(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name on each exchange on which registered | ||||||
Emerging growth company |
☐ |
Exhibit | Description | |||||||
99.1 | ||||||||
LivaNova PLC | |||||
Date: July 29, 2020 | By:/s/ Keyna Skeffington | ||||
Name: Keyna Skeffington | |||||
Title: Senior Vice President & General Counsel | |||||
$ in millions | Three Months Ended June 30, | % Change | Constant-Currency % Change | |||||||||||
Business / Product Line: | 2020 | 2019 | ||||||||||||
Cardiopulmonary | $101.1 | $130.6 | (22.6 | %) | (20.8 | %) | ||||||||
Heart Valves | 17.5 | 33.4 | (47.6 | %) | (46.8 | %) | ||||||||
Advanced Circulatory Support | 6.0 | 8.3 | (27.7 | %) | (27.6 | %) | ||||||||
Cardiovascular | 124.5 | 172.2 | (27.7 | %) | (26.2 | %) | ||||||||
Neuromodulation | 57.2 | 104.3 | (45.1 | %) | (44.7 | %) | ||||||||
Other | 0.5 | 0.7 | (30.0 | %) | (28.5 | %) | ||||||||
Total Net Sales | $182.2 | $277.2 | (34.3 | %) | (33.1 | %) |
Melissa Farina
Vice President, Investor Relations
Phone: +1 (281) 228 7262
e-mail: investorrelations@LivaNova.com |
LIVANOVA PLC | |||||||||||||||||||||||||||||
NET SALES | |||||||||||||||||||||||||||||
(U.S. dollars in millions) | |||||||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | % Change at Actual Currency Rates | % Change at Constant-Currency Rates(1) | ||||||||||||||||||||||||||
Cardiopulmonary | |||||||||||||||||||||||||||||
US | $25.8 | $41.4 | (37.6) | % | (37.6) | % | |||||||||||||||||||||||
Europe | 23.3 | 34.3 | (32.1) | % | (30.7) | % | |||||||||||||||||||||||
Rest of World | 51.9 | 54.9 | (5.3) | % | (1.9) | % | |||||||||||||||||||||||
Total | 101.1 | 130.6 | (22.6) | % | (20.8) | % | |||||||||||||||||||||||
Heart Valves | |||||||||||||||||||||||||||||
US | 2.5 | 4.7 | (46.8) | % | (46.8) | % | |||||||||||||||||||||||
Europe | 5.3 | 10.7 | (49.9) | % | (49.1) | % | |||||||||||||||||||||||
Rest of World | 9.6 | 18.0 | (46.5) | % | (45.4) | % | |||||||||||||||||||||||
Total | 17.5 | 33.4 | (47.6) | % | (46.8) | % | |||||||||||||||||||||||
Advanced Circulatory Support | |||||||||||||||||||||||||||||
US | 5.7 | 7.9 | (28.7) | % | (28.7) | % | |||||||||||||||||||||||
Europe | 0.3 | 0.2 | N/A | N/A | |||||||||||||||||||||||||
Rest of World | — | 0.2 | N/A | N/A | |||||||||||||||||||||||||
Total | 6.0 | 8.3 | (27.7) | % | (27.6) | % | |||||||||||||||||||||||
Cardiovascular | |||||||||||||||||||||||||||||
US | 34.0 | 54.0 | (37.1) | % | (37.1) | % | |||||||||||||||||||||||
Europe | 28.9 | 45.2 | (35.9) | % | (34.7) | % | |||||||||||||||||||||||
Rest of World | 61.6 | 73.0 | (15.6) | % | (12.8) | % | |||||||||||||||||||||||
Total | 124.5 | 172.2 | (27.7) | % | (26.2) | % | |||||||||||||||||||||||
Neuromodulation | |||||||||||||||||||||||||||||
US | 44.2 | 80.6 | (45.1) | % | (45.1) | % | |||||||||||||||||||||||
Europe | 6.4 | 13.0 | (50.6) | % | (49.3) | % | |||||||||||||||||||||||
Rest of World | 6.6 | 10.7 | (38.6) | % | (36.2) | % | |||||||||||||||||||||||
Total | 57.2 | 104.3 | (45.1) | % | (44.7) | % | |||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||
US | — | — | N/A | N/A | |||||||||||||||||||||||||
Europe | — | — | N/A | N/A | |||||||||||||||||||||||||
Rest of World | 0.5 | 0.7 | (30.0) | % | (28.5) | % | |||||||||||||||||||||||
Total | 0.5 | 0.7 | (30.0) | % | (28.5) | % | |||||||||||||||||||||||
Totals | |||||||||||||||||||||||||||||
