Company Overview - LivaNova demonstrates strong and durable growth in its core businesses, which include neuromodulation for epilepsy treatment and cardiopulmonary solutions [1][2] - The company has a diversified portfolio that positions it well in its respective markets [1] Market Expansion Strategy - LivaNova aims to expand into markets with significant unmet patient needs, focusing on high-growth areas where it has competitive advantages [2] - The neuromodulation sector is identified as a key opportunity for future growth [2]

Company Overview - LivaNova demonstrates strong and durable growth in its core businesses, which include neuromodulation for epilepsy treatment and cardiopulmonary solutions [1][2] - The company has a diversified portfolio and holds leadership positions in its respective markets [1][2] Market Expansion Strategy - LivaNova aims to expand into markets with significant unmet patient needs, focusing on high-growth areas where the company has competitive advantages [2]

Summary of LivaNova Conference Call Company Overview - **Company**: LivaNova - **Core Businesses**: Neuromodulation (epilepsy treatment) and cardiopulmonary business - **Growth Strategy**: Focus on expanding into markets with significant unmet needs, particularly in obstructive sleep apnea [2][3] Key Points on Core Business Performance - **Cardiopulmonary Growth**: - Sustained double-digit growth for 10 consecutive quarters, with a recent growth rate of 13% [4] - Growth drivers include an increase in open heart surgery procedures (estimated at 4-5%) and market share gains in oxygenators (increased from 30% to approximately 40% over two years) [4][5] - New heart-lung machine launched in 2023, expected to drive growth for the next 2.5 years [4][6] - **Oxygenators**: - Price increases contributed 300 basis points to growth last year [5] - Manufacturing capacity increased by 10% through process improvements [10] - Plans for further capacity expansion through 24/7 shifts [10][11] Expansion into New Markets - **Obstructive Sleep Apnea (OSA)**: - Significant opportunity due to large patient population and unmet needs [9] - Recent approval from CFDA in China for the Ascend machine, with a successful launch event [9] - Differentiated technology with six electrodes, allowing for improved clinical outcomes [21][22] Neuromodulation and Epilepsy Business - **CoreVNS Study**: - Largest global prospective VNS Therapy study showing impressive seizure freedom and reduction rates [16] - Positive feedback from key opinion leaders indicating a shift in treatment algorithms [16] - **Reimbursement Dynamics**: - Transition from level four to level five APC by CMS, resulting in a 48% increase in reimbursement for Medicare therapy patients [17] - 70% of U.S. implants are replacements, indicating a strong potential for growth [17] Future Growth Drivers - **New Oxygenator Launch**: - Expected to outperform existing products based on preclinical testing [14][15] - **Difficult-to-Treat Depression (DTD)**: - Ongoing CMS reconsideration process for VNS Therapy treatment, with promising clinical evidence from the RECOVER trial [28][31] - 43% reduction in suicidality and over 80% treatment compliance after 24 months [32] Capital Allocation and Long-term Strategy - **Cash Flow Generation**: - Free cash flow guidance raised to $140 to $160 million [39] - Priorities include supporting core business, investing in OSA, and exploring M&A opportunities in underserved markets [39][40] - **Market Positioning**: - LivaNova aims to leverage its capabilities in neuromodulation to address significant patient needs in both cardiovascular and neurological disorders [41][42] Conclusion - LivaNova is well-positioned for growth through its core businesses and expansion into new markets, with a strong focus on innovation and addressing unmet patient needs. The upcoming investor day on November 12 is anticipated to provide further insights into the company's strategic direction and growth opportunities [43][44]

Summary of LivaNova Conference Call Company Overview - **Company**: LivaNova - **Industry**: Medical Technology (Med Tech) Key Points and Arguments Business Growth and Performance - LivaNova has achieved nine out of ten quarters of double-digit growth, exceeding previous high single-digit growth goals [2][4] - The growth is well-distributed across various drivers, particularly in the cardiopulmonary and epilepsy segments [4][6] - The company has increased its market share in oxygenators from 30% to 40% over the last couple of years [5] Cardiopulmonary Segment - The launch of the new heart-lung machine, Essence, is a significant growth driver, with expectations of 60% placement penetration by 2024 and 80% by 2025 [12][14] - The price premium for the Essence machine is approximately double that of the previous generation, contributing to revenue growth [13] - The cardiopulmonary market is expected to continue growing due to an increase in open-heart surgical procedures and a healthy market environment [6][25] Epilepsy Market - The U.S. epilepsy market is growing at mid-single digits, while international markets are growing faster due to lower penetration [31] - The CORE VNS study shows promising outcomes, which could lead to earlier utilization of VNS therapy in treatment algorithms [32][33] - A proposed 48% increase in reimbursement for end-of-service implants could enhance the financial profile for physicians [36] Market Dynamics and Competitive Landscape - The open-heart procedure market has grown from a historical rate of 1-2% to approximately 4-5% due to pent-up demand from underdiagnosed patients during the COVID pandemic [23][24] - LivaNova has been able to capture market share due to competitors facing supply chain and quality issues [25][26] - The company is strategically taking price increases in a supply-constrained market, which has been a significant growth driver [27] Future Opportunities - LivaNova is focusing on obstructive sleep apnea (OSA) as a significant growth opportunity, with plans to outline strategies during the upcoming Investor Day [7][52] - The company is also exploring treatment-resistant depression (DTD) and has engaged with CMS regarding reimbursement opportunities [44][46] - The potential for automation in heart-lung machines is being explored, aiming to improve clinical outcomes and democratize medicine [20][21] Financial Outlook - The company is expected to provide guidance for 2026 in future communications, with current expectations of 6-7% top-line growth and 9-10% EPS growth [53] Additional Important Information - The upcoming Investor Day on November 12 will provide further insights into LivaNova's vision, strategy, and financial expectations [6][8] - The company is confident in its ability to maintain leadership in epilepsy while expanding into new markets like OSA and DTD [51][52]

Financial Data and Key Metrics Changes - LivaNova reported a 10% organic revenue growth compared to the previous year, driven by strong performance in the cardiopulmonary and neuromodulation segments [5][28] - Revenue for the quarter was $353 million, reflecting a 9% increase on a constant currency basis and a 10% increase on an organic basis [28] - Adjusted gross margin increased to 69% from 68% in the previous year, attributed to positive pricing and geographic mix [29] - Adjusted diluted earnings per share rose to $1.05 from $0.93 in the prior year [34] Segment Performance Changes - Cardiopulmonary segment revenue was $199 million, a 13% increase year-over-year, with heart-lung machine revenue growing in the low double digits [11][12] - Epilepsy segment revenue increased by 6% year-over-year, with U.S. revenue growing by 5% and Europe and rest of the world combined growing by 9% [13][14] - The company expects epilepsy revenue growth for the full year to be between 4.5% and 5.5%, up from previous guidance of 4% to 5% [16] Market Data and Key Metrics Changes - The cardiopulmonary segment anticipates a revenue growth of 12% to 13% for the full year, revised from 9% to 10% [12] - The company is preparing to launch the Essence product in China, which is expected to be a significant market for heart-lung machines [12][72] Company Strategy and Industry Competition - LivaNova is focused on expanding its portfolio into high-growth markets and addressing large patient populations with significant unmet needs, particularly in obstructive sleep apnea and difficult-to-treat depression [41] - The company is making progress towards CMS reimbursement reconsideration for VNS therapy in treatment-resistant depression, which could enhance market access [41][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong organic growth due to robust demand and disciplined execution across the portfolio [5] - The company is optimistic about the impact of the proposed CMS reimbursement changes for end-of-service procedures, which could significantly improve hospital economics [52][51] Other Important Information - The company has initiated a process with CMS to seek national Medicare coverage for VNS therapy in unipolar patients with treatment-resistant depression [21] - LivaNova's cash balance increased to $594 million, up from $429 million at the end of 2024, primarily due to the reclassification of restricted cash [34] Q&A Session Summary Question: Can you elaborate on the positive data from the epilepsy business and its implications for growth? - Management highlighted the large study demonstrating significant seizure reduction, which is expected to enhance patient access and drive growth [45][46] Question: What is the expected impact of the CMS proposal to boost end-of-service procedures to level five? - Management noted that this change could lead to a 48% increase in reimbursement, positively impacting procedure penetration and provider sustainability [51][52] Question: Can you break down the oxygenator business and underlying demand? - Management indicated healthy procedure growth and market share gains, with supply not yet catching up to demand [56][58] Question: How does the company view the commercialization of the obstructive sleep apnea program? - Management expressed confidence in internal commercialization capabilities while remaining open to potential partnerships [96][97]

