LivaNova PLC (Nasdaq: LIVN), a market-leading medical technology
company, today reported results for the quarter and full year ended
December 31, 2023 and issued guidance for 2024.
Financial Summary and
Highlights1
- Fourth-quarter revenue of $310.1 million increased 12.8 percent
on a reported basis and 11.9 percent on a constant-currency basis,
as compared to the prior-year period
- Fourth-quarter U.S. GAAP diluted earnings per share was $0.30
and adjusted diluted earnings per share was $0.87
- Full-year 2023 revenue of $1.15 billion increased 12.9 percent
on a reported basis and increased 13.3 percent on a
constant-currency basis, as compared to the prior-year period
- Full-year 2023 U.S. GAAP diluted earnings per share was $0.32
and adjusted diluted earnings per share was $2.80
- In January 2024, LivaNova initiated a wind down of the Advanced
Circulatory Support segment
- In February 2024, LivaNova's Board of Directors named Vladimir
A. Makatsaria the Company's Chief Executive Officer (CEO) and
member of the Board of Directors, effective March 1, 2024
"We delivered strong revenue growth in both the fourth quarter
and full year," said Bill Kozy, Interim Chief Executive Officer and
Board Chair of LivaNova. "Our 2023 performance reflects
double-digit revenue growth across all regions, an improvement in
adjusted operating margin and a 17% increase in adjusted diluted
earnings per share. We are pleased with these financial outcomes as
well as the progress made in refining the business strategy and
portfolio. As we enter 2024 with this strategic focus, we are
excited to welcome Vlad Makatsaria as LivaNova's next CEO. Under
his leadership, I have great confidence that LivaNova will build on
these results and achieve our commitments to serving patients while
creating shareholder value."
Fourth-Quarter 2023
Results
The following table summarizes revenue for the fourth quarter of
2023 by segment (in millions):
Three Months Ended
December 31,
% Change
Constant-Currency %
Change2
2023
2022
Cardiopulmonary
$161.5
$136.5
18.3%
17.0%
Neuromodulation
136.9
127.1
7.7%
7.1%
Advanced Circulatory Support
10.1
9.6
5.0%
4.9%
Other
1.6
1.6
(1.8)%
(6.3)%
Total Net Revenue
$310.1
$274.9
12.8%
11.9%
- Numbers may not add precisely due to rounding.
Cardiopulmonary revenue increased 18.3 percent on a reported
basis and increased 17.0 percent2 on a constant-currency basis
versus the fourth quarter 2022 driven primarily by EssenzTM
Perfusion System sales in the Europe and U.S. regions.
Neuromodulation revenue increased 7.7 percent on a reported
basis and increased 7.1 percent2 on a constant-currency basis
versus the fourth quarter 2022 with strength in the Europe and U.S.
regions.
Advanced Circulatory Support (ACS) revenue increased 5.0 percent
on a reported basis and increased 4.9 percent2 on a
constant-currency basis versus the fourth quarter 2022 driven by an
increase in case volumes.
Earnings Analysis
On a U.S. GAAP basis, fourth-quarter 2023 operating loss was
$88.0 million, as compared to operating income of $14.0 million for
the fourth quarter 2022. Adjusted operating income for the fourth
quarter 2023 was $48.0 million, as compared to adjusted operating
income of $46.8 million for the fourth quarter 2022.
On a U.S. GAAP basis, fourth-quarter 2023 diluted earnings per
share was $0.30, as compared to diluted earnings per share of $0.03
in the fourth quarter 2022. Fourth-quarter 2023 adjusted diluted
earnings per share was $0.87, as compared to adjusted diluted
earnings per share of $0.81 in the fourth quarter 2022.
Full-Year 2023 Results
The following table summarizes revenue for full year 2023 by
segment (in millions):
Year Ended December
31,
% Change
Constant-Currency %
Change2
2023
2022
Cardiopulmonary
$589.0
$500.3
17.7%
18.4%
Neuromodulation
519.7
477.0
9.0%
9.1%
Advanced Circulatory Support
40.3
39.3
2.6%
2.5%
Other
4.5
5.2
(12.8)%
(15.8)%
Total Net Revenue
$1,153.5
$1,021.8
12.9%
13.3%
- Numbers may not add precisely due to rounding.
Cardiopulmonary revenue increased 17.7 percent on a reported
basis and increased 18.4 percent2 on a constant-currency basis
versus 2022 with growth across all regions, driven by increased
heart-lung machine sales, including EssenzTM Perfusion System
installations, and strong oxygenator demand.
Neuromodulation revenue increased 9.0 percent on a reported
basis and increased 9.1 percent2 on a constant-currency basis
versus 2022 with growth across all regions, including new and
replacement implants in the U.S. region.
ACS revenue increased 2.6 percent on a reported basis and
increased 2.5 percent2 on a constant-currency basis versus 2022
driven by an increase in case volumes.
Earnings Analysis
On a U.S. GAAP basis, full-year 2023 operating loss was $68.5
million, as compared to operating loss of $76.8 million for
full-year 2022. Adjusted operating income for full-year 2023 was
$169.3 million, as compared to adjusted operating income of $145.1
million for full-year 2022.
On a U.S. GAAP basis, full-year 2023 diluted earnings per share
was $0.32, as compared to diluted loss per share of $1.61 for
full-year 2022. Full-year 2023 adjusted diluted earnings per share
was $2.80, as compared to adjusted diluted earnings per share of
$2.39 for full-year 2022.
