LivaNova PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Unaudited Condensed Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of LivaNova and the notes thereto as of and for the three and six months ended June 30, 2026 and 2025 have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova as of December 31, 2025 has been derived from audited consolidated financial statements contained in LivaNova’s 2025 Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries for the three and six months ended June 30, 2026, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying LivaNova’s 2025 Form 10-K. The Company has reclassified certain prior period amounts on the condensed consolidated statements of income (loss) and the condensed consolidated statements of cash flows for comparative purposes.

Significant Accounting Policies

LivaNova’s significant accounting policies are included within “Note 2. Basis of Presentation, Use of Accounting Estimates, and Significant Accounting Policies” and “Note 3. Revenue Recognition” of LivaNova’s 2025 Form 10-K.

Note 2. Intangible Assets

Upon receiving PMA from the FDA for the aura6000 System in March 2026, LivaNova reclassified its indefinite-lived IPR&D intangible asset of $112.0 million from the acquisition of ImThera to a finite-lived developed technology intangible asset and commenced amortization over an estimated useful life of 15 years.

Note 3. Derivatives and Risk Management

Due to the global nature of LivaNova’s operations, the Company is exposed to FX fluctuations. LivaNova enters into FX derivative contracts to reduce the impact of FX fluctuations on earnings and cash flow.

LivaNova is also exposed to equity price risk in connection with its 2029 Notes, including exchange/conversion and settlement provisions based on the price of its ordinary shares at exchange/conversion or maturity of the 2029 Notes. The 2029 Capped Calls associated with the 2029 Notes also include settlement provisions that are based on the price of LivaNova’s ordinary shares, subject to a capped price per share.

These derivatives are intended to serve as economic hedges and follow the cash flows of the economic hedged item. LivaNova does not enter into derivative contracts for speculative purposes.

LivaNova had no designated hedging instruments as of June 30, 2026 and December 31, 2025.

Freestanding FX Derivatives

LivaNova uses freestanding derivative forward contracts to offset the variability of the value associated with intercompany loans denominated in a foreign currency. The gross notional amount of freestanding FX derivative contracts outstanding as of June 30, 2026 and December 31, 2025 was $155.6 million and $113.2 million, respectively. From freestanding derivatives, LivaNova recorded net losses of $1.8 million and net gains of $15.0 million for the three months ended June 30, 2026 and 2025, respectively, and net losses of $4.0 million and net gains of $25.4 million for the six months ended June 30, 2026, and 2025, respectively. These amounts, together with foreign currency remeasurement gains and losses on the underlying intercompany loans, are included in foreign exchange and other income/(expense) in LivaNova’s condensed consolidated statements of income (loss).

Capped Call Derivatives

The Capped Call Transactions are carried on the condensed consolidated balance sheets as a derivative asset at their estimated fair value and are adjusted at the end of each reporting period, with unrealized gain or loss reflected in foreign exchange and other income/(expense) in the condensed consolidated statements of income (loss). The Capped Call Transactions are measured at fair value using the Black-Scholes model utilizing observable and unobservable market data, including share price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield, as applicable. For additional information, refer to “Note 4. Fair Value Measurements,” and “Note 12. Supplemental Financial Information.”

2029 Capped Calls

In March 2024, LivaNova issued the 2029 Notes. In connection with the pricing of the 2029 Notes, the Company entered into related privately-negotiated capped call transactions with certain financial institutions. Under the 2029 Capped Calls, the Company purchased a capped call option with an initial strike price of $69.40 and an initial cap price of $94.28 per share. The strike price, which is subject to certain adjustments, corresponds to the initial conversion price of the 2029 Notes. The 2029 Capped Calls are intended to offset any cash payments and/or cash equivalent value of ordinary shares upon conversion of the 2029 Notes if the market value per ordinary share is greater than the strike price, with such offsets being subject to the initial cap price of $94.28 per share. However, the proceeds under the 2029 Capped Calls are limited to the initial cap price in the event the Company’s share price exceeds the cap price at the time of conversion. The 2029 Capped Calls expire on March 15, 2029, and must be settled in cash. The 2029 Capped Calls are subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes and cover the number of LivaNova’s ordinary shares underlying the 2029 Notes. If the 2029 Capped Calls are terminated early, settlement occurs at their termination value, which is equal to their fair value at the time of the early termination.

