LivaNova

2021 
Annual Report

LivaNova / 2021 Annual Report

Front cover: Bennett, a patient treated with VNS Therapy, accompanied by his mother

Dear Shareholder:

We are pleased to report that in 
2021, LivaNova delivered on its 
guidance metrics and was able 
to improve cash flow generation 
against a continued backdrop of 
COVID-19-related headwinds. 
We focused on what we could 
control—managing costs, 
strengthening the balance sheet 
and adapting our operations to 
continue delivering life-saving 
products and therapies. During 
the year, the management team 
undertook additional actions to 
shape our portfolio and realign 
the organization to ensure the 
Company remains well positioned 
to serve our patients and drive 
shareholder value. 

In 2021, we had three areas of focus:

• Executing on our core growth drivers;

• Delivering on our strategic pipeline

initiatives; and

• Improving profitability and

cash generation.

Execution in these three areas will ensure 
that we are well positioned to maximize 
the value of our diverse portfolio and 
strengthen top- and bottom-line results 
in the years to come.

Core Growth 

Our core businesses include Epilepsy, 
which is currently the primary driver of 
the Neuromodulation segment, as well as 
our Cardiopulmonary and ACS segments. 
The foundation of these core businesses 
supports investments into our three 
Strategic Portfolio Initiatives (SPIs): Difficult 
to Treat Depression (DTD), Heart Failure and 
Obstructive Sleep Apnea (OSA). 

Epilepsy. Our progress in U.S. Epilepsy is 
being led by our go-to-market initiative, 
which currently encompasses 12 dedicated 
Comprehensive Epilepsy Center (CEC) 
teams that are supporting our VNS TherapyTM 
System as the standard of care. These 
multi-disciplinary teams are focused on 
partnering with CECs to deliver improved 
outcomes by bringing expertise in the areas 
of clinical research, education and training, 
and community outreach. These teams 
are additive to our existing sales structure 
and complement their work in the field. 
Our dedicated go-to-market teams cover 
25% of CECs in the U.S. and we plan on 
adding additional teams this year. In 2022, 
we forecast a continued rebound in new 
implants in the U.S. as patients and their 
caregivers return to in-person physician 
visits and hospital capacity improves. 
We also expect another solid year of 
replacement implants related to the 
backlog created due to COVID-19.

Cardiopulmonary. Our Cardiopulmonary 
portfolio is expected to deliver lower, but 
durable organic growth with its long-standing 
legacy of cardiac surgery equipment and 
much-anticipated next-generation 
heart-lung machine (HLM), Essenz™, 
launching this year. COVID-19’s impact 
on non-emergent cardiac procedures 
challenged the Cardiopulmonary business in 
both 2020 and 2021. We expect this business 
to improve throughout the year as cardiac 
surgery procedures return to pre-pandemic 
levels and Essenz is released.  

ACS. ACS represents a subset of 
mechanical circulatory support options 
that go beyond the current standards of 
care. The foundation of this business is  
the LifeSPARC™ platform, which includes 
our next-generation pump and controller 
system that launched in 2020. LifeSPARC 
represents a significant technological 
upgrade with improved ease of use, more 
power, better flow rate and more versatility. 
All these features are intended to treat more 
patients in more places. During 2021, the  
ACS business delivered double-digit growth 
for the fourth consecutive year, growing 

25+

years of
years of
experience with 
experience with 
VNS Therapy
VNS Therapy

17%

organic sales 
organic sales 
growth11
growth

45+

years of proven 
years of proven 
Cardiopulmonary  
Cardiopulmonary  
innovation
innovation

1Worldwide net sales growth excludes the Heart Valves business, which was divested effective June 1, 2021. Percent change performance is shown on a year-over-year 
constant-currency basis, which is a non-GAAP measure. Constant-currency eliminates the effects of foreign currency fluctuations. Additionally, other non-GAAP 
measures referenced in this document include adjusted free cash flow, adjusted operating margin and adjusted R&D as a percentage of net sales. For reconciliations 
of certain non-GAAP measures, see the tables at the back of this document.

more than 30%. This growth was driven 
by continued adoption and utilization of 
LifeSPARC and higher usage rates to treat 
COVID-19 patients. ACS faces tougher 
comparisons as COVID-19 cases decline, 
which should be offset by higher overall 
utilization as non-COVID procedures and 
sales force expansion occurs. 

Pipeline Execution

Our SPIs include three, major neurological 
indications that target medical conditions 
with signifi cant unmet needs, specifi cally 
DTD, Heart Failure and OSA. These 
SPIs represent a signifi cant part of the 
Company’s future with each one of these 
opportunities offering the potential to be 
transformative to our business. The SPIs 
for DTD and Heart Failure leverage our VNS 
Therapy platform. This is meaningful since 
the safety and effi cacy for VNS Therapy is 
well understood with over 125,000 patients 
implanted to date.

Diffi cult-to-Treat Depression (DTD).

Depression continues to be an important 
health concern globally and an area 
in need of more effective treatments. 
Major Depressive Disorder (MDD) is the 
leading cause of disability, morbidity and 
mortality worldwide. Of patients with 
MDD, approximately 15-20% have DTD, 
meaning they have not been responsive 
to multiple antidepressant treatments. 
For DTD, the U.S. Centers for Medicare & 
Medicaid reimbursement study, RECOVER, 
continues to advance. This study is 
designed to evaluate VNS Therapy, which 
is U.S. Food and Drug Administration (FDA) 
approved, for unipolar and bipolar DTD 
patients. We recently announced that 
the 250th unipolar depression patient 
was implanted in the study, which allows 
for the initial interim analyses to be 
conducted for that cohort. We believe a 
series of interim analyses is likely needed 
as we collect follow-up data from these 
patients over time during which we will 

continue to recruit into the randomized 
controlled trial. We anticipate transitioning 
to the prospective longitudinal study, 
or registry, for the unipolar cohort in late 
2022 or early 2023.

Heart Failure. We are also applying our 
VNS Therapy technology to treat heart 
failure, a condition that affects more than 
25 million people worldwide. We combined 
our learnings from pre-clinical research, 
initial pilot clinical research and efforts 
of others in this space to create a clinical 
evaluation plan for the VITARIATM System. 
Since the inception of our ANTHEM-
HFrEF pivotal trial, patient enrollment has 
exceeded trial goals and most recently 
achieved two key milestones: enrolling 
the 400th patient and completing the 
nine-month follow-up visit for the 300th 
patient. These milestone achievements 
allow for the fi rst interim analysis to be 
conducted by independent statisticians. 
As part of the interim analyses, 
independent statisticians will review fi ve 
pre-specifi ed conditions, including safety, 
a trend toward the primary endpoint 
and the three pre-specifi ed functional 
endpoints. Once all pre-specifi ed 
conditions have been met, we may submit 
the functional dataset to the FDA. If we 
do not meet all criteria, the independent 
statisticians will take another look at the 
data after the 500th patient is enrolled.

Obstructive Sleep Apnea (OSA).

Since acquiring ImThera and its 
hypoglossal nerve stimulation (HGNS) 
device for the treatment of OSA, we 
have fully remediated and enhanced the 
aura6000TM System. We also have analyzed 
the results of the THN3 pivotal study and 
applied these learnings to the design of 
our OSPREY confi rmatory study. In 2021, we 
obtained FDA approval for the OSPREY trial 
with the fi rst patient implanted in February 
2022. The OSPREY study will be the fi rst 
randomized controlled trial to confi rm 
effi cacy of HGNS for OSA.

LivaNova / 2021 Annual Report

Strategic Priorities

Core 
Growth

Quality
in everything 
we do

Pipeline 
Execution

Operational 
Excellence

Core Growth

U.S. Epilepsy
U.S. ACS

Pipeline Execution

Depression, Heart Failure,
Obstructive Sleep Apnea
and Next-Generation HLM

Operational Excellence

Margin Expansion
Cash Generation

LivaNova / 2021 Annual Report

While the world has 
entered 2022 with 
continued uncertainty, 
we remain committed 
to delivering on our 
three areas of focus, 
or our “Strategic 
Triangle,” and the full 
value of our diverse 
portfolio. In particular, 
2022 is shaping up 
to be a pivotal year 
for some of our 
major clinical and 
product development 
initiatives with the 
commercialization 
of Essenz, and data 
readouts for RECOVER 
and ANTHEM-HFrEF 
all expected to occur 
before year end.

Operational Excellence-
Improving Profi tability 
and Cash Generation

Our commitment to operational 
excellence is captured in our LivaNova 
Business System (LBS), our guide to 
excellence in how we operate and the 
framework by which we continuously 
improve our business. This includes 
expanding LBS across the Company to 
enhance operational excellence. 

In 2021, we employed our LBS framework 
to drive continued focus on increasing 
cash generation and operating 
profi tability, rightsizing our cost structure, 
improving margins and investing in our 
core growth drivers and SPIs. In 2021, we 
generated $84 million in adjusted free 
cash fl ow as compared to $24 million 
in the prior year, improved adjusted 
operating margin by 500 basis points and 
maintained adjusted R&D of approximately 
16% of sales.

During 2021, we also strengthened our 
balance sheet and fi nancial position by 
completing an equity offering, raising $323 
million of net proceeds, allowing the early 
retirement of a $450 million term loan, as 
well as by executing a $125 million secured 
revolving credit facility that is available for 
general corporate purposes. Additionally, 
during 2021, we completed the sale of 
our heart valve business, enabling us 
to sharpen our focus on our primary 
Cardiopulmonary, Neuromodulation and 
ACS segments.  

Environmental, Social and 
Governance (ESG) 

We recognize the growing importance
of ESG. As a global medical technology
company, we are committed to fostering a

sustainable business that supports the 
well-being of our patients, employees and
communities. To help achieve this, we
integrate ESG objectives into our decision
making to deliver long-term value to our
stakeholders. We continued to evolve
our ESG initiative by establishing a
cross-functional ESG Task Force and
including a dedicated item on our Board
Nominating and Corporate Governance
Committee agenda for ESG matters.

During 2021, the ESG Task Force organized 
a framework around various LivaNova 
ESG efforts, culminating in the creation 
of a Sustainability section on the Company
website. The Task Force continues to
implement actionable strategies while
ensuring alignment with our 2022 
strategic priorities. 

Outlook

While the world has entered 2022 with
continued uncertainty, we remain
committed to delivering on our three 
areas of focus, or our “Strategic Triangle,” 
and the full value of our diverse portfolio. 
In particular, 2022 is shaping up to be a 
pivotal year for some of our major clinical 
and product development initiatives with 
the commercialization of Essenz, and data 
readouts for RECOVER and ANTHEM-HFrEF 
all expected to occur before year end.

We believe that we are well positioned
to execute on our 2022 goals and look
forward to providing updates on our
progress throughout the year. On behalf of
LivaNova, our Board of Directors and
approximately 3,000 colleagues around 
the world who are all united by our 
mission, we would like to express our 
sincere appreciation for your investment, 
continued trust and support in our journey 
of life saving and life-changing innovation.

-

William Kozy
Chair of the Board of Directors

Damien McDonald
Chief Executive Offi cer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

(Mark One)
☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021

or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______

Commission file number: 001-37599

LivaNova PLC
(Exact name of registrant as specified in its charter)

England and Wales ................... 98-1268150
(State or other jurisdiction of .......... (I.R.S. Employer
incorporation or organization) ........ Identification No.)

20 Eastbourne Terrace, London, United Kingdom, W2 6LG
(Address of principal executive offices) ....................... (Zip Code)

Registrant’s telephone number, including area code: (44) (0) 203 325-0660

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares - £1.00 par value per share

LIVN

NASDAQ Global Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☒     No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ☐     No ☒

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.  Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such 
files).  Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” 
in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

Emerging growth company

☒

☐
☐

Accelerated filer

Smaller reporting company

☐

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or 

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control 
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its 
audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐     No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $4.1 billion (based on the 
closing price of these shares on the NASDAQ Global Market on June 30, 2021, the last business day of the most recently completed second fiscal quarter). For 
purposes of this calculation, ordinary shares held by persons who hold more than 5% of the outstanding ordinary shares and shares held by executive officers 
and directors of the registrant have been excluded as such persons may be deemed to be affiliates.

As of February 24, 2022, 53,263,563 ordinary shares were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement of LivaNova PLC for the 2021 Annual General Meeting of Shareholders, which will be filed within 120 days of 

December 31, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K.

1

LIVANOVA PLC

TABLE OF CONTENTS
PART I

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of 
Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Item 15.
Item 16.

Exhibits, Financial Statement Schedules
Form 10-K Summary

PART IV

PAGE NO.
4
17
30
30
30
30

31

31
32
50
50
50
50
51
51

52
52
52

52
52

53
59

 In this Annual Report on Form 10-K, “LivaNova,” “the Company,” “we,” “us” and “our” refer to LivaNova PLC and its 
consolidated subsidiaries.

This report may contain references to our proprietary intellectual property, including among others:

•

•

•

•

Trademarks for our VNS therapy systems, the VNS Therapy™ System, the VITARIA™ System and our proprietary
pulse generator products: Model 102 (Pulse™), Model 102R (Pulse Duo™), Model 103 (Demipulse™), Model 104
(Demipulse Duo™), Model 106 (AspireSR™), Model 1000 (SenTiva™), Model 1000-D (SenTiva™ Duo), Model 7103
(VITARIA™ and TitrationAssist™) and Model 8103 (Symmetry™).
Trademarks for our Cardiopulmonary product systems: S5™, S3™, S5 Pro™, B-Capta™, Inspire™, Heartlink™,
XTRA™, 3T Heater-Cooler™, Connect™, Revolution™ and Essenz™.
Trademarks for our advanced circulatory support systems: TandemLife™, TandemHeart™, TandemLung™,
ProtekDuo™ and LifeSPARC™.
Trademarks for our obstructive sleep apnea system: ImThera™ and aura6000™.

These trademarks and trade names are the property of LivaNova or the property of our consolidated subsidiaries and are 

protected under applicable intellectual property laws. Solely for convenience, our trademarks and tradenames referred to in this 
Annual Report on Form 10-K may appear without the ™ symbol, but such references are not intended to indicate in any way 
that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames.

________________________________________

2

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K, other than statements of historical or current fact, are “forward-
looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities 
Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the 
“Exchange Act”). These statements include, but are not limited, to LivaNova’s plans, objectives, strategies, financial 
performance and outlook, trends, prospects or future events and involve known and unknown risks that are difficult to predict. 
As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or 
implied by these forward-looking statements. Generally, you can identify forward-looking statements by the use of words such 
as “may,” “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” “believe,” “will,” “should,” “expect,” “anticipate,” 
“estimate,” “plan,” “intend,” “forecast,” “foresee” or variations of these terms and similar expressions, or the negative of these 
terms or similar expressions. Such forward-looking statements are necessarily based on estimates and assumptions that, while 
considered reasonable by LivaNova and its management based on their knowledge and understanding of the business and 
industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place 
undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of 
which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements 
contained in this Annual Report on Form 10-K. Such risks, uncertainties and other important factors include, but are not limited 
to: the highly competitive nature of the global medical device industry; risks related to the reduction or interruption in our 
supply of components and raw materials; challenges relating to changes in and compliance with governmental laws and 
regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration 
(“FDA”) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the 
ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing 
to satisfy the demand for our products; the outcome of government investigations; the impact of healthcare reform measures; 
reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; 
dependence on new product development, technological advances and innovation; control of costs and expenses; the ability to 
obtain and maintain adequate intellectual property protection; breaches or failures of our information technology systems or 
products, including by cyberattack, unauthorized access or theft; changes in applicable tax rates, laws and positions taken by 
taxing authorities; examinations by tax authorities; product liability, intellectual property, commercial and environmental 
litigation losses; compliance with evolving environmental laws and obligations; changes in general industry and market 
conditions, including domestic and international growth rates; changes in general domestic and international economic 
conditions, including interest rate and currency exchange rate fluctuations; COVID-19; and other unknown or unpredictable 
factors that could harm our financial performance. 

See also the section titled “Risk Factors” (refer to Part I, Item 1A of this report) for further discussion of certain risks and 
uncertainties that could cause actual results and events to differ materially from the forward-looking statements. All forward-
looking statements in this Annual Report on Form 10-K are expressly qualified in their entirety by the cautionary statements set 
forth above. Forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we expressly 
disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, 
future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This cautionary note is applicable to all forward-looking 
statements contained in this report.

The following discussion and analysis should be read in conjunction with and are qualified in their entirety by reference to 
the discussions included in “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition 
and Results of Operations” and elsewhere in this Annual Report on Form 10-K.

3

Item 1. Business

Description of the Business and Background 

PART I

LivaNova PLC, headquartered in London, (collectively with its subsidiaries, the “Company,” “LivaNova,” “we” or “our”), is 
a global medical device company focused on the development and delivery of important products and therapies for the benefit 
of patients, healthcare professionals and healthcare systems throughout the world. We design, develop, manufacture and sell 
innovative products and therapies that are consistent with our mission to provide hope to patients through innovative medical 
technologies, delivering life-changing improvements for both the Head and Heart. 

We were organized under the laws of England and Wales on February 20, 2015 for the purpose of facilitating the business 
combination of Cyberonics, Inc., a Delaware corporation, and Sorin S.p.A. (“Sorin”), a joint stock company organized under 
the laws of Italy. The business combination became effective in October 2015. LivaNova’s ordinary shares are listed for trading 
on the NASDAQ Global Market under the symbol “LIVN.” 

Business Overview

LivaNova is comprised of three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory 
Support, corresponding to our primary business units. Other includes the results of our Heart Valves business, which was 
disposed of on June 1, 2021, and corporate shared service expenses for finance, legal, human resources, information technology 
and corporate business development. 

For further information regarding our reportable segments, historical financial information and our methodology for the 
presentation of financial results, please refer to “Item 15. Exhibits, Financial Statement Schedules” of this Annual Report on 
Form 10-K.

Cardiopulmonary

Our Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including 
oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. 

During conventional coronary artery bypass graft procedures and heart valve surgery, the patient’s heart is temporarily 
stopped, or arrested. The patient is placed on an extracorporeal circulatory support system that temporarily functions as the 
patient’s heart and lungs and provides blood flow to the body. Our products include systems to enable cardiopulmonary bypass, 
including heart-lung machines, autotransfusion systems, oxygenators, perfusion tubing sets, cannulae and accessories, as well 
as related equipment and disposables for autotransfusion and autologous blood washing for neonatal, pediatric and adult 
patients. Our primary cardiopulmonary products include: 

Heart-lung machines. The heart-lung machine product group includes heart-lung machines, heater coolers, related cardiac 
surgery equipment and maintenance services. 

Oxygenators and perfusion tubing systems. The oxygenators product group, which includes oxygenators and other 
disposable devices for extracorporeal circulation, includes the Inspire systems. The Inspire range of product is comprised of 
12 models and provides perfusionists with a customizable approach for the benefit of patients. 

Autotransfusion systems. One of the key elements for a complete blood management strategy is autologous blood 
transfusion. The autotransfusion product group facilitates the collection, processing and reinfusion of the patient’s own 
blood lost at the surgical site during the perioperative period. 

Cannulae. Our cannulae product family is used to connect the extracorporeal circulation to the heart of the patient during 
cardiac surgery.

Connect. Connect is our perfusion charting system. Focused on real time and retrospective calculations and trending tools, 
Connect assists perfusionists with data management during and after cardiopulmonary bypass. 

Neuromodulation 

Our Neuromodulation segment designs, develops and markets devices that deliver neuromodulation therapy to treat drug-
resistant epilepsy (“DRE”) and difficult-to-treat depression (“DTD”). It encompasses the development and management of 
clinical testing of our aura6000 System for treating obstructive sleep apnea (“OSA”), a device that stimulates the hypoglossal 
nerve, which in turn, engages certain muscles in the tongue in order to open the airway while a patient is sleeping, as well as 
our VITARIA System for treating heart failure by stimulating the right vagus nerve.

4

Our principal Neuromodulation product, the LivaNova Vagus Nerve Stimulation Therapy (“VNS Therapy”) System, is an 
implantable device authorized for the treatment of DRE and DTD. The VNS Therapy System consists of an implantable pulse 
generator and connective lead that stimulate the vagus nerve; surgical equipment to assist with the implant procedure; 
equipment and instruction manuals enabling a treating physician to set parameters for a patient’s pulse generator; and for 
epilepsy, magnets to manually suspend or induce nerve stimulation. The pulse generator and lead are surgically implanted in a 
subcutaneous pocket in the upper left chest area, generally during an out-patient procedure. The lead, which does not need to be 
removed to replace a generator with a depleted battery, is connected to the pulse generator and tunneled under the skin to the 
vagus nerve in the lower left side of the patient’s neck. Our VITARIA System for treating heart failure includes elements 
similar to the VNS Therapy System, i.e., the pulse generator, lead, programming computer and wand, though the pulse 
generator and lead are surgically implanted in a subcutaneous pocket in the upper right chest area.

Epilepsy

There are several broad types of treatment available to patients with epilepsy: multiple anti-seizure medications (“ASMs”); 
various forms of the ketogenic diet; vagus nerve stimulation (“VNS”); resective brain surgery and intracranial neurostimulation. 
ASMs typically serve as a first-line treatment and are prescribed for virtually all patients diagnosed with epilepsy. After two 
anti-seizure medications fail to deliver seizure control, the epilepsy is characterized as drug-resistant, at which point, adjunctive 
non-drug options are considered, including ketogenic diet, resective surgery, VNS therapy and other Neuromodulation 
therapies. Despite the regulatory approval and commercialization of more than 12 new seizure medications, the percentage of 
epilepsy patients diagnosed as drug-resistant has not improved over the past 30 years. 

In 1997, our VNS Therapy System was the first medical device treatment approved by the FDA for drug-resistant epilepsy, 
and today is the only neuromodulation device approved for use in DRE patients as young as four years of age with partial onset 
(aka focal) seizures. Other worldwide regulatory bodies have also approved the VNS Therapy System for treating patients with 
DRE, many without age or seizure-type restrictions. Globally, VNS Therapy is the most widely reimbursed neuromodulation 
therapy available. In 2022, the U.S. Centers for Medicare and Medicaid Services (“CMS”) expanded reimbursement for VNS 
Therapy use in the treatment of Lennox Gastaut Syndrome (“LGS”) and Dravet Syndrome.

We distribute multiple VNS Therapy Systems for the treatment of epilepsy, including Model 103 (Demipulse), Model 104 

(Demipulse Duo), Model 106 (AspireSR), Model 1000 (SenTiva) and Model 1000D (SenTiva Duo) pulse generators. The 
newest technology, SenTiva, which launched in 2017, now accounts for over 65% of our product mix. Our AspireSR and 
SenTiva generators provide the traditional benefits of VNS Therapy but add an additional stimulation capability: closed loop 
stimulation (AutoStim™) which responds to detection of changes in heart rate potentially indicative of a seizure. The SenTiva 
generator is the smallest and lightest VNS device capable of delivering responsive therapy for epilepsy and includes the 
additional flexibility of our Scheduled Programming and Day & Night Programming capabilities. In 2017, VNS Therapy 
devices were FDA approved for expanded magnetic resonance imaging (“MRI”) access while similar CE Mark approval 
followed shortly thereafter. Currently, SenTiva, AspireHC and AspireSR models of VNS Therapy technology provide for this 
expanded MRI access. 

Depression

US

In July 2005, the FDA approved the VNS Therapy System for the adjunctive treatment of chronic or recurrent depression for 

patients 18 years or older who are experiencing a major depressive episode and have not had an adequate response to four or 
more antidepressant treatments. In May 2007, the United States (“U.S.”) Centers for Medicare and Medicaid Services (“CMS”) 
issued a national non-coverage determination (“NCD”) within the U.S. with respect to reimbursement of the VNS Therapy 
System for patients with DTD, significantly limiting access to this therapeutic option for most patients. 

