Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 26, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 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) | 53,522,703 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001639691 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Income Statement [Abstract] | ||||||
Net revenue | $ 252,605 | $ 253,215 | [1] | $ 746,931 | $ 765,301 | [1] |
Cost of sales | 81,687 | 84,551 | [1] | 223,220 | 260,950 | [1] |
Gross profit | 170,918 | 168,664 | [1] | 523,711 | 504,351 | [1] |
Operating expenses: | ||||||
Selling, general and administrative | 114,630 | 109,042 | [1] | 349,637 | 347,471 | [1] |
Research and development | 35,725 | 42,133 | [1] | 110,872 | 139,315 | [1] |
Impairment of goodwill | 129,396 | 0 | [1] | 129,396 | 0 | [2],[3] |
Other operating expenses | 23,140 | 1,067 | [1] | 24,518 | 43,103 | [1] |
Operating (loss) income | (131,973) | 16,422 | [1] | (90,712) | (25,538) | [1] |
Interest expense | (12,661) | (11,355) | [1] | (34,889) | (43,806) | [1] |
Loss on debt extinguishment | 0 | (60,238) | [3] | 0 | (60,238) | [2],[3] |
Foreign exchange and other income/(expense) | 38,528 | 13,614 | [1] | 44,065 | 7,410 | [1] |
Loss before tax | (106,106) | (41,557) | [1] | (81,536) | (122,172) | [1] |
Income tax expense | 1,295 | 1,858 | [1] | 6,347 | 8,410 | [1] |
Income (loss) from equity method investments | 57 | (28) | [1] | (24) | (109) | [1] |
Net loss | $ (107,344) | $ (43,443) | [1],[3] | $ (87,907) | $ (130,691) | [1],[2],[3] |
Basic loss per share (in dollars per share) | $ (2.01) | $ (0.84) | [1] | $ (1.64) | $ (2.63) | [1] |
Diluted loss per share (in dollars per share) | $ (2.01) | $ (0.84) | [1] | $ (1.64) | $ (2.63) | [1] |
Shares used in computing basic loss per share (in shares) | 53,534 | 51,582 | [1] | 53,474 | 49,748 | [1] |
Shares used in computing diluted loss per share (in shares) | 53,534 | 51,582 | [1] | 53,474 | 49,748 | [1] |
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have 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 and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | [1] | Sep. 30, 2022 | Sep. 30, 2021 | [1] | |
Statement of Comprehensive Income [Abstract] | ||||||
Net loss | $ (107,344) | $ (43,443) | [2] | $ (87,907) | $ (130,691) | [2],[3] |
Other comprehensive income (loss): | ||||||
Net change in unrealized loss on derivatives | 1,653 | (1,197) | (274) | (2,782) | ||
Tax effect | 0 | 287 | 0 | 668 | ||
Net of tax | 1,653 | (910) | (274) | (2,114) | ||
Foreign currency translation adjustment | (39,887) | (18,986) | (85,653) | (22,516) | ||
Total other comprehensive loss | (38,234) | (19,896) | (85,927) | (24,630) | ||
Total comprehensive loss | $ (145,578) | $ (63,339) | $ (173,834) | $ (155,321) | ||
[1]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 231,114 | $ 207,992 |
Restricted cash | 275,165 | 0 |
Accounts receivable, net of allowance of $11,351 at September 30, 2022 and $13,512 at December 31, 2021 | 172,093 | 185,354 |
Inventories | 122,041 | 105,840 |
Prepaid and refundable taxes | 26,456 | 37,621 |
Current derivative assets | 760 | 106,629 |
Prepaid expenses and other current assets | 23,593 | 35,745 |
Total Current Assets | 851,222 | 679,181 |
Property, plant and equipment, net | 139,162 | 150,066 |
Goodwill | 742,370 | 899,525 |
Intangible assets, net | 365,026 | 399,682 |
Operating lease assets | 34,976 | 40,600 |
Investments | 13,941 | 16,598 |
Deferred tax assets | 1,415 | 2,197 |
Long-term derivative assets | 48,223 | 0 |
Other assets | 16,543 | 13,102 |
Total Assets | 2,212,878 | 2,200,951 |
Current Liabilities: | ||
Current debt obligations | 21,695 | 229,673 |
Accounts payable | 69,616 | 68,000 |
Accrued liabilities and other | 79,008 | 88,937 |
Current derivative liabilities | 3,572 | 183,109 |
Current litigation provision liability | 43,989 | 32,845 |
Taxes payable | 12,398 | 15,140 |
Accrued employee compensation and related benefits | 57,738 | 79,266 |
Total Current Liabilities | 288,016 | 696,970 |
Long-term debt obligations | 518,249 | 9,849 |
Contingent consideration | 81,850 | 86,830 |
Deferred tax liabilities | 6,525 | 7,728 |
Long-term operating lease liabilities | 28,236 | 35,919 |
Long-term employee compensation and related benefits | 17,509 | 19,105 |
Long-term derivative liabilities | 83,145 | 0 |
Other long-term liabilities | 42,385 | 49,905 |
Total Liabilities | 1,065,915 | 906,306 |
Commitments and contingencies (Note 10) | ||
Stockholders’ Equity: | ||
Ordinary Shares, £1.00 par value: unlimited shares authorized; 53,814,279 shares issued and 53,522,857 shares outstanding at September 30, 2022; 53,761,510 shares issued and 53,263,297 shares outstanding at December 31, 2021 | 82,376 | 82,295 |
Additional paid-in capital | 2,143,762 | 2,117,961 |
Accumulated other comprehensive loss | (93,104) | (7,177) |
Accumulated deficit | (985,691) | (897,784) |
Treasury stock at cost, 291,422 ordinary shares at September 30, 2022; 498,213 ordinary shares at December 31, 2021 | (380) | (650) |
Total Stockholders’ Equity | 1,146,963 | 1,294,645 |
Total Liabilities and Stockholders’ Equity | $ 2,212,878 | $ 2,200,951 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) $ in Thousands | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 £ / shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2021 £ / shares |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | $ | $ 11,351 | $ 13,512 | ||
Ordinary shares, par value (in pounds per share) | £ / shares | £ 1 | £ 1 | ||
Ordinary shares issued (in shares) | 53,814,279 | 53,761,510 | ||
Ordinary shares outstanding (in shares) | 53,522,857 | 53,263,297 | ||
Treasury stock (in shares) | 291,422 | 498,213 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | [1] | |
Operating Activities: | |||
Net loss | $ (87,907) | $ (130,691) | [2],[3] |
Non-cash items included in net loss: | |||
Impairment of goodwill | 129,396 | 0 | [2] |
Remeasurement of derivative instruments | (38,825) | (2,211) | |
Stock-based compensation | 32,492 | 30,574 | |
Remeasurement of contingent consideration to fair value | (33,323) | 17,755 | |
Amortization | 18,970 | 20,005 | |
Depreciation | 16,593 | 18,493 | |
Amortization of debt issuance costs | 16,394 | 13,087 | |
Amortization of operating lease assets | 7,100 | 12,133 | |
Deferred tax expense (benefit) | 977 | (1,026) | |
Loss on debt extinguishment | 0 | 60,238 | [2] |
Remeasurement of Respicardia investment and loan | 0 | (4,642) | |
Other | 392 | 1,944 | |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (1,665) | (7,851) | |
Inventories | (22,571) | 8,778 | |
Other current and non-current assets | 12,191 | 20,532 | |
Accounts payable and accrued current and non-current liabilities | (5,395) | 2,999 | |
Taxes payable | (1,772) | 4,996 | |
Litigation provision liability | 8,171 | 3,951 | |
Net cash provided by operating activities | 51,218 | 69,064 | |
Investing Activities: | |||
Purchases of property, plant and equipment | (17,383) | (17,893) | |
Acquisition, net of cash acquired | (8,857) | 0 | |
Purchase of investments | (928) | (3,520) | |
Proceeds from sale of Heart Valves, net of cash disposed | 0 | 40,244 | |
Proceeds from sale of Respicardia investment and loan | 0 | 23,057 | |
Other | (293) | (1,353) | |
Net cash (used in) provided by investing activities | (27,461) | 40,535 | |
Financing Activities: | |||
Proceeds from long-term debt obligations | 507,547 | 0 | |
Repayment of long-term debt obligations | (220,784) | (451,396) | |
Shares repurchased from employees for minimum tax withholding | (8,550) | (12,246) | |
Proceeds from deferred consideration from sale of Heart Valves, net of working capital adjustments | 4,597 | 0 | |
Payment of debt issuance costs | (3,292) | (1,875) | |
Proceeds from share issuances under ESPP | 1,788 | 1,750 | |
Proceeds from issuance of ordinary shares, net | 0 | 324,180 | |
Payment of make-whole premium on long-term debt obligations | 0 | (35,594) | |
Payment of contingent consideration | 0 | (5,249) | |
Other | 481 | 2,247 | |
Net cash provided by (used in) financing activities | 281,787 | (178,183) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (7,257) | (2,402) | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 298,287 | (70,986) | |
Cash, cash equivalents and restricted cash at beginning of period | 207,992 | 252,832 | |
Cash, cash equivalents and restricted cash at end of period | $ 506,279 | $ 181,846 | |
[1]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2022 and 2021, 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 and nine months ended September 30, 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”) and its effects on the economy, employment, patient behaviors and supply chain, among others, has caused and may continue to cause variable demand for our products. Our business continues to be affected by varying levels of government-imposed lockdowns in Asia, as well as global hospital-related challenges, which have led to a decrease in procedures. Notwithstanding improving market dynamics, our Neuromodulation business continues to experience ongoing COVID-19 related headwinds, as described above. Meanwhile, the recovery of global cardiopulmonary procedures has resulted in stronger demand for our Cardiopulmonary products. Our Advanced Circulatory Support (“ACS”) business has been negatively impacted by a reduction in patients treated with extracorporeal membrane oxygenation (“ECMO”) related to fewer severe COVID-19 cases and hospital-related challenges. We are monitoring the potential for various strains of the virus to cause a resumption of high levels of infection and hospitalization that, in turn, may affect the demand for our products, particularly as we move into the winter months. Moreover, although our RECOVER study and ANTHEM-HFrEF and OSPREY clinical trials continue to progress, there may be delays or closures of sites in the future should COVID-19 or variants thereof strengthen or reemerge. Our net revenue and profitability have been negatively affected by the unfavorable foreign currency exchange impact of the strengthened U.S. dollar against a number of currencies. Furthermore, we continue to experience 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 substantially due to COVID-related disruptions and 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 revenue 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 September 30, 2021 Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised Cost of sales $ 83,105 $ 1,446 $ 84,551 $ 256,828 $ 4,122 $ 260,950 Operating income (loss) 17,868 (1,446) 16,422 (21,416) (4,122) (25,538) Loss before tax (40,111) (1,446) (41,557) (118,050) (4,122) (122,172) Income tax expense (benefit) 2,098 (240) 1,858 9,094 (684) 8,410 Net loss (42,237) (1,206) (43,443) (127,253) (3,438) (130,691) Basic and diluted loss per share $ (0.82) $ (0.02) $ (0.84) $ (2.56) $ (0.07) $ (2.63) Consolidated Statements of Comprehensive Income (Loss) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised Net loss $ (42,237) $ (1,206) $ (43,443) $ (127,253) $ (3,438) $ (130,691) Total comprehensive loss (62,133) (1,206) (63,339) (151,883) (3,438) (155,321) 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 September 30, 2021 $ (879,655) $ 1,312,498 $ (13,002) $ (13,002) $ (892,657) $ 1,299,496 Consolidated Statements of Cash Flows Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised Net loss $ (127,253) $ (3,438) $ (130,691) Deferred tax benefit (342) (684) (1,026) Changes in operating assets and liabilities: Inventories 4,656 4,122 8,778 Net cash provided by operating activities 69,064 — 69,064 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. 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 September 30, 2022, our restricted cash balance totaled $275.2 million and was comprised of cash deposits with Barclays held as collateral for a first demand bank guarantee of €270.0 million (approximately $263.9 million as of September 30, 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 USD 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 10. Commitments and Contingencies.” |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Note 2. Business Combinations As of December 31, 2021, 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. 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 consideration of up to $100.0 million payable upon achievement of certain sales-based milestones beginning in 2023 and ending in 2027. Total consideration included approximately $5.5 million of non-cash consideration. The following table presents the acquisition date fair value of the consideration transferred and the fair value of our interest in ALung prior to the acquisition, including certain measurement period adjustments (in thousands): Initial Fair Value of Consideration Measurement Period Adjustments (1) Adjusted Fair Value of Consideration Cash and other considerations $ 15,586 $ — $ 15,586 Contingent consideration 26,369 (9,578) 16,791 Fair value of consideration transferred $ 41,955 $ (9,578) $ 32,377 (1) During the third quarter of 2022, measurement period adjustments were recorded based on information obtained about facts and circumstances that existed as of the acquisition date. The following table presents the preliminary purchase price allocation at fair value for the ALung acquisition, including certain measurement period adjustments (in thousands): Initial Purchase Price Allocation Measurement Period Adjustments (1) Adjusted Purchase Price Allocation Developed technology - 15-year life $ 13,950 $ (11,050) $ 2,900 Goodwill 25,893 977 26,870 Other assets and liabilities, net 2,112 495 2,607 Net assets acquired $ 41,955 $ (9,578) $ 32,377 (1) During the third quarter of 2022, measurement period adjustments were recorded based on information obtained about facts and circumstances that existed as of the acquisition date. Goodwill arising from the ALung acquisition, which is not deductible for tax purposes, primarily represents the synergies anticipated between ALung and our ACS business. The assets acquired, including goodwill, are recognized in our ACS segment. The goodwill for the ACS reporting unit was fully impaired during the third quarter of 2022. Please refer to “Note 5. Goodwill and Intangible Assets” for further details. We recognized ALung acquisition-related expenses of approximately $0.5 million and $4.9 million during the three and nine months ended September 30, 2022, respectively, within “Selling, general and administrative” expenses on our consolidated statement of income (loss). The Company’s consolidated financial statements include the operating results of ALung from the acquisition date. Separate post-acquisition operating results and pro forma financial information for this acquisition have not been presented as the effect was not material for disclosure purposes. The contingent consideration payments are triggered upon the achievement of thresholds associated with sales of products covered by the purchase agreement and are estimated to occur during the years reflected in the table below. The sales-based earnout was valued using projected sales from our internal strategic plan and is a Level 3 fair value measurement, which includes the following significant unobservable inputs (in thousands): ALung Acquisition Fair value at May 2, 2022 Valuation Technique Unobservable Input Ranges Sales-based earnout $ 16,791 Monte Carlo simulation Risk-adjusted discount rate 7.0% - 8.4% Credit risk discount rate 6.4% - 8.0% Revenue volatility 25.7% Projected years of earnout 2023 - 2027 For a reconciliation of the beginning and ending balance of contingent consideration liabilities refer to “Note 7. Fair Value Measurements.” |
Divestiture of Heart Valve Busi
