LivaNova (LIVN) Q4 2023 earnings summary

Executive summary

• FY2023 revenue reached $1,153.5M, up 12.9% reported and 13.3% constant currency; adjusted EPS rose 17.1% to $2.80, and adjusted FCF was $96.3M.

• FY2024 guidance: revenue growth of 4–5% constant currency, or 6–7% excluding ACS; adjusted diluted EPS of $2.95–$3.05.

Financial highlights

• Q4 revenue was $310.1M, up 12.8% reported and 11.9% constant currency; adjusted diluted EPS was $0.87 versus $0.81.

• Q4 adjusted gross margin was 67.7% versus 68.9%, and adjusted operating margin was 15.5% versus 17.0%.

• FY2023 GAAP diluted EPS was $0.32 versus a $1.61 loss; adjusted net income was $152.0M versus $129.2M.

• FY2023 adjusted operating income was $169.3M versus $145.1M; adjusted operating margin was 14.7% versus 14.2%.

Outlook and guidance

• FY2024 adjusted FCF guidance is $95M–$115M; FX impact is expected to be negligible at current rates.

• Excluding ACS, expected revenue growth is 6–7% for both Cardiopulmonary and Epilepsy; the ACS wind down is expected to be substantially complete by year-end 2024.

• Adjusted operating income growth of 25% and margin expansion of ~300bps are expected; EPS growth of 7% is affected by a ~$0.45 impact from a 21% effective tax rate.

• Adjusted FCF is expected to improve 9% despite higher capital spending and ACS wind-down costs; 2024 capital spending is planned at $60M.

• Pipeline milestones include anticipated June 2024 12-month UP patient data for DTD and completion of OSPREY enrollment for OSA.