US | 78.2 | 134.6 | (41.9) | % | (41.9) | % | |||||||||||||||||||||||
Europe | 35.4 | 58.2 | (39.2) | % | (37.9) | % | |||||||||||||||||||||||
Rest of World | 68.7 | 84.4 | (18.7) | % | (15.9) | % | |||||||||||||||||||||||
Total | $182.2 | $277.2 | (34.3) | % | (33.1) | % | |||||||||||||||||||||||
(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 | |||||||||||||||||||||||||||||
NET SALES | |||||||||||||||||||||||||||||
(U.S. dollars in millions) | |||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | % Change at Actual Currency Rates | % Change at Constant-Currency Rates (1) | ||||||||||||||||||||||||||
Cardiopulmonary | |||||||||||||||||||||||||||||
US | $62.7 | $80.5 | (22.2) | % | (22.2) | % | |||||||||||||||||||||||
Europe | 57.5 | 69.9 | (17.7) | % | (15.5) | % | |||||||||||||||||||||||
Rest of World | 97.2 | 101.7 | (4.4) | % | (1.2) | % | |||||||||||||||||||||||
Total | 217.4 | 252.1 | (13.8) | % | (11.9) | % | |||||||||||||||||||||||
Heart Valves | |||||||||||||||||||||||||||||
US | 5.9 | 9.0 | (35.1) | % | (35.1) | % | |||||||||||||||||||||||
Europe | 14.9 | 21.2 | (29.8) | % | (28.1) | % | |||||||||||||||||||||||
Rest of World | 21.9 | 28.8 | (23.8) | % | (22.0) | % | |||||||||||||||||||||||
Total | 42.7 | 59.0 | (27.7) | % | (26.2) | % | |||||||||||||||||||||||
Advanced Circulatory Support | |||||||||||||||||||||||||||||
US | 15.7 | 16.0 | (1.5) | % | (1.5) | % | |||||||||||||||||||||||
Europe | 0.7 | 0.3 | N/A | N/A | |||||||||||||||||||||||||
Rest of World | 0.1 | 0.3 | N/A | N/A | |||||||||||||||||||||||||
Total | 16.5 | 16.6 | (0.4) | % | (0.3) | % | |||||||||||||||||||||||
Cardiovascular | |||||||||||||||||||||||||||||
US | 84.3 | 105.5 | (20.1) | % | (20.1) | % | |||||||||||||||||||||||
Europe | 73.1 | 91.4 | (20.0) | % | (18.0) | % | |||||||||||||||||||||||
Rest of World | 119.2 | 130.8 | (8.8) | % | (5.9) | % | |||||||||||||||||||||||
Total | 276.6 | 327.7 | (15.6) | % | (13.9) | % | |||||||||||||||||||||||
Neuromodulation | |||||||||||||||||||||||||||||
US | 117.5 | 157.4 | (25.4) | % | (25.4) | % | |||||||||||||||||||||||
Europe | 17.0 | 23.7 | (28.1) | % | (25.9) | % | |||||||||||||||||||||||
Rest of World | 12.4 | 17.8 | (30.6) | % | (27.3) | % | |||||||||||||||||||||||
Total | 146.9 | 198.9 | (26.2) | % | (25.6) | % | |||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||
US | — | — | N/A | N/A | |||||||||||||||||||||||||
Europe | — | — | N/A | N/A | |||||||||||||||||||||||||
Rest of World | 1.1 | 1.3 | (14.2) | % | (12.0) | % | |||||||||||||||||||||||
Total | 1.1 | 1.3 | (14.2) | % | (12.0) | % | |||||||||||||||||||||||
Totals | |||||||||||||||||||||||||||||
US | 201.8 | 263.0 | (23.3) | % | (23.3) | % | |||||||||||||||||||||||
Europe | 90.1 | 115.0 | (21.7) | % | (19.6) | % | |||||||||||||||||||||||
Rest of World | 132.8 | 150.0 | (11.5) | % | (8.5) | % | |||||||||||||||||||||||
Total | $424.6 | $528.0 | (19.6) | % | (18.3) | % | |||||||||||||||||||||||
(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, | ||||||||||||||||||||
2020 | 2019 | % Change | ||||||||||||||||||
Net sales | $182.2 | $277.2 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of sales - exclusive of amortization | 56.8 | 74.9 | ||||||||||||||||||
Product remediation | 4.3 | 5.1 | ||||||||||||||||||
Selling, general and administrative | 98.0 | 127.2 | ||||||||||||||||||
Research and development | 25.2 | 34.5 | ||||||||||||||||||
Merger and integration expenses | 2.0 | 4.4 | ||||||||||||||||||