Divestiture of Heart Valve Business | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestiture of Heart Valve Business | Note 3. Divestiture of Heart Valve Business On December 2, 2020, LivaNova entered into a Purchase Agreement with Mitral Holdco S.à r.l. (“Mitral”), 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 and the remaining deferred purchase price of €9.3 million in July 2022. In July 2022, we also made a €4.8 million payment to Mitral upon finalizing the trade working capital and net indebtedness adjustments. During the three and nine months ended September 30, 2021, we recognized a (loss) gain from the sale of the Heart Valve business of $(0.1) million and $0.7 million, respectively, which is included within other operating expenses on the condensed consolidated statements of income (loss). On July 29, 2022, we received a demand letter from Mitral for approximately €20.8 million ($21.2 million as of July 29, 2022) for breach of warranty claims under the A&R Purchase Agreement. Specifically, the claims allege failure to disclose certain information relating to a supplier, thereby allegedly impacting the profitability of Mitral’s business in China and Japan. We responded via letter on October 14, 2022, that we do not believe Mitral’s claims will be sustained and that LivaNova is not responsible for any alleged breach of warranty. We also noted that warranty claims of this type, subject to certain exceptions, are capped at €8 million, and the amount of any such loss. The Company has not recognized a liability related to this matter because any potential loss is not currently probable. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Note 4. Restructuring We initiate restructuring plans to leverage economies of scale, streamline distribution and logistics, and strengthen operational and administrative effectiveness in order to reduce overall costs. During the second quarter of 2022, management committed to implement a cost-optimization and cost reduction program to adapt to current economic conditions, which includes a workforce reduction to be completed by mid-2023. We recognized a charge of $4.1 million and $4.6 million during the three and nine months ended September 30, 2022, respectively. The total estimated restructuring costs associated with the plan are approximately $10.0 million including employee termination benefits, consulting fees and contract termination costs. The following table provides a reconciliation of the beginning and ending balance of the accruals and other reserves recorded in connection with our restructuring plans included within accrued liabilities and other and other long-term liabilities on the condensed consolidated balance sheet (in thousands): Balance at December 31, 2021 (1) $ 836 Charges 4,608 Cash payments (1,831) Balance at September 30, 2022 $ 3,613 (1) Represents restructuring plans initiated prior to 2022. The following table presents restructuring expense by reportable segment (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary $ 371 $ 53 $ 390 $ 2,882 Neuromodulation 2,328 (28) 2,278 1,493 Advanced Circulatory Support 739 — 739 — Other 669 63 1,201 5,406 Total (1) $ 4,107 $ 88 $ 4,608 $ 9,781 (1) Restructuring expense is included within other operating expenses on the condensed consolidated statements of income (loss). |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5. Goodwill and Intangible Assets We test goodwill and indefinite-lived intangible assets for impairment on an annual basis on October 1 or when events or changes in circumstances indicate that a potential impairment exists. As part of our assessment as of September 30, 2022, we considered that revenue for our ACS reporting unit during the nine months ended September 30, 2022, had declined by approximately 29% compared to the prior year period, primarily as a result of a reduction in severe COVID-19 cases, hospital-related challenges and product mix. Furthermore, future revenue projections were reduced. Based on these circumstances, we concluded it was more likely than not that the goodwill of our ACS reporting unit was impaired, and we performed a quantitative assessment of the goodwill as of September 30, 2022, using management’s current estimate of future cash flows. Based on the valuation performed, we determined that the fair value of the ACS reporting unit was less than the carrying value and recognized a goodwill impairment of $129.4 million, in our condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2022. Cumulative goodwill impairments from continuing operations since the merger of Cyberonics, Inc. and Sorin S.p.A. in October 2015 through September 30, 2022 totaled $193.1 million. We also performed an interim impairment analysis related to the ImThera IPR&D intangible asset. As a result, we determined that the fair value of the asset exceeded the carrying value by 11% and the IPR&D intangible asset was not impaired. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments [Abstract] | |
Investments | Note 6. 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 and an investment accounted for under the equity method. As of September 30, 2022 and December 31, 2021, the carrying value of our investments was $13.9 million and $16.6 million, respectively. As of December 31, 2021, LivaNova owned a 3% investment in ALung with a carrying value of $3.0 million, as well as held a note receivable due from ALung with a carrying value of $2.5 million. On May 2, 2022, we acquired the remaining 97% of equity interests in ALung. Please refer to “Note 2. Business Combinations” for further details. 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 income/(expense)” on the condensed consolidated statement of income (loss). During the second quarter of 2021, the Company received a cash dividend from its investment in MD Start II of $3.1 million, which is included in “Foreign exchange and other income/(expense)” on the condensed consolidated statements of income (loss) for the nine months ended September 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7. 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 nine months ended September 30, 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 September 30, 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”) $ 377 $ — $ 377 $ — Derivative assets - designated as cash flow hedges (interest rate swaps) 760 — 760 — Derivative assets - freestanding instruments (FX) 47 — 47 — Derivative assets - capped call derivatives 48,223 — — 48,223 Convertible notes receivable 282 — — 282 $ 49,689 $ — $ 1,184 $ 48,505 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 2,764 $ — $ 2,764 $ — Derivative liabilities - freestanding instruments (FX) 1,232 — 1,232 — Derivative liabilities - embedded exchange feature 83,145 — — 83,145 Contingent consideration arrangements 81,850 — — 81,850 $ 168,991 $ — $ 3,996 $ 164,995 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 (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 Additions — — — 26,369 Utilized as business combination consideration — (2,485) — — Measurement period adjustments (1) — — — (9,578) Changes in fair value (2) (58,406) — (98,555) (33,323) Total at September 30, 2022 - long-term $ 48,223 $ 282 $ 83,145 $ 81,850 (1) For further details refer to “Note 2. Business Combinations.” (2) The decrease in fair value associated with contingent consideration arrangements during the nine months ended September 30, 2022 was primarily related to the change in (i) the discount rates due to increasing interest rates, (ii) the probability of the regulatory milestone-based payment associated with the acquisition of TandemLife and (iii) the timing of projected achievement of a certain regulatory milestone and timing of sales-based earnout payments associated with the acquisition of ImThera. 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 8. Financing Arrangements” for further details. The embedded exchange feature derivative is measured at fair value using a binomial lattice model and discounted cash flows that utilize observable and unobservable market data. The capped call derivative is measured at fair value using the Black-Scholes model utilizing observable and unobservable market data, including stock price, remaining contractual term, expected volatility, risk-free interest rate and expected dividend yield, as applicable. The embedded exchange feature and capped call derivatives are classified as Level 3 as the Company uses historical volatility and implied volatility from options traded to determine expected stock price volatility, an unobservable input that is significant to the valuation. In general, an increase in 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 income/(expense)” in the condensed consolidated statements of income (loss). The fair value of the embedded exchange feature derivative liability and the capped call derivative assets were $83.1 million and $48.2 million, respectively, as of September 30, 2022 and the stock price volatility was 49%. As of September 30, 2022, a 10% lower volatility, holding other inputs constant, would result in approximate fair value for the embedded exchange feature derivative of $68.8 million and a 10% higher volatility, holding other inputs constant, would result in approximate fair value of $96.9 million. As of September 30, 2022, a 10% lower volatility, holding other inputs constant, would result in approximate fair value for the capped call derivatives of $46.8 million and a 10% higher volatility, holding other inputs constant, would result in approximate fair value of $47.3 million. Contingent Consideration Arrangements The following table provides the fair value of our Level 3 contingent consideration arrangements by acquisition (in thousands): September 30, 2022 December 31, 2021 ImThera $ 66,678 $ 86,830 ALung 15,172 — TandemLife — 11,552 $ 81,850 $ 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 earnouts are valued using projected sales from our internal strategic plan. These arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of September 30, 2022: ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 10.8% Probability of payment 85% Projected payment year 2025 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.8% - 15.0% Credit risk discount rate 11.1% - 11.6% Revenue volatility 32.5% Probability of payment 85% Projected years of earnout 2026 - 2029 The ALung business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain sales-based thresholds associated with sales of products. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of September 30, 2022: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 8.5% - 9.6% Credit risk discount rate 9.6% - 11.4% Revenue volatility 26.8% Projected years of earnout 2023 - 2027 |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 8. Financing Arrangements The outstanding principal amount of our long-term debt as of September 30, 2022 and December 31, 2021 was as follows (in thousands, except interest rates): September 30, 2022 December 31, 2021 Maturity Interest Rate Term Facilities $ 290,689 $ — July 2027 5.71% 2020 Cash Exchangeable Senior Notes 235,776 225,140 December 2025 3.00% Bank of America Merrill Lynch Banco Múltiplo S.A. 6,323 6,113 July 2023 13.76% Mediocredito Italiano 2,196 3,379 December 2023 0.50% - 2.74% Bank of America, U.S. 1,500 1,500 January 2023 5.45% Other 515 663 Total long-term facilities 536,999 236,795 Less current portion of long-term debt 18,750 226,946 Total long-term debt obligations $ 518,249 $ 9,849 Revolving Credit The outstanding principal amount of our short-term unsecured revolving credit agreements and other agreements with various banks was $2.9 million and $2.7 million at September 30, 2022 and December 31, 2021, respectively, with interest rates ranging from 3.14% to 13.92% and loan terms ranging from overnight to 90 days, as of September 30, 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 First Lien Credit Agreement”). The 2021 First Lien Credit Agreement, as amended from time to time, 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 First Lien Credit Agreement is available for working capital and other general corporate purposes and, if drawn, can be repaid at any time without premium or penalty. As of September 30, 2022, we were in compliance with the financial covenants contained in our 2021 First Lien Credit Agreement. There were no outstanding borrowings under the 2021 First Lien Credit Agreement as of September 30, 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 First Lien Credit Agreement, 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 First Lien Credit Agreement, 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 First Lien Credit Agreement 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 USD 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. The cash held as collateral supporting the SNIA Litigation Guarantee of $275.2 million was classified as restricted cash on the condensed consolidated balance sheet as of September 30, 2022. For additional information regarding the SNIA litigation, please refer to “Note 10. 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 $4.5 million for the nine months ended September 30, 2022 and is included in interest expense on the consolidated statement of income (loss). The Bridge Loan Facility was repaid in full on July 6, 2022. Term Facilities On July 6, 2022, LivaNova and its wholly-owned subsidiary, LivaNova USA, Inc. (“LivaNova USA”), entered into a new incremental facility amendment (the “Incremental Amendment No. 2”) to its 2021 First Lien Credit Agreement. The Incremental Amendment No. 2 provides for LivaNova USA to, among other things, obtain commitments for term loan facilities from a syndicate of lenders in an aggregate principal amount of $350 million consisting of (i) an initial term loan facility in an aggregate principal amount of $300 million (the “Initial Term Facility”) and (ii) a delayed draw term loan facility in an additional aggregate principal amount of $50 million, which are available in one single drawing on or after July 6 until the date that is nine months after such date (the “Delayed Draw Term Facility” and, together with the Initial Term Facility, the “Term Facilities”). As of September 30, 2022, availability under the Delayed Draw Term Facility was $50 million. Proceeds of the Initial Term Facility were used to repay in full the Bridge Loan Facility on July 6, 2022, with the remainder used for general corporate purposes of the Company. The Term Facilities have a maturity of the earlier of (i) five years or (ii) 91 days prior to December 15, 2025, the maturity date of the 2020 Cash Exchangeable Senior Notes, unless by that date LivaNova USA will have either redeemed or refinanced the Notes, or set aside an amount of cash equal to the then-outstanding principal amount of the Notes. The Term Facilities bear interest at a rate equal to an adjusted term SOFR plus a variable margin based on the Company’s consolidated Total Net Leverage Ratio. As of September 30, 2022, the applicable margin over Adjusted SOFR was equal to 3.50% per annum. The Term Facilities are subject to an original issue discount of 1.5% of their principal amount. The Delayed Draw Term Facility also contemplates the payment of commitment fees at a variable percentage based on the Company’s Total Net Leverage Ratio. As of September 30, 2022, the applicable commitment fee percentage was equal to 0.50% per annum. The Term Facilities are subject to quarterly principal repayment, based on the following amortization schedule: (i) during the first year from the initial funding date: 1.9%; (ii) year two: 5.0%; (ii) year three: 5.0%; (iv) year four: 7.5%; and (v) year five: 10.0%, with the remainder to be paid at maturity. The effective interest rate of the Initial Term Facility at September 30, 2022 was 6.53%. The 2021 First Lien Credit Agreement, as amended, contains customary representations, warranties and covenants, including the requirement to maintain a Senior Secured First Lien Net Leverage Ratio, calculated as the ratio of Consolidated Senior Secured First Lien Net Indebtedness to Consolidated EBITDA, as defined in the credit agreement, for the period of four consecutive fiscal quarters ended on the calculation date, of not more than 3.50 to 1.00 and an Interest Coverage Ratio, calculated as the ratio of Consolidated EBITDA to Consolidated Interest Expense, as defined in the credit agreement, for the period of four consecutive fiscal quarters ended on the calculation date, of not less than 3.00 to 1.00. As of September 30, 2022, we were in compliance with the financial covenants contained in our 2021 First Lien Credit Agreement. Debt discounts and issuance costs related to the Initial Term Facility were approximately $9.6 million. Amortization of debt discount and issuance costs for the Initial Term Facility was $0.4 million for each of the three and nine months ended September 30, 2022, and is included in interest expense on the consolidated statement of income (loss). The unamortized discount and issuance costs related to the Initial Term Facility as of September 30, 2022 was $9.2 million. Issuance costs related to the Delayed Draw Term Facility were approximately $1.6 million. Amortization of issuance costs for the Delayed Draw Term Facility was $0.5 million for each of the three and nine months ended September 30, 2022, and is included in interest expense on the consolidated statement of income (loss). The unamortized issuance cost related to the Delayed Draw Term Facility as of September 30, 2022 was $1.1 million and is included within prepaid expenses and other current assets on the condensed consolidated balance sheet. 