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What changed in LivaNova PLC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LivaNova PLC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+444 added−486 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-29)

Top changes in LivaNova PLC's 2024 10-K

444 paragraphs added · 486 removed · 366 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

102 edited+16 added−26 removed37 unchanged
Biggest changeProduct Approval and Monitoring Many countries in which LivaNova sells its products subject the Company’s medical devices to their own product approval and requirements regarding performance, safety and quality. For example, each medical device that LivaNova seeks to distribute commercially in the US must receive 510(k) clearance or PMA from the FDA, unless specifically exempted by the agency.
Biggest changeFor example, each medical device that LivaNova seeks to distribute commercially in the U.S. must receive 510(k) clearance or PMA from the FDA, unless specifically exempted by the agency. The 510(k) process, also known as pre-market notification, requires LivaNova to demonstrate that its new medical device is substantially equivalent to a legally marketed medical device.
In 2017, for example, the EU published its MDR, which has resulted in significant additional pre- and post-market requirements. Certifications to EU MDR must be achieved by December 2027 or December 2028, based on the risk classification of the device.
In 2017, for example, the EU published its MDR, which has resulted in significant additional pre- and post-market requirements. Certifications to MDR must be achieved by December 2027 or December 2028, based on the risk classification of the device.
Risk Factors” of this Report, under the section entitled “ LivaNova’s products are subject to complex laws and regulations, and failure to obtain product approvals, clearance or reimbursement may materially adversely affect LivaNova’s business, results of operations, cash flows and financial condition. ” Governmental Trade Regulations The sale and shipment of LivaNova’s products and services across international borders, as well as the purchase of components and products from international sources, subject LivaNova to extensive governmental trade regulations.
Risk Factors” of this Report, under the section entitled 13 “ LivaNova’s products are subject to complex laws and regulations, and failure to obtain product approvals, clearance, or reimbursement may materially adversely affect LivaNova’s business, results of operations, cash flows, and financial condition. ” Governmental Trade Regulations The sale and shipment of LivaNova’s products and services across international borders, as well as the purchase of components and products from international sources, subject LivaNova to extensive governmental trade regulations.
The lead does not need to be removed to replace a generator with a depleted battery. The Neuromodulation segment is also engaged in the development and management of clinical testing for LivaNova’s aura6000 System for treating OSA. The aura6000 device stimulates the hypoglossal nerve, which engages specific tongue and palate muscles to open the airway while a patient sleeps.
The lead does not need to be removed to replace a generator with a depleted battery. The 9 Neuromodulation segment is also engaged in the development and management of clinical testing for LivaNova’s aura6000 System for treating OSA. The aura6000 device stimulates the hypoglossal nerve, which engages specific tongue and palate muscles to open the airway while a patient sleeps.
The SenTiva generator is the smallest and lightest VNS device capable of delivering responsive therapy for epilepsy and includes the additional flexibility of LivaNova’s Scheduled Programming and Day & Night Programming capabilities. In 2017, the SenTiva, AspireHC and AspireSR VNS Therapy devices were approved by the FDA for expanded MRI access and similar CE Mark approval followed shortly thereafter.
The SenTiva generator is the smallest and lightest VNS device capable of delivering responsive therapy for epilepsy and includes the additional flexibility of LivaNova’s Scheduled Programming and Day & Night Programming capabilities. In 2017, the SenTiva and AspireSR VNS Therapy devices were approved by the FDA for expanded MRI access and similar CE Mark approval followed shortly thereafter.
These programs provide members with new perspectives, more personalized development, and an opportunity to network with other women across the organization. 17 Seasonality The number of medical procedures incorporating LivaNova’s products is generally lower during the summer months, particularly in European countries, due to summer vacation schedules.
These programs provide members with new perspectives, more personalized development, and an opportunity to network with other women across the organization. Seasonality The number of medical procedures incorporating LivaNova’s products is generally lower during the summer months, particularly in European countries, due to summer vacation schedules.
The competent authorities of the EU countries separately regulate the clinical research for medical devices and the market surveillance of products placed on the market, and manufacturers with CE marked devices are subject to regular inspections to monitor compliance with the applicable directives and essential 12 requirements.
The competent authorities of the EU countries separately regulate the clinical research for medical devices and the market surveillance of products placed on the market, and manufacturers with CE marked devices are subject to regular inspections to monitor compliance with the applicable directives and essential requirements.
However, uncertainty 14 remains as to the nature of any future legislation or other reforms, making it difficult for LivaNova to predict the potential impact of cost-containment trends on future operating results.
However, uncertainty remains as to the nature of any future legislation or other reforms, making it difficult for LivaNova to predict the potential impact of cost containment trends on future operating results.
The management of cross-border transfers of personal information outside of EU member countries is becoming more complex, which may complicate LivaNova’s business and clinical research activities, as well as product offerings that involve transmission or use of patient health information. LivaNova continues to adapt its business processes to comply with those standards and requirements applicable to it.
The management of cross-border transfers of personal information outside of EU member countries is complex, which may complicate LivaNova’s business and clinical research activities, as well as product offerings that involve transmission or use of patient health information. LivaNova continues to adapt its business processes to comply with those standards and requirements applicable to it.
The effects of the CCPA and other recently adopted laws include an increased ability of individuals to control the use of their personal data, heightened transparency obligations, increased obligations of companies to maintain the security of data, and increased exposure to fines or damages for companies that violate these laws, including by not providing individuals their specified privacy rights or, not maintaining data security safeguards at specified levels of quality, or that experience data breaches.
The effects of the CCPA and other recently adopted laws include an increased ability of individuals to control the use of their personal data, heightened transparency obligations, increased obligations of companies to maintain the security of data, and increased exposure to fines or damages for companies that violate these laws, including by not providing individuals their specified privacy rights, not maintaining data security safeguards at specified levels of quality, or experiencing data breaches.
The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information about SEC registrants, including LivaNova.
The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information about SEC registrants, including LivaNova. 18
Oxygenators exchange oxygen and carbon dioxide in the blood of patients during surgical procedures and are utilized by perfusionists during cardiac surgery in conjunction with a HLM and can also be utilized in ECMO. 8 Autotransfusion Systems One of the key elements for a complete blood management strategy is autologous blood transfusion.
Oxygenators exchange oxygen and carbon dioxide in the blood of patients during surgical procedures and are utilized by perfusionists during cardiac surgery in conjunction with an HLM and can also be utilized in ECMO. Autotransfusion Systems One of the key elements for a complete blood management strategy is autologous blood transfusion.
The evolving commercial compliance environment and the resulting need to build and maintain robust systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increases the possibility that a healthcare company may violate one or more of these requirements and be required to allocate significant resources to its compliance program.
The evolving commercial compliance environment and the resulting need to build and maintain robust systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may violate one or more of these requirements and be required to allocate significant resources to its compliance program.
Such alignment has created increased levels of price sensitivity among customers for LivaNova’s products. Some third-party payers must also approve coverage and set reimbursement levels for new or innovative devices or therapies before they reimburse healthcare providers that use the medical devices or therapies.
Such alignment has created increased levels of price sensitivity among customers for LivaNova’s and its competitors’ products. Some third-party payers must also approve coverage and set reimbursement levels for new or innovative devices or therapies before they reimburse healthcare providers that use the medical devices or therapies.
LivaNova regularly reviews third-party patents and patent applications in an effort to protect its intellectual property and avoid disputes over proprietary rights. LivaNova relies on non-disclosure and non-competition agreements with employees, consultants and other parties to protect, in part, trade secrets and other proprietary technology.
LivaNova regularly reviews third-party patents and patent applications in an effort to protect its intellectual property and avoid disputes over proprietary rights. LivaNova also relies on non-disclosure, confidentiality, and non-competition agreements with employees, consultants, and other parties to protect, in part, trade secrets and other proprietary technology.
Any adverse regulatory action, depending on its magnitude, may limit LivaNova’s ability to market and sell its products effectively, limit its ability to obtain future premarket approvals or result in a substantial modification to LivaNova’s business practices and operations. For additional information, see “Item 1A.
Any adverse regulatory action, depending on its magnitude, may limit LivaNova’s ability to market and sell its products effectively, limit its ability to obtain future pre-market approvals, or result in a substantial modification to LivaNova’s business practices and operations. For additional information, see “Item 1A.
LivaNova’s AspireSR and SenTiva generators provide the traditional benefits of VNS Therapy but add an additional stimulation capability: closed loop stimulation (AutoStim) which responds to detection of changes in heart rate potentially indicative of a seizure.
LivaNova’s AspireSR and SenTiva implantable pulse generators provide the traditional benefits of VNS therapy but add an additional stimulation capability: closed loop stimulation (AutoStim), which responds to detection of changes in heart rate potentially indicative of a seizure.
Hospitals are also seeking to reduce costs through a variety of mechanisms, for example, creating centralized purchasing functions that set pricing and, in some cases, limit the number of vendors that can participate in a given purchasing program.
Hospitals are also seeking to reduce costs through a variety of mechanisms, for example, creating centralized purchasing functions that set pricing and, in some cases, limiting the number of vendors that can participate in a given purchasing program.
LivaNova is subject to, for example, the Physician Payments Sunshine Act, which requires the Company to report annually certain payments and other transfers of value it makes to US licensed physicians, nurse practitioners, physician assistants, or teaching hospitals. Any failure to comply with such laws and regulations may result in civil financial penalties.
LivaNova is subject to, for example, the Physician Payments Sunshine Act, which requires the Company to report annually certain payments and other transfers of value it makes to U.S. licensed physicians, nurse practitioners, physician assistants, or teaching hospitals. Any failure to comply with such laws and regulations may result in civil financial penalties.
Disclosure Pursuant to Section 13(r) of the Exchange Act of 1934 Section 13(r) of the Exchange Act requires issuers to disclose in their annual reports, among other things, certain types of dealings with Iran and other entities, including transactions or dealing with government-owned entities, even when those activities are lawful and do not involve US persons.
Disclosure Pursuant to Section 13(r) of the Exchange Act of 1934 Section 13(r) of the Exchange Act requires issuers to disclose in their annual reports, among other things, certain types of dealings with Iran and other entities, including transactions or dealing with government-owned entities, even when those activities are lawful and do not involve U.S. persons.
In addition to base pay, LivaNova’s rewards, compensation, and benefits programs may include, depending on jurisdiction, annual performance bonuses, stock awards, pensions, health and wellbeing programs, paid time off and parental leave, financial assistance for education-related purposes, flexible working schedules, hybrid and remote working, employee stock purchase plans, and employee rewards programs, among others.
In addition to base pay, LivaNova’s rewards, compensation, and benefits programs may include, depending on jurisdiction, annual performance bonuses, stock awards, pensions, health and well-being programs, paid time off and parental leave, financial assistance for education-related purposes, flexible working schedules, hybrid and remote working, employee stock purchase plans, and employee rewards programs, among others.
The US federal government utilizes the False Claims Act, the Anti-Kickback Statute and similar laws to investigate and prosecute device, pharmaceutical and biotechnology companies in connection with the promotion of products for unapproved uses, the provision of patient and provider support (e.g., reimbursement support), and other prohibited sales and marketing practices.
The U.S. federal government utilizes the False Claims Act, the Anti-Kickback Statute, and similar laws to investigate and prosecute device, pharmaceutical, and biotechnology companies in connection with the promotion of products for unapproved uses, the provision of patient and provider support (e.g., reimbursement support), and other prohibited sales and marketing practices.
Risk Factors” of this Report, under the section entitled “ LivaNova is substantially dependent on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to LivaNova’s rights or the rights of others may result in the Company’s payment of significant monetary damages and/or royalty payments, negatively impact LivaNova’s ability to sell current or future products or prohibit the Company from enforcing its patent and other proprietary rights against others. ” Markets and Distribution Methods LivaNova sells most of its medical devices through direct sales representatives in the US and a combination of direct sales representatives and independent distributors in international markets.
Risk Factors” of this Report, under the section entitled “ LivaNova is substantially dependent on patent and other proprietary rights, and failing to protect such rights or to be successful in litigation related to LivaNova’s rights or the rights of others may result in the Company’s payment of significant monetary damages and/or royalty payments, negatively impact LivaNova’s ability to sell current or future products, or prohibit the Company from enforcing its patent and other proprietary rights against others. ” 11 Markets and Distribution Methods LivaNova sells its medical devices through a combination of direct sales representatives, agents, and independent distributors.
Depression In 2005, the FDA approved the VNS Therapy System for the adjunctive treatment of chronic or recurrent depression for patients 18 years or older who are experiencing a major depressive episode and have not had an adequate response to four or more antidepressant treatments.
In 2005, the FDA approved the VNS Therapy System for the adjunctive long-term treatment of chronic or recurrent depression for patients 18 years of age or older who are experiencing a major depressive episode and have not had an adequate response to four or more adequate antidepressant treatments.
The UK Bribery Act prohibits both domestic and international bribery, as well as bribery across both public and private sectors. There are similar laws and regulations applicable to LivaNova outside the US and the UK, all of which are subject to evolving interpretations. For additional information, please refer to “Item 1A.
The UK Bribery Act prohibits both domestic and international bribery, as well as bribery across both public and private sectors. There are similar laws and regulations applicable to LivaNova outside the U.S. and the UK, all of which are subject to evolving interpretations. For additional information, please refer to “Item 1A.
Culture LivaNova seeks to foster a culture of continuous learning, where open and direct communication is valued. Accordingly, LivaNova regularly conducts employee engagement surveys, called LivaNova4You, to measure overall employment engagement and satisfaction and to provide the Company with actionable data for potential opportunities for improvement.
Culture LivaNova seeks to foster a culture of continuous understanding and transparency, where open and direct communication is valued. Accordingly, LivaNova regularly conducts employee engagement surveys, called LivaNova4You, to measure overall employment engagement and satisfaction and to provide the Company with actionable data for potential improvement opportunities.
In 1997, LivaNova’s VNS Therapy System was the first medical device treatment approved by the FDA for the treatment of DRE, and today is the only neuromodulation device approved for use in the US in DRE patients as young as four years of age with partial onset, or focal, seizures.
In 1997, LivaNova’s VNS Therapy System was the first medical device treatment approved by the FDA for the treatment of DRE and today is the only neuromodulation device approved for use in the U.S. in DRE patients as young as four years of age with partial onset or focal seizures.
Although physicians are permitted to use their medical judgment to prescribe medical devices for indications other than those cleared or approved by the FDA, LivaNova is prohibited from promoting products for such “off-label” uses and can only market the Company’s products for cleared or approved uses.
Although physicians are permitted to use their medical judgment to prescribe medical devices for indications other than those cleared or approved by regulatory bodies, LivaNova is prohibited from promoting products for such “off-label” uses and can only market the Company’s products for cleared or approved uses.
The FCPA can be used to prosecute companies in the US for arrangements with physicians or other parties outside the US if the physician or party is a government official of another country and prohibited payments are made to obtain or retain business.
The FCPA can be used to prosecute companies in the U.S. for arrangements with physicians or other parties outside the U.S. if the physician or party is a government official of another country and prohibited payments are made to obtain or retain business.
In certain circumstances, governmental authorities may require LivaNova to obtain approval before LivaNova may export or re-export goods, technology or services to certain destinations, to certain end-users and for certain end-uses.
In certain circumstances, governmental authorities may require LivaNova to obtain approval before LivaNova may export or re-export goods, technology, or services to certain territories and end-users or for certain end-uses.
Many countries control the export and re-export of goods, technology and services for public health, national security, regional stability, antiterrorism and other reasons. Some governments may also impose economic sanctions against certain countries, persons or entities.
Many countries control the export and re-export of goods, technology, and services for public health, national security, regional stability, antiterrorism, and other reasons. Some governments may also impose tariffs, trade restrictions, and economic sanctions against certain countries, persons, or entities.
Available Information LivaNova’s executive headquarters are located at 20 Eastbourne Terrace, London, UK W2 6LG. The Company’s website address is www.livanova.com.
Available Information LivaNova’s global headquarters are located at 20 Eastbourne Terrace, London, UK W2 6LG. The Company’s website address is www.livanova.com.
Given the US government’s success in prosecuting claims under the False Claims Act, LivaNova anticipates that the US government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws.
Given the U.S. government’s success in prosecuting claims under the False Claims Act, LivaNova anticipates that the U.S. government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws.
Production, Quality Systems and Raw Materials LivaNova manufactures a majority of its products in facilities located in the US, Italy, Germany, Australia and Brazil. LivaNova purchases raw materials and components used in its products from numerous suppliers located in various countries worldwide.
Production, Quality Systems, and Raw Materials LivaNova manufactures a majority of its products in facilities located in the U.S., Italy, Germany, Australia, and Brazil. LivaNova purchases raw materials and components used in its products from numerous suppliers located in various countries worldwide.
The FDA and other regulatory agencies in and outside the US review LivaNova’s design and manufacturing practices, labeling, record keeping, and required reports of adverse experiences and other information to identify potential problems with marketed medical devices.