Subsequent Events
On January 8, 2024, LivaNova announced its plan to wind down the
ACS segment to increase the Company's strategic focus on its core
Cardiopulmonary and Neuromodulation segments. The wind down is
anticipated to be substantially complete by the end of 2024. During
the first quarter of 2024, the Company intends to transition all
ACS standalone cannulae products and related accessories into the
Cardiopulmonary segment. The Company expects the wind down to
result in a positive contribution to adjusted operating income in
2024 as compared to 2023.
On February 5, 2024, LivaNova announced its Board of Directors
named Vladimir A. Makatsaria as the Company's CEO and a member of
the Board of Directors, effective March 1, 2024. Makatsaria most
recently served as Company Group Chairman at Johnson & Johnson
MedTech, leading its global Ethicon surgery business. Makatsaria
will succeed Kozy, who has served as Interim CEO since April 2023.
Kozy will continue in his role as LivaNova Board Chair.
Full-Year 2024 Guidance
LivaNova expects revenue for full-year 2024 to grow between 4
and 5 percent on a constant-currency basis. When excluding the
impact of the ACS segment wind down, the Company expects revenue
for full-year 2024 to grow between 6 and 7 percent on a
constant-currency basis. Foreign currency is expected to be
negligible based on current exchange rates.
Adjusted diluted earnings per share for 2024 are expected to be
in the range of $2.95 to $3.05, assuming a share count of
approximately 55 million for full-year 2024. In 2024, the Company
estimates that adjusted free cash flow will be in the range of $95
to $115 million.
Webcast and Conference Call
Instructions
The Company will host a live audiocast for interested parties
commencing at 1 p.m. London time (8 a.m. Eastern Time) on
Wednesday, February 21, 2024 that will be accessible at
www.livanova.com/events. Listeners should register in advance and
log on approximately 10 minutes early to ensure proper setup. To
listen to the conference call by telephone, dial +1 833 470 1428
(if dialing from within the U.S.) or +1 929 526 1599 (if dialing
from outside the U.S.). The conference call access code is 206069.
Within 24 hours of the audiocast, a replay will be available at
www.livanova.com/events, where it will be archived and accessible
for approximately 90 days.
1 Constant-currency percent change and
adjusted diluted earnings per share are non-GAAP measures. For an
explanation of these and other non-GAAP measures used in this news
release, see the section entitled "Use of Non-GAAP Financial
Measures." For reconciliations of certain non-GAAP measures, see
the tables that accompany this news release.
2Constant-currency percent change excludes
the impact from fluctuations in the various currencies in which the
Company operates as compared to reported percent change.
Constant-currency percent change is a non-GAAP metric. For an
explanation of this and other non-GAAP metrics used in this news
release, see the section entitled "Use of Non-GAAP Financial
Measures."
About LivaNova
LivaNova PLC is a global medical technology company built on
nearly five decades of experience and a relentless commitment to
provide hope for patients and their families through medical
technologies, delivering life-changing improvements for both the
Head and Heart. Headquartered in London, LivaNova employs
approximately 2,900 employees and has a presence in more than 100
countries for the benefit of patients, healthcare professionals and
healthcare systems worldwide. For more information, please visit
www.livanova.com.
Use of Non-GAAP Financial Measures
In this news release, management has disclosed financial
measurements that present financial information not in accordance
with GAAP. Company management uses these measurements as aids in
monitoring the Company’s ongoing financial performance from quarter
to quarter and year to year on a regular basis and for benchmarking
against other medical technology companies. Non-GAAP financial
measures used by the Company may be calculated differently from,
and therefore may not be comparable to, similarly titled measures
used by other companies. These non-GAAP financial measures should
be considered along with, but not as alternatives to, operating
performance measures as prescribed by GAAP.
In this news release, the Company refers to comparable,
constant-currency percent change in revenue. Management believes
that referring to comparable, constant-currency percent change is
the most useful way to evaluate the revenue performance of LivaNova
and to compare the revenue performance of current periods to prior
periods on a consistent basis. Constant-currency percent change, a
non-GAAP financial measure, measures the change in revenue between
current and prior-year periods using average exchange rates in
effect during the applicable prior-year period.
LivaNova calculates forward-looking non-GAAP financial measures
based on internal forecasts that omit certain amounts that would be
included in GAAP financial measures. For example, forward-looking
net revenue growth projections are estimated on a constant-currency
basis and exclude the impact of foreign currency fluctuations.
Forward-looking non-GAAP adjusted diluted earnings per share
guidance exclude other items such as, but not limited to, changes
in fair value of derivatives and contingent consideration
arrangements and asset impairment charges that would be included in
comparable GAAP financial measures. The most directly comparable
GAAP measure for constant-currency net revenue, non-GAAP adjusted
tax rate and adjusted diluted earnings per share are net revenue,
the effective tax rate and earnings per share, respectively. The
most directly comparable GAAP measure for adjusted free cash flow
is net cash provided by operating activities. Adjusted free cash
flow is defined as net cash provided by operating activities less
cash used for the purchase of property, plant and equipment
excluding the impact of 3T litigation settlement payments, CARES
Act tax stimulus benefits and gains related to dividends received
from investments and further adjusted as needed for other one-time,
nonrecurring, unusual or infrequent charges, expenses or gains,
including associated expenses, that may not be indicative of the
Company's core business. However, non-GAAP financial adjustments on
a forward-looking basis are subject to uncertainty and variability
as they are dependent on many factors, including but not limited
to, the effect of foreign currency exchange fluctuations, impacts
from potential acquisitions or divestitures, the ultimate outcome
of legal proceedings, gains or losses on the potential sale of
businesses or other assets, restructuring costs, merger and
integration activities, changes in fair value of derivatives and
contingent consideration arrangements, asset impairment charges and
the tax impact of the aforementioned items, tax law changes or
other tax matters. Accordingly, forward-looking non-GAAP financial
measures and reconciliations to the most directly comparable
forward-looking GAAP financial measures are not available without
unreasonable effort.