Financial Data and Key Metrics Changes - LivaNova reported a 10% organic revenue growth compared to the previous year, driven by strong performance in the cardiopulmonary and neuromodulation segments [5][29] - Revenue for the quarter was $353 million, reflecting a 9% increase on a constant currency basis and a 10% increase on an organic basis [29] - Adjusted gross margin increased to 69% from 68% in the previous year, attributed to positive pricing and geographic mix [30] - Adjusted diluted earnings per share rose to $1.05 from $0.93 in the prior year [34] - Cash balance increased to $594 million from $429 million at year-end 2024, while total debt decreased to $431 million from $628 million [34][35] Segment Performance Changes - Cardiopulmonary segment revenue was $199 million, a 13% increase year-over-year, with heart-lung machine revenue growing in the low double digits [11][12] - Epilepsy segment revenue increased by 6%, with U.S. revenue growing by 5% and Europe and rest of the world combined growing by 9% [13][14] - The company expects cardiopulmonary revenue to grow 12-13% for the full year 2025, up from a previous forecast of 9-10% [12] - Epilepsy revenue growth forecast for 2025 was raised to 4.5-5.5% from 4-5% previously [16] Market Data and Key Metrics Changes - The company anticipates launching the Essence heart-lung machine in China in Q3 2025, which is expected to be a significant market for the product [12][72] - The CMS proposal to increase reimbursement for end-of-service procedures to level five could significantly impact procedure penetration, as it affects 70% of implants in the U.S. [52][53] Company Strategy and Industry Competition - LivaNova is focused on expanding its portfolio into high-growth markets, particularly in obstructive sleep apnea (OSA) and difficult-to-treat depression (DTD) [42] - The company is investing in its core businesses to sustain market leadership and clinical excellence, with a strong emphasis on innovation and regulatory achievements [42][27] - The company is optimistic about the competitive landscape, noting that it has gained market share in the cardiopulmonary segment [59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth and capitalize on opportunities in the epilepsy and cardiopulmonary segments [42] - The management highlighted the importance of recent clinical data in driving awareness and adoption of VNS therapy for drug-resistant epilepsy [20][49] - The company remains focused on addressing significant unmet needs in the market, particularly in OSA and DTD [42] Other Important Information - The company is working closely with CMS to seek national Medicare coverage for VNS therapy in treatment-resistant depression [22][24] - The company is also making significant investments in IT infrastructure and innovation to drive long-term efficiencies and scalability [32][39] Q&A Session Summary Question: Can you elaborate on the positive data from the epilepsy business and its implications for growth? - Management highlighted the large study demonstrating significant seizure reduction, which is expected to enhance patient access and drive growth [46][49] Question: What is the expected impact of the CMS proposal to boost end-of-service procedures to level five? - Management noted that this proposal could significantly improve reimbursement for providers, potentially increasing procedure penetration [52][53] Question: Can you break down the oxygenator business and its demand versus capacity? - Management indicated healthy procedure growth and market share gains, but noted that supply is not yet catching up with demand [59][60] Question: What are the expectations for the launch in China? - Management expressed confidence in the Essence product's launch in China, indicating it is a significant market for the company [72] Question: What are the plans for the obstructive sleep apnea program? - Management is confident in its ability to commercialize the OSA portfolio internally but remains open to partnerships if beneficial [96]

Core Viewpoint - LivaNova reported quarterly earnings of $1.05 per share, exceeding the Zacks Consensus Estimate of $0.84 per share, and showing an increase from $0.93 per share a year ago, indicating a strong earnings surprise of +25.00% [1][2] Financial Performance - The company achieved revenues of $352.5 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.56% and up from $318.6 million year-over-year [2] - Over the last four quarters, LivaNova has consistently surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - LivaNova shares have declined approximately 8% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.91 on revenues of $331.4 million, and for the current fiscal year, it is $3.65 on revenues of $1.32 billion [7] - The outlook for the Medical - Instruments industry, where LivaNova operates, is currently in the bottom 41% of Zacks industries, which may impact stock performance [8]

Financial Performance - Net revenue increased by 9.3% on a constant-currency basis and 10.3% organically in 2Q25[14] - Cardiopulmonary revenue grew by 12.7% in 2Q25, driven by strong consumables demand and Essenz Perfusion System sales[11, 24] - Neuromodulation revenue increased by 5.6% in 2Q25, with growth across all regions[11, 28] - Adjusted diluted EPS was $1.05 in 2Q25, favorably impacted by higher revenue and optimization of DTD program spend[11] - Adjusted free cash flow was $48 million in 2Q25, driven by stronger operating results and disciplined working capital management[11] - The company is raising the full-year 2025 revenue guidance by 200 basis points to 8.0% - 9.0% on a constant-currency basis and 9.0% - 10.0% on an organic basis[10] - The company is raising the full-year 2025 adjusted diluted earnings per share range to $3.70 - $3.80[10] - The company is raising the full-year 2025 adjusted free cash flow range to $140 million - $160 million[10] Clinical and Regulatory Milestones - Long-term, real-world evidence demonstrates efficacy of VNS Therapy in a wide range of seizure types in people with drug-resistant epilepsy[10] - Initiated process with CMS for reconsideration of national coverage for VNS Therapy for treatment-resistant depression[10, 11]

[Filing Information](index=1&type=section&id=Filing%20Information) LivaNova PLC filed its Form 10-Q for Q2 2025, reporting 54.6 million ordinary shares outstanding - LivaNova PLC filed its Form 10-Q for the quarterly period ended June 30, 2025 [1](index=1&type=chunk) - The company is a large accelerated filer, with ordinary shares traded on Nasdaq under **LIVN** [2](index=2&type=chunk)[3](index=3&type=chunk) - As of July 30, 2025, there were **54,601,073** ordinary shares outstanding [3](index=3&type=chunk) [Definitions](index=3&type=section&id=Definitions) This section defines key terms and abbreviations used throughout the report, including company references and plan names - Key terms defined include 'LivaNova', '2024 Restructuring Plan', '**2029 Notes**' (**$345.0 million**), 'DTD', and 'TRD' [7](index=7&type=chunk)[8](index=8&type=chunk)[10](index=10&type=chunk) [Intellectual Property, Trademarks, and Trade Names](index=6&type=section&id=Intellectual%20Property%2C%20Trademarks%2C%20and%20Trade%20Names) LivaNova's intellectual property includes trademarks for its Neuromodulation, Cardiopulmonary, and advanced circulatory support systems - Trademarks cover Neuromodulation systems (e.g., **VNS Therapy System**, **SenTiva**), Cardiopulmonary products (e.g., **Essenz**, **S5 Pro**), advanced circulatory support systems (e.g., **TandemLife**, **LifeSPARC**), and obstructive sleep apnea systems (e.g., **ImThera**, **aura6000**) [11](index=11&type=chunk)[12](index=12&type=chunk) [Cautionary Note About Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20About%20Forward-Looking%20Statements) This section warns readers about the inherent uncertainties and risks associated with forward-looking statements, advising against undue reliance - Forward-looking statements are identified by specific words and are based on inherently uncertain estimates and assumptions [13](index=13&type=chunk) - Key risks include global market volatility, supply chain pressures, cybersecurity, R&D failures, regulatory non-compliance, litigation, and tax law changes [13](index=13&type=chunk) - Readers are cautioned not to place undue reliance, and the Company undertakes no obligation to update or revise these statements [15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) This part presents LivaNova's unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls - All financial information is prepared in accordance with **U.S. GAAP**, with **USD** as the reporting currency [16](index=16&type=chunk) - The financial statements are unaudited and prepared in accordance with **U.S. GAAP** for interim financial information [27](index=27&type=chunk) - Management believes the condensed consolidated financial statements reflect all necessary adjustments for a fair statement of operating results [27](index=27&type=chunk) [ITEM 1. Financial Statements (unaudited)](index=8&type=section&id=ITEM%201.