LONDON–(BUSINESS WIRE)–#advancedcirculatorysupport–LivaNova PLC (Nasdaq: LIVN), a market-leading medical technology and innovation company, today reported results for the quarter and full year ended December 31, 2021.
For the fourth quarter of 2021, worldwide sales from continuing operations were $270.1 million, an increase of 0.2 percent on a reported basis and 1.8 percent on a constant-currency1 basis, as compared to the same quarter of the previous year. Excluding sales from the Heart Valves business, which was divested effective June 1, 2021, worldwide sales from continuing operations increased by 10.1 percent on a reported basis and 11.8 percent on a constant-currency1 basis for the fourth quarter of 2021 compared to the fourth quarter of 2020. On the basis of U.S. Generally Accepted Accounting Principles (GAAP), fourth quarter 2021 diluted loss per share from continuing operations was $0.10. Fourth quarter 2021 adjusted diluted earnings per share from continuing operations was $0.57.
“Our execution during the fourth quarter delivered results that met or exceeded the high end of full-year guidance,” said Damien McDonald, Chief Executive Officer of LivaNova. “Neuromodulation sales grew across all regions benefiting from replacement procedures, and Cardiopulmonary sales improved year over year, driven by oxygenator sales. We maintain our commitment to realize operational efficiencies and maximize cash flow generation as evidenced by exceeding the high end of guidance for adjusted free cash flow. While we enter 2022 with ongoing COVID-related market headwinds, we remain focused on delivering sales and earnings growth, achieving our pipeline milestones, and improving profitability and cash generation.”
Segment Reporting Change
Effective in the fourth quarter of 2021, LivaNova changed its segment reporting from two to three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory Support (ACS). The change to segregate the Cardiovascular segment into Cardiopulmonary and ACS reflects the way in which the Company internally manages, evaluates performance and allocates resources. This new structure drives further accountability in execution and provides greater transparency to the growth and margin profiles. The segment financial information presented herein reflects these changes for all periods presented.
Fourth Quarter 2021 Results2
The following table summarizes worldwide sales for the fourth quarter of 2021 by segment (in millions):
|
|
Three Months Ended |
|
% Change |
|
Constant- |
||
|
|
2021 |
|
2020 |
|
|
||
Cardiopulmonary |
|
$133.1 |
|
$122.1 |
|
9.0 % |
|
12.0 % |
Neuromodulation |
|
121.6 |
|
109.2 |
|
11.3 % |
|
11.9 % |
Advanced Circulatory Support |
|
13.8 |
|
13.3 |
|
3.9 % |
|
4.0 % |
Other(1) |
|
1.6 |
|
25.0 |
|
(93.7) % |
|
(93.4) % |
Total Net Sales |
|
270.1 |
|
269.6 |
|
0.2 % |
|
1.8 % |
Less: Heart Valves |
|
— |
|
24.2 |
|
N/A |
|
N/A |
Total Net Sales, Excluding Heart Valves |
|
$270.1 |
|
$245.3 |
|
10.1 % |
|
11.8 % |
|
||||||||
(1) Includes the results of the Heart Valves business, which was divested effective June 1, 2021. |
||||||||
|
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.
Cardiopulmonary sales increased 12.0 percent versus the fourth quarter of 2020 with growth across all regions. This growth was primarily driven by oxygenator sales due to an increase in procedure volumes.
Neuromodulation sales increased 11.9 percent versus the fourth quarter of 2020. This increase was driven by replacement implants as well as improving market dynamics across all regions.
ACS sales increased 4.0 percent compared to the fourth quarter of 2020 primarily due to increased disposable sales driven by the continued adoption of LifeSPARCTM in the U.S.
Financial Performance
On a U.S. GAAP basis, fourth quarter 2021 operating income from continuing operations was $24.8 million. Adjusted operating income from continuing operations for the fourth quarter of 2021 was $40.2 million, a decrease of 15.1 percent as compared to the fourth quarter of 2020. Improvements in gross profit were offset by higher adjusted selling, general and administrative (SG&A) expenses.
On a U.S. GAAP basis, fourth quarter 2021 effective tax rate was a negative 121.2 percent, as compared to 6.2 percent in the fourth quarter of 2020. The effective tax rate for the fourth quarter of 2021 was impacted by changes in the valuation allowance and in the geographic income mix. The adjusted effective tax rate in the quarter was 13.9 percent, as compared to a negative 1.2 percent in the fourth quarter of 2020, related to changes in the valuation allowance and geographic income mix.
On a U.S. GAAP basis, fourth quarter 2021 diluted loss per share from continuing operations was $0.10. Fourth quarter 2021 adjusted diluted earnings per share from continuing operations was $0.57, as compared to $0.70 per share in the fourth quarter of 2020. Adjusted diluted weighted average shares outstanding for the fourth quarter of 2021 were 54.2 million, as compared to 48.9 million for the fourth quarter of 2020.