The Company also believes adjusted financial measures such as
adjusted gross profit percentage, adjusted selling, general and
administrative expense, adjusted research and development expense,
adjusted other operating expenses, adjusted operating income,
adjusted income tax expense, adjusted net income and adjusted
diluted earnings per share, are measures by which LivaNova
generally uses to facilitate management review of the operational
performance of the company, to serve as a basis for strategic
planning and to assist in the design of compensation incentive
plans. Additionally, the Company also uses the non-GAAP liquidity
measure adjusted free cash flow. Furthermore, adjusted financial
measures allow investors to evaluate the Company’s core performance
for different periods on a more comparable and consistent basis,
and with other entities in the medical technology industry by
adjusting for items that are not related to the ongoing operations
of the Company or incurred in the ordinary course of business.
Safe Harbor Statement
Certain statements in this news release, other than statements
of historical or current fact, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act and Section 21E of the
Exchange Act. These statements include, but are not limited to,
LivaNova’s plans, objectives, strategies, financial performance and
outlook, trends, the amount and timing of future cash
distributions, prospects or future events and involve known and
unknown risks that are difficult to predict. As a result, the
Company’s actual financial results, performance, achievements or
prospects may differ materially from those expressed or implied by
these forward-looking statements. Generally, you can identify
forward-looking statements by the use of words such as “may,”
“could,” “seek,” “guidance,” “predict,” “potential,” “likely,”
“believe,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“plan,” “intend,” “forecast,” “foresee” or variations of these
terms and similar expressions, or the negative of these terms or
similar expressions. Such forward-looking statements are
necessarily based on estimates and assumptions that, while
considered reasonable by LivaNova and its management based on their
knowledge and understanding of the business and industry, are
inherently uncertain. These statements are not guarantees of future
performance, and stockholders should not place undue reliance on
forward-looking statements. There are a number of risks,
uncertainties and other important factors, many of which are beyond
the Company’s control, that could cause the Company’s actual
results to differ materially from the forward-looking statements
contained in this Report and include, but are not limited to, the
following risks and uncertainties: volatility in the global market
and worldwide economic conditions, including as caused by the
invasion of Ukraine, the evolving instability in the Middle East,
inflation, changing interest rates, foreign exchange fluctuations,
changes to existing trade agreements and relationships between the
US and other countries including the implementation of sanctions;
cyber-attacks or other disruptions to the Company’s information
technology systems or those of third parties with which the Company
interacts; costs of complying with privacy and security of personal
information requirements and laws; risks related to reductions and
interruptions in the Company’s supply chain; changes in technology,
including the development of superior or alternative technology or
devices by competitors and/or competition from providers of
alternative medical therapies; failure to obtain approvals or
reimbursement in relation to the Company’s products; failure to
establish, expand or maintain market acceptance of the Company’s
products for the treatment of the Company’s approved indications;
failure to develop and commercialize new products and the rate and
degree of market acceptance of such products; unfavorable results
from clinical studies or failure to meet milestones; failure to
comply with, or changes in, laws, regulations or administrative
practices affecting government regulation of the Company’s
products; risks relating to recalls, enforcement actions or product
liability claims; changes or reduction in reimbursement for the
Company’s products or failure to comply with rules relating to
reimbursement of healthcare goods and services; failure to comply
with anti-bribery laws; losses or costs from pending or future
lawsuits and governmental investigations, including in the case of
the Company’s 3T Heater-Cooler and SNIA litigations; risks
associated with environmental laws and regulations as well as
environmental liabilities, violations, protest voting and
litigation; product liability, intellectual property,
shareholder-related, environmental-related, income tax and other
litigation, disputes, losses and costs; failure to retain key
personnel, prevent labor shortages, or manage labor costs; the
failure of the Company’s R&D efforts to keep up with the rapid
pace of technological development in the medical device industry;
risks relating to the impact of climate change and ESG pressures
from internal and external stakeholders; the risk of quality
concerns and the impacts thereof; failure to protect the Company’s
proprietary intellectual property; failure of new acquisitions to
further the Company’s strategic objectives or strengthen the
Company’s existing businesses; the potential for impairments of
intangible assets, goodwill and other long-lived assets; risks
relating to the Company’s indebtedness including under the
exchangeable senior notes, the Company’s revolving credit facility
and the Company’s 2022 Term Facilities, as defined herein;
effectiveness of the Company’s internal controls over financial
reporting; changes in the Company’s profitability and/or failure to
manage costs and expenses; fluctuations in future quarterly
operating results and/or variations in revenue and operating
expenses relative to estimates; changes in tax laws and
regulations, including exposure to additional income tax
liabilities; and other unknown or unpredictable factors that could
harm the Company’s financial performance.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties that affect the Company’s business, including those
described in the “Risk Factors” section of Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and other documents filed from time to time with the United States
Securities and Exchange Commission by LivaNova.