Restructuring expenses | 0.8 | 1.3 | ||||||||||||||||||
Impairment of intangible assets | — | 50.3 | ||||||||||||||||||
Amortization of intangibles | 9.4 | 9.2 | ||||||||||||||||||
Litigation provision, net | 1.0 | — | ||||||||||||||||||
Operating loss from continuing operations | (15.2) | (29.9) | (49.2 | %) | ||||||||||||||||
Interest expense, net | (5.4) | (3.8) | ||||||||||||||||||
Foreign exchange and other losses | (1.0) | (1.9) | ||||||||||||||||||
Loss from continuing operations before tax | (21.7) | (35.6) | (39.0 | %) | ||||||||||||||||
Income tax expense (benefit) | 66.3 | (6.2) | ||||||||||||||||||
Net loss from continuing operations | (88.0) | (29.4) | 199.3 | % | ||||||||||||||||
Net income from discontinued operations, net of tax | — | 0.2 | ||||||||||||||||||
Net loss | ($88.0) | ($29.2) | 201.4 | % | ||||||||||||||||
Basic loss per share: | ||||||||||||||||||||
Continuing operations | ($1.81) | ($0.61) | ||||||||||||||||||
Discontinued operations | — | 0.01 | ||||||||||||||||||
($1.81) | ($0.60) | |||||||||||||||||||
Diluted loss per share: | ||||||||||||||||||||
Continuing operations | ($1.81) | ($0.61) | ||||||||||||||||||
Discontinued operations | — | 0.01 | ||||||||||||||||||
($1.81) | ($0.60) | |||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 48.6 | 48.3 | ||||||||||||||||||
Diluted | 48.6 | 48.3 | ||||||||||||||||||
* 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, | |||||||||||||||||||||||
2020 | 2019 | % Change (1) | |||||||||||||||||||||
Adjusted SG&A (1) | $79.7 | $108.1 | (26.3 | %) | |||||||||||||||||||
Adjusted R&D (1) | 35.2 | 39.7 | (11.3 | %) | |||||||||||||||||||
Adjusted operating (loss) income from continuing operations (1) | (4.2) | 44.2 | (109.5 | %) | |||||||||||||||||||
Adjusted net (loss) income from continuing operations (1) | (7.5) | 34.3 | (121.9 | %) | |||||||||||||||||||
Adjusted diluted (loss) earnings per share from continuing operations (1) | ($0.15) | $0.70 | (121.4 | %) | |||||||||||||||||||
(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. |
Statistics (as a % of net sales, except for income tax rate) | |||||||||||||||||||||||||||||
GAAP Three Months Ended June 30, | Adjusted (1) Three Months Ended June 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
Gross profit | 66.5 | % | 71.1 | % | 60.7 | % | 69.3 | % | |||||||||||||||||||||
SG&A | 53.8 | % | 45.9 | % | 43.7 | % | 39.0 | % | |||||||||||||||||||||
R&D | 13.8 | % | 12.5 | % | 19.3 | % | 14.3 | % | |||||||||||||||||||||
Operating (loss) income from continuing operations | (8.4 | %) | (10.8 | %) | (2.3 | %) | 15.9 | % | |||||||||||||||||||||
Net (loss) income from continuing operations | (48.3 | %) | (10.6 | %) | (4.1 | %) | 12.4 | % | |||||||||||||||||||||
Income tax rate | (306.0 | %) | 17.3 | % | 2.8 | % | 15.4 | % | |||||||||||||||||||||
(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, | ||||||||||||||||||||
2020 | 2019 | % Change | ||||||||||||||||||
Net sales | $424.6 | $528.0 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of sales - exclusive of amortization | 125.7 | 159.2 | ||||||||||||||||||
Product remediation | 5.7 | 8.1 | ||||||||||||||||||
Selling, general and administrative | 218.2 | 252.9 | ||||||||||||||||||
Research and development | 61.1 | 78.1 | ||||||||||||||||||
Merger and integration expenses | 5.5 | 7.6 | ||||||||||||||||||
