LivaNova (LIVN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $319 million, up 10% year-over-year (8.4%–9.6% constant-currency), with adjusted diluted EPS of $0.93 and GAAP diluted EPS of $0.30, driven by double-digit Cardiopulmonary and high single-digit Neuromodulation growth.

• Raised full-year 2024 revenue and adjusted EPS guidance, reflecting strong performance in Cardiopulmonary and Epilepsy/Neuromodulation segments and operational leverage.

• Strategic focus on maximizing core businesses, advancing clinical programs in depression and sleep apnea, and driving innovation, while reducing investment in difficult-to-treat depression until CMS coverage is determined.

• Major restructuring underway, including ACS segment wind-down and leadership changes in Cardiopulmonary.

• Robust liquidity maintained with $345 million in 2029 notes issued and $230 million of 2025 notes repurchased.

Financial highlights

• Q2 2024 revenue was $318.6–$319 million, up 10% year-over-year (9.6% constant-currency); Cardiopulmonary revenue grew 12.7%–14.5%, Neuromodulation up 7.3%–7.8%.

• Adjusted gross margin was 69%–69.3% (down from 71.6%–72% in Q2 2023) due to Italian Payback provision; GAAP gross margin was 68.7%.

• Adjusted operating income rose to $66.9–$67 million (21% margin), up from $49–$49.5 million (17% margin) in Q2 2023; GAAP operating income was $40.2 million.

• Adjusted diluted EPS was $0.93 (up from $0.78 in Q2 2023); GAAP EPS was $0.30.

• Adjusted free cash flow for Q2 2024 was $42–$42.1 million, with a full-year target of $95–$115 million.

Outlook and guidance

• Full-year 2024 revenue growth expected at 7%–8% constant-currency (9%–10% excluding ACS exit), with a 1% FX headwind.

• Adjusted diluted EPS guidance raised to $3.10–$3.20 for 2024.

• Adjusted free cash flow expected at $95–$115 million; capital spending forecast at ~$60 million.

• DTD investment to be reduced in 2025, delivering at least $20 million pre-tax savings ($0.30 EPS accretion).

• ACS wind-down and restructuring to be substantially complete by year-end 2024, with total pre-tax charges of $15–$20 million.