UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 001-37599 LivaNova PLC (Exact name of registrant as specified in its cha ...

Product Development and Clinical Trials - LivaNova's Cardiopulmonary segment includes the development of the Essenz Perfusion System, with successful clinical cases completed in two major centers in Europe during Q4 2022[23]. - The VNS Therapy System is the only neuromodulation device approved for drug-resistant epilepsy patients in the U.S. as young as four years old, with global reimbursement expanding in 2020 and 2022[30]. - The VITARIA System for heart failure was halted after the 500th patient was randomized in the ANTHEM-HFrEF trial, as data did not show a strong positive impact on functional or mortality endpoints[41]. - The LifeSPARC platform received FDA approval in November 2022 for ECMO use beyond six hours for patients in acute respiratory failure, including those treated for COVID-19[42]. - The OSPREY clinical study for the aura6000 System began in March 2022, aiming to confirm safety and effectiveness for treating obstructive sleep apnea[40]. - The RECOVER clinical study, initiated in 2019, aims to gather clinical biomarkers of depression and includes up to 500 unipolar and 500 bipolar patients[36]. - In March 2022, LivaNova announced the 250th unipolar depression patient was implanted in the RECOVER study, leading to the first interim analysis[38]. - The Hemolung RAS received CMS approval for a New Technology Add-on Payment in August 2022, recognizing its potential to improve treatment for Medicare beneficiaries[44]. Financial Performance - In 2022, the company reported net revenue of $1,021.8 million, a slight decrease of 1.3% from $1,035.4 million in 2021[208]. - Gross profit for 2022 was $707.2 million, compared to $706.0 million in 2021, indicating a stable gross margin despite revenue decline[208]. - Operating loss from continuing operations was $76.8 million in 2022, a significant increase from a loss of $0.8 million in 2021[208]. - The company recognized a net loss of $86.2 million in 2022, an improvement from a net loss of $135.8 million in 2021[208]. - The company reported a total reportable segment loss from continuing operations of $43.8 million for 2022, compared to a profit of $36.2 million in 2021[210]. Market and Competitive Environment - The company faces increasing competition in the medical device market from both large manufacturers and small specialized firms[53]. - The current trend among hospitals is to consolidate into larger purchasing groups, enhancing purchasing power and potentially pressuring pricing[52]. - The company operates in a highly competitive medical device market, facing competition from both large manufacturers and alternative therapies, which could impact its market position[107]. Regulatory Compliance and Legal Risks - The company is subject to extensive government regulations, including compliance with the FDA's 510(k) clearance or pre-market approval (PMA) for medical devices sold in the U.S.[59]. - The company aims to be fully compliant with the EU's Medical Device Regulation (Reg MDR) by the May 2024 deadline[60]. - The company is required to comply with various patient privacy and security laws, including HIPAA in the U.S. and GDPR in the EU[68]. - The company is subject to various healthcare regulations, including the federal Anti-Kickback Statute, which can impose civil penalties of up to $100,000 per violation[77]. - The company has previously received a warning letter from the FDA regarding regulatory compliance, which has impacted its ability to market certain devices[111]. - The company may face civil or criminal penalties for non-compliance with product-related regulations, which could restrict its marketing capabilities and affect its financial condition[112]. - The company is involved in product liability litigation related to its cardiopulmonary 3T Heater-Cooler product, which may adversely affect its financial condition and require significant resources for defense[117]. Operational Challenges - The company has experienced supply chain delays and interruptions, labor shortages, and inflationary pressures[56]. - The company continues to face macroeconomic challenges, including supply chain disruptions and rising inflation, impacting overall business performance[191]. - The company is experiencing supply chain delays and interruptions, labor shortages, and inflationary pressures, which have led to longer lead times and price pressures on key raw materials[102]. Research and Development - The company is committed to R&D for technological advancements and new product development to maintain market leadership and address unmet patient needs[45]. - Research and