2025 Capped Calls

In June 2020, LivaNova issued the 2025 Notes. In connection with the pricing of the 2025 Notes, the Company entered into related privately-negotiated capped call transactions with certain financial institutions. Under the 2025 Capped Calls, the Company purchased a capped call option with an initial strike price of $60.98 and an initial cap price of $100.00 per share. The strike price, subject to certain adjustments, corresponded to the initial exchange price of the 2025 Notes. The 2025 Capped Calls were intended to offset any cash payments upon exchange of the 2025 Notes in excess of the principal amount. In connection with the issuance of the 2029 Notes, the Company repurchased an aggregate principal amount of $230.0 million of the 2025 Notes and unwound a corresponding portion of the 2025 Capped Calls at the fair value of such portion of the 2025 Capped Calls. The Company received $22.5 million in cash consideration, the fair value of the terminated portion, upon settlement. The remaining 2025 Capped Calls expired with a fair value ofzero on December 15, 2025.

Embedded Derivatives

The 2025 Notes included, and the 2029 Notes include, terms resulting in a bifurcated embedded derivative. The Embedded Derivatives are measured at fair value using a binomial lattice model and estimated discounted cash flows that utilize observable and unobservable market data and are adjusted at the end of each reporting period, with the unrealized gain or loss reflected in foreign exchange and other income/(expense) in the condensed consolidated statements of income (loss). For additional information, refer to “Note 12. Supplemental Financial Information.”

Balance Sheet Presentation

LivaNova offsets fair value amounts associated with its derivative instruments that are executed with the same counterparty under master netting arrangements on the Company’s condensed consolidated balance sheets. Master netting arrangements include a right to set off or net together purchases and sales of similar products in the settlement process.

The following tables present the fair value and the location of derivative contracts reported on the condensed consolidated balance sheets (in thousands):

Note 4. Fair Value Measurements

LivaNova reviews its fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities in the fair value hierarchy. There were no transfers between Level 1, Level 2, or Level 3 for the six months ended June 30, 2026 and 2025.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the level in the fair value hierarchy at which the Company’s assets and liabilities are measured on a recurring basis (in thousands):

Reconciliation of Level 3 Assets and Liabilities

The tables below present reconciliations of recurring fair value measurements that use significant unobservable inputs (Level 3) (in thousands):

(1)Gains and losses are recorded in foreign exchange and other income/(expense) in the condensed consolidated statements of income (loss).

(2)For the three months ended June 30, 2026, the contingent consideration changes in fair value resulted in a decrease of $1.0 million and an increase of $0.8 million recorded tocost of sales and R&D, respectively. For the comparable 2025 period, the contingent consideration changes in fair value resulted in increases of $1.5 million and $1.2 million recorded tocost of sales and R&D, respectively. For the six months ended June 30, 2026, the contingent consideration changes in fair value resulted in increases of $0.1 million and $10.4 million recorded tocost of sales and R&D, respectively. For the comparable 2025 period, the contingent consideration changes in fair value resulted in increases of $1.8 million and $1.9 million recorded tocost of sales and R&D, respectively.

Share Price Volatility

The share price volatility utilized in determining the fair value of LivaNova’s 2029 Capped Call derivative assets and 2029 Embedded Derivative liability as of June 30, 2026 was 37%. In general, an increase in LivaNova’s share price or share price volatility would increase the fair value of the embedded and capped call derivatives, which would result in an increase in net expense. As the remaining time to the expiration of the derivatives decreases, the fair value of the derivatives decreases. The future impact of the derivatives on net income (loss) depends on how significant inputs, such as share price volatility, and time to the expiration of the derivatives, change in relation to other inputs.