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. The effective interest rate of the Notes at September 30, 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 $3.7 million and $10.6 million for the three and nine months ended September 30, 2022, respectively, and is included in interest expense on the consolidated statement of income (loss). The unamortized discount related to the Notes as of September 30, 2022 and December 31, 2021 was $51.7 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 September 30, 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 September 30, 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 income/(expense)” in the condensed consolidated statements of income (loss). The fair value of the embedded exchange feature derivative liability was $83.1 million as of September 30, 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 income/(expense)” in the condensed consolidated statements of income (loss). The fair value of the capped call derivative assets was $48.2 million as of September 30, 2022. As of September 30, 2022, the capped call derivative assets are classified as long-term. |
Derivatives and Risk Management
Derivatives and Risk Management | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Risk Management | Note 9. Derivatives and Risk ManagementDue to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. We enter into FX derivative contracts and interest rate swap contracts to reduce the impact of foreign currency exchange rate and interest rate fluctuations, respectively, 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, and interest rate swap gains and losses in AOCI are reclassified to interest expense on our condensed consolidated statements of income (loss). 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 September 30, 2022 and December 31, 2021 was $149.5 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 $7.7 million and $2.4 million for the three months ended September 30, 2022 and 2021, respectively, and $12.7 million and $8.4 million for the nine months ended September 30, 2022 and 2021, respectively. These gains are included in “Foreign exchange and other income/(expense)” in the 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 Foreign Currency Risk 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. Interest Rate Risk We entered into interest rate swaps, which qualify for and are designated as cash flow hedges, for a notional amount covering a portion of the Initial Term Facility’s outstanding principal through July 2023, in order to minimize the impact of changes in interest rates by swapping a portion of the Initial Term Facility’s floating-rate interest payments for fixed-rate interest payments. The Initial Term Facility matures in July 2027. The gross notional amounts of open derivative contracts designated as cash flow hedges at September 30, 2022 and December 31, 2021 were as follows (in thousands): Description of Derivative Contract September 30, 2022 December 31, 2021 FX derivative contracts to be exchanged for British Pounds $ 2,708 $ 11,160 FX derivative contracts to be exchanged for Japanese Yen 1,668 6,648 FX derivative contracts to be exchanged for Euro 14,572 58,224 Interest rate swap contracts 210,000 — $ 228,948 $ 76,032 After-tax net (loss) 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) Gain in AOCI as of September 30, 2022 After-Tax Net (Loss) Gain in AOCI as of September 30, 2022 Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (2,367) $ (2,367) Interest rate swap contracts $ 1,151 $ 1,151 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 September 30, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings Losses Recognized in OCI Gains Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ 413 $ 1,838 $ (491) $ 133 FX derivative contracts SG&A — (1,927) — 573 Interest rate swap contracts Interest expense 1,151 — — — $ 1,564 $ (89) $ (491) $ 706 Nine Months Ended September 30, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss (Losses) Gains 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) $ (1,345) $ 3,517 $ (3,335) $ (2,669) FX derivative contracts SG&A — (3,437) — 2,116 Interest rate swap contracts Interest expense 1,151 — — — $ (194) $ 80 $ (3,335) $ (553) 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): September 30, 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 liabilities $ 377 Current derivative liabilities $ 2,764 Interest rate swap contracts Current derivative assets 760 Total derivatives designated as hedging instruments 1,137 2,764 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative liabilities 47 Current derivative liabilities 1,232 Capped call derivatives Long-term derivative assets 48,223 Embedded exchange feature Long-term derivative liabilities 83,145 Total derivatives not designated as hedging instruments 48,270 84,377 Total derivatives $ 49,407 $ 87,141 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 Current derivative liabilities $ 243 Current derivative liabilities $ 1,286 Total derivatives designated as hedging instruments 243 1,286 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative liabilities 61 Current derivative 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 7. Fair Value Measurements.” |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. 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 submitted a detailed response including our proposed corrective and preventative actions to address the FDA’s observations. On August 10, 2022, LivaNova received the Establishment Inspection Report, indicating that the FDA considers the inspection closed. We await the FDA’s determination regarding closure of the Warning Letter, the timing of which is uncertain. See “Item 1A. Risk Factors” in this Form 10-Q for additional information. 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 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 September 30, 2022, the product remediation liability was $0.7 million. Saluggia Site Hazardous Substances 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 September 30, 2022 was $33.6 million, which represented the low end of the estimated range of loss of $33.6 million to $42.7 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 nine months ended September 30, 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 November 2, 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 seven 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. During the third quarter of 2022, we recorded an additional liability of $18.6 million due to new information received about the nature of certain claims. At September 30, 2022, the provision for these matters was $46.8 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 (11,148) Adjustments (1) 19,319 FX and other (884) Total litigation provision liability at September 30, 2022 46,757 Less current portion of litigation provision liability at September 30, 2022 43,989 Long-term portion of litigation provision liability at September 30, 2022 (2) $ 2,768 (1) Adjustments to the litigation provision are included within other operating expenses on the condensed consolidated statements of income (loss) and were $18.6 million and $19.3 million for the three and nine months ended September 30, 2022, respectively. (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 $3.4 billion for remediation costs relating to the environmental damage at chemical sites previously operated by SNIA’s other subsidiaries. There are proceedings relating to the SNIA bankruptcy to which we are not a party in the Bankruptcy Court of Udine and the Bankruptcy Court of Milan. In September 2011, the Bankruptcy Court of Udine held 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. In January 2016, the Court of Udine rejected the appeal, and the Public Administrations appealed to the Supreme Court. Similarly, in July 2014, the Bankruptcy Court of Milan held that the Public Administrations were not creditors of either SNIA or its subsidiaries. The Public Administrations appealed. In April 2022, Bankruptcy Court of Milan declared the Public Administrations to be a non-privileged creditor of SNIA for up to €454 million, and the Public Administrations appealed to the Supreme Court. 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 $285,371 as of September 30, 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 $559.1 million as of September 30, 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 $443.3 million as of September 30, 2022). We appealed the decision on damages in December 2021. The Italian Supreme Court held a hearing on October 5, 2022 to address the appeals of liability and damages. We expect a decision in the first half of 2023. 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 $263.9 million as of September 30, 2022) within 30 calendar days, and on March 21, 2022, LivaNova delivered the guarantee, thereby satisfying the condition. Refer to “Note 8. 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 / Claims 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., was filed in the United States District Court for the District of Minnesota. The complaint alleged (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 sought damages arising out of the 2017 acquisition agreement, including various regulatory milestone payments. In May 2022, the District Court granted LivaNova’s motion for summary judgment; in response, Caisson filed a notice of appeal to the Eighth Circuit Court of Appeal. 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. Please refer to “Note 3. Divestiture of Heart Valve Business” for information regarding a demand letter received by the Company from Mitral on July 29, 2022. The Company has not recognized a liability related to this matter because any potential loss is not currently probable. 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 | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 11. Stockholders' Equity The tables below present the condensed consolidated statements of stockholders’ equity as of and for the three and nine months ended September 30, 2022 and 2021 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive (Loss) Income Accumulated Deficit (1) Total Stockholders' Equity (1) June 30, 2022 53,810 $ 82,359 $ 2,133,258 $ (397) $ (54,870) $ (878,347) $ 1,282,003 Stock-based compensation plans 4 17 10,504 17 — — 10,538 Net loss — — — — — (107,344) (107,344) Other comprehensive loss — — — — (38,234) — (38,234) September 30, 2022 53,814 $ 82,376 $ 2,143,762 $ (380) $ (93,104) $ (985,691) $ 1,146,963 June 30, 2021 49,523 $ 76,405 $ 1,779,113 $ (705) $ 23,075 $ (849,214) $ 1,028,674 Issuance of shares 4,182 5,808 316,798 — — — 322,606 Stock-based compensation plans 27 41 11,480 34 — — 11,555 Net loss — — — — — (43,443) (43,443) Other comprehensive loss — — — — (19,896) — (19,896) September 30, 2021 53,732 $ 82,254 $ 2,107,391 $ (671) $ 3,179 $ (892,657) $ 1,299,496 Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive (Loss) Income 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 52 81 25,801 270 — — 26,152 Net loss — — — — — (87,907) (87,907) Other comprehensive loss — — — — (85,927) — (85,927) September 30, 2022 53,814 $ 82,376 $ 2,143,762 $ (380) $ (93,104) $ (985,691) $ 1,146,963 December 30, 2020 49,447 $ 76,300 $ 1,768,156 $ (1,034) $ 27,809 $ (761,966) $ 1,109,265 Issuance of shares 4,182 5,808 316,798 — — — 322,606 Stock-based compensation plans 103 146 22,437 363 — — 22,946 Net loss — — — — — (130,691) (130,691) Other comprehensive loss — — — — (24,630) — (24,630) September 30, 2021 53,732 $ 82,254 $ 2,107,391 $ (671) $ 3,179 $ (892,657) $ 1,299,496 (1) Accumulated deficit and total stockholders’ equity as of September 30, 2021 and net loss for the three and nine months ended September 30, 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 (loss) for the nine months ended September 30, 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 (194) (85,653) (85,847) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (194) (85,653) (85,847) Reclassification of gain from accumulated other comprehensive loss, before tax (80) — (80) Reclassification of tax benefit — — — Reclassification of gain from accumulated other comprehensive loss, after tax (80) — (80) Net current-period other comprehensive loss, net of tax (274) (85,653) (85,927) September 30, 2022 $ (1,219) $ (91,885) $ (93,104) December 31, 2020 $ 2,319 $ 25,490 $ 27,809 Other comprehensive loss before reclassifications, before tax (3,335) (22,516) (25,851) Tax benefit 801 — 801 Other comprehensive loss before reclassifications, net of tax (2,534) (22,516) (25,050) Reclassification of loss from accumulated other comprehensive income, before tax 553 — 553 Reclassification of tax benefit (133) — (133) Reclassification of loss from accumulated other comprehensive income, after tax 420 — 420 Net current-period other comprehensive loss, net of tax (2,114) (22,516) (24,630) September 30, 2021 $ 205 $ 2,974 $ 3,179 (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 | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Incentive Plans | Note 12. Stock-Based Incentive Plans Stock-based incentive plans compensation expense is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Service-based restricted stock units (“RSUs”) $ 5,484 $ 4,757 $ 16,710 $ 14,804 Service-based stock appreciation rights (“SARs”) 3,069 3,053 9,727 9,439 Market performance-based restricted stock units 1,049 925 2,903 2,586 Operating performance-based restricted stock units 875 2,072 2,271 2,578 Employee share purchase plan 250 315 881 1,167 Total stock-based compensation expense $ 10,727 $ 11,122 $ 32,492 $ 30,574 Stock-based awards may be granted under the 2015 Incentive Award Plan (the “2015 Plan”) and the 2022 Incentive Award Plan (the “2022 Plan”) in the form of stock options, SARs, RSUs and other stock-based and cash-based awards. As of September 30, 2022, there were 197,059 shares available for future grants to our Non-Executive Directors under the 2015 Plan and 1,900,000 shares pursuant to Options or Stock Appreciation Rights and 1,165,819 shares pursuant to other types of awards available for future grants to our employees under the 2022 Plan. During the nine months ended September 30, 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 from two Stock-based compensation agreements issued during the nine months ended September 30, 2022, representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Nine Months Ended September 30, 2022 Shares Weighted Average Grant Date Fair Value Service-based SARs 553,050 $ 34.13 Service-based RSUs 300,588 $ 78.32 Market performance-based RSUs 44,180 $ 103.02 Operating performance-based RSUs 44,174 $ 82.04 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13. Income Taxes Our effective income tax rate for the three and nine months ended September 30, 2022 was (1.2)% and (7.8)%, respectively, compared with (4.5)% and (6.9)%, respectively, for the three and nine months ended September 30, 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 September 30, 2021, the change in the effective tax rate for the three months ended September 30, 2022 was primarily attributable to discrete items and changes in income before tax in countries with varying statutory tax rates as compared to the discrete tax impact of debt extinguishment during the three months ended September 30, 2021. Compared with the nine months ended September 30, 2021, the change in the effective tax rate for the nine months ended September 30, 2022 was primarily attributable to discrete items and changes in income before tax in countries with varying statutory tax rates as compared to discrete items and the discrete tax impact of the sale of the Heart Valve business and the debt extinguishment during the nine months ended September 30, 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 $1.5 million and $1.7 million were unrecognized as of September 30, 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 $0.9 million. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted in the U.S. The IRA is effective for tax years beginning after December 31, 2022 and introduces a 15% alternative minimum tax on corporations with an average annual adjusted financial statement income greater than $1 billion and a 1% excise tax on the net fair market value of stock repurchases. While we do not anticipate a significant tax impact from the IRA, we will continue to evaluate as additional guidance becomes available. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 14. Earnings Per Share Reconciliation of the shares used in the basic and diluted earnings per share computations for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Basic weighted average shares outstanding 53,534 51,582 53,474 49,748 Add effects of share-based compensation instruments (1) — — — — Diluted weighted average shares outstanding 53,534 51,582 53,474 49,748 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 3.9 million and 3.7 million for the three months ended September 30, 2022 and 2021, respectively, and 4.0 million for both the nine months ended September 30, 2022 and 2021, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Informat
Geographic and Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Geographic and Segment Information | Note 15. 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 ACS. 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 for treating drug-resistant epilepsy (“DRE”) and difficult-to-treat depression (“DTD”). 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. It also includes the development and management of clinical testing of our aura6000 System for treating obstructive sleep apnea (“OSA”). This device stimulates the hypoglossal nerve, which in turn, engages certain muscles in the tongue in order to open the airway while a patient is sleeping. Our Neuromodulation segment also includes the VITARIA System for treating heart failure by stimulating the right vagus nerve. Our ACS segment is engaged in the development, production and sale of leading-edge temporary life support products. Our ACS products, which comprise the LifeSPARC platform, simplify temporary extracorporeal cardiopulmonary life support solutions for critically ill patients. The LifeSPARC platform includes a common compact console and pump that provides temporary support for emergent rescue patients in a variety of settings. Our ACS segment also includes the Hemolung Respiratory Assist System (“Hemolung RAS”), which was acquired in May 2022 as part of the acquisition of ALung. “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 revenue of our reportable segments includes 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 revenue by operating segment and geographic region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary United States $ 38,476 $ 40,143 $ 114,437 $ 113,290 Europe 28,754 32,850 93,980 98,609 Rest of World 53,729 50,242 155,437 137,931 120,959 123,235 363,854 349,830 Neuromodulation United States 96,504 88,724 275,145 262,803 Europe 11,130 12,516 37,296 38,799 Rest of World 14,201 12,047 37,416 33,020 121,835 113,287 349,857 334,622 Advanced Circulatory Support United States 8,430 14,925 28,183 40,449 Europe 114 355 1,220 761 Rest of World 92 119 268 456 8,636 15,399 29,671 41,666 Other (1) United States — — — 4,929 Europe — — — 14,407 Rest of World 1,175 1,294 3,549 19,847 1,175 1,294 3,549 39,183 Totals United States 143,410 143,792 417,765 421,471 Europe (2) 39,998 45,721 132,496 152,576 Rest of World 69,197 63,702 196,670 191,254 Total (3) $ 252,605 $ 253,215 $ 746,931 $ 765,301 (1) For the nine months ended September 30, 2021, other primarily includes the net revenue 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 revenue. No country’s net revenue exceeded 10% of our consolidated revenue except for the U.S. The table below presents a reconciliation of segment (loss) income to consolidated loss before tax (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 (1) 2022 2021 (1) Cardiopulmonary $ (10,324) $ 11,957 $ 215 $ (11,700) Neuromodulation 43,281 36,183 132,119 108,422 Advanced Circulatory Support (134,902) 2,387 (136,855) 3,469 Other (2) (19,627) (27,348) (62,159) (95,177) Total reportable segment (loss) income (121,572) 23,179 (66,680) 5,014 Other expenses (3) 10,401 6,757 24,032 30,552 Operating (loss) income (131,973) 16,422 (90,712) (25,538) Interest expense (12,661) (11,355) (34,889) (43,806) Loss on debt extinguishment — (60,238) — (60,238) Foreign exchange and other income/(expense) 38,528 13,614 44,065 7,410 Loss before tax $ (106,106) $ (41,557) $ (81,536) $ (122,172) (1) Segment income for the three and nine months ended September 30, 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, merger and integration expense and restructuring expense. Assets by segment are as follows (in thousands): September 30, 2022 December 31, 2021 Cardiopulmonary $ 810,983 $ 921,481 Neuromodulation 642,701 646,394 Advanced Circulatory Support 123,681 231,846 Other 635,513 401,230 Total $ 2,212,878 $ 2,200,951 Capital expenditures by segment are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary $ 2,295 $ 3,464 $ 7,337 $ 9,184 Neuromodulation 192 45 322 136 Advanced Circulatory Support 589 — 1,273 1,084 Other 2,852 28 8,439 4,379 Total $ 5,928 $ 3,537 $ 17,371 $ 14,783 The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2022 were as follows (in thousands): Cardiopulmonary Neuromodulation Advanced Circulatory Support Total December 31, 2021 $ 398,245 $ 398,754 $ 102,526 $ 899,525 Goodwill as a result of acquisition — — 25,893 25,893 Measurement period adjustments — — 977 977 Impairment (1) — — (129,396) (129,396) Foreign currency adjustments (54,629) — — (54,629) September 30, 2022 $ 343,616 $ 398,754 $ — $ 742,370 (1) Refer to “Note 5. Goodwill and Intangible Assets” Property, plant and equipment, net by geography are as follows (in thousands): September 30, 2022 December 31, 2021 United States $ 63,924 $ 60,852 Europe 71,471 85,313 Rest of World 3,767 3,901 Total $ 139,162 $ 150,066 |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Financial Information | Note 16. Supplemental Financial Information Inventories consisted of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 60,445 $ 43,958 Work-in-process 17,379 14,161 Finished goods 44,217 47,721 $ 122,041 $ 105,840 As of September 30, 2022 and December 31, 2021, inventories included adjustments totaling $7.2 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): September 30, 2022 December 31, 2021 Legal and other administrative costs $ 15,240 $ 11,832 Contract liabilities 10,053 8,419 Operating lease liabilities 9,616 11,261 Research and development costs 6,613 5,329 Interest payable 6,608 359 Contingent consideration (1) — 11,552 Restructuring liabilities 3,613 836 Provisions for agents, returns and other 1,556 2,535 Amount payable to Gyrus Capital S.A. — 11,418 Other accrued expenses 25,709 25,396 $ 79,008 $ 88,937 (1) Refer to “Note 7. Fair Value Measurements” As of September 30, 2022 and December 31, 2021, contract liabilities totaling $13.5 million and $9.8 million, respectively, were 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 income/(expense)” on the condensed consolidated statements of income (loss) (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Exchangeable Notes fair value adjustment (1) $ 50,945 $ 23,489 $ 98,555 $ (28,895) Capped call fair value adjustment (1) (13,385) (9,741) (58,406) 22,217 Investment revaluation (2) — — — 4,642 Dividend Income (2) 305 287 305 3,420 Other derivative liabilities fair value adjustment — 200 — 4,290 Foreign exchange rate fluctuations 575 (782) 3,707 352 Interest income 547 178 624 293 Other (459) (17) (720) 1,091 Foreign exchange and other income/(expense) $ 38,528 $ 13,614 $ 44,065 $ 7,410 (1) Refer to “Note 7. Fair Value Measurements” (2) Refer to “Note 6. 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): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 231,114 $ 207,992 Restricted cash (1) 275,165 — Cash, cash equivalents and restricted cash $ 506,279 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 10. Commitments and Contingencies.” |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Financial Statements (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three and nine months ended September 30, 2022 and 2021, 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 and nine months ended September 30, 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 | ReclassificationsWe 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. |
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, and interest rate swap gains and losses in AOCI are reclassified to interest expense on our condensed consolidated statements of income (loss). 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) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Prior Period Reclassifications on the Condensed Consolidated Statements of Income (Loss) | Consolidated Statements of Income (Loss) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised Cost of sales $ 83,105 $ 1,446 $ 84,551 $ 256,828 $ 4,122 $ 260,950 Operating income (loss) 17,868 (1,446) 16,422 (21,416) (4,122) (25,538) Loss before tax (40,111) (1,446) (41,557) (118,050) (4,122) (122,172) Income tax expense (benefit) 2,098 (240) 1,858 9,094 (684) 8,410 Net loss (42,237) (1,206) (43,443) (127,253) (3,438) (130,691) Basic and diluted loss per share $ (0.82) $ (0.02) $ (0.84) $ (2.56) $ (0.07) $ (2.63) Consolidated Statements of Comprehensive Income (Loss) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised Net loss $ (42,237) $ (1,206) $ (43,443) $ (127,253) $ (3,438) $ (130,691) Total comprehensive loss (62,133) (1,206) (63,339) (151,883) (3,438) (155,321) 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 September 30, 2021 $ (879,655) $ 1,312,498 $ (13,002) $ (13,002) $ (892,657) $ 1,299,496 Consolidated Statements of Cash Flows Nine Months Ended September 30, 2021 As Previously Reported Adjustments As Revised Net loss $ (127,253) $ (3,438) $ (130,691) Deferred tax benefit (342) (684) (1,026) Changes in operating assets and liabilities: Inventories 4,656 4,122 8,778 Net cash provided by operating activities 69,064 — 69,064 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table presents the acquisition date fair value of the consideration transferred and the fair value of our interest in ALung prior to the acquisition, including certain measurement period adjustments (in thousands): Initial Fair Value of Consideration Measurement Period Adjustments (1) Adjusted Fair Value of Consideration Cash and other considerations $ 15,586 $ — $ 15,586 Contingent consideration 26,369 (9,578) 16,791 Fair value of consideration transferred $ 41,955 $ (9,578) $ 32,377 (1) During the third quarter of 2022, measurement period adjustments were recorded based on information obtained about facts and circumstances that existed as of the acquisition date. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the preliminary purchase price allocation at fair value for the ALung acquisition, including certain measurement period adjustments (in thousands): Initial Purchase Price Allocation Measurement Period Adjustments (1) Adjusted Purchase Price Allocation Developed technology - 15-year life $ 13,950 $ (11,050) $ 2,900 Goodwill 25,893 977 26,870 Other assets and liabilities, net 2,112 495 2,607 Net assets acquired $ 41,955 $ (9,578) $ 32,377 (1) During the third quarter of 2022, measurement period adjustments were recorded based on information obtained about facts and circumstances that existed as of the acquisition date. |
Significant Unobservable Inputs Related to Contingent Consideration | The sales-based earnout was valued using projected sales from our internal strategic plan and is a Level 3 fair value measurement, which includes the following significant unobservable inputs (in thousands): ALung Acquisition Fair value at May 2, 2022 Valuation Technique Unobservable Input Ranges Sales-based earnout $ 16,791 Monte Carlo simulation Risk-adjusted discount rate 7.0% - 8.4% Credit risk discount rate 6.4% - 8.0% Revenue volatility 25.7% Projected years of earnout 2023 - 2027 ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 10.8% Probability of payment 85% Projected payment year 2025 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.8% - 15.0% Credit risk discount rate 11.1% - 11.6% Revenue volatility 32.5% Probability of payment 85% Projected years of earnout 2026 - 2029 The ALung business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain sales-based thresholds associated with sales of products. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of September 30, 2022: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 8.5% - 9.6% Credit risk discount rate 9.6% - 11.4% Revenue volatility 26.8% Projected years of earnout 2023 - 2027 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The following table provides a reconciliation of the beginning and ending balance of the accruals and other reserves recorded in connection with our restructuring plans included within accrued liabilities and other and other long-term liabilities on the condensed consolidated balance sheet (in thousands): Balance at December 31, 2021 (1) $ 836 Charges 4,608 Cash payments (1,831) Balance at September 30, 2022 $ 3,613 (1) Represents restructuring plans initiated prior to 2022. |
Schedule of Restructuring Expense by Reportable Segment | The following table presents restructuring expense by reportable segment (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary $ 371 $ 53 $ 390 $ 2,882 Neuromodulation 2,328 (28) 2,278 1,493 Advanced Circulatory Support 739 — 739 — Other 669 63 1,201 5,406 Total (1) $ 4,107 $ 88 $ 4,608 $ 9,781 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 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”) $ 377 $ — $ 377 $ — Derivative assets - designated as cash flow hedges (interest rate swaps) 760 — 760 — Derivative assets - freestanding instruments (FX) 47 — 47 — Derivative assets - capped call derivatives 48,223 — — 48,223 Convertible notes receivable 282 — — 282 $ 49,689 $ — $ 1,184 $ 48,505 Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 2,764 $ — $ 2,764 $ — Derivative liabilities - freestanding instruments (FX) 1,232 — 1,232 — Derivative liabilities - embedded exchange feature 83,145 — — 83,145 Contingent consideration arrangements 81,850 — — 81,850 $ 168,991 $ — $ 3,996 $ 164,995 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 (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 Additions — — — 26,369 Utilized as business combination consideration — (2,485) — — Measurement period adjustments (1) — — — (9,578) Changes in fair value (2) (58,406) — (98,555) (33,323) Total at September 30, 2022 - long-term $ 48,223 $ 282 $ 83,145 $ 81,850 (1) For further details refer to “Note 2. Business Combinations.” (2) The decrease in fair value associated with contingent consideration arrangements during the nine months ended September 30, 2022 was primarily related to the change in (i) the discount rates due to increasing interest rates, (ii) the probability of the regulatory milestone-based payment associated with the acquisition of TandemLife and (iii) the timing of projected achievement of a certain regulatory milestone and timing of sales-based earnout payments associated with the acquisition of ImThera. |