Full-Year 2021 Results2
The following table summarizes worldwide sales for the full year 2021 by segment (in millions):
|
|
Twelve Months Ended |
|
% Change |
|
Constant- |
||
|
|
2021 |
|
2020 |
|
|
||
Cardiopulmonary |
|
$483.0 |
|
$446.7 |
|
8.1 % |
|
6.8 % |
Neuromodulation |
|
456.2 |
|
354.4 |
|
28.7 % |
|
27.9 % |
Advanced Circulatory Support |
|
55.5 |
|
42.3 |
|
31.0 % |
|
30.9 % |
Other(1) |
|
40.8 |
|
90.7 |
|
(55.1) % |
|
(57.6) % |
Total Net Sales |
|
1,035.4 |
|
934.2 |
|
10.8 % |
|
9.7 % |
Less: Heart Valves |
|
36.2 |
|
88.0 |
|
N/A |
|
N/A |
Total Net Sales, Excluding Heart Valves |
|
$999.2 |
|
$846.2 |
|
18.1 % |
|
17.1 % |
|
||||||||
(1) Includes the results of the Heart Valves business, which was divested effective June 1, 2021. |
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.
Cardiopulmonary sales increased 6.8 percent versus full-year 2020. For 2021, the sales increase was primarily due to growth in oxygenator sales across all regions and growth in heart-lung machine sales in the U.S. region, offset by a reduction in capital equipment purchases in the Rest of World region.
Neuromodulation sales increased 27.9 percent versus 2020. This increase was driven by replacement implants as well as improving market dynamics across all regions resulting from increased hospital access and patient willingness to return to clinics.
ACS sales increased 30.9 percent compared to 2020 primarily due to increased disposable sales driven by the continued adoption of LifeSPARCin the U.S and new account acquisitions.
Financial Performance
On a U.S. GAAP basis, full-year 2021 operating loss from continuing operations was $0.8 million. Adjusted operating income from continuing operations for full-year 2021 was $154.8 million, an increase of 65.6 percent as compared to full-year 2020. This increase was primarily driven by revenue growth and gross profit improvements, partially offset by an increase in expenses.
On a U.S. GAAP basis, full-year 2021 effective tax rate was a negative 9.0 percent, as compared to 0.3 percent in 2020. The adjusted effective tax rate for full-year 2021 was 12.0 percent, as compared to 1.4 percent in 2020, related to changes in the geographic income mix and valuation allowance.
On a U.S. GAAP basis, full-year 2021 diluted loss per share from continuing operations was $2.68. Full-year 2021 adjusted diluted earnings per share from continuing operations was $2.07, as compared to $1.21 per share for full-year 2020. Adjusted diluted weighted average shares outstanding for full year 2021 were 51.5 million, as compared to 48.8 million for full year 2020.
Full-year 2021 net cash provided by operating activities was $102.5 million. Full-year 2021 adjusted free cash flow was $84.0 million. Cash and cash equivalents totaled $208.0 million at December 31, 2021. Total debt was $239.5 million.
SNIA Litigation Update
On February 21, 2022, the Court of Appeal of Milan notified the Company that it granted the Company a suspension with respect to the payment of damages in the amount of €453.6 million (approximately U.S. $514.4 million) until a decision has been reached on the appeal to the Court of Cassation (the Italian Supreme Court). This suspension is subject to providing a first demand bank surety of €270.0 million (approximately U.S. $306.2 million) within 30 calendar days. The Company believes that it can satisfy the condition of the surety.
2022 Guidance
LivaNova expects worldwide net sales for full-year 2022 to grow between 3 and 5 percent on a constant-currency basis after excluding the impact of the Heart Valves divestiture. Adjusted diluted earnings per share from continuing operations for 2022 are expected to be in the range of $2.50 to $2.80, assuming a share count of 54 million for full-year 2022. In 2022, the Company estimates that adjusted free cash flow will be in the range of $90 to $110 million.
Webcast and Conference Call Instructions
The Company will host a live audiocast for interested parties commencing at 1 p.m. London time (8 a.m. Eastern Time) on Wednesday, February 23, 2022 that will be accessible at www.livanova.com/events. Listeners should log on approximately 10 minutes in advance to ensure proper setup to receive the audiocast. To listen to the conference call by telephone, dial +1 844 200 6205 (if dialing from within the U.S.) or +1 929 526 1599 (if dialing from outside the U.S.). The conference call access code is 167922. Within 24 hours of the audiocast, a replay will be available at www.livanova.com/events, where it will be archived and accessible for approximately 90 days.