The FDA and other regulatory agencies in and outside the U.S. review LivaNova’s design and manufacturing practices, labeling, record keeping, and required reports of adverse experiences and other information to identify potential problems with marketed medical devices.
Data Privacy and Security Laws As a global medical device technology company, LivaNova may be subject to various laws worldwide that protect the privacy, security and confidentiality of certain data, including employee data and patient health information and restrict the use and 13 unauthorized disclosure of such information. Privacy standards are often strict.
Data Privacy and Security Laws As a global medical device technology company, LivaNova is subject to various laws worldwide that protect the privacy, security, and confidentiality of certain data, including employee data and patient health information, and restrict the use and unauthorized disclosure of such information. Privacy standards are often strict.
In the US, HIPAA, as amended by the HITECH Act and their respective implementing regulations, imposes specified requirements relating to the privacy and security of certain individually identifiable health information.
In the U.S., HIPAA, as amended by the HITECH Act and their respective implementing regulations, imposes specified requirements relating to the privacy and security of certain individually identifiable health information.
Risk Factors” of this Report, under the section entitled “ Cyber-attacks or other disruptions to LivaNova’s information technology systems could lead to reduced revenue, increased costs, liability claims, fines, harm to LivaNova’s competitive position and loss of reputation.” In the EU, the processing of certain data, including employee and patient information, is subject to the privacy, security and confidentiality provisions set forth in Regulation 2016/679.
Risk Factors” of this Report, under the section entitled “ Cybersecurity incidents or other disruptions to LivaNova’s information technology systems could lead to reduced revenue, increased costs, liability claims, regulatory fines, litigation, harm to LivaNova’s competitive position, and loss of reputation.” In the EU, the processing of certain data, including employee and patient information, is subject to the privacy, security, and confidentiality provisions set forth in Regulation 2016/679.
Enforcement actions and financial penalties related to privacy issues in the EU continue to grow, and new privacy and data localization laws and restrictions are being passed in other countries including the US.
Enforcement actions and financial penalties related to privacy issues in the EU continue to grow, and new privacy and data localization laws and restrictions are being passed in other countries, including the U.S.
In addition, as discussed above, the US and foreign government regulators enforce the FCPA and other anti-bribery laws. These laws and regulations are broad in scope and are subject to evolving interpretation.
In addition, as discussed above, the U.S. and foreign government regulators enforce the FCPA and other anti-bribery laws. These laws and regulations are broad in scope and are subject to evolving interpretation.
LivaNova distributes multiple VNS Therapy Systems for the treatment of epilepsy, including Model 103 (Demipulse), Model 104 (Demipulse Duo), Model 106 (AspireSR), Model 1000 (SenTiva) and Model 1000D (SenTiva Duo) pulse generators.
LivaNova distributes multiple VNS Therapy devices for the treatment of epilepsy, including Model 103 (Demipulse), Model 106 (AspireSR), Model 1000 (SenTiva), and Model 1000D (SenTiva Duo) pulse generators.
The US government has obtained multi-million and multi-billion-dollar settlements under the False Claims Act, in addition to individual criminal convictions under applicable criminal statutes.
The U.S. government has obtained multi-million and multi-billion-dollar settlements under the False Claims Act, in addition to individual criminal convictions under applicable criminal statutes.
In addition, state laws, such as the CCPA, govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, thus complicating compliance and data protection efforts. Since the CCPA was enacted, other US states have enacted privacy laws.
In addition, state laws, such as the CCPA, govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, thus complicating compliance and data protection efforts. Since the CCPA was enacted, other U.S. states have enacted comprehensive and health-related privacy laws.
Penalties for regulatory non-compliance can be severe, including fines and revocation or suspension of a company’s business license, mandatory price reductions and criminal sanctions. LivaNova is also required to comply with the regulations of every other country where it commercializes products before the Company can launch or maintain new products in the market.
Penalties for regulatory non-compliance can be severe, including fines and revocation or suspension of a company’s marketing authorization, mandatory price reductions, and criminal sanctions. LivaNova is also required to comply with the regulations of every country where it commercializes products before the Company can launch or maintain products in the market.
Following publication of the D23 study, LivaNova requested that CMS reconsider its previous NCD, and in 2018, CMS published a tracking sheet to reconsider.
Following the publication of these study results, LivaNova requested that CMS reconsider its previous NCD, and in 2018, CMS published a tracking sheet to reconsider.
Two of LivaNova’s non-US subsidiaries currently sell medical devices, including cardiopulmonary and neuromodulation products, to distributors and non-governmental organizations in Iran to support patient care in that country. LivaNova has limited visibility into the identity of the customers of these distributors’ and non-governmental organizations in Iran.
Two of LivaNova’s non-U.S. subsidiaries currently sell medical devices, including cardiopulmonary and neuromodulation products, to distributors and non-governmental organizations in Iran to support patient care in that country. LivaNova has limited visibility into the identity of the customers of these distributors and 16 non-governmental organizations in Iran.
For additional information, please refer to “Note 13. Commitments and Contingencies” in LivaNova’s consolidated financial statements under the sections entitled “Saluggia Site Hazardous Substances” and “SNIA Environmental Liability” and “Item 1A.
For additional information, please refer to “Note 11. Commitments and Contingencies” in LivaNova’s consolidated financial statements under the sections entitled “Saluggia Site Hazardous Substances” and “SNIA Environmental Litigation” and “Item 1A.
LivaNova’s strategy for accelerating diversity begins with creating new ways to find extraordinary talent. Examples of the Company’s efforts include networking with historically black colleges and universities, posting job listings on diverse sites, ensuring diversity-focused interview panels, and training interviewers on how to conduct a fair, unbiased interview process.
LivaNova’s strategy for accelerating diversity begins with creating new ways to identify extraordinary talent. Examples of the Company’s efforts include networking with universities, posting job listings on diverse sites, ensuring diversity-focused interview slates and panels, and training interviewers on how to conduct a fair, unbiased interview process.
LivaNova’s primary medical device competitors in the Cardiopulmonary, Neuromodulation and ACS product groups are Terumo Medical Corporation, Maquet Medical Systems, Medtronic plc, Haemonetics Corporation, NeuroPace, Inc. and Abbott Laboratories, Inc., although not all competitors are present in all product lines.
LivaNova’s primary medical device competitors in the Cardiopulmonary and Neuromodulation product groups are Terumo Medical Corporation, Maquet Medical Systems, Medtronic plc, Haemonetics Corporation, Spectrum Medical Limited, and NeuroPace, Inc., although not all competitors are present in all product lines.
In addition, the FDA and other US regulatory bodies monitor the manner in which LivaNova promotes and advertises its products.
In addition, the FDA and other U.S. regulatory bodies monitor the manner in which LivaNova promotes and advertises its products.
LivaNova is a public limited company organized under the laws of England and Wales and is headquartered in London, England. LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.” Business Overview For the periods presented herein, LivaNova was comprised of three reportable segments: Cardiopulmonary, Neuromodulation and ACS.
LivaNova is a public limited company organized under the laws of England and Wales and is headquartered in London, England. LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.” Business Overview LivaNova is comprised of two reportable segments: Cardiopulmonary and Neuromodulation.
The reconsideration process will happen independently for the unipolar and bipolar cohorts. Obstructive Sleep Apnea In 2018, LivaNova acquired full ownership of ImThera, a company developing an implantable neurostimulation device system for the treatment of obstructive sleep apnea. The device stimulates the hypoglossal nerve, which engages specific tongue and palate muscles to open the airway while a patient sleeps.
Obstructive Sleep Apnea In 2018, LivaNova acquired full ownership of ImThera, a company developing an implantable neurostimulation device system for the treatment of obstructive sleep apnea. The device stimulates the hypoglossal nerve, which engages specific tongue and palate muscles to open the airway while a patient sleeps.
Many countries also require that product approvals be recertified on a regular basis, generally every four to five years. The recertification process requires LivaNova to evaluate any device change and any new regulation or standard relevant to the device and, where required, conduct appropriate testing to document continued compliance. The global regulatory environment is becoming increasingly more stringent and unpredictable.
Many countries also require that product approvals be recertified on a regular basis, generally every four to five years. The recertification process requires LivaNova to evaluate any device change and any new regulation or standard relevant to the device and, where required, conduct appropriate testing to document continued compliance.
LivaNova believes its activities are consistent with applicable law, including US, UK, EU, and other applicable sanction laws, though such laws are complex and continue to evolve rapidly. The Company intends to continue its business in Iran. Human Capital Management LivaNova has approximately 2,900 employees worldwide, representing 75 nationalities and located in 32 countries.
LivaNova believes its activities are consistent with applicable law, including U.S., UK, EU, and other applicable sanction laws, though such laws are complex and continue to evolve rapidly. The Company intends to continue its business in Iran. Human Capital Management LivaNova has approximately 2,900 employees worldwide, representing more than 70 nationalities and located in 31 countries.
Several countries that did not have regulatory requirements for medical devices have established such requirements in recent years, and other countries have expanded, or plan to expand, their existing regulations. While some regulatory bodies have pursued harmonization of global regulations, requirements continue to differ significantly among countries.
The global regulatory environment is becoming increasingly more stringent and unpredictable. Several countries that did not have regulatory requirements for medical devices have established such requirements in recent years, and other countries have expanded, or plan to expand, their existing regulations. While some regulatory bodies have pursued harmonization of global regulations, requirements continue to differ significantly among countries.
Similarly, the LivaNova Women’s Network, a mentorship program created by women and for women, facilitates pairings between mentors and mentees in the US and Latin America. Topics range from career and financial advice to performance management and connection to the Company’s strategy.
In addition, the LivaNova Women’s Network operates a mentorship program created by women and for women that facilitates pairings between mentors and mentees in the U.S. and Latin America. Topics range from career and financial advice to performance management and connection to the Company’s strategy.
Item 1. Business Description of the Business and Background LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through innovative medical technologies that deliver life-changing improvements.
ITEM 1. BUSINESS Description of the Business and Background LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets, and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through medical technologies, delivering life-changing solutions in select neurological and cardiac conditions.
LivaNova’s principal Neuromodulation product, the VNS Therapy System, consists of an implantable pulse generator and connective lead that stimulates the vagus nerve; surgical equipment to assist with the implant procedure; equipment and instruction manuals enabling a treating physician to set parameters for a patient’s pulse generator; and for epilepsy, magnets to manually suspend or induce nerve stimulation.
LivaNova’s principal Neuromodulation product, the VNS Therapy System, consists of an implantable pulse generator and connective lead that stimulates the vagus nerve, surgical equipment to assist with the implant procedure, and equipment and instruction manuals that enable a treating physician to set parameters for a patient’s pulse generator.
LivaNova’s gross revenues and net profits attributable to the above-mentioned Iranian activities were $1.0 million and $0.5 million for the three months ended December 31, 2023, respectively, and $4.3 million and $1.9 million for the year ended December 31, 2023, respectively.
LivaNova’s gross revenues and net profits attributable to the above-mentioned Iranian activities were $2.8 million and $1.6 million for the three months ended December 31, 2024, respectively, and $9.5 million and $4.9 million for the year ended December 31, 2024, respectively.
Oxygenators and Perfusion Tubing Systems The oxygenators product group is comprised of disposable devices for extracorporeal circulation, including the Inspire systems. The Inspire range of products is comprised of 12 models that provide perfusionists with a customizable approach for the benefit of patients.
They are especially important during surgeries involving the heart and lungs. Oxygenators and Perfusion Tubing Systems The oxygenators product group is comprised of disposable devices for extracorporeal circulation, including the Inspire systems. The Inspire range of products is comprised of 12 models that provide perfusionists with a customizable approach for the benefit of patients.
LivaNova uses quality systems in the design, development, manufacturing, warehousing and distribution of its products to ensure its products are safe and effective. In addition, LivaNova utilizes environmental management systems and safety programs to protect the environment and the Company’s employees. For example, all of LivaNova’s manufacturing facilities are certified ISO 13485.
LivaNova’s quality systems, which define how its design, development, manufacturing, warehousing, and distribution processes ensure its products are safe and effective, are ISO 13485 certified. In addition, LivaNova utilizes environmental management systems and safety programs to protect the environment and the Company’s employees.
These laws do not always have the same exceptions or safe harbors as their federal corollaries and, in some states, apply with respect to all payers, including commercial health insurance companies. 15 HIPAA includes federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors; knowingly and willfully embezzling or stealing from a healthcare benefit program; willfully obstructing a criminal investigation of a healthcare offense; or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, products or services.
HIPAA includes federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers; knowingly and willfully embezzling or stealing from a healthcare benefit program; willfully obstructing a criminal investigation of a healthcare offense; or knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, products, or services.
In addition, LivaNova supports internal diversity affinity initiatives, including the Global Women’s Network which consists of female employees across the globe that convene to discuss topics that unite and celebrate the strength of diversity in the workplace.
LivaNova also supports internal diversity affinity initiatives, including the Multi-Generation Network and the Global Women’s Network, where employees convene to discuss topics that unite and celebrate the strength of diversity in the workplace.
In 2021, LivaNova received approval from the FDA to proceed with its investigational device exemption clinical study, the OSPREY clinical trial, and the first patient was implanted in March 2022. The OSPREY clinical trial seeks to confirm the safety and effectiveness of the aura6000 System.
In 2021, LivaNova received approval from the FDA to proceed with its investigational device exemption clinical study, the OSPREY clinical trial, and the first patient was implanted in March 2022 with the aura6000 System. In November 2024, the Company announced the OSPREY clinical study met its primary endpoints for efficacy and safety.
Physician advisories, regulatory safety alerts and publications about LivaNova’s products, or competitor products, can cause major shifts in industry market share, reflecting the importance of product quality, product efficacy and quality systems in the medical device industry.
LivaNova faces competition from, among others, providers of alternative medical therapies, pharmaceuticals, and surgical interventions. Physician advisories, regulatory safety alerts, and publications about LivaNova’s products, or competitor products, can cause major shifts in industry market share, reflecting the importance of product efficacy and quality in the medical device industry.
LivaNova’s markets are subject to rapid technological advances, and as such, product improvement, software advancements and innovation are necessary to maintain market leadership. The Company directs its R&D efforts toward maintaining or achieving technological leadership in each of its markets to help ensure that patients using the Company’s devices and therapies receive the most advanced and effective treatment available.
The Company directs its R&D efforts toward maintaining or achieving technological leadership in each of its markets to help ensure that patients using the Company’s devices and therapies receive the most advanced and effective treatment available.
In 2019, CMS produced a final decision providing coverage for the VNS Therapy System for Medicare beneficiaries through CED when offered in a CMS-approved, double-blind, randomized, placebo-controlled trial with a follow-up duration of at least one year, as well as coverage of VNS Therapy System device replacement.
In 2019, CMS published its final decision on the reconsideration, concluding that CMS will cover the VNS Therapy System for Medicare beneficiaries with treatment-resistant depression through CED when offered in a CMS-approved, double-blind, randomized, placebo-controlled trial with a follow-up duration of at least one year.
Europe and the APAC region are the Company’s largest international markets, comprising 19% and 13% of net revenue during the year ended December 31, 2023, respectively.
Europe and the APAC region are the Company’s largest international markets, with net revenue from these regions representing 18% and 13%, respectively, of total net revenue during the year ended December 31, 2024.
Cost Containment Initiatives Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care arrangements are continuing in many countries where LivaNova does business.
Risk Factors” of this Report, under the section entitled “ Failure to comply with anti-bribery laws could materially adversely affect LivaNova’s business and result in civil and/or criminal sanctions. ” Cost Containment Initiatives Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology assessments, and managed-care arrangements, are continuing in many countries where LivaNova does business.
LivaNova takes countermeasures to reduce its supply chain risk, including working with suppliers to ensure continuity of supply while maintaining high quality and reliability and working to minimize the instances in which the Company relies on a sole supplier.
For quality assurance, sole source availability, or cost effectiveness purposes, LivaNova may procure certain components and raw materials from a sole supplier. LivaNova takes countermeasures to reduce supply chain risks, including working with suppliers to ensure continuity of supply while maintaining high quality and reliability and working to minimize the instances in which the Company relies on a sole source.
As a result, customer transactions have become increasingly complex, which has led, and may continue to lead, to downward pricing pressure and an increase in the use of preferred vendors.
As a result, customer transactions have become increasingly competitive, which has led, and may continue to lead, to downward pricing pressure and an increase in the use of preferred vendors. LivaNova’s global customer base continues to evolve in response to these and other economic developments across the markets the Company serves.
CPB is commonly used in many operations involving the heart. This technique enables the surgical team to oxygenate and circulate the patient’s blood, thus enabling the surgeon to operate on the heart. The most commonly performed procedures requiring CPB are conventional coronary artery bypass grafting and valve surgeries. LivaNova’s products enable CPB for neonatal, pediatric, and adult patients.
