) | Non-recurring Legal, Contingent Consideration and Other Reserves (G) | Stock-based Compensation Costs (H) | Certain Tax Adjustments (I) | Certain Interest Adjustments (J) | Adjusted Financial Measures | |||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $159.2 | $— | $— | ($1.4 | ) | $— | $— | $— | $5.5 | ($1.0 | ) | $— | $— | $162.3 | |||||||||||||||||||||||
Product remediation | 8.1 | — | — | — | — | (8.1 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 68.3 | % | — | % | — | % | 0.3 | % | — | % | 1.5 | % | — | % | (1.0 | )% | 0.2 | % | — | % | — | % | 69.3 | % | |||||||||||||
Selling, general and administrative | $252.9 | $— | $— | ($0.3 | ) | $— | $— | ($0.7 | ) | ($27.8 | ) | ($11.6 | ) | $— | $— | $212.6 | |||||||||||||||||||||
Research and development | 78.1 | — | — | (0.1 | ) | (0.9 | ) | — | (1.9 | ) | 4.2 | (2.9 | ) | — | — | 76.5 | |||||||||||||||||||||
Other operating expenses | 80.3 | (7.6 | ) | (3.9 | ) | (18.5 | ) | (50.3 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||
Operating (loss) income from continuing operations | (50.7 | ) | 7.6 | 3.9 | 20.3 | 51.2 | 8.1 | 2.6 | 18.0 | 15.6 | — | — | 76.6 | ||||||||||||||||||||||||
Income tax (benefit) expense | (12.8 | ) | 1.7 | 0.9 | 5.2 | 12.4 | 2.6 | 0.6 | 9.5 | 3.6 | (13.0 | ) | 0.3 | 11.1 | |||||||||||||||||||||||
Net (loss) income from continuing operations | (44.2 | ) | 5.9 | 2.9 | 15.2 | 38.8 | 5.4 | 2.0 | 8.5 | 12.0 | 13.0 | 1.3 | 60.9 | ||||||||||||||||||||||||
Diluted EPS - Continuing Operations | ($0.92 | ) | $0.12 | $0.06 | $0.31 | $0.79 | $0.11 | $0.04 | $0.17 | $0.25 | $0.27 | $0.03 | $1.25 |
GAAP results for the six months ended June 30, 2019 include: | ||||||||||||||
(A) | Merger and integration expenses related to our legacy companies and recent acquisitions | |||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||
(D) | Impairment of ImThera intangible assets and other long-lived assets | |||||||||||||
(E) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||
(F) | Costs related to acquisitions | |||||||||||||
(G) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||
(H) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||
(I) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||
(J) | Primarily relates to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||
Specified Items | |||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2018 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Product Remediation Expenses (D) | Acquisition Costs (E) | CRM Disposal Costs (F) | Non-recurring Legal and Contingent Consideration (G) | Stock-based Compensation Costs (H) | Certain Tax Adjustments (I) | Certain Interest Adjustments (J) | Adjusted Financial Measures | |||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $176.6 | $— | $— | ($5.7 | ) | $— | ($0.1 | ) | $— | $3.6 | ($0.5 | ) | $— | $— | $174.0 | ||||||||||||||||||||||
Product remediation | 5.3 | — | — | — | (5.3 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 66.2 | % | — | % | — | % | 1.1 | % | 1.0 | % | — | % | — | % | (0.7 | )% | 0.1 | % | — | % | — | % | 67.7 | % | |||||||||||||
Selling, general and administrative | $227.6 | $— | $— | ($0.3 | ) | $— | ($3.8 | ) | ($1.9 | ) | ($11.4 | ) | ($9.3 | ) | $— | $— | $200.9 | ||||||||||||||||||||
Research and development | 66.0 | — | — | (0.1 | ) | — | (3.7 | ) | — | 1.9 | (2.4 | ) | — | — | 61.6 | ||||||||||||||||||||||
Other operating expenses | 28.3 | (7.4 | ) | (2.4 | ) | (18.6 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Operating income from continuing operations | 34.1 | 7.4 | 2.4 | 24.7 | 5.3 | 7.6 | 1.9 | 6.0 | 12.2 | — | — | 101.4 | |||||||||||||||||||||||||
Gain on acquisition | 11.5 | — | — | — | — | (11.5 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Income tax expense | 2.9 | 1.7 | 0.5 | 5.7 | 1.2 | 1.8 | 0.6 | 3.4 | 2.6 | (4.4 | ) | 0.4 | 16.4 | ||||||||||||||||||||||||
Net income from continuing operations | 37.4 | 5.7 | 1.9 | 19.0 | 4.0 | (5.7 | ) | 1.2 | 2.5 | 9.5 | 4.4 | 1.1 | 81.1 | ||||||||||||||||||||||||
Diluted EPS - Continuing Operations | $0.76 | $0.12 | $0.04 | $0.39 | $0.08 | ($0.12 | ) | $0.03 | $0.05 | $0.19 | $0.09 | $0.02 | $1.65 |
GAAP results for the six months ended June 30, 2018 include: | ||||||||||||||
(A) | Merger and integration expenses related to our legacy companies | |||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||
(D) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||
(E) | Costs related to acquisitions | |||||||||||||
(F) | Corporate costs incurred to divest the CRM business not attributable to discontinued operations | |||||||||||||
(G) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||
(H) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||
(I) | Primarily related to discrete tax items and the tax impact of intercompany transactions | |||||||||||||
(J) | Primarily related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||
* | Numbers may not add up precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED | ||||||||
