Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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) | 53,870,826 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Net revenue | $ 286,113 | $ 252,605 | $ 843,413 | $ 746,931 |
Cost of sales | 84,310 | 81,687 | 262,330 | 223,220 |
Gross profit | 201,803 | 170,918 | 581,083 | 523,711 |
Operating expenses: | ||||
Selling, general and administrative | 134,794 | 114,630 | 384,795 | 349,637 |
Research and development | 46,541 | 35,725 | 147,651 | 110,872 |
Impairment of goodwill | 0 | 129,396 | 0 | 129,396 |
Other operating expense | 16,010 | 23,140 | 29,145 | 24,518 |
Operating income (loss) | 4,458 | (131,973) | 19,492 | (90,712) |
Interest expense | (14,986) | (12,661) | (43,232) | (34,889) |
Foreign exchange and other income/(expense) | 8,550 | 38,528 | 36,810 | 44,065 |
(Loss) income before tax | (1,978) | (106,106) | 13,070 | (81,536) |
Income tax expense | 5,308 | 1,295 | 11,776 | 6,347 |
(Loss) income from equity method investments | (32) | 57 | (87) | (24) |
Net (loss) income | $ (7,318) | $ (107,344) | $ 1,207 | $ (87,907) |
Basic (loss) income per share (in dollars per share) | $ (0.14) | $ (2.01) | $ 0.02 | $ (1.64) |
Diluted (loss) income per share (in dollars per share) | $ (0.14) | $ (2.01) | $ 0.02 | $ (1.64) |
Shares used in computing basic (loss) income per share (in shares) | 53,989 | 53,534 | 53,837 | 53,474 |
Shares used in computing diluted (loss) income per share (in shares) | 53,989 | 53,534 | 54,107 | 53,474 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (7,318) | $ (107,344) | $ 1,207 | $ (87,907) |
Other comprehensive income (loss): | ||||
Net change in unrealized income (loss) on derivatives | 0 | 1,653 | (966) | (274) |
Tax effect | 0 | 0 | 0 | 0 |
Net of tax | 0 | 1,653 | (966) | (274) |
Foreign currency translation adjustment | (19,222) | (39,887) | (5,716) | (85,653) |
Total other comprehensive loss | (19,222) | (38,234) | (6,682) | (85,927) |
Total comprehensive loss | $ (26,540) | $ (145,578) | $ (5,475) | $ (173,834) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 233,941 | $ 214,172 |
Restricted cash | 298,781 | 301,446 |
Accounts receivable, net of allowance of $11,628 at September 30, 2023 and $11,862 at December 31, 2022 | 189,871 | 183,110 |
Inventories | 161,539 | 129,379 |
Prepaid and refundable taxes | 25,505 | 31,708 |
Prepaid expenses and other current assets | 44,230 | 26,321 |
Total Current Assets | 953,867 | 886,136 |
Property, plant and equipment, net | 149,302 | 147,187 |
Goodwill | 767,055 | 768,787 |
Intangible assets, net | 347,672 | 368,559 |
Operating lease assets | 31,533 | 35,830 |
Investments | 22,698 | 16,266 |
Deferred tax assets | 1,506 | 1,384 |
Long-term derivative assets | 43,669 | 54,393 |
Other assets | 12,115 | 16,231 |
Total Assets | 2,329,417 | 2,294,773 |
Current Liabilities: | ||
Current debt obligations | 19,027 | 23,434 |
Accounts payable | 62,780 | 74,310 |
Accrued liabilities and other | 89,680 | 81,481 |
Current litigation provision liability | 26,704 | 29,481 |
Taxes payable | 22,300 | 16,505 |
Accrued employee compensation and related benefits | 74,905 | 72,187 |
Total Current Liabilities | 295,396 | 297,398 |
Long-term debt obligations | 568,163 | 518,067 |
Contingent consideration | 89,808 | 85,292 |
Deferred tax liabilities | 9,929 | 8,516 |
Long-term operating lease liabilities | 25,192 | 29,548 |
Long-term employee compensation and related benefits | 15,894 | 16,804 |
Long-term derivative liabilities | 53,303 | 85,675 |
Other long-term liabilities | 46,260 | 45,849 |
Total Liabilities | 1,103,945 | 1,087,149 |
Commitments and contingencies (Note 8) | ||
Stockholders’ Equity: | ||
Ordinary Shares, £1.00 par value: unlimited shares authorized; 53,903,564 shares issued and 53,860,644 shares outstanding at September 30, 2023; 53,851,979 shares issued and 53,564,664 shares outstanding at December 31, 2022 | 82,491 | 82,424 |
Additional paid-in capital | 2,180,661 | 2,157,724 |
Accumulated other comprehensive loss | (54,801) | (48,119) |
Accumulated deficit | (982,823) | (984,030) |
Treasury stock at cost, 42,920 ordinary shares at September 30, 2023; 287,315 ordinary shares at December 31, 2022 | (56) | (375) |
Total Stockholders’ Equity | 1,225,472 | 1,207,624 |
Total Liabilities and Stockholders’ Equity | $ 2,329,417 | $ 2,294,773 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) $ in Thousands | Sep. 30, 2023 USD ($) shares | Sep. 30, 2023 £ / shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2022 £ / shares |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | $ | $ 11,628 | $ 11,862 | ||
Ordinary shares, par value (in pounds per share) | £ / shares | £ 1 | £ 1 | ||
Ordinary shares issued (in shares) | 53,903,564 | 53,851,979 | ||
Ordinary shares outstanding (in shares) | 53,860,644 | 53,564,664 | ||
Treasury stock (in shares) | 42,920 | 287,315 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities: | ||
Net (loss) income | $ 1,207 | $ (87,907) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Stock-based compensation | 28,069 | 32,492 |
Remeasurement of derivative instruments | (25,730) | (38,825) |
Amortization | 19,129 | 18,970 |
Depreciation | 18,582 | 16,593 |
Amortization of debt issuance costs | 14,246 | 16,394 |
Amortization of operating lease assets | 7,270 | 7,100 |
Remeasurement of contingent consideration to fair value | 4,516 | (33,323) |
Impairment of goodwill | 0 | 129,396 |
Other | 2,513 | 1,369 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (8,239) | (1,665) |
Inventories | (33,024) | (22,571) |
Other current and non-current assets | (2,981) | 12,191 |
Accounts payable and accrued current and non-current liabilities | (8,084) | (5,395) |
Taxes payable | 6,347 | (1,772) |
Litigation provision liability | (2,865) | 8,171 |
Net cash provided by operating activities | 20,956 | 51,218 |
Investing Activities: | ||
Purchases of property, plant and equipment | (22,062) | (17,383) |
Purchase of investments | (6,570) | (928) |
Acquisition, net of cash acquired | 0 | (8,857) |
Other | 439 | (293) |
Net cash used in investing activities | (28,193) | (27,461) |
Financing Activities: | ||
Proceeds from long-term debt obligations | 50,000 | 507,547 |
Repayment of long-term debt obligations | (16,061) | (220,784) |
Shares repurchased from employees for minimum tax withholding | (6,995) | (8,550) |
Repayments of short-term borrowings (maturities greater than 90 days) | (1,901) | 0 |
Proceeds from share issuances under ESPP | 1,625 | 1,788 |
Proceeds from deferred consideration from sale of Heart Valves, net of working capital adjustments | 0 | 4,597 |
Payment of debt issuance costs | 0 | (3,292) |
Other | (166) | 481 |
Net cash provided by financing activities | 26,502 | 281,787 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,161) | (7,257) |
Net increase in cash, cash equivalents and restricted cash | 17,104 | 298,287 |
Cash, cash equivalents and restricted cash at beginning of period | 515,618 | 207,992 |
Cash, cash equivalents and restricted cash at end of period | $ 532,722 | $ 506,279 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and 2022, have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 2022 has been derived from audited financial statements contained in LivaNova’s 2022 Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries for the three and nine months ended September 30, 2023, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying LivaNova’s 2022 Form 10-K. Macroeconomic Environment The current macroeconomic environment, including foreign exchange volatility, inflationary pressures, geopolitical instability, and supply chain challenges, has impacted and may continue to impact LivaNova’s business and profitability. Furthermore, LivaNova continues to experience supply chain delays and interruptions, labor shortages, inflationary pressures and logistical and capacity constraints, though, to date, the Company’s supply of raw materials and the production and distribution of finished products have not been materially affected. Moreover, freight and labor costs at LivaNova’s manufacturing facilities have increased substantially in the wake of inflation globally. The Company continues to respond to such challenges, and while LivaNova has business continuity plans in place, the impact of the ongoing challenges the Company is navigating, along with their potential escalation, may adversely affect its business. Conflicts, including those in Ukraine and the Middle East, have caused the Company to assess its ability to sell in certain markets due to any applicable international sanctions, consider the potential impact of raw material sourced from these areas, and determine whether LivaNova is able to transact in a compliant fashion. Net revenues from each of these conflict areas represented approximately 1%, respectively, of LivaNova’s total net revenue for 2022. These conflicts have increased economic uncertainties, and a significant escalation or continuation of these conflicts could have a material, global impact on the Company’s operating results. Reclassifications The Company has reclassified certain prior period amounts on the condensed consolidated balance sheets for comparative purposes. These reclassifications had no impact on LivaNova’s financial condition. Significant Accounting Policies LivaNova’s significant accounting policies are detailed below and in “Note 2. Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies” and “Note 3. Revenue Recognition” of LivaNova’s 2022 Form 10-K. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Note 2. Business Combinations As of December 31, 2021, LivaNova owned a 3% investment in ALung, a privately held medical device company focused on creating advanced medical devices for treating respiratory failure. On May 2, 2022, LivaNova 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 LivaNova’s 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 purchase price allocation at fair value for the ALung acquisition was finalized during the second quarter of 2023 and is presented in the following table, which includes 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 the Company’s ACS business. The assets acquired, including goodwill, are recognized in LivaNova’s ACS segment. The goodwill for the ACS reporting unit was fully impaired during the third quarter of 2022. The Company’s condensed consolidated financial statements include the operating results of ALung from the acquisition date. Separate post-acquisition operating results and pro forma financial information for this acquisition have not been presented as the effect was not material. 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 the Company’s 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 5. Fair Value Measurements.” |
Divestiture of Heart Valve Busi
Divestiture of Heart Valve Business | 9 Months Ended |
Sep. 30, 2023 | |
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, 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 provided 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 LSM at the Company’s Saluggia campus for $64.1 million. On April 9, 2021, LivaNova and Mitral entered into an Amended & Restated 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 provision of LSM and the related expense reimbursement provisions. On April 7, 2023, Mitral provided notice to LivaNova, consistent with the terms of the Amended & Restated Purchase Agreement, that they would not exercise their right to purchase LSM. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 4. Goodwill and Intangible Assets LivaNova tests 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 LivaNova’s assessment as of September 30, 2022, the Company considered that revenue for the 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, LivaNova concluded it was more likely than not that the goodwill of the Company’s ACS reporting unit was impaired, and 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, LivaNova 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 the Company’s 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. LivaNova also performed an interim impairment analysis related to the ImThera IPR&D intangible asset as of September 30, 2022. As a result of this analysis, the Company determined that the fair value of the asset exceeded the carrying value by 11% and that the IPR&D intangible asset was not impaired. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 5. Fair Value Measurements The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no transfers between Level 1, Level 2, or Level 3 during the nine months ended September 30, 2023 and 2022. 