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. In early 2025, the U.S. government imposed tariffs under the IEEPA, which impacted the Company. However, the U.S. Supreme Court ruled the IEEPA tariffs unlawful, resulting in a refund process with U.S. Customs and Border Protection. While the Company recognized net IEEPA tariff refunds that impacted segment income by $5.8 million ($7.7 million reducing cost of sales and $1.9 million reducing net revenue) for the three and six months ended June 30, 2026, adverse changes in export and import costs, including the potential for new or expanded trade restrictions and additional global tariffs, could result in future increased costs or supply chain disruptions. The Company continues to monitor developments in global trade policy and assess potential implications for sourcing, pricing, and logistics.

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. In early 2025, the U.S. government imposed tariffs under the IEEPA, which impacted the Company. However, the U.S. Supreme Court ruled the IEEPA tariffs unlawful, resulting in a refund process with U.S. Customs and Border Protection. While the Company recognized net IEEPA tariff refunds that impacted segment income by $5.8 million ($7.7 million reducing cost of sales and $1.9 million reducing net revenue) for the nine months ended September 30, 2026, adverse changes in export and import costs, including the potential for new or expanded trade restrictions and additional global tariffs, could result in future increased costs or supply chain disruptions. The Company continues to monitor developments in global trade policy and assess potential implications for sourcing, pricing, and logistics.

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 2025 Form 10-K. For the six months ended June 30, 2026, there were no material changes to the application of critical accounting policies and estimates previously disclosed in LivaNova’s 2025 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 2025 Form 10-K. For the nine months ended September 30, 2026, there were no material changes to the application of critical accounting policies and estimates previously disclosed in LivaNova’s 2025 Form 10-K.

Previous wording

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

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, 2025, “Other revenue” includes $3.1 million from a reduction in the reserve associated with the Italian MedTech payback measure related to product sales of previously divested businesses. For additional information, refer to “Note 6. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

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

Current wording

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

Previous wording

Cardiopulmonary net revenue for the three and six months ended June 30, 2026 increased 11.2% to $221.6 million and 14.5% to $430.2 million compared to the three and six months ended June 30, 2025, driven by growth in Europe, primarily reflecting Essenz Perfusion System sales, strong consumables demand, and favorable realized price.

Current wording

Cardiopulmonary net revenue for the three and nine months ended September 30, 2026 increased 10.9% to $225.3 million and 13.3% to $655.5 million, respectively, compared to the three and nine months ended September 30, 2025, with growth across all regions, driven by strong consumables demand and Essenz Perfusion System sales, as well as favorable realized price.

Previous wording

Cardiopulmonary segment income for the three and six months ended June 30, 2026 was $28.2 million and $58.2 million, respectively, compared to segment income of $31.4 million and $56.1 million for the three and six months ended June 30, 2025, respectively. The decrease in segment income for the three-month comparative period primarily resulted from an increase of $11.4 million in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device, partially offset by an increase in net revenue, as described above, and $5.8 million from net tariff refunds. The increase in segment income for the six-month comparative period primarily resulted from an increase in net revenue, as described above, and $5.8 million from net tariff refunds, partially offset by an increase of $10.7 million in the amount recorded for the litigation provision related to LivaNova’s 3T Heater-Cooler device.

Current wording

Cardiopulmonary segment income for the three and nine months ended September 30, 2026 was $7.6 million and $65.8 million, respectively, compared to segment income of $24.7 million and $80.8 million for the three and nine months ended September 30, 2025, respectively. The decrease in segment income for the three-month comparative period primarily resulted from higher litigation provision expense related to LivaNova’s 3T Heater-Cooler device, partially offset by increased net revenue, as described above. The decrease in segment income for the nine-month comparative period primarily resulted from higher litigation provision expense related to LivaNova’s 3T Heater-Cooler device, partially offset by increased net revenue, as described above, and a $5.8 million benefit from net tariff refunds.

Previous wording

Neuromodulation net revenue for the three and six months ended June 30, 2026 increased 10.1% to $166.9 million and 9.7% to $318.7 million, respectively, compared to the three and six months ended June 30, 2025, with growth across all regions, driven by volume growth and favorable realized price.