Contingent Consideration Arrangements

The ImThera acquisition involved contingent consideration arrangements comprised of potential cash payments upon the achievement of a certain regulatory milestone and a sales-based earnout associated with sales of products. In March 2026, the Company received PMA from the FDA for the aura6000 System, thereby achieving the regulatory milestone and, in June 2026, paid $60.5 million, fully satisfying the related regulatory-based contingent consideration liability. Of this payment, $10.0 million was classified as an operating cash outflow in the condensed consolidated statements of cash flows, representing the portion of the payment that exceeded the acquisition-date fair value of the liability, with the remainder classified as a financing cash outflow on the condensed consolidated statements of cash flows. The remaining sales-based earnout is valued using projected sales from LivaNova’s internal strategic plan. These arrangements are Level 3 fair value measurements. The table below presents the significant unobservable inputs of the sales-based earnout arrangement from the ImThera acquisition as of June 30, 2026:

Other

The carrying value of LivaNova’s long-term debt, including the current portion as of June 30, 2026 and December 31, 2025, was $290.1 million and $376.1 million, respectively. The fair value of the 2029 Notes, excluding the conversion feature, as of June 30, 2026 and December 31, 2025, was $312.0 million and $315.2 million, respectively. The fair value was estimated using a discounted cash flow model and is classified as Level 2 within the fair value hierarchy. For all other long-term debt obligations, LivaNova believes the carrying value approximates fair value. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.

Note 5. Financing Arrangements

The following table presents a summary of LivaNova’s long-term debt obligations (in thousands):

Revolving Credit and Term Facilities

The outstanding principal amount of LivaNova’s short-term unsecured revolving credit agreements and other agreements with various banks was $3.4 million and $0.6 million as of June 30, 2026 and December 31, 2025, respectively, with an interest rate of 5.42% as of June 30, 2026.

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, and matures on March 8, 2029. There wereno outstanding borrowings under the revolving facilities under the 2021 First Lien Credit Agreement as of June 30, 2026 and December 31, 2025. As of both June 30, 2026 and December 31, 2025, the applicable commitment fee percentage was 0.25% per annum. As of June 30, 2026, the Company was in compliance with the financial covenants contained in the 2021 First Lien Credit Agreement.

On May 2, 2025, LivaNova made a $200.0 million early repayment of principal under the Term Facilities. This repayment resulted in a loss on debt extinguishment of $2.7 million recognized for the three and six months ended June 30, 2025, associated with the write-off of unamortized debt issuance costs. On January 8, 2026, LivaNova made a $95.9 million early repayment of the remaining outstanding balance under the Term Facilities. This repayment resulted in a loss on debt extinguishment of $0.9 million recognized for the six months ended June 30, 2026, associated with the write-off of the remaining unamortized debt issuance costs. Loss on debt extinguishment is included in interest expense in the condensed consolidated statements of income (loss).

2029 Notes

The effective interest rate of the 2029 Notes was 9.84% as of June 30, 2026. The unamortized debt discount and issuance costs related to the 2029 Notes as of June 30, 2026 and December 31, 2025 were $60.1 million and $69.4 million, respectively. The initial conversion rate for the 2029 Notes is 14.4085 ordinary shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $69.40 per share. Although the Company’s ordinary share price met or exceeded the initial conversion price during portions of the quarter and through the filing date, the conditions required for conversion were not met as of June 30, 2026. Under the terms of the indenture, holders may convert the 2029 Notes during a calendar quarter only if, among other circumstances, the last reported sale price of the Company’s ordinary shares equals or exceeds 130% of the conversion price, or $90.22 per share, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter. Accordingly, the Company included its obligations from the 2029 Notes and the associated embedded derivative as long-term liabilities in the condensed consolidated balance sheet as of June 30, 2026, and the 2029 Notes are not convertible for the three months ending September 30, 2026. For additional information regarding the 2029 Notes and related 2029 Capped Calls, refer to LivaNova’s 2025 Form 10-K and “Note 3. Derivatives and Risk Management.”

Note 6. Commitments and Contingencies

Saluggia Site Hazardous Substances

LSM, formerly a subsidiary of Sorin, one of the companies that merged into LivaNova PLC in 2015, manages site services for the campus in Saluggia, Italy. In addition to being a former LivaNova manufacturing facility, the Saluggia campus is also the location of manufacturing facilities of third parties, a cafeteria for workers, and storage facilities for hazardous substances and equipment previously used in a nuclear research center, later turned nuclear medicine business, between the 1960s and the late 1990s. Pursuant to authorization from the Italian government, LSM performs ordinary maintenance, secures the facilities, monitors air and water quality, and files applicable reports with the competent environmental authorities.