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, 2023 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - freestanding instruments (FX) $ 2,625 $ — $ 2,625 $ — Derivative assets - capped call derivatives 43,669 — — 43,669 Convertible notes receivable 275 — — 275 $ 46,569 $ — $ 2,625 $ 43,944 Liabilities: Derivative liabilities - freestanding instruments (FX) $ 207 $ — $ 207 $ — Derivative liabilities - embedded exchange feature 53,303 — — 53,303 Contingent consideration arrangements 89,808 — — 89,808 $ 143,318 $ — $ 207 $ 143,111 Fair Value as of December 31, 2022 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (interest rate swap) $ 1,333 $ — $ 1,333 $ — Derivative assets - capped call derivatives 54,393 — — 54,393 Convertible notes receivable 285 — — 285 $ 56,011 $ — $ 1,333 $ 54,678 Liabilities: Derivative liabilities - freestanding instruments (FX) $ 5,886 $ — $ 5,886 $ — Derivative liabilities - embedded exchange feature 85,675 — — 85,675 Contingent consideration arrangements 85,292 — — 85,292 $ 176,853 $ — $ 5,886 $ 170,967 The following table provides a reconciliation of the beginning and ending balances of 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, 2022 - long-term $ 54,393 $ 285 $ 85,675 $ 85,292 Changes in fair value (10,724) (10) (32,372) 4,516 Total at September 30, 2023 - long-term $ 43,669 $ 275 $ 53,303 $ 89,808 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 6. 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 LivaNova’s stock price or stock price volatility would increase the fair value of the embedded exchange feature and capped call derivatives which would result in an increase in expense. As time to the expiration of the derivatives decreases, the fair value of the derivatives would decrease. The future impact on net income depends on how significant inputs such as stock price, stock price volatility and time to the expiration of the derivatives change in relation to 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. The fair value of the embedded exchange feature derivative liability and the capped call derivative assets was $53.3 million and $43.7 million, respectively, as of September 30, 2023, and the stock price volatility was 37%. As of September 30, 2023, a 10% lower volatility, holding other inputs constant, would reduce the fair value for the embedded exchange feature derivative liability by $14.0 million, and a 10% higher volatility, holding other inputs constant, would increase the fair value by $14.1 million. As of September 30, 2023, a 10% lower volatility, holding other inputs constant, would reduce the fair value for the capped call derivatives by $8.5 million, and a 10% higher volatility, holding other inputs constant, would increase the fair value by $3.7 million. Contingent Consideration Arrangements The following table provides the fair value of Level 3 contingent consideration arrangements by acquisition (in thousands): September 30, 2023 December 31, 2022 ImThera $ 78,525 $ 69,389 ALung 11,283 15,903 $ 89,808 $ 85,292 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 LivaNova’s internal strategic plan. These arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of September 30, 2023: ImThera Acquisition Valuation Technique Unobservable Input Inputs Regulatory milestone-based payment Discounted cash flow Discount rate 7.9% Probability of payment 85% Projected payment year 2026 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.6% - 14.8% Credit risk discount rate 8.1% - 8.6% 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, 2023: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 10.2% - 11.0% Credit risk discount rate 7.6% - 8.3% Revenue volatility 27.4% Projected years of earnout 2023 - 2027 |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 6. Financing Arrangements The outstanding principal amount of long-term debt as of September 30, 2023 and December 31, 2022 was as follows (in thousands, except interest rates): September 30, 2023 December 31, 2022 Maturity Interest Rate Term Facilities $ 332,433 $ 289,294 July 2027 8.87% 2020 Cash Exchangeable Senior Notes 251,315 239,568 December 2025 3.00% Bank of America Merrill Lynch Banco Múltiplo S.A. — 6,462 N/A N/A Mediocredito Italiano 799 1,601 December 2023 0.50% - 7.15% Bank of America, U.S. 1,500 1,500 January 2025 8.31% Other 533 534 Total long-term facilities 586,580 538,959 Less current portion of long-term debt 18,417 20,892 Total long-term debt obligations $ 568,163 $ 518,067 Revolving Credit The outstanding principal amount of LivaNova’s short-term unsecured revolving credit agreements and other agreements with various banks was $0.6 million and $2.5 million as of September 30, 2023 and December 31, 2022, respectively, with an interest rate of 4.24% and loan terms ranging from overnight to 364 days as of September 30, 2023. On August 13, 2021, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA as 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, referred to as 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 USD-denominated loans, an adjusted SOFR with a floor of 0.00%, or a Base Rate, plus, in each case, a variable margin based on the Company’s Total Net Leverage Ratio, as defined in the agreement. Interest is paid monthly or quarterly, as selected by the borrower, with any outstanding principal due at maturity. The 2021 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 Total Net Leverage Ratio. As of September 30, 2023 and December 31, 2022, the applicable commitment fee percentage was 0.5% per annum. 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, 2023, the Company was in compliance with the financial covenants contained in its 2021 First Lien Credit Agreement. There were no outstanding borrowings under the 2021 First Lien Credit Agreement’s $125 million revolving credit facility as of September 30, 2023 and December 31, 2022. Bridge Loan Facility On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary LivaNova USA entered into the €200 million 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 million and converted the EURIBOR rate in the 2021 First Lien Credit Agreement to SOFR. LivaNova delivered a borrowing notice for $220 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. Cash collateral classified as restricted cash on the condensed consolidated balance sheet was $298.8 million and $301.4 million as of September 30, 2023 and December 31, 2022, respectively. For additional information regarding the SNIA litigation, please refer to “Note 8. 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 condensed consolidated statement of income. 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, entered into Incremental Facility Amendment No. 2. Incremental Facility 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) the Initial Term Facility with an aggregate principal amount of $300 million and (ii) the Delayed Draw Term Facility with an additional aggregate principal amount of $50 million. On April 6, 2023, LivaNova drew $50 million under the Delayed Draw Term Facility for general corporate purposes. Proceeds from 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, 2023, 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 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 Term Facilities at September 30, 2023 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, 2023, the Company was in compliance with the financial covenants contained in the 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 $0.5 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, and is included in interest expense on the condensed consolidated statement of income. The unamortized discount and issuance costs related to the Initial Term Facility as of September 30, 2023 and December 31, 2022 were $7.3 million and $8.7 million, respectively. 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 nil and $0.5 million for the three and nine months ended September 30, 2023, respectively, and is included in interest expense on the condensed consolidated statement of income. The issuance costs related to the Delayed Draw Term Facility were fully amortized as of September 30, 2023. 2020 Cash Exchangeable Senior Notes On June 17, 2020, LivaNova’s wholly-owned subsidiary, LivaNova USA, issued $287.5 million aggregate principal amount of 3.00% Notes by private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. 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, 2023 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 $4.1 million and $11.7 million for the three and nine months ended September 30, 2023, respectively, and $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 condensed consolidated statement of income. The unamortized discount related to the Notes as of September 30, 2023 and December 31, 2022 was $36.2 million and $47.9 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, 2023. As a result, the Company has included its obligations from the Notes and the associated embedded exchange feature derivative as a long-term liability on the condensed consolidated balance sheet as of September 30, 2023. 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. The fair value of the embedded exchange feature derivative liability was $53.3 million and $85.7 million as of September 30, 2023 and December 31, 2022, respectively. 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. The fair value of the capped call derivative assets was $43.7 million and $54.4 million as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, the capped call derivative assets were classified as long-term. |
Derivatives and Risk Management
Derivatives and Risk Management | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Risk Management | Note 7. Derivatives and Risk Management Due to the global nature of LivaNova’s operations, LivaNova is exposed to FX fluctuations. Historically, the Company has entered into FX derivative contracts and interest rate swap contracts to reduce the impact of FX and interest rate fluctuations, respectively, on earnings and cash flow. LivaNova is also exposed to equity price risk in connection with its Notes, including exchange and settlement provisions based on the price of the Company’s ordinary shares at exchange or maturity of the Notes. The capped call transactions associated with the Notes also include settlement provisions that are based on the price of LivaNova’s ordinary shares, subject to a capped price per share. LivaNova does not enter into derivative contracts for speculative purposes. LivaNova measures all outstanding derivatives each period end at fair value and reports 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. These derivatives are intended to serve as economic hedges and follow the cash flows of the economic hedged item. The cash flows from these derivative contracts are reported as operating activities on LivaNova’s condensed consolidated statements of cash flows. If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in AOCI until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to the condensed consolidated statements of income as shown in the tables below, and interest rate swap gains and losses in AOCI are reclassified to interest expense on the condensed consolidated statements of income. The Company evaluates hedge effectiveness at inception. Freestanding FX Derivative Contracts The gross notional amount of FX derivative contracts not designated as hedging instruments outstanding at September 30, 2023 and December 31, 2022 was $174.2 million and $154.5 million, respectively. These derivative contracts are designed to offset the FX effects in earnings of various intercompany loans and trade receivables. For these freestanding derivatives, LivaNova recorded net gains of $5.0 million and $7.7 million for the three months ended September 30, 2023 and 2022, respectively, and net gains of $4.1 million and $12.7 million for the nine months ended September 30, 2023 and 2022, respectively. These gains and losses are included in foreign exchange and other income/(expense) on the condensed consolidated statements of income. Counterparty Credit Risk LivaNova is exposed to credit risk in the event of non-performance by the counterparties to the Company’s derivatives. The two counterparties to the capped call transactions are financial institutions. To limit its credit risk, LivaNova selected financial institutions with a minimum long-term investment grade credit rating. LivaNova’s exposure to the credit risk of the counterparties is not secured by any collateral. If a counterparty becomes subject to insolvency proceedings, the Company will become an unsecured creditor in those proceedings, with a claim equal to LivaNova’s exposure at that time under the capped call transactions with that counterparty. To manage credit risk with respect to its 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 Historically, LivaNova utilized FX derivative contracts, designed as cash flow hedges, to hedge the variability of cash flows associated with LivaNova’s 12-month USD forecasts of revenues and costs denominated in British Pound, Japanese Yen and the Euro. The Company transferred to earnings from AOCI the gain or loss realized on the FX derivative contracts at the time of invoicing. Upon the settlement of LivaNova’s foreign currency cash flow hedges in the fourth quarter of 2022 and following an in-depth analysis of the utility of the Company’s cash flow hedging program, LivaNova discontinued its foreign currency cash flow hedging program. Interest Rate Risk Historically, LivaNova entered into interest rate swaps associated with the Initial Term Facility, which qualified for and were designated as cash flow hedges. The Company’s interest rate swaps expired on April 6, 2023. LivaNova elected not to renew the interest rate swaps as interest expense associated with the Initial Term Facility is principally offset by holding a significant portion of the Initial Term Facility in a depository account, which earns a floating rate of interest. The gross notional amounts of open derivative contracts designated as cash flow hedges at September 30, 2023 and December 31, 2022 were as follows (in thousands): Description of Derivative Contract September 30, 2023 December 31, 2022 Interest rate swap contracts $ — $ 210,000 Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in OCI and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended September 30, 2022 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ 413 $ 1,838 FX derivative contracts SG&A — (1,927) Interest rate swap contracts Interest expense 1,151 — $ 1,564 $ (89) Nine Months Ended September 30, 2023 2022 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Gains Reclassified from AOCI to Earnings (Losses) Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ — $ — $ (1,345) $ 3,517 FX derivative contracts SG&A — — — (3,437) Interest rate swap contracts Interest expense (433) 533 1,151 — $ (433) $ 533 $ (194) $ 80 The Company offsets fair value amounts associated with its derivative instruments on the condensed consolidated balance sheets that are executed with the same counterparty under master netting arrangements. 