Current wording

Neuromodulation net revenue for the three and nine months ended September 30, 2026 increased 11.1% to $166.1 million and 10.2% to $484.9 million, respectively, compared to the three and nine months ended September 30, 2025, with growth across all regions, driven by higher volume and favorable realized price.

Previous wording

Neuromodulation segment income for the three and six months ended June 30, 2026 was $60.9 million and $105.1 million, respectively, compared to $56.0 million and $108.4 million for the three and six months ended June 30, 2025, respectively. The increase in segment income for the three-month comparative period primarily resulted from an increase in net revenue, as described above. The decrease in segment income for the six-month comparative period primarily resulted from a $9.7 million increase in R&D expense associated with the design and development of neurostimulation devices for treating OSA, and $6.8 million of higher expense from the net unfavorable changes in fair value of contingent consideration arrangements associated with the ImThera acquisition, partially offset by an increase in net revenue, as described above.

Current wording

Neuromodulation segment income for the three and nine months ended September 30, 2026 was $62.1 million and $167.2 million, respectively, compared to $56.2 million and $164.6 million for the three and nine months ended September 30, 2025, respectively. The increase in segment income for the three-month comparative period primarily resulted from an increase in net revenue, as described above. The increase in segment income for the nine-month comparative period primarily resulted from an increase in net revenue, as described above, partially offset by a $9.1 million increase in R&D expense associated with the design and development of neurostimulation devices for treating OSA, and $8.3 million of higher expense primarily associated with the ImThera regulatory-based contingent consideration arrangement resulting from achieving PMA from the FDA for the aura6000 System in March 2026.

Previous wording

R&D expense as a percentage of net revenue was 13.7% and 14.9% for the three and six months ended June 30, 2026, respectively, representing increases of 0.3 and 2.2 percentage points compared to the three and six months ended June 30, 2025, respectively. The increase in the six-month comparative period was primarily due to a $9.7 million increase in costs associated with the design and development of neurostimulation devices for treating OSA, as well as $8.5 million of higher expense from the net unfavorable changes in fair value of the milestone-based contingent consideration arrangement associated with the ImThera acquisition.

Current wording

Cost of sales as a percentage of net revenue was 32.6% and 31.7% for the three and nine months ended September 30, 2026, respectively, representing an increase of 1.0 and a decrease of 0.1 percentage points compared to the three and nine months ended September 30, 2025, respectively. The increase in the three-month comparative period was primarily due to the net changes in fair value of the sales-based contingent consideration arrangement associated with the ImThera acquisition. The decrease in the nine-month comparative period was primarily a result of recognizing $7.7 million in tariff refunds.

Previous wording

SG&A expense as a percentage of net revenue was 40.5% and 40.1% for the three and six months ended June 30, 2026, respectively, representing increases of 1.4 and 0.2 percentage points compared to the three and six months ended June 30, 2025, respectively, primarily driven by increased share-based compensation expense resulting primarily from accelerated recognition of expense for retirement-eligible employees. The six-month comparative period was partially offset by fixed cost leverage.

Current wording

SG&A expense as a percentage of net revenue was 39.4% and 39.8% for the three and nine months ended September 30, 2026, respectively, representing increases of 0.7 and 0.3 percentage points compared to the three and nine months ended September 30, 2025, respectively, primarily driven by increased share-based compensation expense resulting primarily from accelerated recognition of expense for retirement-eligible employees. The nine-month comparative period was partially offset by fixed cost leverage.

Previous wording

Other operating expense as a percentage of net revenue was 3.2% and 1.6% for the three and six months ended June 30, 2026, respectively, representing increases of 3.2 and 1.5 percentage points compared to the three and six months ended June 30, 2025, respectively, primarily due to increases of $11.4 million and $10.7 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.

Current wording

Other operating expense as a percentage of net revenue was 8.7% and 4.1% for the three and nine months ended September 30, 2026, respectively, representing increases of 7.7 and 3.7 percentage points compared to the three and nine months ended September 30, 2025, respectively, primarily due to increases of $30.3 million and $41.0 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.