Readers are cautioned not to place undue reliance on the
Company's forward-looking statements, which speak only as of the
date of this news release. The Company undertakes no obligation to
update publicly any of the forward-looking statements in this news
release to reflect actual results, new information or future
events, changes in assumptions or changes in other factors
affecting forward-looking statements, except to the extent required
by applicable law. If LivaNova updates one or more forward-looking
statements, no inference should be drawn that the Company will make
additional updates with respect to those or other forward-looking
statements.
Essenz is a trademark of LivaNova USA, Inc.
LIVANOVA PLC
NET REVENUE
(U.S. dollars in millions)
Three Months Ended December
31,
2023
2022
% Change
Constant-Currency % Change
(1)
Cardiopulmonary
US
$56.9
$45.1
26.4%
26.4%
Europe (2)
46.0
33.1
38.9%
31.7%
Rest of World
58.6
58.3
0.4%
1.5%
Total
161.5
136.5
18.3%
17.0%
Neuromodulation
US
106.5
99.4
7.1%
7.1%
Europe (2)
16.4
13.0
26.0%
20.1%
Rest of World
14.1
14.7
(4.4)%
(4.1)%
Total
136.9
127.1
7.7%
7.1%
Advanced Circulatory Support
US
9.8
9.3
5.2%
5.2%
Europe (2)
0.2
0.2
NM
NM
Rest of World
0.1
0.1
NM
NM
Total
10.1
9.6
5.0%
4.9%
Other Revenue (3)
1.6
1.6
(1.8)%
(6.3)%
Totals
US
173.2
153.8
12.6%
12.6%
Europe (2)
62.6
46.3
35.1%
28.2%
Rest of World
74.4
74.8
(0.6)%
0.2%
Total
$310.1
$274.9
12.8%
11.9%
(1)
Constant-currency percent change,
a non-GAAP financial measure, measures the change in revenue
between current and prior-year periods using average exchange rates
in effect during the applicable prior-year period.
(2)
Includes countries in Europe
where the Company has a direct sales presence. Countries where
sales are made through distributors are included in “Rest of
World.”
(3)
Other revenue primarily includes
rental income not allocated to segments.
NM
Indicates that variance as a
percentage is not meaningful.
•
The revenue results presented are
unaudited. Numbers may not add precisely due to rounding.
LIVANOVA PLC
NET REVENUE
(U.S. dollars in millions)
Year Ended December
31,
2023
2022
% Change
Constant-Currency % Change
(1)
Cardiopulmonary
US
$188.3
$159.5
18.1%
18.1%
Europe (2)
156.6
127.1
23.2%
20.2%
Rest of World
244.1
213.8
14.2%
17.5%
Total
589.0
500.3
17.7%
18.4%
Neuromodulation
US
407.5
374.5
8.8%
8.8%
Europe (2)
57.4
50.3
14.2%
12.9%
Rest of World
54.8
52.2
5.0%
7.7%
Total
519.7
477.0
9.0%
9.1%
Advanced Circulatory Support
US
39.3
37.5
4.6%
4.6%
Europe (2)
0.8
1.4
NM
NM
Rest of World
0.3
0.3
NM
NM
Total
40.3
39.3
2.6%
2.5%
Other Revenue (3)
4.5
5.2
(12.8)%
(15.8)%
Totals
US
635.0
571.6
11.1%
11.1%
Europe (2)
214.8
178.8
20.1%
17.6%
Rest of World
303.7
271.4
11.9%
15.0%
Total
$1,153.5
$1,021.8
12.9%
13.3%
(1)
Constant-currency percent change,
a non-GAAP financial measure, measures the change in revenue
between current and prior-year periods using average exchange rates
in effect during the applicable prior-year period.
(2)
Includes countries in Europe
where the Company has a direct sales presence. Countries where
sales are made through distributors are included in “Rest of
World.”
(3)
Other revenue primarily includes
rental income not allocated to segments.
NM
Indicates that variance as a
percentage is not meaningful.
•
The revenue results presented are
unaudited. Numbers may not add precisely due to rounding.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Three Months Ended December
31,
2023
2022
% Change
Net revenue
$310.1
$274.9
Cost of sales
120.0
91.4
Gross profit
190.2
183.5
3.6%
Operating expenses:
Selling, general and administrative
133.3
119.6
Research and development
46.2
44.9
Impairment of long-lived assets
90.0
—
Other operating expenses
8.7
5.0
Operating (loss) income
(88.0)
14.0
NM
Interest expense
(15.6)
(13.4)
Foreign exchange and other
income/(expense)
9.3
5.8
(Loss) income before tax
(94.3)
6.4
NM
Income tax (benefit) expense
(110.7)
4.7
Net income
$16.3
$1.7
883.7%
Basic income per share
$0.30
$0.03
Diluted income per share
$0.30
$0.03
Weighted average common shares
outstanding:
Basic
54.0
53.5
Diluted
54.3
53.8
NM Indicates that variance is not
meaningful.
• Numbers may not add precisely due to
rounding.
Adjusted Financial Measures (U.S.
dollars in millions, except per share amounts)
Adjusted (1) Three Months
Ended December 31,
2023
2022
% Change
Adjusted SG&A
$119.9
$99.8
20.1%
Adjusted R&D
42.1
42.9
(2.0)%
Adjusted operating income
48.0
46.8
2.6%
Adjusted net income
47.3
43.6
8.3%
Adjusted diluted earnings per share
$0.87
$0.81
7.4%
(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 news release.