This method allows the surgical team to oxygenate and circulate the patient's blood, providing the necessary conditions for the surgeon to operate on the heart. The procedures most commonly requiring CPB include traditional coronary artery bypass grafting and valve surgeries. LivaNova’s products enable CPB for neonatal, pediatric, and adult patients.
The LivaNova Leadership Academy is a program that promotes development through three different learning forums, Manager Fundamentals, Emerging Leaders and Advanced Leadership, to accelerate the development and succession readiness for employees chosen for the program. LivaNova also supports the continuing education of its employees externally.
In addition, LivaNova has a range of tailored programs in place to develop and enhance employees’ career paths. The LivaNova Leadership Academy is a program that promotes development through three different learning forums - Manager Fundamentals, Emerging Leaders, and Advanced Leadership - to accelerate the development and succession readiness for employees chosen for the program.
In 2017, the American Journal of Psychiatry published the results of the longest and largest naturalistic study on treatments for patients experiencing chronic and severe DTD. The findings showed that the addition of the VNS Therapy System to traditional 9 treatment was effective in significantly reducing symptoms of depression and well-tolerated compared with traditional treatment alone.
The findings showed that the addition of the VNS Therapy System to traditional treatment was effective in significantly reducing symptoms of severe and chronic depression compared with traditional treatment alone and that VNS Therapy was well tolerated.
ASMs typically serve as a first-line treatment and are prescribed for virtually all patients diagnosed with epilepsy. After two ASMs fail to deliver seizure control, the epilepsy is characterized as drug-resistant. At this point, adjunctive non-drug options are considered, including VNS therapy, ketogenic diet, resective or ablative surgery and other neuromodulation therapies.
After two ASMs fail to deliver seizure control, the epilepsy is characterized as drug-resistant and adjunctive non-drug options are considered, including VNS therapy, ketogenic diet, surgery, and other neuromodulation therapies.
The CED also includes the possibility to extend the study to a prospective longitudinal registry. In 2019, CMS accepted the protocol for LivaNova’s RECOVER clinical study and the first patient was enrolled.
In this 2019 decision, CMS also agreed to cover a VNS Therapy System device replacement for Medicare beneficiaries already implanted with a device. The CED also included the possibility to extend the study to a prospective longitudinal registry. In 2019, CMS accepted the study protocol for LivaNova’s RECOVER clinical study and the first patient was enrolled.
Heart-lung Machines The HLM product group includes HLMs, heater-coolers, related cardiac surgery equipment and maintenance, and technical services. HLMs temporarily take over the work of the heart and/or lungs, providing blood and oxygen to the body. HLMs are most often used during procedures that require the heart to be stopped.
Heart-lung Machines The HLM product group includes HLMs, heater-coolers, related cardiac surgery equipment and maintenance, and technical services. HLMs temporarily take over the heart and/or lung functions, providing/circulating blood and oxygen to the body, while the heart is stopped during a cardiac surgery procedure. Heater-coolers are used during surgeries to warm or cool patients as part of their care.
Additionally, LivaNova’s Mirandola, Italy plant is ISO 14001 and ISO 45001 certified, and its Munich, Germany plant is ISO 14001 certified. For additional information related to LivaNova’s manufacturing facilities, refer to “Item 2. Properties” in this Report.
LivaNova’s Mirandola, Italy plant is ISO 14001 and ISO 45001 certified, and its Munich, Germany plant is ISO 14001 certified. For additional information related to LivaNova’s manufacturing facilities, refer to “Item 2. Properties” in this Report. Government Regulation and Other Considerations LivaNova’s medical devices are subject to extensive government regulation by numerous government agencies, both within and outside the U.S.
Cardiopulmonary LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing and selling of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. It includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision making during CPB procedures.
In particular, the Cardiopulmonary segment includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision-making during CPB procedures. CPB is frequently utilized in various heart-related procedures.
The ACS cannulae are designed and used for temporary unloading of the right ventricle, for supporting the left ventricle and for connecting ECMO systems. Neuromodulation LivaNova’s Neuromodulation segment is engaged in the design, development, manufacture, marketing and selling of devices that deliver neuromodulation therapy for treating DRE and DTD.
Neuromodulation LivaNova’s Neuromodulation segment is engaged in the design, development, manufacture, marketing, and sale of devices that deliver neuromodulation therapy for treating DRE and DTD.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe capped call transactions are expected generally to offset cash payments due upon exchange of the Notes in excess of the principal amount thereof in the event that the market price per ordinary share of the Company at the time of exchange of the Notes is greater than the strike price under the capped call transactions, with such offset subject to a cap based on the cap price.
Biggest changeThe 2025 Capped Calls and 2029 Capped Calls are expected generally to compensate (through the payment of cash to LivaNova) for potential dilution to LivaNova’s ordinary shares and to offset cash payments due upon exchange of the 2025 Notes or conversion of the 2029 Notes, as applicable, in excess of the principal amount thereof in the event that the market price per ordinary share of LivaNova at the time of exchange of the 2025 Notes or conversion of the 2029 Notes, respectively, is greater than the strike price under the 2025 Capped Calls or 2029 Capped Calls, respectively, with such offset subject to a cap based on the respective cap prices of the 2025 Capped Calls and 2029 Capped Calls.
Other governments have enacted, amended, or are enacting similar data protection laws, including data localization laws that require data to stay within their borders and other technical and operational adaptions that may be required given the rapid changes in data protection regulation where LivaNova conducts business.
Other governments have enacted or amended or are enacting similar data protection laws, including data localization laws that require data to stay within their borders and other technical and operational adaptions that may be required given the rapid changes in data protection regulation where LivaNova conducts business.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. LivaNova’s efforts to comply with applicable laws and regulations may be inadequate, and the Company may be unable to avoid enforcement actions by governmental bodies. Enforcement actions may be costly and could interrupt regular operations of LivaNova’s business.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. LivaNova’s efforts to comply with applicable laws and regulations may be inadequate, and the Company may be unable to avoid enforcement actions by governmental bodies. Enforcement actions may be costly and could interrupt the regular operations of LivaNova’s business.
If the FDA were to conclude that LivaNova is not in compliance with applicable laws or regulations, or that any of the Company’s medical products are ineffective or pose an unreasonable health risk, the FDA could ban such medical products, detain or seize adulterated or misbranded medical products, order a recall, repair, replacement or refund of such products, refuse to grant pending PMA applications, and/or require LivaNova to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health.
If the FDA were to conclude that LivaNova is not in compliance with applicable laws or regulations, or that any of the Company’s medical products are ineffective or pose an unreasonable health risk, the FDA could ban such medical products; detain or seize adulterated or misbranded medical products; order a recall, repair, replacement, or refund of such products; refuse to grant pending PMA applications; and/or require LivaNova to notify health professionals and others that the devices present an unreasonable risk of substantial harm to the public health.
The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA clearance, and requirements for such approvals may differ from FDA requirements. To varying degrees, each of these agencies requires LivaNova to comply with laws and regulations governing the development, testing, manufacturing, labeling, reimbursement, marketing, and distribution of LivaNova’s products.
The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA clearance, and requirements for such approvals may differ from FDA requirements. To varying degrees, each of these agencies requires LivaNova to comply with laws and regulations governing the development, modification, testing, manufacturing, labeling, reimbursement, marketing, and distribution of LivaNova’s products.
LivaNova is working to obtain all appropriate approvals as required, as penalties for regulatory non-compliance can be severe, including fines and revocation or suspension of a company’s business license. The development and implementation of future laws and regulations may also have a material adverse effect on LivaNova.
LivaNova is working to obtain all appropriate approvals as required, as penalties for regulatory non-compliance can be severe, including fines and revocation or suspension of a 23 company’s business license. The development and implementation of future laws and regulations may also have a material adverse effect on LivaNova.
If LivaNova is unable to demonstrate that the Company’s devices are cost-effective, third-party payers may not reimburse the use of LivaNova’s products or provide sufficient reimbursement for LivaNova’s products, which could reduce sales of the Company’s products to healthcare providers that depend upon reimbursement for payment for their services.
If LivaNova is unable to demonstrate that the Company’s devices are effective, third-party payers may not reimburse the use of LivaNova’s products or provide sufficient reimbursement for LivaNova’s products, which could reduce sales of the Company’s products to healthcare providers that depend upon reimbursement for payment for their services.
A recall could also impair LivaNova’s ability to produce its products in a cost-effective and timely manner. In the future, LivaNova may initiate voluntary withdrawal, removal or repair actions that the Company determines do not require notification as a recall.
A recall could also impair LivaNova’s ability to produce its products in a cost-effective and timely manner. In the future, LivaNova may initiate voluntary withdrawal, removal, replacement, or repair actions that the Company determines do not require notification as a recall.
Additionally, transitional climate risks such as changing customer behaviors and changing dynamics in raw materials and utility markets, could lead to lost revenue due to inability to meet changing customer requirements, increasing costs associated with product adjustments to meet changing customer preferences, increasing costs of inputs and raw materials and increasing cost of utilities.
Additionally, transitional climate risks, such as changing customer behaviors and changing dynamics in raw materials and utility markets, could lead to lost revenue due to 24 inability to meet changing customer requirements, increasing costs associated with product adjustments to meet changing customer preferences, increasing costs of inputs and raw materials, and increasing cost of utilities.
In addition, English law generally prohibits a public limited company from repurchasing its own shares without the prior approval 29 of shareholders. As a result, LivaNova’s shareholders must approve these authorities at an annual general meeting of shareholders.
In addition, English law generally prohibits a public limited company from repurchasing its own shares without the prior approval of shareholders. As a result, LivaNova’s shareholders must approve these authorities at an annual general meeting of shareholders.
If LivaNova is unable to maintain these strong relationships, the development and marketing of the Company’s products could suffer, which could have a material adverse effect on LivaNova’s business, results of operations, cash flows and financial condition.
If LivaNova is unable to maintain these relationships, the development and marketing of the Company’s products could suffer, which could have a material adverse effect on LivaNova’s business, results of operations, cash flows, and financial condition.
It is also possible that patients enrolled in clinical studies will experience adverse side effects that are not currently part of the product’s profile, which could inhibit further marketing and development of such products.
It is also possible that patients enrolled in clinical studies will experience adverse side effects that are not currently part of the product’s safety profile, which could inhibit further marketing and development of such products.
However, if a shareholder holds LivaNova’s shares directly rather than through DTC, any transfer of shares could be subject to UK stamp duty or SDRT at a rate of 0.5% of the consideration paid for the transfer.
However, if a shareholder holds LivaNova’s shares directly rather than through DTC, any transfer of those shares could be subject to UK stamp duty or SDRT at a rate of 0.5% of the consideration paid for the transfer.
Because LivaNova’s marketing practices involve direct promotion to patients in certain jurisdictions, the Company is subject to additional laws and regulations intended to prevent misleading of patients and consumers through unethical promotional activities and related data collection practices.
Because LivaNova’s marketing practices involve direct promotion to patients in certain jurisdictions, the Company is subject to additional laws and regulations intended to prevent misleading patients and consumers through unethical promotional activities and related data collection practices.
Certain environmental laws assess liability on current, prior and/or related owners or operators of real property for the costs of investigation, removal, or remediation of hazardous substances on their properties or at properties on which they have disposed of hazardous substances.
Additionally, certain environmental laws assess liability on current, prior, and/or related owners or operators of real property for the costs of investigation, removal, or remediation of hazardous substances on their properties or at properties on which they have disposed of hazardous substances.
Patents issued to or licensed by LivaNova in the past or in the future may be challenged or circumvented by competitors and such patents may be found invalid, unenforceable or insufficiently broad to protect the Company’s technology, and may limit LivaNova’s competitive advantage.
Patents issued to or licensed by LivaNova in the past or in the future may be challenged or circumvented by competitors, and such patents may be found invalid, unenforceable, or insufficiently broad to protect the 28 Company’s technology, and may limit LivaNova’s competitive advantage.
LivaNova’s global operations result in revenues and expenses that are denominated in currencies other than LivaNova’s reporting currency, the USD. Fluctuations in exchange rates may impact, and have impacted, LivaNova’s results of operations and financial condition.
In addition, LivaNova’s global operations result in revenues and expenses that are denominated in currencies other than LivaNova’s reporting currency, the USD. Fluctuations in exchange rates may impact, and have impacted, LivaNova’s results of operations and financial condition.
LivaNova, for example, is currently conducting clinical studies, and any delays or news regarding unfavorable or inconsistent data could have a material adverse effect on LivaNova’s business.
LivaNova, for example, is currently conducting clinical studies, and any trial delays or news regarding unfavorable or inconsistent clinical data could have a material adverse effect on LivaNova’s business.
A key provision of the law is a “payback” measure, requiring companies selling medical devices in Italy to repay a percentage of the healthcare expenditures exceeding the regional 22 maximum caps for medical devices.
A key provision of the law is a “payback” measure, requiring companies selling medical devices in Italy to repay a percentage of the healthcare expenditures exceeding the regional maximum caps for medical devices.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of LivaNova’s business activities, including the Company’s relationships with surgeons and other healthcare providers, some of whom recommend, purchase and/or prescribe LivaNova’s devices, group purchasing organizations and LivaNova’s independent sales agents and distributors, could be subject to challenge under one or more of such laws.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of LivaNova’s business activities, including the Company’s relationships with healthcare providers, some of whom recommend, purchase, and/or prescribe LivaNova’s devices, group purchasing organizations, and LivaNova’s independent sales agents and distributors, could be subject to challenge under one or more of such laws.
Competitive factors include: product quality, reliability and performance; product technology and innovation; breadth of product lines and product services; ability to identify new market trends; changes to the regulatory environment; cost-effectiveness and price; customer support and training; capacity to recruit engineers, scientists and other qualified employees; ability to navigate the regulatory approval process in the markets in which LivaNova operates; reimbursement approval; and effectiveness of systems and processes.
Competitive factors include product quality, reliability and performance; product technology and innovation; breadth of product lines and product services; ability to identify new market trends; changes to the regulatory environment; cost-effectiveness and 21 price; customer support and training; capacity to recruit engineers, scientists, and other qualified employees; ability to navigate the regulatory approval process in the markets in which LivaNova operates; reimbursement approval; reimbursement coverage; and effectiveness of systems and processes.
For example, LivaNova is currently in litigation with the government in Italy stemming from a civil action where the Court of Appeal declared LivaNova (formed through a merger with Sorin) liable for environmental liabilities incurred by SNIA’s (a former parent company of Sorin) other subsidiaries. See “Note 13.
For example, LivaNova is currently in litigation with the government in Italy stemming from a civil action where the Court of Appeal declared LivaNova (formed through a merger with Sorin) liable for environmental liabilities incurred by SNIA’s (a former parent company of Sorin) other subsidiaries. See “Note 11.
For instance, many of LivaNova’s facilities and procedures and those of its suppliers are subject to periodic inspections by the FDA, which can result, and in the past has resulted, in inspectional observations on the FDA’s Form-483, warning letters, or other forms of enforcement.
For instance, many of LivaNova’s facilities and procedures and those of its suppliers are subject to periodic inspections by the FDA, which can result, and in the past has resulted, in inspection observations on the FDA’s Form 483, warning letters, or other forms of enforcement.
Even an unsubstantiated allegation of impropriety could adversely impact LivaNova’s reputation and/or business operations. Furthermore, LivaNova’s devices, products and therapies are purchased principally by hospitals or physicians that typically bill various third-party payers, such as governmental healthcare programs (e.g., Medicare, Medicaid and comparable non-US programs), private insurance plans and managed care plans for the healthcare services provided to their patients.
Even an unsubstantiated allegation of impropriety could adversely impact LivaNova’s reputation and/or business operations. Furthermore, LivaNova’s devices, products, and therapies are purchased principally by hospitals or physicians that typically bill various third-party payers, such as governmental healthcare programs (e.g., Medicare, Medicaid, and comparable non-U.S. programs), private insurance plans, and managed-care plans for the healthcare services provided to their patients.
Investors may also implement this type of strategy by entering into swaps on LivaNova’s ordinary shares in lieu of or in addition to selling short the Company’s ordinary shares. This activity could decrease, or reduce the size of any increase in, the market price of LivaNova’s ordinary shares at that time.
Investors may also implement this type of strategy by entering into swaps or options on LivaNova’s ordinary shares in lieu of or in addition to selling short LivaNova’s ordinary shares. This activity could decrease, or reduce the size of any increase in, the market price of LivaNova’s ordinary shares at that time.
LivaNova is, therefore, exposed to the risk that its employees, independent contractors, principal investigators, consultants, vendors, independent sales agents, and distributors may engage in fraudulent or other illegal activity in violation of these laws and LivaNova’s Code of Conduct.
LivaNova is, therefore, exposed to the risk that its employees, independent contractors, principal investigators, consultants, vendors, independent sales agents, and distributors may engage in fraudulent or other illegal activity in violation of these laws and LivaNova’s Code of Ethics & Business Conduct.
Third-party payers, including private and government insurers, are increasingly requiring evidence that medical devices are cost-effective.
