Slide 1: Second Quarter 2023 Earnings Update
Second Quarter 2023 Earnings Update July 26, 2023
Slide 2: Safe Harbor
Safe Harbor Certain statements in this material, other than statements of historical or current fact, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements i
Slide 3: Intellectual Property, Trademarks and Trade Names
Intellectual Property, Trademarks and Trade Names This report may contain references to our proprietary intellectual property, including among others: • Trademarks for our Neuromodulation systems, the VNS Therapy™ System, the VITARIA™ System and our proprietary pulse generator products: Model 102 (P
Slide 4: Contents
Contents 2Q23 Financial Results 2023 Guidance and Assumptions Closing Thoughts Appendix 4
Slide 5: Financial Results
Financial Results Financial Results 5
Slide 6: 2Q23 Financial Summary
2Q23 Financial Summary 2Q22 2Q23 Net Revenue ($M) Adjusted Diluted EPS et Sales ($ in MM) Adjusted Diluted EPS $293.9 $254.2 • Net revenue increased 16.4 percent on a constant-currency basis $0.78 • Foreign currency had an unfavorable impact on net revenue of ~$2M, $0.53 or 1 percent Adjusted Gross
Slide 7: 2Q23 Net Revenue
2Q23 Net Revenue Cardiopulmonary (CP) Neuromodulation • Heart-lung machines (HLM) • Oxygenators Vagus Nerve Stimulation Therapy • Autotransfusion systems (ATS) (VNS Therapy) • Cannulae • Drug-Resistant Epilepsy (DRE) • Difficult-to-Treat Depression (DTD) 45% $293.9M 16.4% increase(1) 51% Hypoglossal
Slide 8: Segment Net Revenue Comparisons by Region
Segment Net Revenue Comparisons by Region Three Months Ended June 30, Constant- Currency % ($M) 2023 2022 % Change Change(1) Cardiopulmonary United States $46.7 $37.9 23.4% 23.4% Europe(2) 39.2 33.2 18.1% 15.7% Rest of World 64.7 54.8 18.1% 22.3% Total 150.6 125.8 19.7% 20.9% Neuromodulation United
Slide 9: 2Q23 Cardiopulmonary Revenue
2Q23 Cardiopulmonary Revenue(1) Drivers/Impacts Net Revenue ($M) 20.9% $150.6 Revenue increased 21% with strong performance in all regions enhanced by pricing initiatives implemented in 2H22. $125.8 $64.7 $54.8 Oxygenator revenue grew in the mid teens, led by the U.S., driven by higher demand and st
Slide 10: 2Q23 Neuromodulation Revenue
2Q23 Neuromodulation Revenue(1) Drivers/Impacts Net Revenue ($M) 13.5% $133.2 $117.8 $14.0 Revenue increased 14%, with strength across all regions, including growth in new and replacement implants. $12.7 $15.1 $13.7 U.S. Epilepsy revenue increased 15% driven by growth in new and replacement implants
Slide 11: 2Q23 Advanced Circulatory Support Revenue
2Q23 Advanced Circulatory Support Revenue(1) Drivers/Impacts Net Revenue ($M) 0.7% ACS revenue increased about 1% reflecting growth in overall case volumes. $9.4 $9.4 ACS revenue increased 5% in the U.S., offset by Europe. Kits used for cardiac procedures grew year over year, offset by respiratory c
Slide 12: 2Q23 Adjusted Segment Operating Income and Margin
2Q23 Adjusted Segment Operating Income and Margin(1) % to Revenue $66.8M 2Q22 2Q23 Cardiopulmonary 8.6% 18.1% $45.7M $43.2 Neuromodulation 34.8% 32.4% ACS (64.9)% (37.6)% $41.0 Total Segment Margin 18.1% 22.8% Total Operating Margin(2) 13.1% 16.8% $27.2 $10.8 $(6.1) $(3.5) Cardiopulmonary Neuromodul
Slide 13: Adjusted Free Cash Flow
Adjusted Free Cash Flow Continued focus on optimizing cash generation • Targeting $85 - $105M of adjusted free cash flow (FCF) for full-year 2023 Adjusted Free Cash Flow Reconciliation ($M) 1Q 2023 2Q 2023 2023 YTD Net cash provided by operating activities $20.8 $(17.9) $2.8 Less: Purchases of plant
Slide 14: 2Q 2023 Summary
2Q 2023 Summary • 16.4%(1) revenue growth, with strength in Cardiopulmonary and Neuromodulation across all regions • Adjusted operating margin favorably impacted by higher volume and pricing improvements, partially offset by commercial Financial and SPI investment, and heart failure wind-down costs
