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 Report, and with LivaNova’s 2024 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 2024 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.

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 2024 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 2024 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 are defined in the “Definitions” section and in the notes to LivaNova’s condensed consolidated financial statements in this Report.

Previous wording

The current macroeconomic environment, including FX volatility, inflationary pressures, geopolitical instability, and supply chain challenges, has impacted and may continue to impact LivaNova’s business, results of operations, cash flows, and financial condition. 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.

Current wording

The current macroeconomic environment, including FX volatility, inflationary pressures, and geopolitical instability, and global supply chain challenges have impacted and may continue to impact LivaNova’s business, results of operations, cash flows, and financial condition. 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. 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

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.

Current wording

Through September 30, 2025, LivaNova incurred direct costs totaling $13.1 million in connection with this cybersecurity incident, including $0.1 million and $2.5 million for the three months ended September 30, 2025 and 2024, respectively, and $1.5 million and $8.2 million for the nine months ended September 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 September 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 nine months ended September 30, 2025, LivaNova received $1.2 million 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 Cardiopulmonary segment is engaged in the design, development, manufacture, marketing, and sale 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.

Current wording

LivaNova’s Cardiopulmonary segment is engaged in the design, development, manufacture, marketing, and sale of cardiopulmonary products, including HLMs, oxygenators, autotransfusion systems, perfusion tubing systems, cannulae, and other related accessories, and provides services related to certain of these products. 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

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.

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 nine months ended September 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, for the three and six months ended June 30, 2024, “Other Revenue” 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 nine months ended September 30, 2024, “Other Revenue” includes revenue from the Company’s former ACS reportable segment.

Previous 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.

Current wording

Cardiopulmonary net revenue for the three and nine months ended September 30, 2025 increased 18.0% to $203.2 million and 15.3% to $578.8 million, respectively, compared to the three and nine months ended September 30, 2024, with growth across all regions, driven by Essenz Perfusion System sales and strong consumables demand.

Previous 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.

Current wording

Cardiopulmonary segment income for the three and nine months ended September 30, 2025 was $24.7 million and $80.8 million, respectively, compared to segment income of $21.7 million and $56.0 million for the three and nine months ended September 30, 2024, respectively. These increases in segment income primarily resulted from 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 $4.0 million and $12.4 million for the three- and nine-month comparative periods, respectively.

Previous wording

Neuromodulation net revenue for the three and six months ended June 30, 2025 increased 6.2% to $151.7 million and 5.0% to $290.6 million, respectively, compared to the three and six months ended June 30, 2024, with growth across all regions.

Current wording

Neuromodulation net revenue for the three and nine months ended September 30, 2025 increased 6.9% to $149.5 million and 5.6% to $440.1 million, respectively, compared to the three and nine months ended September 30, 2024, with growth across all regions.

Previous 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.

Current wording

Neuromodulation segment income for the three and nine months ended September 30, 2025 was $56.2 million and $164.6 million, respectively, compared to $49.5 million and $151.0 million for the three and nine months ended September 30, 2024, respectively. These increases in segment income primarily resulted from increases in net revenue, as described above, as well as net decreases in R&D expense for the three- and nine-month comparative periods, primarily resulting from $9.7 million and $19.1 million reductions in costs associated with the Company’s DTD program, respectively.

Previous wording

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

Current wording

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

Previous wording

SG&A expenses are comprised of sales, marketing, general, and administrative activities.

Current wording

SG&A expense primarily consists of sales, marketing, general, and administrative activities.

Previous 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.

Current wording

SG&A expense as a percentage of net revenue was 38.7% and 39.5% for the three and nine months ended September 30, 2025, respectively, representing decreases of 1.4 and 1.1 percentage points compared to the three and nine months ended September 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 expenses consist of product design and development efforts, clinical study programs, and regulatory activities.

Current wording

R&D expense primarily consists of product design and development efforts, clinical study programs, and regulatory activities.

Previous 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.

Current wording

R&D expense as a percentage of net revenue was 13.6% and 13.0% for the three and nine months ended September 30, 2025, respectively, representing decreases of 1.7 and 1.9 percentage points compared to the three and nine months ended September 30, 2024, respectively, primarily due to reductions in costs associated with the Company’s DTD program of $9.7 million and $19.1 million, respectively.