Restructuring expenses | 2.4 | 3.9 | ||||||||||||||||||
Impairment of intangible assets | — | 50.3 | ||||||||||||||||||
Amortization of intangibles | 19.7 | 18.5 | ||||||||||||||||||
Litigation provision, net | 1.0 | — | ||||||||||||||||||
Operating loss from continuing operations | (14.6) | (50.7) | (71.2 | %) | ||||||||||||||||
Interest expense, net | (10.1) | (5.2) | ||||||||||||||||||
Foreign exchange and other losses | (2.9) | (1.1) | ||||||||||||||||||
Loss from continuing operations before tax | (27.7) | (57.0) | (51.4 | %) | ||||||||||||||||
Income tax expense (benefit) | 21.6 | (12.8) | ||||||||||||||||||
Losses from equity method investments | (0.2) | — | ||||||||||||||||||
Net loss from continuing operations | (49.4) | (44.2) | 11.8 | % | ||||||||||||||||
Net (loss) income from discontinued operations, net of tax | (1.0) | 0.2 | ||||||||||||||||||
Net loss | ($50.4) | ($44.1) | 14.3 | % | ||||||||||||||||
Basic loss per share: | ||||||||||||||||||||
Continuing operations | ($1.02) | ($0.92) | ||||||||||||||||||
Discontinued operations | (0.02) | 0.01 | ||||||||||||||||||
($1.04) | ($0.91) | |||||||||||||||||||
Diluted loss per share: | ||||||||||||||||||||
Continuing operations | ($1.02) | ($0.92) | ||||||||||||||||||
Discontinued operations | (0.02) | 0.01 | ||||||||||||||||||
($1.04) | ($0.91) | |||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 48.5 | 48.3 | ||||||||||||||||||
Diluted | 48.5 | 48.3 | ||||||||||||||||||
* 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, | |||||||||||||||||||||||
2020 | 2019 | % Change (1) | |||||||||||||||||||||
Adjusted SG&A (1) | $183.4 | $212.6 | (13.7 | %) | |||||||||||||||||||
Adjusted R&D (1) | 76.1 | 76.5 | (0.5 | %) | |||||||||||||||||||
Adjusted operating income from continuing operations (1) | 16.8 | 76.6 | (78.1 | %) | |||||||||||||||||||
Adjusted net income from continuing operations (1) | 8.5 | 60.9 | (86.0 | %) | |||||||||||||||||||
Adjusted diluted earnings per share from continuing operations (1) | $0.17 | $1.25 | (86.4 | %) | |||||||||||||||||||
(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. |
Statistics (as a % of net sales, except for income tax rate) | |||||||||||||||||||||||||||||
GAAP Six Months Ended June 30, | Adjusted (1) Six Months Ended June 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
Gross profit | 69.0 | % | 68.3 | % | 65.1 | % | 69.3 | % | |||||||||||||||||||||
SG&A | 51.4 | % | 47.9 | % | 43.2 | % | 40.3 | % | |||||||||||||||||||||
R&D | 14.4 | % | 14.8 | % | 17.9 | % | 14.5 | % | |||||||||||||||||||||
Operating (loss) income from continuing operations | (3.4 | %) | (9.6 | %) | 4.0 | % | 14.5 | % | |||||||||||||||||||||
Net (loss) income from continuing operations | (11.6 | %) | (8.4 | %) | 2.0 | % | 11.5 | % | |||||||||||||||||||||
Income tax rate | (78.0 | %) | 22.4 | % | 12.4 | % | 15.4 | % | |||||||||||||||||||||
(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. |
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, 2020 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Product Remediation Expenses (D) | Financing Transactions (E) | Non-recurring Legal and Contingent Consideration (F) | Stock-based Compensation Costs (G) | Certain Tax Adjustments (H) | Certain Interest Adjustments (I) | Adjusted Financial Measures | ||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $ | 56.8 | $ | — | $ | — | $ | (0.3) | $ | — | $ | — | $ | 15.4 | $ | (0.3) | $ | — | $ | — | $ | 71.6 | |||||||||||||