%20Financial%20Statements%20%28unaudited%29) This section provides unaudited condensed consolidated financial statements and detailed notes on accounting policies, derivatives, and contingencies [Condensed Consolidated Statements of Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) This statement presents LivaNova's net revenue, gross profit, operating income, and net income (loss) for the reported periods Condensed Consolidated Statements of Income (Loss) (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $352,524 | $318,575 | $669,379 | $613,487 | | Gross profit | $238,988 | $214,878 | $455,242 | $418,086 | | Operating income | $54,183 | $40,166 | $102,800 | $56,412 | | SNIA environmental liability expense | $(1,677) | — | $(362,070) | — | | Net income (loss) | $27,161 | $16,333 | $(300,161) | $(25,610) | | Basic income (loss) per share | $0.50 | $0.30 | $(5.51) | $(0.47) | | Diluted income (loss) per share | $0.50 | $0.30 | $(5.51) | $(0.47) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement details net income (loss) and other comprehensive income (loss) components, including foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $27,161 | $16,333 | $(300,161) | $(25,610) | | Foreign currency translation adjustment | $50,841 | $(7,613) | $88,283 | $(24,936) | | Comprehensive income (loss) | $78,002 | $8,720 | $(211,878) | $(50,546) | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of LivaNova's assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,066,142 | $1,127,186 | | Total Assets | $2,506,702 | $2,506,389 | | Total Current Liabilities | $827,100 | $392,125 | | SNIA environmental liability | $392,268 | — | | Long-term debt obligations | $348,489 | $549,624 | | Total Liabilities | $1,383,863 | $1,186,131 | | Total Stockholders' Equity | $1,122,839 | $1,320,258 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities for the reported periods Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $86,886 | $53,337 | | Net cash used in investing activities | $(19,596) | $(18,932) | | Net cash (used in) provided by financing activities | $(213,403) | $25,277 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(129,918) | $55,249 | | Cash, cash equivalents, and restricted cash at end of period | $593,638 | $633,121 | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering various accounting aspects and significant events [Note 1. Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Note%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This note details the basis of presentation for the unaudited financial statements, including cybersecurity incident costs and error corrections - LivaNova incurred **$13.0 million** in direct costs from a November 2023 cybersecurity incident through June 30, 2025, with **$9.6 million** reimbursed by insurance [28](index=28&type=chunk)[106](index=106&type=chunk) - An immaterial error in classifying Cardiopulmonary employee costs was corrected, with no impact on operating or net income [29](index=29&type=chunk)[98](index=98&type=chunk) [Note 2. Derivatives and Risk Management](index=13&type=section&id=Note%202.%20Derivatives%20and%20Risk%20Management) This note describes LivaNova's use of derivative contracts to manage foreign exchange and equity price risks - LivaNova uses FX derivative contracts to reduce FX fluctuations and Capped Call Transactions to manage equity price risk from its **2025** and **2029 Notes** [31](index=31&type=chunk)[32](index=32&type=chunk) - All derivatives are measured at fair value and are not designated as hedging instruments; changes in fair value are included in earnings [33](index=33&type=chunk) - Net gains from freestanding FX derivatives were **$25.4 million** for the six months ended June 30, 2025, compared to **$4.9 million** in the prior year [34](index=34&type=chunk) [Note 3. Fair Value Measurements](index=14&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note explains the fair value measurements of derivative assets and liabilities, particularly for capped calls and contingent consideration - Capped call and embedded derivatives for **2025** and **2029 Notes** are **Level 3** fair value measurements due to significant unobservable inputs like stock price volatility [43](index=43&type=chunk)[46](index=46&type=chunk) - ImThera contingent consideration arrangements are **Level 3** fair value measurements, using unobservable inputs such as discount rates and payment probabilities [47](index=47&type=chunk) Fair Value of Derivative Assets and Liabilities (in thousands) | Type | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Total derivative assets | $32,334 | $27,097 | | Total derivative liabilities | $49,462 | $54,734 | [Note 4. Financing Arrangements](index=17&type=section&id=Note%204.%20Financing%20Arrangements) This note details LivaNova's long-term debt obligations, including Term Facilities and convertible senior notes Long-Term Debt Obligations (in thousands, except interest rates) | Debt Type | June 30, 2025 | December 31, 2024 | Maturity | Interest Rate | | :--- | :--- | :--- | :--- | :--- | | Term Facilities | $107,722 | $313,014 | July 2027 | 7.36% | | 2029 Notes | $266,569 | $258,043 | March 2029 | 2.50% | | 2025 Notes | $55,713 | $53,887 | December 2025 | 3.00% | | Total long-term debt obligations | $348,489 | $549,624 | | | - An early repayment of **$200 million** on Term Facilities on May 2, 2025, resulted in a **$2.7 million** loss on debt extinguishment [51](index=51&type=chunk)[52](index=52&type=chunk) - The **2025 Notes** will be exchangeable at the holder's option from September 15, 2025, until shortly before maturity [54](index=54&type=chunk) [Note 5. Commitments and Contingencies](index=18&type=section&id=Note%205.%20Commitments%20and%20Contingencies) This note outlines LivaNova's various commitments and contingencies, including environmental liabilities, product litigation, and regulatory payback measures - LivaNova has an estimated liability of **$40.4 million** (**€34.5 million**) for the Saluggia site, with a maximum estimated loss of **$55.3 million** (**€47.2 million**) [57](index=57&type=chunk) - The Italian Supreme Court ruled LivaNova jointly liable for SNIA's environmental liabilities, resulting in a current liability of **€334.8 million** (**$392.3 million**) as of June 30, 2025 [64](index=64&type=chunk) - The provision for **3T Heater-Cooler** device product liability litigation was **$15.4 million** as of June 30, 2025, with **60** claims worldwide [67](index=67&type=chunk) - The Italian MedTech payback measure liability was **$19.7 million** as of June 30, 2025; a new decree may allow settlement at **25%** of original amounts [69](index=69&type=chunk) - A class action settlement for the November 2023 cybersecurity incident was approved on April 4, 2025, with an accrual of **$1.2 million** [71](index=71&type=chunk) [Note 6. Stockholders' Equity](index=21&type=section&id=Note%206.%20Stockholders%27%20Equity) This note details the changes in LivaNova's stockholders' equity, including net loss and comprehensive income adjustments Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2024 | Six Months Ended June 30, 2025 Changes | June 30, 2025 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $1,320,258 | $(197,419) | $1,122,839 | | Net loss | $(903,250) (Accumulated Deficit) | $(300,161) | $(1,203,411) | | Accumulated other comprehensive income (loss) | $(80,170) | $88,283 | $8,113 | | Additional paid-in capital | $2,220,658 | $14,119 | $2,234,777 | [Note 7. Stock-Based Incentive Plans](index=22&type=section&id=Note%207.%20Stock-Based%20Incentive%20Plans) This note describes the company's equity-based compensation plans and the associated stock-based compensation expense - Shareholders approved the **2025 Director Incentive Plan** (**300,000 shares**) and the **Second A&R 2022 Plan** (**2,200,000 shares**) for equity-based compensation [76](index=76&type=chunk)[77](index=77&type=chunk) Stock-Based Compensation Expense (in thousands) | Type of Arrangement | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Service-based RSUs | $8,069 | $9,374 | | Service-based SARs | $6,134 | $6,523 | | Market performance-based RSUs | $929 | $1,046 | | Operating performance-based RSUs | $1,282 | $864 | | Employee share purchase plan | $543 | $618 | | Total | $16,957 | $18,425 | [Note 8. Income Taxes](index=23&type=section&id=Note%208.