LivaNova PLC

Previous wording

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes, which appear elsewhere in this document, and with LivaNova’s 2023 Form 10-K. LivaNova’s discussion and analysis may contain forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Part I, Item 1A. of LivaNova’s 2023 Form 10-K, as updated and supplemented by LivaNova’s Quarterly Reports on Form 10-Q, including in Part II, Item 1A. and elsewhere in this Report.

Current wording

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes, which appear elsewhere in this Report, and with LivaNova’s 2023 Form 10-K. LivaNova’s discussion and analysis may contain forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors” in Part I, Item 1A. of LivaNova’s 2023 Form 10-K, as updated and supplemented by LivaNova’s Quarterly Reports on Form 10-Q, including in Part II, Item 1A. and elsewhere in this Report. The accompanying unaudited condensed consolidated financial statements of LivaNova and its consolidated subsidiaries have been prepared in accordance with U.S. GAAP on an interim basis. The capitalized terms used below have been defined in the “Definitions” section and in the notes to LivaNova’s condensed consolidated financial statements of this Report.

Previous wording

LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through innovative medical technologies that deliver life-changing improvements. LivaNova is a public limited company organized under the laws of England and Wales and is headquartered in London, England. LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.”

Current wording

LivaNova PLC is a market-leading global medical technology company. The Company designs, develops, manufactures, markets, and sells products and therapies that are consistent with LivaNova’s mission to provide hope for patients and their families through medical technologies, delivering life-changing solutions in select neurological and cardiac conditions. LivaNova is a public limited company organized under the laws of England and Wales and is headquartered in London, England. LivaNova’s ordinary shares are listed for trading on the Nasdaq under the symbol “LIVN.”

Previous wording

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 logistical, capacity, and labor constraints, though, to date, the Company’s supply of raw materials and the production and distribution of finished products have not been materially affected. 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.

Current wording

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 logistical, capacity, and labor constraints. However, to date, the Company’s supply of raw materials and the production and distribution of finished products have not been materially affected. 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.

Previous wording

As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems. Promptly after detecting the issue, LivaNova began an investigation with assistance from external cybersecurity experts and coordinated with law enforcement. The Company implemented remediation measures to mitigate the impact of the incident. The Company continues to assess the nature and scope of the affected data and analyze its legal notification obligations, and the Company is notifying affected individuals and regulators as required by applicable law. The Company believes it contained the cybersecurity threat, though its mitigation efforts are ongoing. At this time, all of LivaNova’s manufacturing sites worldwide are operating at normal levels. The Company continues to assess the full impact of the cybersecurity event on its business, results of operations, cash flows and financial condition.

Current wording

As previously disclosed, in November 2023, LivaNova detected a cybersecurity incident that resulted in a disruption of portions of the Company’s information technology systems. Promptly after detecting the issue, LivaNova began an investigation with assistance from external cybersecurity experts and coordinated with law enforcement. The Company implemented remediation measures to mitigate the impact of the incident. The Company continues to assess the nature and scope of the affected data and analyze its legal notification obligations, and the Company is notifying affected individuals and regulators as required by applicable law. The Company believes the incident is contained and mitigation efforts are complete.

Previous wording

Through March 31, 2024, LivaNova had incurred direct costs totaling $5.4 million in connection with this cybersecurity incident, including $2.8 million during the three months ended March 31, 2024. These costs primarily include external cybersecurity experts, legal counsel, and system restoration costs, and do not include business interruption or other non-direct costs. The Company expects to incur additional costs related to this incident in the future. LivaNova maintains insurance, including cyber insurance, which is subject to certain retentions and policy limitations that may serve to limit the amount that the insurers may pay the Company when a claim is submitted. LivaNova plans to file for reimbursement of covered costs related to this incident, but the Company’s insurance coverage may be insufficient to cover all costs and expenses related to this cybersecurity incident, and the insurance carrier may not cover all submitted costs and expenses related to this cybersecurity incident.

Current wording

Through June 30, 2024, LivaNova incurred direct costs totaling $8.3 million in connection with this cybersecurity incident, including $2.9 million and $5.7 million during the three and six months ended June 30, 2024, respectively. These costs primarily include external cybersecurity experts, legal counsel, and system restoration costs, and do not include business interruption losses or potential losses associated with class action-related litigations, as discussed in “Note 6. Commitments and Contingencies” in the condensed consolidated financial statements in this Report. The Company expects to incur additional costs related to this incident in the future. LivaNova maintains insurance, including cyber insurance, which is subject to certain retentions and policy limitations that may limit the amount that the insurers may pay the Company. During the second quarter of 2024, LivaNova filed a claim for insurance reimbursement of covered costs and business interruption losses related to this incident for which it has yet to receive reimbursement or recognize the amount filed as a receivable. The Company’s insurance coverage may be insufficient or unavailable to cover any or all costs and expenses related to this cybersecurity incident.

