LivaNova(LIVN) - 2025 Q1 - Quarterly Results

Financial and Operational Highlights Q1 2025 Performance Summary LivaNova reported strong Q1 2025 organic revenue growth and expanded margins, despite a significant SNIA liability, with key product advancements Q1 2025 Key Financial Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Net Revenue | $316.9 million | +7.4% Reported, +10.4% Organic YoY | | GAAP Diluted EPS | ($6.01) | Impacted by SNIA environmental liability | | Adjusted Diluted EPS | $0.88 | - | | Net Cash from Operations | $24.0 million | - | | Adjusted Free Cash Flow | $20.0 million | - | - The company recorded a significant liability of $360.4 million related to the SNIA environmental case, which heavily impacted GAAP earnings[5][11] - Completed the Premarket Approval (PMA) submission to the U.S. FDA for the aura6000™ System, designed to treat obstructive sleep apnea (OSA)[5] - Announced positive 12-month top-line data from the OSPREY trial for OSA, showing a 65% active patient responder rate and a 68% median reduction in the apnea-hypopnea index[5][6] First-Quarter 2025 Results Revenue Analysis Q1 2025 net revenue grew 7.4% (10.4% organic), driven by Cardiopulmonary's strong growth and Neuromodulation's contributions Q1 2025 Revenue by Segment (in millions) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Cardiopulmonary | $176.3 | $155.9 | 13.1% | 15.0% | | Neuromodulation | $138.9 | $133.9 | 3.8% | 4.7% | | Total Net Revenue | $316.9 | $294.9 | 7.4% | 8.9% | - Cardiopulmonary growth was driven by sales of the Essenz Perfusion System and strong demand for consumables across all regions[8] - Neuromodulation growth was primarily driven by strength in the Europe and Rest of World regions[8] Earnings Analysis Q1 2025 GAAP operating income increased, but a significant SNIA liability caused a GAAP diluted loss per share, while adjusted metrics improved Q1 Operating Income Comparison (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Operating Income | $48.6 | $16.2 | | Adjusted Operating Income | $64.6 | $53.1 | Q1 Earnings Per Share Comparison | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Diluted Loss Per Share | ($6.01) | ($0.78) | | Adjusted Diluted Earnings Per Share | $0.88 | $0.73 | Additional Updates A $360.4 million SNIA environmental liability was recorded, impacting 2025 adjusted diluted EPS by approximately $0.20 and leading to debt repayment - On March 14, 2025, the Italian Supreme Court held LivaNova liable for SNIA's environmental liabilities, resulting in the company recording a liability of $360.4 million[11] - Following the court decision, the SNIA Litigation Guarantee was terminated, and on May 2, 2025, LivaNova repaid $200.0 million of its Term Facilities[11] - The remaining Term Facilities balance is now considered part of the permanent capital structure and will no longer be excluded from non-GAAP measures, reducing the 2025 adjusted diluted EPS forecast by about $0.20[11] Full-Year 2025 Guidance Updated FY2025 Outlook LivaNova raised FY2025 revenue growth guidance, revised adjusted diluted EPS due to SNIA impact and tariffs, and maintained free cash flow guidance Full-Year 2025 Guidance Update | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Revenue Growth (Constant-Currency) | 6.0% to 7.0% | 5.0% to 6.0% | | Revenue Growth (Organic) | 7.0% to 8.0% | 6.0% to 7.0% | | Adjusted Diluted EPS | $3.60 to $3.70 | $3.65 to $3.75 | | Adjusted Free Cash Flow | $135M to $155M | $135M to $155M | - The revision to the adjusted diluted EPS range incorporates the impact of the SNIA decision and currently applicable tariffs[14] - The expected headwind from foreign currency is now smaller, estimated at 0.0% to 1.0%, compared to the previous estimate of 1.5% to 2.0%[13] Financial Statements Net Revenue Detailed net revenue breakdown by segment and geography for Q1 2025 and Q1 2024, illustrating growth across most regions and segments Q1 2025 Net Revenue by Geography (in millions) | Region/Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Cardiopulmonary | | | | | U.S. | $60.8 | $50.6 | 20.3% | | Europe | $44.5 | $40.9 | 8.7% | | Rest of World | $71.0 | $64.4 | 10.2% | | Neuromodulation | | | | | U.S. | $108.3 | $105.9 | 2.3% | | Europe | $15.2 | $13.4 | 13.3% | | Rest of World | $15.4 | $14.5 | 5.7% | | Total U.S. | $169.2 | $160.6 | 5.3% | | Total Europe | $59.7 | $54.3 | 9.9% | | Total Rest of World | $88.0 | $80.0 | 10.1% | Condensed Consolidated Statements of Income (Loss) Q1 2025 unaudited income statement shows a net loss of $327.3 million, or ($6.01) per diluted share, primarily due to a $360.4 million SNIA environmental liability Q1 2025 Condensed Consolidated Statement of Income (Loss) (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net revenue | $316.9 | $294.9 | | Gross profit | $220.8 | $207.4 | | Operating income | $48.6 | $16.2 | | SNIA environmental liability expense | ($360.4) | — | | Loss before tax | ($315.6) | ($34.2) | | Net loss | ($327.3) | ($41.9) | | Diluted loss per share | ($6.01) | ($0.78) | Condensed Consolidated Balance Sheets The March 31, 2025 balance sheet shows total assets of $2,558.7 million and liabilities of $1,524.4 million, with increased cash and a new SNIA liability Condensed Balance Sheet Highlights (in millions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $738.4 | $428.9 | | Restricted cash | — | $294.7 | | Total Assets | $2,558.7 | $2,506.4 | | SNIA environmental liability | $360.4 | — | | Total Liabilities | $1,524.4 | $1,186.1 | | Total Stockholders' Equity | $1,034.3 | $1,320.3 | Condensed Consolidated Statements of Cash Flows Q1 2025 net cash from operating activities increased to $24.0 million, influenced by the SNIA environmental liability add-back, with cash used in investing and financing activities Q1 Statement of Cash Flows Highlights (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24.0 | $10.0 | | Net cash used in investing activities | ($10.6) | ($6.4) | | Net cash (used in) provided by financing activities | ($4.4) | $37.1 | | Net increase in cash, cash equivalents, and restricted cash | $14.9 | $37.8 | Reconciliation of GAAP to Non-GAAP Financial Measures Reconciliation of Key Operating Metrics This section reconciles Q1 2025 GAAP net loss to adjusted net income, primarily driven by the $363.6 million SNIA liability adjustment Q1 2025 GAAP to Non-GAAP Reconciliation (in millions, except EPS) | Metric | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $48.6 | $16.0 | $64.6 | | Net (Loss) Income | ($327.3) | $375.4 | $48.1 | | Diluted EPS | ($6.01) | $6.89 | $0.88 | - Major adjustments for Q1 2025 included SNIA environmental liability, stock-based compensation, amortization, and certain financing and legal costs[35] Reconciliation of Free Cash Flow and Organic Revenue This section reconciles Q1 2025 adjusted free cash flow to $20.0 million and organic revenue growth to 10.4% after excluding divested business revenue Q1 2025 Adjusted Free Cash Flow Reconciliation (in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $24.0 | | Less: Purchases of plant, property, and equipment | ($10.8) | | Add: SNIA financing costs | $6.5 | | Other Adjustments | ($0.4) | | Adjusted free cash flow | $20.0 | Q1 2025 Organic Revenue Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP net revenue | $316.9 | $294.9 | | Less: ACS Revenue | — | $4.1 | | Organic net revenue | $316.9 | $290.8 |