Product remediation | 4.3 | — | — | — | (4.3) | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 66.5 | % | — | % | — | % | 0.2 | % | 2.3 | % | — | % | (8.5) | % | 0.2 | % | — | % | — | % | 60.7 | % | |||||||||||||
Selling, general and administrative | 98.0 | — | — | (0.1) | — | (2.5) | (6.5) | (9.3) | — | — | 79.7 | ||||||||||||||||||||||||
Selling, general and administrative as a percent of net sales | 53.8 | % | — | % | — | % | — | % | — | % | (1.4) | % | (3.6) | % | (5.1) | % | — | % | — | % | 43.7 | % | |||||||||||||
Research and development | 25.2 | — | — | — | — | — | 10.5 | (0.4) | — | — | 35.2 | ||||||||||||||||||||||||
Research and development as a percent of net sales | 13.8 | % | — | % | — | % | — | % | — | % | — | % | 5.7 | % | (0.2) | % | — | % | — | % | 19.3 | % | |||||||||||||
Litigation provision, net | 1.0 | — | — | — | — | — | (1.0) | — | — | — | — | ||||||||||||||||||||||||
Other operating expenses | 12.2 | (2.0) | (0.8) | (9.4) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Operating loss from continuing operations | (15.2) | 2.0 | 0.8 | 9.8 | 4.3 | 2.5 | (18.4) | 10.0 | — | — | (4.2) | ||||||||||||||||||||||||
Operating margin percent | (8.4) | % | 1.1 | % | 0.4 | % | 5.4 | % | 2.3 | % | 1.4 | % | (10.1) | % | 5.5 | % | — | % | — | % | (2.3) | % | |||||||||||||
Income tax expense (benefit) | 66.3 | — | (0.2) | 1.4 | 0.5 | — | 0.6 | (0.4) | (67.9) | (0.5) | (0.2) | ||||||||||||||||||||||||
Net loss from continuing operations | (88.0) | 2.0 | 1.0 | 8.4 | 3.8 | 2.7 | (19.0) | 10.4 | 67.9 | 3.3 | (7.5) | ||||||||||||||||||||||||
Diluted EPS - Continuing Operations | $ | (1.81) | $ | 0.04 | $ | 0.02 | $ | 0.17 | $ | 0.08 | $ | 0.05 | $ | (0.39) | $ | 0.21 | $ | 1.40 | $ | 0.07 | $ | (0.15) |
GAAP results for the three months ended June 30, 2020 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) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||||||||||||
(E) | Costs associated with our June 2020 financing transactions, including the mark-to-market adjustment for the exchangeable option feature and capped call derivatives | |||||||||||||||||||||||||||||||||||||
(F) | 3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, settlements and other matters, remeasurement of contingent consideration related to acquisitions | |||||||||||||||||||||||||||||||||||||
(G) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||||||||||||||||||||||||||
(H) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||||||||||||||||||||||||||
(I) | Primarily relates to non-cash interest expense on our Senior Secured Term Loan and Cash Exchangeable Senior Notes, interest related to the 3T Heater-Cooler matter and intellectual property migration | |||||||||||||||||||||||||||||||||||||
* Numbers may not add 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, 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 and 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 | ||||||||||||||||||||||||||
Selling, general and administrative as a percent of net sales | 45.9 | % | — | % | — | % | — | % | — | % | — | % | (0.1) | % | (4.5) | % | (2.3) | % | — | % | — | % | 39.0 | % | ||||||||||||||
Research and development | 34.5 | — | — | (0.1) | (0.9) | — | (0.2) | 7.9 | (1.7) | — | — | 39.7 | ||||||||||||||||||||||||||
