LivaNova Reports First Quarter 2019 Results

LONDON–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24LIVN&src=ctag” target=”_blank”gt;$LIVNlt;/agt;–LivaNova PLC (NASDAQ:LIVN), a market-leading medical technology and
innovation company, today reported results for the quarter ended
March 31, 2019.

For the first quarter of 2019, worldwide sales from continuing
operations were $250.8 million, an increase of 0.2 percent on a reported
basis and an increase of 4.2 percent on a constant-currency basis, as
compared to the same quarter of the previous year. On the basis of U.S.
Generally Accepted Accounting Principles (GAAP), first quarter 2019
diluted loss per share from continuing operations was $0.31. First
quarter 2019 adjusted diluted earnings per share from continuing
operations were $0.54.

“We are disappointed by our first quarter performance in U.S.
Neuromodulation and Perceval^® sales. As a leadership team, we
are implementing a series of actions to counteract the market dynamic
and salesforce retention issues we experienced,” said Damien McDonald,
Chief Executive Officer of LivaNova. “Sales results for first quarter
2019 were strong in Cardiovascular across all regions primarily driven
by double-digit growth in heart-lung machines (HLM), along with strong
growth in oxygenators and Advanced Circulatory Support. Neuromodulation
had another quarter of double-digit growth in Europe and Rest of World.
Profitability in the quarter was impacted by lower than expected sales
in U.S. Neuromodulation.”

First Quarter 2019 Results

Worldwide sales from continuing operations for the first quarter were
$250.8 million, up 4.2 percent on a constant-currency basis compared to
the first quarter of 2018. The following table highlights worldwide
sales for the first quarter of 2019 by business:

• Note: Numbers may not add up precisely due to rounding.
  Constant-currency % change is considered a non-GAAP metric.

All sales growth rates below reflect comparable, constant-currency
growth. Constant-currency growth accounts for the impact from
fluctuations in the various currencies in which the Company operates as
compared to reported growth.

Cardiovascular

Cardiovascular sales, which include Cardiopulmonary products, Heart
Valves and Advanced Circulatory Support, were $155.5 million,
representing a 5.1 percent increase versus the first quarter of 2018.

Sales in Cardiopulmonary products were $121.6 million, representing a
2.6 percent increase versus the first quarter of 2018, despite the
impact of exiting a distribution agreement in Rest of World equating to
$7.8 million. This growth was primarily driven by HLM and oxygenators.

Heart Valves sales for both tissue and mechanical heart valves were
$25.7 million, a decrease of 11.2 percent compared to the first
quarter of 2018.

Advanced Circulatory Support sales, represented by our TandemLife
business, which was acquired in 2018, were $8.2 million in the quarter.

Neuromodulation

Neuromodulation sales were $94.6 million in the first quarter,
representing a 2.3 percent increase versus the first quarter of 2018.
While the growth in Europe and Rest of World was strong, as previously
reported, the U.S. Neuromodulation business experienced weakness in the
market due to a combination of factors, including competitive dynamics
and salesforce turnover.

Financial Performance

On a U.S. GAAP basis, first quarter 2019 operating loss from continuing
operations was $20.8 million primarily impacted by 3T Heater-Cooler^®
litigation and remediation. Adjusted operating income from continuing
operations for the first quarter of 2019 was $32.5 million, a decrease
of 21.7 percent as compared to the first quarter of 2018. This was
primarily due to lower sales in our U.S. Neuromodulation business. We
continue to invest in our strategic portfolio initiatives and commercial
expansion in Advanced Circulatory Support and in Rest of World.

Our adjusted effective tax rate in the quarter was 15.5 percent, an
improvement from 15.7 percent in the first quarter of 2018, as a result
of ongoing tax efforts.

On a U.S. GAAP basis, first quarter 2019 diluted loss per share from
continuing operations was $0.31. First quarter 2019 adjusted diluted
earnings per share from continuing operations were $0.54, a decrease of
20.6 percent as compared to the first quarter of 2018.

2019 Updated Guidance

As a result of the challenges in the U.S. Neuromodulation business,
LivaNova worldwide net sales for full-year 2019 are now expected to grow
between 1 and 3 percent on a constant-currency basis. This
guidance continues to account for the impact of exiting a low-margin
distribution agreement in Canada and one quarter of sales from
TandemLife prior to the deal closing in April 2018. Adjusted diluted
earnings per share from continuing operations for 2019 are now expected
to be in the range of $3.00 to $3.10.