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): Asset Derivatives Liability Derivatives September 30, 2023 Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Derivatives Not Designated as Hedging Instruments: Capped call derivatives Long-term derivative assets $ 43,669 Embedded exchange feature Long-term derivative liabilities $ 53,303 FX derivative contracts Prepaid expenses and other current assets 2,625 Accrued liabilities and other 207 Total derivatives not designated as hedging instruments 46,294 53,510 Total derivatives $ 46,294 $ 53,510 Asset Derivatives Liability Derivatives December 31, 2022 Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Derivatives Designated as Hedging Instruments: Interest rate swap contracts Prepaid expenses and other current assets $ 1,333 Total derivatives designated as hedging instruments 1,333 Derivatives Not Designated as Hedging Instruments: Capped call derivatives Long-term derivative assets 54,393 FX derivative contracts Accrued liabilities and other $ 5,886 Embedded exchange feature Long-term derivative liabilities 85,675 Total derivatives not designated as hedging instruments 54,393 91,561 Total derivatives $ 55,726 $ 91,561 (1) For the classification of inputs used to evaluate the fair value of derivatives, refer to “Note 5. Fair Value Measurements.” |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. Commitments and Contingencies 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 being a former 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 performed, and continues to perform, ordinary maintenance, secure the facilities, monitor air and water quality and file applicable reports with the competent environmental authorities. In 2020, LSM received correspondence from ISIN 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, 2023 was €36.0 million ($38.1 million), which represented the low end of the estimated range of loss of €36.0 million ($38.1 million) to €45.8 million ($48.4 million) as of September 30, 2023. The estimated liability as of December 31, 2022 was €34.2 million ($36.6 million). The increase in the Saluggia site provision from December 31, 2022 was due to adjustments associated with expected disposal costs. Product Liability Litigation The Company is currently involved in litigation involving LivaNova’s 3T Heater-Cooler device. The litigation includes the MDL, various U.S. state court cases and cases in jurisdictions outside the U.S. On March 29, 2019, LivaNova announced a settlement framework that provided for a comprehensive resolution of the personal injury cases pending in the MDL, the related class action in federal court, as well as certain cases in state courts across the United States. The agreement, which made no admission of liability, was subject to certain conditions, including acceptance of the settlement by individual claimants and provided for a total payment of up to $225 million to resolve the claims covered by the settlement. Per the agreed-upon terms, the second and final payment of $90 million was paid into a qualified settlement fund in January 2020. Cases in state courts in the U.S. and in jurisdictions outside the U.S. continue to progress. As of November 1, 2023, the Company was aware of approximately 75 filed and unfiled claims worldwide, with the majority of the claims in various federal or state courts throughout the United States, including some cases removed to the MDL after the settlement described above. This number includes six cases in the process of settlement or dismissal. 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 three and nine months ended September 30, 2023, the Company recorded an additional liability of $13.6 million and $25.7 million, respectively, due to new information received about the nature of certain claims. At September 30, 2023 and December 31, 2022, the provision for these matters was $29.7 million and $32.5 million, respectively. While the amount accrued represents the Company’s best estimate for those filed and unfiled claims that the Company believes are both probable and estimable at this time, and which are a subset of the filed and unfiled claims worldwide of which LivaNova is currently aware, the actual liability for resolution of these matters may vary from the Company’s 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, 2022 $ 32,487 Payments (28,604) Adjustments (1) 25,739 FX and other 60 Total litigation provision liability at September 30, 2023 29,682 Less current portion of litigation provision liability at September 30, 2023 26,704 Long-term portion of litigation provision liability at September 30, 2023 (2) $ 2,978 (1) Adjustments to the litigation provision are included within other operating expense on the condensed consolidated statements of income. (2) Included within other long-term liabilities on the condensed consolidated balance sheet. SNIA Environmental Liability Sorin was created as a result of a spin-off from SNIA in 2004, and in 2015, Sorin was merged into LivaNova. SNIA subsequently became insolvent, and the Public Administrations sought compensation from SNIA in an aggregate amount of approximately $3.6 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 LivaNova is not a party in the Bankruptcy Court of Udine and the Bankruptcy Court of Milan. In 2011, the Bankruptcy Court of Udine held that 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 2016, the Court of Udine rejected the appeal, and the Public Administrations appealed to the Supreme Court. Similarly, in 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 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. In 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 $308,952 as of September 30, 2023) for legal fees. The Public Administrations appealed the 2016 Decision to the 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 $605.3 million as of September 30, 2023). LivaNova appealed the partial decision on liability to the Italian Supreme Court in August 2019. In 2021, the Court of Appeal delivered the remainder of its decision, ordering LivaNova to pay damages of approximately €453.6 million (approximately $479.9 million as of September 30, 2023). LivaNova appealed the decision on damages in December 2021. 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 LivaNova providing a first demand bank guarantee of €270.0 million (approximately $285.7 million as of September 30, 2023) within 30 calendar days, and on March 21, 2022, LivaNova delivered the guarantee, thereby satisfying the condition. Refer to “Note 6. Financing Arrangements” for information on the financing of the guarantee. In November 2022, in response to one of a number of appeals asserted by LivaNova, the Supreme Court issued an ordinance, a procedural document, whereby the Supreme Court referred a question on interpretation of a European directive on demergers to the ECJ. Specifically, the ordinance asks the ECJ to provide a binding decision as to whether a company resulting from a demerger can be held jointly and severally liable not only for the established liabilities of the demerged company that were articulated at the time of demerger, but also for the environmental liabilities of the demerged company that materialized after the demerger which are derived from actions performed prior to the demerger. Following receipt of the binding decision from the ECJ, the Supreme Court is expected to incorporate and issue a decision in response to all of the appeals of LivaNova and counter-appeals submitted by the Public Administrations. While the timing of the decisions by the ECJ and, subsequently, the Supreme Court are uncertain, the Company believes that the effect of the ordinance will result in a delay of any final decision until at least 2024. 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 2020, Caffaro Brescia declared it was withdrawing from its agreement to maintain the environmental measures. In 2021, LivaNova (in addition to Caffaro Brescia, and other non-LivaNova entities) received an Order from the Italian Ministry of the Environment requiring the Company 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 LivaNova’s alleged joint liability with SNIA for SNIA’s environmental liabilities. LivaNova’s response, dated February 16, 2021, disputes the grounds upon which the Order is based. LivaNova also appealed the Order in the Administrative Court in Brescia. LivaNova has not recognized a liability in connection with these related matters because any potential loss is not currently probable. Caisson Contract Litigation On November 25, 2019, LivaNova received notice of a lawsuit initiated by former members of 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 program and the Company’s November 20, 2019 announcement that it was ending the 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, and in June 2023, the Eighth Circuit Court of Appeal affirmed the decision. The Company now considers Caisson’s claim against LivaNova to be closed. Mitral Litigation On July 29, 2022, LivaNova received a demand letter from Mitral for approximately €20.8 million ($22.0 million as of September 30, 2023) 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. The Company does not believe that Mitral’s claims will be sustained or that LivaNova is responsible for any alleged breach of warranty. Subject to certain exceptions, warranty claims of this type are contractually capped at €8.0 million ($8.5 million as of September 30, 2023). On March 22, 2023, Mitral served a formal claim on LivaNova in the High Court of Justice Commercial Court (King’s Bench Division) alleging damages flowing from the aforementioned asserted breaches of warranties in the A&R Purchase Agreement. Although the claim is in excess of €20.8 million, Mitral acknowledges the €8.0 million cap. The Company filed its Defense on May 17, 2023. As of September 30, 2023, the Company had recorded an accrued liability for an immaterial amount related to this matter. Italian MedTech Payback Measure As previously disclosed, in 2015, the Italian Parliament introduced rules regarding public contracts with the National Healthcare System for the supply of goods and services. In particular, the law introduced a “payback” measure requiring companies selling medical devices in Italy to repay a percentage of the healthcare expenditures exceeding the regional maximum caps for medical devices. In the intervening years since the rules were first issued, there has been considerable uncertainty about how the law will operate and what the exact timeline is for finalization. In August 2022, a decree was published which provided guidance and timetables for the rule. In response, LivaNova filed an appeal at the Administrative Court against the Decree of the Ministry of Health assessing the amount payable and against the MedTech Payback Guidelines. LivaNova also filed appeals against the regions requesting payments. In August 2023, the Administrative Court upheld LivaNova’s request to suspend the effect of the requests for payment by the regions, pending the decision by the court on the merits of the case. The Company has accrued for the law since 2015 based on market and product information. As of September 30, 2023 and December 31, 2022, the total amount reserved for this matter was $7.6 million and $6.4 million, respectively; however, the actual liability could vary. Other Matters Additionally, LivaNova is the subject of various pending or threatened legal actions and proceedings that arise in the ordinary course of LivaNova’s 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 LivaNova’s consolidated net income, financial position or liquidity. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 9. 