(U.S. dollars in millions) | ||||||||
June 30, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $44.5 | $47.2 | ||||||
Accounts receivable, net | 256.1 | 256.1 | ||||||
Inventories | 168.7 | 153.5 | ||||||
Prepaid and refundable taxes | 74.3 | 46.9 | ||||||
Prepaid expenses and other current assets | 24.9 | 29.6 | ||||||
Total Current Assets | 568.4 | 533.3 | ||||||
Property, plant and equipment, net | 185.1 | 191.4 | ||||||
Goodwill | 961.7 | 956.8 | ||||||
Intangible assets, net | 721.0 | 770.4 | ||||||
Operating lease assets | 56.8 | — | ||||||
Investments | 25.1 | 24.8 | ||||||
Deferred tax assets | 97.6 | 68.1 | ||||||
Other assets | 5.8 | 4.8 | ||||||
Total Assets | $2,621.7 | $2,549.7 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Current debt obligations | $37.7 | $28.8 | ||||||
Accounts payable | 88.5 | 76.7 | ||||||
Accrued liabilities and other | 140.7 | 124.3 | ||||||
Current litigation provision liability | 256.6 | 161.9 | ||||||
Taxes payable | 11.6 | 22.5 | ||||||
Accrued employee compensation and related benefits | 60.8 | 82.6 | ||||||
Total Current Liabilities | 595.9 | 496.7 | ||||||
Long-term debt obligations | 174.4 | 139.5 | ||||||
Contingent consideration | 133.1 | 161.4 | ||||||
Litigation provision liability | 36.8 | 132.2 | ||||||
Deferred tax liabilities | 108.8 | 68.2 | ||||||
Long-term operating lease liabilities | 47.4 | — | ||||||
Long-term employee compensation and related benefits | 27.0 | 25.3 | ||||||
Other long-term liabilities | 15.1 | 22.6 | ||||||
Total Liabilities | 1,138.3 | 1,046.0 | ||||||
Total Stockholders’ Equity | 1,483.3 | 1,503.7 | ||||||
Total Liabilities and Stockholders’ Equity | $2,621.7 | $2,549.7 | ||||||
* | Numbers may not add up precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED | ||||||||
(U.S. dollars in millions) | ||||||||
Six Months Ended June 30, | ||||||||
Operating Activities: | 2019 | 2018 | ||||||
Net (loss) income | ($44.1 | ) | $28.3 | |||||
Non-cash items included in net (loss) income: | ||||||||
Impairment of intangible assets | 50.3 | — | ||||||
Amortization | 18.5 | 18.6 | ||||||
Deferred tax expense (benefit) | 15.9 | (9.9 | ) | |||||
Stock-based compensation | 15.6 | 14.2 | ||||||
Depreciation | 15.3 | 16.6 | ||||||
Remeasurement of contingent consideration to fair value | (10.6 | ) | (5.5 | ) | ||||
Amortization of operating lease assets | 6.3 | — | ||||||
Amortization of income taxes payable on intercompany transfers of property | 3.2 | 5.2 | ||||||
Gain on acquisition | — | (11.5 | ) | |||||
Other | 2.7 | 1.4 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (0.3 | ) | 21.8 | |||||
Inventories | (14.3 | ) | (11.3 | ) | ||||
Other current and non-current assets | 1.5 | (15.8 | ) | |||||
Accounts payable and accrued current and non-current liabilities | (29.1 | ) | (5.1 | ) | ||||
Taxes payable | (43.0 | ) | 1.2 | |||||
Restructuring reserve | (5.5 | ) | 0.3 | |||||
Net cash (used in) provided by operating activities | (17.4 | ) | 48.5 | |||||
Investing Activities: | ||||||||
Purchases of property, plant and equipment | (10.8 | ) | (12.5 | ) | ||||
Acquisitions, net of cash acquired | (10.8 | ) | (279.9 | ) | ||||
Purchases of intangible assets | (1.0 | ) | (0.7 | ) | ||||
Proceeds from asset sales | 0.4 | 13.2 | ||||||
Purchase of investment | (0.3 | ) | — | |||||
Proceeds from the sale of CRM business franchise, net of cash disposed | — | 186.7 | ||||||
Net cash used in investing activities | (22.5 | ) | (93.2 | ) | ||||
Financing Activities: | ||||||||
Proceeds from long-term debt obligations | 53.8 | — | ||||||
Repayment of long-term debt obligations | (12.1 | ) | (12.2 | ) | ||||
Shares repurchased from employees for minimum tax withholding | (5.7 | ) | (7.1 | ) | ||||
Debt issuance costs | (3.7 | ) | — | |||||
Proceeds from share issuances under ESPP | 2.6 | — | ||||||
Change in short-term borrowing, net | 2.4 | (18.0 | ) | |||||
Proceeds from short-term borrowing (maturities greater than 90 days) | — | 240.0 | ||||||
Repayment of short-term borrowing (maturities greater than 90 days) | — | (190.0 | ) | |||||
Payment of deferred consideration - acquisition of Caisson Interventional, LLC | — | (14.1 | ) | |||||
Proceeds from exercise of stock options | 0.3 | 2.7 | ||||||
Other | (0.4 | ) | (0.4 | ) | ||||
Net cash provided by financing activities | 37.1 | 0.9 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 0.1 | (2.5 | ) | |||||
Net decrease in cash and cash equivalents | (2.7 | ) | (46.2 | ) | ||||
Cash and cash equivalents at beginning of period | 47.2 | 93.6 | ||||||
Cash and cash equivalents at end of period | $44.5 | $47.4 | ||||||
* | Numbers may not add up precisely due to rounding. |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
GAAP diluted weighted average shares outstanding | 48.3 | 48.3 | |||||
Add effects of stock-based compensation instruments | 0.4 | 0.5 | |||||
Adjusted diluted weighted average shares outstanding (1) | 48.7 | 48.8 | |||||
(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 up precisely due to rounding. |