In March 2017, the American Journal of Psychiatry published the results of the longest and largest naturalistic study (the 
“D23 study”) on treatments for patients experiencing chronic and severe DTD. The findings showed that the addition of the 
VNS Therapy System to traditional treatment is effective in significantly reducing symptoms of depression and well tolerated 
compared with traditional treatment alone. Following publication of the D23 study, we requested CMS to reconsider its 
previous NCD, and in May 2018, CMS published a tracking sheet to reconsider its NCD.

In February 2019, CMS produced a final decision providing coverage for Medicare beneficiaries through Coverage with 
Evidence Development (“CED”) when offered in a CMS-approved, double-blind, randomized, placebo-controlled trial with a 
follow-up duration of at least one year, as well as coverage of VNS Therapy device replacement. The CED also includes the 
possibility to extend the study to a prospective longitudinal registry.

5

In September 2019, CMS accepted the protocol for our RECOVER clinical study and the first patient was enrolled. 

RECOVER will include up to 500 unipolar and up to 500 bipolar patients at a maximum of 100 sites in the United States in the 
randomized part of the trial and up to an additional 5,800 patients in an open label registry.

In February 2020, we announced a research collaboration with Verily, a subsidiary of Alphabet Inc., to capture clinical 
biomarkers of depression within our RECOVER clinical study. Using technology and analytics by way of the Verily Study 
Watch and related Verily mobile phone application, LivaNova and Verily aim to gather quantitative data to further understand 
depressive episodes and a patient’s response to treatment. These complementary approaches are expected to help investigators 
better understand the impact of depression and its treatment on study participants’ lives in a more objective and multi-
dimensional manner. In April 2021, LivaNova and Verily announced that the first patient had been enrolled in their 
collaborative UNCOVER study, a subset of the RECOVER study. 

 Outside the U.S.

In January 2018, we announced the launch and enrollment of the first patient in our RESTORE-LIFE study, which evaluates 

the use of our VNS Therapy System in patients who have DTD and failed to achieve an adequate response to standard 
psychiatric management. 

In March 2020, our VNS Therapy System, Symmetry received CE mark approval for DTD.

Obstructive Sleep Apnea

In January 2018, we acquired full ownership of ImThera, a privately held, emerging-growth company developing an 

implantable neurostimulation device system for the treatment of obstructive sleep apnea. The device stimulates the hypoglossal 
nerve, which in turn, engages certain muscles in the tongue in order to open the airway while a patient is sleeping. We have a 
commercial presence in the European market. 

In June 2021, LivaNova received approval from the FDA to proceed with its investigational device exemption clinical study, 

“Treating Obstructive Sleep Apnea using Targeted Hypoglossal Neurostimulation (OSPREY).” The OSPREY study seeks to 
confirm the safety and effectiveness of the aura6000 System, the LivaNova implantable hypoglossal neurostimulation device 
intended to treat adult patients with moderate to severe obstructive sleep apnea. 

Heart Failure

We are focused on the development and clinical testing of the VITARIA System for treating heart failure through vagus 

nerve stimulation. The VITARIA System provides a specific method of VNS called autonomic regulation therapy (“ART”), and 
it includes elements similar to the VNS Therapy System: pulse generator, lead, programming computer and wand. In 2012, we 
initiated a pilot study, ANTHEM-HF, outside the U.S., and the published results support the safety and efficacy of ART 
delivered to patients with advanced heart failure expressing symptoms despite guideline-directed medical therapy. The study 
was extended to continue follow-up of patients through 42 months, the results for which have been published in a peer-
reviewed cardiology journal. During 2014, we initiated a second pilot study outside the U.S., ANTHEM-HFpEF, to study ART 
in patients experiencing symptomatic heart failure with preserved ejection fraction. The VITARIA System is not approved in 
the U.S. though it has been designated as a breakthrough technology by the FDA. The VITARIA System received CE Mark 
approval in 2015. 

In September 2018, we announced the first successful implantation of the VITARIA System in a patient randomized in the 

ANTHEM-HFrEF Pivotal Study, an international, multi-center, randomized trial (adaptive sample size) to evaluate the 
VITARIA System (FDA’s Breakthrough Technology designation) for the treatment of advanced heart failure. In December 
2021, we enrolled the 400th patient in the trial, and in January 2022, the 300th patient completed the nine-month follow-up visit. 
Given these milestone achievements, the first interim analysis is being conducted by independent statisticians. Enrollment and 
screening continue despite ongoing COVID-19 headwinds, though we are monitoring relevant conditions at medical centers 
participating in the trial.

Advanced Circulatory Support 

Our Advanced Circulatory Support segment is engaged in the development, production and sale of leading-edge temporary 
life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life 
support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae.

6

Advanced Circulatory Support products simplify temporary extracorporeal cardiopulmonary life support solutions for 

critically ill patients. Built around a common compact console and pump, LifeSPARC provides temporary support for emergent 
rescue patients in a variety of settings. Designed for ease of use, the system offers power and versatility for multi-disciplinary 
programs to support more patients. The system is accompanied by four specialized and ready-to-deploy kits, each designed to 
support diverse cannulation strategies.

In July 2019, the FDA approved our LifeSPARC system, a new generation of the Advanced Circulatory Support pump and 
controller, and in the fourth quarter of 2019, we began a limited commercial release in the U.S., followed by a full commercial 
launch in the second half of 2020.

Research and Development (“R&D”)

The markets in which we participate are subject to rapid technological advances. Product improvement, software 

advancements and innovation are necessary to maintain market leadership. We direct our R&D efforts toward maintaining or 
achieving technological leadership in each of the markets we serve to help ensure that patients using our devices and therapies 
receive the most advanced and effective treatment possible. We remain committed to developing technological enhancements 
and new uses for existing products and less invasive and new technologies for new and emerging markets to address unmet 
patient needs. We initiate and participate in many clinical trials each year as the demand for clinical and economic evidence 
remains high. We also expect our development activities to help reduce patient care costs and the length of hospital stays in the 
future. 

We expect to continue to identify innovative technologies and continually assess the ability of our R&D programs to deliver 

economic value to the customer. Our current R&D expenses consist of product design and development efforts, including in 
relation to software and technology, clinical study programs and regulatory activities, which are essential to our strategic 
portfolio initiatives. 

Patents and Licenses 

We rely on a combination of patents, trademarks, copyrights, trade secrets and non-disclosure and non-competition 

agreements to protect our intellectual property. We generally file patent applications in the U.S. and countries where patent 
protection for our technology is appropriate and available. As of December 31, 2021, we held more than 750 issued patents 
worldwide, with approximately 230 pending patent applications that cover various aspects of our technology. Patents typically 
have a 20-year term from the application filing date. In addition, we hold exclusive and non-exclusive licenses to a variety of 
third-party technologies covered by patents and pending patent applications. There can be no assurance that pending patent 
applications will result in the issuance of patents, that patents issued to or licensed by us will not be challenged or circumvented 
by competitors, or that these patents will be found to be valid or sufficiently broad to protect our technology or to provide us 
with a competitive advantage. We have also obtained certain trademarks and trade names for our products and maintain certain 
details about our processes, products and strategies as trade secrets. In the aggregate, we consider these intellectual property 
assets to be of material importance to our business segments and operations. We regularly review third-party patents and patent 
applications in an effort to protect our intellectual property and avoid disputes over proprietary rights. 

We rely on non-disclosure and non-competition agreements with employees, consultants and other parties to protect, in part, 

trade secrets and other proprietary technology. There can be no assurance that these agreements will not be breached, that we 
will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or 
that third parties will not otherwise gain access to our trade secrets and proprietary knowledge.

For additional information, please refer to “Item 1A. Risk Factors” of this Annual Report on Form 10-K, under the section 

entitled “We are substantially dependent on patent and other proprietary rights and failing to protect such rights or to be 
successful in litigation related to our rights or the rights of others may result in our payment of significant monetary damages 
and/or royalty payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our 
patent and other proprietary rights against others.”

Markets and Distribution Methods

The three largest markets for our medical devices are the U.S., Europe and Japan, though emerging markets are an area of 
increasing focus and opportunity for us. We sell most of our medical devices through direct sales representatives in the U.S. and 
a combination of direct sales representatives and independent distributors in markets outside the U.S.

7

Our marketing and sales strategy is focused on rapid, cost-effective delivery of high-quality products to a diverse group of 
customers worldwide, including perfusionists, neurologists, neurosurgeons and other physicians, hospitals and other medical 
institutions and healthcare providers. To achieve this objective, we maintain a highly knowledgeable and dedicated sales staff 
that is able to foster strong relationships with our broad range of customers. We cultivate and maintain close working 
relationships with professionals in the medical industry. These relationships provide us with a detailed understanding of 
therapeutic and diagnostic developments, trends and emerging opportunities, which enable us to respond to the changing needs 
of providers and patients. We actively participate in medical meetings and conduct comprehensive training and educational 
activities to enhance our presence in the medical communities we serve. We believe that these activities also contribute to 
advancing healthcare professionals’ expertise. 

Due to the emphasis on cost-effectiveness in healthcare delivery, the current trend among hospitals and other medical device 
customers is to consolidate into larger purchasing groups to enhance purchasing power. As a result, customer transactions have 
become increasingly complex. Enhanced purchasing power may also lead to pressure on pricing and an increase in the use of 
preferred vendors. Our customer base continues to evolve to reflect such economic changes across the geographic markets we 
serve.

Competition and Industry

We compete in the medical device market with sales to approximately 5,000 hospitals and in more than 100 countries. 
Technological advances and scientific discoveries cause rapid change in this market. Our competitors across our product 
portfolio range from large manufacturers with multiple business lines to small manufacturers offering a limited selection of 
specialized products. In addition, we face competition from providers of alternative medical therapies, such as pharmaceutical 
companies and providers of cannabis derived products, among others.

Product problems, physician advisories, safety alerts and publications about our products can cause major shifts in industry 
market share, reflecting the importance of product quality, product efficacy and quality systems in the medical device industry. 
In addition, because of developments in managed care, economically motivated customers, consolidation among healthcare 
providers, increased competition and declining reimbursement rates, we may be increasingly required to compete on the basis 
of price. In order to continue to compete effectively, we must continue to create or acquire advanced technology, incorporate 
this technology into proprietary products, obtain regulatory approvals in a timely manner, maintain high-quality manufacturing 
processes and successfully market these products. 

Our primary medical device competitors in the Cardiopulmonary, Neuromodulation and Advanced Circulatory Support 

product groups are Terumo Medical Corporation, Maquet Medical Systems, Medtronic plc, Haemonetics Corporation, 
NeuroPace, Inc., Abiomed, Inc. and Abbott Laboratories, Inc., although not all competitors are present in all product lines. 

Production, Quality Systems and Raw Materials

We manufacture a majority of our products at 8 manufacturing facilities located in Italy, Germany, the U.S., Brazil and 

Australia. We purchase raw materials and many of the components used in our manufacturing facilities from numerous 
suppliers in various countries. For quality assurance, sole source availability or cost effectiveness purposes, we may procure 
certain components and raw materials from a sole supplier. We work closely with our suppliers to ensure continuity of supply 
while maintaining high quality and reliability. We use quality systems in the design, production, warehousing and distribution 
of our products to ensure our products are safe and effective. In addition, we utilize environmental management systems and 
safety programs to protect the environment and our employees. For example, our Mirandola, Italy plant is certified ISO 14001 
and ISO 45001 and our Munich, Germany plant is certified ISO 14001. For additional information related to our manufacturing 
facilities, refer to “Item 2. Properties” in this Annual Report on Form 10-K.

Government Regulation and Other Considerations

Our medical devices are subject to extensive government regulation by numerous government agencies, both within and 
outside the U.S. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the 
research, development, testing, manufacturing, labeling, pre-market clearance or approval, marketing, distribution, advertising, 
promotion, record keeping, reporting, tracking, and importing and exporting of our products. Our business is also affected by 
patient privacy and security laws, cost containment initiatives, and environmental health and safety laws and regulations 
worldwide.

The laws applicable to us are subject to changing and evolving interpretations, and we continue to monitor such shifts. The 

Company believes it is in compliance with such laws and regulations, and while the impact of regulatory changes cannot be 
predicted with certainty, the Company does not expect compliance to have a material adverse effect upon the Company’s 
earnings, competitive position or estimated capital expenditures. However, if a governmental authority were to conclude that we 

8

are not in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe civil 
and criminal penalties, including substantial fines and damages, and exclusion from participation as a supplier of products to 
beneficiaries covered by government programs, among other potential enforcement actions. 

Product Approval and Monitoring

Many countries where we sell our products subject our medical devices to their own approval and requirements regarding 
performance, safety and quality. The following provides a brief overview of the oversight and requirements to which we are 
subject for the commercial distribution of our products in the U.S., Europe and Japan, the largest markets for our medical 
devices. 

Each medical device we seek to distribute commercially in the U.S. must receive 510(k) clearance or pre-market approval 

(“PMA”) from the FDA, unless specifically exempted by the agency. The 510(k) process, also known as pre-market 
notification, requires us to demonstrate that our new medical device is substantially equivalent to a legally marketed medical 
device. The PMA process, which is more costly and rigorous than the 510(k) process, requires us to demonstrate independently 
that a medical device is safe and effective for its intended use. One or more clinical studies may be required to support a 510(k) 
application and are almost always required to support a PMA application.

The European Union (“EU”), established a single regulatory approval process, according to which a “Conformité 

Européenne” (French for “European Conformity”) or CE Mark certifies conformity with all of the legal requirements of the 
regulatory process. To obtain a CE Mark, defined products must meet minimum standards of performance, safety and quality 
(i.e., the essential requirements), and then, according to their classification, comply with one or more of a selection of 
conformity assessment routes. To demonstrate compliance with the essential requirements, we must undergo a conformity 
assessment procedure, which varies according to the type of medical device and its classification. As a general rule, 
demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based on, 
among other things, the evaluation of clinical data supporting the safety and performance of the products during normal 
conditions of use. The competent authorities of the EU countries separately regulate the clinical research for medical devices 
and the market surveillance of products placed on the market, and manufacturers with CE marked devices are subject to regular 
inspections to monitor compliance with the applicable directives and essential requirements. In 2017, the EU published its 
Medical Device Regulation (“Reg MDR”), which imposed significantly more premarket and post-market requirements for 
medical devices upon conclusion of a three-year implementation period. We have initiated a plan of action to obtain the 
appropriate approvals for our products and intend to be fully compliant prior to the May 2024 deadline.

To be sold in Japan, our medical devices must undergo thorough safety examinations and demonstrate medical efficacy 
before they are granted approval. The Japanese government, through the Ministry of Health, Labour and Welfare, regulates 
medical devices under the Pharmaceutical Affairs Law (“PAL”). Penalties for a company’s noncompliance with the PAL may 
include revocation or suspension of a company’s business license and/or criminal sanctions. Japanese regulatory bodies also 
assess the quality management systems of the manufacturer and product conformity to the requirements of the PAL. 

Many countries in which we sell our products (outside of the U.S., the EU and Japan) have their own regulatory requirements 

for medical devices. Most of these countries require that product approvals be recertified on a regular basis, generally every 
four to five years. The recertification process requires that we evaluate any device changes and any new regulations or 
standards relevant to the device and, where needed, conduct appropriate testing to document continued compliance. Where 
recertification applications are required, they must be approved in order to continue selling our products in those countries.

The global regulatory environment is increasingly stringent and unpredictable. Several countries that did not have regulatory 

requirements for medical devices have established such requirements in recent years, and other countries have expanded, or 
plan to expand, their existing regulations. While some regulatory bodies have pursued harmonization of global regulations, 
requirements continue to differ significantly among countries. We expect this global regulatory environment will continue to 
evolve, which could impact the cost, approval lead time, and ultimately, our ability to maintain existing approvals or obtain 
future approvals for our products.

Product and Promotional Restrictions

Both before and after we release a product for commercial distribution, we have ongoing responsibilities under various laws 
and regulations governing medical devices. The FDA and other regulatory agencies in and outside the U.S. review our design 
and manufacturing practices, labeling, record keeping, and required reports of adverse experiences and other information to 
identify potential problems with marketed medical devices. We are also subject to periodic inspections for compliance with 
applicable quality system regulations, which govern the methods used in, and the facilities and controls used for, the design, 
manufacture, packaging and servicing of finished medical devices intended for human use. In addition, the FDA and other U.S. 
regulatory bodies monitor the manner in which we promote and advertise our products. Although physicians are permitted to 

9

use their medical judgment to prescribe medical devices for indications other than those cleared or approved by the FDA, we 
are prohibited from promoting products for such “off-label” uses and can only market our products for cleared or approved 
uses. 

Any adverse regulatory action, depending on its magnitude, may limit our ability to market and sell our products effectively, 

limit our ability to obtain future premarket approvals or result in a substantial modification to our business practices and 
operations. For additional information, see “Item 1A. Risk Factors” of this Annual Report on Form 10-K, under the section 
entitled “Our products are subject to costly and complex laws and governmental regulations, and failure to obtain product 
approvals or clearance may materially adversely affect our financial condition and business operations.”

Governmental Trade Regulations 

The sale and shipment of our products and services across international borders, as well as the purchase of components and 
products from international sources, subject us to extensive governmental trade regulations. Many countries control the export 
and re-export of goods, technology and services for public health, national security, regional stability, antiterrorism and other 
reasons. Some governments may also impose economic sanctions against certain countries, persons or entities. In certain 
circumstances, governmental authorities may require that we obtain an approval before we export or re-export goods, 
technology or services to certain destinations, to certain end-users and for certain end-uses. Because we are subject to extensive 
regulations in the countries in which we operate, we are subject to the risk that laws and regulations could change in a way that 
would expose us to additional costs, penalties or liabilities.

We also sell and provide goods, technology and services to agents, representatives and distributors who may export such 
items to customers and end-users, and if these third parties violate applicable export control or economic sanctions laws or 
regulations when engaging in transactions involving our products, we may be subject to varying degrees of liability depending 
on the extent of our participation in the transaction. The activities of these third parties may cause disruption or delays in the 
distribution and sale of our products or result in restrictions being placed on our international distribution and sales of products, 
which may materially impact our business activities.

Patient Privacy and Security Laws 

We are subject to various laws worldwide that protect the security and confidentiality of certain patient health information, 
including patient medical records, and that restrict the use and disclosure of patient health information. Privacy standards are 
becoming increasingly strict; enforcement actions and financial penalties related to privacy issues in the EU are growing; and 
new privacy and data residency laws and restrictions are being passed in other countries including the U.S., China, and Brazil. 
The management of cross-border transfers of information among and outside of EU member countries is becoming more 
complex, which may complicate our business and clinical research activities, as well as product offerings that involve 
transmission or use of patient health information. We continue our efforts to comply with those requirements and to adapt our 
business processes to those standards.

In the U.S., the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health 

Information Technology and Clinical Health Act (“HITECH”) and their respective implementing regulations impose specified 
requirements relating to the privacy, security and transmission of individually identifiable health information. Among other 
things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,” defined as 
independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in 
connection with providing a service for or on behalf of a covered entity. We are deemed to operate as a business associate to 
covered entities in certain instances. In those cases, the patient data that we receive may include protected health information, as 
defined under HIPAA. Enforcement actions can be costly and interrupt regular operations of our business. In addition, state 
laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in 
significant ways, thus complicating compliance and data protection efforts. For example, the California Consumer Privacy Act 
(“CCPA”), a bill to enhance privacy rights and consumer protection for residents of California went into effect January 1, 2020. 
For additional information, see “Item 1A. Risk Factors” of this Annual Report on Form 10-K, under the section entitled “Cyber-
attacks or other disruptions to our information technology systems could lead to reduced revenue, increased costs, liability 
claims, fines, harm to our competitive position and loss of reputation.”

In the EU, Regulation 2016/679 on the protection of natural persons with regard to the processing of personal data and on the 

free movement of such data (“General Data Protection Regulation” or “GDPR”) came into effect in May 2018. One of the 
strictest and most comprehensive data privacy laws in the world, the GDPR, among other things, introduced proactive 
compliance measures, such as the requirement to carry out a Privacy Impact Assessment, Data Transfer Impact Assessment, 
and appoint a Data Protection Officer in organizations where health data is processed on a “large scale.” Although “large scale” 
is not defined, it is likely that clinical trials involving substantial numbers of patients (or healthy volunteers if applicable) would 

10

mean that such requirements apply to us. In addition, the administrative fines that can be levied are significantly increased, the 
maximum being the higher of €20 million (approximately $22.7 million), or 4% of our total worldwide revenue in the previous 
financial year.

Cost Containment Initiatives 

Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive 
pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology 
assessments and managed-care arrangements are continuing in many countries where we do business. These changes are 
causing the marketplace to put increased emphasis on the delivery of more cost-effective medical devices and therapies. 
Government programs, private healthcare insurance and managed-care plans have attempted to control costs by limiting the 
extent of coverage or amount of reimbursement available for particular procedures or treatments, tying reimbursement to 
outcomes, shifting to population health management, and other mechanisms designed to constrain utilization and contain costs. 
Hospitals, which purchase implants, are also seeking to reduce costs through a variety of mechanisms, including, for example, 
creating centralized purchasing functions that set pricing and, in some cases, limit the number of vendors that can participate in 
the purchasing program. Hospitals are also aligning their interests with those of physicians through employment and other 
arrangements, such as gainsharing, whereby a hospital agrees with physicians to share certain realized cost savings resulting 
from the physicians’ collective change in practice patterns, such as standardization of devices where medically appropriate, and 
participation in affordable care organizations. Such alignment has created increasing levels of price sensitivity among 
customers for our products. 

Some third-party payers must also approve coverage and set reimbursement levels for new or innovative devices or therapies 

before they will reimburse healthcare providers who use the medical devices or therapies. Even though a new medical device 
may be cleared for commercial distribution, we may find limited demand for the device until coverage and sufficient 
reimbursement levels have been obtained from governmental and private third-party payers. In addition, some private third-
party payers require that certain procedures or the use of certain products be authorized in advance as a condition of coverage. 

As a result of our manufacturing efficiencies, cost controls and other cost-savings initiatives, we believe we are well-

positioned to respond to changes resulting from this worldwide trend toward cost containment; however, uncertainty remains as 
to the nature of any future legislation or other reforms, making it difficult for us to predict the potential impact of cost-
containment trends on future operating results. 

Applicability of Anti-Corruption Laws and Regulations

Our worldwide business is subject to the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), the UK Bribery Act of 
2010 (the “UK Bribery Act”) and other anti-corruption laws and regulations applicable in the jurisdictions where we operate. 
The FCPA can be used to prosecute companies in the U.S. for arrangements with physicians or other parties outside the U.S. if 
the physician or party is a government official of another country and prohibited payments are made to obtain or retain 
business. The UK Bribery Act prohibits both domestic and international bribery, as well as bribery across both public and 
private sectors. There are similar laws and regulations applicable to us outside the U.S. and the UK, all of which are subject to 
evolving interpretations. For additional information, please refer to “Item 1A. Risk Factors” of this Annual Report on Form 10-
K, under the section entitled “The failure to comply with anti-bribery laws could materially adversely affect our business and 
result in civil and/or criminal sanctions.”

Environmental Regulation and Management 

We are subject to various environmental laws, directives and regulations both in the U.S. and abroad. Like other medical 
device companies, our manufacturing and other operations involve the use, storage and transportation of substances regulated 
under environmental health and safety laws, including those related to the transportation of hazardous substances. To the best of 
our knowledge at this time, we do not expect that compliance with environmental protection laws related to our current 
operations, including but not limited to the Saluggia site as referenced in “Note 13. Commitments and Contingencies” in our 
consolidated financial statements and accompanying notes beginning on page F-1 of this Annual Report on Form 10-K, will 
have a material impact on our financial position or liquidity. In addition, as noted in Note 13 to such financial statements, we 
are engaged in litigation with respect to historical remediation claims at sites operated by subsidiaries of SNIA, unrelated to our 
current operations. For more information, see Note 13. Commitments and Contingencies to such financial statements.