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, 2023 and 2022 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity (1) June 30, 2023 53,904 $ 82,441 $ 2,169,346 $ (95) $ (35,579) $ (975,505) $ 1,240,608 Stock-based compensation plans — 50 11,315 39 — — 11,404 Net income — — — — — (7,318) (7,318) Other comprehensive loss — — — — (19,222) — (19,222) September 30, 2023 53,904 $ 82,491 $ 2,180,661 $ (56) $ (54,801) $ (982,823) $ 1,225,472 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 Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity (1) December 31, 2022 53,852 $ 82,424 $ 2,157,724 $ (375) $ (48,119) $ (984,030) $ 1,207,624 Stock-based compensation plans 52 67 22,937 319 — — 23,323 Net income — — — — — 1,207 1,207 Other comprehensive loss — — — — (6,682) — (6,682) September 30, 2023 53,904 $ 82,491 $ 2,180,661 $ (56) $ (54,801) $ (982,823) $ 1,225,472 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 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, 2023 and 2022 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) (1) Total December 31, 2022 $ 966 $ (49,085) $ (48,119) Other comprehensive loss before reclassifications, before tax (433) (5,716) (6,149) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (433) (5,716) (6,149) Reclassification of gain from accumulated other comprehensive loss, before tax (533) — (533) Reclassification of tax benefit — — — Reclassification of gain from accumulated other comprehensive loss, after tax (533) — (533) Net current-period other comprehensive loss, net of tax (966) (5,716) (6,682) September 30, 2023 $ — $ (54,801) $ (54,801) 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) (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, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Incentive Plans | Note 10. Stock-Based Incentive Plans During the nine months ended September 30, 2023, LivaNova issued stock-based compensatory awards with terms approved by the Compensation Committee of LivaNova’s Board of Directors. The awards with service conditions generally vest ratably over four years and are subject to forfeiture unless service conditions are met. The market performance-based awards that were issued cliff vest after three years subject to the rank of LivaNova’s total shareholder return for the three-year period ending December 31, 2025 relative to the total shareholder returns for a peer group of companies. The adjusted free cash flow and return on invested capital operating performance-based awards that were issued, cliff vest after three years subject to the achievement of certain thresholds of cumulative results for the three-year period ending December 31, 2025. Compensation expense related to awards granted during 2023 for the three and nine months ended September 30, 2023 was $4.5 million and $6.9 million, respectively. Stock-based awards may be granted under the 2015 Plan and the 2022 Plan in the form of stock options, SARs, RSUs and other stock-based and cash-based awards. As of September 30, 2023, there were 13,493 shares available for future grants to LivaNova’s Non-Executive Directors under the 2015 Plan and 1,398,400 shares pursuant to Options or Stock Appreciation Rights and 912,743 shares pursuant to other types of awards available for future grants to LivaNova’s employees under the 2022 Plan. In June 2023, the Company’s shareholders approved the A&R 2022 Plan. The A&R 2022 Plan increases the aggregate number of ordinary shares that can be issued under the 2022 Plan pursuant to options or SARs from 1,900,000 to 2,250,000, and the number of ordinary shares that can be issued pursuant to awards other than options or SARs from 1,200,000 to 1,500,000. Stock-based incentive plan compensation expense is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 RSUs $ 5,690 $ 5,484 $ 16,103 $ 16,710 SARs 3,886 3,069 10,713 9,727 Market performance-based restricted stock units 1,071 1,049 392 2,903 Operating performance-based restricted stock units 866 875 7 2,271 Employee share purchase plan 266 250 854 881 Total stock-based compensation expense $ 11,779 $ 10,727 $ 28,069 $ 32,492 Stock-based compensation agreements issued during the nine months ended September 30, 2023 representing potential shares and their weighted average grant date fair values by type is as follows (shares in thousands, fair value in dollars): Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value Service-based SARs 974,204 $ 19.44 Service-based RSUs 502,821 $ 42.89 Market performance-based RSUs 94,561 $ 38.95 Operating performance-based RSUs 94,556 $ 42.30 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11. Income Taxes LivaNova’s effective income tax rate for the three and nine months ended September 30, 2023 was (268.4)% and 90.1%, respectively, compared with (1.2)% and (7.8)% for the three and nine months ended September 30, 2022, respectively. LivaNova’s 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. LivaNova continually assesses the realizability of its worldwide deferred tax asset and valuation allowance positions, and when the need arises, the Company establishes or releases valuation allowances accordingly. The decrease in the effective tax rate for the three months ended September 30, 2023, compared to the prior year period, was primarily attributable to changes in valuation allowances and year-over-year changes in income before tax in countries with varying statutory tax rates. The increase in the effective tax rate for the nine months ended September 30, 2023, compared to the prior year period, was primarily attributable to changes in valuation allowances, year-over-year changes in income before tax in countries with varying statutory tax rates and an audit settlement. LivaNova operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subjected to review by tax authorities. As a result, there is an uncertainty in income taxes recognized in LivaNova’s financial statements. Tax benefits totaling $0.4 million and $1.6 million were unrecognized as of September 30, 2023 and December 31, 2022, respectively. On July 11, 2023, the UK Act implemented the OECD’s BEPS Pillar Two Framework, providing a minimum effective tax rate of 15%, including both a multinational top-up tax and a domestic top-up tax for accounting periods beginning on or after December 31, 2023. The UK Act also included a transitional safe harbor election for accounting periods beginning on or before December 31, 2026. LivaNova is reviewing the draft guidance issued on June 15, 2023, and the UK Act to assess the full implications for 2024 and will continue to monitor related guidance in the UK and other jurisdictions that impact LivaNova’s operations. Any material change in tax laws, regulations or policies, or their interpretation and enforcement, including with respect to the Pillar Two Framework, could result in a higher effective tax rate and have a material impact on our consolidated statements of income (loss) or financial condition. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 12. 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, 2023 and 2022 are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic weighted average shares outstanding 53,989 53,534 53,837 53,474 Add effects of share-based compensation instruments (1) — — 270 — Diluted weighted average shares outstanding 53,989 53,534 54,107 53,474 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 4.0 million and 3.9 million for the three months ended September 30, 2023 and 2022, respectively, and 3.1 million and 4.0 million for the nine months ended September 30, 2023 and 2022, respectively, 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, 2023 | |
Segment Reporting [Abstract] | |
Geographic and Segment Information | Note 13. Geographic and Segment Information LivaNova identifies operating segments based on how it manages, evaluates and internally reports its business activities to allocate resources, develop and execute its strategy and assess performance. LivaNova has three reportable segments: Cardiopulmonary, Neuromodulation and ACS. Net revenue of the Company’s reportable segments includes revenues from the sale of products that each reportable segment develops and manufactures or distributes. LivaNova’s Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including heart-lung machines, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. LivaNova’s Neuromodulation segment is engaged in the design, development and marketing of devices that deliver neuromodulation therapy for treating DRE and 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 LivaNova’s aura6000 System for treating OSA. LivaNova’s Neuromodulation segment also includes costs associated with LivaNova’s former heart failure program, which, as previously disclosed, the Company began to wind down during the first quarter of 2023. LivaNova’s ACS segment is engaged in the development, production and sale of leading-edge temporary life support products. LivaNova’s 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. LivaNova’s ACS segment also includes the Hemolung RAS, which was acquired in May 2022 as part of the acquisition of ALung. LivaNova operates 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, 2023 2022 2023 2022 Cardiopulmonary United States $ 48,547 $ 38,476 $ 131,372 $ 114,437 Europe (1) 35,190 28,754 110,642 93,980 Rest of World 61,090 53,729 185,488 155,437 144,827 120,959 427,502 363,854 Neuromodulation United States 102,475 96,504 301,029 275,145 Europe (1) 12,661 11,130 41,066 37,296 Rest of World 13,744 14,201 40,689 37,416 128,880 121,835 382,784 349,857 Advanced Circulatory Support United States 10,562 8,430 29,423 28,183 Europe (1) 277 114 522 1,220 Rest of World 113 92 266 268 10,952 8,636 30,211 29,671 Other Revenue (2) 1,454 1,175 2,916 3,549 Totals United States 161,583 143,410 461,823 417,765 Europe (1) 48,129 39,998 152,231 132,496 Rest of World 76,401 69,197 229,359 196,670 Total (3) $ 286,113 $ 252,605 $ 843,413 $ 746,931 (1) Includes countries in Europe where the Company has a direct sales presence. Countries where sales are made through distributors are included in “Rest of World.” (2) Other revenue primarily includes rental income not allocated to segments. (3) No single customer represented over 10% of the Company’s consolidated net revenue. No country’s net revenue exceeded 10% of the Company’s consolidated revenue except for the U.S. LivaNova defines segment income as operating income before merger and integration expense, restructuring expense, amortization of intangible assets, the Saluggia site provision, as well as other income and expense not allocated to segments. Other income and expense not allocated to segments primarily includes rental income and SG&A expenses for finance, legal, human resources, information technology and corporate business development. The table below presents a reconciliation of segment income (loss) to consolidated (loss) income before tax (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cardiopulmonary $ (3,959) $ (10,324) $ 15,006 $ 215 Neuromodulation 41,930 43,281 107,084 132,119 Advanced Circulatory Support 2,884 (134,902) (8,315) (136,855) Segment income (loss) 40,855 (101,945) 113,775 (4,521) Other income/(expense) (1) (36,397) (30,028) (94,283) (86,191) Operating income (loss) 4,458 (131,973) 19,492 (90,712) Interest expense (14,986) (12,661) (43,232) (34,889) Foreign exchange and other income/(expense) 8,550 38,528 36,810 44,065 (Loss) income before tax $ (1,978) $ (106,106) $ 13,070 $ (81,536) (1) Other income/(expense) primarily includes rental income, SG&A expenses for finance, legal, human resources, information technology and corporate business development, as well as amortization of intangible assets, the Saluggia site provision, merger and integration expense and restructuring expense. Assets by segment are as follows (in thousands): September 30, 2023 December 31, 2022 Cardiopulmonary $ 934,188 $ 874,143 Neuromodulation 643,459 646,633 Advanced Circulatory Support 115,881 121,454 Other assets (1) 635,889 652,543 Total $ 2,329,417 $ 2,294,773 (1) Other assets primarily includes corporate assets not allocated to segments. Capital expenditures by segment are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cardiopulmonary $ 4,103 $ 2,295 $ 11,444 $ 7,337 Neuromodulation 597 192 1,089 322 Advanced Circulatory Support 221 589 1,066 1,273 Other capital expenditures (1) 3,261 2,852 8,489 8,439 Total $ 8,182 $ 5,928 $ 22,088 $ 17,371 (1) Other capital expenditures primarily includes corporate capital expenditures not allocated to segments. The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2023 were as follows (in thousands): Cardiopulmonary Neuromodulation Total December 31, 2022 $ 370,033 $ 398,754 $ 768,787 Foreign currency adjustments (1,732) — (1,732) September 30, 2023 $ 368,301 $ 398,754 $ 767,055 Property, plant and equipment, net by geography are as follows (in thousands): September 30, 2023 December 31, 2022 United States $ 67,346 $ 63,458 Europe 77,319 79,654 Rest of World 4,637 4,075 Total $ 149,302 $ 147,187 |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Financial Information | Note 14. Supplemental Financial Information Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 90,953 $ 70,027 Work-in-process 17,919 15,508 Finished goods 52,667 43,844 $ 161,539 $ 129,379 As of September 30, 2023 and December 31, 2022, inventories included adjustments totaling $11.6 million and $8.2 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, 2023 December 31, 2022 Legal and professional costs $ 15,299 $ 8,653 Contract liabilities 10,969 10,226 Interest payable 9,961 — Operating lease liabilities 8,560 9,379 Italian medical device payback law 7,586 6,414 Research and development costs 5,860 7,020 Royalty accrual 4,172 3,950 Provisions for agents, returns and other 3,607 1,678 Restructuring liabilities 1,285 2,045 Current derivative liabilities 207 5,886 Other accrued expenses 22,174 26,230 $ 89,680 $ 81,481 As of September 30, 2023 and December 31, 2022, contract liabilities totaling $15.3 million and $14.1 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 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Exchangeable Notes fair value adjustment (1) $ 402 $ 50,945 $ 32,372 $ 98,555 Capped call fair value adjustment (1) 1,635 (13,385) (10,724) (58,406) Foreign exchange rate fluctuations 420 575 (588) 3,707 Interest income 5,921 547 15,985 624 Other 172 (154) (235) (415) Foreign exchange and other income/(expense) $ 8,550 $ 38,528 $ 36,810 $ 44,065 (1) Refer to “Note 5. Fair Value Measurements” 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, 2023 December 31, 2022 Cash and cash equivalents $ 233,941 $ 214,172 Restricted cash (1) 298,781 301,446 Cash, cash equivalents and restricted cash $ 532,722 $ 515,618 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 8. Commitments and Contingencies.” |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net (loss) income | $ (7,318) | $ (107,344) | $ 1,207 | $ (87,907) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Financial Statements (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and 2022, have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 2022 has been derived from audited financial statements contained in LivaNova’s 2022 Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries for the three and nine months ended September 30, 2023, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying LivaNova’s 2022 Form 10-K. |
Reclassifications | ReclassificationsThe Company has reclassified certain prior period amounts on the condensed consolidated balance sheets for comparative purposes. These reclassifications had no impact on LivaNova’s financial condition. |
Derivatives | If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in AOCI until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to the condensed consolidated statements of income as shown in the tables below, and interest rate swap gains and losses in AOCI are reclassified to interest expense on the condensed consolidated statements of income. The Company evaluates hedge effectiveness at inception. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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 LivaNova’s 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 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The purchase price allocation at fair value for the ALung acquisition was finalized during the second quarter of 2023 and is presented in the following table, which includes 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 |
Significant Unobservable Inputs Related to Contingent Consideration | The sales-based earnout was valued using projected sales from the Company’s 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 7.9% Probability of payment 85% Projected payment year 2026 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.6% - 14.8% Credit risk discount rate 8.1% - 8.6% 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, 2023: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 10.2% - 11.0% Credit risk discount rate 7.6% - 8.3% Revenue volatility 27.4% Projected years of earnout 2023 - 2027 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - freestanding instruments (FX) $ 2,625 $ — $ 2,625 $ — Derivative assets - capped call derivatives 43,669 — — 43,669 Convertible notes receivable 275 — — 275 $ 46,569 $ — $ 2,625 $ 43,944 Liabilities: Derivative liabilities - freestanding instruments (FX) $ 207 $ — $ 207 $ — Derivative liabilities - embedded exchange feature 53,303 — — 53,303 Contingent consideration arrangements 89,808 — — 89,808 $ 143,318 $ — $ 207 $ 143,111 Fair Value as of December 31, 2022 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (interest rate swap) $ 1,333 $ — $ 1,333 $ — Derivative assets - capped call derivatives 54,393 — — 54,393 Convertible notes receivable 285 — — 285 $ 56,011 $ — $ 1,333 $ 54,678 Liabilities: Derivative liabilities - freestanding instruments (FX) $ 5,886 $ — $ 5,886 $ — Derivative liabilities - embedded exchange feature 85,675 — — 85,675 Contingent consideration arrangements 85,292 — — 85,292 $ 176,853 $ — $ 5,886 $ 170,967 |
Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements | The following table provides a reconciliation of the beginning and ending balances of 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, 2022 - long-term $ 54,393 $ 285 $ 85,675 $ 85,292 Changes in fair value (10,724) (10) (32,372) 4,516 Total at September 30, 2023 - long-term $ 43,669 $ 275 $ 53,303 $ 89,808 |
Schedule of Fair Value of Contingent Consideration Arrangements by Acquisition | The following table provides the fair value of Level 3 contingent consideration arrangements by acquisition (in thousands): September 30, 2023 December 31, 2022 ImThera $ 78,525 $ 69,389 ALung 11,283 15,903 $ 89,808 $ 85,292 |
Significant Unobservable Inputs Related to Contingent Consideration | The sales-based earnout was valued using projected sales from the Company’s 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 7.9% Probability of payment 85% Projected payment year 2026 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 14.6% - 14.8% Credit risk discount rate 8.1% - 8.6% 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, 2023: ALung Acquisition Valuation Technique Unobservable Input Inputs Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 10.2% - 11.0% Credit risk discount rate 7.6% - 8.3% Revenue volatility 27.4% Projected years of earnout 2023 - 2027 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The outstanding principal amount of long-term debt as of September 30, 2023 and December 31, 2022 was as follows (in thousands, except interest rates): September 30, 2023 December 31, 2022 Maturity Interest Rate Term Facilities $ 332,433 $ 289,294 July 2027 8.87% 2020 Cash Exchangeable Senior Notes 251,315 239,568 December 2025 3.00% Bank of America Merrill Lynch Banco Múltiplo S.A. — 6,462 N/A N/A Mediocredito Italiano 799 1,601 December 2023 0.50% - 7.15% Bank of America, U.S. 1,500 1,500 January 2025 8.31% Other 533 534 Total long-term facilities 586,580 538,959 Less current portion of long-term debt 18,417 20,892 Total long-term debt obligations $ 568,163 $ 518,067 |
Derivatives and Risk Manageme_2
Derivatives and Risk Management (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and December 31, 2022 were as follows (in thousands): Description of Derivative Contract September 30, 2023 December 31, 2022 Interest rate swap contracts $ — $ 210,000 |
Schedule of Cash Flow Hedges Included in AOCI | Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in OCI and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended September 30, 2022 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ 413 $ 1,838 FX derivative contracts SG&A — (1,927) Interest rate swap contracts Interest expense 1,151 — $ 1,564 $ (89) Nine Months Ended September 30, 2023 2022 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Gains Reclassified from AOCI to Earnings (Losses) Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other income/(expense) $ — $ — $ (1,345) $ 3,517 FX derivative contracts SG&A — — — (3,437) Interest rate swap contracts Interest expense (433) 533 1,151 — $ (433) $ 533 $ (194) $ 80 |
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): Asset Derivatives Liability Derivatives September 30, 2023 Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Derivatives Not Designated as Hedging Instruments: Capped call derivatives Long-term derivative assets $ 43,669 Embedded exchange feature Long-term derivative liabilities $ 53,303 FX derivative contracts Prepaid expenses and other current assets 2,625 Accrued liabilities and other 207 Total derivatives not designated as hedging instruments 46,294 53,510 Total derivatives $ 46,294 $ 53,510 Asset Derivatives Liability Derivatives December 31, 2022 Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Derivatives Designated as Hedging Instruments: Interest rate swap contracts Prepaid expenses and other current assets $ 1,333 Total derivatives designated as hedging instruments 1,333 Derivatives Not Designated as Hedging Instruments: Capped call derivatives Long-term derivative assets 54,393 FX derivative contracts Accrued liabilities and other $ 5,886 Embedded exchange feature Long-term derivative liabilities 85,675 Total derivatives not designated as hedging instruments 54,393 91,561 Total derivatives $ 55,726 $ 91,561 (1) For the classification of inputs used to evaluate the fair value of derivatives, refer to “Note 5. Fair Value Measurements.” |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2022 $ 32,487 Payments (28,604) Adjustments (1) 25,739 FX and other 60 Total litigation provision liability at September 30, 2023 29,682 Less current portion of litigation provision liability at September 30, 2023 26,704 Long-term portion of litigation provision liability at September 30, 2023 (2) $ 2,978 (1) Adjustments to the litigation provision are included within other operating expense on the condensed consolidated statements of income. (2) Included within other long-term liabilities on the condensed consolidated balance sheet. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and 2022 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity (1) June 30, 2023 53,904 $ 82,441 $ 2,169,346 $ (95) $ (35,579) $ (975,505) $ 1,240,608 Stock-based compensation plans — 50 11,315 39 — — 11,404 Net income — — — — — (7,318) (7,318) Other comprehensive loss — — — — (19,222) — (19,222) September 30, 2023 53,904 $ 82,491 $ 2,180,661 $ (56) $ (54,801) $ (982,823) $ 1,225,472 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 Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity (1) December 31, 2022 53,852 $ 82,424 $ 2,157,724 $ (375) $ (48,119) $ (984,030) $ 1,207,624 Stock-based compensation plans 52 67 22,937 319 — — 23,323 Net income — — — — — 1,207 1,207 Other comprehensive loss — — — — (6,682) — (6,682) September 30, 2023 53,904 $ 82,491 $ 2,180,661 $ (56) $ (54,801) $ (982,823) $ 1,225,472 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 |
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, 2023 and 2022 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) (1) Total December 31, 2022 $ 966 $ (49,085) $ (48,119) Other comprehensive loss before reclassifications, before tax (433) (5,716) (6,149) Tax benefit — — — Other comprehensive loss before reclassifications, net of tax (433) (5,716) (6,149) Reclassification of gain from accumulated other comprehensive loss, before tax (533) — (533) Reclassification of tax benefit — — — Reclassification of gain from accumulated other comprehensive loss, after tax (533) — (533) Net current-period other comprehensive loss, net of tax (966) (5,716) (6,682) September 30, 2023 $ — $ (54,801) $ (54,801) 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) (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, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Incentive Plans | Stock-based incentive plan compensation expense is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 RSUs $ 5,690 $ 5,484 $ 16,103 $ 16,710 SARs 3,886 3,069 10,713 9,727 Market performance-based restricted stock units 1,071 1,049 392 2,903 Operating performance-based restricted stock units 866 875 7 2,271 Employee share purchase plan 266 250 854 881 Total stock-based compensation expense $ 11,779 $ 10,727 $ 28,069 $ 32,492 Nine Months Ended September 30, 2023 Shares Weighted Average Grant Date Fair Value Service-based SARs 974,204 $ 19.44 Service-based RSUs 502,821 $ 42.89 Market performance-based RSUs 94,561 $ 38.95 Operating performance-based RSUs 94,556 $ 42.30 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and 2022 are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Basic weighted average shares outstanding 53,989 53,534 53,837 53,474 Add effects of share-based compensation instruments (1) — — 270 — Diluted weighted average shares outstanding 53,989 53,534 54,107 53,474 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 4.0 million and 3.9 million for the three months ended September 30, 2023 and 2022, respectively, and 3.1 million and 4.0 million for the nine months ended September 30, 2023 and 2022, respectively, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Inform_2
Geographic and Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Cardiopulmonary United States $ 48,547 $ 38,476 $ 131,372 $ 114,437 Europe (1) 35,190 28,754 110,642 93,980 Rest of World 61,090 53,729 185,488 155,437 144,827 120,959 427,502 363,854 Neuromodulation United States 102,475 96,504 301,029 275,145 Europe (1) 12,661 11,130 41,066 37,296 Rest of World 13,744 14,201 40,689 37,416 128,880 121,835 382,784 349,857 Advanced Circulatory Support United States 10,562 8,430 29,423 28,183 Europe (1) 277 114 522 1,220 Rest of World 113 92 266 268 10,952 8,636 30,211 29,671 Other Revenue (2) 1,454 1,175 2,916 3,549 Totals United States 161,583 143,410 461,823 417,765 Europe (1) 48,129 39,998 152,231 132,496 Rest of World 76,401 69,197 229,359 196,670 Total (3) $ 286,113 $ 252,605 $ 843,413 $ 746,931 (1) Includes countries in Europe where the Company has a direct sales presence. Countries where sales are made through distributors are included in “Rest of World.” (2) Other revenue primarily includes rental income not allocated to segments. |
Schedule of Segment Reporting Information, by Segment | The table below presents a reconciliation of segment income (loss) to consolidated (loss) income before tax (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cardiopulmonary $ (3,959) $ (10,324) $ 15,006 $ 215 Neuromodulation 41,930 43,281 107,084 132,119 Advanced Circulatory Support 2,884 (134,902) (8,315) (136,855) Segment income (loss) 40,855 (101,945) 113,775 (4,521) Other income/(expense) (1) (36,397) (30,028) (94,283) (86,191) Operating income (loss) 4,458 (131,973) 19,492 (90,712) Interest expense (14,986) (12,661) (43,232) (34,889) Foreign exchange and other income/(expense) 8,550 38,528 36,810 44,065 (Loss) income before tax $ (1,978) $ (106,106) $ 13,070 $ (81,536) (1) Other income/(expense) primarily includes rental income, SG&A expenses for finance, legal, human resources, information technology and corporate business development, as well as amortization of intangible assets, the Saluggia site provision, merger and integration expense and restructuring expense. Assets by segment are as follows (in thousands): September 30, 2023 December 31, 2022 Cardiopulmonary $ 934,188 $ 874,143 Neuromodulation 643,459 646,633 Advanced Circulatory Support 115,881 121,454 Other assets (1) 635,889 652,543 Total $ 2,329,417 $ 2,294,773 (1) Other assets primarily includes corporate assets not allocated to segments. Capital expenditures by segment are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cardiopulmonary $ 4,103 $ 2,295 $ 11,444 $ 7,337 Neuromodulation 597 192 1,089 322 Advanced Circulatory Support 221 589 1,066 1,273 Other capital expenditures (1) 3,261 2,852 8,489 8,439 Total $ 8,182 $ 5,928 $ 22,088 $ 17,371 (1) Other capital expenditures primarily includes corporate capital expenditures not allocated to segments. |
Schedule of Goodwill by Segment | The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2023 were as follows (in thousands): Cardiopulmonary Neuromodulation Total December 31, 2022 $ 370,033 $ 398,754 $ 768,787 Foreign currency adjustments (1,732) — (1,732) September 30, 2023 $ 368,301 $ 398,754 $ 767,055 |
Long-lived Assets by Geographic Areas | Property, plant and equipment, net by geography are as follows (in thousands): September 30, 2023 December 31, 2022 United States $ 67,346 $ 63,458 Europe 77,319 79,654 Rest of World 4,637 4,075 Total $ 149,302 $ 147,187 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | Inventories consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 90,953 $ 70,027 Work-in-process 17,919 15,508 Finished goods 52,667 43,844 $ 161,539 $ 129,379 |
Accrued Liabilities | Accrued liabilities and other consisted of the following (in thousands): September 30, 2023 December 31, 2022 Legal and professional costs $ 15,299 $ 8,653 Contract liabilities 10,969 10,226 Interest payable 9,961 — Operating lease liabilities 8,560 9,379 Italian medical device payback law 7,586 6,414 Research and development costs 5,860 7,020 Royalty accrual 4,172 3,950 Provisions for agents, returns and other 3,607 1,678 Restructuring liabilities 1,285 2,045 Current derivative liabilities 207 5,886 Other accrued expenses 22,174 26,230 $ 89,680 $ 81,481 |
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 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Exchangeable Notes fair value adjustment (1) $ 402 $ 50,945 $ 32,372 $ 98,555 Capped call fair value adjustment (1) 1,635 (13,385) (10,724) (58,406) Foreign exchange rate fluctuations 420 575 (588) 3,707 Interest income 5,921 547 15,985 624 Other 172 (154) (235) (415) Foreign exchange and other income/(expense) $ 8,550 $ 38,528 $ 36,810 $ 44,065 (1) Refer to “Note 5. Fair Value Measurements” |
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, 2023 December 31, 2022 Cash and cash equivalents $ 233,941 $ 214,172 Restricted cash (1) 298,781 301,446 Cash, cash equivalents and restricted cash $ 532,722 $ 515,618 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 8. 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, 2023 December 31, 2022 Cash and cash equivalents $ 233,941 $ 214,172 Restricted cash (1) 298,781 301,446 Cash, cash equivalents and restricted cash $ 532,722 $ 515,618 (1) Restricted cash represents funds held as collateral for the SNIA Litigation Guarantee. Refer to “Note 8. Commitments and Contingencies.” |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Financial Statements - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue Benchmark | Geographic Concentration Risk | Russian Federation | |
Segment Reporting Information [Line Items] | |
Concentration risk, percentage | 1% |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
May 02, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
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 | ||
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, 2023 | |
Business Acquisition [Line Items] | ||
Cash and other considerations | $ 15,586 | |
Contingent consideration | 16,791 | |
Fair value of consideration transferred | 32,377 | |
Measurement Period 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 | Initial Fair Value of Consideration | ||
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, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||
Goodwill | $ 767,055 | $ 768,787 |
ALung Acquisition | ||
Business Acquisition [Line Items] | ||
Intangible assets | 2,900 | |
Goodwill | 26,870 | |
Other assets and liabilities, net | 2,607 | |
Net assets acquired | $ 32,377 | |
Useful life | 15 years | |
ALung Acquisition | Initial Fair Value of Consideration | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 13,950 | |
Goodwill | 25,893 | |
Other assets and liabilities, net | 2,112 | |
Net assets acquired | 41,955 | |
ALung Acquisition | Measurement Period Adjustments | ||
Business Acquisition [Line Items] | ||
Intangible assets | (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, 2023 USD ($) | Dec. 31, 2022 USD ($) | May 02, 2022 USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout | $ 89,808 | $ 85,292 | |
Level 3 | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout | $ 16,791 | ||
Measurement Input, Risk Free Interest Rate [Member] | Level 3 | Minimum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout, measurement input | 0.070 | ||
Measurement Input, Risk Free Interest Rate [Member] | Level 3 | Maximum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout, measurement input | 0.084 | ||
Measurement Input, Entity Credit Risk [Member] | Level 3 | Minimum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout, measurement input | 0.064 | ||
Measurement Input, Entity Credit Risk [Member] | Level 3 | Maximum | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout, measurement input | 0.080 | ||
Measurement Input, Price Volatility [Member] | Level 3 | ALung Acquisition | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Sales-based earnout, measurement input | 0.257 |
Divestiture of Heart Valve Bu_2
Divestiture of Heart Valve Business - Narrative (Details) $ in Millions | Dec. 02, 2020 USD ($) |
Heart Valves | Discontinued Operations, Disposed of by Sale | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Consideration | $ 64.1 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Percent decrease in sales | 29% | |||
Impairment of goodwill | $ 0 | $ 129,396 | $ 0 | $ 129,396 |
Cumulative goodwill impairments | $ 193,100 | $ 193,100 | ||
Percentage of fair value in excess of carrying amount | 11% | 11% |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Liabilities: | ||
Contingent consideration | $ 89,808 | $ 85,292 |
Capped call derivatives | ||
Assets: | ||
Derivative asset | 43,700 | 54,400 |
Fair Value, Recurring | ||
Assets: | ||
Convertible notes receivable | 275 | 285 |
Total assets | 46,569 | 56,011 |
Liabilities: | ||
Contingent consideration | 89,808 | 85,292 |
Total liabilities | 143,318 | 176,853 |
Fair Value, Recurring | Embedded exchange feature | ||
Liabilities: | ||
Derivative liabilities | 53,303 | 85,675 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments: | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 2,625 | |
Liabilities: | ||
Derivative liabilities | 207 | |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments: | Capped call derivatives | ||
Assets: | ||
Derivative asset | 43,669 | 54,393 |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments: | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 1,333 | |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments: | FX derivative contracts | ||
Liabilities: | ||
Derivative liabilities | 5,886 | |
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 Not Designated as Hedging Instruments: | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Derivative liabilities | 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 Designated as Hedging Instruments: | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 0 | |
Fair Value, Recurring | Level 1 | Derivatives Designated as Hedging Instruments: | FX derivative contracts | ||
Liabilities: | ||
Derivative liabilities | 0 | |
Fair Value, Recurring | Level 2 | ||
Assets: | ||
Convertible notes receivable | 0 | 0 |
Total assets | 2,625 | 1,333 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 207 | 5,886 |
Fair Value, Recurring | Level 2 | Embedded exchange feature | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments: | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 2,625 | |
Liabilities: | ||
Derivative liabilities | 207 | |
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 Designated as Hedging Instruments: | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 1,333 | |
Fair Value, Recurring | Level 2 | Derivatives Designated as Hedging Instruments: | FX derivative contracts | ||
Liabilities: | ||
Derivative liabilities | 5,886 | |
Fair Value, Recurring | Level 3 | ||
Assets: | ||
Convertible notes receivable | 275 | 285 |
Total assets | 43,944 | 54,678 |
Liabilities: | ||
Contingent consideration | 89,808 | 85,292 |
Total liabilities | 143,111 | 170,967 |
Fair Value, Recurring | Level 3 | Embedded exchange feature | ||
Liabilities: | ||
Derivative liabilities | 53,303 | 85,675 |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments: | Freestanding Instrument | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Derivative liabilities | 0 | |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments: | Capped call derivatives | ||
Assets: | ||
Derivative asset | $ 43,669 | 54,393 |
Fair Value, Recurring | Level 3 | Derivatives Designated as Hedging Instruments: | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 0 | |
Fair Value, Recurring | Level 3 | Derivatives Designated as Hedging Instruments: | FX derivative contracts | ||
Liabilities: | ||
Derivative liabilities | $ 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, 2023 USD ($) | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | $ 85,292 |
Total at period end | 89,808 |
Embedded Exchange Feature Derivative Liability | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 85,675 |
Changes in fair value | (32,372) |
Total at period end | 53,303 |
Contingent Consideration Liability Arrangements | |
Liabilities Measured on Recurring Basis | |
Total at beginning period | 85,292 |
Changes in fair value | 4,516 |
Total at period end | 89,808 |
Capped Call Derivative Asset | |
Assets Measured on Recurring Basis | |
As of beginning period | 54,393 |
Changes in fair value | (10,724) |
Total at period end | 43,669 |
Convertible Notes Receivable | |
Assets Measured on Recurring Basis | |
As of beginning period | 285 |
Changes in fair value | (10) |
Total at period end | $ 275 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | 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 | $ 14,000,000 | |||
10 percent increase in stock price volatility, fair value | 14,100,000 | |||
Capped call derivatives | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Derivative asset | 43,700,000 | $ 54,400,000 | ||
10 percent decrease in stock price volatility, fair value | 8,500,000 | |||
10 percent increase in stock price volatility, fair value | $ 3,700,000 | |||
Measurement Input, Stock Price Volatility | Embedded exchange feature | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Derivative liability, measurement input | 0.37 | |||
Measurement Input, Stock Price Volatility | Capped call derivatives | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Derivative liability, measurement input | 0.37 | |||
Senior Notes | ||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||
Debt instrument, face amount | $ 287,500,000 | |||
Fair value of embedded derivative liability | $ 53,300,000 | $ 85,700,000 | ||
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, 2023 | Dec. 31, 2022 | May 02, 2022 |