Statistics (as a % of net revenue,
except for income tax rate)
GAAP Three Months Ended
December 31,
Adjusted (1) Three Months
Ended December 31,
2023
2022
2023
2022
Gross profit
61.3%
66.8%
67.7%
68.9%
SG&A
43.0%
43.5%
38.7%
36.3%
R&D
14.9%
16.3%
13.6%
15.6%
Operating (loss) income
(28.4)%
5.1%
15.5%
17.0%
Net income
5.3%
0.6%
15.2%
15.9%
Income tax rate
117.3%
73.6%
(2.9)%
(2.7)%
(1)
Adjusted financial measures are
non-GAAP measures and exclude specified items as described and
reconciled in the "Reconciliation of GAAP to non-GAAP Financial
Measures" contained in the news release.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Year Ended December
31,
2023
2022
% Change
Net revenue
$1,153.5
$1,021.8
Cost of sales
382.3
314.6
Gross profit
771.3
707.2
9.1%
Operating expenses:
Selling, general and administrative
518.1
469.2
Research and development
193.8
155.8
Impairment of goodwill
—
129.4
Impairment of long-lived assets
90.0
—
Other operating expenses
37.8
29.5
Operating loss
(68.5)
(76.8)
(10.8)%
Interest expense
(58.9)
(48.3)
Foreign exchange and other
income/(expense)
46.1
49.9
Loss before tax
(81.2)
(75.1)
8.1%
Income tax (benefit) expense
(98.9)
11.1
Losses from equity method investments
(0.1)
(0.1)
Net income (loss)
$17.5
($86.2)
NM
Basic income (loss) per share
$0.33
($1.61)
Diluted income (loss) per share
$0.32
($1.61)
Weighted average common shares
outstanding:
Basic
53.9
53.5
Diluted
54.2
53.5
NM Indicates that variance is not
meaningful.
• Numbers may not add precisely due to
rounding.
Adjusted Financial Measures (U.S.
dollars in millions, except per share amounts)
Adjusted (1) Year Ended
December 31,
2023
2022
% Change
Adjusted SG&A
$456.0
$401.4
13.6%
Adjusted R&D
178.1
166.2
7.2%
Adjusted operating income
169.3
145.1
16.6%
Adjusted net income
152.0
129.2
17.6%
Adjusted diluted earnings per share
$2.80
$2.39
17.1%
(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 news release.
Statistics (as a % of net revenue,
except for income tax rate)
GAAP Year Ended December
31,
Adjusted (1) Year Ended
December 31,
2023
2022
2023
2022
Gross profit
66.9%
69.2%
69.6%
69.8%
SG&A
44.9%
45.9%
39.5%
39.3%
R&D
16.8%
15.2%
15.4%
16.3%
Operating (loss) income
(5.9)%
(7.5)%
14.7%
14.2%
Net income (loss)
1.5%
(8.4)%
13.2%
12.6%
Income tax rate
121.7%
(14.7)%
5.7%
3.8%
(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 news release.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Three Months Ended
December 31, 2023
GAAP Financial
Measures
Restructuring Expenses
(A)
Depreciation and Amortization
Expenses (B)
Impairment (C)
Financing Transactions
(D)
Contingent Consideration
(E)
Certain Legal & Regulatory
Costs (F)
Stock-based Compensation
Costs (G)
Certain Tax Adjustments
(H)
Certain Interest
Adjustments (I)
Adjusted Financial
Measures
Cost of sales
$120.0
$—
($3.6)
($12.6)
$—
($3.4)
$—
($0.2)
$—
$—
$100.2
Gross profit percent
61.3%
—%
1.2%
4.1%
—%
1.1%
—%
0.1%
—%
—%
67.7%
Selling, general and administrative
133.3
—
(2.8)
—
—
—
(3.6)
(7.0)
—
—
119.9
Selling, general and administrative as a
percent of net revenue
43.0%
—%
(0.9)%
—%
—%
—%
(1.2)%
(2.3)%
—%
—%
38.7%
Research and development
46.2
—
—
—
—
(1.5)
(1.6)
(1.1)
—
—
42.1
Research and development as a percent of
net revenue
14.9%
—%
—%
—%
—%
(0.5)%
(0.5)%
(0.3)%
—%
—%
13.6%
Other operating expenses
8.7
0.1
—
—
—
—
(8.8)
—
—
—
—
Operating (loss) income
(88.0)
(0.1)
6.4
102.6
—
4.8
14.0
8.3
—
—
48.0
Operating margin percent
(28.4)%
—%
2.1%
33.1%
—%
1.6%
4.5%
2.7%
—%
—%
15.5%
Net income
16.3
(0.1)
6.4
102.6
(2.6)
4.8
12.4
8.3
(109.3)
8.3
47.3
Net income as a percent of net revenue
5.3%
—%
2.1%
33.1%
(0.8)%
1.6%
4.0%
2.7%
(35.2)%
2.7%
15.2%
Diluted EPS
$0.30
$—
$0.12
$1.89
($0.05)
$0.09
$0.23
$0.15
($2.01)
$0.15
$0.87
GAAP results for the three
months ended December 31, 2023, include:
(A)
Restructuring expenses related to
organizational changes
(B)
Includes depreciation and
amortization associated with purchase price accounting
(C)
ACS Inventory obsolescence
adjustment and impairment of long-lived assets
(D)
Mark-to-market adjustments for
the exchangeable option feature and capped call derivatives
(E)
Remeasurement of contingent
consideration related to acquisitions
(F)
3T Heater-Cooler litigation
provision, legal expenses primarily related to 3T Heater-Cooler
defense, costs related to the SNIA matter, Medical Device
Regulation ("MDR") costs and cybersecurity incident costs
(G)