Third-party payers, including private and government insurers, are increasingly requiring evidence that medical devices are clinically-effective and cost-effective.
For example, in 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System, impacting the business and financial reporting of medical technology sector companies that sell devices in Italy.
For example, in 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System, impacting the business and financial reporting of medical technology sector companies that sell devices in Italy, including LivaNova.
Similarly, unauthorized access to or through, denial of access to, or other incidents involving LivaNova or its vendors’ information systems, whether by the Company’s employees or third parties, including a cyber-attack by criminal hackers, members of organized crime groups or state-sponsored organizations, who continuously develop and deploy viruses, ransomware, malware or other malicious software programs or social engineering attacks, has resulted and could in the future result in negative publicity, significant remediation costs, legal liability, notification requirements, and damage to LivaNova’s reputation, which could have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition.
Similarly, unauthorized access to or through, denial of access to, or other incidents involving LivaNova or its vendors’ information systems, whether by the Company’s employees or third parties, including a cyber-attack by criminal hackers, or state-sponsored organizations, who continuously develop and deploy viruses, ransomware, malware, or other malicious software programs or social engineering attacks, have resulted and could in the future result in negative publicity, significant remediation costs, legal liability, notification requirements, and damage to LivaNova’s reputation, which could have a material adverse effect on the Company’s business, results of operations, cash flows, and financial condition.
LivaNova may not be able to engage in these activities on desirable terms or at all, which could result in a default on the Notes and/or LivaNova’s revolving credit facility and term facilities.
LivaNova may not be able to engage in these activities on desirable terms or at all, which could result in a default on the 2025 Notes and 2029 Notes and/or LivaNova’s revolving credit facility and term facilities.
In addition, there is also some uncertainty as to whether the UK courts would recognize or enforce judgments of US courts obtained against LivaNova or any of its directors or officers. Changes in tax laws or exposure to additional income tax liabilities could have a material impact on LivaNova’s results of operations and financial condition.
In addition, there is also some uncertainty as to whether the UK courts would recognize or enforce judgments of U.S. courts obtained against LivaNova or any of its directors or officers. Changes in tax laws or exposure to additional income tax liabilities could have a material impact on LivaNova’s results of operations and financial condition.
Cyber risk insurance has also become more difficult and expensive to obtain, and LivaNova cannot be certain that the Company’s current levels of insurance will be available in the future on economically reasonable terms. 19 As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems.
Cyber risk insurance also has become more 20 expensive to obtain, and LivaNova cannot be certain that the Company’s current levels of insurance will be available in the future on economically reasonable terms. As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems.
Even if LivaNova is able to obtain approval, marketing clearance and reimbursement, it may take a significant amount of time, require the expenditure of substantial resources, involve stringent clinical and pre-clinical testing and increased post-market surveillance, and/or involve modifications, repairs or replacements of LivaNova’s products or limitations on the proposed uses of its products.
Even if LivaNova is able to obtain product approval, product clearance, and reimbursement, it may take a significant amount of time; require the expenditure of substantial resources; involve stringent pre-clinical and clinical testing; require increased post-market surveillance; involve modifications, repairs, or replacements of LivaNova’s products; and/or impose limitations on the proposed uses of its products.
Similar consequences could follow, such as audits by non-US regulators and notified bodies. The FDA and other non-US government agencies could also assess civil or criminal penalties against LivaNova, the Company’s officers, or other employees and/or impose operating restrictions on a company-wide basis. The FDA could also recommend prosecution to the US Department of Justice.
Similar consequences could follow, such as audits by non-U.S. regulators and notified bodies. The FDA and other non-U.S. government agencies could also assess civil or criminal penalties against LivaNova, the Company’s officers, or other employees and/or impose operating restrictions on a company-wide basis. The FDA could also recommend prosecution to the U.S. Department of Justice.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government funding levels, the ability to hire and retain key personnel, government shutdowns, and statutory, regulatory and policy changes. In addition, a portion of LivaNova’s revenue is dependent on US federal government healthcare program reimbursement.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government funding levels, the ability to hire and retain key personnel, government shutdowns, and statutory, regulatory, and policy changes. In addition, a portion of LivaNova’s revenue is dependent on U.S. federal government healthcare program reimbursement.
In addition, LivaNova’s indebtedness including under the Notes, combined with the Company’s other financial obligations and contractual commitments including those under LivaNova’s revolving credit facility or term facilities, could have other important consequences.
In addition, LivaNova’s indebtedness, including under the 2025 Notes and 2029 Notes, combined with the Company’s other financial obligations and contractual commitments, including those under LivaNova’s revolving credit facility or term facilities, could have other important consequences.
The Company collects, stores, and handles employee and patient data, including sensitive patient health information, which may present material obligations and risks to LivaNova’s business, including significantly expanded compliance burdens, costs and enforcement risks.
The Company collects, stores, and handles personnel and patient data, including sensitive patient health information, which may present material obligations and risks to LivaNova’s business, including significantly expanded compliance burdens, costs, and enforcement risks.
If the Company is unable to protect LivaNova’s intellectual property in those countries, it could have a material adverse effect on LivaNova’s reputation, business, results of operations, cash flows and financial condition. Inadequate funding for US federal government agencies and government shutdowns could negatively affect LivaNova’s business, results of operations, cash flows and financial condition.
If the Company is unable to protect LivaNova’s intellectual property in those countries, it could have a material adverse effect on LivaNova’s reputation, business, results of operations, cash flows, and financial condition. Inadequate funding for U.S. federal government agencies and government shutdowns could negatively affect LivaNova’s business, results of operations, cash flows, and financial condition.
Ultimately, LivaNova cannot guarantee that its clinical trials will be successful or that the Company will be able to obtain or maintain marketing clearance and/or reimbursement for new products or modifications to existing products.
Ultimately, LivaNova cannot guarantee that its clinical trials will be successful or that the Company will be able to obtain or maintain approval or clearance and/or reimbursement for new products or modifications to existing products.
Such an event could result in product liability claims or a recall of, or safety alert relating to, one or more of LivaNova’s products. For example, as described in “Note 13.
Such an event could result in product liability claims or a recall of, or safety alert relating to, one or more of LivaNova’s products. For example, as described in “Note 11.
For example, the EU MDR has resulted in significant additional premarket and post-market requirements. Certifications to EU MDR must be achieved by December 2027 or December 2028, based on the risk classification of the device. In the interim, the European Commission is allowing companies to use their MDD certifications.
For example, MDR has resulted in significant additional pre-market and post-market requirements. Certifications to MDR must be achieved by December 2027 or December 2028, based on the risk classification of the device. In the interim, the European Commission is allowing companies to use their MDD certifications.
These potential consequences, as well as any adverse outcome from government investigations, could have a material adverse effect on LivaNova’s business, results of operations, cash flows and financial condition. In addition, device manufacturers are prohibited from promoting their products for uses and indications that are not set forth in the approved product labeling (so called “off-label uses”).
These potential consequences, as well as any adverse outcome from government investigations, could have a material adverse effect on LivaNova’s business, results of operations, cash flows, and financial condition. In addition, device manufacturers are prohibited from promoting their products for uses and indications that are not consistent with the approved product labeling (so called “off-label uses”).
In addition, regulators could seek to hold LivaNova liable for conduct committed by companies in which LivaNova invests or acquires. The FCPA can pose unique challenges for manufacturers who operate in foreign cultures where conduct prohibited by the FCPA may not be viewed as illegal in local jurisdictions.
In addition, regulators could seek to hold LivaNova liable for conduct committed by companies in which LivaNova invests or acquires. The FCPA can pose unique challenges for companies that operate in foreign cultures where conduct prohibited by the FCPA may not be viewed as illegal in local jurisdictions.
LivaNova’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation. LivaNova is also subject to ongoing tax audits in various non-US jurisdictions.
LivaNova’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. LivaNova is also subject to ongoing tax audits in various non-U.S. jurisdictions.
If DTC determines at any time that LivaNova’s shares are not eligible for continued deposit and clearance within its facilities, LivaNova believes that its shares would not be eligible for continued listing on a US securities exchange and trading in the Company’s shares would be disrupted.
If DTC determines at any time that LivaNova’s shares are not eligible for continued deposit and clearance within its facilities, LivaNova believes that its shares would not be eligible for continued listing on a U.S. securities exchange and trading in the Company’s shares would be disrupted.
The ability to make scheduled payments of interest on, and principal of, to satisfy exchanges for cash in respect of, and/or to refinance LivaNova’s outstanding Notes or other indebtedness (including any indebtedness under LivaNova’s revolving credit facility or term facilities) depends on the Company’s future performance, which is subject to economic, financial, competitive and other factors beyond its control.
LivaNova’s ability to make payments (including interest, principal upon maturity, and payments to satisfy exchanges for cash or conversions) in respect of and/or to refinance LivaNova’s outstanding Notes or other indebtedness (including any indebtedness under LivaNova’s revolving credit facility or term facilities) depends on the Company’s future performance, which is subject to economic, financial, competitive, and other factors beyond its control.
In addition, to access LivaNova’s products and services, its clients may use computers and other devices that are beyond the Company’s security control safeguards.
In addition, to access LivaNova’s products and services, its customers may use computers and other devices that are beyond the Company’s security control safeguards.
In addition, the laws and intellectual property systems of certain countries in which LivaNova markets some of its products do not protect the Company’s intellectual property rights to the same extent as in the US, which may impact its market position in those countries.
In addition, the laws and intellectual property systems of certain countries in which LivaNova markets some of its products do not protect the Company’s intellectual property rights to the same extent as in the U.S., which may impact its market position in those countries.
LivaNova is a public limited company incorporated under the laws of England and Wales, and as such, the Company’s shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction of the US.
LivaNova is a public limited company incorporated under the laws of England and Wales, and as such, the Company’s shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction of the U.S.
LivaNova’s ability to profitably commercialize the Company’s products is dependent, in large part, on whether third-party payers, including private healthcare insurers, managed care plans, governmental programs and others, agree to cover the costs and services associated with LivaNova’s products and related medical procedures in the US and internationally.
Additionally, LivaNova’s ability to profitably commercialize the Company’s products is dependent, in large part, on whether third-party payers, including private healthcare insurers, managed-care plans, governmental programs, and others, agree to cover the costs and services associated with LivaNova’s products and related medical procedures in the U.S. and internationally.
If a regulating authority were to disagree with LivaNova’s determinations, it could require the Company to report those actions as recalls.
If a regulatory authority were to disagree with LivaNova’s determinations, it could require the Company to report those actions as recalls.
LivaNova reviews, when circumstances warrant, the carrying amounts of its intangible assets, goodwill and other long-lived assets to determine whether those carrying amounts continue to be recoverable in accordance with US GAAP.
LivaNova reviews, when circumstances warrant, the carrying amounts of its intangible assets, goodwill, and other long-lived assets to determine whether those carrying amounts continue to be recoverable in accordance with U.S. GAAP.
Similarly, LivaNova may divest and has divested portions of its business, resulting in the migration of data and overlapping data obligations. As a result of such divestitures, LivaNova may face risks due to the migration or modification of controls, procedures and policies relating to data privacy and cybersecurity internally or enroute during migration.
Similarly, LivaNova may divest and has divested portions of its business, resulting in the migration of data and overlapping data obligations. As a result of such divestitures, LivaNova may face risks due to the migration or modification of controls, 26 procedures, and policies relating to data privacy and cybersecurity internally or en route during migration.
It may be difficult to enforce court judgments obtained in the US and based on the civil liability provisions of US federal or state securities laws against LivaNova in the UK.
It may be difficult to enforce court judgments obtained in the U.S. and based on the civil liability provisions of U.S. federal or state securities laws against LivaNova in the UK.
LivaNova may not have sufficient cash flow from its business operations to pay when due or be able to raise the funds necessary to pay when due, amounts owed with respect to the Notes and/or any amounts owed under the Company’s revolving credit facility and term facilities, which could adversely affect LivaNova’s business and results of operations.
Risks Related to LivaNova’s Indebtedness LivaNova may not have sufficient cash flow from its business operations to pay when due, or be able to raise the funds necessary to pay when due, amounts owed with respect to the 2025 Notes and 2029 Notes and/or any amounts owed under the Company’s revolving credit facility and term facilities, which could adversely affect LivaNova’s business and results of operations.
Furthermore, environmental regulations are continuing to become more stringent and LivaNova may experience increased compliance burdens and costs to meet its regulatory obligations, as well as adverse impacts on raw material sourcing, manufacturing operations and the distribution of LivaNova’s products.
Environmental regulations continue to become more stringent, and LivaNova may experience increased compliance burdens and costs to meet its regulatory obligations, as well as adverse impacts on raw material sourcing, manufacturing operations, and the distribution of LivaNova’s products.
These conflicts have increased economic and regulatory uncertainties, and a significant escalation or continuation of these conflicts could have a material impact on the Company’s operating results. Certain of LivaNova’s subsidiaries have engaged in business dealings in countries subject to comprehensive sanctions, including Iran, Sudan and Syria in addition to Russia and Belarus.
These conflicts have increased economic and regulatory uncertainties, and a significant escalation or continuation of these conflicts could have a material impact on the Company’s operating results. Certain of LivaNova’s subsidiaries are engaged in business dealings in countries subject to comprehensive sanctions, including Iran and Russia.
Because of the predominance of government-administered healthcare systems in many parts of the world outside the US, many of LivaNova’s customer relationships are potentially subject to such laws.
Because of the predominance of government-administered healthcare systems in many parts of the world outside of the U.S., many of LivaNova’s customer relationships are potentially subject to such laws.
LivaNova’s ability to refinance the Notes or other indebtedness, which the Company may need to do in order to satisfy its obligations thereunder, will depend on the capital markets and LivaNova’s financial condition at such time.
LivaNova’s ability to refinance the 2025 Notes, the 2029 Notes, or other indebtedness, which the Company may need to do to satisfy its obligations thereunder, will depend on the capital markets and LivaNova’s financial condition at such time.
These risks, many of which LivaNova has experienced first-hand, include: higher danger of terrorist activity, war or civil unrest; greater exposure to inflation; volatility in freight and labor costs; fluctuating interest and exchange rates; evolving sanctions; increased exposure to cyber-attacks and supply chain challenges; changing energy prices; local product changes and compliance requirements; longer payments terms and collection times for receivables in local jurisdictions; difficulty enforcing agreements; greater exposure to creditworthiness of customers and inconsistent local law enforcement of obligations; trade protection measures and import and export licensing requirements; ensuring compliance with anti-bribery laws; different labor regulations and workforce instability; selling its products through distributors and agents; and political and economic instability.
These risks, many of which LivaNova has experienced first-hand, include higher danger of terrorist activity, war, or civil unrest; greater exposure to inflation; volatility in freight and labor costs; fluctuating interest and exchange rates; increased exposure to cyber-attacks and supply chain challenges; trade protection measures such as tariffs, evolving sanctions, and import and export licensing requirements; changing energy prices; local product changes and compliance requirements; longer payment terms and collection times for receivables in local jurisdictions; difficulty enforcing agreements; greater exposure to creditworthiness of customers and inconsistent local law enforcement of obligations; ensuring compliance with anti-bribery laws; differing labor regulations and workforce instability; selling by way of distributors and agents; and political and economic instability.
LivaNova could also face competition in countries where the Company has not invested in an intellectual property portfolio, or where the Company has not invested in the same protection as in the US.
LivaNova could also face competition in countries where the Company has not invested in an intellectual property portfolio, or where the Company has not invested in the same protection as in the U.S.
Significant negative industry or economic trends, disruptions to LivaNova’s businesses, significant unexpected or unplanned changes in the use of assets, divestitures and market capitalization declines, among other events, may result in impairments to LivaNova’s intangible assets, goodwill and other long-lived assets. Recent impairments have significantly affected LivaNova’s financial results, as could future impairments. Item 1B. Unresolved Staff Comments None.
Significant negative industry or economic trends; disruptions to LivaNova’s businesses; and significant unexpected or unplanned changes in the use of assets, divestitures, and market capitalization declines, among other events, may result in impairments to LivaNova’s intangible assets, goodwill, and other long-lived assets. Recent impairments have significantly affected LivaNova’s financial results, as could future impairments.
Unauthorized disclosure or use of, denial of access to, or other incidents involving sensitive or confidential customer, patient, employee, vendor or Company data, whether through systems failure, employee negligence, fraud, misappropriation, or cybersecurity, ransomware or malware attacks, or other intentional or unintentional acts, could expose the Company to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation, damage LivaNova’s reputation and its competitive positioning in the marketplace, disrupt its, or the Company’s customers’ businesses, or cause LivaNova to lose customers, resulting in significant financial exposure and legal liability.
Unauthorized disclosure or use of, denial of access to, or other incidents involving sensitive or confidential customer, patient, employee, vendor or Company data, whether through systems failure, employee negligence, fraud, misappropriation, cybersecurity incidents, or other intentional or unintentional acts, could expose and have exposed the Company to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation, damage LivaNova’s reputation and its competitive positioning in the marketplace, disrupt its or its customers’ business operations, or cause LivaNova to lose customers, potentially resulting in significant financial exposure and legal liability.