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | $ 89,808 | $ 85,292 | |
Fair Value, Recurring | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 89,808 | 85,292 | |
Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 89,808 | 85,292 | |
Total fair value of Level 3 contingent consideration arrangements | 89,808 | 85,292 | |
ImThera | Fair Value, Recurring | Level 3 | |||
Business Acquisition, Contingent Consideration [Line Items] | |||
Contingent consideration | 78,525 | 69,389 | |
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 | $ 11,283 | $ 15,903 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs (Details) - Level 3 | Sep. 30, 2023 |
ImThera | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.079 |
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 | 0.146 |
ImThera | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.081 |
ImThera | Maximum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.148 |
ImThera | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.086 |
ALung Acquisition | Monte Carlo simulation | Revenue volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.274 |
ALung Acquisition | Minimum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.102 |
ALung Acquisition | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.076 |
ALung Acquisition | Maximum | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.110 |
ALung Acquisition | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.083 |
Financing Arrangements - Schedu
Financing Arrangements - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Jun. 17, 2020 |
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 586,580 | $ 538,959 | |
Less current portion of long-term debt | 18,417 | 20,892 | |
Total long-term debt obligations | $ 568,163 | 518,067 | |
Mediocredito Italiano | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 0.50% | ||
Mediocredito Italiano | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 7.15% | ||
Bank of America, U.S. | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 8.31% | ||
Term Loan | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 332,433 | 289,294 | |
Interest rate, stated percentage | 8.87% | ||
Senior Notes | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | $ 251,315 | 239,568 | |
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 | $ 0 | 6,462 | |
Loans Payable | Mediocredito Italiano | |||
Debt Instrument [Line Items] | |||
Total long-term facilities | 799 | 1,601 | |
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 | $ 533 | $ 534 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) $ / shares in Units, € in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Apr. 06, 2023 USD ($) | Jul. 06, 2022 USD ($) | Jun. 17, 2020 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2023 £ / shares | Mar. 18, 2022 | Mar. 16, 2022 USD ($) | Feb. 24, 2022 USD ($) | Feb. 24, 2022 EUR (€) | Aug. 13, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||||||||||||
Restricted cash | $ 298,781,000 | $ 298,781,000 | $ 301,446,000 | |||||||||||
Amortization of debt issuance costs | 14,246,000 | $ 16,394,000 | ||||||||||||
Proceeds from long-term debt obligations | $ 50,000,000 | 507,547,000 | ||||||||||||
Capped call derivatives | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Derivative, cap price per share | $ / shares | $ 100 | $ 100 | ||||||||||||
Derivative asset | $ 43,700,000 | $ 43,700,000 | 54,400,000 | |||||||||||
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 | $ 4,100,000 | $ 3,700,000 | $ 11,700,000 | $ 10,600,000 | ||||||||||
Unamortized discount (premium), net | $ 36,200,000 | $ 36,200,000 | 47,900,000 | |||||||||||
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 (in pounds per share) | £ / shares | £ 1 | |||||||||||||
Redemption price, percentage of exchange price | 130% | |||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 79.27 | $ 79.27 | ||||||||||||
Redemption, threshold trading days | 20 days | |||||||||||||
Redemption, threshold consecutive trading days | 30 days | |||||||||||||
Option to exchange, price per share | $ / shares | $ 60.98 | $ 60.98 | ||||||||||||
Redemption price, percentage | 100% | |||||||||||||
Fair value of embedded derivative liability | $ 53,300,000 | $ 53,300,000 | 85,700,000 | |||||||||||
Conversion ratio | 0.016398 | |||||||||||||
Revolving Credit Facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Short-term debt | $ 600,000 | 600,000 | $ 2,500,000 | |||||||||||
Line of credit, maximum borrowing capacity | $ 125,000,000 | |||||||||||||
Commitment fee percentage | 0.50% | 0.50% | ||||||||||||
Borrowed funds | $ 0 | $ 0 | $ 0 | |||||||||||
Revolving Credit Facility | Initial Term Facility | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate | 6.53% | 6.53% | ||||||||||||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | ||||||||||||||
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 | 500,000 | 1,500,000 | ||||||||||||
Unamortized discount (premium), net | 7,300,000 | 7,300,000 | $ 8,700,000 | |||||||||||
Days to maturity | 91 days | |||||||||||||
Discount rate | 1.50% | |||||||||||||
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 | |||||||||||||
Proceeds from line of credit | $ 50,000,000 | |||||||||||||
Debt discounts and issuance costs | 1,600,000 | 1,600,000 | ||||||||||||
Amortization of debt issuance costs | $ 0 | $ 500,000 | ||||||||||||
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 | Maximum | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate | 4.24% | 4.24% | ||||||||||||
Debt instrument, term | 364 days | |||||||||||||
Net leverage ratio, threshold for four consecutive fiscal quarters | 3.50 | |||||||||||||
Interest coverage ratio, threshold for four consecutive fiscal quarters | 3 |
Derivatives and Risk Manageme_3
Derivatives and Risk Management - Narrative (Details) - FX derivative contracts - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Derivative [Line Items] | |||||
Gain (loss) on derivative | $ 5 | $ 7.7 | $ 4.1 | $ 12.7 | |
Derivatives Not Designated as Hedging Instruments: | |||||
Derivative [Line Items] | |||||
Notional amount | $ 174.2 | $ 174.2 | $ 154.5 |
Derivatives and Risk Manageme_4
Derivatives and Risk Management - Derivative Notional Amounts (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives Designated as Hedging Instruments: | Cash Flow Hedging | Interest rate swap contracts | ||
Derivative [Line Items] | ||
Notional amount | $ 0 | $ 210,000 |
Derivatives and Risk Manageme_5
Derivatives and Risk Management - Amount of Gain (Loss) Recognized in OCI and Income Statement (Details) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains Recognized in OCI | $ 1,564 | $ (433) | $ (194) |
Gains (Losses) Reclassified from AOCI to Earnings | (89) | 533 | 80 |
FX derivative contracts | Foreign exchange and other income/(expense) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains Recognized in OCI | 413 | 0 | (1,345) |
Gains (Losses) Reclassified from AOCI to Earnings | 1,838 | 0 | 3,517 |
FX derivative contracts | SG&A | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains Recognized in OCI | 0 | 0 | 0 |
Gains (Losses) Reclassified from AOCI to Earnings | (1,927) | 0 | (3,437) |
Derivatives Designated as Hedging Instruments: | Interest rate swap contracts | Interest expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains Recognized in OCI | 1,151 | (433) | 1,151 |
Gains (Losses) Reclassified from AOCI to Earnings | $ 0 | $ 533 | $ 0 |
Derivatives and Risk Manageme_6
Derivatives and Risk Management - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | $ 46,294 | $ 55,726 |
Total liability derivatives | 53,510 | 91,561 |
Derivatives Designated as Hedging Instruments: | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 1,333 | |
Derivatives Designated as Hedging Instruments: | Prepaid expenses and other current assets | Interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 1,333 | |
Derivatives Not Designated as Hedging Instruments: | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 46,294 | 54,393 |
Total liability derivatives | 53,510 | 91,561 |
Derivatives Not Designated as Hedging Instruments: | Long-term derivative assets | Capped call derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 43,669 | 54,393 |
Derivatives Not Designated as Hedging Instruments: | Long-term derivative liabilities | Embedded exchange feature | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | 53,303 | 85,675 |
Derivatives Not Designated as Hedging Instruments: | Prepaid expenses and other current assets | FX derivative contracts | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 2,625 | |
Derivatives Not Designated as Hedging Instruments: | Accrued liabilities and other | FX derivative contracts | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | $ 207 | $ 5,886 |
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. 01, 2023 claim | Jul. 29, 2022 EUR (€) | Feb. 21, 2022 EUR (€) | Mar. 29, 2019 USD ($) | Apr. 01, 2016 EUR (€) | Jan. 31, 2021 EUR (€) | Jan. 31, 2020 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 EUR (€) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 EUR (€) | Dec. 31, 2022 USD ($) | Apr. 30, 2022 EUR (€) | Nov. 30, 2021 EUR (€) | Mar. 05, 2019 EUR (€) | |
Other Commitments [Line Items] | |||||||||||||||
Litigation settlement, amount awarded to other party | $ 225,000 | ||||||||||||||
Payments for legal settlements | $ 90,000 | ||||||||||||||
Additional liability recorded | $ 13,600 | $ 25,700 | |||||||||||||
Reimbursed legal fees | € 292 | 308,952 | |||||||||||||
Environmental maintenance | € | € 1,000 | ||||||||||||||
Heart Valves | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Warranty, cap on claims | € 8,000 | 8,500 | 8,500 | ||||||||||||
Subsequent Event | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Pending claims, number | claim | 75 | ||||||||||||||
Number of settled claims | claim | 6 | ||||||||||||||
Mitral | Heart Valves | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Compensation sought | € 20,800 | 22,000 | |||||||||||||
Pending Litigation | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Italian medical device payback law | 605,300 | 605,300 | |||||||||||||
Judicial Ruling | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Italian medical device payback law | € | € 572,100 | ||||||||||||||
Saluggia, Italy | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimated provision | € 36,000 | 38,100 | € 34,200 | $ 36,600 | |||||||||||
Saluggia, Italy | Minimum | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimated provision | 36,000 | 38,100 | |||||||||||||
Saluggia, Italy | Maximum | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Estimated provision | € 45,800 | 48,400 | |||||||||||||
Product Liability | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Litigation provision liability | 29,682 | 29,682 | 32,487 | ||||||||||||
First demand bank guarantee | 28,604 | ||||||||||||||
SNIA | Pending Litigation | SNIA s.p.a | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Compensation sought | 3,600,000 | ||||||||||||||
Non-privileged creditor, amount | € | € 454,000 | ||||||||||||||
SNIA | Judicial Ruling | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Italian medical device payback law | 479,900 | 479,900 | € 453,600 | ||||||||||||
SNIA | Judicial Ruling | Surety Bond | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
First demand bank guarantee | € 270,000 | 285,700 | |||||||||||||
Italian MedTech Payback | Pending Litigation | |||||||||||||||
Other Commitments [Line Items] | |||||||||||||||
Italian medical device payback law | $ 7,600 | $ 7,600 | $ 6,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Product Liability (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Loss Contingency Accrual [Roll Forward] | |
Less current portion of litigation liability at period end | $ 26,704 |
Litigation provision liability | 2,978 |
Product Liability | |
Loss Contingency Accrual [Roll Forward] | |
Total litigation provision liability at beginning of period | 32,487 |
Payments | (28,604) |
Adjustments | 25,739 |
FX and other | 60 |
Total litigation provision liability at end of period | $ 29,682 |
Stockholders' Equity - Statemen
Stockholders' Equity - Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 53,851,979 | |||
Beginning balance | $ 1,240,608 | $ 1,282,003 | $ 1,207,624 | $ 1,294,645 |
Stock-based compensation plans | 11,404 | 10,538 | 23,323 | 26,152 |
Net (loss) income | (7,318) | (107,344) | 1,207 | (87,907) |
Other comprehensive loss | $ (19,222) | (38,234) | $ (6,682) | (85,927) |
Ending balance (in shares) | 53,903,564 | 53,903,564 | ||
Ending balance | $ 1,225,472 | $ 1,146,963 | $ 1,225,472 | $ 1,146,963 |
Ordinary Shares | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | 53,904,000 | 53,810,000 | 53,852,000 | 53,762,000 |
Beginning balance | $ 82,441 | $ 82,359 | $ 82,424 | $ 82,295 |
Stock-based compensation plans (in shares) | 4,000 | 52,000 | 52,000 | |
Stock-based compensation plans | $ 50 | $ 17 | $ 67 | $ 81 |
Ending balance (in shares) | 53,904,000 | 53,814,000 | 53,904,000 | 53,814,000 |
Ending balance | $ 82,491 | $ 82,376 | $ 82,491 | $ 82,376 |
Additional Paid-In Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 2,169,346 | 2,133,258 | 2,157,724 | 2,117,961 |
