LivaNova(LIVN) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights 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 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] - Raised full-year 2025 revenue, adjusted earnings per share, and adjusted free cash flow guidance[4] - 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] - 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] 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 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] - Disciplined execution contributed to meaningful operating margin expansion and strong cash generation[5] - 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] Second-Quarter 2025 Financial Results 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 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] - Neuromodulation revenue increased across all regions[9] - 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] - 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] Earnings Analysis 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 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 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 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] - Replay accessible at www.livanova.com/events for approximately 90 days[16] About LivaNova 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] - Headquartered in London, it employs approximately 2,900 employees and has a presence in more than 100 countries[17] - Focuses on delivering life-changing solutions in select neurological and cardiac conditions[17] Use of Non-GAAP Financial Measures 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 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] - Constant-currency percent change excludes the impact from fluctuations in various currencies[19] - Organic revenue percent change excludes the impact of acquisitions, divestitures, and currency translation effects[19] Forward-Looking Non-GAAP Measures 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] - Examples of excluded items for adjusted diluted EPS guidance include changes in fair value of derivatives, contingent consideration arrangements, and asset impairment charges[21] - 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] Safe Harbor Statement 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][24] - Actual financial results, performance, achievements, or prospects may differ materially from those expressed or implied by forward-looking statements[24] - 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][25] - 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] Investor Relations Contact 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] - Contact information provided for investor inquiries: Phone: +1 281 895 2382, e-mail: InvestorRelations@livanova.com[28] Detailed Financial Data and Reconciliations 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 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 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 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 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) 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) 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] 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 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 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 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 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 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 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] Condensed Consolidated Statements of Cash Flows - Unaudited 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] - Financing activities shifted from cash provided to cash used, primarily due to repayment of long-term debt obligations[52] Other Non-GAAP Reconciliations - Unaudited 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 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 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 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 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 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] - The misclassification understated cost of sales and overstated selling, general, and administrative expense by equal and offsetting amounts[57] - 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] 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 % |