Previous wording

Prior to the first quarter of 2024, LivaNova operated through three segments: Cardiopulmonary, Neuromodulation and ACS. During the first quarter of 2024, the Company reorganized its operating and reporting structure upon initiating the 2024 Restructuring Plan. This involved transitioning all ACS standalone cannulae and accessories, including ProtekDuo and transseptal (TandemHeart) cannulae, into its Cardiopulmonary segment. Operations for other ACS products, including LifeSPARC and Hemolung systems, will be discontinued by the end of 2024. For additional information, please refer to “Note 2. Restructuring” in the condensed consolidated financial statements in this Report. This restructuring, along with changes in how the Company’s CODM regularly reviews information, allocates resources and assesses performance, resulted in modifications to LivaNova’s reportable segments. Specifically, the ACS segment is now included in “Other,” excluding the ACS standalone cannulae and accessories business, which is now included in the Cardiopulmonary reportable segment. As a result, LivaNova now has two reportable segments: Cardiopulmonary and Neuromodulation. For further information regarding LivaNova’s reportable segments, historical financial information and its methodology for the presentation of financial results, please refer to the condensed consolidated financial statements and accompanying notes of this Report.

Current wording

Prior to the first quarter of 2024, LivaNova operated through three segments: Cardiopulmonary, Neuromodulation, and ACS. During the first quarter of 2024, the Company reorganized its operating and reporting structure upon initiating the 2024 Restructuring Plan. This involved transitioning all ACS standalone cannulae and accessories, including ProtekDuo and transseptal (TandemHeart) cannulae, into its Cardiopulmonary segment. Operations for other ACS products, including LifeSPARC and Hemolung systems, will be discontinued by the end of 2024. For additional information, refer to “Note 2. Restructuring” in the condensed consolidated financial statements in this Report. This restructuring, along with changes in how the Company’s CODM regularly reviews information, allocates resources, and assesses performance, resulted in modifications to LivaNova’s reportable segments. Specifically, LivaNova’s former ACS segment is now included in “Other,” excluding the ACS standalone cannulae and accessories business, which is now included in the Cardiopulmonary reportable segment. As a result, LivaNova now has two reportable segments: Cardiopulmonary and Neuromodulation. The segment financial information presented herein reflects these changes for all periods presented. For additional information regarding LivaNova’s reportable segments, historical financial information, and its methodology for the presentation of financial results, refer to the condensed consolidated financial statements and accompanying notes of this Report.

Previous wording

LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing and selling of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. In particular, the Cardiopulmonary segment includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision making during CPB procedures.

Current wording

LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing, and selling of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae, and other related accessories. In particular, the Cardiopulmonary segment includes the Essenz Perfusion System, the Company’s next-generation HLM with an embedded patient monitor for tailored patient care strategies and sensing technology for data-driven decision making during cardiopulmonary bypass procedures.

Previous wording

Information on Cardiopulmonary that could potentially impact LivaNova’s condensed consolidated financial statements and related disclosures is incorporated by reference to Part I. Note 6. Commitments and Contingencies: Product Liability Litigation.

Current wording

Information on the Cardiopulmonary segment that could potentially impact LivaNova’s condensed consolidated financial statements and related disclosures is incorporated by reference to Part I. “Note 6. Commitments and Contingencies: Product Liability Litigation.”

Previous wording

LivaNova’s Neuromodulation segment also includes costs associated with the Company’s former heart failure program, which the Company began winding down during the first quarter of 2023 and substantially completed winding down during the fourth quarter of 2023.

Current wording

LivaNova’s Neuromodulation segment also includes costs associated with the Company’s former heart failure program, which the Company wound down during 2023.

Previous wording

For a discussion of LivaNova’s critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Form 10-K.

Current wording

For a discussion of LivaNova’s critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Form 10-K. During the six months ended June 30, 2024, there were no material changes to the application of critical accounting policies and estimates previously disclosed in LivaNova’s 2023 Form 10-K.