Previous wording

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

Current wording

Other operating expense primarily consists of charges related to LivaNova’s 3T Heater-Cooler device litigation provision and restructuring expense.

Previous 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.

Current wording

Other operating expense as a percentage of net revenue was 1.0% and 0.4% for the three and nine months ended September 30, 2025, respectively, representing decreases of 1.9 and 2.8 percentage points compared to the three and nine months ended September 30, 2024, respectively. The decreases were due to decreases of $4.0 million and $12.4 million in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device for the three- and nine-month comparative periods, respectively, as well as decreases of $1.5 million and $13.0 million in restructuring costs associated with the 2024 Restructuring Plan for the same periods. 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 $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.

Current wording

Interest expense decreased to $10.9 million and $38.4 million for the three and nine months ended September 30, 2025, respectively, compared to $15.9 million and $47.3 million for the three and nine months ended September 30, 2024, respectively, primarily due to an early repayment on May 2, 2025 of $200 million on principal borrowings under the Term Facilities, as well as decreases in interest rates, partially offset by an increase in amortization of debt issuance costs. 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 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.

Current wording

Foreign exchange and other income/(expense) was expense of $7.5 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, compared to income of $24.7 million and $12.6 million for the three and nine months ended September 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 PLC is a resident in the UK. LivaNova’s effective income tax rate fluctuates based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, valuation allowances, tax credits and incentives, unrecognized tax benefits associated with uncertain tax positions, and tax laws. LivaNova’s tax returns are periodically audited or subjected to review by tax authorities. The Company operates in multiple jurisdictions worldwide and assesses the recoverability of its deferred tax assets for each period and jurisdiction by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) in determining whether a valuation allowance is required. Depending on operating results in the future, a release of a valuation allowance could occur within the next 12 months. The timing and amount of the valuation allowance release could vary based on the Company’s assessment of all available evidence.

Current wording

LivaNova PLC is a resident in the UK. LivaNova’s effective income tax rate fluctuates based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, discrete tax items, valuation allowances, tax credits and incentives, unrecognized tax benefits associated with uncertain tax positions, and tax laws. LivaNova’s tax returns are periodically audited or subjected to review by tax authorities. The Company operates in multiple jurisdictions worldwide and assesses the recoverability of its deferred tax assets for each period and jurisdiction by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) in determining whether a valuation allowance is required. Depending on operating results in the future, a release of a valuation allowance could occur within the next 12 months. The timing and amount of the valuation allowance release could vary based on the Company’s assessment of all available evidence.

Previous 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.

Current wording

LivaNova’s effective income tax rate for the three and nine months ended September 30, 2025 was 21.0% and (10.0)%, respectively, compared to 25.9% and 76.9% for the three and nine months ended September 30, 2024, respectively. The changes in the effective tax rates for the three and nine months ended September 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. 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.

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. LivaNova will continue to monitor developments globally that may impact the Company’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

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 Factors” in the 2024 Form 10-K, as well as “Note 5. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

LivaNova’s operating and working capital obligations primarily consist of liabilities arising from the normal course of business, including inventory supply contracts, the future settlement of derivative instruments, and future lease payments, as well as contingent consideration arrangements resulting from acquisitions and obligations associated with legal and other accruals.

Current wording

LivaNova’s operating and working capital obligations primarily consist of liabilities arising in the normal course of business, including inventory supply contracts, the future settlement of derivative instruments, and future lease payments, as well as contingent consideration arrangements resulting from acquisitions and obligations associated with legal and other accruals.

Previous 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.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2025 increased by $67.6 million compared to the same prior year period, primarily due to higher customer collections resulting from an increase in sales and lower payments related to LivaNova’s 3T Heater-Cooler device litigation provision, as well as restructuring activities, partially offset by an increase in cash outflows for inventories and income taxes.

Previous 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.

Current wording

Cash used in investing activities for the nine months ended September 30, 2025 increased by $5.2 million compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $12.1 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 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.

Current wording

Cash used in financing activities for the nine months ended September 30, 2025 increased by $244.8 million compared to the same prior year period, primarily due to a decrease in proceeds from net debt borrowings and repayments of $255.3 million, partially offset by the payment of $13.8 million related to the ALung contingent consideration arrangement in the prior year period.