%20Income%20Taxes) This note discusses LivaNova's effective income tax rate and the potential impacts of new accounting pronouncements - Effective income tax rate for H1 2025 was **(6.3)%**, compared to **(102.6)%** in the prior year, influenced by pre-tax income, SNIA liability, and valuation allowances [82](index=82&type=chunk)[141](index=141&type=chunk) - LivaNova is evaluating the potential impacts of the **U.S. OBBBA** (One Big Beautiful Bill Act) enacted on July 4, 2025, on R&D expense deductions and other tax items [83](index=83&type=chunk)[142](index=142&type=chunk) [Note 9. Income (Loss) Per Share](index=24&type=section&id=Note%209.%20Income%20%28Loss%29%20Per%20Share) This note presents basic and diluted income (loss) per share calculations and explains exclusions from diluted EPS Basic and Diluted Income (Loss) Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic income (loss) per share | $0.50 | $0.30 | $(5.51) | $(0.47) | | Diluted income (loss) per share | $0.50 | $0.30 | $(5.51) | $(0.47) | - The **2029 Notes** and certain share-based compensation awards were excluded from diluted EPS for H1 2025 due to their anti-dilutive effect [84](index=84&type=chunk) [Note 10. Geographic and Segment Information](index=24&type=section&id=Note%2010.%20Geographic%20and%20Segment%20Information) This note provides a breakdown of LivaNova's net revenue and segment income by its Cardiopulmonary and Neuromodulation segments and geographic regions - LivaNova's two reportable segments are **Cardiopulmonary** (HLMs, oxygenators) and **Neuromodulation** (VNS Therapy for DRE/DTD, aura6000 for OSA) [86](index=86&type=chunk)[87](index=87&type=chunk) Net Revenue by Operating Segment and Geographic Region (in thousands) | Segment/Region | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | $375,592 | $329,605 | 14.0% | | Neuromodulation | $290,563 | $276,748 | 5.0% | | Total Net Revenue | $669,379 | $613,487 | 9.1% | Segment Income (in thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | $56,098 | $34,338 | 63.4% | | Neuromodulation | $108,373 | $101,490 | 6.8% | | Total Segment Income | $164,471 | $135,828 | 21.1% | - Goodwill increased to **$793.365 million** as of June 30, 2025, from **$750.006 million** at December 31, 2024, primarily due to foreign currency adjustments in Cardiopulmonary [91](index=91&type=chunk) [Note 11. Supplemental Financial Information](index=27&type=section&id=Note%2011.%20Supplemental%20Financial%20Information) This note provides additional financial details, including inventory components, accrued liabilities, and foreign exchange and other income/expense Components of Inventories (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | $77,047 | $71,949 | | Work-in-process | $16,333 | $12,322 | | Finished goods | $71,970 | $63,295 | | Total Inventories | $165,350 | $147,566 | Components of Accrued Liabilities and Other (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Italian MedTech payback measure | $19,690 | $15,981 | | Legal and professional costs | $18,972 | $17,379 | | Interest payable | $5,245 | $9,479 | | Restructuring liabilities | — | $2,003 | | Other accrued expenses | $26,057 | $33,463 | | Total Accrued Liabilities and Other | $103,240 | $118,485 | Foreign Exchange and Other Income/(Expense) (in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Embedded derivative fair value adjustment (2025 Notes) | $1,552 | $(1,363) | | Embedded derivative fair value adjustment (2029 Notes) | $3,726 | $(7,935) | | Capped call fair value adjustment (2025 Notes) | $(1,321) | $(8,533) | | Capped call fair value adjustment (2029 Notes) | $(2,077) | $477 | | Investment revaluation - Ceribell, Inc. | $(3,622) | — | | Impairment of investment in ShiraTronics, Inc. | — | $(5,750) | | Interest income | $10,626 | $14,358 | | FX fluctuations | $(1,850) | $(3,105) | | Total | $7,161 | $(12,116) | - The **SNIA Litigation Guarantee** was terminated on March 31, 2025, releasing **$294.698 million** in restricted cash [96](index=96&type=chunk) [Note 12. New Accounting Pronouncements](index=29&type=section&id=Note%2012.%20New%20Accounting%20Pronouncements) This note outlines recently issued accounting standards that will impact future financial disclosures, including income taxes and expense disaggregation - **ASU No. 2023-09** (Income Taxes) will be effective after December 15, 2024, expanding income tax disclosures [97](index=97&type=chunk) - **ASU No. 2024-03** (Expense Disaggregation) will be effective after December 15, 2026, requiring additional disclosures on expense categories [97](index=97&type=chunk) [Note 13. Revision of Previously Issued Financial Statements](index=29&type=section&id=Note%2013.%20Revision%20of%20Previously%20Issued%20Financial%20Statements) This note details the correction of an immaterial error in classifying Cardiopulmonary employee costs, with no impact on income - An immaterial error in classifying Cardiopulmonary employee costs between cost of sales and SG&A was corrected, with no impact on operating or net income [98](index=98&type=chunk)[99](index=99&type=chunk) Summary of Corrections to Impacted Financial Statement Line Items (in thousands) | Line Item | As Previously Reported (FY2024) | Adjustment (FY2024) | As Revised (FY2024) | | :--- | :--- | :--- | :--- | | Cost of sales | $382,564 | $17,389 | $399,953 | | Gross profit | $870,873 | $(17,389) | $853,484 | | Selling, general, and administrative | $526,265 | $(17,389) | $508,876 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on LivaNova's financial performance, covering business segments, macroeconomic impacts, and operational results - LivaNova is a global medical technology company focused on neurological and cardiac conditions, with shares listed on Nasdaq under '**LIVN**' [102](index=102&type=chunk) - Macroeconomic factors like FX volatility, inflation, geopolitical instability, and supply chain challenges continue to impact the business [103](index=103&type=chunk) - The cybersecurity incident incurred **$13.0 million** in direct costs through June 30, 2025, with **$9.6 million** reimbursed by insurance [106](index=106&type=chunk) [Business Segments Overview](index=32&type=section&id=Business%20Segments%20Overview) This section describes LivaNova's Cardiopulmonary and Neuromodulation segments, highlighting key products and clinical trial outcomes - Cardiopulmonary segment designs, develops, manufactures, markets, and sells products like **Heart-Lung Machines (HLMs)** and oxygenators [108](index=108&type=chunk) - Neuromodulation segment focuses on **VNS Therapy** for Drug-Resistant Epilepsy (DRE) and Difficult-to-Treat Depression (DTD), and the **aura6000 System** for Obstructive Sleep Apnea (OSA) [110](index=110&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) - **CORE-VNS** study for DRE showed early and lasting effectiveness of VNS Therapy, with **36-month** data validating its use for severe focal seizures [112](index=112&type=chunk) - **OSPREY** clinical trial for OSA showed a **65% responder rate** at **12 months** with the aura6000 System, demonstrating significant reductions in AHI and ODI [114](index=114&type=chunk) - LivaNova initiated the process with **CMS** to seek reconsideration of national Medicare coverage for **VNS Therapy** in unipolar patients with TRD, supported by peer-reviewed articles [117](index=117&type=chunk)[118](index=118&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes LivaNova's net revenue and segment income performance, noting the impact of the SNIA environmental liability Net Revenue by Operating Segment (in thousands) | Segment | Q2 2025 Net Revenue | Q2 2024 Net Revenue | % Change (QoQ) | H1 2025 Net Revenue | H1 2024 Net Revenue | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cardiopulmonary | $199,272 | $173,714 | 14.7% | $375,592 | $329,605 | 14.0% | | Neuromodulation | $151,670 | $142,876 | 6.2% | $290,563 | $276,748 | 5.0% | | Total Net Revenue | $352,524 | $318,575 | 10.7% | $669,379 | $613,487 | 9.1% | Segment Income (in thousands) | Segment | Q2 2025 Segment Income | Q2 2024 Segment Income | % Change (QoQ) | H1 2025 Segment Income | H1 2024 Segment Income | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cardiopulmonary | $31,407 | $19,627 | 60.0% | $56,098 | $34,338 | 63.4% | | Neuromodulation | $56,020 | $54,812 | 2.2% | $108,373 | $101,490 | 6.8% | | Total Segment Income | $87,427 | $74,439 | 17.4% | $164,471 | $135,828 | 21.1% | - A **$(362.070) million** SNIA environmental liability expense was recorded for the six months ended June 30, 2025 [120](index=120&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Interest expense decreased due to an early repayment of **$200 million** on Term Facilities [137](index=137&type=chunk) [Cost of Sales and Expenses Analysis](index=35&type=section&id=Cost%20of%20Sales%20and%20Expenses%20Analysis) This section analyzes changes in cost of sales, SG&A, R&D, and other operating expenses, highlighting key drivers for each Costs and Expenses as a Percentage of Net Revenue | Expense Category | H1 2025 % of Net Revenue | H1 2024 % of Net Revenue | Change (pp) | | :--- | :--- | :--- | :--- | | Cost of sales | 32.0% | 31.9% | 0.1% | | Selling, general, and administrative | 39.9% | 40.9% | (1.0)% | | Research and development | 12.7% | 14.7% | (2.0)% | | Other operating expenses | 0.1% | 3.3% | (3.2)% | - SG&A expense decreased primarily due to lower costs from the November 2023 cybersecurity incident and related insurance recoveries [130](index=130&type=chunk) - R&D