Non-cash expenses associated with
stock-based compensation costs
(H)
The impact of valuation
allowances, discrete tax items, the tax impact of intercompany
transactions and the tax impact on non-GAAP adjustments
(I)
Non-cash interest expense on the
Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility,
interest expense on the Term Facilities and interest income on the
collateral for the SNIA litigation guarantee and delayed draw on
Term Facilities
• Numbers may not add precisely
due to rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Three Months Ended
December 31, 2022
GAAP Financial
Measures
Merger and Integration
Expenses (A)
Restructuring Expenses
(B)
Depreciation and Amortization
Expenses (C)
Financing Transactions
(D)
Contingent Consideration
(E)
Certain Legal & Regulatory
Costs (F)
Stock-based Compensation
Costs (G)
Certain Tax Adjustments
(H)
Certain Interest
Adjustments (I)
Adjusted Financial
Measures
Cost of sales
$91.4
$—
$—
($3.6)
$—
($2.1)
$—
($0.3)
$—
$—
$85.4
Gross profit percent
66.8%
—%
—%
1.3%
—%
0.8%
—%
0.1%
—%
—%
68.9%
Selling, general and administrative
119.6
—
—
(2.8)
—
—
(5.6)
(11.4)
—
—
99.8
Selling, general and administrative as a
percent of net revenue
43.5%
—%
—%
(1.0)%
—%
—%
(2.0)%
(4.2)%
—%
—%
36.3%
Research and development
44.9
—
—
0.1
—
(1.4)
(0.1)
(0.6)
—
—
42.9
Research and development as a percent of
net revenue
16.3%
—%
—%
—%
—%
(0.5)%
—%
(0.2)%
—%
—%
15.6%
Other operating expenses
5.0
(0.7)
(2.0)
—
—
—
(2.3)
—
—
—
—
Operating income operations
14.0
0.7
2.0
6.3
—
3.5
8.0
12.3
—
—
46.8
Operating margin percent
5.1%
0.2%
0.7%
2.3%
—%
1.3%
2.9%
4.5%
—%
—%
17.0%
Net income
1.7
0.7
2.0
6.3
(3.6)
3.5
8.0
12.3
5.9
6.9
43.6
Net income as a percent of net revenue
0.6%
0.2%
0.7%
2.3%
(1.3)%
1.3%
2.9%
4.5%
2.1%
2.5%
15.9%
Diluted EPS
$0.03
$0.01
$0.04
$0.12
($0.07)
$0.06
$0.15
$0.23
$0.11
$0.13
$0.81
GAAP results for the three months ended
December 31, 2022, include:
(A)
Merger and integration expenses related to
the acquisition of ALung Technologies, Inc.
(B)
Restructuring expenses related to
organizational changes
(C)
Includes depreciation and amortization
associated with purchase price accounting
(D)
Mark-to-market adjustments for the
exchangeable option feature and capped call derivatives
(E)
Remeasurement of contingent consideration
related to acquisitions
(F)
3T Heater-Cooler litigation provision,
legal expenses primarily related to 3T Heater-Cooler defense, costs
related to the SNIA matter and MDR costs
(G)
Non-cash expenses associated with
stock-based compensation costs
(H)
Discrete tax items, the tax impact of
intercompany transactions and the tax impact on non-GAAP
adjustments
(I)
Non-cash interest expense on the Cash
Exchangeable Senior Notes and 2021 Revolving Credit Facility,
interest expense on the Term Facilities
• Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Year Ended
December 31, 2023
GAAP Financial
Measures
Merger and Integration
Expenses (A)
Restructuring Expenses
(B)
Depreciation and Amortization
Expenses (C)
Impairment (D)
Financing Transactions
(E)
Contingent Consideration
(F)
Certain Legal & Regulatory
Costs (G)
Stock-based Compensation
Costs (H)
Certain Tax Adjustments
(I)
Certain Interest
Adjustments (J)
Adjusted Financial
Measures
Cost of sales
$382.3
$—
$—
($14.7)
($12.6)
$—
($3.8)
$—
($1.0)
$—
$—
$350.2
Gross profit percent
66.9%
—%
—%
1.3%
1.1%
—%
0.3%
—%
0.1%
—%
—%
69.6%
Selling, general and administrative
518.1
—
—
(11.5)
—
—
—
(21.3)
(29.4)
—
—
456.0
Selling, general and administrative as a
percent of net revenue
44.9%
—%
—%
(1.0)%
—%
—%
—%
(1.8)%
(2.6)%
—%
—%
39.5%
Research and development
193.8
—
—
0.2
—
—
(5.6)
(4.3)
(6.0)
—
—
178.1
Research and development as a percent of
net revenue
16.8%
—%
—%
—%
—%
—%
(0.5)%
(0.4)%
(0.5)%
—%
—%
15.4%
Other operating expenses
37.8
(0.1)
(1.0)
—
—
—
—
(36.8)
—
—
—
—
Operating (loss) income
(68.5)
0.1
1.0
26.0
102.6
—
9.4
62.4
36.4
—
—
169.3
Operating margin percent
(5.9)%
—%
0.1%
2.3%
8.9%
—%
0.8%
5.4%
3.2%
—%
—%
14.7%
Net income
17.5
0.1
1.0
26.0
102.6
(24.2)
9.4
60.9
36.4
(108.1)
30.5
152.0
Net income as a percent of net revenue
1.5%
—%
0.1%
2.3%
8.9%
(2.1)%
0.8%
5.3%
3.2%
(9.4)%
2.6%
13.2%
Diluted EPS
$0.32
$—
$0.02
$0.48
$1.89
($0.45)
$0.17
$1.12
$0.67
($1.99)
$0.56
$2.80
GAAP results for the year
ended December 31, 2023, include:
(A)
Merger and integration expenses
related to the acquisition of ALung Technologies, Inc.