We believe that sound environmental, health and safety performance contribute to our competitive strength while benefiting 
our customers, stockholders and employees. We are focused on continuous improvement in these areas by reducing pollution, 
depletion of natural resources and our overall environmental footprint. Specifically, we work to optimize energy and resource 
usage, ultimately reducing greenhouse gas emissions and waste. In 2018, we implemented a new system called trigeneration in 
our plant in Mirandola, Italy which is designed to reduce CO2, energy consumption and costs, and generate energy savings. In 

11

2019, we implemented a new vehicle policy, which in addition to generating cost savings and efficiencies throughout the 
Company, has contributed to our goal of decreasing our carbon output. Not only did we exclude certain vehicle models from 
our inventory due to their negative environmental impact, but we implemented a cap on our vehicles’ CO2 emissions at 130 g/
km. In addition, we replaced fluorescent light in our plants in Arvada, Colorado and Mirandola with LED to reduce overall 
energy consumption, and we are continually working to improve the efficiency of our machinery, e.g., by replacing HVAC 
units with more efficient equivalents. Finally, our Mirandola, Italy plant is certified ISO 14001 and ISO 45001 and our Munich, 
Germany plant is certified ISO 14001.

Health Care Fraud and Abuse Laws 

We are subject to U.S. federal and state government healthcare regulation and enforcement and government regulations and 

enforcement in other countries in which we conduct our business. The federal healthcare Anti-Kickback Statute prohibits 
persons from, among other things, knowingly and willfully offering or paying remuneration, directly or indirectly, to a person 
to induce the purchase, order, lease, or recommendation of a good or service for which payment may be made in whole or part 
under a federal healthcare program such as Medicare or Medicaid, unless the arrangement fits within one of several statutory 
exemptions or regulatory “safe harbors.” Violations of the federal Anti-Kickback Statute may result in civil monetary penalties 
up to $100,000 for each violation, plus up to three times the remuneration involved. Violations can also result in criminal 
penalties, including criminal fines of up to $100,000 and imprisonment for up to 10 years. Finally, violations can result in 
exclusion from participation in government healthcare programs, including Medicare and Medicaid.

In addition to the Anti-Kickback Statute, many states have their own anti-kickback laws. Often, these laws closely follow the 

language of the federal law, although they do not always have the same exceptions or safe harbors. In some states, these anti-
kickback laws apply with respect to all payers, including commercial health insurance companies.

Additionally, violations of the U.S. False Claims Act (the “False Claims Act”) can result in significant monetary penalties 

and treble damages. The U.S. federal government utilizes the False Claims Act, and the accompanying threat of significant 
financial liability, to investigate and prosecute device and biotechnology companies in connection with the promotion of 
products for unapproved uses and other sales and marketing practices. The U.S. government has obtained multi-million and 
multi-billion-dollar settlements under the False Claims Act, in addition to individual criminal convictions under applicable 
criminal statutes. Given the U.S. government’s success with prosecuting claims under the False Claims Act, we anticipate that 
the U.S. government will continue to devote substantial resources to investigating healthcare providers’ and manufacturers’ 
compliance with applicable fraud and abuse laws. 

HIPAA includes federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting 

to execute, a scheme to defraud any healthcare benefit program, including private third-party payors; knowingly and willfully 
embezzling or stealing from a healthcare benefit program; willfully obstructing a criminal investigation of a healthcare offense; 
and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or 
fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the 
federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to 
violate it in order to have committed a violation.

There has also been a recent trend of increased federal and state regulation of payments made to physicians and other 

healthcare providers. We are subject, for example, to the Physician Payments Sunshine Act, which requires us to report certain 
payments and other transfers of value we make to U.S. licensed physicians or U.S. teaching hospitals annually. Any failure to 
comply with such laws and regulations hold the potential for criminal and civil financial penalties.

The evolving commercial compliance environment and the need to build and maintain robust systems to comply with 

different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company 
may violate one or more of the requirements. If our operations are found to be in violation of any of such laws or any other 
governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal 
penalties, damages, fines, the curtailment or restructuring of our operations, and exclusion from participation in federal and 
state healthcare programs, any of which could adversely affect our ability to operate our business and our financial results.  

Disclosure Pursuant to Section 13(r) of the Exchange Act of 1934

Section 13(r) of the Exchange Act requires issuers to disclose in their annual reports, among other things, certain types of 
dealings with Iran, including transactions or dealing with government-owned entities, even when those activities are lawful and 
do not involve U.S. persons. Two of our non-U.S. subsidiaries currently sell medical devices, including cardiopulmonary and 
neuromodulation products, to distributors and non-governmental organizations in Iran to support patient care in that country. 
We have limited visibility into the identity of these distributors’ and non-governmental organizations’ customers in Iran. It is 
possible that their customers include entities, such as government-owned hospitals or sub-distributors, that are owned or 

12

controlled directly or indirectly by the Iranian government. To the best of our knowledge at this time, we do not have any 
contracts or commercial arrangements with the Iranian government.

Our gross revenues and net profits attributable to the above-mentioned Iranian activities were $1.4 million and $0.7 million 

for the three months ended December 31, 2021, respectively, and $8.6 million and $3.8 million for the twelve months ended 
December 31, 2021, respectively. 

We believe our activities are consistent with applicable law, including U.S., EU, and other applicable sanctions laws, though 

such laws are complex and continue to evolve rapidly. We intend to continue our business in Iran.

Human Capital Management

Our almost 3,000 employees worldwide are crucial in our mission to provide hope to our patients and their families through 
delivering life-changing medical innovation for the head and the heart. In order to meet the needs of our patients and customers, 
we retain, develop and reward exceptional talent. We have been successful in attracting talent in a highly competitive labor 
market due, in large part, to our proactive recruitment strategies, competitive compensation and benefits, collaborative and 
rewarding work environment, professional training and development programs for managers and employees, and health and 
wellness measures.

Our mission seeks to link our employees to our five core values: patients first, meaningful innovation, act with agility, 
commitment to quality and integrity, and collaborative culture. These values are how we evaluate ourselves and ultimately, 
achieve success as an organization. They are deeply embedded in our culture, from our field personnel and manufacturing floor 
to the executive leadership team and Board of Directors. We continually share best practice stories from our employee 
community throughout the organization, by way of emailed videos and virtual and in-person town halls and leadership 
meetings. Our values inspire our good citizenship and how we conduct our business responsibly and sustainably while 
interacting with our communities, employees and the environment.

Our Chief Human Resources Officer is responsible for developing and executing our human capital strategy, and with her 

team of Human Resources professionals, the Human Resources function is organized into two key areas: (1) Employee 
Experience, which addresses attraction and retention of talent, on-boarding, compensation and performance management, and 
ultimately, the employees’ experience throughout their tenure in the organization; and (2) Talent, Leadership and Development, 
which includes internal career pathing, talent development, coaching and training, and diversity strategy and programming. 

Compensation and Benefits

Our need for top talent demands desirable compensation and benefits packages. In addition to competitive salaries, our 

programs include, depending on jurisdiction, annual bonuses, stock awards, pensions, health benefits and health programs, paid 
time off and parental leave, flexible schedules, remote working, and employee stock purchase plans, among others. To ensure 
alignment with fair pay standards, we monitor and externally benchmark our compensation and benefits policies and practices 
annually with recognized professional partners. We also work closely with our trade unions and works councils to ensure that 
we apply compliant, equitable and fair work practices that are inclusive of the interests of our workers in our policies and 
decisions. 

Importantly, we pride ourselves on forging a strong connection between performance and rewards within the Company. 
Annually, we define clear, SMART (Specific, Measurable, Achievable, Realizable and Timebound) goals and targets at the 
Company level, which translate into business unit and individual level goals for every employee in the organization. They are 
subsequently tracked by way of metrics and dashboards. Individual and Company success translate into rewarding packages, 
aimed to incentivize and encourage top talent. In addition, employees themselves can recognize their colleagues through a 
recently launched employee recognition program called Stars.

Culture

Maintaining a culture that embodies our values and mission is of the utmost importance. It demands self-reflection and a 
commitment to ensure that we take actions to address our employees’ thoughts and opinions. Accordingly, we conduct an 
annual, anonymous employee survey called LivaNova4You to help measure the overall engagement and satisfaction level of 
our team. Thereafter, our senior leadership assess employee engagement to understand and identify potential opportunities for 
improvement. 

In our 2021 survey, we achieved 89 percent participation across the Company. The majority of our engagement drivers 
improved when compared to our 2020 survey results, an encouraging result given the difficulties in working in a pandemic 
environment. We saw an increase in our employee satisfaction & motivation score and equivalent high marks on the employee 
loyalty score, with an increase in our overall engagement index.

13

The survey also revealed growth in collaboration, that is, employees showing high trust and respect for each other; an 
increased feeling of recognition on a job well done; empowerment and the feeling of being sufficiently challenged, despite a 
difficult pandemic environment; and flexibility in coming up with new and innovative ways to work. Our employees also 
acknowledged an improvement in the tools and opportunities for advancement, one of our highest improving scores as 
compared to 2020. 

As with any employee engagement survey, we discovered areas with opportunities for improvement as well. Workload, 

clarification of processes, and perception surrounding benefits, for example, were all areas identified. Leaders within the 
Company are working with their teams to consider how to address these areas over the next year.

Development and Training

As part of our promotion and retention efforts, we organize annual performance reviews for all employees which involve an 
evaluation of goals and performance contributions. A portion of our employees, some of whom include operators involved in 
the direct production of our devices, receive performance feedback in a form and process based on jurisdiction and local rules 
and regulations. We also offer all employees performance management training and workshops to guide both managers and 
employees throughout the review process. 

Our operators are onboarded and trained per requirements and processes specific to their jurisdiction and the product that is 
manufactured in their locations. Thereafter, they receive ongoing technical training to ensure they maintain excellent standards 
for production and manufacturing. Meanwhile, LivaNova offers programs to foster both leadership and professional skills 
development to its corporate employees. Newly hired corporate employees undergo a robust onboarding program through 
LivaNova University and, at any time, employees have access to a large offering of training on commercial, ethics and integrity, 
quality, product, leadership, business strategy, and other key topics and functions in the organization.

Our annual Talent Review process engages our corporate employees to establish development plans and document their skills 

and capabilities, while managers assess employee potential, create succession plans, and identify possible career path 
opportunities. In 2021, 1,600 employees documented at least one development plan. In addition, a targeted group of 22 top 
performers (up from six participants in 2020) were nominated to participate in our Leadership Conversation program, which 
puts these key employees in conversation with selected executive leaders to develop our Talent through close exposure and 
collaboration.

We take great pride in listening to our employees and making LivaNova a great place to work. LivaNova University is the 

direct result of our LivaNova4You survey where employees asked for flexible, scalable access to learning content for 
professional growth in the 2020 survey results. Through our Workday Learning platform, which hosts LivaNova University, 
approximately 2,000 employees have access to over 150 internally developed courses and programs and over 12,000 courses in 
multiple languages from LinkedIn Learning. Internal content is developed by a global cohort of eight learning partners trained 
to design, develop and deploy content to support skill development and strategic needs for the organization. 

Throughout 2021, several global courses and programs for employees were developed, providing a spotlight on new 

employee and manager onboarding, anti-harassment and anti-discrimination campaigns, and the learning culture at LivaNova. 
Overall, during the initial nine months of LivaNova University, 12,456 enrollments were completed across 444 different 
courses by employees resulting in an average of 6.2 learning enrollments completed per employee. Learners rated the quality of 
these courses a 4.5 on a 5-point scale.

Finally, we offer internships and apprenticeships across functions around the globe which can, and do, lead to full-time 
employment. We believe in continuing education and development regardless of nationality and origin, which is why we 
partner with organizations to find new talent with hopes of welcoming future, full-time employees.

Mentoring & Women’s Networking

The LivaNova Women's Network (“LWN”), an organic, grassroots mentorship program, by women and for women, 

facilitates pairings between mentors and mentees. Originating in the U.S., it has since expanded to our Latin America and Asia 
Pacific regions. Topics range from career and financial advice to performance management and connection to the Company’s 
strategic triangle. This program continues to provide members with new perspectives, more personalized development and an 
opportunity to network with other women across the organization, thereby contributing to a better corporate culture based on 
strong, collaborative relationships and continuous opportunities to grow and develop.

14

Diversity 

The success of LivaNova thrives on the diversity of perspective, thought, experience and background within our workforce. 
Accordingly, we closely monitor our diversity metrics. As of December 31, 2021, LivaNova had ten Directors on the Board of 
Directors, of whom 30% are female and 70% are male. Similarly, the Executive Team at the end of 2021 consisted of 10 
individuals, 30% of which are female and 70% male. Of LivaNova’s senior leadership team, which includes the executive team, 
vice presidents and directors, approximately 31% are women and 69% are men. Finally, as of December 31, 2021, LivaNova 
employed approximately 3,000 employees, 52% women and 48% men. Our strategy for accelerating diversity begins with 
creating new ways to find extraordinary talent, and examples of our efforts include accurately mapping the talent market, 
creating job postings that attract highly qualified diverse candidates, expanding the diversity within our interview panels and 
guiding interviewers to conduct a fair interview process.

To help promote diversity, we also have a variety of diversity affinity initiatives that span the globe. We host two Diversity, 
Inclusion and Belonging (DIBs) groups, one in North America and one in the Asia Pacific region, with a mission to empower 
an environment where conversations of diversity and inclusion develop a culture of belonging. These employee-led, executive-
sponsored initiatives are committed to building a network of LivaNova employees who embrace an open mindset with an 
appreciation of diverse experiences and have been meeting regularly. On average, approximately 100 employees participate in 
these meetings. Topics range from inclusivity and harassment in the workplace to multigenerational integration and support for 
working parents. The discussions are open and thought-provoking, encouraging all to share their story, discuss views or simply 
be a supporter to the cause. 

Finally, our senior leadership team monitors and reviews gender and ethnic diversity across our organization on a monthly, 
quarterly and annual basis. The Compensation Committee of the Board of Directors receives similar reports regularly and the 
entire Board of Directors is updated on an annual basis. In relation to Director onboarding, our Corporate Governance 
Guidelines require that Board candidates bring diversified attributes to the Board, which encompass gender, race, ethnicity, 
geography, professional experience, national origin, sexual orientation, life experience, skills and tenure, among others. In the 
summer of 2021, our Nominating and Corporate Governance Charter was updated to emphasize the benefits of diversity and it 
currently demands that every slate of Directors to be considered must include at least one woman and at least one 
underrepresented minority. Diversity, equity and inclusion metrics and conversations are actively pursued from the top down 
and are reflected in leadership’s continual review of the numbers and commitment in working towards an appropriate balance 
with respect to ethnicity, age and gender in relation to leadership and development, promotions, and compensation and benefits.

Health and Safety

Saving the lives of our patients starts with the care and well-being of our employees. In response to the COVID-19 pandemic, 

physical and mental health has been at the forefront of our response. For our manufacturing, operations, and other personnel 
who have remained on site throughout the pandemic due to the essential nature of their work, we have implemented safety 
measures such as the use of personal protective equipment and social distancing measures. At the start of the pandemic, we 
instructed the majority of our employees at many of our facilities across the globe to work from home on a temporary basis and 
implemented company-wide travel restrictions. In 2021, we declared hybrid working patterns, allowing our employees across 
the globe – who can work from home – the flexibility to balance their personal and professional needs. Our office provides a 
safe place for purposeful collaboration, and through piloting and active listening to what employees want and need, we 
developed the Global Ways of Working guidelines, aimed at providing a consistent global framework to determine our future 
ways of working of all employees and teams to maintain the well-being of our people.

To support our employees in difficult times like the pandemic, we rolled out a global Employee Assistance program to 
support health, mental health, financial concerns and other challenges any of us can be faced with in our personal lives. To 
protect our employees, we rolled out a Healthy Habits program and global flu vaccination campaign and enabled a remote 
hybrid working approach and personal flexible working schedule. We also implemented an employee volunteering policy for 
those who want to support their communities during the pandemic or for other philanthropic purposes.

Ethical Standards

At LivaNova, we are committed to acting with integrity and maintaining high ethical standards. We understand and respect 
the obligation we have towards our patients, their families and their caregivers to operate at the topmost level of business ethics 
and compliance. It is not only what we do but how we do it, and this, too, is part of our mission.

Our commitment to integrity starts with our Code of Ethics and Business Conduct, which sets out the key expectations of 
behavior for our directors, officers, employees and contractors. In addition to that and as part of our ethics and compliance 
program, the company maintains a set of policies and procedures that provide a firm foundation for our program and provide 
ethical handrails for our employees in their day-to-day work life.

15

LivaNova values greatly its human capital and their physical, but also psychological safety. We have multiple reporting 
channels for employees as well as business partners to report concerns about potential violations of our Code of Business 
Conduct & Ethics, company policies, or applicable laws and regulations. Our third-party managed Ethics Line is available 24/7 
across multiple time-zones and languages. Employees are encouraged to speak up in good faith over alleged misconduct. Every 
claim received is addressed per our internal investigation procedure, and this may result in corrective and/or disciplinary action. 
It is important to note that LivaNova does not tolerate any retaliation.

As part of our ongoing speak up program initiatives, we are committed to continue to promote awareness and education 

around LivaNova’s Ethics Line and our stance against retaliation.

Seasonality

For Cardiopulmonary and Neuromodulation, the number of medical procedures incorporating our products is generally lower 

during the summer months, particularly in European countries, due to summer vacation schedules. 

Available Information

Our executive headquarters are located at 20 Eastbourne Terrace, London, UK W2 6LG. Our website address is 

www.livanova.com. We make available free of charge on or through our website our Proxy Statements on Schedule 14A, 
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports 
filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and reports relating to beneficial ownership of our 
securities filed or furnished pursuant to Section 16 of the Exchange Act, as soon as reasonably practicable after electronically 
filing such material with the SEC. Our website also contains the charters for each standing committee of our Board of Directors.

We may from time to time provide important disclosures to investors by posting them in the Investor Relations section of our 

website, as allowed by SEC rules. Information on our website is not incorporated into this Annual Report on Form 10-K.

The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information about SEC 

registrants, including LivaNova.

16

Item 1A. Risk Factors 

An investor should carefully consider the risks described below, as well as other information contained in this Annual 
Report on Form 10-K and in our other filings with the SEC. Based on the information currently known to us, we believe the 
following information identifies the most significant risks affecting us, but the risks and uncertainties included below are not 
the only ones related to our businesses. Additional risks and uncertainties not presently known to us or that we currently 
believe to be immaterial may also adversely affect our business.

Risks Relating to the Company

The global medical device industry is highly competitive, and we may be unable to compete effectively.

We operate in a highly competitive market characterized by increasingly complex products that are expensive and time 
consuming to develop and manufacture. In the product lines in which we compete, we face a mixture of competitors ranging 
from large manufacturers with multiple business lines to small manufacturers that offer a limited selection of specialized 
products. Development by other companies of new or improved products, processes, or technologies, may make our products 
or proposed products less competitive. In addition, we face competition from providers of alternative medical therapies, such 
as pharmaceutical companies and providers of cannabis derived products, among others. Competitive factors include: product 
quality, reliability and performance; product technology; breadth of product lines and product services; ability to identify new 
market trends; customer support and training; price; capacity to recruit engineers, scientists and other qualified employees; 
and reimbursement approval. Difficulties in any of these areas may cause our operations and financial condition to suffer.

Reductions or interruptions in the supply of the materials and components used in manufacturing our products may 
adversely affect our financial condition and business operations, particularly in the wake of COVID-19.

We maintain manufacturing operations in five countries located throughout the world and purchase many of the 

components and raw materials used in manufacturing these products from numerous suppliers in various countries. Any 
problem affecting a supplier (whether due to external or internal causes) could have a negative impact on us.

In limited cases, specific components and raw materials are purchased from primary or main suppliers (or in some cases, a 

single or sole supplier) for reasons related to quality assurance, cost-effectiveness ratio and availability. While we work 
closely with our suppliers to ensure supply continuity, minimize the instances in which we rely on a sole supplier and take 
other countermeasures to reduce our supply chain risk, we cannot guarantee that our efforts will always be successful. 
Moreover, due to strict standards and regulations governing the manufacture and marketing of our products, we may not be 
able to locate new supply sources quickly or at all in response to a supply reduction or interruption, with negative effects on 
our ability to manufacture our products effectively and timely.

The COVID-19 pandemic has exacerbated this risk by negatively impacting the global economy, by, among other things, 
causing global supply chain shortages. Increased demand and low capacity worldwide have caused longer lead times and put 
price pressure on key raw materials. We are managing our supply chain by giving long visibility to our suppliers, conducting 
regular supply critical risk reviews and closely monitoring our inventory, among other things, but any problem could quickly, 
negatively reverberate throughout the organization. While we have not experienced any material supply chain issues as a 
result of the pandemic to date, we continue to monitor the landscape closely.

Our products are subject to complex laws and regulations, and failure to obtain product approvals or clearance may 
materially adversely affect our financial condition and business operations. 

Our medical devices and technologies, as well as our business activities, are subject to a complex set of regulations and 

rigorous enforcement, including by the FDA, U.S. Department of Justice, Health and Human Services - Office of the 
Inspector General, and numerous other federal, state, and non-U.S. governmental authorities. To varying degrees, each of 
these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, 
marketing and distribution of our products. As a part of the marketing clearance or approval process for new products and 
new indications for existing products, we conduct numerous clinical trials with a variety of study designs, patient populations 
and trial endpoints. Unfavorable or inconsistent clinical data from existing or future clinical trials, or the markets’ or FDA’s 
perception of this clinical data, may adversely impact our ability to obtain product approvals. Currently, for example, we are 
conducting the RECOVER study and the ANTHEM and OSPREY trials - any delays or news regarding unfavorable or 
inconsistent data could have a material adverse effect on our business. Nevertheless, success in pre-clinical testing and early 
clinical studies does not always ensure that later clinical studies will be successful, and we cannot be sure that later studies 
will replicate the results of prior studies. Any delay or termination of our clinical studies will delay the filing of product 
submissions and, ultimately, our ability to commercialize new products or product modifications. It is also possible that 

17

patients enrolled in clinical studies will experience adverse side effects that are not currently part of the product’s profile, 
which could inhibit further marketing and development of such products. 

Even if we are able to obtain approval or clearance, it may take a significant amount of time; require the expenditure of 
substantial resources; involve stringent clinical and pre-clinical testing, as well as increased post-market surveillance; and 
involve modifications, repairs or replacements of our products or limit the proposed uses of our products. Ultimately, we 
cannot guarantee that our clinical trials will be successful or that we will be able to obtain or maintain marketing clearance for 
new products or modifications to existing products, and any such issues, whether in relation to trials, approvals or clearances, 
could have a material adverse effect on our business, results of operations, financial condition and cash flows. 

Failure to comply with product-related government regulations may materially adversely affect our financial condition 
and business operations.

Both before and after a product is commercially released, we have ongoing responsibilities under FDA and other applicable 

non-U.S. government agency regulations. For instance, many of our facilities and procedures and those of our suppliers are 
subject to periodic inspections by the FDA, which can result in inspectional observations on FDA’s Form-483, warning 
letters, or other forms of enforcement. If the FDA were to conclude that we are not in compliance with applicable laws or 
regulations, or that any of our medical products are ineffective or pose an unreasonable health risk, the FDA could ban such 
medical products, detain or seize adulterated or misbranded medical products, order a recall, repair, replacement, or refund of 
such products, refuse to grant pending PMA applications or require certificates of non-U.S. governments for exports, and/or 
require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the 
public health. In 2015, we received a warning letter from the FDA alleging certain violations of FDA regulations, which 
resulted in certain devices that were manufactured in Munich, Germany, to be denied admission to the U.S. until resolution of 
the issues set forth by the FDA in the warning letter. See “Note 13. Commitments and Contingencies” in our consolidated 
financial statements included in this Annual Report on Form 10-K for additional information. While we work diligently to 
manage our ongoing responsibilities, the FDA and other non-U.S. government agencies could assess civil or criminal 
penalties against us, our officers or employees and impose operating restrictions on a company-wide basis. The FDA could 
also recommend prosecution to the U.S. Department of Justice. An adverse regulatory action could restrict us from 
effectively marketing and selling our products, limit our ability to obtain future pre-market clearances or PMAs, and result in 
a substantial modification to our business practices and operations. These potential consequences, as well as any adverse 
outcome from government investigations, could have a material adverse effect on our business, results of operations, 
financial condition, and cash flows.