Commitments and Contingencies” in LivaNova’s consolidated financial statements included in this Report, the Company is involved in product liability litigation relating to its cardiopulmonary 3T Heater-Cooler product that may adversely affect LivaNova’s financial condition and may require the Company to devote significant resources to its defense and/or settlement of these claims.
Commitments and Contingencies” in LivaNova’s consolidated financial statements included in this Report, the Company is involved in product liability litigation relating to its cardiopulmonary 3T Heater-Cooler product that has adversely affected LivaNova’s financial condition and has required the Company to devote significant resources to its defense and/or settlement of these claims.
Product liability claims or product recalls in the future, regardless of their ultimate outcome, could have a material adverse effect on LivaNova’s business and reputation and on the Company’s ability to attract and retain customers for its products, and future losses from product liability claims could exceed LivaNova’s product liability insurance coverage and lead to a material adverse effect on the Company’s financial condition and liquidity.
Any product liability claims, regardless of their ultimate outcome, could have a material adverse effect on the Company’s ability to attract and retain customers for its products, and future losses from product liability claims could exceed LivaNova’s product liability insurance coverage and lead to a material adverse effect on the Company’s financial condition and liquidity.
LivaNova is subject to income taxes as well as non-income-based taxes in the US, the UK, the EU and various other jurisdictions.
LivaNova is subject to income taxes as well as non-income-based taxes in the U.S., the UK, the EU, and various other jurisdictions.
LivaNova maintains policies and programs to educate its employees and agents on these legal requirements, and to prevent and prohibit improper practices. However, existing safeguards and any future improvements may not always be effective, and LivaNova’s employees, consultants, sales agents, or distributors may engage in conduct for which LivaNova could be held responsible.
LivaNova maintains a compliance program that includes policies and training to educate its employees and agents on these legal requirements, and to prevent and prohibit improper practices. However, existing safeguards and any future improvements may not always be effective, and LivaNova’s employees, consultants, sales agents, or distributors may engage in conduct for which LivaNova could be held responsible.
The original issue discount is amortized and recognized as a component of interest expense over the term of the Notes, which results in an effective interest rate reported in LivaNova’s consolidated statements of operations in excess of the stated interest rate of the Notes.
The original issue discount is amortized and recognized as a component of interest expense over the term of the 2025 Notes and 2029 Notes, which results in an effective interest rate reported in LivaNova’s consolidated statements of income (loss) in excess of the stated interest rate of the 2025 Notes and 2029 Notes.
LivaNova’s devices, products and therapies are subject to regulation regarding quality and cost by HHS, including CMS, as well as comparable state and non-US agencies responsible for reimbursement and regulation of healthcare goods and services, including laws and regulations related to kickbacks, false claims, self-referrals and healthcare fraud.
LivaNova’s devices, products, and therapies are subject to regulation regarding quality and cost by HHS, including CMS, as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of healthcare goods and services, including laws and regulations related to kickbacks, false claims, self-referrals, and healthcare fraud. In addition, as a manufacturer of U.S.
The FDA and similar non-US governmental authorities may require the recall of commercialized products in the event of material deficiencies or defects in design, software or manufacture, or in the event that a product poses an unacceptable risk to 23 patients’ health.
The FDA and similar non-U.S. governmental authorities may require the recall and/or the withdrawal of sales of commercialized products in the event of material deficiencies or defects in design, software, or manufacture, or in the event that a product poses an unacceptable risk to patients’ health.
As a part of the approval, marketing clearance or reimbursement process for new products and new indications for existing products, LivaNova may conduct clinical trials and studies.
As part of the approval, clearance, or reimbursement process for new products, product modifications, and new indications for existing products, LivaNova may conduct clinical trials and studies.
It is LivaNova’s understanding that the Option Counterparties, or their respective affiliates, in connection with establishing their initial hedges of the capped call transactions, purchased LivaNova’s ordinary shares and/or entered into various derivative transactions with respect to the Company’s ordinary shares concurrently with or shortly after the pricing of the Notes.
It is LivaNova’s understanding that the Option Counterparties, or their respective affiliates, in connection with establishing their initial hedges of the 2025 Capped Calls and/or 2029 Capped Calls, purchased LivaNova’s ordinary shares and/or entered into various derivative transactions with respect to LivaNova’s ordinary shares concurrently with or shortly after the pricing of the 2025 Notes and/or 2029 Notes, as applicable.
Any of these factors could harm LivaNova’s business, results of operations, cash flows and financial condition. In addition, if LivaNova incurs additional indebtedness under the revolving credit facility or term facilities, the risks related to LivaNova’s business and its ability to repay the Company’s indebtedness, including under the Notes, would increase. For additional information, please refer to “Note 10.
Any of these factors could harm LivaNova’s business, results of operations, cash flows, and financial condition. In addition, if LivaNova incurs additional indebtedness under the revolving credit facility or term facilities, the risks related to LivaNova’s business and its ability to repay the Company’s indebtedness, including under the 2025 Notes and 2029 Notes, would increase.
If LivaNova does not lawfully collect, store, handle or otherwise process personal information and does not prevent data breaches, particularly given the increased risks associated with sensitive health information, LivaNova may suffer legal and regulatory consequences in addition to business consequences.
If LivaNova does not lawfully collect, store, handle, or otherwise process personal information and does not prevent cybersecurity incidents or other system or data compromises, particularly given the increased risks associated with processing sensitive health information, LivaNova may suffer legal and regulatory consequences in addition to business consequences.
Unfavorable or inconsistent clinical data from existing or future clinical trials, or the interpretation of such clinical data by customers and/or regulatory authorities, may adversely impact LivaNova’s ability to obtain product approvals and receive reimbursement.
Unfavorable or inconsistent clinical data from existing or future clinical trials, or the unfavorable interpretation of such clinical data by customers, regulatory authorities, or third-party payers, may adversely impact LivaNova’s ability to obtain product approval or clearance, and/or receive reimbursement.
The effective interest rate and related interest expense reported in LivaNova’s consolidated financial statement of operations is significantly greater than the stated interest rate of the Notes and may result in volatility to the Company’s reported financial results, which could adversely affect the price at which LivaNova’s ordinary shares trade. LivaNova will settle exchanges of the Notes entirely in cash.
The effective interest rate and related interest expense reported in LivaNova’s consolidated financial statement of operations is significantly greater than the stated interest rate of the 2025 Notes and 2029 Notes and may result in volatility to the Company’s reported financial results, which could adversely affect the price at which LivaNova’s ordinary shares trade.
The success and continuing development of LivaNova’s products depend on maintaining strong relationships with physicians and healthcare professionals. If LivaNova fails to maintain its working relationships with physicians and other healthcare professionals, the Company’s products may not be developed and marketed in line with the needs and expectations of the professionals who use and support LivaNova’s products.
If LivaNova fails to maintain its working relationships with physicians and other healthcare professionals, the Company’s products may not be developed and marketed in line with the needs and expectations of the professionals who use and support LivaNova’s products.
The change in input values at the current period end compared to the previous period end may result in a material change in the respective valuations and the gain or loss resulting from the exchange feature of the Notes and capped call transactions may not completely offset each other.
The change in input values at the current period-end compared to the previous period-end may result in a material change in the respective valuations and the gain or loss resulting from the exchange feature of the 2025 Notes and 2025 Capped Calls and the conversion feature of the 2029 Notes and 2029 Capped Calls, as applicable, and may not completely offset each other.
There continues to be a lack of consistent climate legislation, which creates economic 30 and regulatory uncertainty. Legal, regulatory and customer requirements and preferences designed to mitigate the effects of climate change on the environment are increasing, and they may impose obligations that may increase LivaNova’s compliance burden and cost to meet these obligations.
There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Legal, regulatory, and customer requirements and preferences designed to mitigate the effects of climate change on the environment are increasing, and there is a risk of obligations being imposed that would increase LivaNova’s compliance burden and cost to meet these obligations.
LivaNova designs, develops, manufactures, markets, and sells products globally, and the Company intends to continue to pursue growth opportunities worldwide. LivaNova’s international operations are subject to risks that are inherent in conducting business globally and under non-US laws, regulations and customs.
LivaNova designs, develops, manufactures, markets, and sells products and therapies globally, and the Company intends to continue to pursue growth opportunities worldwide. LivaNova’s international operations are subject to risks that are inherent in conducting business globally.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. Additionally, for a description of the Company’s evaluation of its disclosure controls and procedures, management’s report on internal control over financial reporting and changes in internal control over financial reporting, see “Item 9A.
Biggest changeCommitments and Contingencies” in LivaNova’s consolidated financial statements in this Report. Additionally, for a description of the Company’s evaluation of its disclosure controls and procedures, management’s report on internal control over financial reporting, and changes in internal control over financial reporting, see “Part II, Item 9A.
LivaNova regularly evaluates itself for appropriate business continuity and disaster recovery planning, with test scenarios that include simulations and penetration tests. In addition, LivaNova routinely engages with third-party service providers to conduct evaluations of its security controls, whether through penetration testing or consulting on best practices to address new challenges.
LivaNova regularly evaluates itself for appropriate business continuity and disaster recovery planning, with test scenarios that include simulations and penetration tests. In addition, LivaNova routinely engages with third-party service providers to conduct evaluations of its security controls, whether through penetration testing, security assessments, or consulting on best practices to address new challenges.
In addition, the CISO manages a structured cyber incident response program where periodic simulation exercises are performed to prepare and train the Company’s cybersecurity incident responders. The Company deploys security tools to help bolster its defense detection capabilities, such as endpoint detection and response tools, security information and event management tools, and 24/7 monitoring.
In addition, the CISO manages a structured cybersecurity incident response program where periodic simulation exercises are performed to prepare and train the Company’s cybersecurity incident responders. The Company deploys security tools to help bolster its defense detection capabilities, such as endpoint detection and response tools, security information and event management tools, and 24/7 monitoring.
Guided by the principles of various industry-leading standards, such as the NIST cybersecurity framework and ISO 27001, the objective of the ISMS program is to continue to strengthen LivaNova’s cyber resiliency in connection with its information systems.
Guided by the principles of various industry-leading standards, such as the NIST cybersecurity framework and ISO 27001, the objective of the ISMS program is to continue to strengthen LivaNova’s cyber resiliency in connection with its information technology systems.
Specifically, this IT Advisory Council is responsible for establishing program strategies in alignment with LivaNova’s business objectives, as well as providing guidance on the implementation of appropriate and necessary security controls in alignment with the Information Security Policy.
Specifically, this IT Advisory Council is responsible for establishing program strategies in alignment with LivaNova’s business objectives, as well as providing guidance on the implementation of appropriate and necessary security controls in alignment with the Company’s Information Security Policy.
Among other things, the IT Advisory Council reviews summaries of information security incidents, audit findings, or other test reports, and ensures appropriate root-cause analyses are performed and corrective actions are taken. It also establishes year-over-year goals, security objectives, and priorities for the information security program.
Among other things, the IT Advisory Council reviews summaries of information security incidents, audit findings, or other test reports, and ensures appropriate root-cause analyses are performed and corrective actions are taken. It also reviews year-over-year goals, security objectives, and priorities for the Company’s information security program.
The Audit Committee reviews these reports, which include, among other things, external events 32 impacting the Company, security incidents, user training statistics, and evaluations of user readiness to address cyber incidents. Notwithstanding the Company’s approach to cybersecurity, the Company may not be successful in preventing or mitigating future cybersecurity incidents that could have a material adverse effect on the Company.
The Audit Committee reviews these reports, which include, among other things, external events impacting the Company, cybersecurity incidents, user training statistics, and evaluations of user readiness to address cybersecurity incidents. Notwithstanding the Company’s approach to cybersecurity, the Company may not be successful in preventing or mitigating future cybersecurity incidents that could have a material adverse effect on the Company.
As previously reported, in November 2023, the Company initiated its cyber response protocol in response to a cybersecurity incident that resulted in a disruption of portions of its information technology systems. Promptly after detecting the issue and per LivaNova’s cyber response protocol, the Company began an investigation with assistance from external cybersecurity consultants and coordinated with law enforcement.
As previously disclosed, in November 2023, the Company initiated its cyber response protocol in response to a cybersecurity incident that resulted in a disruption of portions of its information technology systems. Promptly after detecting the issue and per LivaNova’s cyber response protocol, the Company began an investigation with assistance from external cybersecurity experts and coordinated with law enforcement.
On an annual basis, the CISO reviews the information security program achievements and reports to the Company’s IS Executive Committee, which is a cross-functional group composed of the CEO, the CFO, the CLO, and other executive leaders of the Company.
On an annual basis, the CISO reviews the information security program achievements and reports with the Company’s IS Executive Committee, which is a cross-functional group composed of the CEO, the CFO, the CLO, and other executive leaders 34 of the Company.
Among other things, the IS Executive Committee approves the information security policy and the allocation of budget and resources to information security program initiatives, performs the annual management review of the security program, and reviews corrective action to improve the program.
Among other things, the IS Executive Committee approves the Company’s Information Security Policy and the allocation of budget and resources to information security program initiatives, performs the annual management review of the information security program, and reviews corrective actions to improve the program.
While LivaNova maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. For more information on risks related to cybersecurity and data security, see Item 1A. “Risk Factors – Risks Relating to the Company’s Business and Operations.”
While LivaNova maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. For more information on risks related to cybersecurity and data security, see “Item 1A. Risk Factors – Risks Relating to the Company’s Business and Operations.”
As part of the CRO’s enterprise risk management 31 process, regular inquiries and discussions are held with the CISO, Chief Information Officer, Chief Privacy Officer, and their respective teams to review the cybersecurity risk landscape.
As part of the enterprise risk management process, regular inquiries and discussions are held with, among others, the CISO, Chief Information Officer, Chief Privacy Officer, and their respective teams to review the cybersecurity risk landscape.
Item 1C. Cybersecurity Cyber Risk Management and Strategy LivaNova’s enterprise risk management process consists of risk identification, evaluation, control and monitoring, and documentation. The LivaNova Board oversees risk management within the Company, and the CRO provides the framework to identify and reduce risks that may materially impact the Company’s business.
ITEM 1C. CYBERSECURITY Cyber Risk Management and Strategy LivaNova’s enterprise risk management process consists of risk identification, evaluation, control and monitoring, and documentation. The LivaNova Board oversees risk management within the Company, and the legal and compliance teams work in tandem to provide the framework to identify and reduce risks that may materially impact the Company’s business.
As part of his duties, the CISO provides relevant information to the CRO in their regular discussions. The CISO also manages the Company’s ISMS program.
As part of his duties, the CISO provides relevant information in connection with regular enterprise risk assessments. The CISO also manages the Company’s ISMS program.
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The Company continues to assess what information was impacted and to implement remediation measures to mitigate the impact of the incident..
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The Company implemented remediation measures to mitigate the impact of the incident. The Company also assessed the nature and scope of the affected data, analyzed its statutory notification obligations, and notified affected individuals and regulators as required by applicable law.
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While the Company has taken and will continue to take actions to enhance its information security framework, LivaNova cannot determine at this time the extent of the impact from this event on its business, results of operations, cash flows, or financial condition. For further information, please refer to “Item 7.
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The incident has been contained, and the Company’s mitigation efforts are considered complete, but any future cybersecurity event has the potential to materially affect the Company’s results of operations, cash flows, and financial condition. For further information, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 11.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeApproximately 59% of LivaNova’s manufacturing and research facilities by square feet are owned by the Company and the balance is leased. LivaNova also maintains 31 primary administrative offices in 21 countries. Most of these locations are leased. LivaNova is using substantially all of the Company’s currently available productive space to develop, manufacture and market LivaNova’s products.
Biggest changeLivaNova also maintains 31 primary administrative offices in 21 countries. Most of these locations are leased. LivaNova is using substantially all of the Company’s currently available productive space to develop, manufacture, and market LivaNova’s products. LivaNova believes that all of its facilities are in good operating condition, suitable for their respective uses, and adequate for current needs.
Item 2. Properties LivaNova’s principal executive office is located in the UK and is leased by the Company. LivaNova’s business segments are headquartered in the US for Neuromodulation and historically, ACS, and in Italy for Cardiopulmonary. LivaNova has manufacturing and research facilities located in the US, Italy, Germany, Australia, and Brazil.
ITEM 2. PROPERTIES LivaNova’s principal executive office is located in the UK and is leased by the Company. LivaNova’s business segments are headquartered in the U.S. for Neuromodulation and in Italy for Cardiopulmonary. LivaNova has manufacturing and research facilities located in the U.S., Italy, Germany, Australia, and Brazil. The Company’s manufacturing and research facilities are approximately 1.0 million square feet.