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. As a result of the decision by the Italian Supreme Court, the Company recorded €333.3 million ($362.1 million) as SNIA environmental liability expense for the six months ended June 30, 2025. For additional information, refer to “Note 6. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

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 €333.3 million ($363.8 million) as SNIA environmental liability expense for the nine months ended September 30, 2025. For additional information, refer to “Note 6. Commitments and Contingencies” in the condensed consolidated financial statements in this Report.

Previous wording

Interest expense decreased to $7.2 million and $15.5 million for the three and six months ended June 30, 2026, respectively, compared to $14.9 million and $30.2 million for the three and six months ended June 30, 2025, respectively, primarily due to repaying the Term Facilities and 2025 Notes. For additional information, refer to “Note 5. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Current wording

Interest expense decreased to $8.0 million and $23.4 million for the three and nine months ended September 30, 2026, respectively, compared to $10.9 million and $41.1 million for the three and nine months ended September 30, 2025, respectively, primarily due to repaying the Term Facilities and 2025 Notes. For additional information, refer to “Note 5. Financing Arrangements” in the condensed consolidated financial statements in this Report.

Previous wording

Foreign exchange and other income/(expense) was expense of $23.8 million and $29.5 million for the three and six months ended June 30, 2026, respectively, compared to expense of $4.3 million and income of $7.2 million for the three and six months ended June 30, 2025, respectively. For additional information, refer to “Note 12. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Current wording

Foreign exchange and other income/(expense) was income of $26.3 million and expense of $3.2 million for the three and nine months ended September 30, 2026, respectively, compared to expense of $7.5 million and $0.3 million for the three and nine months ended September 30, 2025, respectively. For additional information, refer to “Note 12. Supplemental Financial Information” in the condensed consolidated financial statements in this Report.

Previous wording

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.

Current wording

LivaNova’s effective income tax rate for the three and nine months ended September 30, 2026 was 26.5% and (79.2)%, respectively, compared to 21.0% and (10.0)% for the three and nine months ended September 30, 2025, respectively. The changes in the effective tax rates for the three and nine months ended September 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.

Previous wording

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.

Current wording

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 nine months ended September 30, 2026 of €81.8 million ($95.0 million) and an estimated deferred tax asset of €80.0 million ($92.8 million), as of September 30, 2026. LivaNova determined that the Italian deferred tax assets are more likely than not realizable and, accordingly, did not record a valuation allowance.

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, future payments of operating leases, 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 from the normal course of business, including inventory supply contracts, the future settlement of derivative instruments, and future payments of operating leases, 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, 2026 decreased by $5.1 million, compared to the same prior year period, primarily due to increases in payments to employees and vendors, as well as $10.0 million from the June 2026 payment satisfying the ImThera regulatory-based contingent consideration liability, partially offset by higher customer collections resulting from an increase in sales and a decrease in cash paid for interest.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2026 decreased by $16.5 million, compared to the same prior year period, primarily due to higher payments to vendors and suppliers, including increased inventory purchases to support anticipated demand and supply continuity, as well as higher payments to employees, largely offset by customer collections. The decrease also reflects $10.0 million from the June 2026 ImThera regulatory-based milestone payment, partially offset by lower cash interest payments.

Previous wording

Cash used in investing activities for the six months ended June 30, 2026 increased $26.9 million, compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $19.9 million, principally related to purchases and development of internal-use software, as well as a decrease in proceeds from investments of $6.5 million.

Current wording

Cash used in investing activities for the nine months ended September 30, 2026 increased $27.0 million, compared to the same prior year period, primarily due to an increase in purchases of property, plant, and equipment of $27.8 million, principally related to purchases and development of internal-use software and manufacturing capacity expansion.

Previous wording

Cash used in financing activities for the six months ended June 30, 2026 decreased $62.7 million, compared to the same prior year period, primarily due to a decrease of $114.3 million in repayments of long-term debt obligations, partially offset by $50.4 million from the June 2026 payment satisfying the ImThera regulatory-based contingent consideration liability.

Current wording

Cash used in financing activities for the nine months ended September 30, 2026 decreased $69.2 million, compared to the same prior year period, primarily due to a decrease of $120.9 million in repayments of long-term debt obligations, partially offset by $50.4 million from the June 2026 payment satisfying the ImThera regulatory-based contingent consideration liability.