The Company now estimates that adjusted cash flow from operations,
excluding integration, restructuring and litigation payments, will be in
the range of $150 to $170 million for 2019.

“We are committed to overcoming the current hurdles in U.S.
Neuromodulation, investing in advancing our pipeline and implementing
programs to reach new patient populations around the globe. Over the
past two years, we have transformed the LivaNova portfolio with the sale
of our CRM business, investments in our internal R&D portfolio,
including Treatment-Resistant Depression and Chronic Heart Failure, as
well as recent acquisitions. At the same time, we have been able to
expand gross margins, increase R&D to fuel our pipeline, and strengthen
talent and capabilities,” said McDonald. “We believe these efforts will
provide a strong foundation for LivaNova to most effectively serve the
needs of our customers and patients and create quality, long-term value
for our shareholders.”

Webcast and Conference Call Instructions

The Company will host a live audio webcast for interested parties
commencing at 1 p.m. London time (8 a.m. Eastern Time) on Wednesday, May
1 that will be accessible through the Investor Relations section of the
LivaNova corporate website at www.livanova.com.
To listen to the conference call live by telephone, dial (844)
601-5111 (if dialing from within the U.S.) or (647) 253-8650 (if dialing
from outside the U.S.). The conference ID is 7264769.

Within 24 hours of the webcast, a replay will be available under the
“News & Events / Presentations” section of the Investor Relations
portion of the LivaNova website, where it will be archived and
accessible for approximately 12 months.

About LivaNova

LivaNova PLC is a global medical technology company built on nearly five
decades of experience and a relentless commitment to improve the lives
of patients around the world. LivaNova’s advanced technologies and
breakthrough treatments provide meaningful solutions for the benefit of
patients, healthcare professionals and healthcare systems. Headquartered
in London, LivaNova has a presence in more than 100 countries worldwide.
The Company currently employs approximately 4,000 employees.
LivaNova operates as two businesses: Cardiovascular and Neuromodulation,
with operating headquarters in Mirandola (Italy) and Houston (U.S.),
respectively.

For more information, please visit www.livanova.com.

Use of Non-GAAP Financial Measures

In this press release, management has disclosed financial measurements
that present financial information not necessarily in accordance with
GAAP. Company management uses these measurements as aids in monitoring
the Company’s ongoing financial performance from quarter to quarter and
year to year on a regular basis and for benchmarking against other
medical technology companies. Non-GAAP financial measures used by the
Company may be calculated differently from, and therefore may not be
comparable to, similarly titled measures used by other companies. These
non-GAAP financial measures should be considered along with, but not as
alternatives to, the operating performance measure as prescribed by GAAP.

Unless otherwise noted, all sales growth rates in this release reflect
comparable, constant-currency growth. Management believes that referring
to comparable, constant-currency growth is the most useful way to
evaluate the sales performance of LivaNova and to compare the sales
performance of current periods to prior periods on a consistent basis.
Constant-currency growth, a non-GAAP financial measure, measures the
change in sales between current and prior-year periods using average
exchange rates in effect during the applicable prior-year period.

LivaNova calculates forward-looking non-GAAP financial measures based on
internal forecasts that omit certain amounts that would be included in
GAAP financial measures. For example, forward-looking net sales growth
projections are estimated on a constant-currency basis and exclude the
impact of foreign currency fluctuations. Forward-looking non-GAAP
adjusted tax rate and adjusted diluted earnings per share guidance
exclude other items such as, but not limited to, changes in fair value
of contingent consideration arrangements, asset impairment charges and
product remediation costs that would be included in comparable GAAP
financial measures. The most directly comparable GAAP measure for
constant-currency net sales, non-GAAP adjusted tax rate and adjusted
diluted earnings per share are net sales, the effective tax rate, and
earnings per share, respectively. However, non-GAAP financial
adjustments on a forward-looking basis are subject to uncertainty and
variability as they are dependent on many factors, including but not
limited to, the effect of foreign currency exchange fluctuations,
impacts from potential acquisitions or divestitures, gains or losses on
the potential sale of businesses or other assets, restructuring costs,
merger and integration activities, changes in fair value of contingent
consideration arrangements, product remediation costs, asset impairment
charges, and the tax impact of the items above and the tax impact of tax
law changes or other tax matters. Accordingly, reconciliations to the
most directly comparable forward-looking GAAP financial measures are not
available without unreasonable effort.