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): September 30, 2022 December 31, 2021 ImThera $ 66,678 $ 86,830 ALung 15,172 — TandemLife — 11,552 $ 81,850 $ 98,382 |
Significant Unobservable Inputs Related to Contingent Consideration | The sales-based earnout was valued using projected sales from our internal strategic plan and is a Level 3 fair value measurement, which includes the following significant unobservable inputs (in thousands): ALung Acquisition Fair value at May 2, 2022 Valuation Technique Unobservable Input Ranges Sales-based earnout $ 16,791 Monte Carlo simulation Risk-adjusted discount rate 7.0% - 8.4% Credit risk discount rate 6.4% - 8.0% Revenue volatility 25.7% Projected years of earnout 2023 - 2027 ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 10.8% Probability of payment 85% Projected payment year 2025 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.8% - 15.0% Credit risk discount rate 11.1% - 11.6% Revenue volatility 32.5% Probability of payment 85% Projected years of earnout 2026 - 2029 The ALung business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement of certain sales-based thresholds associated with sales of products. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs as of September 30, 2022: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 8.5% - 9.6% Credit risk discount rate 9.6% - 11.4% Revenue volatility 26.8% Projected years of earnout 2023 - 2027 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The outstanding principal amount of our long-term debt as of September 30, 2022 and December 31, 2021 was as follows (in thousands, except interest rates): September 30, 2022 December 31, 2021 Maturity Interest Rate Term Facilities $ 290,689 $ — July 2027 5.71% 2020 Cash Exchangeable Senior Notes 235,776 225,140 December 2025 3.00% Bank of America Merrill Lynch Banco Múltiplo S.A. 6,323 6,113 July 2023 13.76% Mediocredito Italiano 2,196 3,379 December 2023 0.50% - 2.74% Bank of America, U.S. 1,500 1,500 January 2023 5.45% Other 515 663 Total long-term facilities 536,999 236,795 Less current portion of long-term debt 18,750 226,946 Total long-term debt obligations $ 518,249 $ 9,849 |
Derivatives and Risk Manageme_2
Derivatives and Risk Management (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2022 and December 31, 2021 were as follows (in thousands): Description of Derivative Contract September 30, 2022 December 31, 2021 FX derivative contracts to be exchanged for British Pounds $ 2,708 $ 11,160 FX derivative contracts to be exchanged for Japanese Yen 1,668 6,648 FX derivative contracts to be exchanged for Euro 14,572 58,224 Interest rate swap contracts 210,000 — $ 228,948 $ 76,032 |
Schedule of Cash Flow Hedges Included in AOCI | After-tax net (loss) 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) Gain in AOCI as of September 30, 2022 After-Tax Net (Loss) Gain in AOCI as of September 30, 2022 Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (2,367) $ (2,367) Interest rate swap contracts $ 1,151 $ 1,151 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 September 30, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings Losses Recognized in OCI Gains Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ 413 $ 1,838 $ (491) $ 133 FX derivative contracts SG&A — (1,927) — 573 Interest rate swap contracts Interest expense 1,151 — — — $ 1,564 $ (89) $ (491) $ 706 Nine Months Ended September 30, 2022 2021 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss (Losses) Gains 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) $ (1,345) $ 3,517 $ (3,335) $ (2,669) FX derivative contracts SG&A — (3,437) — 2,116 Interest rate swap contracts Interest expense 1,151 — — — $ (194) $ 80 $ (3,335) $ (553) |
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): September 30, 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 liabilities $ 377 Current derivative liabilities $ 2,764 Interest rate swap contracts Current derivative assets 760 Total derivatives designated as hedging instruments 1,137 2,764 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative liabilities 47 Current derivative liabilities 1,232 Capped call derivatives Long-term derivative assets 48,223 Embedded exchange feature Long-term derivative liabilities 83,145 Total derivatives not designated as hedging instruments 48,270 84,377 Total derivatives $ 49,407 $ 87,141 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 Current derivative liabilities $ 243 Current derivative liabilities $ 1,286 Total derivatives designated as hedging instruments 243 1,286 Derivatives Not Designated as Hedging Instruments FX derivative contracts Current derivative liabilities 61 Current derivative 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 7. Fair Value Measurements.” |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 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 (11,148) Adjustments (1) 19,319 FX and other (884) Total litigation provision liability at September 30, 2022 46,757 Less current portion of litigation provision liability at September 30, 2022 43,989 Long-term portion of litigation provision liability at September 30, 2022 (2) $ 2,768 (1) Adjustments to the litigation provision are included within other operating expenses on the condensed consolidated statements of income (loss) and were $18.6 million and $19.3 million for the three and nine months ended September 30, 2022, respectively. (2) Included within other long-term liabilities on the condensed consolidated balance sheet. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2022 and 2021 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive (Loss) Income Accumulated Deficit (1) Total Stockholders' Equity (1) June 30, 2022 53,810 $ 82,359 $ 2,133,258 $ (397) $ (54,870) $ (878,347) $ 1,282,003 Stock-based compensation plans 4 17 10,504 17 — — 10,538 Net loss — — — — — (107,344) (107,344) Other comprehensive loss — — — — (38,234) — (38,234) September 30, 2022 53,814 $ 82,376 $ 2,143,762 $ (380) $ (93,104) $ (985,691) $ 1,146,963 June 30, 2021 49,523 $ 76,405 $ 1,779,113 $ (705) $ 23,075 $ (849,214) $ 1,028,674 Issuance of shares 4,182 5,808 316,798 — — — 322,606 Stock-based compensation plans 27 41 11,480 34 — — 11,555 Net loss — — — — — (43,443) (43,443) Other comprehensive loss — — — — (19,896) — (19,896) September 30, 2021 53,732 $ 82,254 $ 2,107,391 $ (671) $ 3,179 $ (892,657) $ 1,299,496 Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive (Loss) Income 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 52 81 25,801 270 — — 26,152 Net loss — — — — — (87,907) (87,907) Other comprehensive loss — — — — (85,927) — (85,927) September 30, 2022 53,814 $ 82,376 $ 2,143,762 $ (380) $ (93,104) $ (985,691) $ 1,146,963 December 30, 2020 49,447 $ 76,300 $ 1,768,156 $ (1,034) $ 27,809 $ (761,966) $ 1,109,265 Issuance of shares 4,182 5,808 316,798 — — — 322,606 Stock-based compensation plans 103 146 22,437 363 — — 22,946 Net loss — — — — — (130,691) (130,691) Other comprehensive loss — — — — (24,630) — (24,630) September 30, 2021 53,732 $ 82,254 $ 2,107,391 $ (671) $ 3,179 $ (892,657) $ 1,299,496 (1) Accumulated deficit and total stockholders’ equity as of September 30, 2021 and net loss for the three and nine months ended September 30, 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 (loss) for the nine months ended September 30, 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 (194) (85,653) (85,847) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (194) (85,653) (85,847) Reclassification of gain from accumulated other comprehensive loss, before tax (80) — (80) Reclassification of tax benefit — — — Reclassification of gain from accumulated other comprehensive loss, after tax (80) — (80) Net current-period other comprehensive loss, net of tax (274) (85,653) (85,927) September 30, 2022 $ (1,219) $ (91,885) $ (93,104) December 31, 2020 $ 2,319 $ 25,490 $ 27,809 Other comprehensive loss before reclassifications, before tax (3,335) (22,516) (25,851) Tax benefit 801 — 801 Other comprehensive loss before reclassifications, net of tax (2,534) (22,516) (25,050) Reclassification of loss from accumulated other comprehensive income, before tax 553 — 553 Reclassification of tax benefit (133) — (133) Reclassification of loss from accumulated other comprehensive income, after tax 420 — 420 Net current-period other comprehensive loss, net of tax (2,114) (22,516) (24,630) September 30, 2021 $ 205 $ 2,974 $ 3,179 (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) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Service-based restricted stock units (“RSUs”) $ 5,484 $ 4,757 $ 16,710 $ 14,804 Service-based stock appreciation rights (“SARs”) 3,069 3,053 9,727 9,439 Market performance-based restricted stock units 1,049 925 2,903 2,586 Operating performance-based restricted stock units 875 2,072 2,271 2,578 Employee share purchase plan 250 315 881 1,167 Total stock-based compensation expense $ 10,727 $ 11,122 $ 32,492 $ 30,574 Stock-based compensation agreements issued during the nine months ended September 30, 2022, representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Nine Months Ended September 30, 2022 Shares Weighted Average Grant Date Fair Value Service-based SARs 553,050 $ 34.13 Service-based RSUs 300,588 $ 78.32 Market performance-based RSUs 44,180 $ 103.02 Operating performance-based RSUs 44,174 $ 82.04 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2022 and 2021 are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Basic weighted average shares outstanding 53,534 51,582 53,474 49,748 Add effects of share-based compensation instruments (1) — — — — Diluted weighted average shares outstanding 53,534 51,582 53,474 49,748 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 3.9 million and 3.7 million for the three months ended September 30, 2022 and 2021, respectively, and 4.0 million for both the nine months ended September 30, 2022 and 2021, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Inform_2
Geographic and Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | The table below presents net revenue by operating segment and geographic region (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary United States $ 38,476 $ 40,143 $ 114,437 $ 113,290 Europe 28,754 32,850 93,980 98,609 Rest of World 53,729 50,242 155,437 137,931 120,959 123,235 363,854 349,830 Neuromodulation United States 96,504 88,724 275,145 262,803 Europe 11,130 12,516 37,296 38,799 Rest of World 14,201 12,047 37,416 33,020 121,835 113,287 349,857 334,622 Advanced Circulatory Support United States 8,430 14,925 28,183 40,449 Europe 114 355 1,220 761 Rest of World 92 119 268 456 8,636 15,399 29,671 41,666 Other (1) United States — — — 4,929 Europe — — — 14,407 Rest of World 1,175 1,294 3,549 19,847 1,175 1,294 3,549 39,183 Totals United States 143,410 143,792 417,765 421,471 Europe (2) 39,998 45,721 132,496 152,576 Rest of World 69,197 63,702 196,670 191,254 Total (3) $ 252,605 $ 253,215 $ 746,931 $ 765,301 (1) For the nine months ended September 30, 2021, other primarily includes the net revenue 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 (loss) income to consolidated loss before tax (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 (1) 2022 2021 (1) Cardiopulmonary $ (10,324) $ 11,957 $ 215 $ (11,700) Neuromodulation 43,281 36,183 132,119 108,422 Advanced Circulatory Support (134,902) 2,387 (136,855) 3,469 Other (2) (19,627) (27,348) (62,159) (95,177) Total reportable segment (loss) income (121,572) 23,179 (66,680) 5,014 Other expenses (3) 10,401 6,757 24,032 30,552 Operating (loss) income (131,973) 16,422 (90,712) (25,538) Interest expense (12,661) (11,355) (34,889) (43,806) Loss on debt extinguishment — (60,238) — (60,238) Foreign exchange and other income/(expense) 38,528 13,614 44,065 7,410 Loss before tax $ (106,106) $ (41,557) $ (81,536) $ (122,172) (1) Segment income for the three and nine months ended September 30, 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, merger and integration expense and restructuring expense. Assets by segment are as follows (in thousands): September 30, 2022 December 31, 2021 Cardiopulmonary $ 810,983 $ 921,481 Neuromodulation 642,701 646,394 Advanced Circulatory Support 123,681 231,846 Other 635,513 401,230 Total $ 2,212,878 $ 2,200,951 Capital expenditures by segment are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cardiopulmonary $ 2,295 $ 3,464 $ 7,337 $ 9,184 Neuromodulation 192 45 322 136 Advanced Circulatory Support 589 — 1,273 1,084 Other 2,852 28 8,439 4,379 Total $ 5,928 $ 3,537 $ 17,371 $ 14,783 |
Schedule of Goodwill by Segment | The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2022 were as follows (in thousands): Cardiopulmonary Neuromodulation Advanced Circulatory Support Total December 31, 2021 $ 398,245 $ 398,754 $ 102,526 $ 899,525 Goodwill as a result of acquisition — — 25,893 25,893 Measurement period adjustments — — 977 977 Impairment (1) — — (129,396) (129,396) Foreign currency adjustments (54,629) — — (54,629) September 30, 2022 $ 343,616 $ 398,754 $ — $ 742,370 (1) Refer to “Note 5. Goodwill and Intangible Assets” |
Long-lived Assets by Geographic Areas | Property, plant and equipment, net by geography are as follows (in thousands): September 30, 2022 December 31, 2021 United States $ 63,924 $ 60,852 Europe 71,471 85,313 Rest of World 3,767 3,901 Total $ 139,162 $ 150,066 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | Inventories consisted of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 60,445 $ 43,958 Work-in-process 17,379 14,161 Finished goods 44,217 47,721 $ 122,041 $ 105,840 |
Accrued Liabilities | Accrued liabilities and other consisted of the following (in thousands): September 30, 2022 December 31, 2021 Legal and other administrative costs $ 15,240 $ 11,832 Contract liabilities 10,053 8,419 Operating lease liabilities 9,616 11,261 Research and development costs 6,613 5,329 Interest payable 6,608 359 Contingent consideration (1) — 11,552 Restructuring liabilities 3,613 836 Provisions for agents, returns and other 1,556 2,535 Amount payable to Gyrus Capital S.A. — 11,418 Other accrued expenses 25,709 25,396 $ 79,008 $ 88,937 (1) Refer to “Note 7. Fair Value Measurements” |
Foreign Exchange and Other Gains (Losses) | The table below presents the items included within “Foreign exchange and other income/(expense)” on the condensed consolidated statements of income (loss) (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Exchangeable Notes fair value adjustment (1) $ 50,945 $ 23,489 $ 98,555 $ (28,895) Capped call fair value adjustment (1) (13,385) (9,741) (58,406) 22,217 Investment revaluation (2) — — — 4,642 Dividend Income (2) 305 287 305 3,420 Other derivative liabilities fair value adjustment — 200 — 4,290 Foreign exchange rate fluctuations 575 (782) 3,707 352 Interest income 547 178 624 293 Other (459) (17) (720) 1,091 Foreign exchange and other income/(expense) $ 38,528 $ 13,614 $ 44,065 $ 7,410 (1) Refer to “Note 7. Fair Value Measurements” (2) Refer to “Note 6. 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): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 231,114 $ 207,992 Restricted cash (1) 275,165 — Cash, cash equivalents and restricted cash $ 506,279 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 10. 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): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 231,114 $ 207,992 Restricted cash (1) 275,165 — Cash, cash equivalents and restricted cash $ 506,279 $ 207,992 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 10. Commitments and Contingencies.” |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Financial Statements - Narrative (Details) $ in Thousands, € in Millions | 9 Months Ended | 12 Months Ended | ||
Feb. 21, 2022 EUR (€) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 18, 2022 | |
Segment Reporting Information [Line Items] | ||||
Restricted cash | $ 275,165 | $ 0 | ||
Revenue Benchmark | Geographic Concentration Risk | Russian Federation | ||||
Segment Reporting Information [Line Items] | ||||
Concentration risk, percentage | 1% | |||
Bridge Loan | ||||
Segment Reporting Information [Line Items] | ||||
Restricted cash | 275,200 | |||
SNIA | Judicial Ruling | Bridge Loan | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of cash collateral required as guarantee | 105% | |||
SNIA | Judicial Ruling | Surety Bond | ||||
Segment Reporting Information [Line Items] | ||||
First demand bank guarantee | € 270 | $ 263,900 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 81,687 | $ 84,551 | [1] | $ 223,220 | $ 260,950 | [1] |
Operating income (loss) | (131,973) | 16,422 | [1] | (90,712) | (25,538) | [1] |
Loss before tax | (106,106) | (41,557) | [1] | (81,536) | (122,172) | [1] |
Income tax expense (benefit) | 1,295 | 1,858 | [1] | 6,347 | 8,410 | [1] |
Net loss | $ (107,344) | $ (43,443) | [1],[2] | $ (87,907) | $ (130,691) | [1],[2],[3] |
Basic loss per share (in dollars per share) | $ (2.01) | $ (0.84) | [1] | $ (1.64) | $ (2.63) | [1] |
Diluted loss per share (in dollars per share) | $ (2.01) | $ (0.84) | [1] | $ (1.64) | $ (2.63) | [1] |
As Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 83,105 | $ 256,828 | ||||
Operating income (loss) | 17,868 | (21,416) | ||||
Loss before tax | (40,111) | (118,050) | ||||
Income tax expense (benefit) | 2,098 | 9,094 | ||||
Net loss | $ (42,237) | $ (127,253) | ||||
Basic loss per share (in dollars per share) | $ (0.82) | $ (2.56) | ||||
Diluted loss per share (in dollars per share) | $ (0.82) | $ (2.56) | ||||
Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 1,446 | $ 4,122 | ||||
Operating income (loss) | (1,446) | (4,122) | ||||
Loss before tax | (1,446) | (4,122) | ||||
Income tax expense (benefit) | (240) | (684) | ||||
Net loss | $ (1,206) | $ (3,438) | ||||
Basic loss per share (in dollars per share) | $ (0.02) | $ (0.07) | ||||
Diluted loss per share (in dollars per share) | $ (0.02) | $ (0.07) | ||||
As Revised | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Cost of sales | $ 84,551 | $ 260,950 | ||||
Operating income (loss) | 16,422 | (25,538) | ||||
Loss before tax | (41,557) | (122,172) | ||||
Income tax expense (benefit) | 1,858 | 8,410 | ||||
Net loss | $ (43,443) | $ (130,691) | ||||
Basic loss per share (in dollars per share) | $ (0.84) | $ (2.63) | ||||
Diluted loss per share (in dollars per share) | $ (0.84) | $ (2.63) | ||||
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | $ (107,344) | $ (43,443) | [1],[2] | $ (87,907) | $ (130,691) | [1],[2],[3] |
Total comprehensive loss | $ (145,578) | (63,339) | [1] | $ (173,834) | (155,321) | [1] |
As Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | (42,237) | (127,253) | ||||
Total comprehensive loss | (62,133) | (151,883) | ||||
Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | (1,206) | (3,438) | ||||
Total comprehensive loss | (1,206) | (3,438) | ||||
As Revised | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | (43,443) | (130,691) | ||||
Total comprehensive loss | $ (63,339) | $ (155,321) | ||||
[1]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have 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 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | $ 1,146,963 | $ 1,282,003 | $ 1,294,645 | $ 1,299,496 | $ 1,028,674 | $ 1,109,265 |
As Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | 1,312,498 | |||||
Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | (13,002) | |||||
Accumulated Deficit | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | $ (985,691) | $ (878,347) | $ (897,784) | (892,657) | $ (849,214) | $ (761,966) |
Accumulated Deficit | As Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | (879,655) | |||||
Accumulated Deficit | Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Total Stockholders’ Equity | $ (13,002) |
Unaudited Condensed Consolida_8
Unaudited Condensed Consolidated Financial Statements - Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | $ (107,344) | $ (43,443) | [1],[2] | $ (87,907) | $ (130,691) | [1],[2],[3] |
Deferred tax benefit | 977 | (1,026) | [3] | |||
Inventories | (22,571) | 8,778 | [3] | |||
Net cash provided by operating activities | $ 51,218 | 69,064 | [3] | |||
As Previously Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | (42,237) | (127,253) | ||||
Deferred tax benefit | (342) | |||||
Inventories | 4,656 | |||||
Net cash provided by operating activities | 69,064 | |||||
Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | (1,206) | (3,438) | ||||
Deferred tax benefit | (684) | |||||
Inventories | 4,122 | |||||
Net cash provided by operating activities | 0 | |||||
As Revised | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net loss | $ (43,443) | (130,691) | ||||
Deferred tax benefit | (1,026) | |||||
Inventories | 8,778 | |||||
Net cash provided by operating activities | $ 69,064 | |||||
[1]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 02, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||||
Cash to be paid at closing | $ 15,586 | |||
ALung Acquisition | ||||
Business Acquisition [Line Items] | ||||
Agreement to acquire equity interests | 97% | |||
Maximum consideration | $ 110,000 | |||
Cash to be paid at closing | 10,000 | |||
Contingent consideration | 100,000 | |||
Noncash consideration | $ 5,500 | |||
Legal and valuation expense | $ 500 | $ 4,900 | ||
ALung Acquisition | ALung Acquisition | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 3% |
Business Combinations - Fair Va
Business Combinations - Fair Value of Consideration Transferred (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 02, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Cash and other considerations | $ 15,586 | |
Contingent consideration | 16,791 | |
Fair value of consideration transferred | 32,377 | |
Adjustments | ||
Business Acquisition [Line Items] | ||
Cash and other considerations | 0 | |
Contingent consideration | (9,578) | |
Fair value of consideration transferred | (9,578) | |
ALung Acquisition | ||
Business Acquisition [Line Items] | ||
Cash and other considerations | $ 10,000 | |
ALung Acquisition | As Previously Reported | ||
Business Acquisition [Line Items] | ||
Cash and other considerations | 15,586 | |
Contingent consideration | 26,369 | |
Fair value of consideration transferred | $ 41,955 |
Business Combinations - Purchas
Business Combinations - Purchase Price Allocation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||
Goodwill | $ 742,370 | $ 899,525 |
ALung Acquisition | ||
Business Acquisition [Line Items] | ||
Developed technology - 15-year life | 2,900 | |
Goodwill | 26,870 | |
Other assets and liabilities, net | 2,607 | |
Net assets acquired | $ 32,377 | |
Useful life | 15 years | |
ALung Acquisition | As Previously Reported | ||
Business Acquisition [Line Items] | ||
Developed technology - 15-year life | $ 13,950 | |
Goodwill | 25,893 | |
Other assets and liabilities, net | 2,112 | |
Net assets acquired | 41,955 | |
ALung Acquisition | Adjustments | ||
Business Acquisition [Line Items] | ||
Developed technology - 15-year life | (11,050) | |
Goodwill | 977 | |
Other assets and liabilities, net | 495 | |
Net assets acquired | $ (9,578) |
Business Combinations - Sales-b
Business Combinations - Sales-based Earnout (Details) $ in Thousands | Sep. 30, 2022 USD ($) | May 02, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value at May 2, 2022 | $ 81,850 | $ 86,830 | |
Level 3 | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value at May 2, 2022 | $ 16,791 | ||
Risk-adjusted discount rate | Level 3 | Minimum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Unobservable Input | 0.070 | ||
Risk-adjusted discount rate | Level 3 | Maximum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Unobservable Input | 0.084 | ||
Credit risk discount rate | Level 3 | Minimum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Unobservable Input | 0.064 | ||
Credit risk discount rate | Level 3 | Maximum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Unobservable Input | 0.080 | ||
Revenue volatility | Level 3 | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Unobservable Input | 0.257 |
Divestiture of Heart Valve Bu_2
Divestiture of Heart Valve Business - Narrative (Details) - Heart Valves € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jul. 29, 2022 EUR (€) | Jul. 29, 2022 USD ($) | Jun. 01, 2021 EUR (€) | Jun. 01, 2021 USD ($) | Apr. 09, 2021 | Jul. 31, 2022 EUR (€) | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2021 USD ($) | Dec. 02, 2020 EUR (€) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Payment for working capital and indebtedness adjustments | € | € 4.8 | |||||||||
Gain (loss) on sale | $ | $ (0.1) | $ 0.7 | ||||||||
Warranty, cap on claims | $ | $ 8 | |||||||||
Mitral | ||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||
Compensation sought | € 20.8 | $ 21.2 | ||||||||
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 | ||||||||
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 | |||||||||
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 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring and Related Activities [Abstract] | ||||
Restructuring charges | $ 4,107 | $ 88 | $ 4,608 | $ 9,781 |
Estimated restructuring costs | $ 10,000 | $ 10,000 |
Restructuring - Reconciliation
Restructuring - Reconciliation of Beginning and Ending Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at beginning of period | $ 836 | |||
Charges | $ 4,107 | $ 88 | 4,608 | $ 9,781 |
Cash payments | (1,831) | |||
Balance at end of period | $ 3,613 | $ 3,613 |
Restructuring - Restructuring E
Restructuring - Restructuring Expense by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Charges | $ 4,107 | $ 88 | $ 4,608 | $ 9,781 |
Operating Segments | Cardiopulmonary | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Charges | 371 | 53 | 390 | 2,882 |
Operating Segments | Neuromodulation | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Charges | 2,328 | (28) | 2,278 | 1,493 |
Operating Segments | Advanced Circulatory Support | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Charges | 739 | 0 | 739 | 0 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Charges | $ 669 | $ 63 | $ 1,201 | $ 5,406 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | [1] | Sep. 30, 2022 | Sep. 30, 2021 | [2],[3] | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
Percent decrease in sales | 29% | |||||
Impairment of goodwill | $ 129,396 | $ 0 | $ 129,396 | $ 0 | ||
Cumulative goodwill impairments | $ 193,100 | $ 193,100 | ||||
Percentage of fair value in excess of carrying amount | 11% | 11% | ||||
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have 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 and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||||||||
Apr. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 02, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Carrying value of investments | $ 13,900 | $ 13,900 | $ 16,600 | ||||||||
Proceeds from sale of Respicardia investment and loan | 0 | $ 23,057 | [1] | ||||||||
Gain (loss) on investment | $ 0 | $ 0 | $ 0 | $ 4,642 | |||||||
ALung Acquisition | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Agreement to acquire equity interests | 97% | ||||||||||
A Lung Technologies Inc | Convertible Notes Receivable | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Carrying value of note receivable | 2,500 | ||||||||||
MD Start II | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Dividends | $ 3,100 | ||||||||||
ALung Acquisition | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Investments | $ 3,000 | ||||||||||
ALung Acquisition | ALung Acquisition | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Ownership percentage | 3% | ||||||||||
Cost Method Investee | Zoll Medical Corporation | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Proceeds from sale of Respicardia investment and loan | $ 23,100 | ||||||||||
Gain (loss) on investment | $ 4,600 | ||||||||||
Cost Method Investee | Prepaid Expenses and Other Current Assets | Zoll Medical Corporation | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Carrying value of investments | $ 17,700 | ||||||||||
Outstanding loans | $ 800 | ||||||||||
[1]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Contingent consideration | $ 81,850 | $ 86,830 |
Capped call derivatives | ||
Assets: | ||
Derivative asset | 48,200 | |
Fair Value, Recurring | ||
Assets: | ||
Convertible notes receivable | 282 | 2,767 |
Total assets | 49,689 | 109,700 |
Liabilities: | ||
Contingent consideration | 81,850 | 98,382 |
Total liabilities | 168,991 | 281,795 |
Fair Value, Recurring | Embedded exchange feature | ||
Liabilities: | ||
Derivative liabilities | 83,145 | 181,700 |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 377 | 243 |
Liabilities: | ||
Derivative liabilities | 2,764 | 1,286 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 47 | 61 |
Liabilities: | ||
Derivative liabilities | 1,232 | 427 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Capped call derivatives | ||
Assets: | ||
Derivative asset | 48,223 | 106,629 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 760 | |
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 1 | Derivatives Not Designated as Hedging Instruments | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 0 | |
Fair Value, Recurring | Level 2 | ||
Assets: | ||
Convertible notes receivable | 0 | 0 |
Total assets | 1,184 | 304 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 3,996 | 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 | 377 | 243 |
Liabilities: | ||
Derivative liabilities | 2,764 | 1,286 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 47 | 61 |
Liabilities: | ||
Derivative liabilities | 1,232 | 427 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Capped call derivatives | ||
Assets: | ||
Derivative asset | 0 | 0 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 760 | |
Fair Value, Recurring | Level 3 | ||
Assets: | ||
Convertible notes receivable | 282 | 2,767 |
Total assets | 48,505 | 109,396 |
Liabilities: | ||
Contingent consideration | 81,850 | 98,382 |
Total liabilities | 164,995 | 280,082 |
Fair Value, Recurring | Level 3 | Embedded exchange feature | ||
Liabilities: | ||
Derivative liabilities | 83,145 | 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 | 48,223 | $ 106,629 |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | $ 0 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Recurring Fair Value Measurements (Details) - Fair Value, Recurring - Level 3 $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | $ 98,382 |
Total at period end | 81,850 |
Embedded Exchange Feature Derivative Liability | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 181,700 |
Additions | 0 |
Payment | 0 |
Measurement period adjustments | 0 |
Changes in fair value | (98,555) |
Total at period end | 83,145 |
Contingent Consideration Liability Arrangements | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 98,382 |
Additions | 26,369 |
Payment | 0 |
Measurement period adjustments | (9,578) |
Changes in fair value | (33,323) |
Total at period end | 81,850 |
Capped Call Derivative Asset | |
Assets Measured on Recurring Basis | |
As of beginning period | 106,629 |
Additions | 0 |
Utilized as business combination consideration | 0 |
Measurement period adjustments | 0 |
Changes in fair value | (58,406) |
Total at period end | 48,223 |
Convertible Notes Receivable | |
Assets Measured on Recurring Basis | |
As of beginning period | 2,767 |
Additions | 0 |
Utilized as business combination consideration | (2,485) |
Measurement period adjustments | 0 |