1Constant-currency percent change is a non-GAAP metric. For an explanation of this and other non-GAAP metrics used in this release, please see the section entitled “Use of Non-GAAP Financial Measures.” For reconciliations of certain non-GAAP metrics, please see the tables that accompany the press release. |
2During the fourth quarter of 2021, the Company identified and rectified an error related to foreign currency exchange rates utilized to calculate inventory and cost of sales for the years ended December 31, 2017 through 2020 and the nine months ended September 30, 2021. Accordingly, prior period results on a GAAP and non-GAAP basis were revised. See the section entitled “Supplemental Unaudited Revised Financial Information and Non-GAAP Measures.” |
|
About LivaNova
LivaNova PLC is a global medical technology and innovation company built on nearly five decades of experience and a relentless commitment to provide hope for patients and their families through innovative medical technologies, delivering life-changing improvements for both the Head and Heart. Headquartered in London, LivaNova employs approximately 3,000 employees and has a presence in more than 100 countries for the benefit of patients, healthcare professionals and healthcare systems worldwide. 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 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 derivatives and contingent consideration arrangements and asset impairment charges that would be included in comparable GAAP financial measures. The most directly comparable GAAP measure for constant-currency net sales, non-GAAP adjusted tax rates and adjusted diluted earnings per share are net sales, the effective tax rate and earnings per share, respectively. The most directly comparable GAAP measure for adjusted free cash flow is net cash provided by operating activities. 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, the ultimate outcome of legal proceedings, gains or losses on the potential sale of businesses or other assets, restructuring costs, merger and integration activities, changes in fair value of derivatives and contingent consideration arrangements, asset impairment charges and the tax impact of the aforementioned items, tax law changes or other tax matters. Accordingly, forward-looking GAAP financial measures and 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 continuing operations, adjusted segment operating income, adjusted income tax expense, adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations, 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. Additionally, the Company also uses the non-GAAP liquidity measure adjusted free cash flow. 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, appointments, 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, depreciation and amortization, 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, and serving the needs of our customers and patients. Important factors that may cause actual results to differ include, but are not limited to: (i) the severity and duration of the COVID-19 pandemic, its variants and the related impact on our business, financial condition and results of operations; (ii) reductions in customer spending, a slowdown in customer payments and changes in customer demand for products and services; (iii) unanticipated changes relating to competitive factors in the industries in which LivaNova operates; (iv) the ability to hire and retain key personnel; (v) the ability to attract new customers and retain existing customers in the manner anticipated; (vi) changes in legislation or governmental regulations affecting LivaNova; (vii) international, national or local economic, social or political conditions that could adversely affect LivaNova, its partners or its customers; (viii) conditions in the credit markets; (ix) business and other financial risks inherent to the industries in which LivaNova operates; (x) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xi) LivaNova’s international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; (xii) the potential for international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, labor shortages, supplier disruptions, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs; (xiii) the inability of LivaNova to meet expectations regarding the timing, completion and accounting of tax treatments; and (xiv) organizational and governance structure. 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.