In 2020, LSM received correspondence from ISIN requesting that, within five years, LSM demonstrate the financial capacity to meet its obligations under Italian law to clean and dismantle any contaminated buildings and equipment, as well as to deliver hazardous substances to a national repository. The national repository will be built by the Italian government at a location and time yet to be determined. ISIN subsequently published Technical Guide n. 30, which identifies the technical criteria and general safety and protection requirements for the design, construction, operation, and dismantling of temporary storage facilities for the hazardous substances.

Although there is no legal obligation to deliver any hazardous substances, as the performance of these obligations is contingent on the construction of the as-yet unbuilt national repository, based on the aforementioned factors, the Company concluded its obligation to clean, dismantle, and deliver any hazardous substances to a national repository is probable and reasonably estimable. The estimated liability as of June 30, 2026 was $41.5 million (€36.4 million), which represented the estimated low end of the range of loss, with an estimated maximum end of the range of loss of $52.4 million (€46.0 million). The estimated liability as of December 31, 2025 was $41.8 million (€35.6 million).

SNIA Environmental Litigation

Sorin was created as a result of a spin-off from SNIA in 2004. SNIA subsequently became insolvent, and the Public Administrations sought compensation from SNIA in an aggregate amount of approximately $3.9 billion for remediation costs relating to the environmental damage at chemical sites previously operated by SNIA’s other subsidiaries. In 2012, SNIA filed a civil action against Sorin in the Civil Court of Milan, asserting joint liability of a parent and a spun-off company; the Public Administrations entered voluntarily into the proceeding, asking Sorin, as jointly liable with SNIA, to pay compensation for SNIA’s environmental damages. In 2015, Sorin was merged into LivaNova.

In 2016, the Court of Milan dismissed all legal actions of SNIA and of the Public Administrations, further requiring the Public Administrations to pay Sorin €292,000 ($332,820 as of June 30, 2026) for legal fees. The Public Administrations appealed the 2016 Decision to the Court of Appeal. In March 2019, the Court of Appeal issued a partial decision on the merits declaring LivaNova jointly liable with SNIA for SNIA’s environmental liabilities in an amount up to the fair value of the net worth received by Sorin because of the spin-off of Sorin from SNIA in 2004, an estimated €572.1 million ($652.1 million as of June 30, 2026). LivaNova appealed the partial decision on liability to the Italian Supreme Court in August 2019.

In 2021, the Court of Appeal delivered the remainder of its decision, ordering LivaNova to pay damages of €453.6 million ($517.0 million as of June 30, 2026). LivaNova appealed the decision on damages in December 2021. In February 2022, the Court of Appeal notified the Company that it granted the Company a suspension with respect to the payment of damages until a decision was reached on the appeal to the Italian Supreme Court, subject to LivaNova providing a first demand bank guarantee of €270.0 million ($307.7 million as of June 30, 2026); LivaNova delivered the SNIA Litigation Guarantee in March 2022.

In November 2022, the Italian Supreme Court issued a procedural document whereby the Italian Supreme Court referred a question on the interpretation of a European directive on demergers to the ECJ. Specifically, the ordinance asked the ECJ to provide a binding decision as to whether a company resulting from a demerger can be held jointly and severally liable not only for the established liabilities of the demerged company that were articulated at the time of demerger, but also for the environmental liabilities of the demerged company that materialized after the demerger which are derived from actions performed prior to the demerger. In July 2024, the ECJ issued a judgment, stating that a demerged company can be held responsible for liabilities not established prior to a demerger as long as the liabilities derive from the conduct of a demerged company prior to the demerger. The ECJ judgment also states that national law should determine whether liability for damages stemming from conduct after a demerger can be assigned to a demerged company.