Previous wording

The following table summarizes LivaNova’s condensed consolidated results of operations (in thousands):

Current wording

The following table presents LivaNova’s condensed consolidated results of operations (in thousands):

Previous wording

The following table presents net revenue by operating segment and geographic region for the three months ended March 31, 2024 and 2023 (in thousands, except for percentages):

Current wording

The following table presents net revenue by operating segment and geographic region (in thousands, except for percentages):

Previous wording

(2)Other revenue primarily includes revenue from the Company’s former ACS reportable segment, as discussed above, and rental income not allocated to segments.

Current wording

(2)“Other Revenue” includes revenue from the Company’s former ACS reportable segment, as discussed above, as well as rental and site services income not allocated to segments.

Previous wording

The following table presents segment income for the three months ended March 31, 2024 and 2023 (in thousands, except for percentages):

Current wording

The following table presents segment income(1) (in thousands, except for percentages):

Previous wording

(1)For a reconciliation of segment income to consolidated (loss) income before tax refer to “Note 11. Geographic and Segment Information” in the condensed consolidated financial statements in this Report.

Current wording

(1)For a reconciliation of segment income to consolidated income (loss) before tax, refer to “Note 11. Geographic and Segment Information” in the condensed consolidated financial statements in this Report.

Previous wording

Cardiopulmonary net revenue for the three months ended March 31, 2024 increased 14.8% to $155.9 million compared to the three months ended March 31, 2023, with growth across all regions, driven by Essenz Perfusion System sales in the U.S. and Europe, and strong consumables demand worldwide.

Current wording

Cardiopulmonary net revenue for the three and six months ended June 30, 2024 increased 12.7% to $173.7 million and 13.7% to $329.6 million, respectively, compared to the three and six months ended June 30, 2023, with growth across all regions, driven by Essenz Perfusion System sales and strong consumables demand.

Previous wording

Cardiopulmonary segment income for the three months ended March 31, 2024 was $14.7 million, compared to $9.2 million for the three months ended March 31, 2023. The increase in segment income was primarily due to the increase in net revenue, as described above, partially offset by an increase in the litigation provision related to LivaNova’s 3T Heater-Cooler device of $5.1 million.

Current wording

Cardiopulmonary segment income for the three and six months ended June 30, 2024 was $19.6 million and $34.3 million, respectively, compared to $12.8 million and $22.0 million for the three and six months ended June 30, 2023, respectively. These increases in segment income were primarily due to increases in net revenue, as described above.

Previous wording

Neuromodulation segment income for the three months ended March 31, 2024 was $46.7 million, compared to $27.0 million for the three months ended March 31, 2023. The increase in segment income was primarily due to the increase in net revenue, as described above, as well as $3.8 million from the net favorable change in fair value of the sales-based and milestone-based contingent consideration arrangement associated with the acquisition of ImThera.

Current wording

Neuromodulation segment income for the three and six months ended June 30, 2024 was $54.8 million and $101.5 million, respectively, compared to $38.1 million and $65.2 million for the three and six months ended June 30, 2023, respectively. These increases in segment income were primarily due to increases in net revenue, as described above, as well as decreases in

Previous wording

The following table presents costs and expenses as a percentage of net revenue for the three months ended March 31, 2024 and 2023:

Current wording

The following table presents costs and expenses as a percentage of net revenue:

Previous wording

SG&A expense as a percentage of net revenue was 44.0% for the three months ended March 31, 2024, a decrease of 3.1 percentage points compared to the three months ended March 31, 2023. The decrease was primarily due to a decrease in sales and marketing expenses driven by the wind down of the ACS segment, partially offset by $2.8 million in costs associated with the November 2023 cybersecurity incident, as described above.

Current wording

SG&A expense as a percentage of net revenue was 40.5% and 42.2% for the three and six months ended June 30, 2024, respectively, down 2.3 and 2.7 percentage points compared to the three and six months ended June 30, 2023, respectively. These decreases were primarily due to a decrease in sales and marketing expenses driven by the wind down of the ACS segment, partially offset by $2.9 million and $5.7 million in costs during the three and six months ended June 30, 2024, respectively, associated with the November 2023 cybersecurity incident, as described above.

Previous wording

R&D expense as a percentage of net revenue was 15.5% for the three months ended March 31, 2024, a decrease of 3.5 percentage points compared to the three months ended March 31, 2023. The decrease was primarily due to an $8.7 million decrease in costs associated with winding down the Company’s heart failure program, which was substantially completed during the fourth quarter of 2023.