LIVANOVA PLC |
||||||||||||||
NET SALES |
||||||||||||||
(U.S. dollars in millions) |
||||||||||||||
|
|
|
Three Months Ended December 31, |
|||||||||||
|
|
|
2021 |
|
2020 |
|
% Change at |
|
% Change at |
|||||
Cardiopulmonary |
|
|
|
|
|
|
|
|
||||||
US |
|
$40.8 |
|
$36.3 |
|
12.3 |
% |
|
12.3 |
% |
||||
Europe |
|
|
36.0 |
|
|
34.6 |
|
3.9 |
% |
|
7.9 |
% |
||
Rest of World |
|
|
56.4 |
|
|
51.2 |
|
10.2 |
% |
|
14.5 |
% |
||
Total |
|
|
133.1 |
|
|
122.1 |
|
9.0 |
% |
|
12.0 |
% |
||
Neuromodulation |
|
|
|
|
|
|
|
|
||||||
US |
|
|
95.7 |
|
|
85.2 |
|
12.3 |
% |
|
12.3 |
% |
||
Europe |
|
|
12.6 |
|
|
11.5 |
|
9.4 |
% |
|
10.9 |
% |
||
Rest of World |
|
|
13.2 |
|
|
12.5 |
|
6.3 |
% |
|
9.6 |
% |
||
Total |
|
|
121.6 |
|
|
109.2 |
|
11.3 |
% |
|
11.9 |
% |
||
Advanced Circulatory Support |
|
|
|
|
|
|
|
|
||||||
US |
|
|
13.4 |
|
|
13.0 |
|
2.7 |
% |
|
2.7 |
% |
||
Europe |
|
|
0.4 |
|
|
0.2 |
|
87.0 |
% |
|
NM |
|
||
Rest of World |
|
|
0.1 |
|
|
0.1 |
|
(3.1 |
) % |
|
NM |
|
||
Total |
|
|
13.8 |
|
|
13.3 |
|
3.9 |
% |
|
4.0 |
% |
||
Other |
|
|
|
|
|
|
|
|
||||||
US |
|
|
— |
|
|
3.5 |
|
(100.0 |
) % |
|
(100.0 |
) % |
||
Europe |
|
|
— |
|
|
8.4 |
|
(100.0 |
) % |
|
(100.0 |
) % |
||
Rest of World |
|
|
1.6 |
|
|
13.1 |
|
(88.0 |
) % |
|
(87.3 |
) % |
||
Total |
|
|
1.6 |
|
|
25.0 |
|
(93.7 |
) % |
|
(93.4 |
) % |
||
Totals |
|
|
|
|
|
|
|
|
||||||
US |
|
|
149.8 |
|
|
138.0 |
|
8.6 |
% |
|
8.6 |
% |
||
Europe |
|
|
48.9 |
|
|
54.8 |
|
(10.6 |
) % |
|
(7.8 |
) % |
||
Rest of World |
|
|
71.3 |
|
|
76.8 |
|
(7.2 |
) % |
|
(3.6 |
) % |
||
Total |
|
$270.1 |
|
$269.6 |
|
0.2 |
% |
|
1.8 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|||||
(1) 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. |
||||||||||||||
* The sales results presented are unaudited. Numbers may not add precisely due to rounding. |
LIVANOVA PLC |
||||||||||||||
NET SALES |
||||||||||||||
(U.S. dollars in millions) |
||||||||||||||
|
|
|
Twelve Months Ended December 31, |
|||||||||||
|
|
|
2021 |
|
2020 |
|
% Change at |
|
% Change at |
|||||
Cardiopulmonary |
|
|
|
|
|
|
|
|
||||||
US |
|
$154.1 |
|
$132.5 |
|
16.2 |
% |
|
16.2 |
% |
||||
Europe |
|
|
134.6 |
|
|
122.1 |
|
10.2 |
% |
|
6.4 |
% |
||
Rest of World |
|
|
194.3 |
|
|
192.1 |
|
1.2 |
% |
|
0.6 |
% |
||
Total |
|
|
483.0 |
|
|
446.7 |
|
8.1 |
% |
|
6.8 |
% |
||
Neuromodulation |
|
|
|
|
|
|
|
|
||||||
US |
|
|
358.5 |
|
|
282.5 |
|
26.9 |
% |
|
26.9 |
% |
||
Europe |
|
|
51.4 |
|
|
39.0 |
|
31.8 |
% |
|
25.1 |
% |
||
Rest of World |
|
|
46.3 |
|
|
32.9 |
|
40.5 |
% |
|
40.3 |
% |
||
Total |
|
|
456.2 |
|
|
354.4 |
|
28.7 |
% |
|
27.9 |
% |
||
Advanced Circulatory Support |
|
|
|
|
|
|
|
|
||||||
US |
|
|
53.8 |
|
|
41.1 |
|
31.0 |
% |
|
31.0 |
% |
||
Europe |
|
|
1.1 |
|
|
1.0 |
|
9.1 |
% |
|
7.0 |
% |
||
Rest of World |
|
|
0.5 |
|
|
0.2 |
|
159.0 |
% |
|
NM |
|
||
Total |
|
|
55.5 |
|
|
42.3 |
|
31.0 |
% |
|
30.9 |
% |
||
Other |
|
|
|
|
|
|
|
|
||||||
US |
|
|
4.9 |
|
|
12.5 |
|
(60.5 |
) % |
|
(60.5 |
) % |
||
Europe |
|
|
14.4 |
|
|
31.3 |
|
(53.9 |
) % |
|
(58.5 |
) % |
||
Rest of World |
|
|
21.4 |
|
|
47.0 |
|
(54.4 |
) % |
|
(56.3 |
) % |
||
Total |
|
|
40.8 |
|
|
90.7 |
|
(55.1 |
) % |
|
(57.6 |
) % |
||
Totals |
|
|
|
|
|
|
|
|
||||||
US |
|
|
571.3 |
|
|
468.6 |
|
21.9 |
% |
|
21.9 |
% |
||
Europe |
|
|
201.5 |
|
|
193.4 |
|
4.2 |
% |
|
(0.3 |
) % |
||
Rest of World |
|
|
262.5 |
|
|
272.2 |
|
(3.6 |
) % |
|
(4.3 |
) % |
||
Total |
|
$1,035.4 |
|
$934.2 |
|
10.8 |
% |
|
9.7 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|||||
(1) 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. |
||||||||||||||
* The sales results presented are unaudited. Numbers may not add precisely due to rounding. |
Contacts
Lindsey Little
Senior Director, Investor Relations
Phone: +1 281 895 2382
e-mail: InvestorRelations@livanova.com
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