In addition, in the U.S., device manufacturers are prohibited from promoting their products other than for the uses and 
indications set forth in the approved product labeling (so called “off-label uses”). Our VNS Therapy System, for example, is 
indicated in the U.S., as an adjunctive therapy in reducing the frequency of seizures in patients 4 years of age and older with 
partial onset seizures that are refractory to antiepileptic medications, yet a number of physicians elect to prescribe our device 
for certain patients suffering from generalized seizures. While physicians may exercise their discretion in prescribing a device 
off-label, any failure on the part of the device manufacturer to comply with off-label regulations could subject us to 
significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or 
agreements with, the federal government. 

Governmental regulations outside the U.S. have, and may continue to become, increasingly stringent and common. In the 
EU, for example, Reg MDR (Medical Device Regulation) became effective in May 2021, resulting in significant additional 
premarket and post-market requirements which must be in place by May 2024. During this transition period, the European 
Commission is allowing companies to use their MDD (Medical Device Directive) certifications. LivaNova is working to 
obtain all appropriate approvals and intends to be fully compliant by the May 2024 deadline, as penalties for regulatory non-
compliance can be severe, including fines and revocation or suspension of a company’s business license, mandatory price 
reductions and criminal sanctions.

If our marketed medical devices are defective or otherwise pose safety risks, the FDA and similar non-U.S. governmental 
authorities could require their recall or initiate an enforcement action, or we may initiate a recall of our products 
voluntarily.

The FDA and similar non-U.S. governmental authorities may require the recall of commercialized products in the event of 
material deficiencies or defects in design, software or manufacture or in the event that a product poses an unacceptable risk to 
health. Manufacturers, on their own initiative, may recall a product with a material deficiency, and we have initiated 
voluntary product recalls in the past. Any recall announcement could harm our reputation with customers and negatively 
affect our revenue. A recall could also impair our ability to produce our products in a cost-effective and timely manner. In the 

18

future, we may initiate voluntary withdrawal, removal or repair actions that we determine do not require notification as a 
recall. If a regulating authority were to disagree with our determinations, it could require us to report those actions as recalls. 

In addition, depending on the corrective action taken to redress a device’s deficiencies or defects, regulators may require, 

or we may decide, that we need to obtain new approvals or clearances for the device before we market or distribute the 
corrected device. Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely 
manner. Any corrective action, whether voluntary or involuntary, or litigation, will require the dedication of our time and 
capital, distract management from operating the business, and may harm our reputation and financial results. Moreover, if we 
do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, 
including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines, and or all of 
which could have a material adverse effect on our business.

As a manufacturer of medical devices, we are exposed to product liability claims that could adversely affect our 
consolidated financial condition and tarnish our reputation. 

We manufacture and sell medical devices, both equipment and implantables, that pose product liability risks that are 
inherent in the design, manufacture and marketing of such devices. Component failures, manufacturing defects, software 
errors, design flaws or inadequate disclosure of product-related risks or product-related information with respect to these or 
other products we manufacture or sell could result in an unsafe condition, injury to, or death of, a patient. Such an event could 
result in product liability claims or a recall of, or safety alert relating to, one or more of our products. We have elected to self-
insure with respect to a significant portion of our product liability risks and also hold global insurance policies to cover a 
portion of future potential losses. Product liability claims or product recalls in the future, regardless of their ultimate outcome, 
could have a material adverse effect on our business and reputation and on our ability to attract and retain customers for our 
products, and losses from product liability claims in the future could exceed our product liability insurance coverage and lead 
to a material adverse effect on our financial condition and liquidity. In addition, future unanticipated large liability claims 
may raise substantial doubt about our ability to continue as a going concern.

As described in “Note 13. Commitments and Contingencies” in our consolidated financial statements included in this 

Annual Report on Form 10-K, we are involved in product liability litigation that may adversely affect our financial condition 
and may require us to devote significant resources to our defense of these claims. This product liability litigation relates to 
our cardiopulmonary 3T Heater-Cooler product, and as of March 1, 2022, we are aware of approximately 90 filed and unfiled 
claims worldwide, with the majority of the claims filed in various federal or state courts throughout the U.S. Although we are 
defending these matters vigorously, the outcome of such matters could have a material adverse effect on our business.

Global healthcare policy changes and tightening of reimbursement for products may have a material adverse effect on us.

In response to increases in healthcare costs, there have been and continue to be proposals by governments, regulators and 
third-party payors to control these costs. These proposals have resulted in efforts to enact healthcare system reforms that may 
lead to pricing restrictions, limits on the amounts of reimbursement available for our products and limits on the acceptance 
and use of our products. Our ability to commercialize our products is dependent, in large part, on whether third-party payors, 
including private healthcare insurers, managed care plans, governmental programs and others agree to cover the costs and 
services associated with our products and related procedures in the U.S. and internationally. Similarly, periodic changes to 
reimbursement methodologies could have an adverse impact on our business. Adoption of some or all of such healthcare 
policy and reimbursement proposals could have a material adverse effect on our financial position and results of operations.

Our failure to comply with rules relating to reimbursement of healthcare goods and services, healthcare fraud and abuse, 
false claims and other applicable laws or regulations may subject us to penalties and adversely impact our reputation and 
business operations.

Our devices and therapies are subject to regulation by various governmental agencies worldwide responsible for coverage, 

reimbursement and regulation of healthcare goods and services, including laws and regulations related to kickbacks, false 
claims, self-referrals and health care fraud. Any failure to comply with these laws and regulations could subject us or our 
officers and employees to criminal and civil financial penalties. 

The risk of being found in violation of these laws is increased by the fact that many of them have not been fully interpreted 
by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Because of the breadth 
of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that 
some of our business activities, including our relationships with surgeons and other healthcare providers, some of whom 
recommend, purchase and/or prescribe our devices, group purchasing organizations and our independent sales agents and 
distributors, could be subject to challenge under one or more of such laws. Even an allegation of impropriety could adversely 
impact our reputation and/or business operations.

19

Cyber-attacks or other disruptions to our information technology systems could lead to reduced revenue, increased costs, 
liability claims, fines, harm to our competitive position and loss of reputation. 

We are increasingly dependent on our information technology systems and those of third parties to operate our business, 

and certain products of ours include integrated software and information technology. COVID-19 has exacerbated such 
dependencies due to the challenges in managing such a vast employee population working remotely. We rely on information 
technology systems to collect and process customer orders, manage product manufacturing and shipping and support 
regulatory compliance, and we routinely process, store and transmit large amounts of data, including sensitive personal 
information, patient health information and confidential business information. The secure processing, maintenance and 
transmission of this information is critical to our operations but the size and complexity of our products and the information 
technology systems on which we rely make them vulnerable to cyber-attacks, breakdown, interruptions, destruction, loss or 
compromise of data, obsolescence or incompatibility among systems or other significant disruptions. Unauthorized persons 
routinely attempt to access our products or systems in order to disrupt, disable or degrade such products or services, to obtain 
proprietary or confidential information, to make ransom demands, or to remotely disrupt or access the systems of large health 
care providers by exploiting our products or systems. We maintain an information security risk insurance policy and continue 
to enhance our information security programs. While we have not fallen victim to any material cyber-attacks, such an 
incident or an incident at a third-party vendor could compromise our networks and our information could be accessed, 
publicly disclosed, lost or stolen. The negative publicity resulting from such disruptions could significantly impact our 
reputation and stock price, and the financial consequences could have a material effect on our business. 

In addition, from time to time, we may acquire new businesses. As a result of acquisitions, we may face risks due to 

implementation, modification, or remediation of controls, procedures and policies relating to data privacy and cybersecurity 
at the acquired company. We continue to consolidate and over time integrate the number of systems we operate, and to 
upgrade and expand our information system capabilities for stable and secure business operations. There can be no assurance 
that our process of consolidating, protecting, upgrading and expanding our systems and capabilities, continuing to build 
security into the design of our products, and developing new systems to keep pace with continuing changes in information 
processing technology will be successful or that additional systems issues will not arise in the future. Similarly, we may 
divest and have divested portions of our business, resulting in the migration of data and overlapping data obligations. As a 
result of such divestitures, we may face risks due to migration or modification of controls, procedures and policies relating to 
data privacy and cybersecurity internally or enroute. Any significant breakdown, intrusion, interruption, corruption or 
destruction of these systems, as well as any data breaches, could have a material adverse effect on our business.

The costs of complying with the requirements of federal, state and foreign laws pertaining to the privacy and security of 
personal information, including health related information and the potential liability associated with failure to do so could 
materially adversely affect our business and results of operations.

There is significant regulatory and enforcement focus on data protection in the U.S. (at both the state and federal level) and 

abroad, and an actual or alleged failure to comply with applicable U.S. or foreign data protection regulations or other data 
protection standards may expose us to litigation (including, in some instances, class action litigation), fines, sanctions or other 
penalties, which could harm our reputation and adversely impact our business, results of operations and financial condition. 
This regulatory environment is increasingly challenging and may present material obligations and risks to our business, 
including significantly expanded compliance burdens, costs and enforcement risks. If we are unable to maintain secure, 
reliable information technology systems and prevent data breaches, we may suffer legal and regulatory consequences in 
addition to business consequences. Our worldwide operations mean that we are subject to data protection and cyber-security 
laws and regulations in many jurisdictions. For example, if we are in breach of the GDPR’s or CCPA’s requirement that we 
ensure a level of security, both in terms of technology and other organizational measures, appropriate to the risk that the 
confidentiality, integrity or availability of personally identifiable data is compromised, we could be subject to fines and 
enforcement actions. Violations of GDPR can result in fines of as much as 4% of a company’s annual revenue. Other 
governments have enacted or are enacting similar data protection laws, including data localization laws that require data to 
stay within their borders. Despite programs to comply with such laws and regulations and our purchase of a cyber insurance 
policy, there is no guarantee that we will avoid enforcement actions by governmental bodies. Enforcement actions may be 
costly and interrupt regular operations of our business. In addition, there is a trend of civil lawsuits and class actions relating 
to breaches of consumer data or other cyber-attacks pursuant to laws such as CCPA. While we have not been named in any 
such lawsuits, if a breach or loss of data occurs, we could become a target of civil litigation or government enforcement 
actions.

20

Quality problems with our processes, goods, and services could harm our reputation for producing high-quality products 
and erode our competitive advantage, sales, and market share.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure. Our 

quality certifications are critical to the marketing success of our goods and services. If we fail to meet these standards, our 
reputation could be damaged, we could lose customers, and our revenue and results of operations could decline. Aside from 
specific customer standards, our success depends generally on our ability to manufacture precision-engineered components, 
sub-assemblies, and finished products to exact tolerances and from multiple materials. If our components fail to meet these 
standards or fail to adapt to evolving standards, our reputation as a manufacturer of high-quality components will be harmed, 
our competitive advantage could be damaged, and we could lose customers and market share.

We cannot guarantee that our internal R&D efforts and those R&D efforts that rely on investments and investment 
collaborations will be successful.

Our strategy to provide a broad range of therapies to restore patients to fuller, healthier lives requires a wide variety of 

technologies, products and capabilities. The rapid pace of technological development in the medical industry and the 
specialized expertise required in different areas of medicine make it difficult for one company alone to develop a broad 
portfolio of technological solutions. As a result, we also rely on investments and investment collaborations to provide us 
access to new technologies both in areas served by our existing or legacy businesses as well as in new areas.

If we do not develop innovative new and enhanced products and services on a timely basis, our offerings will become 
obsolete over time and our business and financial results could be negatively impacted. Our success depends on several 
factors, including our ability to appropriately allocate our R&D funding to products and services with higher growth 
prospects, for example, further incorporation of software; hire and retain the necessary R&D talent; stimulate customer 
demand for and convince customers to adopt new technologies; innovate and develop new technologies and applications; and 
acquire or obtain third-party technologies that may have valuable applications in the markets that we serve. 

We expect to make investments where we believe that we can stimulate the development of, or acquire new technologies 

and products to further our strategic objectives and strengthen our existing businesses. Investments and investment 
collaborations in and with medical technology companies are inherently risky, and we cannot guarantee that any of our 
previous or future acquisitions, investments or investment collaborations will be successful or will not materially adversely 
affect our consolidated earnings, financial condition or cash flows.

We are substantially dependent on patent and other proprietary rights and failing to protect such rights or to be successful 
in litigation related to our rights or the rights of others may result in our payment of significant monetary damages and/or 
royalty payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our patent 
and other proprietary rights against others. 

We rely on a combination of patents, trade secrets, and non-disclosure and non-competition agreements to protect our 

proprietary intellectual property, and we will continue to do so. While we intend to defend against any threats to our 
intellectual property, any litigation to counter the infringement, misappropriation, or unauthorized use of our intellectual 
property may require the expenditure of significant financial and managerial resources, which may adversely affect our 
business, operating results and financial condition. Additionally, our patents, trade secrets, or other agreements may not 
prevent competitors from independently developing or selling similar products and services and may not adequately deter 
misappropriation or improper use of our technology. Further, pending patent applications may not result in patents being 
issued to us. Patents issued to or licensed by us in the past or in the future may be challenged or circumvented by competitors 
and such patents may be found invalid, unenforceable or insufficiently broad to protect our technology and may limit our 
competitive advantage. Third parties could obtain patents that may require us to negotiate licenses to conduct our business, 
and the required licenses may not be available on reasonable terms or at all. 

We also rely on non-disclosure and non-competition agreements with certain employees, consultants and other parties to 
protect, in part, trade secrets and other proprietary rights. We cannot be certain that these agreements will not be breached, 
that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent 
proprietary information, or that third parties will not otherwise gain access to our trade secrets or proprietary knowledge.

We operate in an industry characterized by extensive patent litigation and are subject to patent claims from time to time. 
While we intend to defend against any third-party intellectual property threats, intellectual property litigation is inherently 
complex and unpredictable. Such litigation can result in significant damage awards and injunctions that could prevent our 
manufacture and sale of affected products or require us to pay significant royalties in order to continue to manufacture or sell 
affected products.

21

In addition, the laws and intellectual property systems of certain countries in which we market some of our products do not 

protect our intellectual property rights to the same extent as in the U.S., which may impact our market position in those 
countries. We could also face competition in countries where we have not invested in an intellectual property portfolio, or 
where we have not invested in the same protection as in the U.S. If we are unable to protect our intellectual property in those 
countries, it could have a material adverse effect on our business, financial condition, cash flows and reputation.

We are subject to environmental laws and regulations and the risk of environmental liabilities, violations and litigation in 
multiple jurisdictions, including in Saluggia, where we are currently involved in the disposal of hazardous substances and 
in Italy in relation to SNIA’s environmental liabilities.

Our operations involve the use of substances regulated under environmental laws, primarily those used in manufacturing 

and sterilization processes in the various jurisdictions where we operate. In addition, certain environmental laws assess 
liability on current, prior and/or related owners or operators of real property for the costs or investigation, removal or 
remediation of hazardous substances at their properties or at properties on which they have disposed of hazardous substances. 
For example, our Saluggia campus contains hazardous substances as a result of nuclear installations, built in 1960 under 
previous ownership, and the Italian Government has stated that we will eventually be responsible for dismantling the nuclear 
installation on Company property, which will involve cleaning and dismantling contaminated buildings and equipment as 
well as delivering the aforementioned waste to a national repository. We have recognized a liability of $39.3 million as of 
December 31, 2021. In addition, as described in “Note 13. Commitments and Contingencies” in our consolidated financial 
statements included in this Annual Report on Form 10-K along with the aforementioned matter, we are currently in litigation 
with the government in Italy stemming from a civil action where the Court of Appeal in Milan (Court of Appeal) declared 
LivaNova (formed through a merger with Sorin) jointly liable with SNIA (a former parent company of Sorin) for 
environmental liabilities incurred by SNIA’s other subsidiaries. In November 2021, the Court of Appeal delivered the 
remainder of the decision, demanding that LivaNova pay damages of approximately €453.6 million (approximately 
$514.6 million as of December 31, 2021). LivaNova appealed both the liability and damages decisions, and they will be 
decided together at the Italian Supreme Court. In February 2022, the Court of Appeal granted a stay on the demand for 
payment from the Public Administrations pending resolution of the Company’s appeal on liability and damages. The stay was 
granted with the condition that the Company provide a first demand bank surety of €270.0 million (approximately $306.2 
million as of December 31, 2021) within 30 calendar days. For additional information, please refer to “Liquidity and Capital 
Resources” within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this 
Annual Report on Form 10-K. Our liquidity, business operations or results of operations could be adversely affected by a 
negative decision in the case of SNIA or increase in anticipated costs relating to transportation of hazardous waste in 
Saluggia.

It is also possible that, a governmental authority may seek to hold us liable for successor liability violations committed by 
any companies in which we invest or that we acquire. Finally, private parties could bring personal injury or other claims due 
to the presence of, or exposure to, hazardous substances. The ultimate cost of site cleanup and timing or future cash outflows 
is difficult to predict, given the uncertainties regarding the extent of the required cleanup and the interpretation of applicable 
laws and regulations. The costs of complying with current or future environmental protection and health and safety laws and 
regulations, or liabilities arising from past or future releases of, or exposures to, hazardous substances, may exceed our 
estimates, or have a material adverse effect on our business, results of operations, financial condition and cash flows.

We are subject to the risks of conducting business internationally.

We develop, manufacture, distribute and sell our products globally and we intend to continue to pursue growth 

opportunities worldwide. Our international operations are subject to risks that are inherent in conducting business globally 
and under non-U.S. laws, regulations and customs. These risks include possible nationalization, invasions, wars, negative 
consequences associated with Brexit, expropriation, importation limitations, pricing restrictions, government shutdowns and 
violations of laws. On February 24, 2022, for example, Russia launched an invasion in Ukraine which has the potential to 
affect our ability to import certain materials used to manufacture our products and sell our products in these countries. Our 
profitability and operations are, and will continue to be, subject to a number of risks and potential costs, including: local 
product preferences and product requirements; longer-term receivables than are typical in the EU or the U.S.; difficulty 
enforcing agreements; creditworthiness of customers; trade protection measures and import and export licensing 
requirements; imposition of sanctions; different labor regulations and workforce instability; higher danger of terrorist activity, 
war or civil unrest; selling our products through distributors and agents; political and economic instability; and the risks 
further described below in the section entitled “The failure to comply with anti-bribery laws could materially adversely affect 
our business and result in civil and/or criminal sanctions.” Any of the aforementioned risks could adversely affect our 
business, results of operations, financial conditions and cash flows.

22

From time to time, certain of our subsidiaries have limited business dealings in countries subject to comprehensive 

sanctions, including Iran, Sudan, and Syria. These business dealings represent an insignificant amount of our consolidated 
revenues and income, but expose us to a heightened risk of violating applicable sanctions regulations. Violations of these 
regulations are punishable by civil penalties including fines, denial of export privileges, injunctions, asset seizures, debarment 
from government contracts and revocations or restriction of licenses, as well as criminal fines and imprisonment. We have 
established policies and procedures designed to assist with our compliance with such laws and regulations, but there can be 
no assurance that our policies and procedures will prevent us from violating these regulations in every transaction in which 
we may engage, and such a violation could adversely affect our reputation, business, results of operations, financial 
conditions and cash flows.

Our functional currency is the U.S. dollar; however, a portion of the revenues earned and expenses incurred by certain of 

our subsidiaries are denominated in currencies other than the U.S. dollar. We determine the functional currency of our 
subsidiaries that exist and operate in different economic and currency environments based on the primary economic 
environment in which the subsidiary operates, that is, the currency of the environment in which an entity primarily generates 
and expends cash. For transactions denominated in currencies other than our functional currencies, fluctuations in the 
exchange rate will impact our results of operations and financial condition. Although we may elect to hedge certain foreign 
currency exposure, we cannot be certain that the hedging activity will eliminate our currency risk.

In addition, in many of the countries where we operate, employees are covered by various laws and/or collective bargaining 

agreements that endow them, through their local or national representatives, with the right to be consulted in relation to 
specific issues, including the downsizing or closing of departments and staff reductions. The laws and/or collective 
bargaining agreements that are applicable to these agreements could have an impact on our flexibility, as they apply to 
programs to redefine and/or strategically reposition our activities. Our ability to implement staff downsizing programs or 
even temporary interruptions of employment relationships is predicated on the approval of government entities and the 
consent of labor unions. A negative response from a works council or union-organized work stoppages by employees could 
have a negative impact on our business. 

COVID-19 has had, and we expect will continue to have, an adverse effect on our business, results of operations, financial 
condition and cash flows, the nature and extent of which are uncertain and unpredictable.

The continuing global spread of COVID-19 and its variants, including corresponding preventative and precautionary 

measures that we and other businesses, communities and governments are taking to mitigate the spread of the disease, has led 
to unprecedented restrictions on, disruptions in, and other related impacts on business. COVID-19 is affecting our employees, 
customers, facilities, communities and business operations, as well as the global economy and financial markets. As the 
COVID-19 crisis continues to evolve, the full extent to which the COVID-19 pandemic will impact our business, results of 
operations, financial condition and liquidity will depend on future developments that are highly uncertain and cannot be 
accurately predicted. In addition to travel restrictions, countries, states and governments may continue to close borders, 
impose prolonged quarantines or other restrictions and requirements on travel, and further limit our ability to conduct 
business in-person as we did prior to COVID-19.

While we are seeing improvement, we continue to experience ongoing COVID-19 related headwinds and are monitoring 
the potential for various strains of the virus to cause a resumption of high levels of infection and hospitalization, that in turn, 
may affect the demand for our products. In certain geographies, hospital systems continue to prioritize treatment of 
COVID-19 patients and otherwise comply with government guidelines, thereby resulting in the suspension or cancellation of 
elective medical procedures, which has caused a reduction in sales of these products. To the extent individuals and hospital 
systems continue to de-prioritize, delay or cancel these procedures, or if unemployment or loss of insurance coverage 
adversely impacts an individual’s ability to pay for our products and services, our business, cash flows, financial condition 
and results of operations will continue to be negatively affected. Further, the COVID-19 pandemic is straining hospital 
systems around the world, resulting in adverse financial impacts to those systems that could result in reduced future 
expenditures for our products. While our clinical trials have resumed, we continue to monitor relevant conditions as there can 
be no assurance that there will not be delays or closures of sites in the future should COVID-19 or variants thereof strengthen 
or reemerge.

While the industry has experienced supply chain, labor shortage, inflation and logistical issues in the wake of COVID-19, 

to date, the supply of raw materials and the production and distribution of finished products within LivaNova remain 
operational with no material constraints. Regardless, there can be no assurance that any negative impacts from supply chain, 
staffing shortages, inflation or logistics would not adversely affect our operating results. All of our manufacturing plants have 
been able to remain open during COVID-19. Regardless, there can be no assurance that any of our facilities will not need to 
shut down in the future as a direct result of the COVID-19 pandemic. 

23

In addition, COVID-19 has impacted and may further impact the global economy and capital markets, including by 

negatively impacting demand for our products and foreign currency exchange rates, each of which may adversely impact our 
business. Further, the COVID-19 pandemic, and the volatile global economic conditions stemming from the pandemic, could 
precipitate or amplify the other risk factors that we identify here. We could experience loss of sales and profits due to delayed 
payments or insolvency of healthcare professionals, hospitals and other customers, suppliers and vendors facing liquidity 
issues. As a result, we may be compelled to take additional measures to preserve our cash flow.