(B)
Restructuring expenses related to
organizational changes
(C)
Includes depreciation and
amortization associated with purchase price accounting
(D)
ACS Inventory obsolescence
adjustment and impairment of long-lived assets
(E)
Mark-to-market adjustments for
the exchangeable option feature and capped call derivatives
(F)
Remeasurement of contingent
consideration related to acquisitions
(G)
3T Heater-Cooler litigation
provision, legal expenses primarily related to 3T Heater-Cooler
defense, costs related to the SNIA matter, MDR costs and
cybersecurity incident costs
(H)
Non-cash expenses associated with
stock-based compensation costs
(I)
The impact of valuation
allowances, discrete tax items, R&D tax credits, the tax impact
of intercompany transactions and the tax impact on non-GAAP
adjustments
(J)
Non-cash interest expense on the
Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility,
interest expense on the Term Facilities and interest income on the
collateral for the SNIA litigation guarantee and delayed draw on
Term Facilities
• Numbers may not add precisely
due to rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(U.S. dollars in millions, except per
share amounts)
Specified Items
Year Ended
December 31, 2022
GAAP Financial
Measures
Merger and Integration
Expenses (A)
Restructuring Expenses
(B)
Depreciation and Amortization
Expenses (C)
Impairment (D)
Financing Transactions
(E)
Contingent Consideration
(F)
Certain Legal & Regulatory
Costs (G)
Stock-based Compensation
Costs (H)
Certain Tax Adjustments
(I)
Certain Interest
Adjustments (J)
Adjusted Financial
Measures
Cost of sales
$314.6
$—
$—
($14.5)
$—
$—
$10.5
$—
($1.5)
$—
$—
$309.1
Gross profit percent
69.2%
—%
—%
1.4%
—%
—%
(1.0)%
—%
0.1%
—%
—%
69.8%
Selling, general and administrative
469.2
—
—
(11.3)
—
—
—
(20.9)
(35.6)
—
—
401.4
Selling, general and administrative as a
percent of net revenue
45.9%
—%
—%
(1.1)%
—%
—%
—%
(2.0)%
(3.5)%
—%
—%
39.3%
Research and development
155.8
—
—
0.2
—
—
19.4
(1.5)
(7.7)
—
—
166.2
Research and development as a percent of
net revenue
15.2%
—%
—%
—%
—%
—%
1.9%
(0.1)%
(0.8)%
—%
—%
16.3%
Other operating expenses
29.5
(1.1)
(6.6)
—
—
—
—
(21.8)
—
—
—
—
Operating (loss) income
(76.8)
1.1
6.6
25.6
129.4
—
(29.9)
44.2
44.8
—
—
145.1
Operating margin percent
(7.5)%
0.1%
0.6%
2.5%
12.7%
—%
(2.9)%
4.3%
4.4%
—%
—%
14.2%
Net (loss) income
(86.2)
1.1
6.6
25.6
129.4
(44.1)
(29.9)
44.2
44.8
5.9
31.7
129.2
Net (loss) income as a percent of net
revenue
(8.4)%
0.1%
0.6%
2.5%
12.7%
(4.3)%
(2.9)%
4.3%
4.4%
0.6%
3.1%
12.6%
Diluted EPS
($1.61)
$0.02
$0.12
$0.47
$2.40
($0.82)
($0.55)
$0.82
$0.83
$0.11
$0.59
$2.39
GAAP results for the year
ended December 31, 2022, include:
(A)
Merger and integration expenses
related to the acquisition of ALung Technologies, Inc.
(B)
Restructuring expenses related to
organizational changes
(C)
Includes depreciation and
amortization associated with purchase price accounting
(D)
Goodwill impairment associated
with the Company's ACS business
(E)
Mark-to-market adjustments for
the exchangeable option feature and capped call derivatives
(F)
Remeasurement of contingent
consideration related to acquisitions
(G)
3T Heater-Cooler litigation
provision, legal expenses primarily related to 3T Heater-Cooler
defense, costs related to the SNIA matter and MDR costs
(H)
Non-cash expenses associated with
stock-based compensation costs
(I)
Discrete tax items, R&D tax
credits, the tax impact of intercompany transactions and the tax
impact on non-GAAP adjustments
(J)
Non-cash interest expense on the
Cash Exchangeable Senior Notes and 2021 Revolving Credit Facility,
interest expense on the 2022 Bridge Loan and Term Facilities
• Numbers may not add precisely
due to rounding.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS -
UNAUDITED
(U.S. dollars in millions)
December 31, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$266.5
$214.2
Restricted cash
311.4
301.4
Accounts receivable, net of allowance
215.1
183.1
Inventories
147.9
129.4
Prepaid and refundable taxes
20.1
31.7
Prepaid expenses and other current
assets
27.2
26.3
Total Current Assets
988.2
886.1
Property, plant and equipment, net
154.2
147.2
Goodwill
782.9
768.8
Intangible assets, net
261.2
368.6
Operating lease assets
50.8
35.8
Investments
22.8
16.3
Deferred tax assets
118.9
1.4
Long-term derivative assets
38.5
54.4
Other assets
12.1
16.2
Total Assets
$2,429.6
$2,294.8
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Current debt obligations
$18.1
$23.4
Accounts payable
80.8
74.3
Accrued liabilities and other
107.3
81.5
Current litigation provision liability
10.8
29.5
Taxes payable
23.3
16.5
Accrued employee compensation and related
benefits
94.6
72.2
Total Current Liabilities
335.0
297.4
Long-term debt obligations
568.5
518.1
Contingent consideration
80.9
85.3
Deferred tax liabilities
11.6
8.5
Long-term operating lease liabilities
45.4
29.5
Long-term employee compensation and
related benefits
17.3
16.8
Long-term derivative liabilities
45.6
85.7
Other long-term liabilities
47.7
45.8
Total Liabilities
1,151.9
1,087.1
Total Stockholders’ Equity
1,277.6
1,207.6
Total Liabilities and Stockholders’
Equity
$2,429.6
$2,294.8
•
Numbers may not add precisely due to
rounding.