Research and development as a percent of net sales | 12.5 | % | — | % | — | % | — | % | (0.3) | % | — | % | (0.1) | % | 2.9 | % | (0.6) | % | — | % | — | % | 14.3 | % | ||||||||||||||
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 | ||||||||||||||||||||||||||
Operating margin percent | (10.8) | % | 1.6 | % | 0.5 | % | 3.7 | % | 18.5 | % | 1.8 | % | 0.2 | % | (2.6) | % | 3.1 | % | — | % | — | % | 15.9 | % | ||||||||||||||
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 | |||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2020 | GAAP Financial Measures | Merger and Integration Expenses (A) | Restructuring Expenses (B) | Depreciation and Amortization Expenses (C) | Product Remediation Expenses (D) | Financing Transactions (E) | Non-recurring Legal and Contingent Consideration (F) | Stock-based Compensation Costs (G) | Certain Tax Adjustments (H) | Certain Interest Adjustments (I) | Adjusted Financial Measures | ||||||||||||||||||||||||
Cost of sales - exclusive of amortization | $ | 125.7 | $ | — | $ | — | $ | (0.7) | $ | — | $ | — | $ | 24.2 | $ | (0.9) | $ | — | $ | — | $ | 148.3 | |||||||||||||
Product remediation | 5.7 | — | — | — | (5.7) | — | — | — | — | — | — | ||||||||||||||||||||||||
Gross profit percent | 69.0 | % | — | % | — | % | 0.2 | % | 1.4 | % | — | % | (5.7) | % | 0.2 | % | — | % | — | % | 65.1 | % | |||||||||||||
Selling, general and administrative | 218.2 | — | — | (0.1) | — | (2.5) | (15.6) | (16.6) | — | — | 183.4 | ||||||||||||||||||||||||
Selling, general and administrative as a percent of net sales | 51.4 | % | — | % | — | % | — | % | — | % | (0.6) | % | (3.7) | % | (3.9) | % | — | % | — | % | 43.2 | % | |||||||||||||
Research and development | 61.1 | — | — | (0.1) | — | — | 16.6 | (1.5) | — | — | 76.1 | ||||||||||||||||||||||||
Research and development as a percent of net sales | 14.4 | % | — | % | — | % | — | % | — | % | — | % | 3.9 | % | (0.4) | % | — | % | — | % | 17.9 | % | |||||||||||||
Litigation provision, net | 1.0 | — | — | — | — | — | (1.0) | — | — | — | — | ||||||||||||||||||||||||
Other operating expenses | 27.6 | (5.5) | (2.4) | (19.7) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Operating (loss) income from continuing operations | (14.6) | 5.5 | 2.4 | 20.5 | 5.7 | 2.5 | (24.3) | 19.0 | — | — | 16.8 | ||||||||||||||||||||||||
Operating margin percent | (3.4) | % | 1.3 | % | 0.6 | % | 4.8 | % | 1.4 | % | 0.6 | % | (5.7) | % | 4.5 | % | — | % | — | % | 4.0 | % | |||||||||||||
Income tax expense | 21.6 | 0.3 | — | 2.9 | 0.8 | — | 2.0 | 0.6 | (27.0) | — | 1.2 | ||||||||||||||||||||||||
Net (loss) income from continuing operations | (49.4) | 5.2 | 2.4 | 17.6 | 5.0 | 2.7 | (26.3) | 18.4 | 27.0 | 6.0 | 8.5 | ||||||||||||||||||||||||
Diluted EPS - Continuing Operations | $ | (1.02) | $ | 0.11 | $ | 0.05 | $ | 0.36 | $ | 0.10 | $ | 0.05 | $ | (0.54) | $ | 0.38 | $ | 0.55 | $ | 0.12 | $ | 0.17 |
GAAP results for the six months ended June 30, 2020 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) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||||||||||||
(E) | Costs associated with our June 2020 financing transactions, including the mark-to-market adjustment for the exchangeable option feature and capped call derivatives | |||||||||||||||||||||||||||||||||||||
(F) | 3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, settlements and other matters, remeasurement of contingent consideration related to acquisitions | |||||||||||||||||||||||||||||||||||||