Finally, COVID-19 could adversely impact our ability to retain key employees and the continued service and availability of 
skilled personnel necessary to run our productions and operations, including our executive officers and other members of our 
management team, as well as the ability of our third-party suppliers, manufacturers, distributors and vendors to retain their 
key employees. To the extent our management or other personnel are impacted in significant numbers by COVID-19 and are 
not available to perform their job duties, we could experience delays in, or the suspension of, our manufacturing operations, 
research and product development activities, regulatory work streams, clinical development programs and other important 
commercial functions.

While the impact of COVID-19 has had, and we expect it to continue to have, an adverse effect on our business, results of 
operations, financial condition and cash flows, the nature and extent of such impact is uncertain and unpredictable. For more 
information on the impact of COVID-19 on the Company and LivaNova’s mitigation measures, please refer to “Recent 
Developments Regarding COVID-19” within “Note 1. Nature of Operations,” and “COVID-19” under “Item 7. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 

The failure to comply with anti-bribery laws could materially adversely affect our business and result in civil and/or 
criminal sanctions. 

Our operations are subject to anti-corruption laws, including the UK Bribery Act, FCPA and other anti-corruption laws that 
apply in countries where we do business, that generally prohibit us and our employees and intermediaries from bribing, being 
bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some 
other business advantage. Because of the predominance of government-administered healthcare systems in many parts of the 
world outside the U.S., many of our customer relationships are potentially subject to such laws.

We are, therefore, exposed to the risk that our employees, independent contractors, principal investigators, consultants, 
vendors, independent sales agents and distributors may engage in fraudulent or other illegal activity in violation of these laws 
and our Code of Conduct. It is not always possible to identify and deter misconduct by our employees and other third parties, 
and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged 
risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be 
in compliance with such laws or regulations.

Global enforcement of anti-corruption laws has increased substantially in recent years, with more frequent voluntary self-
disclosures by companies, aggressive investigations and enforcement proceedings by governmental agencies, and assessment 
of significant fines and penalties against companies and individuals. We cannot predict the nature, scope or effect of future 
regulatory requirements to which our international operations might be subject or the manner in which existing laws might be 
administered or interpreted. Any alleged or actual violations of these regulations may subject us to government scrutiny, 
severe criminal or civil sanctions and other liabilities, including exclusion from government contracting or government 
healthcare programs, and could negatively affect our business, reputation, operating results and financial condition.

The impact of pending or existing climate change resulting from increased concentrations of carbon dioxide and other 
greenhouse gasses in the atmosphere could present major risks to our future operations.

The physical impacts of natural disasters and extreme weather conditions, such as hurricanes, tornadoes, earthquakes, 
wildfires or flooding could pose physical risks to our facilities, disrupt our supply chain operations, and negatively impact 
operational costs. In addition, as new legal and regulatory requirements designed to mitigate the effects of climate change on 
the environment are increasing, they may impose legal or regulatory requirements which may increase our compliance 
burdens and costs to meet these obligations. Individually or in the aggregate, such risks could materially negatively impact 
our future operations.

Our inability to integrate recently acquired businesses or to successfully complete and integrate future acquisitions could 
limit our future growth or otherwise be disruptive to our ongoing business.

From time to time, we acquire businesses and may pursue acquisitions in support of our strategic goals. There can be no 

assurance that acquisition opportunities will be available on acceptable terms or at all, or that we will be able to obtain 
necessary financing or regulatory approvals to complete potential acquisitions. The success of any acquisition, investment or 

24

alliance may be affected by a number of factors, including our ability to properly assess and value the potential business 
opportunity or to successfully integrate any businesses we may acquire into our existing business. The integration of the 
operations of acquired businesses requires significant efforts, including the coordination of information technologies, human 
resources, R&D, sales and marketing, operations, manufacturing, legal, compliance and finance. These efforts result in 
additional expenses and involve significant amounts of management’s time that cannot then be dedicated to other projects. 
Failure to manage and coordinate the growth of the combined company successfully could also have an adverse impact on 
our business. In addition, we cannot be certain that our investments, alliances and acquired businesses will become profitable 
or remain so. If our investments, alliances or acquisitions are not successful, we may incur costs in excess of what we 
anticipate. 

We may incur impairments of intangible assets and goodwill, primarily acquired in acquisitions, that may adversely affect 
our financial results.

As of December 31, 2021, the carrying value of our net intangible assets and goodwill totaled $1.3 billion, which 

represents 59.0% of our total assets. During the year ended December 31, 2020, we entered into a Purchase Agreement for 
the divestiture of certain of LivaNova’s subsidiaries as well as certain other assets and liabilities relating to the Company’s 
Heart Valve business that resulted in an impairment of the Heart Valves disposal group of $180.2 million and a $21.3 million 
impairment to the goodwill. During the year ended December 31, 2019, we determined that the In Process Research and 
Development (“IPR&D”) asset relating to ImThera was impaired and as a result, recorded an impairment of $50.3 million, 
and we also fully impaired the goodwill and the IPR&D asset associated with the discontinuation of the Caisson business by 
recording a $42.4 million impairment to goodwill and a $89.0 million impairment to the IPR&D asset.

We review, when circumstances warrant, the carrying amounts of our intangible assets to determine whether those carrying 
amounts continue to be recoverable in accordance with U.S. Generally Accepted Accounting Principles. Significant negative 
industry or economic trends, disruptions to our businesses, significant unexpected or planned changes in the use of assets, 
divestitures and market capitalization declines, among other events, may result in impairments to goodwill and other 
intangible assets. Recent impairments have significantly affected our financial results and future impairments could 
significantly affect reported financial results.

The closing of the proposed sale of LivaNova Site Management (“LSM”) in the context of the Heart Valves business 
divestment is subject to a number of conditions, satisfaction of which are beyond our control and there can be no 
assurance that such conditions will be satisfied or that the divestiture of LSM will be completed.

On December 2, 2020, we entered into a Purchase Agreement, amended and restated on April 9, 2021, with Mitral Holdco 
S.à r.l., a company incorporated under the laws of Luxembourg and wholly owned and controlled by funds advised by Gyrus 
Capital S.A., a Swiss private equity firm, which provides for the divestiture of LivaNova’s Heart Valve business, as well as 
site management operations conducted by the Company’s LSM subsidiary.

The divestiture of the Company’s Heart Valve business has been substantially completed. The divestiture of LSM remains 
subject to a number of closing conditions that are beyond our control, and there can be no assurance that such conditions will 
be satisfied or that such divestiture will be completed.

The success and continuing development of our products depend on maintaining strong relationships with physicians and 
healthcare professionals.

If we fail to maintain our working relationships with physicians and other healthcare professionals, our products may not 
be developed and marketed in line with the needs and expectations of the professionals who use and support our products. 
Physicians assist us as researchers, marketing consultants, product consultants, inventors and public speakers, and we rely on 
these professionals to provide us with considerable knowledge and experience. As a result of the COVID-19 pandemic, our 
access to these professionals has been limited at times, and travel restrictions, shutdowns and similar measures have impacted 
our ability to maintain these relationships, thereby affecting our ability to develop, market and sell new and improved 
products. If we are unable to maintain these strong relationships, the development and marketing of our products could suffer, 
which could have a material adverse effect on our consolidated financial condition and results of operations.

Inadequate funding for U.S. federal government agencies and government shutdowns could negatively affect our 
business, results of operations and financial condition.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government 

budget and funding levels, ability to hire and retain key personnel, government shutdowns and statutory, regulatory and 
policy changes. In addition, a portion of our revenue is dependent on U.S. federal government healthcare program 

25

reimbursement. Any disruption in U.S. federal government operations, including government shutdowns, could have a 
material adverse effect on our business, results of operations and financial condition.

We may experience volatility in the trading price of our shares due to fluctuations in our quarterly operating results, 
COVID-19 or other factors.

We experienced volatility in the trading price of our shares during 2019, 2020 and 2021, including following the pre-
release of our earnings for the first quarter in 2019 as well as during COVID-19 in 2020. In the future, our operating results 
may vary significantly from quarter to quarter due to many factors, including factors beyond our control, which may cause 
further volatility in the trading price of our shares. A number of other factors may also cause future volatility in our stock 
price, including the items discussed in this “Item 1A. Risk Factors.”

Shareholder activists could cause a disruption to our business.

In mid-October 2020, an activist investor indicated its concerns with, among other things, our capital allocation, reporting 
transparency within our sub-segments, and corporate governance and leadership. In the future, our business, operating results 
or financial condition could be adversely affected because activist proposals can be a significant distraction for our Board of 
Directors, management and employees and may require us to expend significant time and resources. Shareholder activists 
may create uncertainty for our employees, investors and customers, additional risk and uncertainties with respect to our 
financial position, operations, strategies and management, and may adversely affect our ability to attract and retain key 
employees. Any perceived uncertainties as to our future direction also may affect the market price and volatility of our 
securities.

Risks Related to our Indebtedness

Paying amounts due in cash in respect of our outstanding Notes on interest payment dates, at maturity and upon 
exchange thereof will require a cash payment. We may not have sufficient cash flow from our business to pay when due, 
or raise the funds necessary to pay when due, amounts owed in respect of the Notes or any amounts owed under our 
revolving credit facility or bridge loan facility, which could adversely affect our business and results of operations.

On June 17, 2020, our wholly-owned subsidiary, LivaNova USA, Inc., issued $287.5 million aggregate principal amount of 

3.00% Cash Exchangeable Senior Notes due in 2025 (the “Notes”). The ability to make scheduled payments of interest on, 
and principal of, to satisfy exchanges for cash in respect of, and/or to refinance, our outstanding Notes or other indebtedness 
(including any indebtedness under our revolving credit agreements) depends on our future performance, which is subject to 
economic, financial, competitive and other factors beyond our control. If we are unable to generate enough cash flow to make 
payments on the Notes or other indebtedness when due, we may be required to adopt one or more alternatives, such as selling 
assets or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to 
refinance the Notes or other indebtedness, which we may need to do in order to satisfy our obligations thereunder, will 
depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these 
activities or engage in these activities on desirable terms, which could result in a default on the Notes.

The holders of the Notes have the right to require us to repurchase their Notes upon the occurrence of a fundamental 

change (as defined in the indenture governing the Notes (the “Indenture”)) at a repurchase price equal to 100% of the 
principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. Upon repurchase of the Notes, we 
will be required to make cash payments as required by the Indenture. We may not have enough available cash or be able to 
obtain financing at the time we are required to make repurchases of, or exchange of, the Notes for cash. Our failure to 
repurchase the Notes or exchange the Notes for cash at a time when the repurchase or exchange is required by the Indenture 
governing the Notes would constitute a default under such Indenture.

In addition, our indebtedness including under the Notes, combined with our other financial obligations and contractual 

commitments including those under our revolving credit facility or bridge loan facility, could have other important 
consequences. For example, it could:

• Make us more vulnerable to adverse changes in government regulation and in the worldwide economic, industry and

•
•
•

competitive environment;
Limit our flexibility in planning for, or reacting to, changes in our business and our industry;
Place us at a disadvantage compared to our competitors who have less debt;
Limit our ability to borrow additional amounts to fund acquisitions, for working capital and for other general
corporate purposes; and

• Make an acquisition of the Company less attractive or more difficult.

26

Any of these factors could harm our business, results of operations and financial condition. In addition, if we incur 
additional indebtedness under the revolving credit facility or bridge loan facility, the risks related to our business and our 
ability to repay our indebtedness including under the Notes would increase. For additional information, please refer to “Note 
10. Financing Arrangements” in the consolidated financial statements in this Annual report on Form 10-K.

The conditional exchange features of the Notes when triggered, may adversely affect our liquidity and operating results.

If the conditional exchange feature of the Notes is triggered, holders of Notes are entitled to exchange the Notes at any time 

during specified periods, at their option. Holders of the Notes for example, are entitled to exchange the Notes during any 
calendar quarter, if the last reported sale price of LivaNova’s ordinary shares, with a nominal value of £1.00 per share for at 
least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, 
the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the exchange price – the 
exchange price being $60.98 per share and the “conversion trigger” (subject to other conditions per the Indenture) being 
$79.27 per share – on each applicable trading day. The exchange condition was satisfied on December 20, 2021, which 
allows the holders of the Notes to request to exchange the Notes through March 31, 2022. If holders elect to exchange their 
Notes during future periods following the satisfaction of an exchange condition as laid out in the Indenture, we would be 
required to settle our exchange obligation through the payment of cash, which could adversely affect our liquidity. In 
addition, the Notes are currently redeemable and classified as current, resulting in a material reduction of our net working 
capital.

Our debt instruments require us to comply with affirmative covenants and specified financial covenants and ratios and 
other obligations.

Certain restrictions and covenants in our debt instruments, including our revolving credit agreement and bridge loan 
facility, could affect our ability to operate and may limit our ability to react to market conditions or to take advantage of 
potential business opportunities as they arise. For example, such restrictions could adversely affect our ability to finance our 
operations, make strategic acquisitions, investments or alliances, restructure our organization or finance capital needs. 
Additionally, our ability to comply with these covenants and restrictions may be affected by events beyond our control, such 
as prevailing economic, financial, regulatory and industry conditions. If any of these restrictions or covenants is breached, we 
could be in default under one or more of our debt instruments, which, if not cured or waived, could result in acceleration of 
the indebtedness under such agreements and cross defaults under our other debt instruments. (For more information on these 
debt instruments, please refer to “Note 10. Financing Arrangements.”) 

The accounting for the Notes will result in LivaNova having to recognize interest expense significantly greater than the 
stated interest rates of the Notes and may result in volatility to our reported financial results, which could adversely affect 
the price at which our ordinary shares trade.

We will settle exchanges of the Notes entirely in cash. Accordingly, the exchange feature that is part of the Notes is 
accounted for as a derivative pursuant to accounting standards relating to derivative instruments. This resulted in an initial 
valuation of the exchange feature, which was bifurcated from the debt component of the Notes, resulting in an original issue 
discount. The original issue discount is amortized and recognized as a component of interest expense over the term of the 
Notes, which results in an effective interest rate reported in our consolidated statements of operations in excess of the stated 
interest rate of the Notes. Although this accounting treatment does not affect the amount of cash interest paid to holders of the 
Notes or our cash flows, it reduces our earnings and could adversely affect the price at which our ordinary shares trade.

Additionally, for each financial statement period after issuance of the Notes, a derivative gain or loss is and will be reported 
in our consolidated statements of income (loss) to the extent the valuation of the exchange feature changes from the previous 
period. The capped call transactions described below and elsewhere in this annual report are also accounted for as derivative 
instruments. The valuation of the exchange feature of the Notes and capped call transactions utilizes significant observable 
and unobservable market inputs, including stock price, stock price volatility, risk-free interest rate, and time to expiration of 
the Notes. The change of inputs at period end from the previous period may result in a material change of the valuation and 
the gain or loss resulting from the exchange feature of the Notes and capped call transactions may not completely offset each 
other. As such, there may be a material net impact to our consolidated statements of operations, which could adversely affect 
the price at which our ordinary shares trade.

27

The arbitrage or hedging strategy by purchasers of the Notes and Option Counterparties in connection with our capped 
call transactions may affect the value of our ordinary shares.

We expect that many investors in, and potential purchasers of the Notes will employ, or seek to employ, an arbitrage 
strategy with respect to the Notes. Investors would typically implement such a strategy by selling short our ordinary shares 
underlying the Notes and dynamically adjusting their short position while continuing to hold the Notes. Investors may also 
implement this type of strategy by entering into swaps on our ordinary shares in lieu of or in addition to selling short our 
ordinary shares. This activity could decrease (or reduce the size of any increase in) the market price of our ordinary shares at 
that time.

In connection with the pricing of the Notes, we entered into privately negotiated capped call transactions with certain 

financial institutions (the “Option Counterparties”). The capped call transactions are expected generally to offset cash 
payments due upon exchange of the Notes in excess of the principal amount thereof in the event that the market value per 
ordinary share of the Company is at the time of exchange of the Notes greater than the strike price under the capped call 
transactions, with such offset subject to a cap based on the cap price. We understand the Option Counterparties, or their 
respective affiliates, in connection with establishing their initial hedges of the capped call transactions, purchased our 
ordinary shares and/or entered into various derivative transactions with respect to our ordinary shares concurrently with or 
shortly after the pricing of the Notes. The Option Counterparties or their respective affiliates may modify these initial hedge 
positions by entering into or unwinding various derivatives with respect to our ordinary shares and/or purchasing or selling 
our ordinary shares or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are 
likely to do so during any observation period related to an exchange of the Notes or upon a repurchase or redemption of the 
Notes). This activity could cause or avoid an increase or decrease in the market price of our ordinary shares at that time.

We are subject to counterparty risk with respect to the capped call transactions.

The Option Counterparties are financial institutions, and we are subject to the risk that they might default under the capped 

call transactions. Our exposure to the credit risk of the Option Counterparties is not secured by any collateral.

If an Option Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those 

proceedings, with a claim equal to our exposure at that time under the capped call transactions with that Option Counterparty. 
Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the 
market price and in the volatility of our ordinary shares. In addition, upon a default by an Option Counterparty, we may suffer 
adverse tax consequences and may, on a net basis, have to pay more cash to settle exchanges of the Notes. We can provide no 
assurances as to the financial stability or viability of the Option Counterparties.

Risks Relating to Tax and Our Jurisdiction of Incorporation

We are incorporated in England and Wales, and governed by their laws which may afford less protection to shareholders 
than under U.S. laws. 

Being that we are a public limited company incorporated under the laws of England and Wales, our shareholders may have 
more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction of the United 
States. It may be difficult to enforce any court judgments obtained in the U.S. against us in the U.K. based on the civil 
liability provisions of U.S. federal or state securities laws. In addition, there is also some uncertainty as to whether the courts 
of U.K. would recognize or enforce judgements of U.S. courts obtained against us or any of our directors or officers.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial 
condition and results of operations.

We are subject to income taxes as well as non-income based taxes in the U.S., the UK, the EU and various other 

jurisdictions. No assurances can be given as to what our worldwide effective corporate tax rate will be because of, among 
other things, uncertainty regarding the tax regulations and laws, enactment and enforceability thereof and policies of the 
jurisdictions where we operate. Our actual effective tax rate may vary from our expectations or from historical trends and that 
variance may be material. Our effective tax rates could be affected by changes in the mix of earnings in countries with 
differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their 
interpretation. We are also subject to ongoing tax audits in various non-U.S. jurisdictions. Tax authorities may disagree with 
certain positions we have taken and assess additional taxes. We believe that our accruals reflect the probable outcome of 
known contingencies. However, there can be no assurance that we will accurately predict the outcomes of ongoing audits, 
and the actual outcomes of these audits could have a material impact on our consolidated statements of income (loss) or 
financial condition. 

28

The IRS may not agree with the conclusion that we should be treated as a foreign corporation for U.S. federal tax 
purposes, and we may be required to pay substantial U.S. federal income taxes. 

Based on our management and organizational structure, we believe that we should be regarded as a resident exclusively in 
the UK for tax purposes and that we are appropriately treated as a foreign corporation for U.S. federal tax purposes. Although 
we are incorporated in the UK, the U.S. Internal Revenue Service (the “IRS”) may assert that we should be treated as a U.S. 
corporation (and, therefore, a U.S. tax resident) for U.S. federal tax purposes. If we were to be treated as a U.S. corporation 
for U.S. federal income tax purposes, we could be subject to substantially greater U.S. tax liability than currently 
contemplated as a non-U.S. corporation.

The IRS may limit Cyberonics’ and its U.S. affiliates’ ability to utilize their U.S. tax attributes as a result of the merger of 
Cyberonics and Sorin.

The merger of Cyberonics and Sorin is considered an inversion for tax purposes. The U.S. Internal Revenue Code (“IRC”) 

and regulations under the IRC impose a minimum level of tax on any “inversion gain” of a U.S. corporation (and any U.S. 
person related to the U.S. corporation) depending on the resulting percentage ownership by U.S. persons of the merged 
company. The effect of this provision in the IRC is to deny the use of certain U.S. tax attributes (including net operating 
losses and certain tax credits) to offset U.S. tax liability, if any, attributable to such inversion gain. In our case, we believe 
that the former stockholders of Cyberonics own less than the IRC’s stated percentage of the Company. However, it cannot be 
assured that the IRS will agree with our position.

As an English public limited company, certain capital structure decisions require shareholder approval, which may limit 
our flexibility to manage our capital structure.

We are a public limited company incorporated under the laws of England and Wales. Under English law, our board of 
directors may only allot shares with the prior authorization of shareholders. English law also generally provides shareholders 
with preemptive rights when new shares are issued for cash, which rights may be excluded by shareholders. In addition, 
English law generally prohibits a public company from repurchasing its own shares without the prior approval of 
shareholders. At the 2020 AGM, our shareholders approved the amendment of our articles of association to authorize the 
allotment of additional shares of up to 20% of our outstanding share capital without preemptive rights for a period of five 
years, though prior to the 2020 AGM, the Company declared, based on discussions with stakeholders and advisors, that it 
would not utilize such authorities for more than 18 months in excess of an amount equal to 10% of our then share capital. As 
a result, at future AGMs, we will be seeking shareholder approval to renew these authorities. If we do not receive shareholder 
approval of these matters, we may not be able to raise additional capital, in a timely manner or at all, if and as needed to fund 
our operations. In addition, we may not be able to continue to grant equity awards to employees, directors, officers and 
consultants under our incentive plans.

Transfers of our shares, other than ones effected by means of the transfer of book-entry interests in the Depository Trust 
Company (“DTC”), may be subject to UK stamp duty or UK stamp duty reserve tax (“SDRT”). 

Transfers of our shares effected by means of the transfer of book-entry interests in DTC are not subject to UK stamp duty 

or SDRT. However, if a shareholder holds our shares directly rather than through DTC, any transfer of shares could be 
subject to UK stamp duty or SDRT at a rate of 0.5% of the consideration paid for the transfer and certain issues or transfers 
of shares to depositories or into clearance services are charged at a rate of 1.5% of the consideration paid for the transfer, or 
1.5% of the market value of the shares if there is no consideration. The transferee generally pays the UK stamp duty or 
SDRT. The potential for UK stamp duty or SDRT could adversely affect the trading price of our shares.

The facilities of DTC are a widely used mechanism that allow for rapid electronic transfers of securities between the 
participants in the DTC system, which include many large banks and brokerage firms. Our shares are at present, subject to 
certain conditions, generally eligible for deposit and clearing within the DTC system. However, DTC generally has discretion 
to cease to act as a depository and clearing agency for our shares. If DTC determines at any time that our shares are not 
eligible for continued deposit and clearance within its facilities, then we believe that our shares would not be eligible for 
continued listing on a U.S. securities exchange and trading in our shares would be disrupted. While we would pursue 
alternative arrangements to preserve the listing and maintain trading, any such disruption could have a material adverse effect 
on the trading price of our shares. 

29

Item 1B. Unresolved Staff Comments 

None. 

Item 2. Properties

Our principal executive office is located in the UK and is leased by us. Our business segments have headquarters located in 
the U.S. for Neuromodulation and Advanced Circulatory Support and Italy for Cardiopulmonary. We have manufacturing and 
research facilities located in Brazil, Germany, Italy, Australia and the U.S. Our manufacturing and research facilities are 
approximately 1.0 million square feet. The manufacturing and research facilities located in the U.S., Italy and Brazil are 
substantially owned by us. Approximately 45% of our manufacturing and research facilities by square feet are located within 
the U.S. Approximately 58% of our manufacturing and research facilities by square feet are owned by us and the balance is 
leased.

We also maintain 22 primary administrative offices in 18 countries. Most of these locations are leased. We are using 

substantially all of our currently available productive space to develop, manufacture and market our products. We believe that 
all of our facilities are in good operating condition, suitable for their respective uses and adequate for current needs.

