LivaNova Reports Second Quarter 2018 Results
Aug. 01, 2018
LONDON--(BUSINESS WIRE)--Aug 1, 2018--LivaNova PLC (NASDAQ:LIVN), a market-leading medical technology and innovation company, today reported results for the quarter ended June 30, 2018.
For the second quarter of 2018, worldwide sales from continuing operations were $287.5 million, an increase of 12.4 percent on a reported basis and an increase of 10.2 percent on a constant currency basis, as compared to the same quarter of the previous year. On an underlying basis, second quarter sales grew 8.7 percent 1. On the basis of U.S. Generally Accepted Accounting Principles (GAAP), second quarter 2018 diluted earnings per share from continuing operations were $0.40. Second quarter 2018 adjusted diluted earnings per share from continuing operations were $0.96.
"The second quarter results reflect the initial success of our growth strategy as we focus on our Cardiac Surgery and Neuromodulation portfolios. We saw an acceleration in our underlying sales growth and grew earnings while making significant investments in marketing, product development and clinical activities," said Damien McDonald, Chief Executive Officer of LivaNova. “Neuromodulation grew double digits behind strong demand for our newest VNS Therapy ® System, SenTiva ®, which launched in Europe in the second quarter. Cardiac Surgery continues to experience strong growth, driven by sales of our S5 ® heart-lung machine and our Perceval ® sutureless aortic heart valve. Our differentiated pipeline continues to make progress and we feel confident in our growth outlook as we continue to deliver quality care to patients around the world."
Second Quarter 2018 Results
Worldwide sales from continuing operations for the second quarter were $287.5 million, up 10.2 percent on a constant currency basis compared to the second quarter of 2017. The following table highlights worldwide sales for the second quarter of 2018 by business:Note: Numbers may not add up precisely due to rounding. Constant currency % change is considered a non-GAAP metric.
For discussion purposes, all sales growth rates below reflect comparable, constant currency growth. Constant currency growth accounts for the impact from fluctuations in the various currencies in which the Company operates as compared to reported growth.
Cardiac Surgery sales, which include Cardiopulmonary products, Heart Valves and Advanced Circulatory Support, were $176.5 million, representing an 8.3 percent increase versus the second quarter of 2017.
Sales in Cardiopulmonary products were $136.6 million, representing a 7.2 percent increase versus the second quarter of 2017. Growth in heart-lung machines sales in both U.S. and Rest of World was the major contributor primarily due to customer upgrades from legacy S3 ® to current S5 machines.
Heart Valve sales for both tissue and mechanical heart valves were $33.8 million, a decrease of 5.1 percent compared to the second quarter of 2017. Strong growth in demand for the Perceval sutureless aortic heart valve was more than offset by the expected termination of a contract manufacturing customer and by continued declines in mechanical and traditional tissue valves.
Advanced Circulatory Support sales, which represent our recently acquired TandemLife business, were $6.0 million in the quarter.
Neuromodulation sales were $110.7 million in the second quarter, representing a 13.2 percent increase versus the second quarter of 2017. The increase was driven by strong demand for SenTiva in the U.S. and Europe coupled with commercial expansion efforts in several international markets.
On a U.S. GAAP basis, second quarter 2018 operating income from continuing operations was $21.6 million. Adjusted operating income from continuing operations for the second quarter of 2018 was $59.9 million, a decrease of 6.8 percent as compared to the second quarter of 2017. This was primarily due to increased investments in sales and marketing activities, product innovation and clinical trials to support sales growth and gross margin expansion, along with a negative impact from foreign currency.
Our adjusted effective tax rate in the quarter was 17.4 percent, an improvement from 24.0 percent in the second quarter of 2017, as a result of ongoing tax efforts and the recent changes in U.S. and U.K. tax laws.
On a U.S. GAAP basis, second quarter 2018 diluted earnings per share from continuing operations were $0.40. Second quarter 2018 adjusted diluted earnings per share from continuing operations were $0.96, an increase of 3.2 percent as compared to the second quarter of 2017.