development expenses were $155.8 million in 2022, down from $183.4 million in 2021, reflecting a strategic focus on key projects[208]. - The company relies on investments and collaborations for R&D, which are inherently risky and may not guarantee success[139]. Human Resources and Diversity - The company employs approximately 2,900 individuals globally, with a gender distribution of approximately 52% female and 48% male as of December 31, 2022[93]. - The Executive Team at the end of 2022 consisted of 11 individuals, with approximately 27% being female[93]. - The company has established a "Global Women's Network" to empower female employees and promote diversity and inclusion within the organization[94]. - The company has launched the LivaNova Commercial Academy to develop current and future leaders through a comprehensive leadership bootcamp[91]. - The company has a proactive recruitment strategy and offers competitive compensation packages, including health benefits and flexible working arrangements[87]. Environmental and Social Governance (ESG) - The company is focused on continuous improvement in environmental performance, aiming to reduce greenhouse gas emissions and overall environmental footprint[76]. - The company is subject to increased scrutiny regarding ESG matters, which could impact reputation and access to capital[140]. - Environmental liabilities related to hazardous substances at the company's Saluggia campus could lead to significant financial impacts, including a court-ordered payment of approximately €453.6 million (approximately $484.9 million) for environmental damages[133]. Currency and Economic Risks - In 2022, the company's net revenue and profitability were negatively affected by unfavorable foreign currency exchange impacts due to a strengthened U.S. dollar against several currencies[105]. - The company experienced unfavorable foreign currency fluctuations impacting revenues by approximately $33.5 million in Cardiopulmonary and $9.7 million in Neuromodulation for 2022[211][215]. - The Russian market represented only 1.0% of total net revenue in 2022, but geopolitical tensions have increased economic uncertainties[192]. Financial Instruments and Debt - The company issued $287.5 million aggregate principal amount of 3.00% Cash Exchangeable Senior Notes due in 2025[156]. - The effective interest expense reported is significantly greater than the stated interest rates of the Notes, which may lead to volatility in reported financial results[162]. - The company is subject to counterparty risk with respect to capped call transactions, which could affect financial stability[166]. - The company’s debt instruments impose affirmative covenants and specified financial ratios that could limit operational flexibility and strategic opportunities[161]. Strategic Challenges - The company may face challenges in integrating acquired businesses, which could disrupt ongoing operations and limit growth[150]. - Changes in global healthcare policies and reimbursement reductions may adversely impact the company's business, particularly in Italy where a "payback" measure requires repayment of a percentage of healthcare expenditures exceeding regional caps[119]. - The company's ability to commercialize products depends on third-party payers agreeing to cover costs; failure to demonstrate cost-effectiveness could reduce sales[120].

LivaNova PLC (NASDAQ:LIVN) Q4 2022 Results Earnings Conference Call February 22, 2023 8:00 AM ET Company Participants Matthew Dodds - Senior Vice President, Corporate Development Damien McDonald - Chief Executive Officer Alex Shvartsburg - Chief Financial Officer Conference Call Participants Rick Wise - Stifel Financial Michael Polark - Wolfe Research Matthew Taylor - Jefferies LLC Adam Maeder - Piper Sandler Mike Matson - Needham & Company, LLC Matt Miksic - Barclays Capital Operator Good day, ladies and g ...

Safe Harbor In this presentation, "LivaNova," "the Company," "we," "us" and "our" refer to LivaNova PLC and its consolidated subsidiaries. This report may contain references to our proprietary intellectual property, including among others: • Trademarks for our advanced circulatory support systems: TandemLife™, TandemHeart™, TandemLung™, ProtekDuo™, LifeSPARC™, ALung™, Hemolung™, Respiratory Dialysis™ and ActivMix™. Agenda Financial Results Financial Results 4Q22 Financial Summary Adjusted SG&A % 4Q21 4Q22 • ...

Liva\Nova | --- | --- | --- | --- | |--------------------------------|-------|-------|-------| | | | | | | Health innovation that matters | | | | Third Quarter 2022 Earnings Presentation November 2, 2022 Safe Harbor 2 Certain statements in this presentation, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as a ...