Current wording

R&D expense as a percentage of net revenue was 14.0% and 14.7% for the three and six months ended June 30, 2024, respectively, down 3.4 percentage points compared to both the three and six months ended June 30, 2023, respectively. These decreases were primarily due to R&D expense declines of $8.1 million and $16.8 million for the three- and six-month comparative periods, respectively, associated with winding down the Company’s heart failure program, which was completed during the fourth quarter of 2023.

Previous wording

Other operating expenses primarily consists of the provision for litigation involving LivaNova’s 3T Heater-Cooler device, and restructuring expense.

Current wording

Other operating expenses primarily consists of the litigation provision related to LivaNova’s 3T Heater-Cooler device as well as restructuring expense.

Previous wording

Other operating expenses as a percentage of net revenue was 5.3% for the three months ended March 31, 2024, an increase of 4.4 percentage points compared to the three months ended March 31, 2023. The increase was primarily due to an $8.5 million increase in restructuring costs resulting from the 2024 Restructuring Plan, as well as a $5.1 million increase in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device. For additional information, please refer to “Note 2. Restructuring,” and “Note 6. Commitments and Contingencies,” respectively, in the condensed consolidated financial statements in this Report.

Current wording

Other operating expenses as a percentage of net revenue was 1.5% for the three months ended June 30, 2024, a decrease of 2.2 percentage points compared to the three months ended June 30, 2023. The decrease was primarily due to an $8.1 million decrease in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device, partially offset by an increase in restructuring expense of $1.9 million resulting from the 2024 Restructuring Plan. Other operating expenses as a percentage of net revenue was 3.3% for the six months ended June 30, 2024, an increase of 0.9 percentage points compared to the six months ended June 30, 2023. The increase was primarily due to an increase in restructuring expense of $10.4 million resulting from the 2024 Restructuring Plan, partially offset by a $3.1 million decrease in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device. For additional information, refer to “Note 2. Restructuring” and “Note 6. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

Interest expense for the three months ended March 31, 2024 increased to $15.9 million, compared to $13.4 million for the three months ended March 31, 2023, primarily due to increases in interest rates, average borrowings, and amortization of debt issuance costs. For further details, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Current wording

Interest expense increased to $15.5 million and $31.4 million for the three and six months ended June 30, 2024, respectively, compared to $14.8 million and $28.2 million for the three and six months ended June 30, 2023, respectively, primarily due to increases in average borrowings and the amortization of debt issuance costs, partially offset by a decrease in interest rates. For additional information, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Previous wording

In connection with the 2025 Notes Repurchase Transaction, during the three months ended March 31, 2024, LivaNova incurred a loss on debt extinguishment of $25.5 million. For additional information, please refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Current wording

In connection with the 2025 Notes Repurchase Transaction, during the six months ended June 30, 2024, LivaNova incurred a loss on debt extinguishment of $25.5 million. For additional information, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Previous wording

Foreign exchange and other income/(expense) consists primarily of gains and losses arising from transactions denominated in a currency different from an entity’s functional currency, FX derivative gains and losses, and changes in the fair value of embedded and capped call derivatives.

Current wording

Foreign exchange and other income/(expense) consists primarily of gains and losses arising from transactions denominated in a currency different from an entity’s functional currency, FX derivative gains and losses, interest income, changes in the fair value of embedded and capped call derivatives, and an impairment of LivaNova’s investment in ShiraTronics, Inc.

Previous wording

Foreign exchange and other income/(expense) was expense of $9.1 million for the three months ended March 31, 2024, compared to income of $25.5 million for the three months ended March 31, 2023. For further details, refer to “Note 12. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Current wording

Foreign exchange and other income/(expense) was expense of $3.0 million and $12.1 million for the three and six months ended June 30, 2024, respectively, compared to income of $2.7 million and $28.3 million for the three and six months ended June 30, 2023, respectively. For additional information, refer to “Note 12. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Previous wording

LivaNova PLC is resident in the UK for tax purposes. LivaNova’s subsidiaries conduct operations and earn income in numerous countries and are subject to the laws of, and varying income tax rates imposed by, the taxing jurisdictions in those countries. 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.

Current wording

LivaNova PLC is resident in the UK for tax purposes. 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. The Company continually assesses the realizability of its worldwide deferred tax asset and valuation allowance positions and, when required, establishes or releases valuation allowances accordingly. LivaNova operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subjected to review by tax authorities.

Previous wording

LivaNova’s effective income tax rate for the three months ended March 31, 2024 was (22.6)%, compared with 24.3% for the three months ended March 31, 2023. The decrease in the effective tax rate for the three months ended March 31, 2024, 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 certain discrete tax items.

Current wording

LivaNova’s effective income tax rate for the three and six months ended June 30, 2024 was 24.2% and (102.6)%, respectively, compared to 77.6% and 43.0% for the three and six months ended June 30, 2023, respectively. The decrease in the effective tax rate for both the three and six months ended June 30, 2024, compared to the prior year periods, was primarily attributable to changes in valuation allowances, year-over-year changes in income before tax in countries with varying statutory tax rates, and certain discrete tax items.

Previous wording

On July 11, 2023, the UK Act implemented the 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. Draft UK legislation has also been published for a UTPR to be introduced, although not before accounting periods beginning on or after December 31, 2024. The UTPR is intended to ensure that amounts of multinational top-up tax that are not collected under foreign global minimum tax rules can, in certain circumstances, be collected instead in the UK. This minimum tax is treated as a period cost beginning in 2024 and has not had a material impact on the Company's financial results of operations for the current period. LivaNova 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 (loss) income or financial condition.

Current wording

On July 11, 2023, the UK Act implemented the Pillar Two framework, providing a minimum effective tax rate of 15.0%, 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. This minimum tax is treated as a period cost beginning in 2024 and has not had a material impact on the Company's consolidated results of operations for the current period. LivaNova will continue to monitor related guidance in the UK and other jurisdictions that impact LivaNova’s operations.

Previous wording

The following table presents selected financial information related to LivaNova’s liquidity as of March 31, 2024 and December 31, 2023 (in thousands):

Current wording

The following table presents selected financial information related to LivaNova’s liquidity (in thousands):

Previous wording

(1)On March 8, 2024, LivaNova and LivaNova USA entered into Incremental Facility Amendment No. 3, which provides for LivaNova USA to obtain revolving commitments in an aggregate principal amount of $225 million. For additional information, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Current wording

On March 8, 2024, LivaNova and LivaNova USA entered into Incremental Facility Amendment No. 3, which provides for LivaNova USA to obtain revolving commitments in an aggregate principal amount of $225.0 million. For additional information, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Previous wording

The following table presents net cash and cash equivalents provided by (used in) operating, investing and financing activities and the net increase in the balance of cash and cash equivalents and restricted cash for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table presents net cash, cash equivalents, and restricted cash provided by (used in) operating, investing, and financing activities and the net increase in the balance of cash, cash equivalents, and restricted cash (in thousands):

Previous wording

Cash provided by operating activities during the three months ended March 31, 2024 decreased by $10.8 million compared to the same prior year period primarily due to changes in operating assets and liabilities totaling $38.5 million, partially offset by an increase in net income adjusted for non-cash items of $11.3 million, a decrease in 3T Heater-Cooler litigation settlement payments of $11.4 million, and an increase in adjustments to the 3T Heater-Cooler litigation provision of $5.1 million.

Current wording

Cash provided by operating activities during the six months ended June 30, 2024 increased $50.5 million, compared to the same prior year period, primarily due to an increase in net (loss) income adjusted for non-cash items of $32.2 million and a decrease in 3T Heater-Cooler litigation settlement payments of $15.4 million.

Previous wording

Cash used in investing activities during the three months ended March 31, 2024 decreased $5.1 million compared to the same prior year period primarily due to a decrease in purchases of equity investments of $5.1 million.

Current wording

Cash used in investing activities during the six months ended June 30, 2024 increased $0.8 million, compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $5.2 million, partially offset by a decrease in purchases of equity investments of $5.0 million.

Previous wording

Cash provided by financing activities during the three months ended March 31, 2024 increased $42.4 million compared to the same prior year period, primarily due to net proceeds during the three months ended March 31, 2024 of $46.8 million from debt and derivative transactions associated with the 2029 Notes, 2025 Notes, 2029 Capped Calls and 2025 Capped Calls, as discussed in “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report, partially offset by payment of the ALung contingent consideration arrangement of $13.8 million during the three months ended March 31, 2024.

Current wording

Cash provided by financing activities during the six months ended June 30, 2024 decreased $5.5 million, compared to the same prior year period, primarily due to payment of the ALung contingent consideration arrangement of $13.8 million during the six months ended June 30, 2024, partially offset by an increase in proceeds associated with net debt borrowings and repayments of $6.9 million.