Slide 15: 2023 Guidance
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Slide 16: 2023 Guidance
2023 Guidance Raising full-year guidance for revenue, adjusted diluted EPS, and adjusted FCF Consolidated Guidance Consolidated Guidance Consolidated Guidance As of February 22, 2023 As of May 3, 2023 As of July 26, 2023 Worldwide net revenue growth(1) 3 - 5% 4 - 6% 8 - 10% Adjusted diluted EPS(1)(2
Slide 17: Assumptions for 2023
Assumptions for 2023 • Cardiopulmonary revenue now expected to grow 11-13% REVENUE(1) 8 - 10% • Epilepsy revenue now expected to grow 6-8% • ACS revenue now expected to be flat year over year • Gross margin flat due to ongoing inflationary pressures, offset by productivity and price EPS(2) $2.55 - 2
Slide 18: 2023 Strategic Priorities
2023 Strategic Priorities Core Growth Focus on commercial execution in under-penetrated markets • Drive therapy expansion and VNS adoption for U.S. Epilepsy • Deliver on Essenz launch objectives • Continue growth in the Rest of World and Europe regions Pipeline Execution Strategic portfolio initiati
Slide 19: Appendix
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Slide 20: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations The following tables reconcile the most comparable U.S. Generally Accepted Accounting Principles (GAAP) measures to the non-GAAP financial and operating measures presented in LivaNova’s second-quarter 2023 press release and during the conference call held in conjunct
Slide 21: 2Q23 Adjusted EPS
2Q23 Adjusted EPS(1) $0.14 $0.78 $0.11 $0.32 $0.05 $0.03 $0.11 $0.02 GAAP Financial Depreciation and Financing Transactions Contingent Certain Legal and Stock-based Certain Interest Adjusted Financial Measures Amortization Expenses Consideration Regulatory Costs Compensation Costs Adjustments Measur
Slide 22: GAAP to Non-GAAP Reconciliations - Unaudited
GAAP to Non-GAAP Reconciliations - Unaudited RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) Merger and Depreciation and Specified Items Stock-based Integration Restructuring Amortization Financing Contingent Certain Legal & Comp
Slide 23: GAAP to Non-GAAP Reconciliations - Unaudited
GAAP to Non-GAAP Reconciliations - Unaudited RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) Merger and Depreciation and Specified Items Stock-based Integration Restructuring Amortization Financing Contingent Certain Legal & Comp
Slide 24: GAAP to Non-GAAP Reconciliations - Unaudited
GAAP to Non-GAAP Reconciliations - Unaudited RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) Specified Items Merger and Depreciation and Stock-based Integration Restructuring Amortization Financing Contingent Certain Legal & Comp
Slide 25: GAAP to Non-GAAP Reconciliations - Unaudited
GAAP to Non-GAAP Reconciliations - Unaudited RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions, except per share amounts) Specified Items Depreciation and Stock-based Merger and Restructuring Amortization Financing Contingent Certain Legal & Compensation Cer
Slide 26: GAAP to Non-GAAP Reconciliations - Unaudited
GAAP to Non-GAAP Reconciliations - Unaudited RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED (U.S. dollars in millions) (U.S. dollars in millions) Three Months Ended Twelve Months Ended Adjusted free cash flow reconc
Slide 27: Segment Non-GAAP Reconciliation - Unaudited
Segment Non-GAAP Reconciliation - Unaudited (U.S. dollars in millions) Specified Items Stock-based Depreciation and Contingent Certain Legal & Compensation Three Months Ended GAAP Amortization Consideration Regulatory Costs Costs Adjusted June 30, 2023 Financial Results (A) (B) (C) (D) Financial Res