The Company also believes adjusted financial measures such as adjusted
gross profit percentage; adjusted selling, general and administrative
expense; adjusted research and development expense; adjusted other
operating expenses; adjusted operating income from continued operations;
adjusted income tax expense; adjusted net income from continuing
operations; and adjusted diluted earnings per share, are measures by
which LivaNova generally uses to facilitate management review of the
operational performance of the company, to serve as a basis for
strategic planning, and to assist in the design of compensation
incentive plans. Furthermore, adjusted financial measures allow
investors to evaluate the Company’s core performance for different
periods on a more comparable and consistent basis, and with other
entities in the medical technology industry by adjusting for items that
are not related to the ongoing operations of the Company or incurred in
the ordinary course of business.

Safe Harbor Statement

Certain statements in this press release, other than purely historical
information, are “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, as amended. These statements include, but are not limited to,
LivaNova’s plans, objectives, strategies, financial performance and
outlook, trends, the amount and timing of future cash distributions,
prospects or future events and involve known and unknown risks that are
difficult to predict. As a result, our actual financial results,
performance, achievements or prospects may differ materially from those
expressed or implied by these forward-looking statements. In some cases,
you can identify forward-looking statements by the use of words such as
“may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,”
“believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,”
“intend,” “forecast,” “foresee,” or variations of these terms and
similar expressions, or the negative of these terms or similar
expressions. Such forward-looking statements are necessarily based on
estimates and assumptions that, while considered reasonable by LivaNova
and its management based on their knowledge and understanding of the
business and industry, are inherently uncertain. These statements are
not guarantees of future performance, and stockholders should not place
undue reliance on forward-looking statements. Investors are cautioned
that all such statements involve risks and uncertainties, including
without limitation, statements concerning achieving a stronger future,
driving sustainable growth and value to our shareholders, projected net
sales, adjusted diluted earnings per share, cash flow from operations,
capital expenditures, and depreciation and amortization for 2019,
advancing our growth, driving product launches and funding our equity
investments, executing on our synergy targets and retaining our focus,
energy and discipline as a company, serving the needs of our customers
and patients, and delivering strong value to our shareholders. Important
factors that may cause actual results to differ include, but are not
limited to: (i) the inability of LivaNova to meet expectations regarding
the timing, completion and accounting of tax treatments; (ii)
organizational and governance structure; (iii) reductions in customer
spending, a slowdown in customer payments and changes in customer demand
for products and services; (iv) unanticipated changes relating to
competitive factors in the industries in which LivaNova operates; (v)
the ability to hire and retain key personnel; (vi) the ability to
attract new customers and retain existing customers in the manner
anticipated; (vii) changes in legislation or governmental regulations
affecting LivaNova; (viii) international, national or local economic,
social or political conditions that could adversely affect LivaNova, its
partners or its customers; (ix) conditions in the credit markets; (x)
business and other financial risks inherent to the industries in which
LivaNova operates; (xi) risks associated with assumptions made in
connection with critical accounting estimates and legal proceedings;
(xii) LivaNova’s international operations, which are subject to the
risks of currency fluctuations and foreign exchange controls; (xiii) and
the potential for international unrest, economic downturn or effects of
currencies, tax assessments, tax adjustments, anticipated tax rates, raw
material costs or availability, benefit or retirement plan costs, or
other regulatory compliance costs. The foregoing list of factors is not
exhaustive. You should carefully consider the foregoing factors and the
other risks and uncertainties that affect the Company’s business,
including those described in the “Risk Factors” section of Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and other documents filed from time to time with the United
States Securities and Exchange Commission by LivaNova.

We caution you not to place undue reliance on any forward-looking
statements, which are made only as of the date of this press release.
The Company does not undertake or assume any obligation to update
publicly any of the forward-looking statements in this press release to
reflect actual results, new information or future events, changes in
assumptions or changes in other factors affecting forward-looking
statements, except to the extent required by applicable law. If we
update one or more forward-looking statements, no inference should be
drawn that we will make additional updates with respect to those or
other forward-looking statements.

Contacts

Melissa Farina
Vice President, Investor Relations
Phone:
+1 (281) 228 7262
e-mail: investorrelations@LivaNova.com

Read full story here