The Company’s manufacturing and research facilities are approximately 1.0 million square feet. The manufacturing and research facilities located in the US, Italy and Brazil are substantially owned by LivaNova. Approximately 45% of the Company’s manufacturing and research facilities by square feet are located within the US.
The manufacturing and research facilities located in the U.S., Italy, and Brazil are owned by LivaNova. 45% of LivaNova’s manufacturing and research facilities by square feet are located within the U.S., 58% of LivaNova’s manufacturing and research facilities by square feet are owned by the Company, and the balance is leased.
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LivaNova believes that all of its facilities are in good operating condition, suitable for their respective uses and adequate for current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Information pertaining to certain material pending legal and regulatory proceedings and settlements is incorporated herein by reference to “Note 13. Commitments and Contingencies” in LivaNova’s consolidated financial statements and accompanying notes, beginning on page F-1 of this Report, and should be considered an integral part of “Item 3 of Part I” of this Report. Item 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS Information pertaining to certain material pending legal and regulatory proceedings and settlements is incorporated herein by reference to “Note 11. Commitments and Contingencies” in LivaNova’s consolidated financial statements and accompanying notes, beginning on page F-1 of this Report, and should be considered an integral part of “Part I, Item 3. Legal Proceedings” of this Report.
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Mine Safety Disclosures Not applicable. 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities LivaNova’s ordinary shares are quoted on the Nasdaq Stock Market LLC under the symbol “LIVN.” As of February 23, 2024, according to data provided by LivaNova’s transfer agent, there were 20 stockholders of record.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES LivaNova’s ordinary shares are quoted on Nasdaq under the symbol “LIVN.” As of February 18, 2025, according to data provided by LivaNova’s transfer agent, there were 20 stockholders of record.
Stock Performance Graph The following graph compares LivaNova’s five-year cumulative total return with the five-year cumulative total return of the companies on the S&P 500 Index and the companies on the S&P Health Care Equipment Index. This graph assumes the investment of $100 on December 31, 2018 and the reinvestment of all dividends since that date.
Stock Performance Graph The following graph compares LivaNova’s five-year cumulative total return with the five-year cumulative total return of the companies on the S&P 500 Index and the companies on the S&P Healthcare Equipment Select Industry Index. This graph assumes the investment of $100 on December 31, 2019 and the reinvestment of all dividends since that date.
Such information will not be deemed incorporated by reference into any filing LivaNova makes under the Securities Act, unless LivaNova explicitly incorporates it into such filing at such time. Item 6. [Reserved] 34 Item 7.
Such information will not be deemed incorporated by reference into any filing LivaNova makes under the Securities Act, unless LivaNova explicitly incorporates it into such filing at such time.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the consolidated financial statements and the corresponding notes included elsewhere in this Report.
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Certain percentages presented in this discussion and analysis are calculated from the underlying whole-dollar amounts and therefore may not tie to percentages recalculated from the rounded numbers used for disclosure purposes. The following discussion, analysis and comparisons generally focus on the operating results for 2023, 2022 and 2021.
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LivaNova has elected to omit certain discussions on the earliest of the three years covered in this Report. Refer to

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGoodwill and Intangible Assets” in LivaNova’s consolidated financial statements included in this Report. 37 Results of Operations The following table summarizes LivaNova’s consolidated results for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Net revenue $ 1,153,545 $ 1,021,805 $ 1,035,365 Cost of sales 382,295 314,577 329,371 Gross profit 771,250 707,228 705,994 Operating expenses: Selling, general and administrative 518,129 469,243 471,904 Research and development 193,817 155,805 183,414 Impairment of goodwill — 129,396 — Impairment of long-lived assets 89,974 — — Other operating expenses 37,828 29,536 51,460 Operating loss (68,498) (76,752) (784) Interest expense (58,853) (48,250) (50,151) Loss on debt extinguishment — — (60,238) Foreign exchange and other income/(expense) 46,125 49,860 (13,299) Loss before tax (81,226) (75,142) (124,472) Income tax (benefit) expense (98,876) 11,051 11,198 Losses from equity method investments (104) (53) (148) Net income (loss) $ 17,546 $ (86,246) $ (135,818) 38 Net Revenue by Segment and Geographic Area: The following table presents net revenue by operating segment and geographic region for the years ended December 31, 2023, 2022 and 2021 (in thousands, except for percentages): % Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Cardiopulmonary United States $ 188,299 $ 159,489 $ 154,073 18.1 % 3.5 % Europe (1) 156,606 127,064 134,562 23.2 % (5.6) % Rest of World 244,072 213,761 194,344 14.2 % 10.0 % 588,977 500,314 482,979 17.7 % 3.6 % Neuromodulation United States 407,493 374,542 358,476 8.8 % 4.5 % Europe (1) 57,435 50,291 51,435 14.2 % (2.2) % Rest of World 54,782 52,160 46,261 5.0 % 12.8 % 519,710 476,993 456,172 9.0 % 4.6 % Advanced Circulatory Support United States 39,252 37,527 53,821 4.6 % (30.3) % Europe (1) 751 1,447 1,120 (48.1) % 29.2 % Rest of World 319 327 518 (2.4) % (36.9) % 40,322 39,301 55,459 2.6 % (29.1) % Other Revenue (2) 4,536 5,197 40,755 (12.7) % (87.2) % Totals United States 635,044 571,558 571,299 11.1 % 0.0 % Europe (1) 214,792 178,802 201,524 20.1 % (11.3) % Rest of World 303,709 271,445 262,542 11.9 % 3.4 % Total $ 1,153,545 $ 1,021,805 $ 1,035,365 12.9 % (1.3) % (1) Includes countries in Europe where the Company has a direct sales presence.
Biggest changeBusiness” in this Report. 38 Results of Operations The following table presents LivaNova’s annual consolidated results of operations (in thousands): 2024 2023 2022 Net revenue $ 1,253,437 $ 1,153,545 $ 1,021,805 Cost of sales 382,564 382,295 314,577 Gross profit 870,873 771,250 707,228 Operating expenses: Selling, general, and administrative 526,265 518,129 469,243 Research and development 182,514 193,817 155,805 Impairment of goodwill — — 129,396 Impairment of long-lived assets — 89,974 — Other operating expenses 33,043 37,828 29,536 Operating income (loss) 129,051 (68,498) (76,752) Interest expense (63,070) (58,853) (48,250) Loss on debt extinguishment (25,482) — — Foreign exchange and other income/(expense) 47,811 46,125 49,860 Income (loss) before tax 88,310 (81,226) (75,142) Income tax expense (benefit) 25,058 (98,876) 11,051 Loss from equity method investments (18) (104) (53) Net income (loss) $ 63,234 $ 17,546 $ (86,246) Net Revenue The following table presents net revenue by operating segment and geographic region (in thousands, except for percentages): % Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Cardiopulmonary United States $ 242,463 $ 202,358 $ 171,632 19.8 % 17.9 % Europe (1) 168,024 157,414 128,545 6.7 % 22.5 % Rest of World (1) 273,025 244,340 214,021 11.7 % 14.2 % 683,512 604,112 514,198 13.1 % 17.5 % Neuromodulation United States 441,022 407,493 374,542 8.2 % 8.8 % Europe (1) 54,899 57,435 50,291 (4.4) % 14.2 % Rest of World (1) 58,302 54,782 52,160 6.4 % 5.0 % 554,223 519,710 476,993 6.6 % 9.0 % Other Revenue (2) 15,702 29,723 30,614 (47.2) % (2.9) % Totals United States 695,083 635,044 571,558 9.5 % 11.1 % Europe (1) 220,032 214,792 178,802 2.4 % 20.1 % Rest of World (1) 338,322 303,709 271,445 11.4 % 11.9 % $ 1,253,437 $ 1,153,545 $ 1,021,805 8.7 % 12.9 % 39 (1) “Europe” includes the UK, Germany, France, Italy, the Netherlands, Spain, Belgium, Poland, Sweden, Switzerland, Austria, Norway, Portugal, Finland, and Denmark.
This evidence includes: profitability in the most recent quarters; internal profitability forecasts for the current and next two future years; the 43 amount of deferred tax asset relative to estimated profitability; the potential effects on future profitability from increasing competition, healthcare reforms and overall economic conditions; limitations and potential limitations on the use of LivaNova’s net operating losses due to ownership changes, pursuant to IRC Section 382; and the implementation of prudent and feasible tax planning strategies, if any.
This evidence includes: profitability in the most recent quarters; internal profitability forecasts for the current and next two future years; the amount of deferred tax asset relative to estimated profitability; the potential effects on future profitability from increasing competition, healthcare reforms, and overall economic conditions; limitations and potential limitations on the use of LivaNova’s net operating losses due to ownership changes, pursuant to IRC Section 382; and the implementation of prudent and feasible tax planning strategies, if any.
Long-lived assets held and used are assessed for possible impairment by comparing their carrying values with their associated undiscounted, future cash flows. In 42 order to calculate the impairment charge, LivaNova generally measures fair value by considering sale prices for similar assets, discounted estimated future cash flows using an appropriate discount rate and/or estimated replacement cost.
Long-lived assets held and used are assessed for possible impairment by comparing their carrying values with their associated undiscounted, future cash flows. In order to calculate the impairment charge, LivaNova generally measures fair value by considering sale prices for similar assets, discounted estimated future cash flows using an appropriate discount rate, and/or estimated replacement cost.
Under these agreements, LivaNova agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to agreed-upon notional principal amounts. These interest rate swaps are structured to mirror the payment terms of the underlying loan. The Company’s outstanding interest rate swaps expired on April 6, 2023.
Under these agreements, LivaNova agrees to 46 exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to agreed-upon notional principal amounts. These interest rate swaps are structured to mirror the payment terms of the underlying loan. The Company’s outstanding interest rate swaps expired on April 6, 2023.
LivaNova manages these risks through regular operating and financing activities and, at certain times, derivative financial instruments. Foreign Currency Exchange Rate Risk Due to the global nature of LivaNova’s operations, the Company is exposed to FX fluctuations.
The Company manages these risks through regular operating and financing activities and, at certain times, derivative financial instruments. Foreign Currency Exchange Rate Risk Due to the global nature of LivaNova’s operations, the Company is exposed to FX fluctuations.
Additionally, the Company determined that it was more likely than not that the carrying amounts associated with the ACS segment, including the long-lived assets (asset group), may not be recoverable.
The Company determined that it was more likely than not that the carrying amounts associated with the ACS segment, including the long-lived assets (asset group), may not be recoverable.
For additional information, please refer to “Note 17. Income Taxes” in LivaNova’s consolidated financial statements included in this Report. Legal and Other Contingencies Provisions for legal contingencies are recognized when the Company determines it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment.
For additional information, please refer to “Note 15. Income Taxes” in LivaNova’s consolidated financial statements included in this Report. Legal and Other Contingencies Provisions for legal contingencies are recognized when the Company determines it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment.
The fair value of contingent consideration is determined based on the consideration expected to be transferred based on estimated future cash flows of the acquired business, discounted to present value in accordance with accepted valuation methodologies. For additional information, please refer to “Note 9. Fair Value Measurements” in LivaNova’s consolidated financial statements included in this Report.
The fair value of contingent consideration is determined based on the consideration expected to be transferred based on estimated future cash flows of the acquired business, discounted to present value in accordance with accepted valuation methodologies. For additional information, please refer to “Note 8. Fair Value Measurements” in LivaNova’s consolidated financial statements included in this Report.
Liquidity and Capital Resources Based on LivaNova’s current business plan, the Company believes that its sources of liquidity, which primarily consist of cash and cash equivalents, future cash generated from operations, and available borrowings under its revolving credit facility, will be sufficient to fund its uses of liquidity, primarily consisting of day-to-day operating expenses, working capital, capital expenditures, acquisition earn-outs and debt service requirements over the twelve-month period beginning from the issuance date of this Report.
Liquidity and Capital Resources Based on LivaNova’s current business plan, the Company believes that its sources of liquidity, which primarily consist of cash and cash equivalents, future cash generated from operations, and available borrowings under its revolving credit facility, will be sufficient to fund its uses of liquidity, primarily consisting of day-to-day operating expenses, working capital, capital expenditures, acquisition earnouts, and debt service requirements over the twelve-month period beginning from the issuance date of this Report.
Estimates are used in assessing the likelihood of a loss being incurred and when determining a reasonable estimate of the loss for each claim. Final settlement amounts may be materially different from the provision recorded. For additional information, please refer to “Note 13. Commitments and Contingencies” in LivaNova’s consolidated financial statements included in this Report.
Estimates are used in assessing the likelihood of a loss being incurred and when determining a reasonable estimate of the loss for each claim. Final settlement 43 amounts may be materially different from the provision recorded. For additional information, please refer to “Note 11. Commitments and Contingencies” in LivaNova’s consolidated financial statements included in this Report.
These data further support consideration of VNS Therapy for people who are not responding to ASMs and those unsuitable or unwilling to undergo surgery. Depression and Obstructive Sleep Apnea A discussion of Depression and Obstructive Sleep Apnea are incorporated by reference to the sections titled “Depression” and “Obstructive Sleep Apnea,” respectively, included within “Part I., Item 1.
These data further support consideration of VNS Therapy for people who are not responding to ASMs and those unsuitable or unwilling to undergo surgery. Depression and Obstructive Sleep Apnea Discussions of Depression and Obstructive Sleep Apnea are incorporated by reference to the sections titled “Depression” and “Obstructive Sleep Apnea,” respectively, included within “Part I, Item 1.
LivaNova files federal and local tax returns in many jurisdictions throughout the world and is subject to income tax examinations for its fiscal year 2018 and subsequent years, with certain exceptions.
LivaNova files federal and local tax returns in many jurisdictions throughout the world and is subject to income tax examinations for its fiscal year 2019 and subsequent years, with certain exceptions.
Contingent Consideration Liabilities Contingent consideration liabilities result from acquisition agreements that include potential future payment of consideration that is contingent upon the achievement of performance milestones and/or sales-based earn-outs. Contingent consideration liabilities are measured at fair value each reporting period, the determination of which requires significant judgments and estimates.
Contingent Consideration Liabilities Contingent consideration liabilities result from acquisition agreements that include potential future payment of consideration that is contingent upon the achievement of performance milestones and/or sales-based earnouts. Contingent consideration liabilities are measured at fair value each reporting period, the determination of which requires significant judgments and estimates.
New Accounting Pronouncements For a discussion of new accounting standards and disclosure requirements, please refer to “Note 21. New Accounting Pronouncements” in LivaNova’s consolidated financial statements included in this Report.
New Accounting Pronouncements For a discussion of new accounting standards and disclosure requirements, please refer to “Note 19. New Accounting Pronouncements” in LivaNova’s consolidated financial statements included in this Report.
To prepare LivaNova’s consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that may affect the reported amounts of the Company’s assets and liabilities, the disclosure of contingent liabilities as of the date of its consolidated financial statements and the reported amounts of its revenue and expenses during the reporting period.
To prepare LivaNova’s consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that may affect the reported amounts of the Company’s assets and liabilities, the disclosure of contingent liabilities as of the date of its consolidated financial statements, and the reported amounts of its revenue and expenses during the reporting period.
Although LivaNova does not currently foresee a concentrated credit risk associated with these receivables, repayment is dependent on the financial stability of these industry sectors and the respective countries’ national economies and healthcare systems. Factors Affecting Future Operating Results and Share Price The material factors affecting LivaNova’s future operating results and share prices are disclosed in “Item 1A.
Although LivaNova does not currently foresee a concentrated credit risk associated with these receivables, repayment is dependent on the financial stability of these industry sectors and the respective countries’ national economies and healthcare systems. Factors Affecting Future Operating Results and Share Price The material factors affecting LivaNova’s future operating results and share prices are disclosed in “Part I, Item 1A.
The Company uses historical volatility and implied volatility from options traded to determine expected stock price volatility which is an unobservable input that is significant to the valuation. For additional information, please refer to “Note 9. Fair Value Measurements” and “Note 10. Financing Arrangements” in LivaNova’s consolidated financial statements included in this Report.
The Company uses historical volatility and implied volatility from options traded to determine expected stock price volatility, which is an unobservable input that is significant to the valuations. For additional information, please refer to “Note 8. Fair Value Measurements” and “Note 9. Financing Arrangements” in LivaNova’s consolidated financial statements included in this Report.
LivaNova regularly assesses the likely outcomes of its tax positions in order to determine the appropriateness of the Company’s reserves; however, the actual outcome of an audit can be significantly different than LivaNova’s expectations, which could have a material impact on the Company’s tax provision.
LivaNova regularly assesses the likely outcomes of its tax positions to determine the appropriateness of the Company’s reserves; however, the actual outcome of an audit can be significantly different from LivaNova’s expectations, which could have a material impact on the Company’s tax provision.
The capped call derivative is measured at fair value using the Black-Scholes model utilizing observable and unobservable market data, including stock price, remaining contractual term, expected volatility, risk-free interest rate and expected dividend yield, as applicable.
The capped call derivatives are measured at fair value using the Black-Scholes model utilizing observable and unobservable market data, including stock price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield, as applicable.
