Certain statements in this Quarterly Report on Form 10-Q, other than purelystatements of historical information,or current fact, 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 (the “Exchange Act”).Act. 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, ourthe Company’s actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases,Generally, 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. There are a number of risks, uncertainties and other important factors, many of which are beyond ourthe Company’s control, that could cause ourthe Company’s actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, and include, but are not limited to, the following risks and uncertainties summarized below:

Other factors that could cause ourLivaNova’s actual results to differ from our projected results are described in (1) “Part II, Item 1A. Risk Factors” and elsewhere in this and ourthe Company’s other Quarterly Reports on Form 10-Q, (2) our Annual Report onthe Company’s 2022 Form 10-K, for(3) the fiscal year ended December 31, 2021 (“2021 Form 10-K”), (3) ourCompany’s reports and registration statements filed and furnished from time to time with the Securities and Exchange Commission (“SEC”)SEC and (4) other announcements we makeLivaNova makes from time to time.

Readers are cautioned not to place undue reliance on ourthe Company’s forward-looking statements, which speak only as of the date hereof. We undertakeThe Company undertakes no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. You should read the following discussion and analysis in conjunction with ourthe Company’s unaudited condensed consolidated financial statements and related notes included elsewhere in this report. Operating results for the six months ended June 30, 20222023 are not necessarily indicative of future results, including the full fiscal year. You should also refer to ourthe Company’s “Annual Consolidated Financial Statements,” “Notes” thereto, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our 2021LivaNova’s 2022 Form 10-K and in ourthe Company’s Quarterly Reports on Form 10-Q.

All of the financial information included in this quarterly report has been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.” and such principles, “U.S. GAAP”). GAAP. The reporting currency of ourthe Company’s condensed consolidated financial statements is U.S. dollars.

The accompanying condensed consolidated financial statements of LivaNova as of, and for the three and six months ended June 30, 20222023 and 2021,2022, have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 20212022 has been derived from audited financial statements contained in our 2021LivaNova’s 2022 Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries for the three and six months ended June 30, 2022,2023 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our 2021LivaNova’s 2022 Form 10-K.

The COVID-19 pandemic (“COVID-19”) and its effects on the economy, employment, patient behaviors andcurrent macroeconomic environment, including foreign exchange volatility, supply chain among others,challenges, inflationary pressures, and geopolitical instability, has causedimpacted and may continue to cause variable demand for our products. Throughout the pandemic, healthcare customers have diverted medical resources and priorities towards the treatment of COVID-19, and public health bodies have delayed elective procedures, which has negatively impacted the usage of our products. Further, some people have avoided seeking treatment for non-COVID-19 procedures, and hospitals and clinics have experienced staffing shortages, which has negatively impacted the demand for our products. While the recovery of global cardiopulmonary procedures has resulted in stronger demand for our Cardiopulmonary products, our Neuromodulation business continues to experience ongoing COVID-19 related headwinds as described above. Our Advanced Circulatory Support (“ACS”) business has been similarly negatively impacted by a reduction in patients treated with extracorporeal membrane oxygenation (“ECMO”) related to fewer severe COVID-19 cases and hospital staffing challenges. We are monitoring the potential for various strains of the virus to cause a resumption of high levels of infection and hospitalization that, in turn, may affect the demand for our products.

In February 2022, Russia launched an invasion in Ukraine, which caused usthe Company to assess ourits ability to sell in the market due to international sanctions, to consider the potential impact of raw material sourced from the region, and to determine whether we areLivaNova is able to transact in a compliant fashion. Although the regionbusiness across Russia, Ukraine and Belarus represented 1% of ourLivaNova’s total net salesrevenue for 2021,2022, the Russian invasion of Ukraine has increased economic uncertainties, and a significant escalation or continuation of the conflict could have a material, global impact on ourthe Company’s operating results. In addition, our Russian employees and local subsidiary are subject to evolving laws and regulations imposed by the Russian authorities in response to international sanctions.

We haveThe Company has reclassified certain prior period amounts on the condensed consolidated statements of income (loss), the condensed consolidated balance sheets and the condensed consolidated statements of cash flows for comparative purposes. These reclassifications did not have a material effect on ourLivaNova’s financial condition, results of operations or cash flows.

OurLivaNova’s significant accounting policies are detailed below and in “Note 2. Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies” and “Note 3. Revenue Recognition” of our 2021LivaNova’s 2022 Form 10-K.

Goodwill arising from the ALung acquisition, which is not deductible for tax purposes, primarily represents the synergies anticipated between ALung and ourthe Company’s ACS business. The assets acquired, including goodwill, are recognized in ourLivaNova’s ACS segment.

The Company’s condensed consolidated financial statements include the operating results of ALung from the acquisition date. Separate post-acquisition operating results and pro forma financial information for this acquisition have not been presented as the effect was not material for disclosure purposes.

For a reconciliation of the beginning and ending balance of contingent consideration liabilities, refer to “Note 5.4. Fair Value Measurements.”

We reviewThe Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no transfers between Level 1, Level 2, or Level 3 during the six months ended June 30, 20222023 and 2021.2022.

In June 2020, the Company issued $287.5 million in cash exchangeable senior notes and entered into related capped call transactions. The cash exchangeable senior notes include an embedded exchange feature that is bifurcated from the cash exchangeable senior notes. Please refer to “Note 6.5. Financing Arrangements” for further details. The embedded exchange feature derivative is measured at fair value using a binomial lattice model and discounted cash flows that utilize observable and unobservable market data. 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 embedded exchange feature and capped call derivatives are classified as Level 3 as the Company uses historical volatility and implied volatility from options traded to determine expected stock price volatility, an unobservable input that is significant to the valuation. In general, an increase in ourLivaNova’s stock price or stock price volatility would increase the fair value of the embedded exchange feature and capped call derivatives which would result in an increase in expense. As time to the expiration of the derivatives decreases, the fair value of the derivatives would decrease. The future impact on net income depends on how significant inputs such as stock price, stock price volatility and time to the expiration of the derivatives change in relation to

The fair value of the embedded exchange feature derivative liability and the capped call derivative assets were $134.1was $53.7 million and $61.6$42.0 million, respectively, as of June 30, 20222023, and the stock price volatility was 54%36%. As of June 30, 2022,2023, a 10% lower volatility, holding other inputs constant, would result in approximatereduce the fair value for the embedded exchange feature derivative of $118.5liability by $13.8 million, and a 10% higher volatility, holding other inputs constant, would result in approximateincrease the fair value of $146.8by $14.4 million. As of June 30, 2022,2023, a 10% lower volatility, holding other inputs constant, would result in approximatereduce the fair value for the capped call derivatives of $65.0by $9.2 million, and a 10% higher volatility, holding other inputs constant, would result in approximateincrease the fair value of $57.4by $4.0 million.