expense decreased primarily due to a **$9.4 million** reduction in costs associated with the DTD program for the six-month period [132](index=132&type=chunk) - Other operating expenses decreased due to an **$11.5 million** reduction in restructuring costs and an **$8.5 million** reduction in the **3T Heater-Cooler** litigation provision for the six-month period [134](index=134&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses LivaNova's short-term liquidity and working capital, noting the impact of the SNIA environmental liability - LivaNova's available short-term liquidity as of June 30, 2025, was **$818.6 million**, comprising **$593.6 million** in cash and equivalents and **$225.0 million** in revolving credit facility availability [145](index=145&type=chunk) - The decrease in working capital is primarily due to the increase in current liabilities, notably the **SNIA environmental liability** [24](index=24&type=chunk)[64](index=64&type=chunk)[145](index=145&type=chunk) Working Capital (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current assets | $1,066,142 | $1,127,186 | | Current liabilities | $827,100 | $392,125 | | Working Capital | $239,042 | $735,061 | [Cash Flows Analysis](index=37&type=section&id=Cash%20Flows%20Analysis) This section analyzes the changes in cash flows from operating, investing, and financing activities for the reported periods Net Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Operating activities | $86,886 | $53,337 | +$33,549 | | Investing activities | $(19,596) | $(18,932) | -$(664) | | Financing activities | $(213,403) | $25,277 | -$(238,680) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(129,918) | $55,249 | -$(185,167) | - Operating cash flow increased due to higher customer collections and lower restructuring payments [147](index=147&type=chunk) - Financing cash flow shifted from positive to negative primarily due to a **$200 million** early repayment of Term Facilities and the release of restricted cash from the **SNIA Litigation Guarantee** termination [149](index=149&type=chunk)[96](index=96&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) LivaNova is exposed to market risks from foreign currency, equity prices, interest rates, and supplier concentration, managed through operations and derivatives - LivaNova is exposed to market risks from foreign currency exchange rates, equity price risk, interest rate risks, and concentration of procurement suppliers [150](index=150&type=chunk) - These risks are managed through regular operating and financing activities and, at times, derivative financial instruments [150](index=150&type=chunk) [ITEM 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) LivaNova's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - LivaNova's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025 [152](index=152&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 [153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information including Iran dealings, and a list of exhibits [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) Material legal and regulatory proceedings and settlements are detailed in Note 5 of the condensed consolidated financial statements - Material legal and regulatory proceedings are detailed in '**Note 5. Commitments and Contingencies**' [154](index=154&type=chunk) [ITEM 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to LivaNova's risk factors were reported since the 2024 Annual Report on Form 10-K and Q1 2025 Form 10-Q - No material changes to risk factors were reported since the **2024 Form 10-K** and **Q1 2025 Form 10-Q** [155](index=155&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report [156](index=156&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=38&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report [157](index=157&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to LivaNova's operations - Mine safety disclosures are not applicable [158](index=158&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information) This section covers trading arrangements and details LivaNova's medical device sales in Iran through non-U.S. subsidiaries - No directors or officers adopted, terminated, or modified **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements [159](index=159&type=chunk) - LivaNova's non-U.S. subsidiaries sold medical devices in Iran, generating **$3.5 million** in gross revenue and **$1.7 million** in net profits for Q2 2025, and **$8.8 million** in gross revenue and **$4.8 million** for H1 2025 [160](index=160&type=chunk)[161](index=161&type=chunk) - LivaNova believes its activities in Iran are consistent with applicable sanctions laws and intends to continue its business there [162](index=162&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the report, including incentive plans, grant agreements, and CEO/CFO certifications - Exhibits include the **Second Amended and Restated LivaNova PLC 2022 Incentive Award Plan**, the **2025 Director Incentive Award Plan**, and related grant agreements [165](index=165&type=chunk) - Certifications from the CEO and CFO pursuant to **Sections 302** and **906** of the Sarbanes-Oxley Act of 2002 are included [165](index=165&type=chunk) - Interactive Data Files (**XBRL**) for financial statements are provided [165](index=165&type=chunk) [Signatures](index=41&type=section&id=Signatures) The report was signed by LivaNova's CEO, Vladimir Makatsaria, and CFO, Alex Shvartsburg, on August 6, 2025 - The report was signed by **Vladimir Makatsaria**, CEO, and **Alex Shvartsburg**, CFO, on **August 6, 2025** [169](index=169&type=chunk)[170](index=170&type=chunk)

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) LivaNova reported strong Q2 2025 results with double-digit revenue growth and operating margin expansion, leading to raised full-year guidance and strategic investments in core and high-growth markets [Financial Summary and Highlights](index=1&type=section&id=Financial%20Summary%20and%20Highlights) LivaNova reported strong second-quarter 2025 results with double-digit revenue growth and operating margin expansion, leading to raised full-year 2025 guidance for revenue, adjusted EPS, and adjusted free cash flow - Delivered **double-digit reported and organic revenue growth** and continued operating margin expansion[4](index=4&type=chunk) - Raised full-year 2025 revenue, adjusted earnings per share, and adjusted free cash flow guidance[4](index=4&type=chunk) - Initiated process with U.S. Centers for Medicare and Medicaid Services (CMS) for reconsideration of national coverage for VNS Therapy™ for treatment-resistant depression, supported by five peer-reviewed publications from the RECOVER study[4](index=4&type=chunk) - Published 24-month data from the CORE-VNS study, showing adjunctive VNS Therapy is associated with substantial reductions in generalized tonic-clonic seizures in people with drug-resistant epilepsy (DRE)[4](index=4&type=chunk) Second-Quarter 2025 Key Financial Highlights | Metric | Q2 2025 Value | Change vs. Prior-Year Period | | :-------------------------------- | :------------ | :--------------------------- | | Revenue (Reported) | $352.5 million | +10.7% | | Revenue (Constant-Currency) | $352.5 million | +9.3% | | Revenue (Organic) | $352.5 million | +10.3% | | U.S. GAAP Diluted EPS | $0.50 | - | | Adjusted Diluted EPS | $1.05 | - | | Net Cash Provided by Operating Activities | $62.9 million | - | | Adjusted Free Cash Flow | $47.8 million | - | [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Vladimir Makatsaria highlighted strong Q2 revenue growth driven by Cardiopulmonary and Neuromodulation, attributing success to disciplined execution, operating margin expansion, and cash generation - Strong revenue growth driven by Cardiopulmonary business momentum and solid Neuromodulation performance across all regions[5](index=5&type=chunk) - Disciplined execution contributed to meaningful operating margin expansion and strong cash generation[5](index=5&type=chunk) - Strategy focuses on investing in core businesses, sustaining market leadership, and leveraging Neuromodulation capabilities into attractive high-growth markets like obstructive sleep apnea and difficult-to-treat depression[5](index=5&type=chunk) [Second-Quarter 2025 Financial Results](index=2&type=section&id=Second-Quarter%202025%20Financial%20Results) LivaNova achieved double-digit revenue growth in Q2 2025 across Cardiopulmonary and Neuromodulation segments, alongside significant increases in both GAAP and adjusted operating income and EPS [Revenue by Segment](index=2&type=section&id=Revenue%20by%20Segment) LivaNova's total net revenue for Q2 2025 increased by 10.7% reported and 9.3% constant-currency, with organic growth of 10.3%. Cardiopulmonary revenue saw significant growth (14.7% reported, 12.7% constant-currency) driven by consumables and Essenz™ Perfusion System sales. Neuromodulation also grew across all regions (6.2% reported, 5.6% constant-currency) Second-Quarter 2025 Revenue by Segment (in millions) | Segment | 2025 Revenue | 2024 Revenue | % Change (Reported) | % Change (Constant Currency) | | :-------------- | :----------- | :----------- | :------------------ | :--------------------------- | | Cardiopulmonary | $199.3 | $173.7 | 14.7 % | 12.7 % | | Neuromodulation | $151.7 | $142.9 | 6.2 % | 5.6 % | | Other Revenue | $1.6 | $2.0 | (20.3)% | (24.4)% | | **Total Net Revenue** | **$352.5** | **$318.6** | **10.7 %** | **9.3 %** | | Total Organic Net Revenue | $352.5 | $315.6 | N/A | 10.3 % | - Cardiopulmonary revenue growth was driven by strong consumables demand and Essenz™ Perfusion System sales across all regions[7](index=7&type=chunk) - Neuromodulation revenue increased across all regions[9](index=9&type=chunk) - Completed 36-month data analysis of the CORE-VNS study, demonstrating early and lasting outcomes of adjunctive VNS Therapy on severe focal seizures in both children and adults with DRE[8](index=8&type=chunk) - CMS recently proposed to move DRE end-of-service procedures beginning in 2026 from Level 4 into a Level 5 Ambulatory Payment Classification under the 2026 Medicare Hospital Outpatient Prospective Payment System[8](index=8&type=chunk) [Earnings Analysis](index=3&type=section&id=Earnings%20Analysis) For Q2 2025, LivaNova reported a significant increase in both GAAP and adjusted operating income and diluted earnings per share compared to Q2 2024, reflecting improved profitability Second-Quarter 2025 Earnings Analysis (in millions, except per share) | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------- | :------ | :------ | :------- | | U.S. GAAP Operating Income | $54.2 | $40.2 | +34.8% | | Adjusted Operating Income | $77.4 | $66.9 | +15.7% | | U.S. GAAP Diluted EPS | $0.50 | $0.30 | +66.7% | | Adjusted Diluted EPS | $1.05 | $0.93 | +12.9% | [Full-Year 2025 Guidance](index=3&type=section&id=Full-Year%202025%20Guidance) LivaNova has raised its full-year 2025 guidance across key financial metrics, including revenue growth, adjusted diluted earnings per share, and adjusted free cash flow, reflecting increased confidence in its performance Full-Year 2025 Guidance Update | Metric | Prior Guidance | New Guidance | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Revenue Growth (Constant-Currency) | 6.0% to 7.0% | 8.0% to 9.0% | +200 bps | | Revenue Growth (Organic) | 7.0% to 8.0% | 9.0% to 10.0% | +200 bps | | Foreign Currency Impact | 0.0% to 1.0% headwind | ~1.0% tailwind | Shift to tailwind | | Adjusted Diluted EPS | $3.60 to $3.70 | $3.70 to $3.80 | +$0.10 at midpoint | | Adjusted Free Cash Flow | $135 million to $155 million | $140 million to $160 million | +$5 million at midpoint | [Company Information](index=3&type=section&id=Company%20Information) This section provides details on LivaNova's Q2 2025 earnings webcast and conference call, along with an overview of the company's global medical technology operations [Webcast and Conference Call Instructions](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Instructions) LivaNova hosted a live audiocast and conference call on August 6, 2025, to discuss its results, with replay available online for approximately 90 days - Live audiocast and conference call held on August 6, 2025, at 1 p.m. London time (8 a.m. Eastern Time)[15](index=15&type=chunk) - Replay accessible at www.livanova.com/events for approximately 90 days[16](index=16&type=chunk) [About LivaNova](index=4&type=section&id=About%20LivaNova) LivaNova PLC is a global medical technology company with nearly five decades of experience, headquartered in London. It focuses on delivering life-changing solutions for neurological and cardiac conditions, employing approximately 2,900 people and operating in over 100 countries - LivaNova PLC is a global medical technology company with nearly five decades of experience[17](index=17&type=chunk) - Headquartered in London, it employs approximately **2,900 employees** and has a presence in more than **100 countries**[17](index=17&type=chunk) - Focuses on delivering life-changing solutions in select neurological and cardiac conditions[17](index=17&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) LivaNova utilizes non-GAAP financial measures like constant-currency and organic revenue to provide a clearer view of operational performance, while forward-looking non-GAAP measures are not reconciled to GAAP due to inherent uncertainties [Use and Definition](index=4&type=section&id=Use%20and%20Definition) LivaNova uses non-GAAP financial measures to supplement U.S. GAAP, monitoring operational performance and benchmarking. These measures, such as constant-currency and organic revenue, provide a consistent basis for evaluating performance by excluding impacts from currency fluctuations, acquisitions, and divestitures - Non-GAAP measures are used by management to monitor operational performance and for benchmarking against other medical technology companies[18](index=18&type=chunk) - Constant-currency percent change excludes the impact from fluctuations in various currencies[19](index=19&type=chunk) - Organic revenue percent change excludes the impact of acquisitions, divestitures, and currency translation effects[19](index=19&type=chunk) [Forward-Looking Non-GAAP Measures](index=4&type=section&id=Forward-Looking%20Non-GAAP%20Measures) The company calculates forward-looking non-GAAP measures based on internal forecasts, omitting certain GAAP items like fair value changes of derivatives or asset impairment charges. Due to inherent uncertainty and variability of these adjustments, LivaNova does not reconcile forward-looking non-GAAP measures to their most directly comparable GAAP measures without unreasonable effort - Forward-looking non-GAAP financial measures are based on internal forecasts that omit certain amounts included in GAAP measures[20](index=20&type=chunk) - Examples of excluded items for adjusted diluted EPS guidance include changes in fair value of derivatives, contingent consideration arrangements, and asset impairment charges[21](index=21&type=chunk) - The company does not reconcile forward-looking non-GAAP financial measures to GAAP due to the uncertainty and variability of adjustments, making it impractical without unreasonable effort[21](index=21&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This section outlines LivaNova's forward-looking statements, emphasizing that actual results may differ materially due to known and unknown risks. It lists numerous factors that could cause discrepancies, including market volatility, supply chain pressures, cybersecurity incidents, regulatory changes, and litigation - Statements in the news release, other than historical facts, are 'forward-looking statements' subject to known and unknown risks[23](index=23&type=chunk)[24](index=24&type=chunk) - Actual financial results, performance, achievements, or prospects may differ materially from those expressed or implied by forward-looking statements[24](index=24&type=chunk) - Key risks include global market volatility, economic conditions, supply chain pressures, cybersecurity incidents, changes in technology, regulatory compliance, litigation (e.g., 3T Heater-Cooler), and environmental liabilities (e.g., SNIA)[24](index=24&type=chunk)[25](index=25&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company undertakes no obligation to update them except as required by law[27](index=27&type=chunk) [Investor Relations Contact](index=7&type=section&id=Investor%20Relations%20Contact) Briana Gotlin serves as the Vice President of Investor Relations for LivaNova, providing contact information for investor inquiries - Briana Gotlin is the Vice President, Investor Relations[28](index=28&type=chunk) - Contact information provided for investor inquiries: Phone: **+1 281 895 2382**, e-mail: **InvestorRelations@livanova.com**[28](index=28&type=chunk) [Detailed Financial Data and Reconciliations](index=8&type=section&id=Detailed%20Financial%20Data%20and%20Reconciliations) This section presents unaudited detailed financial statements, including net revenue by segment and region, condensed consolidated statements of income, balance sheets, cash flows, and various GAAP to non-GAAP reconciliations [Net Revenue by Segment and Region - Unaudited](index=8&type=section&id=Net%20Revenue%20by%20Segment%20and%20Region) This section provides detailed unaudited net revenue breakdowns for LivaNova's Cardiopulmonary and Neuromodulation segments across different regions for both the three and six months ended June 30, 2025 [Three Months Ended June 30, 2025](index=8&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For Q2 2025, LivaNova's total net revenue was $352.5 million, an increase of 10.7% reported and 9.3% constant-currency. Cardiopulmonary revenue grew 14.7% reported, with Europe showing the highest regional growth at 27.2%. Neuromodulation revenue increased 6.2% reported, with Europe also leading regional growth at 13.7% Q2 2025 Net Revenue by Segment and Region (U.S. dollars in millions) | Segment | Region | 2025 | 2024 | % Change | Constant-Currency % Change | | :-------------- | :------------- | :----- | :----- | :------- | :--------------------------- | | Cardiopulmonary | U.S. | $71.2 | $64.9 | 9.8 % | 9.8 % | | | Europe | $49.0 | $38.6 | 27.2 % | 20.3 % | | | Rest of World | $79.0 | $70.3 | 12.4 % | 11.3 % | | | **Total** | **$199.3** | **$173.7** | **14.7 %** | **12.7 %** | | Neuromodulation | U.S. | $117.2 | $111.7 | 5.0 % | 5.0 % | | | Europe | $17.7 | $15.6 | 13.7 % | 7.3 % | | | Rest of World | $16.7 | $15.6 | 7.1 % | 8.2 % | | | **Total** | **$151.7** | **$142.9** | **6.2 %** | **5.6 %** | | Other Revenue | | $1.6 | $2.0 | (20.3)% | (24.4)% | | **Totals** | **U.S.