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; however, the Italian Supreme Court also ruled that the Company should not be held responsible for certain payments previously approved by the Court of Appeal in the amount of €157.3 million ($179.2 million as of June 30, 2026). The case was referred back to the Court of Appeal to implement the decisions respecting costs and damages in accordance with the judgment of the Italian Supreme Court.

On March 31, 2025, as a result of the decision by the Italian Supreme Court, the SNIA Litigation Guarantee was terminated, and the restriction on the cash deposit held as collateral was released. For additional information on the financing of the guarantee, refer to “Note 12. Supplemental Financial Information.”

On May 15, 2025, as a procedural step, the Public Administrations served the Company with a filing to return the proceedings to the Court of Appeal. In addition to seeking a return of the case to the Court of Appeal, the Public Administrations asserted that the Court of Appeal forgo an examination of the amounts disapproved by the Italian Supreme Court and instead impose costs of €108.8 million ($124.0 million as of June 30, 2026) at a minimum. These assertions are counter to the decision of the Italian Supreme Court’s judgment, which disapproved costs of €157.3 million ($179.2 million as of June 30, 2026). The Public Administrations’ filing is not a legal judgment or demand for payment.

At a hearing on June 24, 2026, the Court of Appeal scheduled a hearing for December 9, 2026 to allow the parties to discuss a possible out-of-court resolution of the matter. Discussions remain ongoing, and there can be no assurance that they will result in a settlement.

As a result of the March 14, 2025 decision by the Italian Supreme Court, the Company recorded a current liability in the first quarter of 2025. As of June 30, 2026, the current liability on the consolidated balance sheet was €337.8 million ($385.0 million), representing the Company’s best estimate inclusive of estimated costs, fees, interest, and taxes. These estimated costs do not include the Company’s legal fees, which are expensed as incurred and included in SG&A in LivaNova’s condensed consolidated statements of income (loss). As of the date of this filing, the Company believes the amount recorded for the SNIA matter remains its best estimate and has determined that it has sufficient resources to satisfy the liability.

Product Liability Litigation

The Company continues to be involved in litigation involving LivaNova’s 3T device. The litigation includes the cases remaining in the federal multi-district litigation in the U.S. District Court for the Middle District of Pennsylvania and various U.S. state courts, as well as claims in jurisdictions outside the United States. As of August 5, 2026, the Company was aware of approximately 60 filed and unfiled claims worldwide. The complaints generally seek damages and other relief based on theories of strict liability, negligence, breach of express and implied warranties, failure to warn, design and manufacturing defect, fraudulent and negligent misrepresentation or concealment, unjust enrichment, and violations of various state consumer protection statutes.

As of June 30, 2026 and December 31, 2025, the provision for these matters was $23.1 million and $15.6 million, respectively. While the amount accrued represents LivaNova’s best estimate for those worldwide filed and unfiled claims of which LivaNova is aware and believes are both probable and estimable at this time, the actual liability for resolution of these matters may vary from the Company’s provision. A provision has not been recorded for any claims where a potential loss is not determined to be probable, or a potential loss or range of potential loss is not reasonably estimable at this time.

The following table presents the changes in the litigation provision liability for the six months ended June 30, 2026 (in thousands):

(1)Adjustments to the litigation provision are included in other operating expense on the condensed consolidated statements of income (loss).

(2)Included in other long-term liabilities on the condensed consolidated balance sheets.

Italian MedTech Payback Measure

In 2015, the Italian Parliament introduced a law regarding public contracts with the National Healthcare System for the supply of goods and services. In particular, the law introduced a payback measure requiring companies selling medical devices in Italy to repay a percentage of the healthcare expenditures exceeding the regional maximum caps for medical devices. In 2024, the Constitutional Court upheld the payback law, and it entered into force in August 2025. In June 2025, the Italian government introduced a settlement mechanism for 2015-2018 obligations, in which the Company elected to participate. In September 2025, the Company paid €3.5 million ($4.0 million as of June 30, 2026), representing full settlement of its obligations for that period, and reversed the remaining $3.8 million reserve associated with those years. As of June 30, 2026 and December 31, 2025, the Company had a reserve of $13.9 million and $12.8 million, respectively, reflecting its best estimate of the full potential obligation for 2019 to present; however, the actual liability could vary. The reserve is included in accrued liabilities and other in the condensed consolidated balance sheets. Amounts recognized associated with the Italian MedTech payback measure are recorded as a reduction to net revenue in the condensed consolidated statements of income (loss).