Financial Data and Key Metrics Changes - The company achieved a revenue growth of 5% in Q3 2022, with total revenue reaching $253 million compared to the previous year [9][28] - Adjusted gross margin was 70%, consistent with Q3 2021, but impacted by supply chain challenges and inflationary pressures [29] - Adjusted operating income decreased to $37 million from $46 million year-over-year, with an operating income margin of 15% down from 18% [31] - Adjusted diluted earnings per share were $0.58, down from $0.66 in Q3 2021 [33] - The company recorded a $129 million non-cash goodwill impairment charge for the ACS reporting unit [33] Segment Performance Changes - Cardiopulmonary segment revenue was $121 million, a 7% increase year-over-year, driven by high-single digit growth in oxygenator revenue [10][11] - Epilepsy revenue increased by 11%, with growth across all regions, primarily from replacement implants [12][13] - ACS revenue was $9 million, a significant decrease of 44% year-over-year, primarily due to a decline in severe COVID cases [17][21] Market Performance Changes - US epilepsy revenue grew 9% year-over-year, with total implants up mid-single digits [13] - The rest of the world region for epilepsy saw a 28% growth, led by Brazil [15] - The company expects global epilepsy revenue to grow 6% to 8% for the full year [16] Company Strategy and Industry Competition - The company is navigating macro headwinds including supply chain issues, inflation, and foreign exchange volatility [9] - Strategic portfolio initiatives include ongoing studies like the RECOVER study and ANTHEM-HFrEF trial, with expectations for continued progress [23][25] - The company plans to add two additional dedicated teams for epilepsy in Q4 to enhance market penetration [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving procedure trends globally, particularly in the US [47] - The company maintains its guidance for 2022, expecting constant currency revenue growth of 4% to 6% and adjusted EPS of $2.25 to $2.45 [36] - Management highlighted the potential impact of foreign exchange rates on future earnings, estimating a $0.35 EPS headwind [36][50] Other Important Information - The company’s cash balance at September 30 was $506 million, significantly up from $208 million at year-end 2021 [34] - Total debt increased to $540 million, primarily due to a $300 million term loan facility executed in July [34] - The FDA classified a field action related to the LifeSPARC controller as a Class I recall, but the device remains safe for use [20] Q&A Session Summary Question: Epilepsy performance drivers and backlog - Management noted improved market conditions and a backlog of approximately 300 patients remaining for EOS [42][44] Question: 2023 growth outlook - Management expects improving procedure trends but acknowledges ongoing macro challenges [47] Question: Essenz launch updates - The Essenz program is progressing well, with clinical cases expected before year-end in Europe [53] Question: ACS business confidence - Management indicated a modest improvement expected in Q4, with a focus on non-COVID cases [57] Question: RECOVER study interim analysis - Management remains confident in achieving statistical significance, even if the full 500 patients are required [60][81] Question: Retaining sales force amid ACS headwinds - Management has taken steps to retain the sales team and is optimistic about non-COVID business growth [65] Question: SG&A and R&D expense increases - The increase in expenses is attributed to the timing of spending, with lower expenses in the prior year due to pandemic impacts [67][68]

PART I. FINANCIAL INFORMATION [Note About Forward-Looking Statements](index=3&type=section&id=Note%20About%20Forward%20Looking%20Statements) The report includes forward-looking statements subject to risks like supply chain disruptions and economic volatility - The report identifies several key risks that could cause actual results to differ from forward-looking statements[9](index=9&type=chunk)[10](index=10&type=chunk)[15](index=15&type=chunk) - Key risks include **supply chain interruptions**, global market volatility, foreign exchange fluctuations, and regulatory compliance failures[10](index=10&type=chunk)[15](index=15&type=chunk) [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The unaudited financial statements show results for the three and nine months ended September 30, 2022 [Condensed Consolidated Statements of Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) The company reported a Q3 2022 net loss of $107.3 million, driven by a significant goodwill impairment charge Condensed Consolidated Statements of Income (Loss) (in thousands) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | **$252,605** | **$253,215** | **$746,931** | **$765,301** | | Gross Profit | $170,918 | $168,664 | $523,711 | $504,351 | | Impairment of goodwill | $129,396 | $— | $129,396 | $— | | Operating (Loss) Income | $(131,973) | $16,422 | $(90,712) | $(25,538) | | **Net Loss** | **$(107,344)** | **$(43,443)** | **$(87,907)** | **$(130,691)** | | Diluted