** | **$188.5** | **$179.5** | **5.0 %** | **5.0 %** | | | **Europe** | **$66.8** | **$51.3** | **30.3 %** | **23.1 %** | | | **Rest of World** | **$97.3** | **$87.8** | **10.8 %** | **10.0 %** | | | **Grand Total** | **$352.5** | **$318.6** | **10.7 %** | **9.3 %** | [Six Months Ended June 30, 2025](index=9&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) For the six months ended June 30, 2025, total net revenue was $669.4 million, up 9.1% reported and constant-currency. Cardiopulmonary revenue increased 14.0% reported, with the U.S. showing the highest growth at 14.4%. Neuromodulation revenue grew 5.0% reported, with Europe leading regional growth at 13.5% Six Months Ended June 30, 2025 Net Revenue by Segment and Region (U.S. dollars in millions) | Segment | Region | 2025 | 2024 | % Change | Constant-Currency % Change | | :-------------- | :------------- | :----- | :----- | :------- | :--------------------------- | | Cardiopulmonary | U.S. | $132.1 | $115.5 | 14.4 % | 14.4 % | | | Europe | $93.6 | $79.5 | 17.7 % | 15.5 % | | | Rest of World | $150.0 | $134.7 | 11.4 % | 12.3 % | | | **Total** | **$375.6** | **$329.6** | **14.0 %** | **13.8 %** | | Neuromodulation | U.S. | $225.6 | $217.6 | 3.7 % | 3.7 % | | | Europe | $32.9 | $29.0 | 13.5 % | 11.2 % | | | Rest of World | $32.1 | $30.1 | 6.4 % | 9.9 % | | | **Total** | **$290.6** | **$276.7** | **5.0 %** | **5.1 %** | | Other Revenue | | $3.2 | $7.1 | (54.8)% | (55.3)% | | **Totals** | **U.S.** | **$357.6** | **$340.2** | **5.1 %** | **5.1 %** | | | **Europe** | **$126.5** | **$105.6** | **19.8 %** | **17.5 %** | | | **Rest of World** | **$185.3** | **$167.7** | **10.5 %** | **11.8 %** | | | **Grand Total** | **$669.4** | **$613.5** | **9.1 %** | **9.1 %** | [Condensed Consolidated Statements of Income (Loss) - Unaudited](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) This section presents LivaNova's unaudited GAAP and adjusted condensed consolidated statements of income (loss) for the three and six months ended June 30, 2025, highlighting profitability and key adjustments [Three Months Ended June 30, 2025 (GAAP & Adjusted)](index=10&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20%28GAAP%20%26%20Adjusted%29) For Q2 2025, GAAP net income was $27.2 million ($0.50 diluted EPS), up from $16.3 million ($0.30 diluted EPS) in Q2 2024. Adjusted net income was $57.4 million ($1.05 adjusted diluted EPS), compared to $50.8 million ($0.93 adjusted diluted EPS) in the prior year, demonstrating improved profitability on both GAAP and adjusted bases Q2 2025 GAAP Condensed Consolidated Statements of Income (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Net revenue | $352.5 | $318.6 | | Gross profit | $239.0 | $214.9 | | Operating income | $54.2 | $40.2 | | Income before tax | $33.3 | $21.6 | | Net income | $27.2 | $16.3 | | Diluted income per share | $0.50 | $0.30 | Q2 2025 Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Adjusted SG&A | $121.4 | $108.7 | | Adjusted R&D | $44.0 | $41.3 | | Adjusted operating income | $77.4 | $66.9 | | Adjusted net income | $57.4 | $50.8 | | Adjusted diluted earnings per share | $1.05 | $0.93 | Q2 2025 GAAP vs. Adjusted Statistics (as a % of net revenue) | Metric | GAAP 2025 | GAAP 2024 | Adjusted 2025 | Adjusted 2024 | | :---------------- | :-------- | :-------- | :------------ | :------------ | | Gross profit | 67.8 % | 67.4 % | 68.9 % | 68.1 % | | Operating income | 15.4 % | 12.6 % | 21.9 % | 21.0 % | | Net income | 7.7 % | 5.1 % | 16.3 % | 15.9 % | | Income tax rate | 18.5 % | 24.2 % | 22.0 % | 20.8 % | [Six Months Ended June 30, 2025 (GAAP & Adjusted)](index=12&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20%28GAAP%20%26%20Adjusted%29) For the first six months of 2025, LivaNova reported a GAAP net loss of ($300.2) million (diluted loss per share of ($5.51)), significantly higher than the ($25.6) million loss in H1 2024, primarily due to a large SNIA environmental liability expense. However, adjusted net income increased to $105.5 million ($1.93 adjusted diluted EPS) from $90.8 million ($1.66 adjusted diluted EPS) in H1 2024, indicating underlying operational improvement H1 2025 GAAP Condensed Consolidated Statements of Income (Loss) (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Net revenue | $669.4 | $613.5 | | Gross profit | $455.2 | $418.1 | | Operating income | $102.8 | $56.4 | | Loss before tax | ($282.3) | ($12.6) | | Net loss | ($300.2) | ($25.6) | | Basic loss per share | ($5.51) | ($0.47) | | Diluted loss per share | ($5.51) | ($0.47) | - A significant **SNIA environmental liability expense of ($362.1) million** impacted GAAP loss before tax and net loss for the six months ended June 30, 2025[38](index=38&type=chunk) H1 2025 Adjusted Financial Measures (U.S. dollars in millions, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Adjusted SG&A | $237.1 | $217.8 | | Adjusted R&D | $82.2 | $84.1 | | Adjusted operating income | $141.9 | $120.0 | | Adjusted net income | $105.5 | $90.8 | | Adjusted diluted earnings per share | $1.93 | $1.66 | H1 2025 GAAP vs. Adjusted Statistics (as a % of net revenue) | Metric | GAAP 2025 | GAAP 2024 | Adjusted 2025 | Adjusted 2024 | | :---------------- | :-------- | :-------- | :------------ | :------------ | | Gross profit | 68.0 % | 68.1 % | 68.9 % | 68.8 % | | Operating income | 15.4 % | 9.2 % | 21.2 % | 19.6 % | | Net (loss) income | (44.8)% | (4.2)% | 15.8 % | 14.8 % | | Income tax rate | (6.3)% | (102.6)% | 23.0 % | 20.8 % | [Reconciliation of GAAP to Non-GAAP Financial Measures - Unaudited](index=14&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed unaudited reconciliations of LivaNova's GAAP financial measures to non-GAAP measures for operating income, net income, and diluted EPS for both quarterly and year-to-date periods [Three Months Ended June 30, 2025](index=14&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For Q2 2025, GAAP operating income of $54.2 million was adjusted to $77.4 million, primarily by adding back depreciation and amortization, contingent consideration remeasurement, certain legal & regulatory costs, and stock-based compensation costs. Net income reconciliation shows similar adjustments, leading to adjusted net income of $57.4 million Q2 2025 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $54.2 | | Restructuring Expenses | ($0.1) | | Depreciation and Amortization Expenses | $4.2 | | Contingent Consideration | $2.8 | | Certain Legal & Regulatory Costs | $7.1 | | Stock-based Compensation Costs | $9.2 | | **Adjusted Operating Income** | **$77.4** | Q2 2025 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | $0.50 | | Depreciation and Amortization | $0.08 | | Financing Transactions | $0.18 | | Contingent Consideration | $0.05 | | Certain Legal & Regulatory Costs | $0.16 | | Stock-based Compensation Costs | $0.17 | | Certain Tax Adjustments | ($0.18) | | Certain Interest Adjustments | $0.10 | | **Adjusted Diluted EPS** | **$1.05** | [Three Months Ended June 30, 2024](index=15&type=section&id=Three%20Months%20Ended%20June%2030%2C%202024) For Q2 2024, GAAP operating income of $40.2 million was adjusted to $66.9 million, with significant add-backs for depreciation and amortization, legal & regulatory costs, and stock-based compensation. Adjusted net income was $50.8 million, up from GAAP net income of $16.3 million Q2 2024 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $40.2 | | Restructuring Expenses | $2.1 | | Depreciation and Amortization Expenses | $4.3 | | Contingent Consideration | $0.4 | | Certain Legal & Regulatory Costs | $11.7 | | Stock-based Compensation Costs | $8.2 | | **Adjusted Operating Income** | **$66.9** | Q2 2024 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | $0.30 | | Restructuring Expenses | $0.04 | | Depreciation and Amortization | $0.08 | | Impairment | $0.11 | | Financing Transactions | $0.05 | | Contingent Consideration | $0.01 | | Certain Legal & Regulatory Costs | $0.21 | | Stock-based Compensation Costs | $0.15 | | Certain Tax Adjustments | ($0.15) | | Certain Interest Adjustments | $0.14 | | **Adjusted Diluted EPS** | **$0.93** | [Six Months Ended June 30, 2025](index=16&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) For H1 2025, GAAP operating income of $102.8 million was adjusted to $141.9 million, with significant add-backs including depreciation and amortization, contingent consideration, legal & regulatory costs (including SNIA environmental liability), and stock-based compensation. The GAAP net loss of ($300.2) million was adjusted to a net income of $105.5 million, primarily due to the large SNIA environmental liability adjustment H1 2025 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $102.8 | | Restructuring Expenses | ($0.2) | | Depreciation and Amortization Expenses | $8.3 | | Contingent Consideration | $3.7 | | Certain Legal & Regulatory Costs | $10.3 | | Stock-based Compensation Costs | $17.0 | | **Adjusted Operating Income** | **$141.9** | H1 2025 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | ($5.51) | | Depreciation and Amortization | $0.15 | | Financing Transactions | $0.07 | | Contingent Consideration | $0.07 | | SNIA environmental liability, legal & regulatory costs | $6.81 | | Stock-based Compensation Costs | $0.31 | | Certain Tax Adjustments | ($0.25) | | Certain Interest Adjustments | $0.26 | | **Adjusted Diluted EPS** | **$1.93** | [Six Months Ended June 30, 2024](index=17&type=section&id=Six%20Months%20Ended%20June%2030%2C%202024) For H1 2024, GAAP operating income of $56.4 million was adjusted to $120.0 million, with significant add-backs for restructuring, depreciation and amortization, legal & regulatory costs, and stock-based compensation. The GAAP net loss of ($25.6) million was adjusted to a net income of $90.8 million H1 2024 GAAP to Adjusted Operating Income Reconciliation (U.S. dollars in millions) | Adjustment Category | Impact on Operating Income | | :-------------------------------- | :------------------------- | | GAAP Operating Income | $56.4 | | Restructuring Expenses | $11.4 | | Depreciation and Amortization Expenses | $8.6 | | Contingent Consideration | $0.3 | | Certain Legal & Regulatory Costs | $24.9 | | Stock-based Compensation Costs | $18.4 | | **Adjusted Operating Income** | **$120.0** | H1 2024 GAAP to Adjusted Diluted EPS Reconciliation | Adjustment Category | Impact on Diluted EPS | | :-------------------------------- | :-------------------- | | GAAP Diluted EPS | ($0.47) | | Restructuring Expenses | $0.21 | | Depreciation and Amortization | $0.16 | | Impairment | $0.11 | | Financing Transactions | $0.78 | | Contingent Consideration | $0.00 | | Certain Legal & Regulatory Costs | $0.46 | | Stock-based Compensation Costs | $0.34 | | Certain Tax Adjustments | ($0.20) | | Certain Interest Adjustments | $0.28 | | **Adjusted Diluted EPS** | **$1.66** | [Condensed Consolidated Balance Sheets - Unaudited](index=18&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, LivaNova's total assets remained stable at $2,506.7 million compared to December 31, 2024. Current assets decreased slightly due to a reduction in restricted cash, while current liabilities significantly increased to $827.1 million from $392.1 million, primarily driven by the recognition of a $392.3 million SNIA environmental liability and current contingent consideration Condensed Consolidated Balance Sheets (U.S. dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $593.6 | $428.9 | | Restricted cash | — | $294.7 | | Total Current Assets | $1,066.1 | $1,127.2 | | Total Assets | $2,506.7 | $2,506.4 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | SNIA environmental liability | $392.3 | — | | Current contingent consideration | $48.3 | — | | Total Current Liabilities | $827.1 | $392.1 | | Long-term debt obligations | $348.5 | $549.6 | | Total Liabilities | $1,383.9 | $1,186.1 | | Total Stockholders' Equity | $1,122.8 | $1,320.3 | | Total Liabilities and Stockholders' Equity | $2,506.7 | $2,506.4 | - Significant increase in current liabilities primarily due to the recognition of **SNIA environmental liability** and current contingent consideration[50](index=50&type=chunk) [Condensed Consolidated Statements of Cash Flows - Unaudited](index=19&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $86.9 million from $53.3 million in H1 2024, largely due to the SNIA environmental liability adjustment. Net cash used in investing activities remained stable. Net cash used in financing activities was ($213.4) million, a significant change from the $25.3 million provided in H1 2024, mainly due to debt repayments Condensed Consolidated Statements of Cash Flows (U.S. dollars in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $86.9 | $53.3 | | Net cash used in investing activities | ($19.6) | ($18.9) | | Net cash (used in) provided by financing activities | ($213.4) | $25.3 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | ($129.9) | $55.2 | | Cash, cash equivalents, and restricted cash at end of period | $593.6 | $633.1 | - Operating cash flow benefited from the **SNIA environmental liability adjustment**[52](index=52&type=chunk) - Financing activities shifted from cash provided to cash used, primarily due to repayment of long-term debt obligations[52](index=52&type=chunk) [Other Non-GAAP Reconciliations - Unaudited](index=20&type=section&id=Other%20Non-GAAP%20Reconciliations) This section provides unaudited reconciliations for LivaNova's income tax rate, organic net revenue, adjusted free cash flow, and adjusted diluted weighted average shares outstanding [Income Tax Rate Reconciliation](index=20&type=section&id=Income%20Tax%20Rate%20Reconciliation) For Q2 2025, the GAAP income tax rate was 18.5%, adjusted to 22.0%. For H1 2025, the GAAP income tax rate was (6.3)%, adjusted to 23.0%, reflecting the impact of certain tax adjustments on the reported loss Income Tax Rate Reconciliation (Three Months Ended June 30) | Metric | GAAP 2025 | Adjusted 2025 | GAAP 2024 | Adjusted 2024 | | :-------------- | :-------- | :------------ | :-------- | :------------ | | Income tax rate | 18.5 % | 22.0 % | 24.2 % | 20.8 % | Income Tax Rate Reconciliation (Six Months Ended June 30) | Metric | GAAP 2025 | Adjusted 2025 | GAAP 2024 | Adjusted 2024 | | :-------------- | :-------- | :------------ | :-------- | :------------ | | Income tax rate | (6.3)% | 23.0 % | (102.6)% | 20.8 % | [Organic Net Revenue Reconciliation](index=20&type=section&id=Organic%20Net%20Revenue%20Reconciliation) Organic net revenue for Q2 2025 was $352.5 million, representing a 10.3% constant-currency growth, after excluding $3.0 million from the former ACS segment in 2024. For H1 2025, organic net revenue was $669.4 million, a 10.4% constant-currency growth, after excluding $7.1 million from ACS in 2024 Organic Net Revenue Reconciliation (U.S. dollars in millions) | Period | GAAP Net Revenue | Less: ACS | Organic Net Revenue | Constant-Currency % Change (Organic) | | :-------------------------- | :--------------- | :-------- | :------------------ | :----------------------------------- | | Three Months Ended June 30, 2025 | $352.5 | — | $352.5 | 10.3 % | | Three Months Ended June 30, 2024 | $318.6 | $3.0 | $315.6 | N/A | | Six Months Ended June 30, 2025 | $669.4 | — | $669.4 | 10.4 % | | Six Months Ended June 30, 2024 | $613.5 | $7.1 | $606.4 | N/A | [Adjusted Free Cash Flow Reconciliation](index=20&type=section&id=Adjusted%20Free%20Cash%20Flow%20Reconciliation) For Q2 2025, adjusted free cash flow was $47.8 million, derived from net cash provided by operating activities of $62.9 million, adjusted for purchases of property, plant, and equipment, cybersecurity incident insurance proceeds, dividends received, and 3T Heater-Cooler litigation payments Adjusted Free Cash Flow Reconciliation (Three Months Ended June 30, 2025, U.S. dollars in millions) | Metric | Amount | | :-------------------------------- | :----- | | Net cash provided by operating activities | $62.9 | | Less: Purchases of plant, property, and equipment | ($15.1) | | Less: Cybersecurity incident insurance proceeds | ($1.0) | | Less: Dividends received from investments | ($0.4) | | Add: 3T Heater-Cooler litigation payments | $1.5 | | **Adjusted free cash flow** | **$47.8** | [Adjusted Diluted Weighted Average Shares Outstanding Reconciliation](index=21&type=section&id=Adjusted%20Diluted%20Weighted%20Average%20Shares%20Outstanding%20Reconciliation) For the six months ended June 30, 2025, adjusted diluted weighted average shares outstanding were 54.7 million, slightly higher than the GAAP diluted shares of 54.5 million due to the effects of stock-based compensation instruments Adjusted Diluted Weighted Average Shares Outstanding Reconciliation (shares in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | GAAP diluted weighted average shares outstanding | 54.5 | 54.2 | | Add: Effects of stock-based compensation instruments | 0.2 | 0.4 | | **Adjusted diluted weighted average shares outstanding** | **54.7** | **54.6** | [Supplemental Unaudited Revised Financial Information and Non-GAAP Measures](index=22&type=section&id=Supplemental%20Unaudited%20Revised%20Financial%20Information) LivaNova identified and corrected an immaterial error in Q2 2025 related to the classification of certain employee costs within the Cardiopulmonary segment, specifically between cost of sales and selling, general, and administrative expense. This reclassification had no impact on operating income or net income for any periods presented, but revised the reported amounts for cost of sales, gross profit, and SG&A - An immaterial error was identified and corrected regarding the classification of certain employee costs in the Cardiopulmonary segment[57](index=57&type=chunk) - The misclassification understated cost of sales and overstated selling, general, and administrative expense by equal and offsetting amounts[57](index=57&type=chunk) - The correction had no impact on operating income (loss) or net income (loss) for annual and interim periods for the years ended December 31, 2023 and 2024, and the three months ended March 31, 2025[57](index=57&type=chunk) Impact of Revision on Q2 2024 GAAP Financials (U.S. dollars in millions) | Metric | As Reported | As Revised | | :-------------------------------- | :---------- | :--------- | | GAAP Cost of sales | $99.7 | $103.7 | | GAAP Gross profit | $218.9 | $214.9 | | GAAP Selling, general, and administrative | $129.1 | $125.1 | | GAAP Gross profit (% of net revenue) | 68.7 % | 67.4 % | | GAAP Selling, general, and administrative (% of net revenue) | 40.5 % | 39.3 % |