Item 3. Legal Proceedings

Information pertaining to certain material pending legal and regulatory proceedings and settlements is incorporated herein by 

reference to “Note 13. Commitments and Contingencies” in our consolidated financial statements and accompanying notes, 
beginning on page F-1 of this Annual Report on Form 10-K and should be considered an integral part of “Item 3 of Part I” of 
this Annual Report on Form 10-K. 

Item 4. Mine Safety Disclosures 

Not applicable.

30

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of 
Equity Securities

Our ordinary shares are quoted on the NASDAQ Global Market under the symbol “LIVN.”

As of February 24, 2022, according to data provided by our transfer agent, there were 21 stockholders of record. A 

substantially greater number of holders of our ordinary shares are “street name” or beneficial holders, whose shares of record 
are held by banks, brokers and other financial institutions.

Dividend Policy

We currently have no intention to declare and pay dividends.

Issuer Purchases of Securities

None.

Stock Performance Graph

The following graph compares our five-year cumulative total return with the five-year cumulative total return of the 

companies on the Standard & Poor’s (“S&P’s”) 500 Index and the companies on the S&P Health Care Equipment Index. This 
graph assumes the investment of $100 on December 31, 2016 and the reinvestment of all dividends since that date. 

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among LivaNova Plc, the S&P 500 Index 
and the S&P Health Care Equipment Index

$300

$250

$200

$150

$100

$50

$0

LivaNova Plc

S&P 500

S&P Health Care Equipment Index

12/31/16
$100.00

100.00

100.00

12/31/17
177.72

121.83

130.90

12/31/18
203.40

116.49

152.15

12/31/19
167.73

153.17

196.77

12/31/20
147.23

181.35

231.46

12/31/21
194.42

233.41

276.26

*$100 invested on 12/31/16 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

The information under the caption “Stock Performance Graph” above is not deemed to be “filed” as part of the Annual 

Report on Form 10-K and is not subject to the liability provisions of Section 18 of the Exchange Act. Such information will not 
be deemed incorporated by reference into any filing we make under the Securities Act unless we explicitly incorporate it into 
such filing at such time.

Item 6. [Reserved]

31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the 

corresponding notes included elsewhere in this Annual Report on Form 10-K. Certain percentages presented in this discussion 
and analysis are calculated from the underlying whole-dollar amounts and therefore may not be recalculated from the rounded 
numbers used for disclosure purposes. The following discussion, analysis and comparisons generally focus on the operating 
results for the years ended December 31, 2021 (“2021”), December 31, 2020 (“2020”) and December 31, 2019 (“2019”).

We have elected to omit certain discussions on the earliest of the three years covered in this Annual Report on Form 10-K. 
Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations located in our Form 
10-K for the year ended December 31, 2020, filed on March 1, 2021, for reference to discussion of the fiscal year ended
December 31, 2019, the earliest of the three fiscal years presented.

COVID-19

Since early 2020, the COVID-19 pandemic (“COVID-19”) has caused and may continue to cause unpredictable demand for 

our products. Throughout the pandemic, healthcare customers have diverted medical resources and priorities towards the 
treatment of COVID-19, and public health bodies have delayed elective procedures, which has negatively impacted the usage of 
our products. Further, some people have avoided seeking treatment for non-COVID-19 procedures and hospitals and clinics 
have experienced staffing shortages, which have negatively impacted the demand for our products. While we have seen 
improvement during 2021, we continue to experience ongoing COVID-19 related headwinds and are monitoring the potential 
for various strains of the virus to cause a resumption of high levels of infection and hospitalization, that in turn, may affect the 
demand for our products.

While our RECOVER study and ANTHEM-HFrEF pivotal trial experienced delays during 2020 due to COVID-19, work 
continued to progress throughout 2021. Impacts related to the Delta strain of COVID-19 created some delay in implants in the 
RECOVER study, and we continue to monitor relevant conditions at participating centers for both RECOVER and ANTHEM-
HFrEF as there can be no assurance that there will not be closures of sites in the future should COVID-19 or variants thereof 
strengthen or reemerge.

Our business operations have been affected by a range of external factors related to the pandemic that are not within our 
control. For example, many jurisdictions have imposed, and in some cases reimposed, a wide range of restrictions to limit the 
spread of COVID-19. We continue to evaluate the evolving laws and regulations developing around the world and are working 
to meet customer-specific requirements to operate in a COVID-19 business environment. However, if the pandemic has a 
substantial impact on our employees, vendors, suppliers or productivity, our operations may suffer, and in turn our results of 
operations and overall financial performance may be harmed.

Importantly, we continue to take actions in managing the health and safety of our employees throughout the pandemic. As 

guidance from authorities such as the U.S. Centers for Disease Control and Prevention or the World Health Organization 
evolves, we update our practices accordingly. For our manufacturing, operations, and other personnel who have remained on 
site throughout the pandemic due to the essential nature of their work, we have implemented safety measures such as the use of 
personal protective equipment and social distancing measures. At the start of the pandemic, we instructed the majority of our 
employees at many of our facilities across the globe to work from home on a temporary basis and implemented company-wide 
travel restrictions. Though there has been no Company-wide mandate to return to the office, employees are encouraged to 
return for purposeful collaboration. We continue to maintain enhanced safety protocols and encourage our employees to seek 
vaccination. We have incurred additional expenses in connection with our response to the COVID-19 pandemic, including 
manufacturing inefficiencies and costs related to enabling our employees to support our customers while working remotely. 

We have successfully implemented our business continuity plans, and our management team is responding to changes in our 
environment quickly and effectively. We have not closed any of our manufacturing plants. Additionally, while there are many 
supply chain, labor shortage, inflation and logistical issues emerging in the wake of COVID-19 related disruptions, to date, the 
supply of raw materials and the production and distribution of finished products remain operational with no material constraints 
relating to COVID-19. We continue to monitor the landscape for any potential disruptions.

We continue to implement cost reduction efforts. We have reduced expenses by evaluating whether projects and initiatives 
are critical to meet the needs of the Company, protecting strategic priorities for future growth, reducing discretionary spending 
and tightening management of personnel costs. 

The extent to which the COVID-19 pandemic continues to impact the Company’s results of operations and financial 

condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that 
may emerge concerning the severity and longevity of COVID-19 and its variants, the resurgence of COVID-19 in regions that 

32

have begun to recover from the initial impact of the pandemic, the impact of COVID-19 on economic activity and the actions to 
contain its impact on public health and the global economy.

For further discussion on COVID-19, refer to “Item 1A. Risk Factors” of this Annual Report on Form 10-K under the section 

entitled “COVID-19 has had, and we expect will continue to have, an adverse effect on our business, results of operations, 
financial condition and cash flows, the nature and extent of which are uncertain and unpredictable.”

Description of the Business

We are a public limited company organized under the laws of England and Wales and headquartered in London, England. We 

are a global medical device company focused on the development and delivery of important products and therapies for the 
benefit of patients, healthcare professionals and healthcare systems throughout the world. We design, develop, manufacture and 
sell innovative products and therapies that are consistent with our mission to provide hope to patients through innovative 
technologies, delivering life-changing improvements for both the Head and Heart.

Background

We were organized under the laws of England and Wales on February 20, 2015 for the purpose of facilitating the business 
combination of Cyberonics, Inc., a Delaware corporation, and Sorin S.p.A., a joint stock company organized under the laws of 
Italy. The business combination became effective in October 2015. LivaNova’s ordinary shares are listed for trading on the 
NASDAQ Global Market under the symbol “LIVN.”

Business Segments

LivaNova is comprised of three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory 
Support, corresponding to our primary business units. Other includes the results of our Heart Valves business, which was 
disposed of on June 1, 2021, and corporate shared service expenses for finance, legal, human resources, information technology 
and corporate business development.

Effective in the fourth quarter of 2021, LivaNova changed its reportable segments corresponding to changes in how the 
Company’s chief operating decision maker regularly reviews information, allocates resources and assesses performance. The 
segment financial information presented herein reflects these changes for all periods presented. The Company’s changes to its 
reportable segments are summarized as follows:

•

•

•

The Company’s Advanced Circulatory Support business is no longer assessed as part of the Company’s previously
reported Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Cardiopulmonary business is no longer assessed as part of the Company’s previously reported
Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Heart Valves business, which was disposed of on June 1, 2021, is now included within Other.

Cardiopulmonary

Our Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including 
oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. 

Cardiopulmonary Product Approval

In April 2021, the FDA provided 510(k) clearance for B-Capta, the new in-line, blood-gas monitoring system integrated into 

the Company’s S5 heart-lung machine. The system is designed to easily and accurately monitor arterial and venous blood gas 
parameters even during long and complex pediatric and adult cardiopulmonary bypass procedures. B-Capta, which received CE 
Mark in May 2020 and completed a successful limited commercial release in Europe, is now available globally.

Product Remediation

On December 29, 2015, we received an FDA Warning Letter (the “Warning Letter”) alleging certain violations of FDA 
regulations applicable to medical device manufacturing at our Munich, Germany and Arvada, Colorado facilities and issued 
inspectional observations on the FDA’s Form-483 applicable to our Munich, Germany facility.

The Warning Letter further stated that our 3T Heater-Cooler devices (the “3T devices”) and other devices we manufactured at 

our Munich facility were subject to refusal of admission into the U.S. until resolution of the issues set forth by the FDA in the 
Warning Letter. The FDA informed us that the import alert was limited to the 3T devices, but that the agency reserved the right 
to expand the scope of the import alert if future circumstances warranted such action. The Warning Letter did not request that 
existing users cease using the 3T device, and manufacturing and shipment of all our products other than the 3T device were 
unaffected by the import limitation. To help clarify these issues for current customers, we issued an informational Customer 

33

Letter in January 2016 and that same month agreed with the FDA on a process for shipping 3T devices to existing U.S. users 
pursuant to a certificate of medical necessity program. 

Finally, the Warning Letter stated that premarket approval applications for Class III devices to which certain Quality System 

regulation deviations identified in the Warning Letter were reasonably related would not be approved until the violations had 
been corrected; however, this restriction applied only to the Munich and Arvada facilities, which do not manufacture or design 
devices subject to Class III premarket approval. 

On February 25, 2020, LivaNova received clearance for K191402, a 510(k) for the 3T devices that addressed issues 
contained in the 2015 Warning Letter along with design changes that further mitigate the potential risk of aerosolization. 
Concurrent with this clearance, (1) 3T devices manufactured in accordance with K191402 will not be subjected to the import 
alert and (2) LivaNova initiated a correction to distribute the updated Operating Instructions cleared under K191402. With this 
510(k) clearance, all actions to remediate the FDA’s inspectional observations in the Warning Letter are complete, and at this 
time, LivaNova is awaiting the FDA’s close-out inspection.

For further information, refer to “Note 13. Commitments and Contingencies” in our consolidated financial statements and 

accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K. 

Centers for Disease Control and Prevention (“CDC”) and FDA Safety Communications, Company Field Safety Notice Update 
and Product Remediation Plan

On October 13, 2016, the CDC and the FDA separately released safety notifications regarding the 3T devices. The CDC’s 
Morbidity and Mortality Weekly Report (“MMWR”) and Health Advisory Notice (“HAN”) reported that tests conducted by the 
CDC and its affiliates indicate that there appears to be genetic similarity between both patient and 3T device strains of the non-
tuberculous mycobacterium (“NMT”) bacteria M. chimaera isolated in hospitals in Iowa and Pennsylvania. Citing the 
geographic separation between the two hospitals referenced in the investigation, the report asserts that 3T devices manufactured 
prior to August 18, 2014 could have been contaminated during the manufacturing process. The CDC’s HAN and FDA’s Safety 
Communication, issued contemporaneously with the MMWR report, each assess certain risks associated with 3T devices and 
provide guidance for providers and patients. The CDC notification states that the decision to use the 3T device during a surgical 
operation is to be taken by the surgeon based on a risk approach and on patient need. Both the CDC’s and FDA’s 
communications confirm that 3T devices are critical medical devices and enable doctors to perform life-saving cardiac surgery 
procedures. 

Also on October 13, 2016, concurrent with the CDC’s HAN and FDA’s Safety Communication, we issued a Field Safety 
Notice Update for U.S. users of 3T devices to proactively and voluntarily contact facilities to aid in implementation of the CDC 
and FDA recommendations. In the fourth quarter of 2016, we initiated a program to provide existing 3T device users with a 
new loaner 3T device at no charge pending regulatory approval and implementation of additional risk mitigation strategies 
worldwide, including a vacuum canister and internal sealing upgrade program and a deep disinfection service. In April 2017, 
we obtained CE Mark in Europe for the design change of the 3T device, and in October 2018, the FDA concluded that we could 
commence the vacuum canister and internal sealing upgrade program in the U.S. On February 25, 2020, LivaNova received 
clearance for K191402, a 510(k) for the 3T devices that addressed issues contained in the 2015 Warning Letter along with 
design changes that further mitigate the potential risk of aerosolization. We are in the process of completing and closing out all 
recall activities with the FDA. While our vacuum canister and internal sealing upgrade program and deep cleaning service in 
the U.S. are substantially complete, these services will continue as a servicing option outside of the U.S.

On December 31, 2016, we recognized a liability for a product remediation plan related to our 3T Heater-Cooler device (“3T 
device”). We concluded that it was probable that a liability had been incurred upon management’s approval of the plan and the 
commitments made by management to various regulatory authorities globally in the fourth quarter of 2016, and furthermore, 
the cost associated with the plan was reasonably estimable. At December 31, 2021, the product remediation liability was $0.8 
million. For further information, refer to “Note 6. Product Remediation Liability” in our consolidated financial statements and 
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

34

Product Liability

The Company is currently involved in litigation involving our 3T device. The litigation includes federal multi-district 

litigation in the U.S. District Court for the Middle District of Pennsylvania, various U.S. state court cases and cases in 
jurisdictions outside the U.S. A class action, filed in February 2016 in the U.S. District Court for the Middle District of 
Pennsylvania, consisting of all Pennsylvania residents who underwent open heart surgery at WellSpan York Hospital and Penn 
State Milton S. Hershey Medical Center between 2011 and 2015 and who currently are asymptomatic for NTM infection, was 
dismissed on July 16, 2021. 

On March 29, 2019, we announced a settlement framework that provides for a comprehensive resolution of the personal 
injury cases pending in the multi-district litigation in U.S. federal court, the related class action in federal court, as well as 
certain cases in state courts across the United States. The agreement, which makes no admission of liability, is subject to certain 
conditions, including acceptance of the settlement by individual claimants and provides for a total payment of up to $225 
million to resolve the claims covered by the settlement. Per the agreed-upon terms, the first payment of $135 million was paid 
into a qualified settlement fund in July 2019 and the second payment of $90 million was paid in January 2020. Cases covered 
by the settlement are being dismissed as amounts are disbursed to individual plaintiffs from the qualified settlement fund.

Cases in state and federal courts in the U.S. and in jurisdictions outside the U.S. continue to progress. As of March 1, 2022, 
including the cases encompassed in the settlement framework described above that have not yet been dismissed, we are aware 
of approximately 90 filed and unfiled claims worldwide, with the majority of the claims in various federal or state courts 
throughout the United States. This number includes seven cases that have settled but have not yet been dismissed. 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.

At December 31, 2021, the provision for these matters was $39.5 million. While the amount accrued represents our best 

estimate for those filed and unfiled claims that are both probable and estimable, the actual liability for resolution of these 
matters may vary from our estimate.

Neuromodulation 

Our Neuromodulation segment designs, develops and markets devices that deliver neuromodulation therapy to treat DRE, 
and DTD. It encompasses the development and management of clinical testing of our aura6000 System for treating OSA, a 
device that stimulates the hypoglossal nerve, which in turn, engages certain muscles in the tongue in order to open the airway 
while a patient is sleeping, as well as our VITARIA System for treating heart failure by stimulating the right vagus nerve. 

Epilepsy

We continue to make significant investments in R&D focused on improving the VNS Therapy System with an enhanced 
pulse generator, lead and programming software, and we are developing new products that provide additional features and 
functionality. We also support studies for our product development efforts and to build clinical evidence for the VNS Therapy 
System. 

Peer reviewed evidence published in 2021 and 2022 continues to confirm the safety, efficacy and cost effectiveness of VNS 
Therapy in both the adult and pediatric patient population. In January 2022, the Journal of Neurology published a meta-analysis 
and systematic review that demonstrated benefits of VNS Therapy in adults with DRE that demonstrates that seizure frequency 
improves without an increase in the rate of serious adverse events or discontinuations. These data further support consideration 
of VNS Therapy for people who are not responding to ASMs and those unsuitable or unwilling to undergo surgery.

Depression

US

In July 2005, the FDA approved the VNS Therapy System for the adjunctive treatment of chronic or recurrent depression for 

patients 18 years or older who are experiencing a major depressive episode and have not had an adequate response to four or 
more antidepressant treatments. In May 2007, CMS issued a national non-coverage determination within the U.S. with respect 
to reimbursement of the VNS Therapy System for patients with DTD, significantly limiting access to this therapeutic option for 
most patients. 

In March 2017, the American Journal of Psychiatry published the results of the longest and largest naturalistic study (the 
“D23 study”) on treatments for patients experiencing chronic and severe DTD. The findings showed that the addition of the 
VNS Therapy System to traditional treatment is effective in significantly reducing symptoms of depression and well tolerated 

35

compared with traditional treatment alone. Following publication of the D23 study, we requested CMS to reconsider its 
previous NCD, and in May 2018, CMS published a tracking sheet to reconsider its NCD. 

In February 2019, CMS produced a final decision providing coverage for Medicare beneficiaries through CED when offered 
in a CMS-approved, double-blind, randomized, placebo-controlled trial with a follow-up duration of at least one year, as well as 
coverage of VNS Therapy device replacement. The CED also includes the possibility to extend the study to a prospective 
longitudinal registry.

In September 2019, CMS accepted the protocol for our RECOVER clinical study and the first patient was enrolled. 

RECOVER will include up to 500 unipolar and up to 500 bipolar patients at a maximum of 100 sites in the United States in the 
randomized part of the trial and up to an additional 5,800 patients in an open label registry.

In February 2020, we announced a research collaboration with Verily, a subsidiary of Alphabet Inc., to capture clinical 
biomarkers of depression within our RECOVER clinical study. Using technology and analytics by way of the Verily Study 
Watch and related Verily mobile phone application, LivaNova and Verily aim to gather quantitative data to further understand 
depressive episodes and a patient’s response to treatment. These complementary approaches are expected to help investigators 
better understand the impact of depression and its treatment on study participants’ lives in a more objective and multi-
dimensional manner. In April 2021, LivaNova and Verily announced that the first patient had been enrolled in their 
collaborative UNCOVER study, a subset of the RECOVER study. 

Outside the U.S.

In January 2018, we announced the launch and enrollment of the first patient in our RESTORE-LIFE study, which evaluates 

the use of our VNS Therapy System in patients who have DTD and failed to achieve an adequate response to standard 
psychiatric management. 

In March 2020, our VNS Therapy System, Symmetry received CE mark approval for DTD.

Obstructive Sleep Apnea

In January 2018, we acquired full ownership of ImThera, a privately held, emerging-growth company developing an 

implantable neurostimulation device system for the treatment of obstructive sleep apnea. The device stimulates the hypoglossal 
nerve, which in turn, engages certain muscles in the tongue in order to open the airway while a patient is sleeping. We have a 
commercial presence in the European market. 

In June 2021, LivaNova received approval from the FDA to proceed with its investigational device exemption clinical study, 

“Treating Obstructive Sleep Apnea using Targeted Hypoglossal Neurostimulation (OSPREY).” The OSPREY study seeks to 
confirm the safety and effectiveness of the aura6000 System, the LivaNova implantable hypoglossal neurostimulation device 
intended to treat adult patients with moderate to severe obstructive sleep apnea.

Heart Failure

We are focused on the development and clinical testing of the VITARIA System for treating heart failure through vagus 

nerve stimulation. The VITARIA System provides a specific method of VNS called autonomic regulation therapy (“ART”), and 
it includes elements similar to the VNS Therapy System: pulse generator, lead, programming computer and wand. In 2012, we 
initiated a pilot study, ANTHEM-HF, outside the U.S., and the published results support the safety and efficacy of ART 
delivered to patients with advanced heart failure expressing symptoms despite guideline-directed medical therapy. The study 
was extended to continue follow-up of patients through 42 months, the results for which have been published in a peer-
reviewed cardiology journal. During 2014, we initiated a second pilot study outside the U.S., ANTHEM-HFpEF, to study ART 
in patients experiencing symptomatic heart failure with preserved ejection fraction. The VITARIA System is not approved in 
the U.S. though it has been designated as a breakthrough technology by the FDA. The VITARIA System received CE Mark 
approval in 2015. 

In September 2018, we announced the first successful implantation of the VITARIA System in a patient randomized in the 

ANTHEM-HFrEF Pivotal Study, an international, multi-center, randomized trial (adaptive sample size) to evaluate the 
VITARIA System (FDA’s Breakthrough Technology designation) for the treatment of advanced heart failure. The trial was 
paused temporarily in March 2020 due to COVID-19 restrictions, but we were able to re-initiate enrollment and screening 
activities shortly thereafter in more than half of the sites. We continue to monitor relevant conditions at medical centers 
participating in the trial. In December 2021, we enrolled the 400th patient in the trial, and in January 2022, the 300th patient 
completed the nine-month follow-up visit. Given these milestone achievements, the first interim analysis is being conducted by 
independent statisticians. 

36

Advanced Circulatory Support

Our Advanced Circulatory Support segment is engaged in the development, production and sale of leading-edge temporary 
life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life 
support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae.

In July 2019, the FDA approved our LifeSPARC system, a new generation of the Advanced Circulatory Support pump and 

controller. In the fourth quarter of 2019, we began a limited commercial release in the U.S., followed by a full commercial 
launch in the second half of 2020.

Divestiture of Heart Valves Business

On December 2, 2020, LivaNova entered into a Share and Asset Purchase Agreement (“Purchase Agreement”) with Mitral 
Holdco S.à r.l., a company incorporated under the laws of Luxembourg and wholly owned and controlled by funds advised by 
Gyrus Capital S.A., a Swiss private equity firm. The Purchase Agreement provided for the divestiture of certain of LivaNova’s 
subsidiaries as well as certain other assets and liabilities relating to the Company’s Heart Valve business and site management 
operations conducted by the Company’s subsidiary LSM at the Company’s Saluggia campus for €60.0 million (approximately 
$68.1 million as of December 31, 2021). On April 9, 2021, LivaNova and the Purchaser entered into an Amended and Restated 
Share and Asset Purchase Agreement (the “A&R Purchase Agreement”) which amends and restates the original Purchase 
Agreement to, among other things, defer the closing of the sale and purchase of LSM by up to two years and include or amend 
certain additional terms relating to such deferral, including certain amendments relating to the potential hazardous substances 
liabilities of LSM and the related expense reimbursement provisions. The closing of the sale of the Heart Valve business 
occurred on June 1, 2021 and we received €34.8 million (approximately $42.5 million as of June 1, 2021), subject to customary 
trade working capital and net indebtedness adjustments, as set forth in the Purchase Agreement. We received $3.0 million in 
additional proceeds during the fourth quarter of 2021. An additional €9.3 million (approximately $10.6 million as of December 
31, 2021) is payable to LivaNova in 2022. 