Stock-based compensation plans | 11,315 | 10,504 | 22,937 | 25,801 |
Ending balance | 2,180,661 | 2,143,762 | 2,180,661 | 2,143,762 |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (95) | (397) | (375) | (650) |
Stock-based compensation plans | 39 | 17 | 319 | 270 |
Ending balance | (56) | (380) | (56) | (380) |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (35,579) | (54,870) | (48,119) | (7,177) |
Other comprehensive loss | (19,222) | (38,234) | (6,682) | (85,927) |
Ending balance | (54,801) | (93,104) | (54,801) | (93,104) |
Accumulated Deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (975,505) | (878,347) | (984,030) | (897,784) |
Net (loss) income | (7,318) | (107,344) | 1,207 | (87,907) |
Ending balance | $ (982,823) | $ (985,691) | $ (982,823) | $ (985,691) |
Stockholders' Equity - Comprehe
Stockholders' Equity - Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | $ 1,240,608 | $ 1,282,003 | $ 1,207,624 | $ 1,294,645 |
Other comprehensive loss before reclassifications, before tax | (6,149) | (85,847) | ||
Tax benefit | 0 | 0 | ||
Other comprehensive loss before reclassifications, net of tax | (6,149) | (85,847) | ||
Reclassification of gain from accumulated other comprehensive loss, before tax | (533) | (80) | ||
Reclassification of tax benefit | 0 | 0 | ||
Reclassification of gain from accumulated other comprehensive loss, after tax | (533) | (80) | ||
Total other comprehensive loss | (19,222) | (38,234) | (6,682) | (85,927) |
Ending balance | 1,225,472 | 1,146,963 | 1,225,472 | 1,146,963 |
Total | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (35,579) | (54,870) | (48,119) | (7,177) |
Total other comprehensive loss | (19,222) | (38,234) | (6,682) | (85,927) |
Ending balance | (54,801) | (93,104) | (54,801) | (93,104) |
Change in Unrealized Gain (Loss) on Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | 966 | (945) | ||
Other comprehensive loss before reclassifications, before tax | (433) | (194) | ||
Tax benefit | 0 | 0 | ||
Other comprehensive loss before reclassifications, net of tax | (433) | (194) | ||
Reclassification of gain from accumulated other comprehensive loss, before tax | (533) | (80) | ||
Reclassification of tax benefit | 0 | 0 | ||
Reclassification of gain from accumulated other comprehensive loss, after tax | (533) | (80) | ||
Total other comprehensive loss | (966) | (274) | ||
Ending balance | 0 | (1,219) | 0 | (1,219) |
Foreign Currency Translation Adjustments Gain (Loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Beginning balance | (49,085) | (6,232) | ||
Other comprehensive loss before reclassifications, before tax | (5,716) | (85,653) | ||
Tax benefit | 0 | 0 | ||
Other comprehensive loss before reclassifications, net of tax | (5,716) | (85,653) | ||
Reclassification of gain from accumulated other comprehensive loss, 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 | (5,716) | (85,653) | ||
Ending balance | $ (54,801) | $ (91,885) | $ (54,801) | $ (91,885) |
Stock-Based Incentive Plans - N
Stock-Based Incentive Plans - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement, vesting period | 4 years | ||
Share-based compensation arrangement, compensation cost | $ 4.5 | $ 6.9 | |
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) | 13,493 | 13,493 | |
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 | ||
Options | 2022 Incentive Award Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement, number of shares available for grant (in shares) | 1,398,400 | 1,398,400 | |
Options | A&R 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) | 2,250,000 | 2,250,000 | 1,900,000 |
Other Than Option, Awards | 2022 Incentive Award Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation arrangement, number of shares available for grant (in shares) | 912,743 | 912,743 | |
Other Than Option, Awards | A&R 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) | 1,500,000 | 1,500,000 | 1,200,000 |
Stock-Based Incentive Plans - C
Stock-Based Incentive Plans - Compensation Expense (Details) - Continuing Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 11,779 | $ 10,727 | $ 28,069 | $ 32,492 |
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 5,690 | 5,484 | 16,103 | 16,710 |
SARs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 3,886 | 3,069 | 10,713 | 9,727 |
Market performance-based restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 1,071 | 1,049 | 392 | 2,903 |
Operating performance-based restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 866 | 875 | 7 | 2,271 |
Employee share purchase plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 266 | $ 250 | $ 854 | $ 881 |
Stock-Based Incentive Plans - E
Stock-Based Incentive Plans - Executed Agreements (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
SARs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 974,204 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 19.44 |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 502,821 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 42.89 |
Market performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 94,561 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 38.95 |
Operating performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 94,556 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 42.30 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate (percent) | (268.40%) | (1.20%) | 90.10% | (7.80%) | |
Unrecognized tax benefits | $ 0.4 | $ 0.4 | $ 1.6 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 53,989 | 53,534 | 53,837 | 53,474 |
Add effects of share-based compensation instruments (in shares) | 0 | 0 | 270 | 0 |
Diluted weighted average shares outstanding (in shares) | 53,989 | 53,534 | 54,107 | 53,474 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
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) | 4 | 3.9 | 3.1 | 4 |
Geographic and Segment Inform_3
Geographic and Segment Information - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment geographic_region | |
Segment Reporting [Abstract] | |
Reportable segments | segment | 3 |
Number of geographic regions in which entity operates | geographic_region | 3 |
Geographic and Segment Inform_4
Geographic and Segment Information - Revenue by Operating Segment & Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 286,113 | $ 252,605 | $ 843,413 | $ 746,931 |
Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 144,827 | 120,959 | 427,502 | 363,854 |
Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 128,880 | 121,835 | 382,784 | 349,857 |
Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 10,952 | 8,636 | 30,211 | 29,671 |
Other Revenue | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 1,454 | 1,175 | 2,916 | 3,549 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 161,583 | 143,410 | 461,823 | 417,765 |
United States | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 48,547 | 38,476 | 131,372 | 114,437 |
United States | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 102,475 | 96,504 | 301,029 | 275,145 |
United States | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 10,562 | 8,430 | 29,423 | 28,183 |
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 48,129 | 39,998 | 152,231 | 132,496 |
Europe | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 35,190 | 28,754 | 110,642 | 93,980 |
Europe | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 12,661 | 11,130 | 41,066 | 37,296 |
Europe | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 277 | 114 | 522 | 1,220 |
Rest of World | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 76,401 | 69,197 | 229,359 | 196,670 |
Rest of World | Operating Segments | Cardiopulmonary | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 61,090 | 53,729 | 185,488 | 155,437 |
Rest of World | Operating Segments | Neuromodulation | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 13,744 | 14,201 | 40,689 | 37,416 |
Rest of World | Operating Segments | Advanced Circulatory Support | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 113 | $ 92 | $ 266 | $ 268 |
Geographic and Segment Inform_5
Geographic and Segment Information - Reconciliation of Segment (Loss) Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ 4,458 | $ (131,973) | $ 19,492 | $ (90,712) |
Interest expense | (14,986) | (12,661) | (43,232) | (34,889) |
Foreign exchange and other income/(expense) | 8,550 | 38,528 | 36,810 | 44,065 |
(Loss) income before tax | (1,978) | (106,106) | 13,070 | (81,536) |
Continuing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Segment income (loss) | 40,855 | (101,945) | 113,775 | (4,521) |
Other income and expense | (36,397) | (30,028) | (94,283) | (86,191) |
Operating income (loss) | 4,458 | (131,973) | 19,492 | (90,712) |
Operating Segments | Cardiopulmonary | Continuing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Segment income (loss) | (3,959) | (10,324) | 15,006 | 215 |
Operating Segments | Neuromodulation | Continuing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Segment income (loss) | 41,930 | 43,281 | 107,084 | 132,119 |
Operating Segments | Advanced Circulatory Support | Continuing Operations | ||||
Segment Reporting Information [Line Items] | ||||
Segment income (loss) | $ 2,884 | $ (134,902) | $ (8,315) | $ (136,855) |
Geographic and Segment Inform_6
Geographic and Segment Information - Assets & Expenditures by Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Assets | $ 2,329,417 | $ 2,329,417 | $ 2,294,773 | ||
Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Capital expenditures | 8,182 | $ 5,928 | 22,088 | $ 17,371 | |
Operating Segments | Cardiopulmonary | Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 934,188 | 934,188 | 874,143 | ||
Capital expenditures | 4,103 | 2,295 | 11,444 | 7,337 | |
Operating Segments | Neuromodulation | Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 643,459 | 643,459 | 646,633 | ||
Capital expenditures | 597 | 192 | 1,089 | 322 | |
Operating Segments | Advanced Circulatory Support | Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 115,881 | 115,881 | 121,454 | ||
Capital expenditures | 221 | 589 | 1,066 | 1,273 | |
Other | Continuing Operations | |||||
Segment Reporting Information [Line Items] | |||||
Assets | 635,889 | 635,889 | $ 652,543 | ||
Capital expenditures | $ 3,261 | $ 2,852 | $ 8,489 | $ 8,439 |
Geographic and Segment Inform_7
Geographic and Segment Information - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill | |
Goodwill, beginning | $ 768,787 |
Foreign currency adjustments | (1,732) |
Goodwill, ending | 767,055 |
Cardiopulmonary | |
Goodwill | |
Goodwill, beginning | 370,033 |
Foreign currency adjustments | (1,732) |
Goodwill, ending | 368,301 |
Neuromodulation | |
Goodwill | |
Goodwill, beginning | 398,754 |
Foreign currency adjustments | 0 |
Goodwill, ending | $ 398,754 |
Geographic and Segment Inform_8
Geographic and Segment Information - Geographic Areas (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 149,302 | $ 147,187 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 67,346 | 63,458 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 77,319 | 79,654 |
Rest of World | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 4,637 | $ 4,075 |
Supplemental Financial Inform_3
Supplemental Financial Information - Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 90,953 | $ 70,027 |
Work-in-process | 17,919 | 15,508 |
Finished goods | 52,667 | 43,844 |
Inventory, Net | $ 161,539 | $ 129,379 |
Supplemental Financial Inform_4
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Provision for obsolescence | $ 11.6 | $ 8.2 |
Contract liability | $ 15.3 | $ 14.1 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Balance Sheet Related Disclosures [Abstract] | ||
Legal and professional costs | $ 15,299 | $ 8,653 |
Contract liabilities | 10,969 | 10,226 |
Interest payable | 9,961 | 0 |
Operating lease liabilities | 8,560 | 9,379 |
Italian medical device payback law | 7,586 | 6,414 |
Research and development costs | 5,860 | 7,020 |
Royalty accrual | 4,172 | 3,950 |
Provisions for agents, returns and other | 3,607 | 1,678 |
Restructuring liabilities | 1,285 | 2,045 |
Current derivative liabilities | 207 | 5,886 |
Other accrued expenses | 22,174 | 26,230 |
Accrued liabilities and other | $ 89,680 | $ 81,481 |
Supplemental Financial Inform_6
Supplemental Financial Information - Foreign Exchange (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Foreign exchange rate fluctuations | $ 420 | $ 575 | $ (588) | $ 3,707 |
Interest income | 5,921 | 547 | 15,985 | 624 |
Other | 172 | (154) | (235) | (415) |
Foreign exchange and other income/(expense) | 8,550 | 38,528 | 36,810 | 44,065 |
Senior Notes | Embedded Exchange Feature Derivative Liability | ||||
Debt Instrument [Line Items] | ||||
Changes in fair value | 402 | 50,945 | 32,372 | 98,555 |
Capped call derivatives | Capped Call Derivative Asset | ||||
Debt Instrument [Line Items] | ||||
Changes in fair value | $ 1,635 | $ (13,385) | $ (10,724) | $ (58,406) |
Supplemental Financial Inform_7
Supplemental Financial Information - Cash, Cash Equivalents, Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||||
Cash and cash equivalents | $ 233,941 | $ 214,172 | ||
Restricted cash | 298,781 | 301,446 | ||
Cash, cash equivalents and restricted cash | $ 532,722 | $ 515,618 | $ 506,279 | $ 207,992 |