(G) | Non-cash expenses associated with stock-based compensation costs | |||||||||||||||||||||||||||||||||||||
(H) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||||||||||||||||||||||||||
(I) | Primarily relates to non-cash interest expense on our Senior Secured Term Loan and Cash Exchangeable Senior Notes, interest related to the 3T Heater-Cooler matter and intellectual property migration | |||||||||||||||||||||||||||||||||||||
* Numbers may not add 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 and 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 | ||||||||||||||||||||||||||
Selling, general and administrative as a percent of net sales | 47.9 | % | — | % | — | % | (0.1) | % | — | % | — | % | (0.1) | % | (5.3) | % | (2.2) | % | — | % | — | % | 40.3 | % | ||||||||||||||
Research and development | 78.1 | — | — | (0.1) | (0.9) | — | (1.9) | 4.2 | (2.9) | — | — | 76.5 | ||||||||||||||||||||||||||
Research and development as a percent of net sales | 14.8 | % | — | % | — | % | — | % | (0.2) | % | — | % | (0.4) | % | 0.8 | % | (0.6) | % | — | % | — | % | 14.5 | % | ||||||||||||||
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 | ||||||||||||||||||||||||||
Operating margin percent | (9.6) | % | 1.4 | % | 0.7 | % | 3.8 | % | 9.7 | % | 1.5 | % | 0.5 | % | 3.4 | % | 3.0 | % | — | % | — | % | 14.5 | % | ||||||||||||||
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. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED | ||||||||||||||
(U.S. dollars in millions) | ||||||||||||||
June 30, 2020 | December 31, 2019 | |||||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $232.5 | $61.1 | ||||||||||||
Accounts receivable, net of allowance | 186.1 | 257.8 | ||||||||||||
Inventories, net | 177.2 | 164.2 | ||||||||||||
Prepaid and refundable taxes | 41.7 | 37.8 | ||||||||||||
Prepaid expenses and other current assets | 34.8 | 28.6 | ||||||||||||
Total Current Assets | 672.4 | 549.4 | ||||||||||||
Property, plant and equipment, net | 185.7 | 181.4 | ||||||||||||
Goodwill | 902.2 | 915.8 | ||||||||||||
Intangible assets, net | 583.5 | 607.5 | ||||||||||||
Operating lease assets | 51.1 | 54.4 | ||||||||||||
Investments | 30.2 | 27.3 | ||||||||||||
Deferred tax assets | 23.1 | 68.7 | ||||||||||||
Other assets | 54.4 | 7.4 | ||||||||||||
Total Assets | $2,502.7 | $2,411.8 | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Current debt obligations | $7.4 | $77.4 | ||||||||||||
Accounts payable | 69.1 | 85.9 | ||||||||||||
Accrued liabilities and other | 97.2 | 120.1 | ||||||||||||
Current litigation provision liability | 37.4 | 146.0 | ||||||||||||
Taxes payable | 8.4 | 12.7 | ||||||||||||
Accrued employee compensation and related benefits | 48.8 | 70.4 | ||||||||||||
Total Current Liabilities | 268.4 | 512.6 | ||||||||||||
Long-term debt obligations | 639.2 | 260.3 | ||||||||||||
Contingent consideration | 71.2 | 114.4 | ||||||||||||
Litigation provision liability | 11.6 | 24.4 | ||||||||||||
Deferred tax liabilities | 30.1 | 32.2 | ||||||||||||
Long-term operating lease liabilities | 42.4 | 46.0 | ||||||||||||
Long-term employee compensation and related benefits | 22.4 | 22.8 | ||||||||||||
Long-term derivative liability | 71.5 | 0.1 | ||||||||||||
Other long-term liabilities | 12.7 | 15.3 | ||||||||||||
Total Liabilities | 1,169.5 | 1,028.1 | ||||||||||||
Total Stockholders’ Equity | 1,333.2 | 1,383.7 | ||||||||||||