37

Results of Operations

The following table summarizes our consolidated results for the years ended December 31, 2021, 2020 and 2019 (in 

thousands):

Net sales

Cost of sales

Gross profit

Operating expenses:

Selling, general and administrative

Research and development

Impairment of disposal group

Impairment of goodwill

Impairment of long-lived assets

Other operating expenses

Operating loss from continuing operations

Interest income

Interest expense

Loss on debt extinguishment

Foreign exchange and other gains/(losses)

Loss from continuing operations before tax

Income tax expense (benefit)

Losses from equity method investments

Net loss from continuing operations

Net (loss) income from discontinued operations, net of tax

Year Ended December 31,
2020 (1)

2019 (1)

2021

$ 

1,035,365  $ 

934,241  $ 

1,084,170 

329,371 

705,994 

471,904 

183,414 

— 

— 

— 

51,460 

(784)   

435 

(50,151)   

(60,238)   

(13,734)   

339,478 

594,763 

446,561 

152,902 

180,160 

21,269 

6,762 

61,008 

360,365 

723,805 

528,466 

146,849 

— 

42,417 

142,517 

35,110 

(273,899)   

(171,554) 

131 

(40,837)   

(1,407)   

(32,010)   

803 

(15,091) 

— 

(2,536) 

(188,378) 

(30,374) 

— 

(158,004) 

365 

(124,472)   

(348,022)   

11,198 

(148)   

(135,818)   

— 

(960)   

(264)   

(347,326)   

(1,493)   

Net loss

$ 

(135,818)  $ 

(348,819)  $ 

(157,639) 

(1) The consolidated results the years ended December 31, 2020 and 2019 have been revised. For further details refer to “Note 

1. Nature of Operations” in our consolidated financial statements and accompanying notes, beginning on page F-1 of this 
Annual Report on Form 10-K.

38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales by Segment and Geographic Area:

The following table presents net sales by operating segment and geographic region (in thousands, except for percentages):

Year Ended December 31,
2020

2021

2019

2021 vs 2020

2020 vs 2019

% Change

Cardiopulmonary
United States
Europe (1)
Rest of World

Neuromodulation
United States
Europe (1)
Rest of World

Advanced Circulatory Support

United States
Europe (1)
Rest of World

Other (2)

United States
Europe (1)
Rest of World

Totals

United States
Europe (1)
Rest of World
Total

$ 

154,073  $ 
134,562 
194,344 
482,979 

132,543  $ 
122,062 
192,127 
446,732 

358,476 
51,435 
46,261 
456,172 

53,821 
1,120 
518 
55,459 

4,929 
14,407 
21,419 
40,755 

282,509 
39,019 
32,916 
354,444 

41,094 
1,027 
200 
42,321 

12,488 
31,259 
46,997 
90,744 

161,471 
135,632 
207,613 
504,716 

335,332 
46,262 
42,953 
424,547 

30,781 
741 
401 
31,923 

18,900 
40,548 
63,536 
122,984 

571,299 
201,525 
262,541 
1,035,365  $ 

$ 

468,634 
193,367 
272,240 
934,241  $ 

546,484 
223,183 
314,503 
1,084,170 

 16.2 %
 10.2 %
 1.2 %
 8.1 %

 26.9 %
 31.8 %
 40.5 %
 28.7 %

 31.0 %
 9.1 %
 159.0 %
 31.0 %

 (60.5) %
 (53.9) %
 (54.4) %
 (55.1) %

 21.9 %
 4.2 %
 (3.6) %
 10.8 %

 (17.9) %
 (10.0) %
 (7.5) %
 (11.5) %

 (15.8) %
 (15.7) %
 (23.4) %
 (16.5) %

 33.5 %
 38.6 %
 (50.1) %
 32.6 %

 (33.9) %
 (22.9) %
 (26.0) %
 (26.2) %

 (14.2) %
 (13.4) %
 (13.4) %
 (13.8) %

(1)

Includes countries in Europe where we have a direct sales presence. Countries where sales are made through distributors are
included in “Rest of World.”

(2) Other primarily includes the net sales of the Company’s Heart Valves business, which was disposed of on June 1, 2021.

The following table presents segment income (loss) from continuing operations (in thousands):

Cardiopulmonary
Neuromodulation 
Advanced Circulatory Support
Other (2)
Total reportable segment income 
(loss) from continuing operations (3)

Year Ended December 31,
2020 (1)

2019 (1)

2021

% Change

2021 vs 2020

2020 vs 2019

$ 

(6,429)  $ 

169,499 
2,195 
(129,082) 

35,735  $ 
109,273 
(575)
(365,116) 

50,533 
83,333 
3,941
(233,275)

 (118.0) %
 55.1 %
 (481.7) %
 (64.6) %

 (29.3) %
 31.1 %
 (114.6) %
 56.5 %

$ 

36,183  $ 

(220,683)  $ 

(95,468) 

 (116.4) %

 131.2 %

(1) Segment loss from continuing operations for the years ended December 31, 2020 and 2019 have been revised. For further

details refer to “Note 1. Nature of Operations” in our consolidated financial statements and accompanying notes, beginning
on page F-1 of this Annual Report on Form 10-K.

(2) Other includes the results of the Company’s Heart Valves business, which was disposed of on June 1, 2021, and corporate
shared service expenses for finance, legal, human resources, information technology and corporate business development.

(3) For a reconciliation of segment income (loss) from continuing operations to our consolidated loss from continuing

operations before tax, refer to “Note 19. Geographic and Segment Information” in our consolidated financial statements and
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

39

Cardiopulmonary

Cardiopulmonary net sales for the year ended December 31, 2021 compared to the year ended December 31, 2020 increased 
8.1% to $483.0 million primarily due to growth in oxygenator sales resulting from an increase in procedure volumes, across all 
regions, growth in heart-lung machine sales in the U.S. region, as well as the favorable impact of foreign currency fluctuations, 
partially offset by a reduction in capital equipment purchases in the Rest of World region.

Cardiopulmonary segment operating loss for the year ended December 31, 2021 was $6.4 million as compared to segment 

operating income for the year ended December 31, 2020 of $35.7 million. The decrease in segment operating income was 
primarily due to an increase in the litigation provision related to our 3T Heater-Cooler device and related legal costs of 
$37.8 million, as well as an increase in sales and marketing expenses due to lower 2020 commercial related variable and 
discretionary spending as a result of COVID-19 during the year ended December 31, 2020 and an increase in research and 
development expenses due to the upcoming launch of our next-generation heart-lung machine. These increases in expenses 
were partially offset by an increase in sales, as discussed above.

Cardiopulmonary net sales for the year ended December 31, 2020 compared to the year ended December 31, 2019 decreased 

11.5% to $446.7 million primarily due to declines in heart lung machines (“HLM”) and oxygenator sales. HLM sales were 
negatively impacted due to COVID-19 impacts on hospital budgets for capital equipment, while oxygenator sales were 
negatively impacted by a decline of non-emergent cardiac surgery procedures globally resulting from COVID-19. 

Cardiopulmonary segment operating income decreased 29.3% for the year ended December 31, 2020 as compared to the year 

ended December 31, 2019, primarily due to the decrease in net sales, as discussed above.

Neuromodulation

Neuromodulation net sales for the year ended December 31, 2021 compared to the year ended December 31, 2020 increased 

28.7% to $456.2 million primarily due to improving market dynamics across all regions resulting from increased hospital 
access and patient willingness to return to clinics.

Neuromodulation segment operating income increased 55.1% for the year ended December 31, 2021 compared to the year 
ended December 31, 2020 primarily from an increase in sales, as discussed above. This increase was partially offset by the net 
impact of the change in fair value of the sales-based and milestone-based contingent consideration arrangement associated with 
the acquisition of ImThera of $21.5 million, as well as an increase in sales and marketing expenses due to lower 2020 
commercial related variable and discretionary spending as a result of COVID-19 during the year ended December 31, 2020 and 
an increase in research and development expenses due to our DTD and heart failure clinical trials.

Neuromodulation net sales for the year ended December 31, 2020 compared to the year ended December 31, 2019 decreased 
16.5% to $354.4 million. The decrease in net sales for the year ended December 31, 2020 was primarily due to declines in both 
new patient and end of service implants globally as patients and physicians delayed implant procedures due to COVID-19.

Neuromodulation segment operating income increased 31.1% for the year ended December 31, 2020 compared to the year 
ended December 31, 2019 primarily due to an increase in operating income resulting from the net impact of the change in fair 
value of contingent consideration arrangements of $27.6 million, a decrease in selling, general and administrative expense 
driven by cost containment actions, as well as a $50.3 million impairment of an IPR&D asset during the year ended December 
31, 2019, partially offset by overall declines in net sales, as discussed above.

Advanced Circulatory Support

Advanced Circulatory Support net sales for the year ended December 31, 2021 compared to the year ended December 31, 
2020 increased 31.0% to $55.5 million, resulting from continued adoption and utilization of LifeSPARC in the U.S. and an 
increase in procedure volumes.

Advanced Circulatory Support segment operating income increased 481.7% for the year ended December 31, 2021 compared 
to the year ended December 31, 2020 primarily from an increase in sales, as discussed above. This increase was partially offset 
by an increase in sales and marketing expenses due to lower commercial related variable and discretionary spending as a result 
of COVID-19 during the year ended December 31, 2020.

Advanced Circulatory Support net sales for the year ended December 31, 2020 compared to the year ended December 31, 
2019 increased 32.6% to $42.3 million for the year ended December 31, 2020, resulting from the full U.S. commercial release 
of LifeSPARC during the second half of 2020.

Advanced Circulatory Support segment operating income decreased 114.6% for the year ended December 31, 2020 compared 

to the year ended December 31, 2019 primarily due to an increase in R&D expense resulting from the net impact of the change 

40

in fair value of a milestone-based contingent consideration arrangement of $8.5 million, partially offset by an increase in net 
sales, as discussed above.

Costs and Expenses

The following table illustrates our comparative costs and expenses as a percentage of net sales:

Cost of sales

Selling, general and administrative

Research and development

Impairment of disposal group

Impairment of goodwill

Impairment of long-lived assets

Other operating expenses

Cost of Sales

Year Ended December 31,
2020

2019

2021

 31.8 %

 45.6 %

 17.7 %

 — %

 — %

 — %

 5.0 %

 36.3 %

 47.8 %

 16.4 %

 19.3 %

 2.3 %

 0.7 %

 6.5 %

 33.2 %

 48.7 %

 13.5 %

 — %

 3.9 %

 13.1 %

 3.2 %

Cost of sales consisted primarily of direct labor, allocated manufacturing overhead, the acquisition cost of raw materials and 

components.

Cost of sales as a percentage of net sales was 31.8% for the year ended December 31, 2021, a decrease of 4.5% as compared 
to 2020. The decrease was primarily due to favorable product mix, partially due to the sale of the Heart Valves business during 
the second quarter of 2021, unfavorable manufacturing variances during the year ended December 31, 2020, as well as a decline 
in product remediation expenses associated with our 3T Heater-Cooler device of $7.0 million. These decreases were partially 
offset by the net impact of the change in fair value of a sales-based contingent consideration arrangement of $4.5 million for the 
year ended December 31, 2021 compared to the year ended December 31, 2020.

Cost of sales as a percentage of net sales was 36.3% for the year ended December 31, 2020, an increase of 3.1% as compared 
to 2019. The increase was primarily due to product mix and unfavorable manufacturing variances of $20.0 million for the year 
ended December 31, 2020 due to the decline in demand resulting from COVID-19.

Selling, General and Administrative (“SG&A”) Expenses

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

SG&A expenses as a percentage of net sales decreased for the year ended December 31, 2021 as compared to 2020 primarily 

due to an increase in sales, partially offset by an increase in sales and marketing expenses due to lower commercial related 
variable and discretionary spending as a result of COVID-19 during the year ended December 31, 2020.

SG&A expenses as a percentage of net sales decreased for the year ended December 31, 2020 as compared to 2019 primarily 
due to sales and marketing reductions from cost containment actions resulting from COVID-19, a decrease in 3T legal expenses 
and the settlement of tax litigation that resulted in the release of an uncertain tax position of $4.3 million.

Research and Development Expenses

R&D expenses consist of product design and development efforts, clinical study programs and regulatory activities, which 

are essential to our strategic portfolio initiatives, including DTD, OSA and heart failure.

R&D expenses as a percentage of net sales increased for the year ended December 31, 2021 as compared to 2020 primarily 

due to an increase in R&D expense resulting from the net impact of changes in fair value of milestone-based contingent 
consideration arrangements of $16.6 million as well as an increase in research and development expenses due to the upcoming 
launch of our next-generation heart-lung machine and due to our DTD and heart failure clinical trials.

R&D expenses as a percentage of net sales increased for the year ended December 31, 2020 as compared to 2019 primarily 

due to a decline in net sales as well as an increase in R&D expense resulting from the net impact of changes in fair value of 
milestone-based contingent consideration arrangements of $8.8 million.

Impairments of Disposal Group, Goodwill and Long-lived Assets

During the year ended December 31, 2020, we recognized an impairment of $180.2 million to record the Heart Valves 

disposal group at fair value less estimated cost to sell. Additionally, during the year ended December 31, 2020, we recorded a 

41

$21.3 million impairment to the goodwill allocated to the Heart Valves disposal group based upon the relative fair values of the 
businesses. For further information refer to “Note 4. Divestiture of Heart Valve Business” in our consolidated financial 
statements and accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K. 

During the second quarter of 2019, we determined that there would be a delay in the estimated commercialization date of the 
Company’s obstructive sleep apnea product currently under development. This delay constituted a triggering event that required 
evaluation of the IPR&D asset arising from the ImThera acquisition for impairment. Based on the assessment performed, we 
determined that the IPR&D asset was impaired and as a result, recorded an impairment of $50.3 million, which is included in 
our Neuromodulation segment. The estimated fair value of IPR&D was determined using the income approach. Future delays in 
commercialization or changes in management estimates could result in further impairment.

The announcement that we would be ending our Caisson TMVR program effective December 31, 2019, triggered an 
evaluation of finite and indefinite lived assets for impairment. As a result, we fully impaired the goodwill and IPR&D asset 
associated with the Caisson business of $42.4 million and $89.0 million, respectively during the year ended December 31, 
2019.

Other Operating Expenses

Other operating expenses consists primarily of the provision for litigation involving our 3T Heater-Cooler device, the 
provision for the decommissioning of hazardous substances at our site in Saluggia, Italy, merger and integration expense, 
restructuring expense, and the loss on the on sale of our Heart Valves business. 

Other operating expenses as a percentage of net sales for the year ended December 31, 2021 compared to the year ended 
December 31, 2020 decreased primarily due to a $42.2 million provision recognized in 2020 for our obligation to clean and 
dismantle contaminated buildings and equipment at our Saluggia, Italy campus as well as to deliver hazardous substances to a 
national repository. For further information, refer to “Note 13. Commitments and Contingencies” in our consolidated financial 
statements and accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K. This decrease was partially 
offset by an increase in the litigation provision related to our 3T Heater-Cooler device of $34.2 million. 

Other operating expenses as a percentage of net sales for the year ended December 31, 2020 compared to the year ended 

December 31, 2019 increased primarily due to a $42.2 million provision for our obligation to clean and dismantle contaminated 
buildings and equipment at our Saluggia, Italy campus as well as to deliver hazardous substances to a national repository, as 
discussed above. This increase was partially offset by a decrease in merger and integration expenses primarily due to 
completion of certain integration activities associated with our merger and acquisitions.

Interest Expense

We incurred interest expense of $50.2 million for the year ended December 31, 2021, as compared to $40.8 million and $15.1 

million for 2020 and 2019, respectively. The increase for the year ended December 31, 2021 as compared to 2020 was 
primarily due to $10.5 million in increased interest expense in 2021 from the exchangeable notes that were entered into in June 
2020. The increase for the year ended December 31, 2020 as compared to 2019 was primarily due to increased average debt 
borrowings at increased effective borrowing rates. For further information on our debt refer to “Note 10. Financing 
Arrangements” in our consolidated financial statements and accompanying notes, beginning on page F-1 of this Annual Report 
on Form 10-K.

Loss on Debt Extinguishment

Loss on debt extinguishment for the year ended December 31, 2021 resulted from the early repayment and termination of the 

Company’s 2020 senior secured term loan and revolving credit facility with ACF FINCO I LP, respectively, totaling 
$60.2 million. For further details on the loss on debt extinguishment, refer to “Note 10. Financing Arrangements” in our 
consolidated financial statements and accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

Foreign Exchange and Other Gains/(Losses)

Foreign exchange and other gains/(losses) consist primarily of gains and losses arising from transactions denominated in a 
currency different from an entity’s functional currency, foreign currency exchange rate derivative gains and losses and changes 
in the fair value of embedded and capped call derivatives.

Foreign exchange and other gains/(losses) was a loss of $13.7 million for the year ended December 31, 2021, as compared to 

losses of $32.0 million and $2.5 million for 2020 and 2019, respectively. For further details, refer to “Note 20. Supplemental 
Financial Information” in our consolidated financial statements and accompanying notes, beginning on page F-1 of this Annual 
Report on Form 10-K.

42

Income Taxes

LivaNova PLC is resident in the UK. Our subsidiaries conduct operations and earn income in numerous countries and are 
subject to the laws of taxing jurisdictions within those countries, and the income tax rates imposed in the tax jurisdictions in 
which our subsidiaries conduct operations vary. As a result of the changes in the overall level of our income, the earnings mix 
in various jurisdictions, changes in valuation allowances, and the changes in tax laws, our consolidated effective income tax rate 
may vary substantially from one reporting period to another. 

Our effective income tax rate from continuing operations was (9.0%), 0.3% and 16.1% for the years ended December 31, 
2021, 2020 and 2019, respectively. Our effective income tax rate fluctuates based on, among other factors, changes in pretax 
income in countries with varying statutory tax rates, changes in valuation allowances, changes in tax credits and incentives and 
changes in unrecognized tax benefits associated with uncertain tax positions.

Compared with the year ended December 31, 2020, the decrease in the effective tax rate for 2021 was primarily attributable 

to changes in valuation allowances, the tax impact of the sale of the Heart Valve business and the early repayment and 
termination of the Company’s 2020 senior secured term loan. Comparatively, the effective tax rate for 2020 included the tax 
benefits related to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, the release of the uncertain tax 
positions upon the settlement of tax litigation in Italy and other items, offset by an increase to the valuation allowance of the 
UK and other jurisdictions.

Compared with the year ended December 31, 2019, the decrease in the effective tax rate for 2020 was primarily attributable 
to a tax benefit related to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, the tax benefit due to the release 
of the uncertain tax positions upon the settlement of tax litigation in Italy and other items, offset by an increase to the valuation 
allowance of the UK and other jurisdictions. Comparatively, the effective tax rate for 2019 included a release of uncertain tax 
positions and a U.S. federal tax benefit from a return to provision reconciliation, partly offset by the valuation allowance for a 
portion of the U.S. federal and state net operating losses and attributes.

Critical Accounting Estimates

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with accounting 

principles generally accepted in the U.S. (“U.S. GAAP”). Our most significant accounting policies are disclosed in “Note 2. 
Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies” and “Note 3. Revenue Recognition” 
in our consolidated financial statements and accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K. 
New accounting pronouncements are disclosed in “Note 22. New Accounting Pronouncements” in our consolidated financial 
statements and accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K. 

To prepare our consolidated financial statements in conformity with U.S. GAAP, management makes estimates and 

assumptions that may affect the reported amounts of our assets and liabilities, the disclosure of contingent liabilities as of the 
date of our consolidated financial statements and the reported amounts of our revenue and expenses during the reporting period. 
Our actual results may differ from these estimates. We consider estimates to be critical if we are required to make assumptions 
about material matters that are uncertain at the time of estimation, or if materially different estimates could have been made or it 
is reasonably likely that the accounting estimate will change from period to period. The following are areas requiring 
management’s judgment that we consider critical:

Goodwill and Long-Lived Assets

We allocate the purchase price consideration for an acquisition to the assets we acquire and liabilities we assume based on 
their fair values at the date of acquisition, including property, plant and equipment, inventories, accounts receivable, long-term 
debt, and identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. We 
allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired to goodwill. 
We base the fair value of identifiable intangible assets acquired in a business combination, including IPR&D, on valuations that 
use information and assumptions provided by management, which consider management’s best estimates of inputs and 
assumptions that a market participant would use.

Intangible assets shown on the consolidated balance sheets consist of finite-lived and indefinite-lived assets expected to 
generate future economic benefits and are recorded at their respective fair values as of their acquisition date. Finite-lived 
intangible assets consist primarily of developed technology and technical capabilities, including patents, related know-how and 
licensed patent rights, trade names and customer relationships. Customer relationships consist of relationships with hospitals 
and surgeons in the countries where we operate. Indefinite-lived intangible assets other than goodwill are composed of IPR&D 
assets acquired in acquisitions. 

43

We review, each reporting period if there are circumstances that warrant an evaluation of the carrying amounts of our 
property and equipment and our finite-lived intangible assets to determine whether such carrying amounts continue to be 
recoverable. Such changes in circumstance may include, among other items, an expectation of a sale or disposal of a long-lived 
asset or asset group, adverse changes in market or competitive conditions, an adverse change in legal factors or business climate 
in the markets in which we operate and operating or cash flow losses. Long-lived assets held and used are assessed for possible 
impairment by comparing their carrying values with their associated undiscounted, future cash flows. In order to calculate the 
impairment charge, we generally measure fair value by considering sale prices for similar assets, discounted estimated future 
cash flows using an appropriate discount rate and/or estimated replacement cost.

We estimate the useful lives of our finite-lived intangible assets, which requires significant management judgment. We 
evaluate our intangible assets each reporting period to determine whether events and circumstances indicate a different useful 
life.

We evaluate the goodwill and indefinite-lived intangible assets for impairment at least annually on October 1st and whenever 
other facts and circumstances indicate that the carrying amounts of goodwill and other indefinite-lived intangible assets may not 
be recoverable. Estimating the fair value of goodwill requires various assumptions, including revenue growth rates and discount 
rates. We performed a sensitivity analysis for our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support 
reporting units, as of October 1, 2021, for each of these assumptions and determined that an increase of 0.5% in the discount 
rate used, or a decrease of 0.5% in the expected revenue growth rate would not result in an impairment of goodwill. Estimating 
the fair value of indefinite-lived intangible assets requires various assumptions, including revenue growth rates, timing and 
probability of commercialization, and discount rates. We performed a sensitivity analysis, as of October 1, 2021, for each of 
these assumptions and determined that an increase of 0.5% in the discount rate, or a decrease of 0.5% in the expected revenue 
growth rate would not result in an impairment of our indefinite-lived intangible asset. For additional information, please refer to 
“Note 4. Divestiture of Heart Valve Business” and “Note 7. Goodwill and Intangible Assets” in the consolidated financial 
statements in this Annual report on Form 10-K.

Income Taxes

We are a UK corporation, and we operate through our various subsidiaries in a number of countries throughout the world. 
Our provision for income taxes is based on the tax laws and rates applicable in the jurisdictions in which we operate and earn 
income. We use significant judgment and estimates in accounting for our income taxes. We recognize deferred tax assets and 
liabilities for the anticipated future tax effects of temporary differences between the financial statements basis and the tax basis 
of our assets and liabilities, which are measured using enacted tax rates expected to apply to taxable income in the years in 
which those temporary differences are expected to be recovered or settled.

 We file federal and local tax returns in many jurisdictions throughout the world and are subject to income tax examinations 
for our fiscal year 2015 and subsequent years, with certain exceptions. While we believe that our tax return positions are fully 
supported, tax authorities may disagree with certain positions we have taken and assess additional taxes and as a result, we may 
establish reserves for uncertain tax positions, which require a significant degree of management judgment. We regularly assess 
the likely outcomes of our tax positions in order to determine the appropriateness of our reserves; however, the actual outcome 
of an audit can be significantly different than our expectations, which could have a material impact on our tax provision. The 
total amount of unrecognized tax benefit, as of December 31, 2021, if recognized, would reduce our income tax expense by 
approximately $1.7 million. 