Changes in fair value | 0 |
Total at period end | $ 282 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Sep. 30, 2022 USD ($) | Jun. 30, 2020 USD ($) | Jun. 17, 2020 USD ($) |
Embedded exchange feature | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
10 percent decrease in stock price volatility, fair value | $ 68,800,000 | ||
10 percent increase in stock price volatility, fair value | 96,900,000 | ||
Capped call derivatives | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative asset | 48,200,000 | ||
10 percent decrease in stock price volatility, fair value | 46,800,000 | ||
10 percent increase in stock price volatility, fair value | $ 47,300,000 | ||
Measurement Input, Stock Price Volatility | Embedded exchange feature | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative liability, measurement input | 0.49 | ||
Measurement Input, Stock Price Volatility | Capped call derivatives | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative liability, measurement input | 0.49 | ||
Probability of payment | TandemLife | Level 3 | Discounted cash flow | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0 | ||
Senior Notes | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Debt instrument, face amount | $ 287,500,000 | ||
Fair value of embedded derivative liability | $ 83,100,000 | ||
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 | Sep. 30, 2022 | May 02, 2022 | Dec. 31, 2021 |
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | $ 81,850 | $ 86,830 | |
Fair Value, Recurring | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 81,850 | 98,382 | |
Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 81,850 | 98,382 | |
Total fair value of Level 3 contingent consideration arrangements | 81,850 | 98,382 | |
ImThera | Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 66,678 | 86,830 | |
ALung Acquisition | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | $ 16,791 | ||
ALung Acquisition | Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 15,172 | 0 | |
TandemLife | Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | $ 0 | $ 11,552 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs (Details) - Level 3 | Sep. 30, 2022 |
ImThera | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.108 |
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 | 0.148 |
ImThera | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.111 |
ImThera | Maximum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.150 |
ImThera | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.116 |
ALung Acquisition | Monte Carlo simulation | Revenue volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.268 |
ALung Acquisition | Minimum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.085 |
ALung Acquisition | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.096 |
ALung Acquisition | Maximum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.096 |
ALung Acquisition | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.114 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Jun. 17, 2020 |
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 536,999 | $ 236,795 | |
Less current portion of long-term debt | 18,750 | 226,946 | |
Total long-term debt obligations | $ 518,249 | 9,849 | |
Bank of America Merrill Lynch Banco Múltiplo S.A. | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 13.76% | ||
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 | 5.45% | ||
Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 290,689 | 0 | |
Interest rate, stated percentage | 5.71% | ||
Senior Notes | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 235,776 | 225,140 | |
Interest rate, stated percentage | 3% | 3% | |
Loans Payable | Bank of America Merrill Lynch Banco Múltiplo S.A. | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 6,323 | 6,113 | |
Loans Payable | Mediocredito Italiano | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | 2,196 | 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 | $ 515 | $ 663 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) $ / shares in Units, € in Millions | 3 Months Ended | 9 Months Ended | |||||||||||
Jul. 06, 2022 USD ($) | Jun. 17, 2020 USD ($) | Sep. 30, 2022 USD ($) claim $ / shares | Sep. 30, 2022 USD ($) claim $ / shares | Sep. 30, 2021 USD ($) | [1] | Sep. 30, 2022 £ / shares | Mar. 18, 2022 | Mar. 16, 2022 USD ($) | Feb. 24, 2022 USD ($) | Feb. 24, 2022 EUR (€) | Dec. 31, 2021 USD ($) | Aug. 13, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||||||||
Restricted cash | $ 275,165,000 | $ 275,165,000 | $ 0 | ||||||||||
Amortization of debt issuance costs | 16,394,000 | $ 13,087,000 | |||||||||||
Proceeds from long-term debt obligations | $ 507,547,000 | $ 0 | |||||||||||
Capped call derivatives | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Derivative, cap price per share | $ / shares | $ 100 | $ 100 | |||||||||||
Derivative asset | $ 48,200,000 | $ 48,200,000 | |||||||||||
Bridge Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Restricted cash | $ 275,200,000 | $ 275,200,000 | |||||||||||
Bridge Loan | SNIA | Judicial Ruling | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Percentage of cash collateral required as guarantee | 105% | ||||||||||||
Senior Notes | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 9.95% | 9.95% | |||||||||||
Debt discounts and issuance costs | $ 82,000,000 | ||||||||||||
Amortization of debt issuance costs | $ 3,700,000 | $ 10,600,000 | |||||||||||
Unamortized discount (premium), net | $ 51,700,000 | $ 51,700,000 | 62,400,000 | ||||||||||
Debt instrument, face amount | 287,500,000 | ||||||||||||
Debt issuance costs, net | $ 7,000,000 | ||||||||||||
Interest rate, stated percentage | 3% | 3% | 3% | ||||||||||
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% | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 79.27 | $ 79.27 | |||||||||||
Redemption, threshold trading days | claim | 20 | 20 | |||||||||||
Redemption, threshold consecutive trading days | claim | 30 | 30 | |||||||||||
Option to exchange, price per share | $ / shares | $ 60.98 | $ 60.98 | |||||||||||
Redemption price, percentage | 100% | ||||||||||||
Fair value of embedded derivative liability | $ 83,100,000 | $ 83,100,000 | |||||||||||
Conversion ratio | 0.016398 | ||||||||||||
Revolving Credit Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Short-term debt | $ 2,900,000 | 2,900,000 | 2,700,000 | ||||||||||
Line of credit, maximum borrowing capacity | $ 125,000,000 | ||||||||||||
Borrowed funds | $ 0 | $ 0 | $ 0 | ||||||||||
Revolving Credit Facility | Initial Term Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 6.53% | 6.53% | |||||||||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
LIBOR floor rate | 0% | ||||||||||||
Revolving Credit Facility | Bridge Loan | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt discounts and issuance costs | $ 4,500,000 | ||||||||||||
Amortization of debt issuance costs | $ 4,500,000 | ||||||||||||
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 | Line of Credit | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, term | 5 years | ||||||||||||
Line of credit, maximum borrowing capacity | $ 350,000,000 | ||||||||||||
Debt discounts and issuance costs | $ 9,600,000 | 9,600,000 | |||||||||||
Amortization of debt issuance costs | 400,000 | 400,000 | |||||||||||
Unamortized discount (premium), net | 9,200,000 | 9,200,000 | |||||||||||
Days to maturity | 91 days | ||||||||||||
Discount rate | 1.50% | ||||||||||||
Commitment fee percentage | 0.50% | ||||||||||||
Amortization percentage, year one | 1.90% | ||||||||||||
Amortization percentage, year two | 5% | ||||||||||||
Amortization percentage, year three | 5% | ||||||||||||
Amortization percentage, year four | 7.50% | ||||||||||||
Amortization percentage, year five | 10% | ||||||||||||
Revolving Credit Facility | Line of Credit | Initial Term Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, maximum borrowing capacity | $ 300,000,000 | ||||||||||||
Revolving Credit Facility | Line of Credit | Delayed Draw Term Facility | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Line of credit, maximum borrowing capacity | $ 50,000,000 | ||||||||||||
Line of credit, remaining borrowing capacity | 50,000,000 | 50,000,000 | |||||||||||
Debt discounts and issuance costs | 1,600,000 | 1,600,000 | |||||||||||
Amortization of debt issuance costs | 500,000 | 500,000 | |||||||||||
Unamortized discount (premium), net | $ 1,100,000 | $ 1,100,000 | |||||||||||
Revolving Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR) | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Debt instrument, basis spread on variable rate | 3.50% | ||||||||||||
Revolving Credit Facility | Minimum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 3.14% | 3.14% | |||||||||||
Revolving Credit Facility | Maximum | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 13.92% | 13.92% | |||||||||||
Debt instrument, term | 90 days | ||||||||||||
Net leverage ratio, threshold for four consecutive fiscal quarters | 3.50 | ||||||||||||
Interest coverage ratio, threshold for four consecutive fiscal quarters | 3 | ||||||||||||
[1]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Derivative [Line Items] | |||||
Gain (loss) on derivative | $ 7.7 | $ 2.4 | $ 12.7 | $ 8.4 | |
Derivatives Not Designated as Hedging Instruments | |||||
Derivative [Line Items] | |||||
Notional amount | $ 149.5 | $ 149.5 | $ 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 | Sep. 30, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Notional amount | $ 228,948 | $ 76,032 |
Foreign Exchange Contract | United Kingdom, Pounds | ||
Derivative [Line Items] | ||
Notional amount | 2,708 | 11,160 |
Foreign Exchange Contract | Japan, Yen | ||
Derivative [Line Items] | ||
Notional amount | 1,668 | 6,648 |
Foreign Exchange Contract | Euro Member Countries, Euro | ||
Derivative [Line Items] | ||
Notional amount | 14,572 | 58,224 |
Interest rate swap contracts | ||
Derivative [Line Items] | ||
Notional amount | $ 210,000 | $ 0 |
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI | $ 1,564 | $ (491) | $ (194) | $ (3,335) |
Gains (Losses) Reclassified from AOCI to Earnings | (89) | 706 | 80 | (553) |
Cash Flow Hedging | Foreign Exchange Contract | Foreign exchange and other income/(expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI | 413 | (491) | (1,345) | (3,335) |
Gains (Losses) Reclassified from AOCI to Earnings | 1,838 | 133 | 3,517 | (2,669) |
Cash Flow Hedging | Foreign Exchange Contract | SG&A | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI | 0 | 0 | 0 | 0 |
Gains (Losses) Reclassified from AOCI to Earnings | (1,927) | 573 | (3,437) | 2,116 |
Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
After-tax Net Loss in AOCI as of period end | (2,367) | |||
After-Tax Net (Loss) Gain in AOCI as of September 30, 2022 Expected to be Reclassified to Earnings in Next 12 Months | (2,367) | |||
Derivatives Designated as Hedging Instruments | Interest rate swap contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
After-tax Net Loss in AOCI as of period end | 1,151 | |||
After-Tax Net (Loss) Gain in AOCI as of September 30, 2022 Expected to be Reclassified to Earnings in Next 12 Months | 1,151 | |||
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Interest rate swap contracts | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains (Losses) Recognized in OCI | 1,151 | 0 | 1,151 | 0 |
Gains (Losses) Reclassified from AOCI to Earnings | $ 0 | $ 0 | $ 0 | $ 0 |
Derivatives and Risk Manageme_6
Derivatives and Risk Management - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | $ 49,407 | $ 106,933 |
Total liability derivatives | 87,141 | 183,413 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 1,137 | 243 |
Total liability derivatives | 2,764 | 1,286 |
Derivatives Designated as Hedging Instruments | Current derivative assets | Interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 760 | |
Derivatives Designated as Hedging Instruments | Current derivative liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 377 | 243 |
Total liability derivatives | 2,764 | 1,286 |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 48,270 | 106,690 |
Total liability derivatives | 84,377 | 182,127 |
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 | 47 | 61 |
Total liability derivatives | 1,232 | 427 |
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 | 48,223 | |
Derivatives Not Designated as Hedging Instruments | Long-term derivative liabilities | Embedded exchange feature | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | $ 83,145 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) € in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Nov. 02, 2022 claim | Feb. 21, 2022 EUR (€) | Mar. 29, 2019 USD ($) | Apr. 01, 2016 EUR (€) | Jan. 31, 2021 EUR (€) repository_site | Jan. 31, 2020 USD ($) | Jul. 31, 2019 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Apr. 30, 2022 EUR (€) | Nov. 30, 2021 EUR (€) | Mar. 05, 2019 EUR (€) | Aug. 27, 2015 non-conformity | |
Other Commitments [Line Items] | ||||||||||||||
Product remediation liability, net | $ 700 | $ 700 | ||||||||||||
Reimbursed legal fees | € 292 | 285,371 | ||||||||||||
Environmental maintenance | € | € 1,000 | |||||||||||||
Subsequent Event | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Pending claims, number | claim | 90 | |||||||||||||
Number of settled claims | claim | 7 | |||||||||||||
Pending Litigation | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Estimate of possible loss | 559,100 | 559,100 | € 572,100 | |||||||||||
Saluggia, Italy | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Number of national repository sites | repository_site | 67 | |||||||||||||
Estimated provision | 33,600 | |||||||||||||
Estimated liability | $ 39,300 | |||||||||||||
Saluggia, Italy | Minimum | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Estimated provision | 33,600 | |||||||||||||
Saluggia, Italy | Maximum | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Estimated provision | 42,700 | |||||||||||||
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 | |||||||||||||
Loss contingency, period increase (decrease) | 18,600 | 19,300 | ||||||||||||
Litigation provision liability | 46,757 | 46,757 | $ 39,470 | |||||||||||
First demand bank guarantee | 11,148 | |||||||||||||
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 | 3,400,000 | |||||||||||||
Non-privileged creditor, amount | € | € 454,000 | |||||||||||||
SNIA | Judicial Ruling | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Estimate of possible loss | $ 443,300 | 443,300 | € 453,600 | |||||||||||
SNIA | Judicial Ruling | Surety Bond | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
First demand bank guarantee | € 270,000 | $ 263,900 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Product Liability (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Loss Contingency Accrual [Roll Forward] | ||
Less current portion of litigation liability at period end | $ 43,989 | $ 43,989 |
Long-term portion of litigation provisions liability at period end | 2,768 | 2,768 |
Product Liability | ||
Loss Contingency Accrual [Roll Forward] | ||
Total litigation provision liability at beginning of period | 39,470 | |
Payments | (11,148) | |
Adjustments | 19,319 | |
FX and other | (884) | |
Total litigation provision liability at end of period | 46,757 | 46,757 |
Loss contingency, period increase (decrease) | $ 18,600 | $ 19,300 |
Stockholders' Equity - Statemen
Stockholders' Equity - Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance (in shares) | 53,761,510 | |||||
Beginning balance | $ 1,282,003 | $ 1,028,674 | $ 1,294,645 | $ 1,109,265 | ||
Issuance of shares | 322,606 | 322,606 | ||||
Stock-based compensation plans | 10,538 | 11,555 | 26,152 | 22,946 | ||
Net loss | (107,344) | (43,443) | [1],[2] | (87,907) | (130,691) | [1],[2],[3] |
Other comprehensive income (loss) | $ (38,234) | (19,896) | [1] | $ (85,927) | (24,630) | [1] |
Ending balance (in shares) | 53,814,279 | 53,814,279 | ||||
Ending balance | $ 1,146,963 | $ 1,299,496 | $ 1,146,963 | $ 1,299,496 | ||
Ordinary Shares | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance (in shares) | 53,810,000 | 49,523,000 | 53,762,000 | 49,447,000 | ||
Beginning balance | $ 82,359 | $ 76,405 | $ 82,295 | $ 76,300 | ||
Issuance of shares (in shares) | 4,182,000 | 4,182,000 | ||||
Issuance of shares | $ 5,808 | $ 5,808 | ||||
Stock-based compensation plans (in shares) | 4,000 | 27,000 | 52,000 | 103,000 | ||
Stock-based compensation plans | $ 17 | $ 41 | $ 81 | $ 146 | ||
Ending balance (in shares) | 53,814,000 | 53,732,000 | 53,814,000 | 53,732,000 | ||
Ending balance | $ 82,376 | $ 82,254 | $ 82,376 | $ 82,254 | ||
Additional Paid-In Capital | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance | 2,133,258 | 1,779,113 | 2,117,961 | 1,768,156 | ||
Issuance of shares | 316,798 | 316,798 | ||||
Stock-based compensation plans | 10,504 | 11,480 | 25,801 | 22,437 | ||
Ending balance | 2,143,762 | 2,107,391 | 2,143,762 | 2,107,391 | ||
Treasury Stock | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance | (397) | (705) | (650) | (1,034) | ||
Stock-based compensation plans | 17 | 34 | 270 | 363 | ||
Ending balance | (380) | (671) | (380) | (671) | ||
Accumulated Other Comprehensive (Loss) Income | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance | (54,870) | 23,075 | (7,177) | 27,809 | ||
Other comprehensive income (loss) | (38,234) | (19,896) | (85,927) | (24,630) | ||
Ending balance | (93,104) | 3,179 | (93,104) | 3,179 | ||
Accumulated Deficit | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Beginning balance | (878,347) | (849,214) | (897,784) | (761,966) | ||
Net loss | (107,344) | (43,443) | (87,907) | (130,691) | ||
Ending balance | $ (985,691) | $ (892,657) | $ (985,691) | $ (892,657) | ||
[1]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | $ 1,282,003 | $ 1,028,674 | $ 1,294,645 | $ 1,109,265 | ||
Other comprehensive loss before reclassifications, before tax | (85,847) | (25,851) | ||||
Tax benefit | 0 | 801 | ||||
Other comprehensive loss before reclassifications, net of tax | (85,847) | (25,050) | ||||
Reclassification of loss from accumulated other comprehensive income, before tax | (80) | 553 | ||||
Reclassification of tax benefit | 0 | (133) | ||||
Reclassification of gain from accumulated other comprehensive loss, after tax | (80) | 420 | ||||
Total other comprehensive loss | (38,234) | (19,896) | [1] | (85,927) | (24,630) | [1] |
Ending balance | 1,146,963 | 1,299,496 | 1,146,963 | 1,299,496 | ||
Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (54,870) | 23,075 | (7,177) | 27,809 | ||
Total other comprehensive loss | (38,234) | (19,896) | (85,927) | (24,630) | ||
Ending balance | (93,104) | 3,179 | (93,104) | 3,179 | ||
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 | (194) | (3,335) | ||||
Tax benefit | 0 | 801 | ||||
Other comprehensive loss before reclassifications, net of tax | (194) | (2,534) | ||||
Reclassification of loss from accumulated other comprehensive income, before tax | (80) | 553 | ||||
Reclassification of tax benefit | 0 | (133) | ||||
Reclassification of gain from accumulated other comprehensive loss, after tax | (80) | 420 | ||||
Total other comprehensive loss | (274) | (2,114) | ||||
Ending balance | (1,219) | 205 | (1,219) | 205 | ||
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 | (85,653) | (22,516) | ||||
Tax benefit | 0 | 0 | ||||
Other comprehensive loss before reclassifications, net of tax | (85,653) | (22,516) | ||||
Reclassification of loss from accumulated other comprehensive income, before tax | 0 | 0 | ||||
Reclassification of tax benefit | 0 | 0 | ||||
Reclassification of gain from accumulated other comprehensive loss, after tax | 0 | 0 | ||||
Total other comprehensive loss | (85,653) | (22,516) | ||||
Ending balance | $ (91,885) | $ 2,974 | $ (91,885) | $ 2,974 | ||
[1]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, compensation cost | $ 3,400 | $ 6,500 | ||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, vesting period | 4 years | |||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, vesting period | 2 years | |||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, number of shares available for grant (in shares) | 197,059 | 197,059 | ||
Continuing Operations | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 10,727 | $ 11,122 | $ 32,492 | $ 30,574 |
Service-based restricted stock units (“RSUs”) | Continuing Operations | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 5,484 | 4,757 | 16,710 | 14,804 |
Service-based stock appreciation rights (“SARs”) | Continuing Operations | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 3,069 | 3,053 | $ 9,727 | 9,439 |
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 | 1,049 | 925 | $ 2,903 | 2,586 |
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 | 875 | 2,072 | $ 2,271 | 2,578 |
Employee share purchase plan | Continuing Operations | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 250 | $ 315 | $ 881 | $ 1,167 |
Options | 2022 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, number of shares available for grant (in shares) | 1,900,000 | 1,900,000 | ||
Other Awards | 2022 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement, number of shares available for grant (in shares) | 1,165,819 | 1,165,819 |
Stock-Based Incentive Plans - E
Stock-Based Incentive Plans - Executed Agreements (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
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 | 300,588 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 78.32 |
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 | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate (percent) | (1.20%) | (4.50%) | (7.80%) | (6.90%) | |
Unrecognized tax benefits | $ 1.5 | $ 1.5 | $ 1.7 | ||
Unrecognized tax benefits, potential decrease amount | $ 0.9 | $ 0.9 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Earnings Per Share [Abstract] | ||||||
Basic weighted average shares outstanding (in shares) | 53,534 | 51,582 | [1] | 53,474 | 49,748 | [1] |
Add effects of share-based compensation instruments (in shares) | 0 | 0 | 0 | 0 | ||
Diluted weighted average shares outstanding (in shares) | 53,534 | 51,582 | [1] | 53,474 | 49,748 | [1] |
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have 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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 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) | 3.9 | 3.7 | 4 | 4 |
Geographic and Segment Inform_3
Geographic and Segment Information - Segment Info (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 USD ($) geographic_region | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) geographic_region segment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |||
Segment Reporting Information [Line Items] | |||||||
Reportable segments | segment | 3 | ||||||
Number of geographic regions in which entity operates | geographic_region | 3 | 3 | |||||
Net revenue | $ 252,605 | $ 253,215 | [1] | $ 746,931 | $ 765,301 | [1] | |
Operating (loss) income | (131,973) | 16,422 | [1] | (90,712) | (25,538) | [1] | |
Interest expense | (12,661) | (11,355) | [1] | (34,889) | (43,806) | [1] | |
Loss on debt extinguishment | 0 | (60,238) | [2] | 0 | (60,238) | [2],[3] | |
Foreign exchange and other income/(expense) | 38,528 | 13,614 | [1] | 44,065 | 7,410 | [1] | |
Loss before tax | (106,106) | (41,557) | [1] | (81,536) | (122,172) | [1] | |
Assets | 2,212,878 | 2,212,878 | $ 2,200,951 | ||||
Operating Segments | Cardiopulmonary | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 120,959 | 123,235 | 363,854 | 349,830 | |||
Operating Segments | Neuromodulation | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 121,835 | 113,287 | 349,857 | 334,622 | |||
Operating Segments | Advanced Circulatory Support | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 8,636 | 15,399 | 29,671 | 41,666 | |||
Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 1,175 | 1,294 | 3,549 | 39,183 | |||
Continuing Operations | |||||||
Segment Reporting Information [Line Items] | |||||||
Total reportable segment (loss) income | (121,572) | 23,179 | (66,680) | 5,014 | |||
Other expenses | 10,401 | 6,757 | 24,032 | 30,552 | |||
Operating (loss) income | (131,973) | 16,422 | (90,712) | (25,538) | |||
Capital expenditures | 5,928 | 3,537 | 17,371 | 14,783 | |||
Continuing Operations | Operating Segments | Cardiopulmonary | |||||||
Segment Reporting Information [Line Items] | |||||||
Total reportable segment (loss) income | (10,324) | 11,957 | 215 | (11,700) | |||
Assets | 810,983 | 810,983 | 921,481 | ||||
Capital expenditures | 2,295 | 3,464 | 7,337 | 9,184 | |||
Continuing Operations | Operating Segments | Neuromodulation | |||||||
Segment Reporting Information [Line Items] | |||||||
Total reportable segment (loss) income | 43,281 | 36,183 | 132,119 | 108,422 | |||
Assets | 642,701 | 642,701 | 646,394 | ||||
Capital expenditures | 192 | 45 | 322 | 136 | |||
Continuing Operations | Operating Segments | Advanced Circulatory Support | |||||||
Segment Reporting Information [Line Items] | |||||||
Total reportable segment (loss) income | (134,902) | 2,387 | (136,855) | 3,469 | |||
Assets | 123,681 | 123,681 | 231,846 | ||||
Capital expenditures | 589 | 0 | 1,273 | 1,084 | |||
Continuing Operations | Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Total reportable segment (loss) income | (19,627) | (27,348) | (62,159) | (95,177) | |||
Assets | 635,513 | 635,513 | $ 401,230 | ||||
Capital expenditures | 2,852 | 28 | 8,439 | 4,379 | |||
United States | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 143,410 | 143,792 | 417,765 | 421,471 | |||
United States | Operating Segments | Cardiopulmonary | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 38,476 | 40,143 | 114,437 | 113,290 | |||
United States | Operating Segments | Neuromodulation | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 96,504 | 88,724 | 275,145 | 262,803 | |||
United States | Operating Segments | Advanced Circulatory Support | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 8,430 | 14,925 | 28,183 | 40,449 | |||
United States | Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 0 | 0 | 0 | 4,929 | |||
Europe | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 39,998 | 45,721 | 132,496 | 152,576 | |||
Europe | Operating Segments | Cardiopulmonary | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 28,754 | 32,850 | 93,980 | 98,609 | |||
Europe | Operating Segments | Neuromodulation | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 11,130 | 12,516 | 37,296 | 38,799 | |||
Europe | Operating Segments | Advanced Circulatory Support | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 114 | 355 | 1,220 | 761 | |||
Europe | Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 0 | 0 | 0 | 14,407 | |||
Rest of World | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 69,197 | 63,702 | 196,670 | 191,254 | |||
Rest of World | Operating Segments | Cardiopulmonary | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 53,729 | 50,242 | 155,437 | 137,931 | |||
Rest of World | Operating Segments | Neuromodulation | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 14,201 | 12,047 | 37,416 | 33,020 | |||
Rest of World | Operating Segments | Advanced Circulatory Support | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | 92 | 119 | 268 | 456 | |||
Rest of World | Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Net revenue | $ 1,175 | $ 1,294 | $ 3,549 | $ 19,847 | |||
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[2]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have 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) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | [1] | Sep. 30, 2022 | Sep. 30, 2021 | [2],[3] | |
Goodwill | ||||||
Goodwill, beginning | $ 899,525 | |||||
Goodwill as a result of acquisition | 25,893 | |||||
Measurement period adjustments | 977 | |||||
Impairment | $ (129,396) | $ 0 | (129,396) | $ 0 | ||
Foreign currency adjustments | (54,629) | |||||
Goodwill, ending | 742,370 | 742,370 | ||||
Cardiopulmonary | ||||||
Goodwill | ||||||
Goodwill, beginning | 398,245 | |||||
Goodwill as a result of acquisition | 0 | |||||
Measurement period adjustments | 0 | |||||
Impairment | 0 | |||||
Foreign currency adjustments | (54,629) | |||||
Goodwill, ending | 343,616 | 343,616 | ||||
Neuromodulation | ||||||
Goodwill | ||||||
Goodwill, beginning | 398,754 | |||||
Goodwill as a result of acquisition | 0 | |||||
Measurement period adjustments | 0 | |||||
Impairment | 0 | |||||
Foreign currency adjustments | 0 | |||||
Goodwill, ending | 398,754 | 398,754 | ||||
Advanced Circulatory Support | ||||||
Goodwill | ||||||
Goodwill, beginning | 102,526 | |||||
Goodwill as a result of acquisition | 25,893 | |||||
Measurement period adjustments | 977 | |||||
Impairment | (129,396) | |||||
Foreign currency adjustments | 0 | |||||
Goodwill, ending | $ 0 | $ 0 | ||||
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have 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 and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”[3]The condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |
Geographic and Segment Inform_5
Geographic and Segment Information - Geographic Areas (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 139,162 | $ 150,066 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 63,924 | 60,852 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 71,471 | 85,313 |
Rest of World | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 3,767 | $ 3,901 |
Supplemental Financial Inform_3
Supplemental Financial Information - Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 60,445 | $ 43,958 |
Work-in-process | 17,379 | 14,161 |
Finished goods | 44,217 | 47,721 |
Inventory, Net | 122,041 | 105,840 |
Provision for obsolescence | $ 7,200 | $ 8,900 |
Supplemental Financial Inform_4
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Legal and other administrative costs | $ 15,240 | $ 11,832 |
Contract liabilities | 10,053 | 8,419 |
Operating lease liabilities | 9,616 | 11,261 |
Research and development costs | 6,613 | 5,329 |
Interest payable | 6,608 | 359 |
Contingent consideration | 0 | 11,552 |
Restructuring liabilities | 3,613 | 836 |
Provisions for agents, returns and other | 1,556 | 2,535 |
Amount payable to Gyrus Capital S.A. | 0 | 11,418 |
Other accrued expenses | 25,709 | 25,396 |
Accrued liabilities | 79,008 | 88,937 |
Contract liability | $ 13,500 | $ 9,800 |
Supplemental Financial Inform_5
Supplemental Financial Information - Foreign Exchange (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |||
Debt Instrument [Line Items] | ||||||
Investment revaluation | $ 0 | $ 0 | $ 0 | $ 4,642 | ||
Dividend Income | 305 | 287 | 305 | 3,420 | ||
Foreign exchange rate fluctuations | 575 | (782) | 3,707 | 352 | ||
Interest income | 547 | 178 | 624 | 293 | ||
Other | (459) | (17) | (720) | 1,091 | ||
Foreign exchange and other income/(expense) | 38,528 | 13,614 | [1] | 44,065 | 7,410 | [1] |
Fair Value Adjustment, Derivative Liability | ||||||
Debt Instrument [Line Items] | ||||||
Changes in fair value | 0 | 200 | 0 | 4,290 | ||
Senior Notes | Embedded Exchange Feature Derivative Liability | ||||||
Debt Instrument [Line Items] | ||||||
Changes in fair value | 50,945 | 23,489 | 98,555 | (28,895) | ||
Capped call derivatives | Capped Call Derivative Asset | ||||||
Debt Instrument [Line Items] | ||||||
Changes in fair value | $ (13,385) | $ (9,741) | $ (58,406) | $ 22,217 | ||
[1]The condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2021 have 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 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | [1] | Dec. 31, 2020 | [1] |
Receivables [Abstract] | ||||||
Cash and cash equivalents | $ 231,114 | $ 207,992 | ||||
Restricted cash | 275,165 | 0 | ||||
Cash, cash equivalents and restricted cash | $ 506,279 | $ 207,992 | $ 181,846 | $ 252,832 | ||
[1]The condensed consolidated statement of cash flows for the three and nine months ended September 30, 2021 have been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.” |