Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 29, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37599 | |
Entity Registrant Name | LivaNova PLC | |
Entity Incorporation, State or Country Code | X0 | |
Entity Tax Identification Number | 98-1268150 | |
Entity Address, Address Line One | 20 Eastbourne Terrace | |
Entity Address, City or Town | London | |
Entity Address, Country | GB | |
Entity Address, Postal Zip Code | W2 6LG | |
Country Region | 44 | |
City Area Code | 0 | |
Local Phone Number | 203 325-0660 | |
Title of 12(b) Security | Ordinary Shares - £1.00 par value per share | |
Trading Symbol | LIVN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 53,440,615 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001639691 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | [1] | |
Income Statement [Abstract] | |||
Net sales | $ 240,175 | $ 247,603 | |
Cost of sales | 71,732 | 84,195 | |
Gross profit | 168,443 | 163,408 | |
Operating expenses: | |||
Selling, general and administrative | 118,525 | 115,681 | |
Research and development | 40,918 | 44,625 | |
Other operating expenses | (505) | 8,800 | |
Operating income (loss) | 9,505 | (5,698) | |
Interest expense | (7,840) | (15,936) | |
Foreign exchange and other gains/(losses) | 3,904 | (6,443) | |
Income (loss) before tax | 5,569 | (28,077) | |
Income tax expense | 2,537 | 2,644 | |
Losses from equity method investments | (39) | (40) | |
Net income (loss) | $ 2,993 | $ (30,761) | [2],[3] |
Basic loss per share (in dollars per share) | $ 0.06 | $ (0.63) | |
Diluted loss per share (in dollars per share) | $ 0.06 | $ (0.63) | |
Shares used in computing basic loss per share (in shares) | 53,300 | 48,736 | |
Shares used in computing diluted loss per share (in shares) | 54,176 | 48,736 | |
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | [2] | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 2,993 | $ (30,761) | [1],[3] |
Other comprehensive (loss) income: | |||
Net change in unrealized loss on derivatives | (695) | (335) | |
Tax effect | 0 | 339 | |
Net of tax | (695) | 4 | |
Foreign currency translation adjustment | (8,260) | (25,875) | |
Total other comprehensive loss | (8,955) | (25,871) | |
Total comprehensive loss | $ (5,962) | $ (56,632) | |
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 128,737 | $ 207,992 |
Restricted cash | 313,647 | 0 |
Accounts receivable, net of allowance of $13,493 at March 31, 2022 and $13,512 at December 31, 2021 | 182,112 | 185,354 |
Inventories | 114,844 | 105,840 |
Prepaid and refundable taxes | 29,168 | 37,621 |
Current derivative assets | 82 | 106,629 |
Prepaid expenses and other current assets | 41,033 | 35,745 |
Total Current Assets | 809,623 | 679,181 |
Property, plant and equipment, net | 147,957 | 150,066 |
Goodwill | 896,599 | 899,525 |
Intangible assets, net | 390,455 | 399,682 |
Operating lease assets | 38,167 | 40,600 |
Investments | 16,745 | 16,598 |
Deferred tax assets | 2,699 | 2,197 |
Long-term derivative assets | 96,717 | 0 |
Other assets | 17,921 | 13,102 |
Total Assets | 2,416,883 | 2,200,951 |
Current Liabilities: | ||
Current debt obligations | 4,752 | 229,673 |
Accounts payable | 73,921 | 68,000 |
Accrued liabilities and other | 92,026 | 88,937 |
Current derivative liabilities | 1,928 | 183,109 |
Current litigation provision liability | 30,126 | 32,845 |
Taxes payable | 22,592 | 15,140 |
Accrued employee compensation and related benefits | 82,569 | 79,266 |
Total Current Liabilities | 307,914 | 696,970 |
Long-term debt obligations | 455,810 | 9,849 |
Contingent consideration | 83,341 | 86,830 |
Deferred tax liabilities | 7,879 | 7,728 |
Long-term operating lease liabilities | 30,876 | 35,919 |
Long-term employee compensation and related benefits | 18,779 | 19,105 |
Long-term derivative liabilities | 170,660 | 0 |
Other long-term liabilities | 49,770 | 49,905 |
Total Liabilities | 1,125,029 | 906,306 |
Commitments and contingencies (Note 7) | ||
Stockholders’ Equity: | ||
Ordinary Shares, £1.00 par value: unlimited shares authorized; 53,763,500 shares issued and 53,435,821 shares outstanding at March 31, 2022; 53,761,510 shares issued and 53,263,297 shares outstanding at December 31, 2021 | 82,298 | 82,295 |
Additional paid-in capital | 2,121,098 | 2,117,961 |
Accumulated other comprehensive loss | (16,132) | (7,177) |
Accumulated deficit | (894,791) | (897,784) |
Treasury stock at cost, 327,679 ordinary shares at March 31, 2022; 498,213 ordinary shares at December 31, 2021 | (619) | (650) |
Total Stockholders’ Equity | 1,291,854 | 1,294,645 |
Total Liabilities and Stockholders’ Equity | $ 2,416,883 | $ 2,200,951 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) $ in Thousands | Mar. 31, 2022USD ($)shares | Mar. 31, 2022£ / shares | Dec. 31, 2021USD ($)shares | Dec. 31, 2021£ / shares |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | $ | $ 13,493 | $ 13,512 | ||
Ordinary shares, par value (in pounds per share) | £ / shares | £ 1 | £ 1 | ||
Ordinary shares issued (in shares) | 53,763,500 | 53,761,510 | ||
Ordinary shares outstanding (in shares) | 53,435,821 | 53,263,297 | ||
Treasury stock (in shares) | 327,679 | 498,213 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Operating Activities: | |||
Net income (loss) | $ 2,993 | $ (30,761) | [1],[2],[3] |
Non-cash items included in net income (loss): | |||
Stock-based compensation | 10,256 | 9,536 | [1] |
Amortization | 6,465 | 6,699 | [1] |
Depreciation | 5,626 | 6,079 | [1] |
Amortization of debt issuance costs | 4,412 | 4,409 | [1] |
Remeasurement of contingent consideration to fair value | (3,773) | 453 | [1] |
Amortization of operating lease assets | 2,653 | 5,389 | [1] |
Remeasurement of Respicardia investment and loan | 0 | (4,640) | [1] |
Remeasurement of derivative instruments | (1,355) | 7,268 | [1] |
Other | 1,073 | 498 | [1] |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | 1,494 | (3,372) | [1] |
Inventories | (9,637) | (1,625) | [1] |
Other current and non-current assets | (1,953) | 26,820 | [1] |
Accounts payable and accrued current and non-current liabilities | 9,957 | (1,858) | [1] |
Taxes payable | 709 | (3,337) | [1] |
Litigation provision liability | (3,097) | (2,078) | [1] |
Net cash provided by operating activities | 25,823 | 19,480 | [1] |
Investing Activities: | |||
Purchases of property, plant and equipment | (5,215) | (8,220) | [1] |
Purchase of investments | (278) | (1,800) | [1] |
Proceeds from asset sales | 11 | 162 | |
Net cash used in investing activities | (5,482) | (9,858) | [1] |
Financing Activities: | |||
Proceeds from long-term debt obligations | 218,342 | 0 | |
Payment of debt issuance costs | (2,426) | 0 | |
Shares repurchased from employees for minimum tax withholding | (1,074) | (3,740) | [1] |
Payment of contingent consideration | 0 | (4,387) | [1] |
Other | 35 | (201) | [1] |
Net cash provided by (used in) financing activities | 214,877 | (8,328) | [1] |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (826) | (1,587) | [1] |
Net increase (decrease) in cash, cash equivalents and restricted cash | 234,392 | (293) | [1] |
Cash, cash equivalents and restricted cash at beginning of period | 207,992 | 252,832 | [1] |
Cash, cash equivalents and restricted cash at end of period | $ 442,384 | $ 252,539 | [1] |
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Financial Statements | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Unaudited Condensed Consolidated Financial Statements | Note 1. Unaudited Condensed Consolidated Financial Statements Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three months ended March 31, 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, 2021 has been derived from audited financial statements contained in our 2021 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 months ended March 31, 2022, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our 2021 Form 10-K. Global Developments COVID-19 The COVID-19 pandemic (“COVID-19”) has caused and may continue to cause unpredictable 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 recent recovery of global cardiopulmonary procedures has resulted in stronger demand for our Cardiopulmonary products, our Neuromodulation and Advanced Circulatory Support businesses continue to experience ongoing COVID-19 related headwinds. 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. Moreover, although our RECOVER study and ANTHEM-HFrEF pivotal trial continue to progress, there may be delays or closures of sites in the future should COVID-19 or variants thereof strengthen or reemerge. Certain conditions improved during 2021, but we continue to experience COVID-19 related headwinds. Like many companies, for example, we are experiencing supply chain delays and interruptions, labor shortages, inflationary pressures and logistical issues in the wake of COVID-19. Though, to date, our supply of raw materials and the production and distribution of finished products have not been materially affected, demand and low capacity worldwide have caused longer lead times and put price pressure on key raw materials. Moreover, freight and labor costs at our manufacturing facilities have increased in the wake of inflation globally. The Company continues to respond to such challenges, and while we have business continuity plans in place, the impact of the ongoing challenges we are experiencing, along with their potential escalation, may adversely affect our business and the recoverability of our tangible and intangible assets. The future impact of pandemic-related developments remains uncertain. Ukraine Invasion In February 2022, Russia launched an invasion in Ukraine which caused us to assess our 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 are able to transact in a compliant fashion. Although the region represented 1% of our total net sales for 2021, 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 our 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. Revision of Previously Issued Financial Statements During the fourth quarter of 2021, the Company identified and corrected 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. Using the guidance in ASC Topic 250, Accounting Changes and Error Corrections , ASC Topic 250-S99-1, Assessing Materiality , and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements , we evaluated whether our previously issued consolidated financial statements were materially misstated due to these errors. Based upon our evaluation of both quantitative and qualitative factors, we believe that the effects of these errors were not material individually or in the aggregate to any previously reported quarterly or annual period. Accordingly, we have revised our previously issued financial statements as shown below (in thousands): Consolidated Statements of Income (Loss) Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Cost of sales - exclusive of amortization $ 79,216 $ 1,275 $ 80,491 Operating loss (4,423) (1,275) (5,698) Loss before tax (26,802) (1,275) (28,077) Income tax expense 2,856 (212) 2,644 Net loss (29,698) (1,063) (30,761) Basic and diluted loss per share $ (0.61) $ (0.02) $ (0.63) Consolidated Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Net loss $ (29,698) $ (1,063) $ (30,761) Total comprehensive loss (55,569) (1,063) (56,632) Consolidated Statements of Stockholders’ Equity As Previously Reported Adjustments As Revised Accumulated Deficit Total Stockholders’ Equity Accumulated Deficit Total Stockholders’ Equity Accumulated Deficit Total Stockholders’ Equity March 31, 2021 $ (782,100) $ 1,065,757 $ (10,627) $ (10,627) $ (792,727) $ 1,055,130 Consolidated Statements of Cash Flows Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Net loss $ (29,698) $ (1,063) $ (30,761) Deferred tax expense (benefit) 37 (212) (175) Changes in operating assets and liabilities: Inventories (2,900) 1,275 (1,625) Net cash used in operating activities 19,480 — 19,480 Reclassifications We have 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 our financial condition, results of operations or cash flows. The prior period reclassifications on the condensed consolidated statements of income (loss) are summarized and presented below (in thousands): • Product remediation has been reclassified to cost of sales; • Merger and integration expenses have been reclassified to other operating expenses; • Restructuring expenses have been reclassified to other operating expenses; • Litigation provision, net has been reclassified to other operating expenses; • Amortization of intangibles has been reclassified to cost of sales or selling, general and administrative based on the nature of the underlying intangible asset; • Gain on the sale of Heart Valve business has been reclassified from revaluation of disposal group to other operating expenses; and • Interest income has been reclassified to foreign exchange and other gains/(losses). Three Months Ended March 31, 2021 As Revised Reclassifications Current Presentation Net sales $ 247,603 $ — $ 247,603 Cost of sales 80,491 3,704 84,195 Product remediation 68 (68) — Gross profit 167,044 (3,636) 163,408 Operating expenses: Selling, general and administrative 112,618 3,063 115,681 Research and development 44,625 — 44,625 Merger and integration expenses 630 (630) — Restructuring expenses 6,092 (6,092) — Revaluation of disposal group (966) 966 — Amortization of intangibles 6,699 (6,699) — Litigation provision, net 3,044 (3,044) — Other operating expenses — 8,800 8,800 Operating loss (5,698) — (5,698) Interest income (74) 74 — Interest expense (15,936) — (15,936) Foreign exchange and other gains/(losses) (6,369) (74) (6,443) Loss before tax $ (28,077) $ — $ (28,077) Significant Accounting Policies Our 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 2021 Form 10-K. Restricted Cash The Company classifies cash that is not available for use in its operations as restricted cash within current assets on the condensed consolidated balance sheet. As of March 31, 2022, our restricted cash balance totaled $313.6 million and was comprised of cash deposits with Barclays held as collateral for a first demand bank guarantee of €270.0 million (approximately $299.5 million as of March 31, 2022) to obtain the suspension of the Court of Appeal of Milan judgment for the payment of damages in connection with the SNIA litigation until review of such judgment by the Italian Supreme Court (the “SNIA Litigation Guarantee”). As security for the SNIA Litigation Guarantee, LivaNova is required to grant cash collateral to Barclays in US dollars in an amount equal to the USD equivalent of 105% of the amount of the SNIA Litigation Guarantee calibrated on a biweekly basis. For additional information regarding the SNIA litigation, please refer to “Note 7. Commitments and Contingencies.” |
Investments
Investments | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Investments | Note 3. Investments Investments on the condensed consolidated balance sheets represent the carrying value of our investments in equity securities of non-consolidated affiliates without readily determinable fair values for which we do not exert significant influence over the investee. These equity investments are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. At March 31, 2022 and December 31, 2021, the carrying value of our investments was $16.7 million and $16.6 million, respectively. In April 2021, Zoll Medical Corporation acquired Respicardia Inc., a privately funded U.S. company in which we had an equity investment and also to which we had a loan outstanding. As a result of the acquisition, we received proceeds of $23.1 million for both our investment and loan receivable which had carrying values of $17.7 million and $0.8 million as of December 31, 2020, respectively. The Company recorded a gain of $4.6 million during the first quarter of 2021 to adjust the investment and loans receivable to fair value, which is included in foreign exchange and other gains/(losses) on the condensed consolidated statement of income (loss). |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements We review 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 three months ended March 31, 2022 and 2021. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value as of March 31, 2022 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “FX”) $ 262 $ — $ 262 $ — Derivative assets - freestanding instruments (FX) 21 — 21 — Derivative assets - capped call derivatives 96,717 — — 96,717 Convertible notes receivable 2,770 — — 2,770 $ 99,770 $ — $ 283 $ 99,487 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 1,946 $ — $ 1,946 $ — Derivative liabilities - freestanding instruments (FX) 183 — 183 — Derivative liabilities - embedded exchange feature 170,660 — — 170,660 Contingent consideration arrangements 94,609 — — 94,609 $ 267,398 $ — $ 2,129 $ 265,269 Fair Value as of December 31, 2021 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “ FX ” ) $ 243 $ — $ 243 $ — Derivative assets - freestanding instruments (FX) 61 — 61 — Derivative assets - capped call derivatives 106,629 — — 106,629 Convertible notes receivable 2,767 — — 2,767 $ 109,700 $ — $ 304 $ 109,396 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 1,286 $ — $ 1,286 $ — Derivative liabilities - freestanding instruments (FX) 427 — 427 — Derivative liabilities - embedded exchange feature 181,700 — — 181,700 Contingent consideration arrangements 98,382 — — 98,382 $ 281,795 $ — $ 1,713 $ 280,082 The following table provides a reconciliation of the beginning and ending balances of our recurring fair value measurements, using significant unobservable inputs (Level 3) (in thousands): Capped Call Derivative Asset Convertible Notes Receivable Embedded Exchange Feature Derivative Liability Contingent Consideration Liability Arrangements As of December 31, 2021 $ 106,629 $ 2,767 $ 181,700 $ 98,382 Changes in fair value (9,912) 3 (11,040) (3,773) Total at March 31, 2022 96,717 2,770 170,660 94,609 Less current portion at March 31, 2022 — 2,495 — 11,268 Long-term portion at March 31, 2022 $ 96,717 $ 275 $ 170,660 $ 83,341 Embedded Exchange Feature and Capped Call Derivatives 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 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 which is an unobservable input that is significant to the valuation. In general, an increase in our 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 other inputs. Changes in the fair value of the embedded exchange feature derivative and capped call derivatives are recognized in foreign exchange and other gains/(losses) in the condensed consolidated statements of income (loss). The stock price volatility as of March 31, 2022 was 36%. As of March 31, 2022, a 10% lower volatility, holding other inputs constant, would result in approximate fair value for the embedded exchange feature derivative of $154.5 million and a 10% higher volatility, holding other inputs constant, would result in approximate fair value of $188.2 million. As of March 31, 2022, a 10% lower volatility, holding other inputs constant, would result in approximate fair value for the capped call derivatives of $107.4 million and a 10% higher volatility, holding other inputs constant, would result in approximate fair value of $87.4 million. Contingent Consideration Arrangements The following table provides the fair value of our Level 3 contingent consideration arrangements by acquisition (in thousands): March 31, 2022 December 31, 2021 ImThera $ 83,341 $ 86,830 TandemLife 11,268 11,552 $ 94,609 $ 98,382 The ImThera business combination involved contingent consideration arrangements composed of potential cash payments upon the achievement of a certain regulatory milestone and a sales-based earnout associated with sales of products. The sales-based earnout is valued using projected sales from our internal strategic plan. Both arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of March 31, 2022: ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 5.3% Probability of payment 85% Projected payment year 2024 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 13.9% Credit risk discount rate 5.5% - 6.2% Revenue volatility 32.5% Probability of payment 85% Projected years of earnout 2025 - 2028 The TandemLife business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain regulatory milestones. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of March 31, 2022: TandemLife Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 4.9% Probability of payment 90% Projected payment year 2023 |
Financing Arrangements
Financing Arrangements | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 5. Financing Arrangements The outstanding principal amount of our long-term debt as of March 31, 2022 and December 31, 2021 was as follows (in thousands, except interest rates): March 31, 2022 December 31, 2021 Maturity Interest Rate 2020 Cash Exchangeable Senior Notes $ 228,535 $ 225,140 December 2025 3.00% Bridge Loan Facility 216,366 — June 2023 4.17% Bank of America Merrill Lynch Banco Múltiplo S.A. 7,203 6,113 July 2023 9.32% Mediocredito Italiano 3,312 3,379 December 2023 0.50% - 2.74% Bank of America, U.S. 1,500 1,500 January 2023 2.85% Other 623 663 Total long-term facilities 457,539 236,795 Less current portion of long-term debt 1,729 226,946 Total long-term debt $ 455,810 $ 9,849 Revolving Credit The outstanding principal amount of our short-term unsecured revolving credit agreements and other agreements with various banks was $3.0 million and $2.7 million at March 31, 2022 and December 31, 2021, respectively, with interest rates ranging from 2.85% to 9.32% and loan terms ranging from overnight to 364 days, as of March 31, 2022. On August 13, 2021, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. (the “Borrower”) entered into a First Lien Credit Agreement with the lenders and issuing banks party thereto and Goldman Sachs Bank USA, as First Lien Administrative Agent and First Lien Collateral Agent, relating to a $125 million senior secured multi-currency revolving credit facility to be made available to the Borrower (the “2021 Revolving Credit Facility”). The 2021 Revolving Credit Facility, as amended on March 16, 2022, expires on August 13, 2026 and bears interest at a rate equal to, for U.S. dollar-denominated loans, an adjusted Secured Overnight Financing Rate (“SOFR”) with a floor of 0.00%, or a Base Rate, plus, in each case, a variable margin based on the Company’s senior secured net leverage ratio. Interest is paid monthly or quarterly, as selected by the Borrower, with any outstanding principal due at maturity. The First Lien Credit Agreement also contemplates the payment of commitment fees on the unused portion of the commitments, at a variable percentage based on the Company’s senior secured net leverage ratio. The 2021 Revolving Credit Facility is available for working capital and other general corporate purposes and, if drawn, can be repaid at any time without premium or penalty. The First Lien Credit Agreement contains customary representations, warranties and covenants, including the requirement to maintain a senior secured first lien net leverage ratio of less than 4.50 to 1.00 for as long as there are any revolving loans outstanding under the 2021 Revolving Credit Facility, as well as in order for the Company to borrow additional revolving loans. There were no outstanding borrowings under the 2021 Revolving Credit Facility as of March 31, 2022 and December 31, 2021. Bridge Loan Facility On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc., entered into an Incremental Facility Amendment No. 1 to the 2021 Revolving Credit Facility, relating to a €200 million bridge loan facility (the “Bridge Loan Facility”). On March 16, 2022, LivaNova entered into Amendment No. 2 to the 2021 Revolving Credit Facility, which converted the available borrowings under the Bridge Loan Facility from €200 million to $220.0 million and converted the EURIBOR rate in the 2021 Revolving Credit Facility to SOFR. LivaNova delivered a borrowing notice for $220.0 million in connection with the Bridge Loan Facility, which was funded on March 17, 2022. On March 18, 2022, LivaNova PLC, acting through its Italian branch, entered into an Indemnity Letter and an Account Pledge Agreement with Barclays, further to which Barclays issued the SNIA Litigation Guarantee. As security for the SNIA Litigation Guarantee, LivaNova is required to grant cash collateral to Barclays in US dollars in an amount equal to the USD equivalent of 105% of the amount of the SNIA Litigation Guarantee calibrated on a biweekly basis. The proceeds of the Bridge Loan Facility were used by LivaNova to post a portion of the cash collateral supporting the SNIA Litigation Guarantee and can be used towards payment of court ordered damages or settlements (including interest, expenses and charges in connection therewith) in the event of a negative decision by the Italian Supreme Court. The cash held as collateral supporting the SNIA Litigation Guarantee of $313.6 million is classified as restricted cash on the condensed consolidated balance sheet as of March 31, 2022. The Bridge Loan Facility bears interest at an adjusted term SOFR, with a floor of 0.5%, plus 3.5% increasing by 0.25% 15 days after drawing and by an additional 0.5% 90 days after drawing and every 90 days thereafter, with a maximum margin of 5.25% over adjusted SOFR. The effective interest rate of the Bridge Loan Facility at March 31, 2022 was 11.04%. The Bridge Loan Facility matures on June 16, 2023 and is subject to mandatory prepayment in connection with certain asset dispositions, equity or debt issuance as well as in the event that collateral securing the SNIA Litigation Guarantee is released. For additional information regarding the SNIA litigation, please refer to “Note 7. Commitments and Contingencies.” Debt discounts and issuance costs related to the Bridge Loan Facility were approximately $4.5 million. Amortization of debt discount and issuance costs for the Bridge Loan Facility was $0.9 million for the three months ended March 31, 2022 and is included in interest expense on the consolidated statement of income (loss). The unamortized discount related to the Bridge Loan Facility as of March 31, 2022 was $3.6 million. Outstanding borrowings under the Bridge Loan Facility was $220.0 million as of March 31, 2022. 2020 Cash Exchangeable Senior Notes On June 17, 2020, our wholly-owned subsidiary, LivaNova USA, Inc., issued $287.5 million aggregate principal amount of 3.00% Notes (the “Notes”) by private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The sale of the Notes resulted in approximately $278.0 million in net proceeds to the Company after deducting issuance costs. Interest is payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020. The effective interest rate of the Notes at March 31, 2022 was 9.95%. The Notes mature on December 15, 2025 unless earlier exchanged, repurchased, or redeemed. Debt discounts and issuance costs related to the Notes were approximately $82.0 million and included $75.0 million of discount attributable to the embedded exchange feature, discussed below, and $7.0 million of allocated issuance costs to the Notes related to legal, bank and accounting fees. Amortization of debt discount and issuance costs for the Notes was $3.4 million and $3.1 million for the three months ended March 31, 2022 and 2021, respectively, and is included in interest expense on the consolidated statement of income (loss). The unamortized discount related to the Notes as of March 31, 2022 and December 31, 2021 was $59.0 million and $62.4 million, respectively. Holders of the Notes are entitled to exchange the Notes at any time during specified periods, at their option. This includes the right to exchange the Notes during any calendar quarter, if the last reported sale price of LivaNova’s ordinary shares, with a nominal value of £1.00 per share, is greater than or equal to 130% of the exchange price, or $79.27 per share for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. The exchange condition was not satisfied during the quarterly period ending March 31, 2022. As a result, we have included our obligations from the Notes and the associated embedded exchange feature derivative as a long-term liability on the consolidated balance sheet as of March 31, 2022. The Notes are exchangeable solely into cash and are not exchangeable into ordinary shares of LivaNova or any other security under any circumstances. The initial exchange rate for the Notes is 16.3980 ordinary shares per $1,000 principal amount of Notes (equivalent to an initial exchange price of approximately $60.98 per share). The exchange rate is subject to adjustment in certain circumstances, as set forth in the indenture governing the Notes. The Company may redeem the Notes at its option, on or after June 20, 2023 and prior to the 51 st scheduled trading day immediately preceding the maturity date, in whole or in part, if the last reported sale price per ordinary share has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Additionally, the Company may redeem the Notes at its option, prior to their stated maturity, in whole but not in part, in connection with certain tax-related events. Embedded Exchange Feature The embedded exchange feature of the Notes requires bifurcation from the Notes and is accounted for as a derivative liability. The fair value of the Notes’ embedded exchange feature derivative at the time of issuance was $75.0 million and was recorded as debt discount on the Notes. This discount is amortized as interest expense using the effective interest method over the term of the Notes. The Notes’ embedded exchange feature derivative is carried on the condensed consolidated balance sheets at its estimated fair value and is adjusted at the end of each reporting period, with the unrealized gain or loss reflected within foreign exchange and other gains/(losses) in the condensed consolidated statements of income (loss). The fair value of the embedded exchange feature derivative liability was $170.7 million as of March 31, 2022. Capped Call Transactions In connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions with certain of the initial purchasers of the Notes or their respective affiliates. The capped call transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of LivaNova’s ordinary shares underlying the Notes and are expected generally to offset any cash payments the Company is required to make upon exchange of the Notes in excess of the principal amount thereof in the event that the market value per ordinary share, as measured under the capped call transactions, is greater than the strike price of the capped call transactions, with such offset being subject to an initial cap price of $100.00 per share. The capped call transactions expire on December 15, 2025 and must be settled in cash. If the capped call transactions are converted or redeemed early, settlement occurs at their termination value, which is equal to their fair value at the time of the redemption. The capped call transactions are carried on the condensed consolidated balance sheets as a derivative asset at their estimated fair value and are adjusted at the end of each reporting period, with unrealized gain or loss reflected within foreign exchange and other gains/(losses) in the condensed consolidated statements of income (loss). The fair value of the capped call derivative assets was $96.7 million as of March 31, 2022. As of March 31, 2022, the capped call derivative assets are classified as long-term. |
Derivatives and Risk Management
Derivatives and Risk Management | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Risk Management | Note 6. Derivatives and Risk Management Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. We enter into FX derivative contracts to reduce the impact of foreign currency exchange rate fluctuations on earnings and cash flow. We are also exposed to equity price risk in connection with our Notes, including exchange and settlement provisions based on the price of our ordinary shares at exchange or maturity of the Notes. In addition, the capped call transactions associated with the Notes also include settlement provisions that are based on the price of our ordinary shares, subject to a capped price per share. We do not enter into derivative contracts for speculative purposes. We measure all outstanding derivatives each period end at fair value and report the fair value as either financial assets or liabilities on the condensed consolidated balance sheets. At inception of the contract, the derivative is designated as either a freestanding derivative or a hedge. Derivatives that are not designated as hedging instruments are referred to as freestanding derivatives with changes in fair value included in earnings. If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in accumulated other comprehensive income (“AOCI”) until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to our condensed consolidated statements of income (loss) as shown in the tables below. We evaluate hedge effectiveness at inception. Cash flows from derivative contracts are reported as operating activities on our condensed consolidated statements of cash flows. Freestanding FX Derivative Contracts The gross notional amount of FX derivative contracts not designated as hedging instruments outstanding at March 31, 2022 and December 31, 2021 was $93.8 million and $136.7 million, respectively. These derivative contracts are designed to offset the FX effects in earnings of various intercompany loans and trade receivables. We recorded net gains for these freestanding derivatives of $1.0 million and $7.7 million for the three months ended March 31, 2022 and 2021, respectively. These gains are included in foreign exchange and other gains/(losses) on our condensed consolidated statements of income (loss). Counterparty Credit Risk We are exposed to credit risk in the event of non-performance by the counterparties to our derivatives. The two counterparties to the capped call transactions are financial institutions. To limit our credit risk, we selected financial institutions with a minimum long-term investment grade credit rating. Our exposure to the credit risk of the counterparties is not secured by any collateral. If a counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under the capped call transactions with that counterparty. To manage credit risk with respect to our other derivatives, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market positions. However, if one or more of these counterparties were in a liability position to the Company and were unable to meet their obligations, any transactions with the counterparty could be subject to early termination, which could result in substantial losses for the Company. Cash Flow Hedges We utilize FX derivative contracts, designed as cash flow hedges, to hedge the variability of cash flows associated with our 12-month U.S. dollar forecasts of revenues and costs denominated in British Pound, Japanese Yen and the Euro. We transfer to earnings from AOCI the gain or loss realized on the FX derivative contracts at the time of invoicing. The gross notional amounts of open derivative contracts designated as cash flow hedges at March 31, 2022 and December 31, 2021 were as follows (in thousands): Description of Derivative Contract March 31, 2022 December 31, 2021 FX derivative contracts to be exchanged for British Pounds $ 8,126 $ 11,160 FX derivative contracts to be exchanged for Japanese Yen 3,334 6,648 FX derivative contracts to be exchanged for Euros 43,620 58,224 $ 55,080 $ 76,032 After-tax net gain associated with derivatives designated as cash flow hedges recorded in the ending balance of AOCI and the amount expected to be reclassified to earnings in the next 12 months are as follows (in thousands): Description of Derivative Contract After-Tax Net Loss in AOCI as of March 31, 2022 After-Tax Net Loss in AOCI as of March 31, 2022 Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (1,640) $ (1,640) Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in other comprehensive income (loss) (“OCI”) and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended March 31, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings Losses Recognized in OCI (Losses) Gains Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other gains/(losses) $ (642) $ 441 $ (2,223) $ (1,496) FX derivative contracts SG&A — (388) — 685 $ (642) $ 53 $ (2,223) $ (811) We offset fair value amounts associated with our derivative instruments on our condensed consolidated balance sheets that are executed with the same counterparty under master netting arrangements. Our netting arrangements include a right to set off or net together purchases and sales of similar products in the settlement process. The following tables present the fair value and the location of derivative contracts reported on the condensed consolidated balance sheets (in thousands): March 31, 2022 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) FX derivative contracts Current derivative assets $ 262 Current derivative liabilities $ 1,946 Total derivatives designated as hedging instruments 262 1,946 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative assets 3 Current derivative assets 183 FX derivative contracts Current derivative liabilities 18 Capped call derivatives Long-term derivative assets 96,717 Embedded exchange feature Long-term derivative liabilities 170,660 Total derivatives not designated as hedging instruments 96,738 170,843 Total derivatives $ 97,000 $ 172,789 December 31, 2021 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) FX derivative contracts Accrued liabilities $ 243 Accrued liabilities $ 1,286 Total derivatives designated as hedging instruments 243 1,286 Derivatives Not Designated as Hedging Instruments FX derivative contracts Accrued liabilities 61 Accrued liabilities 427 Capped call derivatives Current derivative assets 106,629 Embedded exchange feature Current derivative liabilities 181,700 Total derivatives not designated as hedging instruments 106,690 182,127 Total derivatives $ 106,933 $ 183,413 (1) For the classification of inputs used to evaluate the fair value of our derivatives, refer to “Note 4. Fair Value Measurements.” |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7. Commitments and Contingencies FDA Warning Letter On December 29, 2015, the FDA issued a Warning Letter alleging certain violations of FDA regulations applicable to medical device manufacturers at our Munich, Germany and Arvada, Colorado facilities. The FDA inspected the Munich facility from August 24, 2015 to August 27, 2015 and the Arvada facility from August 24, 2015 to September 1, 2015. On August 27, 2015, the FDA issued a Form 483 identifying two observed non-conformities with certain regulatory requirements at the Munich facility. We did not receive a Form 483 in connection with the FDA’s inspection of the Arvada facility. Following receipt of the Form 483, we provided written responses to the FDA describing corrective and preventive actions that were underway or to be taken to address the FDA’s observations at the Munich facility. The Warning Letter responded in part to our responses and identified other alleged violations related to the manufacture of our 3T Heater-Cooler device that were not previously included in the Form 483. The Warning Letter further stated that our 3T devices and other devices we manufactured at our Munich facility were subject to refusal of admission into the U.S. until resolution of the issues set forth by the FDA in the Warning Letter. The FDA had informed us that the import alert was limited to the 3T devices, but that the agency reserved the right to expand the scope of the import alert if future circumstances warranted such action. The Warning Letter did not request that existing users cease using the 3T device, and manufacturing and shipment of all of our products other than the 3T device were unaffected by the import limitation. To help clarify these issues for current customers, we issued an informational Customer Letter in January 2016 and that same month agreed with the FDA on a process for shipping 3T devices to existing U.S. users pursuant to a certificate of medical necessity program. Finally, the Warning Letter stated that premarket approval applications for Class III devices to which certain Quality System regulation deviations identified in the Warning Letter were reasonably related would not be approved until the violations had been corrected; however, this restriction applied only to the Munich and Arvada facilities, which do not manufacture or design devices subject to Class III premarket approval. On February 25, 2020, LivaNova received clearance for K191402, a 510(k) for the 3T devices that addressed issues contained in the 2015 Warning Letter along with design changes that further mitigate the potential risk of aerosolization. Concurrent with this clearance, (1) 3T devices manufactured in accordance with K191402 will not be subjected to the import alert and (2) LivaNova initiated a correction to distribute the updated Operating Instructions cleared under K191402. With this 510(k) clearance, all actions to remediate the FDA’s inspectional observations in the Warning Letter were complete, and LivaNova awaited the FDA’s close-out inspection. On April 28, 2022, the FDA completed its close-out inspection of the Munich, Germany facility and, at the conclusion of the inspection, issued a Form 483 which contained three inspectional observations in the areas of design validation, process validation and complaint investigations. We are preparing a detailed response to the FDA commenting on the Form 483 observations in the context of our previous actions and remediation efforts to the 2015 Warning Letter, including the January 2016 informational Customer Letter; shipment of products pursuant to our certificate of medical necessity program; and the activities that we conducted to obtain clearance of K191402 for the modified 3T device. We intend to submit our response to the FDA within 15 working days of receiving the Form 483 and will also include our proposed corrective and preventive actions to address the FDA's observations. While we intend to resolve the issues raised by the FDA in our response, whether the FDA will accept our response is uncertain. Refer to “Part II, Item 1A. Risk Factors” in this Form 10-Q for additional information regarding the risks surrounding receipt of the Form 483. CDC and FDA Safety Communications and Company Field Safety Notice On October 13, 2016, the Center for Disease Control (the “CDC”) and the FDA separately released safety notifications regarding the 3T devices. The CDC’s Morbidity and Mortality Weekly Report (“MMWR”) and Health Advisory Notice (“HAN”) reported that tests conducted by the CDC and its affiliates indicate that there appears to be genetic similarity between both patient and 3T device strains of the non-tuberculous mycobacterium (“NTM”) bacteria M. chimaera isolated in hospitals in Iowa and Pennsylvania. Citing the geographic separation between the two hospitals referenced in the investigation, the report asserts that 3T devices manufactured prior to August 18, 2014 could have been contaminated during the manufacturing process. The CDC’s HAN and FDA’s Safety Communication, issued contemporaneously with the MMWR report, each assess certain risks associated with 3T devices and provide guidance for providers and patients. The CDC notification states that the decision to use the 3T device during a surgical operation is to be taken by the surgeon based on a risk approach and on patient need. Both the CDC’s and FDA’s communications confirm that 3T devices are critical medical devices and enable doctors to perform life-saving cardiac surgery procedures. Also on October 13, 2016, concurrent with the CDC’s HAN and FDA’s Safety Communication, we issued a Field Safety Notice Update for U.S. users of 3T devices to proactively and voluntarily contact facilities to aid in implementation of the CDC and FDA recommendations. In the fourth quarter of 2016, we initiated a program to provide existing 3T device users with a new loaner 3T device at no charge pending regulatory approval and implementation of additional risk mitigation strategies worldwide, including a vacuum canister and internal sealing upgrade program and a deep disinfection service. In April 2017, we obtained CE Mark in Europe for the design change of the 3T device, and in October 2018, the FDA concluded that we could commence the vacuum canister and internal sealing upgrade program in the U.S. On February 25, 2020, LivaNova received clearance for K191402, a 510(k) for the 3T devices that addressed issues contained in the 2015 Warning Letter along with design changes that further mitigate the potential risk of aerosolization. We are in the process of completing and closing out all recall activities with the FDA. While our vacuum canister and internal sealing upgrade program and deep cleaning service in the U.S. are substantially complete, these services will continue as a servicing option outside of the U.S. On December 31, 2016, we recognized a liability for our product remediation plan related to our 3T device. We concluded that it was probable that a liability had been incurred upon management’s approval of the plan and the commitments made by management to various regulatory authorities globally during the fourth quarter of 2016, and furthermore, the cost associated with the plan was reasonably estimable. At March 31, 2022, the product remediation liability was $0.8 million. Since clearance for K191402 was received, the liability associated with 3T remediation efforts has declined over time such that the Company has concluded that, at this point in time, the current/future liability is immaterial, and we do not intend to provide further disclosure on this matter. Saluggia Site Hazardous Substances LivaNova Site Management S.r.l. (“LSM”), formerly a subsidiary of Sorin, one of the companies that merged into LivaNova PLC in 2015, manages site services for the campus in Saluggia, Italy. In addition to a LivaNova manufacturing facility, the Saluggia campus is also the location of manufacturing facilities of third parties, a cafeteria for workers, and storage facilities for hazardous substances and equipment previously used in a nuclear research center, later turned nuclear medicine business, between the 1960s and the late 1990s. Pursuant to authorization from the Italian government, LSM has, and continues to, perform ordinary maintenance, secure the facilities, monitor air and water quality and file applicable reports with the competent environmental authorities. During 2020, LSM received correspondence from ISIN (a sub-body of the Italian Ministry of Economic Development) requesting that within five years, LSM demonstrate the financial capacity to meet its obligations under Italian law to clean and dismantle any contaminated buildings and equipment as well as to deliver hazardous substances to a national repository. This repository will be built by the Italian government at a location and time yet to be determined. ISIN subsequently published Technical Guide n. 30, which identifies the technical criteria, and general safety and protection requirements for the design, construction, operation and dismantling of temporary storage facilities for the hazardous substances. In January 2021, a list of 67 potential sites for the national repository was published. Although there is no legal obligation to begin any work or deliver the hazardous substances, as the performance of these obligations is contingent on the construction of the as-yet unbuilt national repository, based on the aforementioned factors, the Company concluded its obligation to clean, dismantle, and deliver any hazardous substances to a national repository is probable and reasonably estimable. The estimated liability as of March 31, 2022 was $38.3 million, which represented the low end of the estimated range of loss of $38.3 million to $48.7 million. The estimated liability as of December 31, 2021 was $39.3 million. The decrease in the liability from December 31, 2021 was primarily due to the effects of foreign currency changes during the three months ended March 31, 2022. Litigation Product Liability The Company is currently involved in litigation involving our 3T device. The litigation includes federal multi-district litigation in the U.S. District Court for the Middle District of Pennsylvania, various U.S. state court cases and cases in jurisdictions outside the U.S. A class action, filed in February 2016 in the U.S. District Court for the Middle District of Pennsylvania, consisting of all Pennsylvania residents who underwent open heart surgery at WellSpan York Hospital and Penn State Milton S. Hershey Medical Center between 2011 and 2015 and who currently are asymptomatic for NTM infection, was dismissed on July 16, 2021. On March 29, 2019, we announced a settlement framework that provides for a comprehensive resolution of the personal injury cases pending in the multi-district litigation in U.S. federal court, the related class action in federal court, as well as certain cases in state courts across the United States. The agreement, which makes no admission of liability, is subject to certain conditions, including acceptance of the settlement by individual claimants and provides for a total payment of up to $225 million to resolve the claims covered by the settlement. Per the agreed-upon terms, the first payment of $135 million was paid into a qualified settlement fund in July 2019 and the second payment of $90 million was paid in January 2020. Cases covered by the settlement are being dismissed as amounts are disbursed to individual plaintiffs from the qualified settlement fund. Cases in state courts in the U.S. and in jurisdictions outside the U.S. continue to progress. As of May 4, 2022, including the cases encompassed in the settlement framework described above that have not yet been dismissed, we were aware of approximately 90 filed and unfiled claims worldwide, with the majority of the claims in various federal or state courts throughout the United States. This number includes five cases that have settled but have not yet been dismissed. The complaints generally seek damages and other relief based on theories of strict liability, negligence, breach of express and implied warranties, failure to warn, design and manufacturing defect, fraudulent and negligent misrepresentation or concealment, unjust enrichment, and violations of various state consumer protection statutes. At March 31, 2022, the provision for these matters was $36.2 million. While the amount accrued represents our best estimate for those filed and unfiled claims that we believe are both probable and estimable at this time, and which are a subset of the filed and unfiled claims worldwide of which we are currently aware, the actual liability for resolution of these matters may vary from our estimate. The remaining claims for which a provision has not been recorded are remote or the potential loss is not estimable at this time. Changes in the carrying amount of the litigation provision liability are as follows (in thousands): Total litigation provision liability at December 31, 2021 $ 39,470 Payments (2,754) Adjustments (1) (343) FX and other (142) Total litigation provision liability at March 31, 2022 36,231 Less current portion of litigation provision liability at March 31, 2022 30,126 Long-term portion of litigation provision liability at March 31, 2022 (2) $ 6,105 (1) Adjustments to the litigation provision are included within other operating expenses on the condensed consolidated statements of income (loss). (2) Included within other long-term liabilities on the condensed consolidated balance sheet. Environmental Liability Sorin was created as a result of a spin-off (the “Sorin spin-off”) from SNIA in January 2004, and in October 2015, Sorin was merged into LivaNova. SNIA subsequently became insolvent, and the Italian Ministry of the Environment and the Protection of Land and Sea (the “Italian Ministry of the Environment”), sought compensation from SNIA in an aggregate amount of approximately $4 billion for remediation costs relating to the environmental damage at chemical sites previously operated by SNIA’s other subsidiaries. In September 2011 and July 2014, the Bankruptcy Court of Udine and the Bankruptcy Court of Milan held (in proceedings to which we were not parties) that the Italian Ministry of the Environment and other Italian government agencies (the “Public Administrations”) were not creditors of either SNIA or its subsidiaries in connection with their claims in the Italian insolvency proceedings. The Public Administrations appealed, and in January 2016, the Court of Udine rejected the appeal. The Public Administrations appealed that decision to the Supreme Court. In addition, the Bankruptcy Court of Milan’s decision has been appealed. In January 2012, SNIA filed a civil action against Sorin in the Civil Court of Milan asserting joint liability of a parent and a spun-off company; the Public Administrations entered voluntarily into the proceeding, asking Sorin, as jointly liable with SNIA, to pay compensation for SNIA’s environmental damages. On April 1, 2016, the Court of Milan dismissed all legal actions of SNIA and of the Public Administrations further requiring the Public Administrations to pay Sorin approximately €292,000 (approximately $323,901 as of March 31, 2022) for legal fees. The Public Administrations appealed the 2016 Decision to the Court of Appeal of Milan (“Court of Appeal”). On March 5, 2019, the Court of Appeal issued a partial decision on the merits declaring Sorin/LivaNova jointly liable with SNIA for SNIA’s environmental liabilities in an amount up to the fair value of the net worth received by Sorin because of the Sorin spin-off, an estimated €572.1 million (approximately $634.6 million as of March 31, 2022). We appealed the partial decision on liability to the Italian Supreme Court in August 2019. In November 2021, the Court of Appeal delivered the remainder of its decision, ordering LivaNova to pay damages of approximately €453.6 million (approximately $503.1 million as of March 31, 2022). We appealed the decision on damages in December 2021, and in early 2022, the Italian Supreme Court agreed to combine the appeals on liability and damages. On February 21, 2022, the Court of Appeal notified the Company that it granted the Company a suspension with respect to the payment of damages until a decision has been reached on the appeal to the Italian Supreme Court. This suspension was subject to our providing a first demand bank guarantee of €270.0 million (approximately $299.5 million as of March 31, 2022) within 30 calendar days. On March 21, 2022, LivaNova delivered the guarantee as required by the Court of Appeal, thereby satisfying the condition to obtain the suspension of the Court of Appeal’s judgment for the payment of damages in connection with the SNIA litigation until review of such judgment by the Italian Supreme Court. Refer to “Note 5. Financing Arrangements” for information on the financing of the guarantee. In 2011, Caffaro, a SNIA subsidiary, sold its Brescia chemical business to Caffaro Brescia, a third party belonging to the Todisco group, and as part of the acquisition, Caffaro Brescia agreed to secure hydraulic barriers at the site and maintain existing environmental security measures. In September 2020, Caffaro Brescia declared it was withdrawing from its agreement to maintain the environmental measures. In January 2021, we (in addition to Caffaro Brescia, and other non-LivaNova entities) received an administrative order (“Order”) from the Italian Ministry of the Environment requiring us to ensure the maintenance of the environmental measures and to guarantee that such works remain fully operational, the annual management and maintenance for which is estimated at approximately €1 million per year. LivaNova’s receipt of the Order appears to be based on the aforementioned Court of Appeal decision regarding our alleged joint liability with SNIA for SNIA’s environmental liabilities. Our response, dated February 16, 2021, disputes the grounds upon which the Order is based. We also appealed the Order in the Administrative Court in Brescia. We have not recognized a liability in connection with these related matters because any potential loss is not currently probable. Contract Litigation On November 25, 2019, LivaNova received notice of a lawsuit initiated by former members of Caisson Interventional, LLC (“Caisson”), a subsidiary of the Company acquired in 2017. The lawsuit, Todd J. Mortier, as Member Representative of the former Members of Caisson Interventional, LLC v. LivaNova USA, Inc., is currently pending in the United States District Court for the District of Minnesota. The complaint alleges (i) breach of contract, (ii) breach of the covenant of good faith and fair dealing and (iii) unjust enrichment in connection with the Company’s operation of Caisson’s Transcatheter Mitral Valve Replacement (“TMVR”) program and the Company’s November 20, 2019 announcement that it was ending the TMVR program at the end of 2019. The lawsuit seeks damages arising out of the 2017 acquisition agreement, including various regulatory milestone payments. We intend to vigorously defend this claim. The Company has not recognized a liability related to this matter because any potential loss is not currently probable or reasonably estimable. Other Matters Additionally, we are the subject of various pending or threatened legal actions and proceedings that arise in the ordinary course of our business. These matters are subject to many uncertainties and outcomes that are not predictable and that may not be known for extended periods of time. Since the outcome of these matters cannot be predicted with certainty, the costs associated with them could have a material adverse effect on our consolidated net income, financial position or liquidity. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 8. Stockholders' Equity The tables below present the condensed consolidated statements of stockholders’ equity as of and for the three months ended March 31, 2022 and 2021 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit (1) Total Stockholders' Equity (1) December 31, 2021 53,762 $ 82,295 $ 2,117,961 $ (650) $ (7,177) $ (897,784) $ 1,294,645 Stock-based compensation plans 2 3 3,137 31 — — 3,171 Net income — — — — — 2,993 2,993 Other comprehensive loss — — — — (8,955) — (8,955) March 31, 2022 53,764 $ 82,298 $ 2,121,098 $ (619) $ (16,132) $ (894,791) $ 1,291,854 December 31, 2020 49,447 $ 76,300 $ 1,768,156 $ (1,034) $ 27,809 $ (761,966) $ 1,109,265 Stock-based compensation plans 8 10 2,251 236 — — 2,497 Net loss — — — — — (30,761) (30,761) Other comprehensive income — — — — (25,871) — (25,871) March 31, 2021 49,455 $ 76,310 $ 1,770,407 $ (798) $ 1,938 $ (792,727) $ 1,055,130 (1) Accumulated deficit and total stockholders’ equity as of March 31, 2021 and net loss for the three months ended March 31, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” The table below presents the change in each component of AOCI, net of tax, and the reclassifications out of AOCI into net income for the three months ended March 31, 2022 and 2021 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) (1) Total December 31, 2021 $ (945) $ (6,232) $ (7,177) Other comprehensive loss before reclassifications, before tax (642) (8,260) (8,902) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (642) (8,260) (8,902) Reclassification of loss from accumulated other comprehensive income, before tax (53) — (53) Reclassification of tax benefit — — — Reclassification of loss from accumulated other comprehensive income, after tax (53) — (53) Net current-period other comprehensive loss, net of tax (695) (8,260) (8,955) March 31, 2022 $ (1,640) $ (14,492) $ (16,132) December 31, 2020 $ 2,319 $ 25,490 $ 27,809 Other comprehensive income before reclassifications, before tax (1,146) (25,875) (27,021) Tax expense 534 — 534 Other comprehensive income before reclassifications, net of tax (612) (25,875) (26,487) Reclassification of loss from accumulated other comprehensive income (loss), before tax 811 — 811 Reclassification of tax benefit (195) — (195) Reclassification of loss from accumulated other comprehensive income (loss), after tax 616 — 616 Net current-period other comprehensive income, net of tax 4 (25,875) (25,871) March 31, 2021 $ 2,323 $ (385) $ 1,938 (1) Taxes are not provided for foreign currency translation adjustments as translation adjustments are related to earnings that are intended to be reinvested in the countries where earned. |
Stock-Based Incentive Plans
Stock-Based Incentive Plans | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Incentive Plans | Note 9. Stock-Based Incentive Plans Stock-based incentive plans compensation expense is as follows (in thousands): Three Months Ended March 31, 2022 2021 Service-based restricted stock units (“RSUs”) $ 5,344 $ 4,842 Service-based stock appreciation rights (“SARs”) 2,938 3,322 Market performance-based restricted stock units 851 763 Operating performance-based restricted stock units 785 267 Employee share purchase plan 338 342 Total stock-based compensation expense $ 10,256 $ 9,536 During the three months ended March 31, 2022, we issued stock-based compensatory awards with terms approved by the Compensation Committee of our Board of Directors. The awards with service conditions generally vest ratably over four years and are subject to forfeiture unless service conditions are met. The market performance-based awards that were issued cliff vest after three years subject to the rank of our total shareholder return for the three-year period ending December 31, 2024 relative to the total shareholder returns for a peer group of companies. The adjusted free cash flow and return on invested capital operating performance-based awards that were issued cliff vest after three years subject to the achievement of certain thresholds of cumulative results for the three-year period ending December 31, 2024. Compensation expense related to awards granted during 2022 for the three months ended March 31, 2022 was $0.1 million. Stock-based compensation agreements issued during the three months ended March 31, 2022, representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Three Months Ended March 31, 2022 Shares Weighted Average Grant Date Fair Value Service-based SARs 553,050 $ 34.13 Service-based RSUs 246,824 $ 82.04 Market performance-based RSUs 44,180 $ 103.02 Operating performance-based RSUs 44,174 $ 82.04 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income Taxes Our effective income tax rate for the three months ended March 31, 2022 was 45.6% compared with (9.4)% for the three months ended March 31, 2021. Our effective income tax rate fluctuates based on, among other factors, changes in pretax income in countries with varying statutory tax rates, valuation allowances, tax credits and incentives, and unrecognized tax benefits associated with uncertain tax positions. We continually assess the realizability of our worldwide deferred tax asset and valuation allowance positions, and when the need arises, we establish or release valuation allowances accordingly. Compared with the three months ended March 31, 2021, the change in the effective tax rate for the three months ended March 31, 2022 was primarily attributable to changes in the valuation allowances and changes in income before tax in countries with varying statutory tax rates as compared to changes in valuation allowances and other discrete items during the three months ended March 31, 2021. We operate in multiple jurisdictions throughout the world, and our tax returns are periodically audited or subjected to review by tax authorities. As a result, there is an uncertainty in income taxes recognized in our financial statements. Tax benefits totaling $1.7 million and $1.7 million were unrecognized as of March 31, 2022 and December 31, 2021, respectively. It is reasonably possible that, within the next twelve months, due to the settlement of uncertain tax positions with various tax authorities and the expiration of statutes of limitations, unrecognized tax benefits could decrease by up to approximately $0.6 million. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 11. Earnings Per Share Reconciliation of the shares used in the basic and diluted earnings per share computations for the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three Months Ended March 31, 2022 2021 Basic weighted average shares outstanding 53,300 48,736 Add effects of share-based compensation instruments (1) 876 — Diluted weighted average shares outstanding 54,176 48,736 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 2.2 million and 4.3 million for the three months ended March 31, 2022 and 2021, respectively, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Informat
Geographic and Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Geographic and Segment Information | Note 12. Geographic and Segment Information We identify operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources, developing and executing our strategy, and assessing performance. We have three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory Support. Our Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. Our Neuromodulation segment is engaged in the design, development and marketing of devices that deliver neuromodulation therapy to treat drug-resistant epilepsy (“DRE”), difficult-to-treat depression (“DTD”) and obstructive sleep apnea (“OSA”). Neuromodulation products include the VNS Therapy System, which consists of an implantable pulse generator, a lead that connects the generator to the vagus nerve, and other accessories. Our Advanced Circulatory Support segment is engaged in the development, production and sale of leading-edge temporary life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae. “Other” includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. For 2021, other also includes the results of our Heart Valves business, which was disposed of on June 1, 2021. Net sales of our reportable segments include revenues from the sale of products that each reportable segment develops and manufactures or distributes. We define segment income as operating income before merger and integration, restructuring and amortization of intangibles. We operate under three geographic regions: U.S., Europe, and Rest of World. The table below presents net sales by operating segment and geographic region (in thousands): Three Months Ended March 31, 2022 2021 Cardiopulmonary United States $ 38,096 $ 35,759 Europe 32,067 30,626 Rest of World 46,912 42,334 117,075 108,719 Neuromodulation United States 87,210 82,300 Europe 12,456 11,679 Rest of World 10,561 9,720 110,227 103,699 Advanced Circulatory Support United States 10,963 12,560 Europe 603 228 Rest of World 117 204 11,683 12,992 Other (1) United States — 2,717 Europe — 8,284 Rest of World 1,190 11,192 1,190 22,193 Totals United States 136,269 133,336 Europe (2) 45,126 50,817 Rest of World 58,780 63,450 Total (3) $ 240,175 $ 247,603 (1) For 2021, other primarily includes the net sales of the Company’s Heart Valves business, which was disposed of on June 1, 2021. (2) Europe includes those countries in which we have a direct sales presence, whereas European countries in which we sell through distributors are included in Rest of World. (3) No single customer represented over 10% of our consolidated net sales. No country’s net sales exceeded 10% of our consolidated sales except for the U.S. The table below presents a reconciliation of segment income to consolidated income (loss) before tax (in thousands): Three Months Ended March 31, 2022 2021 (1) Cardiopulmonary $ 6,895 $ 1,442 Neuromodulation 37,478 34,083 Advanced Circulatory Support (5,438) 2,393 Other (2) (23,082) (30,195) Total reportable segment income 15,853 7,723 Other expenses (3) 6,348 13,421 Operating income (loss) 9,505 (5,698) Interest expense (7,840) (15,936) Foreign exchange and other gains/(losses) 3,904 (6,443) Income (loss) before tax $ 5,569 $ (28,077) (1) Segment income for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” (2) Other includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. For 2021, other also includes the results of the Company’s Heart Valves business, which was disposed of on June 1, 2021. (3) Other expenses primarily consist of amortization of intangible assets for the three months ended March 31, 2022, as well as merger and integration expense and restructuring expense during the three months ended March 31, 2021. Assets by segment are as follows (in thousands): March 31, 2022 December 31, 2021 Cardiopulmonary $ 905,140 $ 921,481 Neuromodulation 653,484 646,394 Advanced Circulatory Support 230,278 231,846 Other 627,981 401,230 Total $ 2,416,883 $ 2,200,951 Capital expenditures by segment are as follows (in thousands): Three Months Ended March 31, 2022 2021 Cardiopulmonary $ 1,829 $ 3,049 Neuromodulation 84 40 Advanced Circulatory Support 684 556 Other 2,983 1,469 Total $ 5,580 $ 5,114 The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2022 were as follows (in thousands): Cardiopulmonary Neuromodulation Advanced Circulatory Support Total December 31, 2021 $ 398,245 $ 398,754 $ 102,526 $ 899,525 Foreign currency adjustments (2,926) — — (2,926) March 31, 2022 $ 395,319 $ 398,754 $ 102,526 $ 896,599 Property, plant and equipment, net by geography are as follows (in thousands): March 31, 2022 December 31, 2021 United States $ 62,099 $ 60,852 Europe 80,987 85,313 Rest of World 4,871 3,901 Total $ 147,957 $ 150,066 |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Financial Information | Note 13. Supplemental Financial Information Inventories consisted of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials $ 48,367 $ 43,958 Work-in-process 16,846 14,161 Finished goods 49,631 47,721 $ 114,844 $ 105,840 As of March 31, 2022 and December 31, 2021, inventories include adjustments totaling $9.8 million and $8.9 million, respectively, to record balances at lower of cost or net realizable value. Accrued liabilities and other consisted of the following (in thousands): March 31, 2022 December 31, 2021 Contingent consideration (1) $ 11,268 $ 11,552 Operating lease liabilities 10,967 11,261 Legal and other administrative costs 10,751 8,948 Amount payable to Gyrus Capital S.A. 9,610 11,418 Contract liabilities 8,722 8,419 Research and development costs 5,638 5,329 Interest payable 2,516 359 Provisions for agents, returns and other 2,029 2,535 Other accrued expenses 30,525 29,116 $ 92,026 $ 88,937 (1) Refer to “Note 4. Fair Value Measurements” As of March 31, 2022 and December 31, 2021, contract liabilities of $10.5 million and $9.8 million, respectively, are included within accrued liabilities and other long-term liabilities on the condensed consolidated balance sheets. The table below presents the items included within foreign exchange and other gains/(losses) on the condensed consolidated statements of income (loss) (in thousands): Three Months Ended March 31, 2022 2021 Exchangeable Notes fair value adjustment (1) $ 11,040 $ (26,335) Capped call fair value adjustment (1) (9,912) 12,550 Investment revaluation (2) — 4,642 Other derivative liabilities fair value adjustment — 3,167 Foreign exchange rate fluctuations 2,791 (409) Interest income 20 (74) Other (35) 16 Foreign exchange and other gains/(losses) $ 3,904 $ (6,443) (1) Refer to “Note 4. Fair Value Measurements” (2) Refer to “Note 3. Investments” The table below presents a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the amounts shown on the condensed consolidated statement of cash flows (in thousands): March 31, 2022 December 31, 2021 Cash and cash equivalents $ 128,737 $ 207,992 Restricted cash (1) 313,647 — Cash, cash equivalents and restricted cash $ 442,384 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 7. Commitments and Contingencies.” |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 14. Subsequent Event Acquisition of ALung Technologies, Inc. As of March 31, 2022, LivaNova owned a 3% investment in ALung Technologies, Inc. (“ALung”), a privately held medical device company focused on creating advanced medical devices for treating respiratory failure, with a carrying value of $3.0 million, as well as a note receivable with a carrying value of $2.5 million. On May 2, 2022, we acquired the remaining 97% of equity interests in ALung for a purchase price of up to $110.0 million, consisting of $10.0 million paid at closing, subject to customary adjustments, and contingent considerations of up to $100.0 million payable upon achievement of certain sales-based milestones beginning in 2023 and ending in 2027. Due to the timing of the acquisition, the initial accounting for this acquisition is not complete as of the filing date of this Quarterly Report on Form 10-Q. |
Divestiture of Heart Valve Busi
Divestiture of Heart Valve Business | 3 Months Ended |
Mar. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestiture of Heart Valve Business | Note 2. Divestiture of Heart Valve Business On December 2, 2020, LivaNova entered into a Purchase Agreement with Mitral Holdco S.à r.l., a company incorporated under the laws of Luxembourg and wholly-owned and controlled by funds advised by Gyrus Capital S.A., a Swiss private equity firm. The Purchase Agreement provides for the divestiture of certain of LivaNova’s subsidiaries as well as certain other assets and liabilities relating to the Company’s Heart Valve business and site management operations conducted by the Company’s subsidiary LivaNova Site Management (“LSM”) at the Company’s Saluggia campus for €60.0 million. On April 9, 2021, LivaNova and the Purchaser entered into an A&R Purchase Agreement which amends and restates the original Purchase Agreement to, among other things, defer the closing of the sale and purchase of LSM by up to two years and include or amend certain additional terms relating to such deferral, including certain amendments relating to the potential hazardous substances liabilities of LSM and the related expense reimbursement provisions. The closing of the sale of the Heart Valve business occurred on June 1, 2021, and we received €34.8 million (approximately $42.5 million as of June 1, 2021), subject to customary trade working capital and net indebtedness adjustments, as set forth in the Purchase Agreement. We also received $3.0 million in December 2021. An additional €9.3 million (approximately $10.3 million as of March 31, 2022) is payable to LivaNova in 2022. During the three months ended March 31, 2021, we increased the carrying value of the disposal group by $1.0 million, which is included within other operating expenses on the condensed consolidated statement of income (loss). |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Financial Statements (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three months ended March 31, 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, 2021 has been derived from audited financial statements contained in our 2021 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 months ended March 31, 2022, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our 2021 Form 10-K. |
Reclassifications | Reclassifications We have 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 our financial condition, results of operations or cash flows. The prior period reclassifications on the condensed consolidated statements of income (loss) are summarized and presented below (in thousands): • Product remediation has been reclassified to cost of sales; • Merger and integration expenses have been reclassified to other operating expenses; • Restructuring expenses have been reclassified to other operating expenses; • Litigation provision, net has been reclassified to other operating expenses; • Amortization of intangibles has been reclassified to cost of sales or selling, general and administrative based on the nature of the underlying intangible asset; • Gain on the sale of Heart Valve business has been reclassified from revaluation of disposal group to other operating expenses; and • Interest income has been reclassified to foreign exchange and other gains/(losses). Three Months Ended March 31, 2021 As Revised Reclassifications Current Presentation Net sales $ 247,603 $ — $ 247,603 Cost of sales 80,491 3,704 84,195 Product remediation 68 (68) — Gross profit 167,044 (3,636) 163,408 Operating expenses: Selling, general and administrative 112,618 3,063 115,681 Research and development 44,625 — 44,625 Merger and integration expenses 630 (630) — Restructuring expenses 6,092 (6,092) — Revaluation of disposal group (966) 966 — Amortization of intangibles 6,699 (6,699) — Litigation provision, net 3,044 (3,044) — Other operating expenses — 8,800 8,800 Operating loss (5,698) — (5,698) Interest income (74) 74 — Interest expense (15,936) — (15,936) Foreign exchange and other gains/(losses) (6,369) (74) (6,443) Loss before tax $ (28,077) $ — $ (28,077) |
Restricted Cash | Restricted CashThe Company classifies cash that is not available for use in its operations as restricted cash within current assets on the condensed consolidated balance sheet. |
Derivatives | If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in accumulated other comprehensive income (“AOCI”) until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to our condensed consolidated statements of income (loss) as shown in the tables below. We evaluate hedge effectiveness at inception. Cash flows from derivative contracts are reported as operating activities on our condensed consolidated statements of cash flows. |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Financial Statements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Prior Period Reclassifications on the Condensed Consolidated Statements of Income (Loss) | Consolidated Statements of Income (Loss) Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Cost of sales - exclusive of amortization $ 79,216 $ 1,275 $ 80,491 Operating loss (4,423) (1,275) (5,698) Loss before tax (26,802) (1,275) (28,077) Income tax expense 2,856 (212) 2,644 Net loss (29,698) (1,063) (30,761) Basic and diluted loss per share $ (0.61) $ (0.02) $ (0.63) Consolidated Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Net loss $ (29,698) $ (1,063) $ (30,761) Total comprehensive loss (55,569) (1,063) (56,632) Consolidated Statements of Stockholders’ Equity As Previously Reported Adjustments As Revised Accumulated Deficit Total Stockholders’ Equity Accumulated Deficit Total Stockholders’ Equity Accumulated Deficit Total Stockholders’ Equity March 31, 2021 $ (782,100) $ 1,065,757 $ (10,627) $ (10,627) $ (792,727) $ 1,055,130 Consolidated Statements of Cash Flows Three Months Ended March 31, 2021 As Previously Reported Adjustments As Revised Net loss $ (29,698) $ (1,063) $ (30,761) Deferred tax expense (benefit) 37 (212) (175) Changes in operating assets and liabilities: Inventories (2,900) 1,275 (1,625) Net cash used in operating activities 19,480 — 19,480 • Product remediation has been reclassified to cost of sales; • Merger and integration expenses have been reclassified to other operating expenses; • Restructuring expenses have been reclassified to other operating expenses; • Litigation provision, net has been reclassified to other operating expenses; • Amortization of intangibles has been reclassified to cost of sales or selling, general and administrative based on the nature of the underlying intangible asset; • Gain on the sale of Heart Valve business has been reclassified from revaluation of disposal group to other operating expenses; and • Interest income has been reclassified to foreign exchange and other gains/(losses). Three Months Ended March 31, 2021 As Revised Reclassifications Current Presentation Net sales $ 247,603 $ — $ 247,603 Cost of sales 80,491 3,704 84,195 Product remediation 68 (68) — Gross profit 167,044 (3,636) 163,408 Operating expenses: Selling, general and administrative 112,618 3,063 115,681 Research and development 44,625 — 44,625 Merger and integration expenses 630 (630) — Restructuring expenses 6,092 (6,092) — Revaluation of disposal group (966) 966 — Amortization of intangibles 6,699 (6,699) — Litigation provision, net 3,044 (3,044) — Other operating expenses — 8,800 8,800 Operating loss (5,698) — (5,698) Interest income (74) 74 — Interest expense (15,936) — (15,936) Foreign exchange and other gains/(losses) (6,369) (74) (6,443) Loss before tax $ (28,077) $ — $ (28,077) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements on a Recurring Basis | The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value as of March 31, 2022 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “FX”) $ 262 $ — $ 262 $ — Derivative assets - freestanding instruments (FX) 21 — 21 — Derivative assets - capped call derivatives 96,717 — — 96,717 Convertible notes receivable 2,770 — — 2,770 $ 99,770 $ — $ 283 $ 99,487 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 1,946 $ — $ 1,946 $ — Derivative liabilities - freestanding instruments (FX) 183 — 183 — Derivative liabilities - embedded exchange feature 170,660 — — 170,660 Contingent consideration arrangements 94,609 — — 94,609 $ 267,398 $ — $ 2,129 $ 265,269 Fair Value as of December 31, 2021 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “ FX ” ) $ 243 $ — $ 243 $ — Derivative assets - freestanding instruments (FX) 61 — 61 — Derivative assets - capped call derivatives 106,629 — — 106,629 Convertible notes receivable 2,767 — — 2,767 $ 109,700 $ — $ 304 $ 109,396 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 1,286 $ — $ 1,286 $ — Derivative liabilities - freestanding instruments (FX) 427 — 427 — Derivative liabilities - embedded exchange feature 181,700 — — 181,700 Contingent consideration arrangements 98,382 — — 98,382 $ 281,795 $ — $ 1,713 $ 280,082 |
Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements | The following table provides a reconciliation of the beginning and ending balances of our recurring fair value measurements, using significant unobservable inputs (Level 3) (in thousands): Capped Call Derivative Asset Convertible Notes Receivable Embedded Exchange Feature Derivative Liability Contingent Consideration Liability Arrangements As of December 31, 2021 $ 106,629 $ 2,767 $ 181,700 $ 98,382 Changes in fair value (9,912) 3 (11,040) (3,773) Total at March 31, 2022 96,717 2,770 170,660 94,609 Less current portion at March 31, 2022 — 2,495 — 11,268 Long-term portion at March 31, 2022 $ 96,717 $ 275 $ 170,660 $ 83,341 |
Schedule of Fair Value of Contingent Consideration Arrangements by Acquisition | The following table provides the fair value of our Level 3 contingent consideration arrangements by acquisition (in thousands): March 31, 2022 December 31, 2021 ImThera $ 83,341 $ 86,830 TandemLife 11,268 11,552 $ 94,609 $ 98,382 |
Significant Unobservable Inputs Related to Contingent Consideration | Both arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of March 31, 2022: ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 5.3% Probability of payment 85% Projected payment year 2024 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 13.9% Credit risk discount rate 5.5% - 6.2% Revenue volatility 32.5% Probability of payment 85% Projected years of earnout 2025 - 2028 The TandemLife business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain regulatory milestones. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of March 31, 2022: TandemLife Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 4.9% Probability of payment 90% Projected payment year 2023 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The outstanding principal amount of our long-term debt as of March 31, 2022 and December 31, 2021 was as follows (in thousands, except interest rates): March 31, 2022 December 31, 2021 Maturity Interest Rate 2020 Cash Exchangeable Senior Notes $ 228,535 $ 225,140 December 2025 3.00% Bridge Loan Facility 216,366 — June 2023 4.17% Bank of America Merrill Lynch Banco Múltiplo S.A. 7,203 6,113 July 2023 9.32% Mediocredito Italiano 3,312 3,379 December 2023 0.50% - 2.74% Bank of America, U.S. 1,500 1,500 January 2023 2.85% Other 623 663 Total long-term facilities 457,539 236,795 Less current portion of long-term debt 1,729 226,946 Total long-term debt $ 455,810 $ 9,849 |
Derivatives and Risk Manageme_2
Derivatives and Risk Management (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amounts of Derivative Contracts Designated Cash Flow Hedges | The gross notional amounts of open derivative contracts designated as cash flow hedges at March 31, 2022 and December 31, 2021 were as follows (in thousands): Description of Derivative Contract March 31, 2022 December 31, 2021 FX derivative contracts to be exchanged for British Pounds $ 8,126 $ 11,160 FX derivative contracts to be exchanged for Japanese Yen 3,334 6,648 FX derivative contracts to be exchanged for Euros 43,620 58,224 $ 55,080 $ 76,032 |
Schedule of Cash Flow Hedges Included in AOCI | After-tax net gain associated with derivatives designated as cash flow hedges recorded in the ending balance of AOCI and the amount expected to be reclassified to earnings in the next 12 months are as follows (in thousands): Description of Derivative Contract After-Tax Net Loss in AOCI as of March 31, 2022 After-Tax Net Loss in AOCI as of March 31, 2022 Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (1,640) $ (1,640) Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in other comprehensive income (loss) (“OCI”) and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended March 31, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings Losses Recognized in OCI (Losses) Gains Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other gains/(losses) $ (642) $ 441 $ (2,223) $ (1,496) FX derivative contracts SG&A — (388) — 685 $ (642) $ 53 $ (2,223) $ (811) |
Schedule of Fair Value of Derivative Instruments in Statement of Financial Position | The following tables present the fair value and the location of derivative contracts reported on the condensed consolidated balance sheets (in thousands): March 31, 2022 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) FX derivative contracts Current derivative assets $ 262 Current derivative liabilities $ 1,946 Total derivatives designated as hedging instruments 262 1,946 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative assets 3 Current derivative assets 183 FX derivative contracts Current derivative liabilities 18 Capped call derivatives Long-term derivative assets 96,717 Embedded exchange feature Long-term derivative liabilities 170,660 Total derivatives not designated as hedging instruments 96,738 170,843 Total derivatives $ 97,000 $ 172,789 December 31, 2021 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) FX derivative contracts Accrued liabilities $ 243 Accrued liabilities $ 1,286 Total derivatives designated as hedging instruments 243 1,286 Derivatives Not Designated as Hedging Instruments FX derivative contracts Accrued liabilities 61 Accrued liabilities 427 Capped call derivatives Current derivative assets 106,629 Embedded exchange feature Current derivative liabilities 181,700 Total derivatives not designated as hedging instruments 106,690 182,127 Total derivatives $ 106,933 $ 183,413 (1) For the classification of inputs used to evaluate the fair value of our derivatives, refer to “Note 4. Fair Value Measurements.” |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation Provision Liabilities | Changes in the carrying amount of the litigation provision liability are as follows (in thousands): Total litigation provision liability at December 31, 2021 $ 39,470 Payments (2,754) Adjustments (1) (343) FX and other (142) Total litigation provision liability at March 31, 2022 36,231 Less current portion of litigation provision liability at March 31, 2022 30,126 Long-term portion of litigation provision liability at March 31, 2022 (2) $ 6,105 (1) Adjustments to the litigation provision are included within other operating expenses on the condensed consolidated statements of income (loss). (2) Included within other long-term liabilities on the condensed consolidated balance sheet. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | The tables below present the condensed consolidated statements of stockholders’ equity as of and for the three months ended March 31, 2022 and 2021 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated Deficit (1) Total Stockholders' Equity (1) December 31, 2021 53,762 $ 82,295 $ 2,117,961 $ (650) $ (7,177) $ (897,784) $ 1,294,645 Stock-based compensation plans 2 3 3,137 31 — — 3,171 Net income — — — — — 2,993 2,993 Other comprehensive loss — — — — (8,955) — (8,955) March 31, 2022 53,764 $ 82,298 $ 2,121,098 $ (619) $ (16,132) $ (894,791) $ 1,291,854 December 31, 2020 49,447 $ 76,300 $ 1,768,156 $ (1,034) $ 27,809 $ (761,966) $ 1,109,265 Stock-based compensation plans 8 10 2,251 236 — — 2,497 Net loss — — — — — (30,761) (30,761) Other comprehensive income — — — — (25,871) — (25,871) March 31, 2021 49,455 $ 76,310 $ 1,770,407 $ (798) $ 1,938 $ (792,727) $ 1,055,130 (1) Accumulated deficit and total stockholders’ equity as of March 31, 2021 and net loss for the three months ended March 31, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents the change in each component of AOCI, net of tax, and the reclassifications out of AOCI into net income for the three months ended March 31, 2022 and 2021 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) (1) Total December 31, 2021 $ (945) $ (6,232) $ (7,177) Other comprehensive loss before reclassifications, before tax (642) (8,260) (8,902) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (642) (8,260) (8,902) Reclassification of loss from accumulated other comprehensive income, before tax (53) — (53) Reclassification of tax benefit — — — Reclassification of loss from accumulated other comprehensive income, after tax (53) — (53) Net current-period other comprehensive loss, net of tax (695) (8,260) (8,955) March 31, 2022 $ (1,640) $ (14,492) $ (16,132) December 31, 2020 $ 2,319 $ 25,490 $ 27,809 Other comprehensive income before reclassifications, before tax (1,146) (25,875) (27,021) Tax expense 534 — 534 Other comprehensive income before reclassifications, net of tax (612) (25,875) (26,487) Reclassification of loss from accumulated other comprehensive income (loss), before tax 811 — 811 Reclassification of tax benefit (195) — (195) Reclassification of loss from accumulated other comprehensive income (loss), after tax 616 — 616 Net current-period other comprehensive income, net of tax 4 (25,875) (25,871) March 31, 2021 $ 2,323 $ (385) $ 1,938 (1) Taxes are not provided for foreign currency translation adjustments as translation adjustments are related to earnings that are intended to be reinvested in the countries where earned. |
Stock-Based Incentive Plans (Ta
Stock-Based Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-based Incentive Plans | Stock-based incentive plans compensation expense is as follows (in thousands): Three Months Ended March 31, 2022 2021 Service-based restricted stock units (“RSUs”) $ 5,344 $ 4,842 Service-based stock appreciation rights (“SARs”) 2,938 3,322 Market performance-based restricted stock units 851 763 Operating performance-based restricted stock units 785 267 Employee share purchase plan 338 342 Total stock-based compensation expense $ 10,256 $ 9,536 Stock-based compensation agreements issued during the three months ended March 31, 2022, representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Three Months Ended March 31, 2022 Shares Weighted Average Grant Date Fair Value Service-based SARs 553,050 $ 34.13 Service-based RSUs 246,824 $ 82.04 Market performance-based RSUs 44,180 $ 103.02 Operating performance-based RSUs 44,174 $ 82.04 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Weighted-Average Shares Outstanding | Reconciliation of the shares used in the basic and diluted earnings per share computations for the three months ended March 31, 2022 and 2021 are as follows (in thousands): Three Months Ended March 31, 2022 2021 Basic weighted average shares outstanding 53,300 48,736 Add effects of share-based compensation instruments (1) 876 — Diluted weighted average shares outstanding 54,176 48,736 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 2.2 million and 4.3 million for the three months ended March 31, 2022 and 2021, respectively, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Inform_2
Geographic and Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | The table below presents net sales by operating segment and geographic region (in thousands): Three Months Ended March 31, 2022 2021 Cardiopulmonary United States $ 38,096 $ 35,759 Europe 32,067 30,626 Rest of World 46,912 42,334 117,075 108,719 Neuromodulation United States 87,210 82,300 Europe 12,456 11,679 Rest of World 10,561 9,720 110,227 103,699 Advanced Circulatory Support United States 10,963 12,560 Europe 603 228 Rest of World 117 204 11,683 12,992 Other (1) United States — 2,717 Europe — 8,284 Rest of World 1,190 11,192 1,190 22,193 Totals United States 136,269 133,336 Europe (2) 45,126 50,817 Rest of World 58,780 63,450 Total (3) $ 240,175 $ 247,603 (1) For 2021, other primarily includes the net sales of the Company’s Heart Valves business, which was disposed of on June 1, 2021. (2) Europe includes those countries in which we have a direct sales presence, whereas European countries in which we sell through distributors are included in Rest of World. |
Schedule of Segment Reporting Information, by Segment | The table below presents a reconciliation of segment income to consolidated income (loss) before tax (in thousands): Three Months Ended March 31, 2022 2021 (1) Cardiopulmonary $ 6,895 $ 1,442 Neuromodulation 37,478 34,083 Advanced Circulatory Support (5,438) 2,393 Other (2) (23,082) (30,195) Total reportable segment income 15,853 7,723 Other expenses (3) 6,348 13,421 Operating income (loss) 9,505 (5,698) Interest expense (7,840) (15,936) Foreign exchange and other gains/(losses) 3,904 (6,443) Income (loss) before tax $ 5,569 $ (28,077) (1) Segment income for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” (2) Other includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. For 2021, other also includes the results of the Company’s Heart Valves business, which was disposed of on June 1, 2021. (3) Other expenses primarily consist of amortization of intangible assets for the three months ended March 31, 2022, as well as merger and integration expense and restructuring expense during the three months ended March 31, 2021. Assets by segment are as follows (in thousands): March 31, 2022 December 31, 2021 Cardiopulmonary $ 905,140 $ 921,481 Neuromodulation 653,484 646,394 Advanced Circulatory Support 230,278 231,846 Other 627,981 401,230 Total $ 2,416,883 $ 2,200,951 Capital expenditures by segment are as follows (in thousands): Three Months Ended March 31, 2022 2021 Cardiopulmonary $ 1,829 $ 3,049 Neuromodulation 84 40 Advanced Circulatory Support 684 556 Other 2,983 1,469 Total $ 5,580 $ 5,114 |
Schedule of Goodwill by Segment | The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2022 were as follows (in thousands): Cardiopulmonary Neuromodulation Advanced Circulatory Support Total December 31, 2021 $ 398,245 $ 398,754 $ 102,526 $ 899,525 Foreign currency adjustments (2,926) — — (2,926) March 31, 2022 $ 395,319 $ 398,754 $ 102,526 $ 896,599 |
Long-lived Assets by Geographic Areas | Property, plant and equipment, net by geography are as follows (in thousands): March 31, 2022 December 31, 2021 United States $ 62,099 $ 60,852 Europe 80,987 85,313 Rest of World 4,871 3,901 Total $ 147,957 $ 150,066 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | Inventories consisted of the following (in thousands): March 31, 2022 December 31, 2021 Raw materials $ 48,367 $ 43,958 Work-in-process 16,846 14,161 Finished goods 49,631 47,721 $ 114,844 $ 105,840 |
Accrued Liabilities | Accrued liabilities and other consisted of the following (in thousands): March 31, 2022 December 31, 2021 Contingent consideration (1) $ 11,268 $ 11,552 Operating lease liabilities 10,967 11,261 Legal and other administrative costs 10,751 8,948 Amount payable to Gyrus Capital S.A. 9,610 11,418 Contract liabilities 8,722 8,419 Research and development costs 5,638 5,329 Interest payable 2,516 359 Provisions for agents, returns and other 2,029 2,535 Other accrued expenses 30,525 29,116 $ 92,026 $ 88,937 (1) Refer to “Note 4. Fair Value Measurements” |
Foreign Exchange and Other Gains (Losses) | The table below presents the items included within foreign exchange and other gains/(losses) on the condensed consolidated statements of income (loss) (in thousands): Three Months Ended March 31, 2022 2021 Exchangeable Notes fair value adjustment (1) $ 11,040 $ (26,335) Capped call fair value adjustment (1) (9,912) 12,550 Investment revaluation (2) — 4,642 Other derivative liabilities fair value adjustment — 3,167 Foreign exchange rate fluctuations 2,791 (409) Interest income 20 (74) Other (35) 16 Foreign exchange and other gains/(losses) $ 3,904 $ (6,443) (1) Refer to “Note 4. Fair Value Measurements” (2) Refer to “Note 3. Investments” |
Schedule of Cash, Cash Equivalents and Restricted Cash | The table below presents a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the amounts shown on the condensed consolidated statement of cash flows (in thousands): March 31, 2022 December 31, 2021 Cash and cash equivalents $ 128,737 $ 207,992 Restricted cash (1) 313,647 — Cash, cash equivalents and restricted cash $ 442,384 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 7. Commitments and Contingencies.” |
Schedule of Cash, Cash Equivalents and Restricted Cash | The table below presents a reconciliation of cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the amounts shown on the condensed consolidated statement of cash flows (in thousands): March 31, 2022 December 31, 2021 Cash and cash equivalents $ 128,737 $ 207,992 Restricted cash (1) 313,647 — Cash, cash equivalents and restricted cash $ 442,384 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 7. Commitments and Contingencies.” |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Financial Statements (Narrative) (Details) $ in Thousands, € in Millions | Feb. 21, 2022USD ($) | Feb. 21, 2022EUR (€) | Dec. 31, 2021USD ($) | Mar. 31, 2022USD ($) | Mar. 18, 2022 |
Segment Reporting Information [Line Items] | |||||
Restricted cash | $ 0 | $ 313,647 | |||
Revenue Benchmark | Geographic Concentration Risk | Russian Federation | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk, percentage | 1.00% | ||||
Bridge Loan | |||||
Segment Reporting Information [Line Items] | |||||
Restricted cash | $ 313,600 | ||||
SNIA | Judicial Ruling | Bridge Loan | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of cash collateral required as guarantee | 105.00% | ||||
SNIA | Judicial Ruling | Surety Bond | |||||
Segment Reporting Information [Line Items] | |||||
First demand bank guarantee | $ 299,500 | € 270 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales - exclusive of amortization | $ 71,732 | $ 84,195 | [1] |
Operating loss | 9,505 | (5,698) | [1] |
Income (loss) before tax | 5,569 | (28,077) | [1] |
Income tax expense | 2,537 | 2,644 | [1] |
Net income (loss) | $ 2,993 | $ (30,761) | [1],[2],[3] |
Basic loss per share (in dollars per share) | $ 0.06 | $ (0.63) | [1] |
Diluted loss per share (in dollars per share) | $ 0.06 | $ (0.63) | [1] |
As Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales - exclusive of amortization | $ 79,216 | ||
Operating loss | (4,423) | ||
Income (loss) before tax | (26,802) | ||
Income tax expense | 2,856 | ||
Net income (loss) | $ (29,698) | ||
Basic loss per share (in dollars per share) | $ (0.61) | ||
Diluted loss per share (in dollars per share) | $ (0.61) | ||
Adjustments | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales - exclusive of amortization | $ 1,275 | ||
Operating loss | (1,275) | ||
Income (loss) before tax | (1,275) | ||
Income tax expense | (212) | ||
Net income (loss) | $ (1,063) | ||
Basic loss per share (in dollars per share) | $ (0.02) | ||
Diluted loss per share (in dollars per share) | $ (0.02) | ||
As Revised | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales - exclusive of amortization | $ 80,491 | ||
Operating loss | (5,698) | ||
Income (loss) before tax | (28,077) | ||
Income tax expense | 2,644 | ||
Net income (loss) | $ (30,761) | ||
Basic loss per share (in dollars per share) | $ (0.63) | ||
Diluted loss per share (in dollars per share) | $ (0.63) | ||
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | $ 2,993 | $ (30,761) | [1],[2],[3] |
Total comprehensive loss | $ (5,962) | (56,632) | [2] |
As Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | (29,698) | ||
Total comprehensive loss | (55,569) | ||
Adjustments | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | (1,063) | ||
Total comprehensive loss | (1,063) | ||
As Revised | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | (30,761) | ||
Total comprehensive loss | $ (56,632) | ||
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Stockholders' Equity (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | $ 1,291,854 | $ 1,294,645 | $ 1,055,130 | $ 1,109,265 |
As Previously Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | 1,065,757 | |||
Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | (10,627) | |||
Accumulated Deficit | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | $ (894,791) | $ (897,784) | (792,727) | $ (761,966) |
Accumulated Deficit | As Previously Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | (782,100) | |||
Accumulated Deficit | Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total Stockholders’ Equity | $ (10,627) |
Unaudited Condensed Consolida_8
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | $ 2,993 | $ (30,761) | [1],[2],[3] |
Deferred tax expense (benefit) | (175) | ||
Inventories | (9,637) | (1,625) | [1] |
Net cash used in operating activities | $ 25,823 | 19,480 | [1] |
As Previously Reported | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | (29,698) | ||
Deferred tax expense (benefit) | 37 | ||
Inventories | (2,900) | ||
Net cash used in operating activities | 19,480 | ||
Adjustments | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | (1,063) | ||
Deferred tax expense (benefit) | (212) | ||
Inventories | 1,275 | ||
Net cash used in operating activities | 0 | ||
As Revised | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | $ (30,761) | ||
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Unaudited Condensed Consolida_9
Unaudited Condensed Consolidated Financial Statements - Prior Period Reclassifications on the Condensed Consolidated Statements of Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net sales | $ 240,175 | $ 247,603 | [1] |
Cost of sales | 71,732 | 84,195 | [1] |
Product remediation | 0 | ||
Gross profit | 168,443 | 163,408 | [1] |
Operating expenses: | |||
Selling, general and administrative | 118,525 | 115,681 | [1] |
Research and development | 40,918 | 44,625 | [1] |
Merger and integration expenses | 0 | ||
Restructuring expenses | 0 | ||
Revaluation of disposal group | 0 | ||
Amortization of intangibles | 0 | ||
Litigation provision, net | 0 | ||
Other operating expenses | (505) | 8,800 | [1] |
Operating income (loss) | 9,505 | (5,698) | [1] |
Interest income | 0 | ||
Interest expense | (7,840) | (15,936) | [1] |
Foreign exchange and other gains/(losses) | 3,904 | (6,443) | [1] |
Income (loss) before tax | $ 5,569 | (28,077) | [1] |
As Revised | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net sales | 247,603 | ||
Cost of sales | 80,491 | ||
Product remediation | 68 | ||
Gross profit | 167,044 | ||
Operating expenses: | |||
Selling, general and administrative | 112,618 | ||
Research and development | 44,625 | ||
Merger and integration expenses | 630 | ||
Restructuring expenses | 6,092 | ||
Revaluation of disposal group | (966) | ||
Amortization of intangibles | 6,699 | ||
Litigation provision, net | 3,044 | ||
Other operating expenses | 0 | ||
Operating income (loss) | (5,698) | ||
Interest income | (74) | ||
Interest expense | (15,936) | ||
Foreign exchange and other gains/(losses) | (6,369) | ||
Income (loss) before tax | (28,077) | ||
Reclassifications | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net sales | 0 | ||
Cost of sales | 3,704 | ||
Product remediation | (68) | ||
Gross profit | (3,636) | ||
Operating expenses: | |||
Selling, general and administrative | 3,063 | ||
Research and development | 0 | ||
Merger and integration expenses | (630) | ||
Restructuring expenses | (6,092) | ||
Revaluation of disposal group | 966 | ||
Amortization of intangibles | (6,699) | ||
Litigation provision, net | (3,044) | ||
Other operating expenses | 8,800 | ||
Operating income (loss) | 0 | ||
Interest income | 74 | ||
Interest expense | 0 | ||
Foreign exchange and other gains/(losses) | (74) | ||
Income (loss) before tax | $ 0 | ||
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Equity Method Investments [Line Items] | |||||
Carrying value of investments | $ 16,700 | $ 16,600 | |||
Gain (loss) on investment | $ 0 | $ 4,642 | |||
Zoll Medical Corporation | Cost Method Investee | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds from sale of investments | $ 23,100 | ||||
Gain (loss) on investment | $ 4,600 | ||||
Zoll Medical Corporation | Cost Method Investee | Prepaid Expenses and Other Current Assets | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Outstanding loans | $ 17,700 | $ 800 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Contingent consideration | $ 83,341 | $ 86,830 |
Capped Call Derivatives | ||
Assets: | ||
Derivative asset | 96,700 | |
Fair Value, Recurring | ||
Assets: | ||
Convertible notes receivable | 2,770 | 2,767 |
Total assets | 99,770 | 109,700 |
Liabilities: | ||
Contingent consideration | 94,609 | 98,382 |
Total liabilities | 267,398 | 281,795 |
Fair Value, Recurring | Embedded Exchange Feature | ||
Liabilities: | ||
Derivative liabilities | 170,660 | 181,700 |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 262 | 243 |
Liabilities: | ||
Derivative liabilities | 1,946 | 1,286 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 21 | 61 |
Liabilities: | ||
Derivative liabilities | 183 | 427 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Capped Call Derivatives | ||
Assets: | ||
Derivative asset | 96,717 | 106,629 |
Fair Value, Recurring | Level 1 | ||
Assets: | ||
Convertible notes receivable | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Embedded Exchange Feature | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Not Designated as Hedging Instruments | Capped Call Derivatives | ||
Assets: | ||
Derivative asset | 0 | 0 |
Fair Value, Recurring | Level 2 | ||
Assets: | ||
Convertible notes receivable | 0 | 0 |
Total assets | 283 | 304 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 2,129 | 1,713 |
Fair Value, Recurring | Level 2 | Embedded Exchange Feature | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 2 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 262 | 243 |
Liabilities: | ||
Derivative liabilities | 1,946 | 1,286 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 21 | 61 |
Liabilities: | ||
Derivative liabilities | 183 | 427 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Capped Call Derivatives | ||
Assets: | ||
Derivative asset | 0 | 0 |
Fair Value, Recurring | Level 3 | ||
Assets: | ||
Convertible notes receivable | 2,770 | 2,767 |
Total assets | 99,487 | 109,396 |
Liabilities: | ||
Contingent consideration | 94,609 | 98,382 |
Total liabilities | 265,269 | 280,082 |
Fair Value, Recurring | Level 3 | Embedded Exchange Feature | ||
Liabilities: | ||
Derivative liabilities | 170,660 | 181,700 |
Fair Value, Recurring | Level 3 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments | Capped Call Derivatives | ||
Assets: | ||
Derivative asset | $ 96,717 | $ 106,629 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Recurring Fair Value Measurements (Details) - Fair Value, Recurring - Level 3 $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | $ 98,382 |
Total at period end | 94,609 |
Embedded Exchange Feature Derivative Liability | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 181,700 |
Changes in fair value | (11,040) |
Total at period end | 170,660 |
Less current portion at period end | 0 |
Long-term portion at period end | 170,660 |
Contingent Consideration Liability Arrangements | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 98,382 |
Changes in fair value | (3,773) |
Total at period end | 94,609 |
Less current portion at period end | 11,268 |
Long-term portion at period end | 83,341 |
Capped Call Derivative Asset | |
Assets Measured on Recurring Basis | |
As of beginning period | 106,629 |
Changes in fair value | (9,912) |
Total at period end | 96,717 |
Less current portion at period end | 0 |
Long-term portion at period end | 96,717 |
Convertible Notes Receivable | |
Assets Measured on Recurring Basis | |
As of beginning period | 2,767 |
Changes in fair value | 3 |
Total at period end | 2,770 |
Less current portion at period end | 2,495 |
Long-term portion at period end | $ 275 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Mar. 31, 2022USD ($) | Jun. 30, 2020USD ($) | Jun. 17, 2020USD ($) |
Embedded Exchange Feature | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
10 percent decrease in stock price volatility, fair value | $ 154,500,000 | ||
10 percent increase in stock price volatility, fair value | 188,200,000 | ||
Capped Call Derivatives | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
10 percent decrease in stock price volatility, fair value | 107,400,000 | ||
10 percent increase in stock price volatility, fair value | $ 87,400,000 | ||
Measurement Input, Stock Price Volatility | Embedded Exchange Feature | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative liability, measurement input | 0.36 | ||
Measurement Input, Stock Price Volatility | Capped Call Derivatives | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative liability, measurement input | 0.36 | ||
Senior Notes | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt instrument, face amount | $ 287,500,000 | ||
2020 Cash Exchangeable Senior Notes | Senior Notes | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt instrument, face amount | $ 287,500,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Contingent Consideration by Acquisition (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | $ 83,341 | $ 86,830 |
Fair Value, Recurring | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 94,609 | 98,382 |
Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 94,609 | 98,382 |
Total fair value of Level 3 contingent consideration arrangements | 94,609 | 98,382 |
ImThera | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 83,341 | 86,830 |
TandemLife | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | $ 11,268 | $ 11,552 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs (Details) - Level 3 | Mar. 31, 2022 |
ImThera | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.053 |
ImThera | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.85 |
ImThera | Monte Carlo simulation | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.85 |
ImThera | Monte Carlo simulation | Revenue volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.325 |
ImThera | Minimum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.139 |
ImThera | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.055 |
ImThera | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.062 |
TandemLife | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.049 |
TandemLife | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.90 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 17, 2020 |
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 457,539 | $ 236,795 | |
Less current portion of long-term debt | 1,729 | 226,946 | |
Long-term debt obligations | $ 455,810 | 9,849 | |
Bank of America Merrill Lynch Banco Múltiplo S.A. | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 9.32% | ||
Mediocredito Italiano | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 0.50% | ||
Mediocredito Italiano | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 2.74% | ||
Bank of America, U.S. | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 2.85% | ||
Senior Notes | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 228,535 | 225,140 | |
Interest rate, stated percentage | 3.00% | 3.00% | |
Bridge Loan | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 216,366 | 0 | |
Bridge Loan | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 4.17% | ||
Loans Payable | Bank of America Merrill Lynch Banco Múltiplo S.A. | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 7,203 | 6,113 | |
Loans Payable | Mediocredito Italiano | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | 3,312 | 3,379 | |
Loans Payable | Bank of America, U.S. | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | 1,500 | 1,500 | |
Other | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 623 | $ 663 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) $ / shares in Units, € in Millions | Feb. 24, 2022USD ($) | Feb. 21, 2022USD ($) | Feb. 21, 2022EUR (€) | Jun. 17, 2020USD ($) | Mar. 31, 2022USD ($)claim$ / shares | Mar. 31, 2021USD ($) | Mar. 31, 2022£ / shares | Mar. 18, 2022 | Mar. 16, 2022USD ($) | Feb. 24, 2022EUR (€) | Dec. 31, 2021USD ($) | Aug. 13, 2021USD ($) | |
Debt Instrument [Line Items] | |||||||||||||
Restricted cash | $ 313,647,000 | $ 0 | |||||||||||
Amortization of debt issuance costs | 4,412,000 | $ 4,409,000 | [1] | ||||||||||
Proceeds from long-term debt obligations | $ 218,342,000 | 0 | |||||||||||
SNIA | Judicial Ruling | Surety Bond | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
First demand bank guarantee | $ 299,500,000 | € 270 | |||||||||||
Capped Call Derivatives | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative, cap price per share | $ / shares | $ 100 | ||||||||||||
Derivative asset | $ 96,700,000 | ||||||||||||
Bridge Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Restricted cash | $ 313,600,000 | ||||||||||||
Bridge Loan | SNIA | Judicial Ruling | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Percentage of cash collateral required as guarantee | 105.00% | ||||||||||||
Senior Notes | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate (percent) | 9.95% | ||||||||||||
Debt discounts and issuance costs | $ 82,000,000 | ||||||||||||
Amortization of debt issuance costs | $ 3,400,000 | $ 3,100,000 | |||||||||||
Debt issuance costs, net | 7,000,000 | ||||||||||||
Debt instrument, face amount | $ 287,500,000 | ||||||||||||
Unamortized discount (premium), net | $ 59,000,000 | 62,400,000 | |||||||||||
Interest rate, stated percentage | 3.00% | 3.00% | |||||||||||
Proceeds from long-term debt obligations | $ 278,000,000 | ||||||||||||
Unamortized discount | $ 75,000,000 | ||||||||||||
Redemption, threshold par value | £ / shares | £ 1 | ||||||||||||
Redemption price, percentage of exchange price | 130.00% | ||||||||||||
Conversion ratio | 0.016398 | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 79.27 | ||||||||||||
Redemption, threshold trading days | claim | 20 | ||||||||||||
Redemption, threshold consecutive trading days | claim | 30 | ||||||||||||
Option to exchange, price per share | $ / shares | $ 60.98 | ||||||||||||
Redemption price, percentage | 100.00% | ||||||||||||
Fair value of embedded derivative liability | $ 170,700,000 | ||||||||||||
Minimum | Bridge Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate, stated percentage | 4.17% | ||||||||||||
Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Short-term debt | $ 3,000,000 | 2,700,000 | |||||||||||
Line of credit, maximum borrowing capacity | $ 125,000,000 | ||||||||||||
Borrowed funds | $ 0 | $ 0 | |||||||||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
LIBOR floor rate | 0.00% | ||||||||||||
Revolving Credit Facility | Bridge Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate (percent) | 11.04% | ||||||||||||
Borrowed funds | $ 220,000,000 | ||||||||||||
Debt discounts and issuance costs | $ 4,500,000 | ||||||||||||
Amortization of debt issuance costs | 900,000 | ||||||||||||
Unamortized discount (premium), net | $ 3,600,000 | ||||||||||||
Revolving Credit Facility | Bridge Loan | Goldman Sachs Bank USA | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, maximum borrowing capacity | $ 220,000,000 | € 200 | |||||||||||
Revolving Credit Facility | Bridge Loan | Goldman Sachs Bank USA | Period One | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, period of interest rate increase | 15 days | ||||||||||||
Revolving Credit Facility | Bridge Loan | Goldman Sachs Bank USA | Period Two | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, period of interest rate increase | 90 days | ||||||||||||
Revolving Credit Facility | Bridge Loan | Goldman Sachs Bank USA | Period Three | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, period of interest rate increase | 90 days | ||||||||||||
Revolving Credit Facility | Bridge Loan | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
LIBOR floor rate | 0.50% | ||||||||||||
Revolving Credit Facility | Bridge Loan | Euro Interbank Offered Rate (EURIBOR) | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, basis spread on variable rate | 3.50% | ||||||||||||
Debt instrument, maximum interest rate | 5.25% | ||||||||||||
Revolving Credit Facility | Bridge Loan | Euro Interbank Offered Rate (EURIBOR) | Period One | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, increase in basis spread on variable rate | 0.25% | ||||||||||||
Revolving Credit Facility | Bridge Loan | Euro Interbank Offered Rate (EURIBOR) | Period Two | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, increase in basis spread on variable rate | 0.50% | ||||||||||||
Revolving Credit Facility | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate (percent) | 2.85% | ||||||||||||
Revolving Credit Facility | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate (percent) | 9.32% | ||||||||||||
Debt instrument, term | 364 days | ||||||||||||
Net leverage ratio | 4.50 | ||||||||||||
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Derivatives and Risk Manageme_3
Derivatives and Risk Management - Narrative (Details) - Foreign Exchange Contract - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Foreign exchange and other gains/(losses) | |||
Derivative [Line Items] | |||
Gain (loss) on derivative | $ 1 | $ 7.7 | |
Derivatives Not Designated as Hedging Instruments | |||
Derivative [Line Items] | |||
Notional amount | $ 93.8 | $ 136.7 |
Derivatives and Risk Manageme_4
Derivatives and Risk Management - Derivative Notional Amounts (Details) - Derivatives Designated as Hedging Instruments - Cash Flow Hedging - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Notional amount | $ 55,080 | $ 76,032 |
Foreign Exchange Contract | United Kingdom, Pounds | ||
Derivative [Line Items] | ||
Notional amount | 8,126 | 11,160 |
Foreign Exchange Contract | Japan, Yen | ||
Derivative [Line Items] | ||
Notional amount | 3,334 | 6,648 |
Foreign Exchange Contract | Euro Member Countries, Euro | ||
Derivative [Line Items] | ||
Notional amount | $ 43,620 | $ 58,224 |
Derivatives and Risk Manageme_5
Derivatives and Risk Management - Amount of Gain (Loss) Recognized in OCI and Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI | $ (642) | $ (2,223) |
Gains (Losses) Reclassified from AOCI to Earnings | 53 | (811) |
Cash Flow Hedging | Foreign Exchange Contract | Foreign exchange and other gains/(losses) | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI | (642) | (2,223) |
Gains (Losses) Reclassified from AOCI to Earnings | 441 | (1,496) |
Cash Flow Hedging | Foreign Exchange Contract | SG&A | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (Losses) Recognized in OCI | 0 | 0 |
Gains (Losses) Reclassified from AOCI to Earnings | (388) | $ 685 |
Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
After-tax Net Loss in AOCI as of period end | (1,640) | |
After-Tax Net Loss in AOCI as of March 31, 2022 Expected to be Reclassified to Earnings in Next 12 Months | $ (1,640) |
Derivatives and Risk Manageme_6
Derivatives and Risk Management - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | $ 97,000 | $ 106,933 |
Total liability derivatives | 172,789 | 183,413 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 262 | 243 |
Total liability derivatives | 1,946 | 1,286 |
Derivatives Designated as Hedging Instruments | Current derivative assets | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 262 | |
Derivatives Designated as Hedging Instruments | Current derivative liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | 1,946 | |
Derivatives Designated as Hedging Instruments | Accrued liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 243 | |
Total liability derivatives | 1,286 | |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 96,738 | 106,690 |
Total liability derivatives | 170,843 | 182,127 |
Derivatives Not Designated as Hedging Instruments | Current derivative assets | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 3 | |
Derivatives Not Designated as Hedging Instruments | Current derivative assets | Capped Call Derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 106,629 | |
Derivatives Not Designated as Hedging Instruments | Current derivative liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 18 | |
Total liability derivatives | 183 | |
Derivatives Not Designated as Hedging Instruments | Current derivative liabilities | Embedded Exchange Feature | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | 181,700 | |
Derivatives Not Designated as Hedging Instruments | Long-term derivative assets | Capped Call Derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 96,717 | |
Derivatives Not Designated as Hedging Instruments | Long-term derivative liabilities | Embedded Exchange Feature | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | $ 170,660 | |
Derivatives Not Designated as Hedging Instruments | Accrued liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 61 | |
Total liability derivatives | $ 427 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) € in Thousands, $ in Thousands | May 04, 2022claim | Feb. 21, 2022USD ($) | Feb. 21, 2022EUR (€) | Mar. 29, 2019USD ($) | Apr. 01, 2016EUR (€) | Jan. 31, 2021EUR (€)repository_site | Jan. 31, 2020USD ($) | Jul. 31, 2019USD ($) | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Nov. 30, 2021EUR (€) | Mar. 05, 2019EUR (€) | Aug. 27, 2015non-conformity |
Other Commitments [Line Items] | |||||||||||||||
Product remediation liability, net | $ 800 | ||||||||||||||
Litigation provision, net | $ 0 | ||||||||||||||
Reimbursed legal fees | € 292 | 323,901 | |||||||||||||
Environmental maintenance | € | € 1,000 | ||||||||||||||
Subsequent Event | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Pending claims, number | claim | 90 | ||||||||||||||
Number of settled claims | claim | 5 | ||||||||||||||
Pending Litigation | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimate of possible loss | 634,600 | € 572,100 | |||||||||||||
Saluggia, Italy | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Number of national repository sites | repository_site | 67 | ||||||||||||||
Litigation provision, net | $ 39,300 | ||||||||||||||
Estimated provision | 38,300 | ||||||||||||||
Saluggia, Italy | Minimum | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimated provision | $ 38,300 | ||||||||||||||
Saluggia, Italy | Maximum | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimated provision | $ 48,700 | ||||||||||||||
FDA Warning Letter | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Number of observed non-conformities | non-conformity | 2 | ||||||||||||||
Product Liability | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Litigation settlement, amount awarded to other party | $ 225,000 | ||||||||||||||
Litigation provision liability | 36,231 | $ 39,470 | |||||||||||||
First demand bank guarantee | 2,754 | ||||||||||||||
Product Liability | First Payment | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Payments for legal settlements | $ 135,000 | ||||||||||||||
Product Liability | Second Payment | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Payments for legal settlements | $ 90,000 | ||||||||||||||
SNIA | Pending Litigation | SNIA s.p.a | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Compensation sought | 4,000,000 | ||||||||||||||
SNIA | Judicial Ruling | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimate of possible loss | $ 503,100 | € 453,600 | |||||||||||||
SNIA | Judicial Ruling | Surety Bond | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
First demand bank guarantee | $ 299,500 | € 270,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Product Liability (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Loss Contingency Accrual [Roll Forward] | |
Less current portion of litigation liability at period end | $ 30,126 |
Long-term portion of litigation provisions liability at period end | 6,105 |
Product Liability | |
Loss Contingency Accrual [Roll Forward] | |
Total litigation provision liability at beginning of period | 39,470 |
Payments | (2,754) |
Adjustments | (343) |
FX and other | (142) |
Total litigation provision liability at end of period | $ 36,231 |
Stockholders' Equity - Statemen
Stockholders' Equity - Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 53,761,510 | ||
Beginning balance | $ 1,294,645 | $ 1,109,265 | |
Stock-based compensation plans | 3,171 | 2,497 | |
Net income | 2,993 | (30,761) | [1],[2],[3] |
Other comprehensive income (loss) | $ (8,955) | (25,871) | [2] |
Ending balance (in shares) | 53,763,500 | ||
Ending balance | $ 1,291,854 | $ 1,055,130 | |
Ordinary Shares | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance (in shares) | 53,762,000 | 49,447,000 | |
Beginning balance | $ 82,295 | $ 76,300 | |
Stock-based compensation plans (in shares) | 2,000 | 8,000 | |
Stock-based compensation plans | $ 3 | $ 10 | |
Ending balance (in shares) | 53,764,000 | 49,455,000 | |
Ending balance | $ 82,298 | $ 76,310 | |
Additional Paid-In Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | 2,117,961 | 1,768,156 | |
Stock-based compensation plans | 3,137 | 2,251 | |
Ending balance | 2,121,098 | 1,770,407 | |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (650) | (1,034) | |
Stock-based compensation plans | 31 | 236 | |
Ending balance | (619) | (798) | |
Accumulated Other Comprehensive Income (Loss) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (7,177) | 27,809 | |
Other comprehensive income (loss) | (8,955) | (25,871) | |
Ending balance | (16,132) | 1,938 | |
Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning balance | (897,784) | (761,966) | |
Net income | 2,993 | (30,761) | |
Ending balance | $ (894,791) | $ (792,727) | |
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[2] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” | ||
[3] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Stockholders' Equity - Comprehe
Stockholders' Equity - Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning balance | $ 1,294,645 | $ 1,109,265 | |
Other comprehensive loss before reclassifications, before tax | (8,902) | (27,021) | |
Tax benefit | 0 | 534 | |
Other comprehensive loss before reclassifications, net of tax | (8,902) | (26,487) | |
Reclassification of loss from accumulated other comprehensive income (loss), before tax | (53) | 811 | |
Reclassification of tax benefit | 0 | (195) | |
Reclassification of loss from accumulated other comprehensive income, after tax | (53) | 616 | |
Total other comprehensive loss | (8,955) | (25,871) | [1] |
Ending balance | 1,291,854 | 1,055,130 | |
Total | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning balance | (7,177) | 27,809 | |
Total other comprehensive loss | (8,955) | (25,871) | |
Ending balance | (16,132) | 1,938 | |
Change in Unrealized Gain (Loss) on Derivatives | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning balance | (945) | 2,319 | |
Other comprehensive loss before reclassifications, before tax | (642) | (1,146) | |
Tax benefit | 0 | 534 | |
Other comprehensive loss before reclassifications, net of tax | (642) | (612) | |
Reclassification of loss from accumulated other comprehensive income (loss), before tax | (53) | 811 | |
Reclassification of tax benefit | 0 | (195) | |
Reclassification of loss from accumulated other comprehensive income, after tax | (53) | 616 | |
Total other comprehensive loss | (695) | 4 | |
Ending balance | (1,640) | 2,323 | |
Foreign Currency Translation Adjustments Gain (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||
Beginning balance | (6,232) | 25,490 | |
Other comprehensive loss before reclassifications, before tax | (8,260) | (25,875) | |
Tax benefit | 0 | 0 | |
Other comprehensive loss before reclassifications, net of tax | (8,260) | (25,875) | |
Reclassification of loss from accumulated other comprehensive income (loss), before tax | 0 | 0 | |
Reclassification of tax benefit | 0 | 0 | |
Reclassification of loss from accumulated other comprehensive income, after tax | 0 | 0 | |
Total other comprehensive loss | (8,260) | (25,875) | |
Ending balance | $ (14,492) | $ (385) | |
[1] | The condensed consolidated statement of comprehensive income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Stock-Based Incentive Plans - C
Stock-Based Incentive Plans - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement, vesting period | 4 years | |
Share-based compensation arrangement, compensation cost | $ 100 | |
Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 10,256 | $ 9,536 |
Service-based restricted stock units (“RSUs”) | Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 5,344 | 4,842 |
Service-based stock appreciation rights (“SARs”) | Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 2,938 | 3,322 |
Market performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement, vesting period | 3 years | |
Market performance-based restricted stock units | Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 851 | 763 |
Operating performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation arrangement, vesting period | 3 years | |
Operating performance-based restricted stock units | Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 785 | 267 |
Employee share purchase plan | Continuing Operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 338 | $ 342 |
Stock-Based Incentive Plans - E
Stock-Based Incentive Plans - Executed Agreements (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Service-based stock appreciation rights (“SARs”) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 553,050 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 34.13 |
Service-based restricted stock units (“RSUs”) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 246,824 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 82.04 |
Market performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 44,180 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 103.02 |
Operating performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 44,174 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 82.04 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate (percent) | 45.60% | (9.40%) | |
Unrecognized tax benefits | $ 1.7 | $ 1.7 | |
Unrecognized tax benefits, potential decrease amount | $ 0.6 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - shares shares in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Earnings Per Share [Abstract] | |||
Basic weighted average shares outstanding (in shares) | 53,300 | 48,736 | [1] |
Add effects of share-based compensation instruments (in shares) | 876 | 0 | |
Diluted weighted average shares outstanding (in shares) | 54,176 | 48,736 | [1] |
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Stock Compensation Plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 2.2 | 4.3 |
Geographic and Segment Inform_3
Geographic and Segment Information - Segment Info (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2022USD ($)segmentgeographic_region | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Reportable segments | segment | 3 | |||
Number of geographic regions in which entity operates | geographic_region | 3 | |||
Net sales | $ 240,175 | $ 247,603 | [1] | |
Operating income (loss) | 9,505 | (5,698) | [1] | |
Interest expense | (7,840) | (15,936) | [1] | |
Foreign exchange and other gains/(losses) | 3,904 | (6,443) | [1] | |
Income (loss) before tax | 5,569 | (28,077) | [1] | |
Litigation provision, net | 0 | |||
Assets | 2,416,883 | $ 2,200,951 | ||
Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 117,075 | 108,719 | ||
Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 110,227 | 103,699 | ||
Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 11,683 | 12,992 | ||
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,190 | 22,193 | ||
Continuing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Total reportable segment income | 15,853 | 7,723 | ||
Other expenses | 6,348 | 13,421 | ||
Operating income (loss) | 9,505 | (5,698) | ||
Capital expenditures | 5,580 | 5,114 | ||
Continuing Operations | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Total reportable segment income | 6,895 | 1,442 | ||
Assets | 905,140 | 921,481 | ||
Capital expenditures | 1,829 | 3,049 | ||
Continuing Operations | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Total reportable segment income | 37,478 | 34,083 | ||
Assets | 653,484 | 646,394 | ||
Capital expenditures | 84 | 40 | ||
Continuing Operations | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Total reportable segment income | (5,438) | 2,393 | ||
Assets | 230,278 | 231,846 | ||
Capital expenditures | 684 | 556 | ||
Continuing Operations | Other | ||||
Segment Reporting Information [Line Items] | ||||
Total reportable segment income | (23,082) | (30,195) | ||
Assets | 627,981 | $ 401,230 | ||
Capital expenditures | 2,983 | 1,469 | ||
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 136,269 | 133,336 | ||
United States | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 38,096 | 35,759 | ||
United States | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 87,210 | 82,300 | ||
United States | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 10,963 | 12,560 | ||
United States | Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 0 | 2,717 | ||
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 45,126 | 50,817 | ||
Europe | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 32,067 | 30,626 | ||
Europe | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 12,456 | 11,679 | ||
Europe | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 603 | 228 | ||
Europe | Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 0 | 8,284 | ||
Rest of World | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 58,780 | 63,450 | ||
Rest of World | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 46,912 | 42,334 | ||
Rest of World | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 10,561 | 9,720 | ||
Rest of World | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 117 | 204 | ||
Rest of World | Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,190 | $ 11,192 | ||
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Geographic and Segment Inform_4
Geographic and Segment Information - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill | |
Goodwill, beginning | $ 899,525 |
Foreign currency adjustments | (2,926) |
Goodwill, ending | 896,599 |
Cardiopulmonary | |
Goodwill | |
Goodwill, beginning | 398,245 |
Foreign currency adjustments | (2,926) |
Goodwill, ending | 395,319 |
Neuromodulation | |
Goodwill | |
Goodwill, beginning | 398,754 |
Foreign currency adjustments | 0 |
Goodwill, ending | 398,754 |
Advanced Circulatory Support | |
Goodwill | |
Goodwill, beginning | 102,526 |
Foreign currency adjustments | 0 |
Goodwill, ending | $ 102,526 |
Geographic and Segment Inform_5
Geographic and Segment Information - Geographic Areas (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 147,957 | $ 150,066 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 62,099 | 60,852 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 80,987 | 85,313 |
Rest of World | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 4,871 | $ 3,901 |
Supplemental Financial Inform_3
Supplemental Financial Information - Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 48,367 | $ 43,958 |
Work-in-process | 16,846 | 14,161 |
Finished goods | 49,631 | 47,721 |
Inventory, Net | 114,844 | 105,840 |
Provision for obsolescence | $ 9,800 | $ 8,900 |
Supplemental Financial Inform_4
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Contingent consideration | $ 11,268 | $ 11,552 |
Operating lease liabilities | 10,967 | 11,261 |
Legal and other administrative costs | 10,751 | 8,948 |
Amount payable to Gyrus Capital S.A. | 9,610 | 11,418 |
Contract liabilities | 8,722 | 8,419 |
Research and development costs | 5,638 | 5,329 |
Interest payable | 2,516 | 359 |
Provisions for agents, returns and other | 2,029 | 2,535 |
Other accrued expenses | 30,525 | 29,116 |
Accrued liabilities | 92,026 | 88,937 |
Contract liability | $ 10,500 | $ 9,800 |
Supplemental Financial Inform_5
Supplemental Financial Information - Foreign Exchange (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | ||
Debt Instrument [Line Items] | |||
Investment revaluation | $ 0 | $ 4,642 | |
Foreign exchange rate fluctuations | 2,791 | (409) | |
Interest income | 20 | (74) | |
Other | (35) | 16 | |
Foreign exchange and other gains/(losses) | 3,904 | (6,443) | [1] |
Fair Value Adjustment, Derivative Liability | |||
Debt Instrument [Line Items] | |||
Changes in fair value | 0 | 3,167 | |
Senior Notes | Embedded Exchange Feature Derivative Liability | |||
Debt Instrument [Line Items] | |||
Changes in fair value | 11,040 | (26,335) | |
Capped Call Derivatives | Capped Call Derivative Asset | |||
Debt Instrument [Line Items] | |||
Changes in fair value | $ (9,912) | $ 12,550 | |
[1] | The condensed consolidated statement of income (loss) for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Supplemental Financial Inform_6
Supplemental Financial Information - Cash, Cash Equivalents, Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | [1] | Dec. 31, 2020 | [1] |
Receivables [Abstract] | ||||||
Cash and cash equivalents | $ 128,737 | $ 207,992 | ||||
Restricted cash | 313,647 | 0 | ||||
Cash, cash equivalents and restricted cash | $ 442,384 | $ 207,992 | $ 252,539 | $ 252,832 | ||
[1] | The condensed consolidated statement of cash flows for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Thousands | May 02, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Subsequent Event [Line Items] | |||
Contingent consideration | $ 83,341 | $ 86,830 | |
ALung Technologies, Inc. | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Agreement to acquire equity interests (as a percent) | 97.00% | ||
Fair value of consideration transferred | $ 110,000 | ||
Cash to be paid at closing | 10,000 | ||
Contingent consideration | $ 100,000 | ||
A Lung Technologies Inc | Convertible Notes Receivable | |||
Subsequent Event [Line Items] | |||
Carrying value of note receivable | $ 2,500 | ||
ALung Technologies, Inc. | |||
Subsequent Event [Line Items] | |||
Ownership percentage (percent) | 3.00% | ||
Investments | $ 3,000 |
Divestiture of Heart Valve Bu_2
Divestiture of Heart Valve Business - Narrative (Details) € in Millions, $ in Millions | Dec. 30, 2022EUR (€) | Mar. 31, 2022USD ($) | Dec. 17, 2021USD ($) | Jun. 01, 2021EUR (€) | Jun. 01, 2021USD ($) | Apr. 09, 2021 | Mar. 31, 2021USD ($) | Dec. 02, 2020EUR (€) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Gain (loss) on sale | $ 1 | |||||||
Heart Valves | Discontinued Operations, Disposed of by Sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Consideration | € | € 60 | |||||||
Sale and purchase deferral period | 2 years | |||||||
Proceeds from sales of business, affiliate and productive assets | € 34.8 | $ 42.5 | ||||||
Heart Valves | Business Combination, Consideration, Tranche One | Discontinued Operations, Disposed of by Sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sales of business, affiliate and productive assets | $ 3 | |||||||
Heart Valves | Business Combination, Consideration, Tranche Two | Discontinued Operations, Disposed of by Sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sales of business, affiliate and productive assets | $ 10.3 | |||||||
Heart Valves | Forecast | Business Combination, Consideration, Tranche Two | Discontinued Operations, Disposed of by Sale | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sales of business, affiliate and productive assets | € | € 9.3 |