Other Matters

LivaNova is the subject of various pending or threatened legal actions and proceedings that arise in the ordinary course of LivaNova’s business. These matters are subject to many uncertainties and outcomes that are not predictable and may not be known for extended periods of time. Since the outcome of these matters cannot be predicted with certainty, the costs associated with them could have a material adverse effect on LivaNova’s consolidated results of operations, financial condition, and/or cash flows.

Note 7. Shareholders’ Equity

The tables below present the condensed consolidated statements of shareholders’ equity as of and for the three and six months ended June 30, 2026 and 2025 (in thousands):

The tables below present the changes in AOCI, net of tax, for the six months ended June 30, 2026 and 2025 (in thousands):

(1)Taxes were not provided for foreign currency translation adjustments, as translation adjustments are related to earnings that are intended to be reinvested in the countries where earned.

(1)Taxes were not provided for foreign currency translation adjustments, as translation adjustments are related to earnings that are intended to be reinvested in the countries where earned.

Note 8. Share-Based Incentive Plans

Share-Based Compensation Expense

The following table presents the amounts of share-based compensation expense recognized in LivaNova’s condensed consolidated statements of income (loss) by type of arrangement (in thousands):

Share-based compensation granted for the six months ended June 30, 2026, representing potential shares and their weighted average grant date fair values by type, is as follows (shares in thousands, fair value in dollars):

(1)Awards cliff vest after three years and are subject to performance conditions, including the rank of LivaNova’s total shareholder return for thethree-year period ending December 31, 2028 relative to the total shareholder returns of the S&P Healthcare Equipment Select Constituents index, as well as the achievement of specified cumulative revenue growth and adjusted earnings per share performance thresholds.

(2)Represents shares based on an assumed 100% performance achievement. Performance-based RSU awards have a minimum and maximum possible achievement level of 0% and 200%, respectively.

Note 9. Income Taxes

LivaNova’s effective income tax rate for the three and six months ended June 30, 2026 was (488.1)% and (186.8)%, respectively, compared to 18.5% and (6.3)% for the three and six months ended June 30, 2025, respectively. The changes in the effective tax rates for the three and six months ended June 30, 2026, compared to the prior year period, were primarily attributable to year-over-year changes in income before income tax in countries with varying statutory tax rates, certain discrete tax items, including the SNIA environmental liability recognized in 2025 and the discrete tax benefit resulting from the Italian tax ruling recognized in 2026 (further described below), and changes in valuation allowances.

The Company considers all available evidence (both positive and negative) in determining whether a valuation allowance is required on deferred tax assets. 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.

In May 2026, the Italian tax authority, Agenzia delle Entrate, issued a ruling on the deductibility of the SNIA environmental liability expense, resulting in a discrete tax benefit for the three and six months ended June 30, 2026 of €81.8 million ($95.4 million) and an estimated deferred tax asset of €80.0 million ($93.3 million), as of June 30, 2026. LivaNova determined that the Italian deferred tax assets are more likely than not realizable and, accordingly, did not record a valuation allowance.

The OBBBA was enacted in the U.S. in July 2025 and includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. LivaNova has accounted for the relevant changes within its annual effective tax rate and cash taxes.

Note 10. Earnings (Loss) Per Share

The following table presents basic and diluted earnings (loss) per share:

The following table presents the reconciliations of net income (loss) and weighted average shares outstanding used in the calculations of basic and diluted earnings (loss) per share (in thousands):

(1)For the three and six months ended June 30, 2026 and 2025, the 2029 Notes were outstanding and potentially dilutive securities but were excluded from the computation of diluted earnings (loss) per share because their effect would have been anti-dilutive under the if-converted method. Anti-dilution from the 2029 Notes was 0.1 million shares for the three months ended June 30, 2026.