LivaNova worldwide net sales for full-year 2018 are expected to grow between 6 and 8 percent on a constant currency basis. Full-year 2018 effective tax rate is expected to be in the range of 18 to 20 percent. Adjusted diluted earnings per share for 2018 are expected to be in the range of $3.50 to $3.70.
Webcast and Conference Call Instructions
The Company will host a live audio webcast for interested parties commencing at 1 p.m. London time (8 a.m. Eastern Daylight Time) on Wednesday, Aug. 1, 2018 that will be accessible through the Investor Relations section of the LivaNova corporate website at www.livanova.com. To listen to the conference call live by telephone, dial (866) 393-4306 (if dialing from within the U.S.) or (734) 385-2616 (if dialing from outside the U.S.). The conference ID is 5184037.
Within 24 hours of the webcast, a replay will be available under the "News & Events / Presentations" section of the Investor Relations portion of the LivaNova website, where it will be archived and accessible for approximately 12 months.
LivaNova PLC is a global medical technology company built on nearly five decades of experience and a relentless commitment to improve the lives of patients around the world. LivaNova’s advanced technologies and breakthrough treatments provide meaningful solutions for the benefit of patients, healthcare professionals and healthcare systems. Headquartered in London, LivaNova has a presence in more than 100 countries worldwide. The Company currently employs approximately 4,000 employees. LivaNova operates as two businesses: Cardiac Surgery and Neuromodulation, with operating headquarters in Mirandola (Italy) and Houston (U.S.A.), respectively.
For more information, please visit www.livanova.com.
Use of Non-GAAP Financial Measures
In this press release, management has disclosed financial measurements that present financial information not necessarily in accordance with GAAP. Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against other medical technology companies. Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP financial measures should be considered along with, but not as alternatives to, the operating performance measure as prescribed by GAAP.
Unless otherwise noted, all sales growth rates in this release reflect comparable, constant currency growth. Management believes that referring to comparable, constant currency growth is the most useful way to evaluate the sales performance of LivaNova and to compare the sales performance of current periods to prior periods on a consistent basis. Constant currency growth, a non-GAAP financial measure, measures the change in sales between current and prior-year periods using average exchange rates in effect during the applicable prior-year period.
The Company also believes adjusted financial measures such as adjusted diluted earnings per share, adjusted operating income and adjusted tax rate are meaningful and allow investors to evaluate the Company’s performance for different periods on a more comparable basis by adjusting for items that are not related to the ongoing operations of the Company.
Safe Harbor Statement
Certain statements in this press release, 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 of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, LivaNova’s plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “forecast,” “foresee,” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by LivaNova and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning achieving a stronger future, driving sustainable growth and value to our shareholders, projected net sales, adjusted diluted earnings per share, cash flow from operations, capital expenditures, and depreciation and amortization for 2018, advancing our growth, driving product launches and funding our equity investments, executing on our synergy targets and retaining our focus, energy and discipline as a company, serving the needs of our customers and patients, and delivering strong value to our shareholders. Important factors that may cause actual results to differ include, but are not limited to: (i) the inability of LivaNova to meet expectations regarding the timing, completion and accounting of tax treatments; (ii) organizational and governance structure; (iii) reductions in customer spending, a slowdown in customer payments and changes in customer demand for products and services; (iv) unanticipated changes relating to competitive factors in the industries in which LivaNova operates; (v) the ability to hire and retain key personnel; (vi) the ability to attract new customers and retain existing customers in the manner anticipated; (vii) changes in legislation or governmental regulations affecting LivaNova; (viii) international, national or local economic, social or political conditions that could adversely affect LivaNova, its partners or its customers; (ix) conditions in the credit markets; (x) business and other financial risks inherent to the industries in which LivaNova operates; (xi) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xii) LivaNova’s international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; (xiii) and the potential for international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Company’s business, including those described in the “Risk Factors” section of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed from time to time with the United States Securities and Exchange Commission by LivaNova.
We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release. The Company does not undertake or assume any obligation to update publicly any of the forward-looking statements in this press release to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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