From time to time, LivaNova may access debt and/or equity markets to optimize its capital structure, raise additional capital, or increase liquidity as necessary. LivaNova’s liquidity could be adversely affected by the factors affecting future operating results, including those referred to in “Item 1A. Risk Factors” above and by the contingencies referred to in “Note 13.
From time to time, LivaNova may access debt and/or equity markets to optimize its capital structure, raise additional capital, or increase liquidity, as necessary. LivaNova’s liquidity could be adversely affected by the factors affecting future operating results, including those referred to in “Part I, Item 1A. Risk Factors” above and by the contingencies referred to in “Note 11.
In January 2022, the Journal of Neurology published a meta-analysis and systematic review that demonstrated benefits of VNS Therapy in adults with DRE that demonstrates that seizure frequency improves without an increase in the rate of serious adverse events or discontinuations.
In January 2022, the Journal of Neurology published a meta-analysis and systematic review that demonstrated the benefits of VNS Therapy in adults with DRE and improvements in seizure frequency without an increase in the rate of serious adverse events or discontinuations for that population.
Historically, LivaNova has entered into interest rate derivative instruments designated as cash flow hedges to manage the exposure to interest rate movements and to reduce the risk of increased borrowing costs by converting floating-rate debt into fixed-rate debt.
Interest Rate Risk LivaNova is subject to interest rate risk on its investments and debt. Historically, LivaNova has entered into interest rate derivative instruments designated as cash flow hedges to manage the exposure to interest rate movements and to reduce the risk of increased borrowing costs by converting floating-rate debt into fixed-rate debt.
Costs and Expenses The following table presents costs and expenses as a percentage of net revenue for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Cost of sales 33.1 % 30.8 % 31.8 % Selling, general and administrative 44.9 % 45.9 % 45.6 % Research and development 16.8 % 15.2 % 17.7 % Impairment of goodwill — % 12.7 % — % Impairment of long-lived assets 7.8 % — % — % Other operating expenses 3.3 % 2.9 % 5.0 % Cost of Sales Cost of sales consists primarily of direct labor, allocated manufacturing overhead, and the acquisition cost of raw materials, and components.
Cost of Sales and Expenses The following table presents costs and expenses as a percentage of net revenue: 2024 2023 2022 Cost of sales 30.5 % 33.1 % 30.8 % Selling, general, and administrative 42.0 % 44.9 % 45.9 % Research and development 14.6 % 16.8 % 15.2 % Impairment of goodwill — % — % 12.7 % Impairment of long-lived assets — % 7.8 % — % Other operating expenses 2.6 % 3.3 % 2.9 % Cost of Sales Cost of sales consists primarily of direct labor, allocated manufacturing overhead, and the acquisition of raw materials and components.
Income Taxes” in LivaNova’s consolidated financial statements included in this Report. Critical Accounting Estimates LivaNova has adopted various accounting policies to prepare the consolidated financial statements in accordance with US GAAP. The Company’s most significant accounting policies are disclosed in “Note 2. Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies” and “Note 3.
Critical Accounting Estimates LivaNova has adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. The Company’s most significant accounting policies are disclosed in “Note 2. Basis of Presentation, Use of Accounting Estimates, and Significant Accounting Policies” and “Note 3. Revenue Recognition” in LivaNova’s consolidated financial statements included in this Report.
Foreign exchange and other income/(expense) was income of $46.1 million and $49.9 million for the years ended December 31, 2023 and 2022, respectively. For further details, refer to “Note 20. Supplemental Financial Information” in LivaNova’s consolidated financial statements included in this Report. Income Taxes LivaNova PLC is resident in the UK.
Foreign exchange and other income/(expense) was income of $47.8 million and $46.1 million for the years ended December 31, 2024 and 2023, respectively. For further details, refer to “Note 18. Supplemental Financial Information” in LivaNova’s consolidated financial statements included in this Report. Income Taxes LivaNova PLC is resident in the UK.
LivaNova elected not to renew the interest rate swaps as interest expense associated with the Initial Term Facility is principally offset by holding a significant portion of the Initial Term Facility in a depository account, which earns a floating rate of interest.
LivaNova elected not to renew the interest rate swaps. Interest expense associated with the Initial Term Facility is principally offset by holding proceeds from the Term Facilities in a depository account, which earns a floating rate of interest.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations located in LivaNova ’ s Annual Report on Form 10-K for the year ended December 31, 2022 , filed on February 27, 2023, for reference to discussion of 2021, the earliest of the three fiscal years presented.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations located in LivaNova’s Annual Report on Form 10-K for the year ended December 31, 2023 , filed on February 29, 2024, for reference to discussion of 2022, the earliest of the three fiscal years presented.
During the year ended December 31, 2023, LivaNova received $50.0 million in proceeds from the issuance of long-term debt and repaid $21.6 million in long-term debt. During the year ended December 31, 2022, LivaNova received $507.5 million in proceeds from the issuance of long-term debt and repaid $223.5 million in long-term debt.
During the year ended December 31, 2024, LivaNova received $335.5 million in proceeds from the issuance of long-term debt and repaid $247.5 million in long-term debt. During the year ended December 31, 2023, LivaNova received $50.0 million in proceeds from the issuance of long-term debt and repaid $21.6 million in long-term debt.
While LivaNova believes that its reserves for credit losses are adequate, essentially all of the Company’s trade receivables are concentrated in the hospital and healthcare sectors worldwide, and accordingly, LivaNova is exposed to their respective business, economic and country-specific variables.
In addition, LivaNova has historically had strong collections and minimal write-offs. While LivaNova believes that its reserves for credit losses are adequate, essentially all of the Company’s trade receivables are concentrated in the hospital and healthcare sectors worldwide, and accordingly, LivaNova is exposed to their respective business, economic, and country-specific variables.
Description of the Business LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through innovative medical technologies that deliver life-changing improvements.
Description of the Business LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets, and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through medical technologies, delivering life-changing solutions in select neurological and cardiac conditions.
The embedded exchange feature derivative is measured at fair value using a binomial lattice model and estimated discounted cash flows that utilize observable and unobservable market data.
The embedded derivatives are measured at fair value using a binomial lattice model and estimated discounted cash flows that utilize observable and unobservable market data.
Neuromodulation segment income for the year ended December 31, 2023 was $153.4 million compared to $172.8 million for the year ended December 31, 2022.
Neuromodulation segment income for the year ended December 31, 2024 was $195.3 million compared to $153.4 million for the year ended December 31, 2023.
Financing Arrangements” in LivaNova’s consolidated financial statements included in this Report.
Financing Arrangements” in the consolidated financial statements in this Report.
Financing Arrangements” in LivaNova’s consolidated financial statements included in this Report. 41 Foreign Exchange and Other Income/(Expense) Foreign exchange and other income/(expense) consists primarily of gains and losses arising from transactions denominated in a currency different from an entity’s functional currency, FX derivative gains and losses, and changes in the fair value of embedded and capped call derivatives.
Foreign Exchange and Other Income/(Expense) Foreign exchange and other income/(expense) consists primarily of gains and losses arising from transactions denominated in a currency different from an entity’s functional currency, FX derivative gains and losses, interest income, changes in the fair value of embedded and capped call derivatives, and gains and losses associated with LivaNova’s investments.
Income Taxes LivaNova is a UK corporation, and operates through the Company’s various subsidiaries in a number of countries throughout the world. LivaNova’s provision for income taxes is based on the tax laws and rates applicable in the jurisdictions in which the Company operates and earns income. LivaNova uses significant judgment and estimates in accounting for the Company’s income taxes.
LivaNova’s provision for income taxes is based on the tax laws and rates applicable in the jurisdictions in which the Company operates and earns income. LivaNova uses significant judgment and estimates in accounting for the Company’s income taxes.
Each reporting period, LivaNova reviews if there are circumstances that warrant an evaluation of the carrying amounts of LivaNova’s property and equipment and its finite-lived intangible assets to determine whether such carrying amounts continue to be recoverable.
Indefinite-lived intangible assets other than goodwill are composed of IPR&D assets acquired in acquisitions. 42 Each reporting period, LivaNova determines whether there are circumstances that warrant an evaluation of the carrying amounts of LivaNova’s property and equipment and its finite-lived intangible assets to determine whether such carrying amounts continue to be recoverable.
If interest rates associated with LivaNova’s variable-rate financing arrangements were to increase/(decrease) by 100 basis points, the effect on interest expense within LivaNova’s consolidated statement of income (loss) would be an increase/(decrease) of approximately $3.5 million, respectively.
If interest rates associated with LivaNova’s variable-rate financing arrangements as of December 31, 2024 were to increase/(decrease) by 100 basis points, the effect on interest expense within LivaNova’s consolidated statements of income (loss) would be an increase/(decrease) of $3.2 million, respectively, offset by an increase/(decrease) in interest income from amounts held in variable-rate depository accounts.
Embedded Exchange Feature and Capped Call Derivatives In June 2020, the Company issued the Notes and entered into related capped call transactions. The Notes include an embedded exchange feature that is bifurcated from the Notes.
Embedded and Capped Call Derivatives In June 2020 and March 2024, the Company issued the 2025 Notes and 2029 Notes, respectively, and entered into related capped call transactions. The 2025 Notes and 2029 Notes include embedded derivatives that are bifurcated from the 2025 Notes and 2029 Notes.
Cost of sales as a percentage of net revenue was 33.1% for the year ended December 31, 2023, an increase of 2.3 percentage points compared to the year ended December 31, 2022.
Cost of sales as a percentage of net revenue was 30.5% for the year ended December 31, 2024, a decrease of 2.6 percentage points compared to the year ended December 31, 2023.
LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.” Macroeconomic Environment The current macroeconomic environment, including foreign exchange volatility, inflationary pressures, geopolitical instability, and supply chain challenges, has impacted and may continue to impact LivaNova’s business and profitability.
LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.” Macroeconomic Environment The current macroeconomic environment, including FX volatility, inflationary pressures, geopolitical instability, and supply chain challenges, has impacted and may continue to impact LivaNova’s business, results of operations, cash flows, and financial condition. Furthermore, LivaNova continues to experience logistical, capacity, and labor constraints.
This risk is limited due to the large number of customers and their dispersion across a number of geographic areas, as well as LivaNova’s efforts to control its exposure to credit risk by monitoring its receivables and the use of credit approvals and credit limits. In addition, LivaNova has historically had strong collections and minimal write-offs.
Concentration of Credit Risk LivaNova’s trade accounts receivable represents potential concentrations of credit risk. This risk is limited due to the large number of customers and their dispersion across a number of geographic areas, as well as LivaNova’s efforts to control its exposure to credit risk by monitoring its receivables and the use of credit approvals and credit limits.
R&D expenses as a percentage of net revenue was 16.8% for the year ended December 31, 2023, an increase of 1.6 percentage points compared to the year ended December 31, 2022.
R&D expenses as a percentage of net revenue were 14.6% for the year ended December 31, 2024, a decrease of 2.2 percentage points compared to the year ended December 31, 2023.
Other operating expenses as a percentage of net revenue was 3.3% for the year ended December 31, 2023, an increase of 0.4 percentage points compared to the year ended December 31, 2022.
Other operating expenses as a percentage of net revenue were 2.6% for the year ended December 31, 2024, a decrease of 0.7 percentage points compared to the year ended December 31, 2023.
Peer reviewed evidence published in 2021 and 2022 continues to confirm the safety, efficacy and cost effectiveness of VNS Therapy in both the adult and pediatric patient population.
LivaNova also supports studies for the Company’s product development efforts and to build clinical evidence for the VNS Therapy System. Peer reviewed evidence published in 2021 and 2022 continues to confirm the safety, efficacy, and cost effectiveness of VNS Therapy in both the adult and pediatric patient populations.
The total amount of unrecognized tax benefit, as of December 31, 2023, if recognized, would reduce LivaNova’s income tax expense by approximately $5.4 million. LivaNova periodically assesses the recoverability of its deferred tax assets by considering whether it is more-likely-than-not that some or all of the actual benefit of those assets will be realized.
The Company has accrued $15.2 million, of which $14.1 million is unrecognized tax benefit, as of December 31, 2024. LivaNova periodically assesses the recoverability of its deferred tax assets by considering whether it is more likely than not that some or all of the actual benefit of those assets will be realized.
Epilepsy LivaNova continues to make investments in R&D focused on improving the VNS Therapy System with an enhanced pulse generator, lead and programming software, and LivaNova is developing new products that provide additional features and functionality. LivaNova also supports studies for the Company’s product development efforts and to build clinical evidence for the VNS Therapy System.
LivaNova’s Neuromodulation segment also includes costs associated with the Company’s former heart failure program, which the Company wound down during 2023. Epilepsy LivaNova continues to make investments in R&D focused on improving the VNS Therapy System with an enhanced pulse generator, lead, and programming software, and LivaNova is developing new products that provide additional features and functionality.
Debt and Capital LivaNova’s capital structure consists of debt and equity. As of December 31, 2023, LivaNova’s total debt of $586.7 million was 45.9% of its total equity of $1,277.6 million. As of December 31, 2022, LivaNova’s total debt of $541.5 million was 44.8% of its total equity of $1,207.6 million.
As of December 31, 2024, LivaNova’s total debt of $627.6 million was 47.5% of its total equity of $1,320.3 million. As of December 31, 2023, LivaNova’s total debt of $586.7 million was 45.9% of its total equity of $1,277.6 million.
Cash Flows The following table presents net cash and cash equivalents provided by (used in) operating, investing and financing activities and the net increase (decrease) in the balance of cash and cash equivalents for the years ended December 31, 2023, 2022 and 2021 (in thousands): 2023 2022 2021 Operating activities $ 74,914 $ 69,921 $ 102,544 Investing activities (40,331) (38,414) 36,904 Financing activities 21,484 280,130 (181,483) Effect of exchange rate changes on cash and cash equivalents 6,187 (4,011) (2,805) Net increase (decrease) $ 62,254 $ 307,626 $ (44,840) Operating Activities Cash provided by operating activities for the year ended December 31, 2023 increased $5.0 million compared to the prior year primarily resulting from improvements in working capital and an increase in net income adjusted for non-cash items, partially offset by an increase in 3T Heater-Cooler litigation payments of $24.8 million.
Financing Arrangements” in the consolidated financial statements in this Report. 45 Cash Flows The following table presents net cash, cash equivalents, and restricted cash provided by (used in) operating, investing, and financing activities and the net increase in the balance of cash, cash equivalents, and restricted cash (in thousands): 2024 2023 2022 Operating activities $ 183,038 $ 74,914 $ 69,921 Investing activities (48,160) (40,331) (38,414) Financing activities 18,551 21,484 280,130 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (7,745) 6,187 (4,011) Net increase in cash, cash equivalents, and restricted cash $ 145,684 $ 62,254 $ 307,626 Operating Activities Cash provided by operating activities for the year ended December 31, 2024 increased $108.1 million, compared to the prior year, primarily due to (i) an increase in net income adjusted for non-cash items of $72.2 million, (ii) an increase in customer collections, (iii) reduced cash outflows for inventories, and (iv) a decrease in 3T Heater-Cooler litigation settlement payments of $36.2 million.
LivaNova performed a quantitative impairment assessment for its Cardiopulmonary and Neuromodulation reporting units as of October 1, 2023. The assessment was performed using management’s current estimate of future cash flows. LivaNova concluded that the fair value of its Cardiopulmonary and Neuromodulation reporting units exceeded their carrying value by 23% and 528%, respectively.
LivaNova performed a quantitative goodwill impairment assessment for its Cardiopulmonary and Neuromodulation reporting units as of October 1, 2024, including sensitivity analyses of key assumptions. The assessment was conducted using management’s current estimate of future cash flows.
Impairments of Goodwill and Long-Lived Assets LivaNova tests goodwill for impairment on an annual basis on October 1, or when events or changes in circumstances indicate that a potential impairment exists. On January 5, 2024, the Board of Directors of LivaNova PLC approved the 2024 Restructuring Plan to enhance the Company’s focus on its core Cardiopulmonary and Neuromodulation segments.
Impairment of Long-Lived Assets LivaNova tests goodwill and indefinite-lived intangible assets for impairment on an annual basis on October 1, or when events or changes in circumstances indicate that a potential impairment exists.
During the first quarter of 2024, the Company reorganized its operating and reporting structure upon initiating the 2024 Restructuring Plan and transitioned all ACS standalone cannulae and accessories, including ProtekDuo and transseptal (TandemHeart) cannulae, into its Cardiopulmonary segment. Operations for other ACS products, including LifeSPARC and Hemolung systems, will be discontinued by the end of 2024.
Prior to 2024, LivaNova operated through three segments: Cardiopulmonary, Neuromodulation, and ACS. During the first quarter of 2024, the Company reorganized its operating and reporting structure upon initiating the 2024 Restructuring Plan. This involved transitioning all ACS standalone cannulae and accessories, including ProtekDuo and transseptal (TandemHeart) cannulae, into its Cardiopulmonary segment.
LivaNova maintains insurance, including cyber insurance, which is subject to certain retentions and policy limitations that may serve to limit the amount that the insurers may pay the Company when the Company makes a claim.
Commitments and Contingencies” in LivaNova’s consolidated financial statements in this Report. LivaNova maintains insurance, including cyber insurance, which is subject to certain retentions and policy limitations that will likely limit the amount that the insurers may reimburse the Company.
Revenue Recognition” in LivaNova’s consolidated financial statements included in this Report.
Commitments and Contingencies” in LivaNova’s consolidated financial statements in this Report.
Legally enforceable master netting agreements reduce credit risk by providing protection in bankruptcy in certain circumstances and generally permitting the closeout and netting of transactions with the same counterparty upon the occurrence of certain events. 47 Interest Rate Risk LivaNova is subject to interest rate risk on its investments and debt.
The terms of the ISDA agreements may also include credit support requirements, cross-default provisions, termination events, and set-off provisions. Legally enforceable master netting agreements reduce credit risk by providing protection in bankruptcy in certain circumstances and generally permitting the closeout and netting of transactions with the same counterparty upon the occurrence of certain events.
For the years ended December 31, 2021, “Other” also includes the results of LivaNova’s Heart Valve business, which was divested on June 1, 2021. 35 Cardiopulmonary LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing and selling of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories.
Cardiopulmonary LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing, and sale of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae, and other related accessories.
Customer relationships consist of relationships with hospitals and surgeons in the countries where LivaNova operates. Indefinite-lived intangible assets other than goodwill are composed of IPR&D assets acquired in acquisitions.
Customer relationships consist of relationships with hospitals and surgeons in the countries where LivaNova operates.
Financing Activities Cash provided by financing activities during the year ended December 31, 2023 decreased $258.6 million compared to the prior year. The decrease was primarily due to a reduction in proceeds from net long and short-term debt borrowings and repayments of $257.5 million.
Financing Activities Cash provided by financing activities during the year ended December 31, 2024 decreased $2.9 million, compared to the prior year, primarily due to payment of the ALung contingent consideration arrangement of $13.8 million during the year ended December 31, 2024, partially offset by an increase in proceeds from net debt borrowings and repayments of $5.7 million.
Investing Activities Cash used in investing activities during the year ended December 31, 2023 increased $1.9 million compared to the prior year largely due to increases in purchases of property, plant and equipment and investments of $8.5 million and $3.6 million, respectively, partially offset by $8.9 million paid during the year ended December 31, 2022 associated with the acquisition of ALung.
Investing Activities Cash used in investing activities during the year ended December 31, 2024 increased $7.8 million, compared to the prior year, primarily due to an increase in purchases of property, plant, and equipment of $12.1 million primarily related to purchases and development of internal-use software, partially offset by a decrease in purchases of equity investments of $5.4 million.
Cardiopulmonary Cardiopulmonary net revenue for the year ended December 31, 2023 increased 17.7% to $589.0 million compared to the year ended December 31, 2022 with growth across all regions, driven by increased HLM sales, including from Essenz Perfusion System installations, and strong oxygenator demand.
Geographic and Segment Information” in LivaNova’s consolidated financial statements included in this Report. Cardiopulmonary Cardiopulmonary net revenue for the year ended December 31, 2024 increased 13.1% to $683.5 million compared to the year ended December 31, 2023, with growth across all regions, driven by strong consumables demand and Essenz Perfusion System sales.
The Company continues to respond to such challenges, and while LivaNova has business continuity plans in place, the impact of the ongoing challenges the Company is navigating, along with their potential escalation, may adversely affect its business. For further discussion on these macroeconomic pressures and potential implications, refer to “Item 1A. Risk Factors” of this Report.
However, to date, the Company’s supply of raw materials and the production and distribution of finished products have not been materially affected. The Company continues to respond to such challenges, and while LivaNova has business continuity plans in place, the impact of the ongoing challenges the Company is navigating, along with their potential escalation, may adversely affect its business.
Neuromodulation LivaNova’s Neuromodulation segment is engaged in the design, development, manufacture, marketing and selling of devices that deliver neuromodulation therapy for treating DRE and DTD. It is also engaged in the development and management of clinical testing of LivaNova’s aura6000 System for treating OSA.
Commitments and Contingencies: Product Liability Litigation” in the consolidated financial statements included in this Report. Neuromodulation LivaNova’s Neuromodulation segment is engaged in the design, development, manufacture, marketing, and sale of devices that deliver neuromodulation therapy for treating DRE and DTD.
The increase was primarily due to an increase in the litigation provision related to LivaNova’s 3T Heater-Cooler device of $12.7 million, partially offset by a reduction in restructuring expense of $5.7 million. For additional information, please refer to “Note 13. Commitments and Contingencies” and “Note 6. Restructuring” in LivaNova’s consolidated financial statements included in this Report.
These decreases were partially offset by an increase in restructuring expense of $12.4 million resulting from the 2024 Restructuring Plan. For additional information, refer to “Note 4. Restructuring” and “Note 11. Commitments and Contingencies” in the consolidated financial statements in this Report.
As such, LivaNova recorded impairments of the following long-lived assets during the year ended December 31, 2023, included within impairment of long-lived assets on its consolidated statements of income (loss) (in thousands): 2023 Intangible assets: Developed technology $ 78,067 Trade names 7,117 Property, plant and equipment 3,894 Operating lease assets 896 Total impairment of long-lived assets $ 89,974 In connection with the 2024 Restructuring Plan, LivaNova expects to incur pre-tax restructuring charges in the range of approximately $15 million to $20 million.
As such, LivaNova recorded impairments of the following long-lived assets during the year ended December 31, 2023 (in thousands): 2023 Intangible assets: Developed technology $ 78,067 Trade names 7,117 Property, plant, and equipment 3,894 Operating lease assets 896 $ 89,974 Other Operating Expenses Other operating expenses primarily consist of the provision for litigation involving LivaNova’s 3T Heater-Cooler device, the Saluggia site remediation provision, and restructuring expense.
The increase in segment income was primarily due to the increase in net revenue, as described above, partially offset by an increase in sales and marketing expense associated with the launch of Essenz, as well as a $12.7 million increase in the litigation provision related to LivaNova’s 3T Heater-Cooler device. 39 Neuromodulation Neuromodulation net revenue for the year ended December 31, 2023 increased 9.0% to $519.7 million compared to the year ended December 31, 2022 with growth across all regions, including new and replacement implants in the US region.
Cardiopulmonary segment income for the year ended December 31, 2024 was $76.8 million, compared to $26.4 million for the year ended December 31, 2023. The increase in segment income was primarily due to an increase in net revenue, as described above, as well as a decrease in the litigation provision related to LivaNova’s 3T Heater-Cooler device of $14.8 million.
The increase was primarily due to the net impact of the change in fair value of sales-based contingent consideration arrangements totaling $14.2 million as well as an inventory obsolescence adjustment of $12.6 million during the year ended December 31, 2023 associated with the wind down of LivaNova’s ACS segment.
The decrease was primarily due to an inventory obsolescence adjustment of $12.6 million during the year ended December 31, 2023 associated with the wind down of LivaNova’s ACS segment, as well as a decrease in amortization resulting from the impairment of the ACS segment’s developed technology intangible asset in 2023. 40 Selling, General, and Administrative Expense SG&A expenses are comprised of sales, marketing, general, and administrative activities.
LivaNova’s effective income tax rate was (121.7%) and 14.7% for the years ended December 31, 2023 and 2022, respectively.
The Company considers all available evidence (both positive and negative) in determining whether a valuation allowance is required. LivaNova’s effective income tax rate was 28.4% and 121.7% for the years ended December 31, 2024 and 2023, respectively.
The following table presents selected financial information related to LivaNova’s liquidity as of December 31, 2023 and 2022 (in thousands): 2023 2022 Available Short-term Liquidity Cash and cash equivalents $ 266,504 $ 214,172 Availability under the 2021 First Lien Credit Agreement 125,000 125,000 Availability under the Delayed Draw Term Facility (1) — 50,000 $ 391,504 $ 389,172 Working Capital Current assets $ 988,158 $ 886,136 Current liabilities 334,983 297,398 $ 653,175 $ 588,738 Debt Obligations Current portion of long-term debt $ 17,484 $ 20,892 Short-term unsecured borrowing arrangements 627 2,542 Current debt obligations 18,111 23,434 Long-term debt obligations 568,543 518,067 Total debt obligations $ 586,654 $ 541,501 (1) On April 6, 2023, LivaNova drew the full $50 million under the Delayed Draw Term Facility to be used for general corporate purposes.
LivaNova’s operating and working capital obligations primarily consist of liabilities arising from the normal course of business, including inventory supply contracts, the future settlement of derivative instruments, and future payments of operating leases, as well as contingent consideration arrangements resulting from acquisitions and obligations associated with legal and other accruals. 44 The following table presents selected financial information related to LivaNova’s liquidity (in thousands): December 31, 2024 2023 Available Short-term Liquidity Cash and cash equivalents $ 428,858 $ 266,504 Availability under the 2021 First Lien Credit Agreement 225,000 125,000 $ 653,858 $ 391,504 Working Capital Current assets $ 1,127,186 $ 988,158 Current liabilities 392,125 334,983 $ 735,061 $ 653,175 Debt Obligations Current portion of long-term debt $ 77,339 $ 17,484 Short-term unsecured borrowing arrangements 665 627 Current debt obligations 78,004 18,111 Long-term debt obligations 549,624 568,543 $ 627,628 $ 586,654 Debt and Capital LivaNova’s capital structure consists of debt and equity.
ACS’s products, which comprise the LifeSPARC and Hemolung systems, and standalone cannulae and accessories, including ProtekDuo and transseptal (TandemHeart) cannulae, simplify temporary extracorporeal cardiopulmonary life support solutions for critically ill patients. On January 5, 2024, the Board of Directors of LivaNova PLC approved the 2024 Restructuring Plan to enhance the Company’s focus on its core Cardiopulmonary and Neuromodulation segments.
On January 5, 2024, the Board of Directors of LivaNova PLC approved the 2024 Restructuring Plan to enhance the Company’s focus on its core Cardiopulmonary and Neuromodulation segments. The main component of the 2024 Restructuring Plan was to wind down the ACS segment, which was substantially completed in 2024.
It includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision making during CPB procedures. In March 2023, LivaNova announced it had received FDA 510(k) clearance for its Essenz HLM, which enabled the commercial launch of Essenz in the US.
In particular, the Cardiopulmonary segment includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision-making during CPB procedures. Information on the Cardiopulmonary segment that could potentially impact LivaNova’s consolidated financial statements and related disclosures is incorporated by reference to “Note 11.
Interest Expense LivaNova incurred interest expense of $58.9 million for the year ended December 31, 2023, compared to $48.3 million for the year ended December 31, 2022. The increase was primarily due to an increase in interest rates and average borrowings, partially offset by reduced amortization of debt issuance costs.
Interest Expense LivaNova incurred interest expense of $63.1 million for the year ended December 31, 2024, compared to $58.9 million for the year ended December 31, 2023.
Compared with the year ended December 31, 2022, the effective tax rate benefit for 2023 was primarily attributable to the release of a $110.8 million UK valuation allowance, and changes in other valuation allowances, partially offset by other discrete items including the impairment of the ACS long-lived assets. For additional information, please refer to “Note 17.
Compared with the year ended December 31, 2023, the change in the effective tax rate for 2024 was primarily attributable to changes in the mix of taxable income in various jurisdictions, non-deductible interest and premiums, and changes in tax valuation allowances. For additional information, please refer to “Note 15. Income Taxes” in LivaNova’s consolidated financial statements included in this Report.
Cybersecurity Incident As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems. Promptly after detecting the issue, LivaNova began an investigation with assistance from external cybersecurity experts and coordinated with law enforcement. LivaNova took action to remediate the issue by, for example, taking certain systems offline.
For further discussion on these macroeconomic pressures and potential implications, refer to “Item 1A. Risk Factors” of this Report. Cybersecurity Incident As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems.
SG&A expenses as a percentage of net revenue was 44.9% for the year ended December 31, 2023, a decrease of 1.0 percentage points compared to the year ended December 31, 2022, primarily due to lower stock-based compensation expense of $6.2 million in 2023, driven by the forfeiture of share-based awards associated with the departure of the Company’s former CEO, as well as recovery of legal costs associated with the Caisson litigation of $3.0 million in 2023.
SG&A expenses as a percentage of net revenue were 42.0% for the year ended December 31, 2024, a decrease of 2.9 percentage points compared to the year ended December 31, 2023.
The Company continues to assess the full impact of the cybersecurity event on its business, results of operations, cash flows and financial condition. LivaNova incurred direct costs of approximately $2.6 million during the three and twelve months ended December 31, 2023, in connection with this incident. These costs primarily included external cybersecurity experts, legal counsel, and system restoration costs.
Through December 31, 2024, LivaNova incurred direct costs totaling $11.6 million in connection with this cybersecurity incident, including $9.0 million and $2.6 million during the twelve months ended December 31, 2024 and 2023, respectively.
The decrease in segment income was primarily due to a $29.0 million net unfavorable change in fair value of the sales-based and milestone-based contingent consideration arrangement associated with the acquisition of ImThera, as well as an increase in SG&A expense of $16.3 million driven by an increase in sales and marketing expense, and an increase in R&D expense of $12.5 million primarily associated with the Company’s RECOVER clinical study and OSPREY clinical trial.
The increase in segment income was primarily due to an increase in net revenue, as described above, as well as a net decrease in R&D expense, primarily associated with the winding down of the Company’s heart failure program of $24.8 million.
The following table presents segment income for the years ended December 31, 2023, 2022 and 2021 (in thousands): % Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Cardiopulmonary $ 20,004 $ 11,247 $ (6,429) 77.9 % NM Neuromodulation 153,384 172,775 169,499 (11.2) % 1.9 % Advanced Circulatory Support (117,418) (142,590) 2,195 NM NM Segment income (1) $ 55,970 $ 41,432 $ 165,265 35.1 % (74.9) % (1) For a reconciliation of segment income to consolidated loss before tax, refer to “Note 19.
The following table presents segment income (1) (in thousands, except for percentages): % Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Cardiopulmonary $ 76,848 $ 26,407 $ 17,106 191.0 % 54.4 % Neuromodulation 195,309 153,384 172,775 27.3 % (11.2) % $ 272,157 $ 179,791 $ 189,881 51.4 % (5.3) % (1) For a reconciliation of segment income to consolidated income (loss) before tax, refer to “Note 17.
Therefore, LivaNova concluded that its Cardiopulmonary and Neuromodulation reporting units’ goodwill and indefinite-lived intangible assets were not impaired on the October 1, 2023 test date.
LivaNova concluded that the fair value of its Cardiopulmonary and Neuromodulation reporting units exceeded the carrying value of the respective reporting units and were, therefore, not impaired on the October 1, 2024 test date. Income Taxes LivaNova is a UK corporation and operates through the Company’s various subsidiaries in a number of countries throughout the world.
These increases in expense were partially offset by the increase in net revenue, as described above. Advanced Circulatory Support ACS net revenue for the year ended December 31, 2023 increased 2.6% to $40.3 million compared to the year ended December 31, 2022 driven by an increase in case volumes.
These increases in segment income were partially offset by increases in sales and marketing and R&D expenses. Neuromodulation Neuromodulation net revenue for the year ended December 31, 2024 increased 6.6% to $554.2 million compared to the year ended December 31, 2023, with growth in the Rest of World and U.S. regions, partially offset by a decline in Europe.
These costs do not include business interruption or other non-direct costs, and the Company expects to incur additional costs related to this incident in the future.
The total incurred direct costs primarily included external cybersecurity expert and legal fees, system restoration costs, and a $1.2 million provision related to the class action settlement, and do not include business interruption losses. The Company expects to incur additional costs related to this incident in the future. For further discussion on legal and regulatory developments, refer to “Note 11.
On July 6, 2022, LivaNova and the Borrower entered into Incremental Facility Amendment No. 2, which provides for the Borrower to, among other things, obtain commitments for term loan facilities from a syndicate of lenders in an aggregate principal amount of $350 million consisting of (i) the Initial Term Facility with an aggregate principal amount of $300 million and (ii) the Delayed Draw Term Facility with an additional aggregate principal amount of $50 million.
On March 8, 2024, LivaNova and LivaNova USA entered into Incremental Facility Amendment No. 3, which provides for LivaNova USA to obtain revolving commitments in an aggregate principal amount of $225.0 million. For additional information, refer to “Note 9. Financing Arrangements” in the consolidated financial statements in this Report.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk The information required under 7A. has been incorporated by reference to the information contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report under the section entitled “ Market Risk.”
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required under 7A. has been incorporated by reference to the information contained in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report under the section entitled “Market Risk.”

Other LIVN 10-K year-over-year comparisons