Slide 1: Fourth Quarter and Full-Year 2017 Earnings Performance
Fourth Quarter and Full-Year 2017 Earnings Performance February 28, 2018
Slide 2: Safe Harbor
Safe Harbor Certain statements in this presentation, other than purely historical information, 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 Securities Exchange Act of 1934, as ame
Slide 3: Intellectual Property
Intellectual Property 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 (Pulse®), Model 102R (Pulse Duo®
Slide 4: Agenda
Agenda 4Q17 and FY17 Highlights Financial Results 2018 Guidance Summary 4
Slide 5: 4Q17 and FY17 Highlights
4Q17 and FY17 Highlights
Slide 6: 2017 Financial Highlights
2017 Financial Highlights Ended the year with strong financial results Met or exceeded all of our financial projections for 2017 Improved top-line growth* every quarter in 2017 versus prior year Reduced full-year adjusted income tax* rate to 22.8 percent Exceeded adjusted EPS* guidance while making
Slide 7: Fourth Quarter 2017 Highlights
Fourth Quarter 2017 Highlights Advancing our strategic objectives u Neuromodulation: – Launched our SenTiva VNS Therapy System and next-generation programmer – Strong initial demand and interest for the device u CRM/Discontinued Operations: – Announced that we entered into a binding letter of intent
Slide 8: Fourth Quarter 2017 and Recent Highlights
Fourth Quarter 2017 and Recent Highlights: Acquiring products that are complementary to our existing portfolio u ImThera: – Announced intent to acquire ImThera Medical, which closed early 2018 – Complementary to Neuromodulation portfolio – Obstructive Sleep Apnea (OSA) market is large and growing, w
Slide 9: Financial Results
Financial Results
Slide 10: 4Q17 At a Glance
4Q17 At a Glance: Strongest top-line growth quarter in 2017 Net Sales ($M) Adjusted Gross Adjusted Operating Adjusted EPS from Margin* Margin from Continuing Increased 8.1% on a constant currency basis* Continuing Operations* Operations* 64.6% 64.3% $278.4 21.7% $249.6 19.8% $0.88 $0.83 4Q16 4Q17 4Q
Slide 11: Full-year 2017 At a Glance
Full-year 2017 At a Glance: A year of progress Net Sales Adjusted Gross Adjusted Operating Adjusted EPS from Increased 4.1% on a Margin* Margin from Continuing constant currency basis* Continuing Operations* Operations* 65.1% 65.7% $1.0B 22.0% 21.6% $964.9M $3.31 $3.03 FY16 FY17 FY16 FY17 FY16 FY17
Slide 12: Full-year 2017 Net Sales
Full-year 2017 Net Sales 100% Drug-Resistant Epilepsy 80% Cardiopulmonary (CP) (DRE) $1.0B Treatment-Resistant Depression Heart-lung machines (HLM) (TRD) Oxygenators Autotransfusion systems (ATS) Vagus Nerve Stimulation Therapy Cannulae (VNS Therapy®) 40% 60% Neuromodulation Cardiac Surgery (NM) (CS
Slide 13: 4Q17 Cardiac Surgery Sales
Heart Valves 4Q17 Cardiac Surgery Sales Cardiopulmonary Net Sales ($M) Drivers/Impacts $178 $159 + Heart-lung machine sales up in every region, 36 0.2%* primarily due to customer upgrades from S3 34 to S5 devices + INSPIRE oxygenator performed well, particularly in international regions 9.2%* 142 12
Slide 14: 4Q17 Neuromodulation Sales
4Q17 Neuromodulation Sales Net Sales ($M) Drivers/Impacts $100 $91 + Strong growth from launch of SenTiva, our newest VNS Therapy System + Expanded MRI labeling globally and expanded 9.4%* pediatric labeling in the U.S. + Starting to see decrease in median age of patients receiving implants + Contin
Slide 15: Key Adjusted Financial Results from Continuing Operations
Key Adjusted Financial Results from Continuing Operations* Full-year 4Q17 % of 4Q16 Full-year 2016* 2017 Net Sales $179M $665M Gross profit 64% of sales 66% of sales $93M $351M SG&A 33% of sales 35% of sales $31M $95M R&D 11% of sales 9% of sales $55M $219M Operating income 20% of sales 22% of sales
Slide 16: 4Q17 Adjusted EPS from Continuing Operations