Total Liabilities and Stockholders’ Equity | $2,502.7 | $2,411.8 | ||||||||||||
* 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, | |||||||||||||
2020 | 2019 | |||||||||||||
Operating Activities: | ||||||||||||||
Net loss | ($50.4) | ($44.1) | ||||||||||||
Non-cash items included in net loss: | ||||||||||||||
Deferred tax expense | 46.2 | 15.9 | ||||||||||||
Remeasurement of contingent consideration to fair value | (46.0) | (10.6) | ||||||||||||
Amortization | 19.7 | 18.5 | ||||||||||||
Stock-based compensation | 19.0 | 15.6 | ||||||||||||
Depreciation | 13.6 | 15.3 | ||||||||||||
Remeasurement of derivative instruments | (7.3) | (3.8) | ||||||||||||
Amortization of operating lease assets | 6.3 | 6.3 | ||||||||||||
Impairment of intangible assets | — | 50.3 | ||||||||||||
Other | 5.4 | 5.9 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable, net | 66.3 | (0.3) | ||||||||||||
Inventories, net | (16.2) | (14.3) | ||||||||||||
Other current and non-current assets | (10.3) | 5.3 | ||||||||||||
Accounts payable and accrued current and non-current liabilities | (47.1) | (29.1) | ||||||||||||
Taxes payable | (2.2) | (43.0) | ||||||||||||
Litigation provision liability | (121.2) | — | ||||||||||||
Restructuring reserve | (0.9) | (5.5) | ||||||||||||
Net cash used in operating activities | (125.1) | (17.4) | ||||||||||||
Investing Activities: | ||||||||||||||
Purchases of property, plant and equipment | (18.0) | (10.8) | ||||||||||||
Purchase of investments | (3.2) | (0.3) | ||||||||||||
Loans to investees | (2.3) | — | ||||||||||||
Acquisitions, net of cash acquired | — | (10.8) | ||||||||||||
Other | 0.7 | (0.6) | ||||||||||||
Net cash used in investing activities | (22.7) | (22.5) | ||||||||||||
Financing Activities: | ||||||||||||||
Proceeds from long-term debt obligations | 886.9 | 53.8 | ||||||||||||
Repayment of long-term debt obligations | (481.3) | (12.1) | ||||||||||||
Proceeds from short term borrowings (maturities greater than 90 days) | 46.7 | — | ||||||||||||
Repayments of short term borrowings (maturities greater than 90 days) | (44.8) | — | ||||||||||||
Purchase of capped call | (43.1) | — | ||||||||||||
Debt issuance costs | (20.0) | (3.7) | ||||||||||||
Closing adjustment payment for sale of CRM business | (14.9) | — | ||||||||||||
Payment of contingent consideration | (5.3) | (0.3) | ||||||||||||
Shares repurchased from employees for minimum tax withholding | (5.2) | (5.7) | ||||||||||||
Proceeds from share issuances under ESPP | 2.1 | 2.6 | ||||||||||||
Change in short-term borrowing, net | (1.5) | 2.4 | ||||||||||||
Other | — | 0.2 | ||||||||||||
Net cash provided by financing activities | 319.7 | 37.1 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (0.6) | 0.1 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 171.4 | (2.7) | ||||||||||||
Cash and cash equivalents at beginning of period | 61.1 | 47.2 | ||||||||||||
Cash and cash equivalents at end of period | $232.5 | $44.5 | ||||||||||||
* Numbers may not add up precisely due to rounding. |
Three Months Ended June 30, 2019 | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||
GAAP diluted weighted average shares outstanding | 48.3 | 48.5 | 48.3 | ||||||||||||||||||||
Add effects of stock-based compensation instruments | 0.4 | 0.3 | 0.5 | ||||||||||||||||||||
Adjusted diluted weighted average shares outstanding (1) | 48.7 | 48.8 | 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. |