(2)Excluded from the computation of diluted earnings (loss) per share were shares underlying stock options, SARs, and RSUs totaling 0.1 million and 0.6 million for the three months ended June 30, 2026 and 2025, respectively, and 0.1 million and 3.0 million for the six months ended June 30, 2026 and 2025, respectively, because to include them would have been anti-dilutive under the treasury stock method.

Note 11. Segment and Geographic Information

Segment Information

LivaNova identifies operating segments based on how it manages, evaluates, and internally reports its business activities to allocate resources, develop and execute its strategy, and assess performance. LivaNova hastwo reportable segments: Cardiopulmonary and Neuromodulation.

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.

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. Neuromodulation products include the VNS Therapy System, which consists of an implantable pulse generator, a lead that connects the generator to the vagus nerve, and other accessories. This segment also includes the design and development of neurostimulation devices for treating OSA.

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

(1)“Europe” includes the UK, Germany, France, Italy, the Netherlands, Spain, Belgium, Poland, Sweden, Switzerland, Austria, Norway, Portugal, Finland, and Denmark. Excluding Europe and the U.S., “Rest of World” includes all other countries where LivaNova operates.

(2)“Other Revenue” includes rental and site services income not allocated to segments.

LivaNova defines segment income as operating income before restructuring expense, amortization of intangible assets, the Saluggia site provision, merger and integration expense, and other income and expense not allocated to segments. Other income and expense not allocated to segments primarily includes corporate expense and rental income. LivaNova’s CODM is the Company’s CEO, who is regularly provided the results comprising segment income to make strategic business decisions, including, but not limited to, evaluation of the Company’s business portfolio, R&D investment decisions, and consideration of the Company’s organizational structure.

The following table presents a reconciliation of segment income to consolidated income (loss) before income tax (in thousands):

(1)“Interest expense” includes contractual interest expense associated with LivaNova’s short- and long-term financing arrangements and the amortization of debt discount and issuance costs of $4.9 million and $9.7 million for the three and six months ended June 30, 2026, respectively, and $5.7 million and $11.4 million for the three and six months ended June 30, 2025, respectively.

The following table presents the components of segment income, including significant expenses, of LivaNova’s reportable segments (in thousands):

The following table presents assets by reportable segment (in thousands):

(1)“Other assets” primarily include corporate assets not allocated to segments.

The following table presents capital expenditures by segment (in thousands):

(1)“Other capital expenditures” primarily includes corporate capital expenditures not allocated to segments.

The following table presents changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2026 (in thousands):

Geographic Information

The following table presents property, plant, and equipment, net by geographic region (in thousands):

Note 12. Supplemental Financial Information

The following table presents the components of inventories (in thousands):

As of June 30, 2026 and December 31, 2025, inventories included adjustments totaling $19.4 million and $18.0 million, respectively, to record balances at the lower of cost or net realizable value.

The following table presents the components of accrued liabilities and other (in thousands):

As of June 30, 2026 and December 31, 2025, contract liabilities totaling $18.6 million and $17.9 million, respectively, were included in accrued liabilities and other long-term liabilities in the condensed consolidated balance sheets.

The following table presents the items included in foreign exchange and other income/(expense) on the condensed consolidated statements of income (loss) (in thousands):

(1)Refer to “Note 4. Fair Value Measurements.”

(2)During the three months ended June 30, 2026, one of LivaNova’s equity investments was acquired by a third party, resulting in consideration receivable of $17.1 million and the recognition of a gain on sale of $13.6 million. As of June 30, 2026, $14.9 million of the consideration receivable is included within prepaid expenses and other current assets and $2.2 million is included within other assets on the condensed consolidated balance sheet.

(3)During the three months ended June 30, 2025, LivaNova liquidated its investment in Ceribell, Inc., consisting of 391,952 common shares, in a series of transactions with an average sales price of $16.69 per common share, resulting in net proceeds of $6.5 million from an initial investment in 2018 of $3.0 million.

The following table presents supplemental information to the condensed consolidated statements of cash flows (in thousands):

Note 13. New Accounting Pronouncements

The following table presents a description of future adoptions of new ASUs issued by the FASB that may have an impact on LivaNova’s consolidated financial statements when adopted: