LivaNova PLC

Previous wording

In addition, the impact that the imposition of tariffs and changes to global trade policies could have on the Company’s results of operations is uncertain. A significant number of LivaNova’s Cardiopulmonary products and component parts are sourced and produced outside of the U.S., including in Italy and Germany. Similarly, LivaNova manufactures its Neuromodulation products in the U.S., which are then often distributed internationally. For additional information, see “Part II, Item 1A. Risk Factors” of this Report.

Current wording

In addition, the impact that the imposition of tariffs and changes to global trade policies could have on the Company’s results of operations is uncertain. A significant number of LivaNova’s Cardiopulmonary products and component parts are sourced and produced outside of the U.S., including in Italy and Germany. Similarly, LivaNova manufactures its Neuromodulation products in the U.S., which are then often distributed internationally. For additional information, see (1) “Part II, Item 1A. Risk Factors” and elsewhere in this Report and the Company’s other Quarterly Reports on Form 10-Q and (2) “Part I, Item 1A. Risk Factors” of the Company’s 2024 Form 10-K.

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 also assessed the nature and scope of the affected data, analyzed its statutory notification obligations, and notified affected individuals and regulators as required by applicable law. For further discussion on legal and regulatory developments, refer to “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report. The incident has been contained, and the Company’s mitigation efforts are considered complete.

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. As a result, the Company engaged external cybersecurity experts, coordinated with law enforcement, implemented remediation measures, and notified affected individuals and regulators as required by applicable law. The incident was contained, and the Company’s mitigation efforts are considered complete. For further discussion on legal and regulatory developments, refer to “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

Through March 31, 2025, LivaNova incurred direct costs totaling $12.4 million in connection with this cybersecurity incident, including $0.8 million and $2.8 million for the three months ended March 31, 2025 and 2024, respectively. The total direct costs incurred primarily include external cybersecurity expert and legal fees, system restoration costs, and a $1.2 million provision related to the class action settlement, and do not include business interruption losses. The Company expects to incur additional costs related to this incident in the future. For further discussion on potential legal and regulatory developments, refer to “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report. LivaNova maintains insurance, including cyber insurance, which is subject to certain retentions and policy limitations that will likely limit the amount that the insurers may reimburse the Company. LivaNova has filed claims for insurance reimbursement of covered costs and business interruption losses related to this incident and has submitted additional claims and supplemental requests for reimbursement as new costs have been incurred. Through March 31, 2025, LivaNova had received $8.6 million, including $5.2 million in reimbursement of business incident costs and $3.4 million in reimbursement of business interruption losses. For the three months ended March 31, 2025, LivaNova received $0.1 million in reimbursement of business incident costs. The

Current wording

Through June 30, 2025, LivaNova incurred direct costs totaling $13.0 million in connection with this cybersecurity incident, including $0.6 million and $2.9 million for the three months ended June 30, 2025 and 2024, respectively, and $1.4 million and $5.7 million for the six months ended June 30, 2025 and 2024, respectively. The total direct costs incurred primarily include external cybersecurity expert and legal fees, system restoration costs, and $1.2 million related to a class action settlement, and do not include business interruption losses. The Company may 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 will likely limit the amount that the insurers may reimburse the Company. LivaNova has filed claims for insurance reimbursement of direct costs and business interruption losses related to this incident and has submitted additional claims and supplemental requests for reimbursement as new costs have been incurred. Through June 30, 2025, LivaNova has received $9.6 million, including $6.2 million in reimbursement of direct costs and $3.4 million in reimbursement of business interruption losses. For the three and six months ended June 30, 2025, LivaNova received $1.0 million and $1.2 million, respectively, in reimbursement of direct costs. The Company’s insurance coverage may be insufficient to cover all costs and expenses related to this cybersecurity incident or may be unavailable to cover all costs and expenses related to this cybersecurity incident.

Previous wording

LivaNova’s Neuromodulation segment is engaged in the design, development, manufacture, marketing, and sale of devices that deliver neuromodulation therapy for treating DRE and DTD. LivaNova’s principal Neuromodulation product, the VNS Therapy System, consists of an implantable pulse generator and connective lead that stimulates the vagus nerve, surgical equipment to assist with the implant procedure, and equipment and instruction manuals that enable a treating physician to set parameters for a patient’s pulse generator. The lead does not need to be removed to replace a generator with a depleted battery.

Current wording

LivaNova’s principal Neuromodulation product, the VNS Therapy System, is designed as an adjunctive treatment to reduce seizures in people with DRE, and is approved in many jurisdictions globally, including in the U.S. for patients 4 years of age or older with partial onset seizures. The VNS Therapy System consists of an implantable pulse generator and connective lead that stimulates the left vagus nerve, surgical equipment to assist with the implant procedure, and equipment and instruction manuals that enable a treating physician to set parameters for a patient’s pulse generator. The lead does not need to be removed to replace a generator with a depleted battery.

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 2024 Form 10-K. For the three months ended March 31, 2025, there were no material changes to the application of critical accounting policies and estimates previously disclosed in LivaNova’s 2024 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 2024 Form 10-K. For the six months ended June 30, 2025, there were no material changes to the application of critical accounting policies and estimates previously disclosed in LivaNova’s 2024 Form 10-K.

Previous wording

(2)“Other Revenue” includes rental and site services income not allocated to segments. In addition, “Other Revenue” for the three months ended March 31, 2024 includes revenue from the Company’s former ACS reportable segment.

Current wording

(2)“Other Revenue” includes rental and site services income not allocated to segments. In addition, for the three and six months ended June 30, 2024, “Other Revenue” includes revenue from the Company’s former ACS reportable segment.

Previous wording

(1)For a reconciliation of segment income to consolidated loss before tax, refer to “Note 10. 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 10. 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, 2025 increased 13.1% to $176.3 million compared to the three months ended March 31, 2024, with growth across all regions, driven by Essenz Perfusion System sales and strong consumables demand.

Current wording

Cardiopulmonary net revenue for the three and six months ended June 30, 2025 increased 14.7% to $199.3 million and 14.0% to $375.6 million, respectively, compared to the three and six months ended June 30, 2024, with growth across all regions, driven by strong consumables demand and Essenz Perfusion System sales.

Previous wording

Cardiopulmonary segment income for the three months ended March 31, 2025 was $24.7 million, compared to segment income of $14.7 million for the three months ended March 31, 2024. The increase in segment income was primarily due to an increase in net revenue, as described above, as well as a decrease in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device of $5.7 million.

Current wording

Cardiopulmonary segment income for the three and six months ended June 30, 2025 was $31.4 million and $56.1 million, respectively, compared to segment income of $19.6 million and $34.3 million for the three and six months ended June 30, 2024, respectively. These increases in segment income were primarily due to increases in net revenue, as described above, as well as decreases in the amounts recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device of $2.8 million and $8.5 million for the three- and six-month comparative periods, respectively.

Previous wording

Neuromodulation segment income for the three months ended March 31, 2025 was $52.4 million compared to $46.7 million for the three months ended March 31, 2024. The increase in segment income was primarily due to the increase in net revenue, as described above, as well as a net decrease in R&D expense, primarily resulting from a reduction in costs associated with the Company’s DTD program of $5.3 million.

Current wording

Neuromodulation segment income for the three and six months ended June 30, 2025 was $56.0 million and $108.4 million, respectively, compared to $54.8 million and $101.5 million for the three and six months ended June 30, 2024, respectively. These increases in segment income were primarily due to increases in net revenue, as described above, as well as a net decrease in R&D expense for the six-month comparative period, primarily resulting from a $9.4 million reduction in costs associated with the Company’s DTD program.

Previous wording

Cost of sales consists primarily of direct labor, allocated manufacturing overhead, and the acquisition of raw materials and components.

Current wording

Cost of sales consists primarily of direct labor, allocated overhead, and the acquisition of raw materials and components.

Previous wording

Cost of sales as a percentage of net revenue was 30.3% for the three months ended March 31, 2025, an increase of 0.6 percentage points compared to the three months ended March 31, 2024 and was consistent with volume leverage.

Current wording

Cost of sales as a percentage of net revenue was 32.2% and 32.0% for the three and six months ended June 30, 2025, respectively, a decrease of 0.4 and an increase of 0.1 percentage points compared to the three and six months ended June 30, 2024, respectively, and were consistent with volume leverage.

Previous wording

SG&A expense as a percentage of net revenue was 42.2% for the three months ended March 31, 2025, a decrease of 1.8 percentage points compared to the three months ended March 31, 2024 primarily resulting from insurance recoveries and a decline in costs associated with the November 2023 cybersecurity incident.

Current wording

SG&A expense as a percentage of net revenue was 39.1% and 39.9% for the three and six months ended June 30, 2025, respectively, representing decreases of 0.2 and 1.0 percentage points compared to the three and six months ended June 30, 2024, respectively, primarily due to the decline in costs associated with the November 2023 cybersecurity incident and the impact of related insurance recoveries.

Previous wording

R&D expense as a percentage of net revenue was 12.0% for the three months ended March 31, 2025, a decrease of 3.5 percentage points compared to the three months ended March 31, 2024. The decrease was primarily due to a reduction in costs associated with the Company’s DTD program of $5.3 million.

Current wording

R&D expense as a percentage of net revenue was 13.4% and 12.7% for the three and six months ended June 30, 2025, respectively, representing decreases of 0.6 and 2.0 percentage points compared to the three and six months ended June 30, 2024, respectively, primarily due to a reduction in costs associated with the Company’s DTD program of $4.0 million and $9.4 million, respectively.

Previous wording

Other operating expenses as a percentage of net revenue was 0.2% for the three months ended March 31, 2025, a decrease of 5.1 percentage points compared to the three months ended March 31, 2024. The decrease was due to a $9.3 million decrease in restructuring costs associated with the 2024 Restructuring Plan, as well as a $5.7 million decrease in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device. For additional information, please refer to “Note 5. Commitments and Contingencies,” in the condensed consolidated financial statements in this Report.

Current wording

Other operating expenses as a percentage of net revenue was zero and 0.1% for the three and six months ended June 30, 2025, respectively, representing decreases of 1.5 and 3.2 percentage points compared to the three and six months ended June 30, 2024, respectively. The decreases were due to decreases of $2.2 million and $11.5 million in restructuring costs associated with the 2024 Restructuring Plan for the three- and six-month comparative periods, respectively, as well as decreases of $2.8 million and $8.5 million in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device for the three- and six-month comparative periods, respectively. For additional information, please refer to “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

On March 14, 2025, the Italian Supreme Court issued its decision in response to all of the appeals of the Company and counter-appeals submitted by the Public Administrations. The Italian Supreme Court determined that LivaNova can be held jointly and severally liable for the established liabilities of SNIA at the time of demerger as well as the environmental liabilities of the demerged company that materialized after the demerger which are derived from actions performed prior to the demerger.

Current wording

On March 14, 2025, the Italian Supreme Court issued its decision in response to all of the appeals of the Company and counter-appeals submitted by the Public Administrations. The Italian Supreme Court determined that LivaNova can be held jointly and severally liable for the established liabilities of SNIA at the time of demerger, as well as the environmental liabilities of the demerged company that materialized after the demerger, which are derived from actions performed prior to the demerger. As a result of the decision by the Italian Supreme Court, the Company recorded the SNIA environmental liability expense in the quarter ended March 31, 2025, and has continued to accrue interest since that time. For additional information, please refer to “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

Interest expense decreased to $15.3 million for the three months ended March 31, 2025 compared to $15.9 million for the three months ended March 31, 2024, primarily due to decreases in interest rates, partially offset by an increase in amortization of debt issuance costs and an increase in average borrowings. For additional information, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Current wording

Interest expense decreased to $12.3 million and $27.6 million for the three and six months ended June 30, 2025, respectively, compared to $15.5 million and $31.4 million for the three and six months ended June 30, 2024, respectively, primarily due to an early repayment on May 2, 2025 of $200 million on principal borrowings under the Term Facilities. 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) was income of $11.4 million for the three months ended March 31, 2025, compared to expense of $9.1 million for the three months ended March 31, 2024. For additional information, refer to “Note 11. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Current wording

Foreign exchange and other income/(expense) was an expense of $4.3 million and income of $7.2 million for the three and six months ended June 30, 2025, respectively, compared to an expense of $3.0 million and $12.1 million for the three and six months ended June 30, 2024, respectively. For additional information, refer to “Note 11. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Previous wording

LivaNova’s effective income tax rate for the three months ended March 31, 2025 was (3.7)% compared to (22.6)% for the three months ended March 31, 2024. The change in the effective tax rate for the three months ended March 31, 2025, compared to the prior year period, was primarily attributable to year-over-year changes in income before tax in countries with varying statutory tax rates, certain discrete tax items, including the SNIA environmental liability, and changes in valuation allowances.

Current wording

LivaNova’s effective income tax rate for the three and six months ended June 30, 2025 was 18.5% and (6.3)%, respectively, compared to 24.2% and (102.6)% for the three and six months ended June 30, 2024, respectively. The changes in the effective tax rates for the three and six months ended June 30, 2025, compared to the prior year periods, were primarily attributable to year-over-year changes in income before tax in countries with varying statutory tax rates, certain discrete tax items, including the SNIA environmental liability, and changes in valuation allowances.

Previous wording

LivaNova is subject to income taxes as well as non-income-based taxes in the U.S., the UK, the EU, and various other jurisdictions. LivaNova will continue to monitor legislative developments including the adoption of Pillar Two and related guidance in the UK and other jurisdictions that may impact LivaNova’s operations.

Current wording

LivaNova is subject to income taxes as well as non-income-based taxes in the U.S., the UK, the EU, and various other jurisdictions. In June 2025, the Group of Seven released a statement on global minimum taxes indicating potential changes to substance-based non-refundable tax credits. The statement has not been incorporated into the OECD framework, and LivaNova will continue to monitor OECD and Pillar Two guidance for any new developments. On July 4, 2025, the U.S. enacted the OBBBA. Provisions of the OBBBA applicable to LivaNova include, but are not limited to, the elective deduction of domestic research and development expenses, changes to interest deductions, changes to Foreign-Derived Deduction Eligible Income, and the permanent reinstatement of bonus depreciation. LivaNova is still evaluating the potential impacts of the OBBBA. LivaNova will continue to monitor legislative developments in the U.S., the UK, the EU, and various other jurisdictions that may impact LivaNova’s operations.

Previous wording

Based on LivaNova’s current business plan, which includes estimates and assumptions regarding the amount and timing of cash receipts and payments, the Company believes that its sources of liquidity, which primarily consist of cash and cash equivalents, future cash generated from operations, and available borrowings under its revolving credit facility, will be sufficient to fund its uses of liquidity, primarily consisting of day-to-day operating expenses, working capital, capital expenditures, acquisition earnouts, commitments and contingencies, including the SNIA environmental liability, and debt service requirements over the twelve-month period beginning from the issuance date of this Report. From time to time, LivaNova may access debt and/or equity markets to optimize its capital structure, raise additional capital, or increase liquidity, as necessary. LivaNova’s liquidity could be adversely affected by the factors affecting future operating results, including those referred to in “Part I, Item 1A. Risk Factors” in the 2024 Form 10-K, as well as “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Current wording

Based on LivaNova’s current business plan, which includes estimates and assumptions regarding the amount and timing of cash receipts and payments, the Company believes that its sources of liquidity, which primarily consist of cash and cash equivalents, future cash generated from operations, and available borrowings under its revolving credit facility, will be sufficient to fund its uses of liquidity, primarily consisting of day-to-day operating expenses, working capital, capital expenditures, acquisition earnouts, commitments and contingencies, including the SNIA environmental liability, and debt service requirements over the twelve-month period beginning from the issuance date of this Report. From time to time, LivaNova may access debt and/or equity markets to optimize its capital structure, raise additional capital, or increase liquidity, as necessary. LivaNova’s liquidity could be adversely affected by the factors affecting future operating results, including those referred to in “Part I, Item 1A. Risk

Previous wording

For information on LivaNova’s debt obligations, refer to “Note 4. Financing Arrangements” and “Note 13. Subsequent Event” in the condensed consolidated financial statements in this Report.

Current wording

For information on LivaNova’s debt obligations, refer to “Note 4. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Previous 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):

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 (decrease) increase in the balance of cash, cash equivalents, and restricted cash (in thousands):

Previous wording

Cash provided by operating activities for the three months ended March 31, 2025 increased $14.0 million compared to the same prior year period, primarily due to higher customer collections resulting from an increase in sales, as well as lower payments to vendors and for restructuring activities, partially offset by an increase in annual incentive payouts and higher cash outflows for inventories.

Current wording

Cash provided by operating activities for the six months ended June 30, 2025 increased $33.5 million compared to the same prior year period, primarily due to higher customer collections resulting from an increase in sales and lower payments for restructuring activities, partially offset by an increase in cash outflows for inventories and to vendors, including service providers.

Previous wording

Cash used in investing activities for the three months ended March 31, 2025 increased $4.3 million compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $4.4 million, principally related to purchases and development of internal-use software.

Current wording

Cash used in investing activities for the six months ended June 30, 2025 increased $0.7 million compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $7.4 million, principally related to purchases and development of internal-use software, partially offset by proceeds from the sale of LivaNova’s investment in Ceribell, Inc. of $6.5 million.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2025 decreased $41.6 million compared to the same prior year period, primarily due to a decrease in proceeds from net debt borrowings and repayments of $55.6 million, partially offset by the payment of the ALung contingent consideration arrangement during the three months ended March 31, 2024 of $13.8 million.

Current wording

Cash used in financing activities for the six months ended June 30, 2025 increased $238.7 million compared to the same prior year period, primarily due to a decrease in proceeds from net debt borrowings and repayments of $253.4 million, partially offset by the payment of the ALung contingent consideration arrangement for the six months ended June 30, 2024 of $13.8 million.