4Q17 Adjusted EPS from Continuing Operations* Reconciliation of Adjusted EPS to GAAP EPS $0.88 ($0.12) ($0.06) ($0.10) ($0.06) ($0.07) ($0.07) ($0.17) ($0.01) ($0.02) ($0.85) ($0.65) Adj. Merger Restructuring Depreciation Product Other Equity Other Acquisition Certain Certain GAAP Diluted and expens
Slide 17: FY17 Adjusted EPS from Continuing Operations
FY17 Adjusted EPS from Continuing Operations* Reconciliation of Adjusted EPS to GAAP EPS $3.31 ($0.24) ($0.30) ($0.55) $0.59 ($0.10) ($0.08) ($0.03) ($0.28) $1.12 ($0.43) ($0.77) Adj. Merger Restructuring Depreciation Product Other Equity Other Acquisition Certain Certain GAAP Diluted and expense an
Slide 18: 2018 Guidance
2018 Guidance 18
Slide 19: Full-year 2017 Performance Versus Guidance
Full-year 2017 Performance Versus Guidance* Actuals including Guidance CRM Worldwide net sales growth (1) 1% - 3% 2.8% ü Gross margin (1) Mid-60% 65% ü R&D (1) 10% - 11% 10.5% ü SG&A (1) 36% - 37% 36% ü Operating margin (1) High teens 19% ü Effective tax rate (1) (2) 22% - 23% 22% ü Diluted EPS (1)
Slide 20: Full-year 2018 Guidance from Continuing Operations
Full-year 2018 Guidance from Continuing Operations Guidance Worldwide net sales growth (1) 4% - 6% Gross margin (1) 66% - 68% R&D (1) 11% - 13% SG&A (1) 34% - 36% Operating margin (1) 19% -21% Effective tax rate 20% - 22% Diluted EPS (1) (2) $3.40 - $3.60 Cash flow from operations (3) $180M - $200M
Slide 21: Full-year 2018 Sales Guidance Assumptions
Full-year 2018 Sales Guidance Assumptions Neuromodulation • SenTiva continues to gain adoption throughout the year • Direct-to-consumer advertising (DTC) campaign will be key component in expanding patient outreach • Significant sequential progression in our International region due to implementatio
Slide 22: Summary
Summary 22
Slide 23: Summary
Summary • Met or exceeded our financial commitments for the year FINANCIAL • Sales growth in all business franchises and regions GROWTH • Ending 2017 well positioned to drive shareholder value • On track to close CRM sale to MicroPort in second quarter 2018 STRATEGIC • Investing in our future throug
Slide 24: Appendix
Appendix 24
Slide 25: GAAP to Non-GAAP Reconciliations- Unaudited
GAAP to Non-GAAP Reconciliations- Unaudited (U.S. dollars in millions, except per share amounts) Operating Income Income (loss) Diluted Diluted EPS income from (loss) from from Net EPS from from Gross continuing continuing discontinued income continuing discontinued Diluted Three Months Ended Decemb
Slide 26: GAAP to Non-GAAP Reconciliations- Unaudited
GAAP to Non-GAAP Reconciliations- Unaudited (U.S. dollars in millions, except per share amounts) Operating (loss) Income Income (loss) Diluted EPS Diluted EPS income from (loss) from from Net from from Gross continuing continuing discontinued income continuing discontinued Diluted Three Months Ended
Slide 27: GAAP to Non-GAAP Reconciliations- Unaudited
GAAP to Non-GAAP Reconciliations- Unaudited (U.S. dollars in millions, except per share amounts) Operating Income (loss) Diluted EPS Diluted EPS income from Income from from Net from from Gross continuing continuing discontinued income continuing discontinued Diluted Year Ended December 31, 2017 Sal
Slide 28: GAAP to Non-GAAP Reconciliations- Unaudited
GAAP to Non-GAAP Reconciliations- Unaudited (U.S. dollars in millions, except per share amounts) Operating Income (loss) Diluted EPS Diluted EPS income from Income from from Net from from Gross continuing continuing discontinued income continuing discontinued Diluted Year Ended December 31, 2016 Sal
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations The preceding 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 fourth-quarter and full-year 2017 press release and during the conference call he
Slide 30: www.livanova.com
www.livanova.com www.livanova.com