Loss Per Share | $(2.01) | $(0.84) | $(1.64) | $(2.63) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets remained flat at $2.21 billion, with a notable goodwill decrease and liability increase Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $231,114 | $207,992 | | Restricted cash | $275,165 | $— | | Goodwill | $742,370 | $899,525 | | **Total Assets** | **$2,212,878** | **$2,200,951** | | Current debt obligations | $21,695 | $229,673 | | Long-term debt obligations | $518,249 | $9,849 | | **Total Liabilities** | **$1,065,915** | **$906,306** | | **Total Stockholders' Equity** | **$1,146,963** | **$1,294,645** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while financing cash flow increased due to new debt proceeds Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,218 | $69,064 | | Net cash (used in) provided by investing activities | $(27,461) | $40,535 | | Net cash provided by (used in) financing activities | $281,787 | $(178,183) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$298,287** | **$(70,986)** | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Key notes cover the ALung acquisition, a $129.4 million goodwill impairment, new financing, and major litigation updates - The company acquired the remaining 97% of ALung Technologies for up to **$110.0 million**, including contingent consideration[39](index=39&type=chunk) - A goodwill impairment charge of **$129.4 million** was recognized for the Advanced Circulatory Support (ACS) reporting unit[54](index=54&type=chunk) - The company entered into new term loan facilities for an aggregate principal amount of **$350 million**[75](index=75&type=chunk)[76](index=76&type=chunk) - In the SNIA environmental litigation, the company has appealed a decision ordering it to pay approximately **€453.6 million**[121](index=121&type=chunk)[122](index=122&type=chunk) - An additional liability of **$18.6 million** was recorded in Q3 2022 for the 3T device product liability litigation[116](index=116&type=chunk)[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses segment performance amidst global disruptions, a goodwill impairment, and new debt financing [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q3 2022 revenue was flat as Neuromodulation growth was offset by declines in other segments and a large impairment Net Revenue by Segment (in thousands) | Segment | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | $120,959 | $123,235 | (1.8)% | | Neuromodulation | $121,835 | $113,287 | 7.5% | | Advanced Circulatory Support | $8,636 | $15,399 | (43.9)% | | **Total** | **$252,605** | **$253,215** | **(0.2)%** | - The ACS segment recorded a goodwill impairment of **$129.4 million** in Q3 2022, driven by a **29% year-to-date revenue decline**[199](index=199&type=chunk) - Neuromodulation segment income increased due to higher revenue and a favorable change in contingent consideration fair value[188](index=188&type=chunk) - Cardiopulmonary segment income decreased due to a **$20.1 million increase** in litigation provisions and legal costs[185](index=185&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity was impacted by securing a €270.0 million bank guarantee for litigation, funded by new term loans - To suspend payment of damages in the SNIA litigation, the company provided a **€270.0 million bank guarantee**, collateralized by **$275.2 million** in restricted cash[216](index=216&type=chunk)[218](index=218&type=chunk) - A **$220.0 million Bridge Loan Facility** was used to post collateral and was later repaid using proceeds from a new **$350 million Term Facility**[217](index=217&type=chunk)[221](index=221&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating activities | $51,218 | $69,064 | | Investing activities | $(27,461) | $40,535 | | Financing activities | $281,787 | $(178,183) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency, equity prices, and interest rates - The company's primary market risks stem from **foreign currency exchange rates**, equity price fluctuations, and interest rate changes[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the quarter[228](index=228&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended September 30, 2022[229](index=229&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 for details on material pending legal and regulatory proceedings - For information on material legal proceedings, the report refers to **"Note 10. Commitments and Contingencies"** in the financial statements[231](index=231&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) Updated risks include heightened supply chain disruptions, ongoing FDA regulatory issues, and international business uncertainties - **Supply chain risks** are exacerbated by COVID-19, leading to delays, labor shortages, and inflationary pressures[235](index=235&type=chunk) - The company faces ongoing **FDA regulatory risk**, highlighted by a 2015 Warning Letter and a recent Form 483[236](index=236&type=chunk)[237](index=237&type=chunk) - Increased EPA scrutiny on **ethylene oxide (EtO) emissions** presents a potential risk to product sterilization processes[242](index=242&type=chunk) - International operations carry significant risks, including impacts from the **Russia-Ukraine conflict** and currency fluctuations[243](index=243&type=chunk)[246](index=246&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) Disclosures include business dealings in Iran and the planned retirement of the General Counsel - The company disclosed sales to distributors in Iran, generating net revenue of **$1.5 million** for the three months ended September 30, 2022[251](index=251&type=chunk)[253](index=253&type=chunk) - Keyna Skeffington, General Counsel and Company Secretary, will **retire** from the company on June 30, 2023[254](index=254&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications and Interactive Data Files - The exhibits filed with this report include **CEO and CFO certifications** (Exhibits 31.1, 31.2, 32.1) and Interactive Data Files (Exhibit 101)[256](index=256&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $254 million, representing a 7% increase year-over-year, excluding heart valves [15][18] - Adjusted gross margin was 69%, consistent with Q2 2021, while adjusted operating income decreased to $33 million from $38 million in the prior year [15][16] - Adjusted diluted earnings per share increased to $0.53 from $0.50 in Q2 2021 [16] - Cash balance at June 30 was $407 million, up from $208 million at year-end 2021, while total debt increased to $466 million from $240 million [17] Segment Results and Key Metrics Changes - Cardiopulmonary segment revenue was $126 million, a 14% increase year-over-year, driven by mid-teen growth in oxygenator and heart-lung machine sales [6][10] - Epilepsy revenue increased by 3%, with growth in Europe and the rest of the world, while US revenue was flat year-over-year [7][8] - ACS revenue was $9 million, down 29% year-over-year, primarily due to a decline in severe COVID cases [9][10] Market Data and Key Metrics Changes - The rest of the world region for epilepsy revenue achieved 19% growth, led by Brazil, Japan, and Taiwan [8] - US epilepsy results were impacted by hospital staffing challenges and COVID-related postponements, with total implants down in the mid-single digits [8] Company Strategy and Development Direction - The company aims to drive long-term shareholder value through a strategic triangle underpinned by the LivaNova business system [20] - The focus remains on expanding the sales force and enhancing commercial execution in key markets [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter performance reflects the strength of the diverse portfolio despite macroeconomic challenges [20] - The updated full-year outlook anticipates constant currency revenue growth of 4% to 6%, with adjusted EPS guidance of $2.25 to $2.45 [18][20] Other Important Information - The heart valve business was divested on June 1, 2021, impacting year-over-year comparisons [10] - The company is progressing with the RECOVER study and anticipates a transition to a prospective longitudinal study in late 2022 or early 2023 [12] Q&A Session Summary Question: What gives confidence that ACS will return to growth in the second half? - Management indicated that improvements in staffing and the expansion of the sales force are expected to drive growth in ACS [23] Question: Update on RECOVER study enrollment? - Management confirmed that reaching 350 patients is imminent, with results expected by the end of the month [24] Question: Is the interest cost from the new term loan included in adjusted EPS? - Management confirmed that the interest cost from the term loan is treated as an extraordinary item and excluded from adjusted EPS [25] Question: Update on CMS response timing for RECOVER? - Management stated that the transition to registry is expected late this year or early next year, with a detailed timeline for data submission to CMS [29][31] Question: How does the company view the impact of inflation and currency on guidance? - Management indicated that both inflation and currency are significant factors impacting guidance, with expectations of a $0.30 reduction at the midpoint [36][37] Question: Update on heart-lung machine product launch? - Management expects a limited commercial release by the end of the year, with full release early in Q1 2023 [38] Question: How many patients will have treatment close to 12 months by the end of the month for RECOVER? - Management did not provide specific numbers but indicated that separation in treatment effects is expected to be observed as patients approach the one-year mark [60]

| --- | --- | --- | --- | |----------------------------|-------|-------|-------| | | | | | | Ethan, VNS Therapy Patient | | | | Second Quarter 2022 Earnings Presentation August 3, 2022 Safe Harbor 2 Certain statements in this presentation, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchan ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 001-37599 LivaNova PLC (Exact name of registrant as specified in its char ...