LIVANOVA PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS - UNAUDITED
(U.S. dollars in millions)
Year Ended December
31,
2023
2022
Operating Activities:
Net income (loss)
$17.5
($86.2)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Deferred tax expense
(114.4)
1.4
Impairment of long-lived assets
90.0
—
Stock-based compensation
36.4
44.8
Amortization
25.5
25.2
Depreciation
24.7
22.4
Remeasurement of derivative
instruments
(22.9)
(38.7)
Amortization of debt issuance costs
19.1
21.3
ACS inventory obsolescence adjustment
12.6
—
Amortization of operating lease assets
10.6
10.2
Remeasurement of contingent consideration
to fair value
9.4
(29.9)
Impairment of goodwill
—
129.4
Other
1.1
1.7
Changes in operating assets and
liabilities:
Accounts receivable, net
(28.9)
(4.8)
Inventories
(28.5)
(25.7)
Other current and non-current assets
15.3
7.5
Accounts payable and accrued current and
non-current liabilities
19.2
(3.5)
Taxes payable
7.4
1.4
Litigation provision liability
(19.1)
(6.6)
Net cash provided by operating
activities
74.9
69.9
Investing Activities:
Purchases of property, plant and
equipment
(35.0)
(26.5)
Purchase of investments
(6.5)
(3.0)
Acquisitions, net of cash acquired
—
(8.9)
Other
1.2
(0.1)
Net cash used in investing
activities
(40.3)
(38.4)
Financing Activities:
Proceeds from long-term debt
obligations
50.0
507.5
Repayment of long-term debt
obligations
(21.6)
(223.5)
Shares repurchased from employees for
minimum tax withholding
(7.5)
(8.7)
Repayments of short-term borrowings
(maturities greater than 90 days)
(2.0)
—
Proceeds from deferred consideration from
sale of Heart Valves, net of working capital adjustments
—
4.6
Debt issuance costs
—
(3.3)
Other
2.6
3.5
Net cash provided by financing
activities
21.5
280.1
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
6.2
(4.0)
Net increase in cash, cash equivalents
and restricted cash
62.3
307.6
Cash, cash equivalents and restricted cash
at beginning of period
515.6
208.0
Cash, cash equivalents and restricted cash
at end of period
$577.9
$515.6
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
Three Months Ended December
31,
2023
2022
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
(Loss) income before tax
($94.3)
$—
$45.9
$6.4
$—
$42.5
Income tax (benefit) expense
(110.7)
109.3
(1.3)
4.7
(5.9)
(1.2)
Net income
$16.3
($109.3)
$47.3
$1.7
$5.9
$43.6
Income tax rate
117.3%
(2.9)%
73.6%
(2.7)%
•
Numbers may not add precisely due to
rounding.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
Year Ended December
31,
2023
2022
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
GAAP Financial
Measures
Certain Tax
Adjustments
Adjusted Financial
Measures
(Loss) income before tax
($81.2)
$—
$161.3
($75.1)
$—
$134.4
Income tax (benefit) expense
(98.9)
108.1
9.2
11.1
(5.9)
5.1
Net income (loss)
$17.5
($108.1)
$152.0
($86.2)
$5.9
$129.2
Income tax rate
121.7%
5.7%
(14.7)%
3.8%
•
Numbers may not add precisely due to
rounding.
The following table presents the reconciliation of GAAP diluted
weighted average shares outstanding, used in the computation of
GAAP diluted net loss per common share, to adjusted diluted
weighted average shares outstanding, used in the computation of
adjusted diluted earnings per common share (in millions of
shares):
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES - UNAUDITED
(shares in millions)
Year Ended December
31,
2022
GAAP diluted weighted average shares
outstanding
53.5
Add effects of stock-based compensation
instruments
0.5
Adjusted diluted weighted average shares
outstanding (1)
54.0
(1)
Adjusted diluted weighted average
shares outstanding is a non-GAAP measure and includes the effects
of stock-based compensation instruments, as reconciled in the above
table.
•
Numbers may not add precisely due
to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240221387429/en/
Briana Gotlin Director, Investor Relations Phone: +1 281 895
2382 e-mail: InvestorRelations@livanova.com
LivaNova (NASDAQ:LIVN)
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