We periodically assess the recoverability of our deferred tax assets by considering whether it is more-likely-than-not that 
some or all of the actual benefit of those assets will be realized. To the extent that realization does not meet the “more-likely-
than-not” criterion, we establish a valuation allowance. We periodically review the adequacy and necessity of the valuation 
allowance by considering significant positive and negative evidence relative to our ability to recover deferred tax assets and to 
determine the timing and amount of valuation allowance that should be released. This evidence includes: profitability in the 
most recent quarters; internal forecasts for the current and next two future years; size of deferred tax asset relative to estimated 
profitability; the potential effects on future profitability from increasing competition, healthcare reforms and overall economic 
conditions; limitations and potential limitations on the use of our net operating losses due to ownership changes, pursuant to 
IRC Section 382; and the implementation of prudent and feasible tax planning strategies, if any.

For additional information, please refer to “Note 17. Income Taxes” in the consolidated financial statements in this Annual 

report on Form 10-K.

44

Legal and Other Contingencies

Provisions for legal contingencies are recognized when the Company determines it is probable that a loss has been incurred 

and the amount is reasonably estimable, the determination of which requires significant judgment. Estimates are used in 
assessing the likelihood of a loss being incurred and when determining a reasonable estimate of the loss for each claim. Final 
settlement amounts may be materially different from the provision recorded. For additional information, please refer to “Note 
13. Commitments and Contingencies” in the consolidated financial statements in this Annual report on Form 10-K.

Contingent Consideration Liabilities

Contingent consideration liabilities are from arrangements resulting from acquisitions that involve potential future payment 

of consideration that is contingent upon the achievement of performance milestones and sales-based earn-outs. Contingent 
consideration liabilities are measured at fair value each reporting period, the determination of which requires significant 
judgements and estimates. The fair value of contingent consideration is determined based on the consideration expected to be 
transferred and estimated as the probability of future cash flows, discounted to present value in accordance with accepted 
valuation methodologies. For additional information, please refer to “Note 9. Fair Value Measurements” in the consolidated 
financial statements in this Annual report on Form 10-K.

Embedded Exchange Feature and Capped Call Derivatives

In June 2020, the Company issued cash exchangeable senior notes and entered into related capped call transactions. The cash 

exchangeable senior notes include an embedded exchange feature that is bifurcated from the cash exchangeable senior notes. 
The embedded exchange feature derivative is measured at fair value using a binomial lattice model and discounted cash flows 
that utilize observable and unobservable market data. The capped call derivative is measured at fair value using the Black-
Scholes model utilizing observable and unobservable market data, including stock price, remaining contractual term, expected 
volatility, risk-free interest rate and expected dividend yield, as applicable. The Company uses historical volatility and implied 
volatility from options traded to determine expected stock price volatility which is an unobservable input that is significant to 
the valuation. For additional information, please refer to “Note 9. Fair Value Measurements” and “Note 10. Financing 
Arrangements” in the consolidated financial statements in this Annual report on Form 10-K.

New Accounting Pronouncements

For a discussion of new accounting standards and disclosure requirements, please refer to “Note 22. New Accounting 
Pronouncements” in our consolidated financial statements and accompanying notes, beginning on page F-1 of this Annual 
Report on Form 10-K.

Liquidity and Capital Resources

Based on our current business plan, we believe that our sources of liquidity, which primarily consist of cash and cash 

equivalents, future cash generated from operations and available borrowings under our current debt facilities, will be sufficient 
to fund our uses of liquidity, primarily consisting of purchase obligations for expected operating, working capital and R&D 
needs, capital expenditures, and debt service requirements over the twelve-month period beginning from the issuance date of 
these consolidated financial statements. From time to time, we may decide to access debt and/or equity markets to optimize our 
capital structure, raise additional capital or increase liquidity as necessary, including to satisfy liabilities that may arise in 
connection with the SNIA litigation. On February 21, 2022, the Court of Appeal notified the Company that it granted the 
Company a suspension with respect to the payment of damages in the amount of €453.6 million (approximately U.S. 
$514.6 million at December 31, 2021) in the SNIA litigation until a decision has been reached on our appeal to the Italian 
Supreme Court. This suspension is subject to providing a first demand bank surety of €270.0 million (approximately U.S. 
$306.2 million) within 30 calendar days. On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary, LivaNova 
USA, Inc. entered into an Incremental Facility Amendment No. 1 to the First Lien Credit Agreement with Goldman Sachs Bank 
USA, relating to a €200 million bridge loan facility (the “Bridge Loan Facility”). We intend to use the proceeds to secure the 
first demand bank surety of €270.0 million or, alternatively, for payment of court ordered damages or settlements (including 
interest, expenses and charges in connection therewith) in the event of a negative decision by the Italian Supreme Court. The 
Bridge Loan Facility has an availability period until June 30, 2022 and a maturity date 15 months after drawing. Borrowings 
under the Bridge Loan Facility bear interest at a rate equal to an adjusted EURIBOR (with a floor of 0.00%) plus 3.5% 
increasing by 0.25% 15 days after drawing and by an additional 0.5% 90 days after drawing and every 90 days thereafter, with 
a maximum margin of 5.25% over adjusted EURIBOR. Our liquidity could be adversely affected by the factors affecting future 
operating results, including those referred to in “Item 1A. Risk Factors” above and by the contingencies referred to in “Note 13. 
Commitments and Contingencies” in the consolidated financial statements in this Annual report on Form 10-K.

45

Our operating, working capital and R&D purchase obligations primarily consist of obligations arising from the normal course 
of business including inventory supply contract obligations, 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. The following table presents selected financial information related to our liquidity as of December 
31, 2021 and 2020 (in thousands):

Sources of liquidity

Cash and cash equivalents

Accounts receivable, net

Inventories
Short term derivative assets (1)
Availability under revolving credit facilities (2)

Short term uses of liquidity

Short term derivative liabilities (1)
Short term debt (2)
Short term operating leases (3)
Short term contingent consideration (4)
Short term 3T litigation provision (5)

Long-term uses of liquidity

Long-term debt (2)
Long-term operating leases (3)
Long-term contingent consideration (4)
Long-term Saluggia site liability (5)
Long-term 3T litigation provision (5)

December 31,

2021

2020

$ 

207,992  $ 

185,354 

105,840 

106,629 

125,000 

$ 

183,109  $ 

229,673 

11,261 
11,552 

32,845 

252,832 

184,356 

115,285 

2,053 

50,000 

7,372 

13,343 

11,276 
13,968 

28,612 

$ 

9,849  $ 

642,298 

35,919 

86,830 

38,788 

6,625 

42,221 

89,850 

42,476 

7,878 

(1) For additional information, please refer to “Note 11. Derivatives and Risk Management” in the consolidated financial 

statements in this Annual Report on Form 10-K.

(2) For additional information, please refer to “Note 10. Financing Arrangements” in the consolidated financial statements in this 

Annual Report on Form 10-K.

(3) For additional information, please refer to “Note 12. Leases” in the consolidated financial statements in this Annual Report on Form 

10-K.

(4) For additional information, please refer to “Note 9. Fair Value Measurements” in the consolidated financial statements in this 

Annual Report on Form 10-K.

(5) For additional information, please refer to “Note 13. Commitments and Contingencies” in the consolidated financial statements in 

this Annual Report on Form 10-K.

Debt and Capital

Our capital structure consists of debt and equity. As of December 31, 2021, our total debt of $239.5 million was 18.5% of 

total equity of $1,294.6 million. As of December 31, 2020, our total debt of $655.6 million was 59.1% of total equity of 
$1,109.3 million. 

During the year ended December 31, 2021, we repaid $452.3 million in long-term debt and paid $35.6 million for the make-

whole premium associated with the early retirement of long-term debt. We received $322.6 million in net proceeds from the 
issuance of ordinary shares. Additionally, we reduced our short-term unsecured revolving credit agreements and other 
agreements with various banks by $2.0 million.

During the year ended December 31, 2020, we borrowed $886.9 million in long-term debt, incurred $23.7 million in debt 
issuance costs, and repaid $482.1 million in long-term debt. Additionally, we increased our short-term unsecured revolving 
credit agreements and other agreements with various banks by $1.3 million.

On June 17, 2020, our wholly-owned subsidiary, LivaNova USA, Inc., issued $287.5 million aggregate principal amount of 
3.00% Cash Exchangeable Senior Notes due in 2025 (the “Notes”). Holders of the Notes are entitled to exchange the Notes at 
any time during specified periods, at their option. This includes the right to exchange the Notes during any calendar quarter, if 
the last reported sale price of LivaNova’s ordinary shares, with a nominal value of £1.00 per share, is greater than or equal to 

46

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
130% of the exchange price, or $79.27 per share for at least 20 trading days (whether or not consecutive) during a period of 30 
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. The 
exchange condition was satisfied on December 20, 2021, which allows the holders of the Notes to request to exchange the 
Notes through March 31, 2022. As a result, we have reclassified our obligations from the Notes and the associated embedded 
exchange feature derivative as a current liability on the consolidated balance sheet as of December 31, 2021. However, as of the 
date of filing of this Form 10-K, no holders have elected to exchange the Notes. The Notes are exchangeable solely into cash 
and are not exchangeable into ordinary shares of LivaNova or any other security under any circumstances. The initial exchange 
rate for the Notes is 16.3980 ordinary shares per $1,000 principal amount of Notes (equivalent to an initial exchange price of 
approximately $60.98 per share). The exchange rate is subject to adjustment in certain circumstances, as set forth in the 
indenture governing the Notes. If holders elect to exchange their Notes during the current period or any future periods in the 
event an exchange condition is met, we would be required to settle our exchange obligation through the payment of cash, which 
could adversely affect our liquidity. Currently, the Company believes it is unlikely the holders of the Notes will exchange 
significant amounts of the Notes. 

The Company has also entered into privately negotiated capped call transactions with terms substantially similar to those 

applicable to the Notes. The capped call transactions are expected generally to offset any cash payments the Company is 
required to make upon exchange of the Notes in excess of the principal amount thereof in the event that the market value per 
ordinary share, as measured under the capped call transactions, is greater than the strike price of the capped call transactions, 
with such offset being subject to an initial cap price of $100.00 per share. The capped call transactions expire on December 15, 
2025 and must be settled in cash. If the capped call transactions are converted or redeemed early, settlement occurs at their 
termination value, which is equal to their fair value at the time of the redemption. The capped call transactions are included at 
their estimated fair value as of December 31, 2021 within current derivative assets on the consolidated balance sheet.

On August 13, 2021, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. (the “Borrower”) entered into a 

First Lien Credit Agreement with the lenders and issuing banks party thereto and Goldman Sachs Bank USA, as First Lien 
Administrative Agent and First Lien Collateral Agent, relating to a $125 million senior secured multi-currency revolving credit 
facility to be made available to the Borrower (the “2021 Revolving Credit Facility”). The 2021 Revolving Credit Facility is 
available for working capital and other general corporate purposes and, if drawn, can be repaid at any time without premium or 
penalty. There were no outstanding borrowings under the 2021 Revolving Credit Facility as of December 31, 2021.

On August 6, 2021, the Company closed an offering and issued 4,181,818 ordinary shares, par value ₤1.00 per share, at an 

offering price of $82.50 per share. Net proceeds from the offering were approximately $322.6 million, after deducting 
underwriting discounts, commissions and offering expenses. Proceeds from the offering were used to repay the Company’s 
$450 million 2020 senior secured term loan.

Cash Flows

Net cash and cash equivalents provided by (used in) operating, investing and financing activities and the net (decrease) 

increase in the balance of cash and cash equivalents were as follows (in thousands):

Operating activities
Investing activities

Financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase

Operating Activities

Year Ended December 31,
2020

2021

2019

$ 

102,544  $ 

(79,422)  $ 

36,904 

(181,483) 

(2,805) 

(41,844) 

310,756 

2,205 

$ 

(44,840)  $ 

191,695  $ 

(91,142) 

(41,290) 

146,581 

(216) 

13,933 

Cash provided by operating activities for the year ended December 31, 2021 increased $182.0 million as compared to the 
same prior-year period. The increase is primarily due to a decrease in 3T litigation settlement payments of $103.4 million, the 
receipt of a CARES Act tax refund of $24.5 million during the year ended December 31, 2021, and an increase in sales.

Cash used in operating activities for the year ended December 31, 2020 decreased $11.7 million as compared to 2019, 
primarily due to the effect of improved working capital management of $77.7 million, partially offset by a decrease in net 
income adjusted for non-cash items of $66.0 million, 3T litigation settlement payments made during 2019 and the change in 
operating assets and liabilities.

47

Investing Activities

Cash provided by investing activities during the year ended December 31, 2021 increased $78.7 million as compared to the 
same prior-year period. The increase is primarily due to proceeds from the sale of Heart Valves of $42.9 million, proceeds from 
the sale of LivaNova’s investment in and loan to Respicardia totaling $23.1 million, as well as a decrease in purchases in 
property, plant and equipment of $9.5 million.

Cash used in investing activities during the year ended December 31, 2020 increased $0.6 million as compared to 2019. The 

increase is primarily due to an increase in purchases of property, plant and equipment of $10.3 million and an increase in 
purchases of investments and loans to investees totaling $3.4 million, partially offset by a decrease of $9.0 million in cash paid 
for acquisitions and a decrease in purchases of intangible assets of $3.3 million.

Financing Activities

Cash used in financing activities during the year ended December 31, 2021 increased $492.2 million as compared to the same 

prior year period. The increase is primarily due to a net repayment of borrowings during the year ended December 31, 2021 of 
$456.7 million compared to net proceeds from borrowings of $382.4 million in the prior year period, as well as a payment of 
$35.6 million for the make-whole premium on long-term debt obligations made during the year ended December 31, 2021. 
These increases were partially offset by the net proceeds from the issuance of ordinary shares of $322.6 million during the year 
ended December 31, 2021, as well as the purchase of a capped call associated with our Notes of $43.1 million and a closing 
adjustment payment for the sale of our former Cardiac Rhythm Management (“CRM”) business of $14.9 million made during 
the year ended December 31, 2020.

Cash provided by financing activities during the year ended December 31, 2020 increased $164.2 million as compared to 

2019, primarily due to an increase in net borrowings and associated costs of $214.5 million and a decrease in payments of 
contingents consideration of $6.9 million, partially offset by the purchase of a capped call associated with our Notes of $43.1 
million and a closing adjustment payment for the sale of our former CRM business of $14.9 million.

Market Risk

We are exposed to certain market risks as part of our ongoing business operations, including risks from foreign currency 
exchange rates, interest rate risks and concentration of procurement suppliers, that could adversely affect our consolidated 
financial position, results of operations or cash flows. 

We manage these risks through regular operating and financing activities and, at certain times, derivative financial 

instruments.

Foreign Currency Exchange Rate Risk

Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. We maintain a 

foreign currency exchange rate risk management strategy that utilizes derivatives to reduce our exposure to unanticipated 
fluctuations in forecast revenue and costs and fair values of debt, inter-company debt and accounts receivable caused by 
changes in foreign currency exchange rates. 

 We mitigate our credit risk relating to counter-parties of our derivatives through a variety of techniques, including 

transacting with multiple, high-quality financial institutions, thereby limiting our exposure to individual counter-parties and by 
entering into International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements, which include provisions for 
a legally enforceable master netting agreement, with almost all of our derivative counter-parties. The terms of the ISDA 
agreements may also include credit support requirements, cross default provisions, termination events, and set-off provisions. 
Legally enforceable master netting agreements reduce credit risk by providing protection in bankruptcy in certain circumstances 
and generally permitting the closeout and netting of transactions with the same counter-party upon the occurrence of certain 
events.

Interest Rate Risk

We are subject to interest rate risk on our investments and debt. If interest rates were to increase or decrease by 0.5%, the 

effects on our consolidated statement of income (loss) would not be material. 

Concentration of Credit Risk

Our trade accounts receivable represent potential concentrations of credit risk. This risk is limited due to the large number of 
customers and their dispersion across a number of geographic areas, as well as our efforts to control our exposure to credit risk 
by monitoring our receivables and the use of credit approvals and credit limits. In addition, we have historically had strong 
collections and minimal write-offs. While we believe that our reserves for credit losses are adequate, essentially all of our trade 

48

receivables are concentrated in the hospital and healthcare sectors worldwide, and accordingly, we are exposed to their 
respective business, economic and country-specific variables. Although we do not currently foresee a concentrated credit risk 
associated with these receivables, repayment is dependent on the financial stability of these industry sectors and the respective 
countries’ national economies and healthcare systems. 

Factors Affecting Future Operating Results and Share Price

The material factors affecting our future operating results and share prices are disclosed in “Item 1A. Risk Factors” of this 

Annual Report on Form 10-K.

49

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The information required under 7A. has been incorporated by reference to the information contained in “Item 7. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K 
under the section entitled “Market Risk.”

Item 8. Financial Statements and Supplementary Data

Our audited consolidated financial statements and notes thereto included in “Item 15. Exhibits, Financial Statement 

Schedules” of this Annual Report on Form 10-K, beginning on page F-1 of this Annual Report on Form 10-K, are incorporated 
herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, that are

designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is 
recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure 
controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated 
and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as 
appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the 
participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and 
procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our CEO and 
CFO concluded that our disclosure controls and procedures were effective as of December 31, 2021.

(b) Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rule 13a-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not 
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or 
procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 using the 
criteria set forth in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations 
of the Treadway Commission. Based on this assessment, we concluded that the Company’s internal control over financial 
reporting was effective as of December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by 

PricewaterhouseCoopers LLP, an independent registered public accounting firm. Their report is included after “Item 16. Form 
10-K Summary” in this Annual Report on Form 10-K.

(c) Changes in Internal Control Over Financial Reporting

During the fourth quarter of 2021, there were no changes to our internal control over financial reporting (as defined in Rules
13a-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, our internal 
control over financial reporting.

50

Item 9B. Other Information

On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. entered into an Incremental 
Facility Amendment No. 1 to the First Lien Credit Agreement with Goldman Sachs Bank USA, with the lenders and issuing 
banks party thereto and Goldman Sachs Bank USA, as a First Lien Administrative Agent, relating to a €200 million bridge loan 
facility. The proceeds may be used to secure the first demand bank surety of €270.0 million required in connection with the 
SNIA litigation or, alternatively, for payment of court ordered damages or settlements (including interest, expenses and charges 
in connection therewith) in the event of a negative decision by the Italian Supreme Court. The Bridge Loan Facility has an 
availability period until June 30, 2022 and a maturity date 15 months after drawing. Borrowings under the Bridge Loan Facility 
bear interest at a rate equal to an adjusted EURIBOR (with a floor of 0.00%) plus 3.50% increasing by 0.25% 15 days after 
drawing and by an additional 0.5% 90 days after drawing and every 90 days thereafter, with a maximum margin of 5.25% over 
adjusted EURIBOR. 

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

51

Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information required for this Item 10 is incorporated by reference from our definitive Proxy Statement for the annual 

meeting of stockholders to be held on June 13, 2022 (the “2022 Proxy Statement”).

We have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all employees, officers and 
directors of the Company. A copy of the Code of Conduct is publicly available on our website, www.livanova.com. We intend 
to post any amendments to the Code of Conduct or any grant of a waiver from a provision of the Code of Conduct requiring 
disclosure under applicable SEC rules on the Investor Relations section of our website.

Item 11. Executive Compensation

The information required for this Item 11 is incorporated by reference from our 2022 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder 
Matters

The information required for this Item 12 is incorporated by reference from our 2022 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required for this Item 13 is incorporated by reference from our 2022 Proxy Statement.

Item 14. Principal Accounting Fees and Services

The information required for this Item 14 is incorporated by reference from our 2022 Proxy Statement.

52

Item 15. Exhibits, Financial Statement Schedules

(1) Financial Statements

PART IV

 The Consolidated Financial Statements of LivaNova PLC and its subsidiaries and the Report of Independent Registered 

Public Accounting Firms are included in this Annual Report on Form 10-K beginning on page F-1:
Description

Page No.

Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
Consolidated Statements of Income (Loss) for the Years Ended December 31, 2021, December 31, 2020 and 
December 31, 2019
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, December 
31, 2020 and December 31, 2019
Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, December 31, 2020 
and December 31, 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, December 31, 2020 and 
December 31, 2019
Notes to Consolidated Financial Statements

F-1

F-3

F-4
F-5

F-6

F-7
F-8

(2) Financial Statement Schedules

All schedules required by Regulation S-X have been omitted as not applicable or not required, or the information required has 

been included in the notes to the consolidated financial statements.

(3) Index to Exhibits

The exhibits marked with the asterisk symbol (*) are filed or furnished (in the case of Exhibit 32.1) with this Form 10-K. The 

exhibits marked with the cross symbol (†) are management contracts or compensatory plans or arrangements filed pursuant to 
Item 601(b)(10)(iii) of Regulation S-K.

Exhibit
Number
2.1

2.2

2.3

3.1

4.1*
4.2

4.3

10.1†

10.2†

10.3†

10.4†

Document Description
Letter of Intent, dated as of November 20, 2017, by and among the Company, MicroPort Cardiac Rhythm B.V. and 
MicroPort Scientific Corporation (including the form of Stock and Asset Purchase Agreement attached as Exhibit A 
thereto), incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on November 
20, 2017
Stock and Asset Purchase Agreement, dated as of March 8, 2018, by and among the Company, MicroPort Cardiac 
Rhythm B.V. and MicroPort Scientific Corporation (excluding schedules and exhibits, which the Company agrees to 
furnish supplementally to the Securities and Exchange Commission upon request), incorporated by reference to 
Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on March 8, 2018
Share and Asset Purchase Agreement, dated as of December 2, 2020, by and between LivaNova PLC and Mitral 
Holdco S.a.r.l., incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K, filed on 
December 3, 2020
Amended Articles of Association, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on 
Form 10-Q for the quarter ended June 30, 2020
Description of Securities Registered Under Section 12 of the Exchange Act
Indenture, dated as of June 17, 2020, among LivaNova USA, Inc., as Issuer, LivaNova PLC, as Guarantor, and 
Citibank, N.A., as Trustee, incorporated by reference to Exhibit 4.1 of the Company's current Report on Form 8-K, 
filed on June 17, 2020
Form of 3.00% Cash Exchangeable Senior Notes due 2025 (included in Exhibit 4.1 of the Company's current Report 
on Form 8-K, filed on June 17, 2020)
Form of Deed of Indemnification (Directors), each effective October 19, 2015, incorporated by reference to Exhibit 
10.3 of the Company’s Current Report on Form 8-K, filed on October 19, 2015
Form of Deed of Indemnification (Officers), each effective October 19, 2015, incorporated by reference to Exhibit 
10.4 of the Company’s Current Report on Form 8-K, filed on October 19, 2015
2015 Incentive Award Plan and related Sub-Plan for U.K. Participants, adopted on October 16, 2015, incorporated 
by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on October 19, 2015
Cyberonics, Inc. 2009 Stock Plan, as amended, incorporated by reference to Appendix A to Cyberonics, Inc.’s Proxy 
Statement on Schedule 14A, filed on August 2, 2012

53

10.5†

10.6

10.7†

10.8†

10.9†

10.10†

10.11†

Amended and Restated Cyberonics, Inc. New Employee Equity Inducement Plan, as amended, incorporated by 
reference to Exhibit 10.3 of Cyberonics, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 
24, 2008
Form of Rule 10b5-1 Repurchase Plan, incorporated by reference to Appendix B of the Company’s Proxy Statement 
on Schedule 14A, filed on May 16, 2016
Form of the Company’s 2017 Service-Based RSU Agreement, incorporated by reference to Exhibit 10.1 of the 
Company’s Current Report on Form 8-K, filed on May 11, 2017
Form of the Company’s 2017 Performance-Based RSU Agreement, incorporated by reference to Exhibit 10.2 of the 
Company’s Current Report on Form 8-K, filed on May 11, 2017
CEO Employment Agreement effective January 1, 2017 between the Company and Damien McDonald, incorporated 
by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on February 28, 2017
Side Letter dated January 1, 2017 between the Company and Damien McDonald, incorporated by reference to 
Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on February 28, 2017
Service Agreement effective May 24, 2017, between the Company and Keyna Skeffington, incorporated by 
reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017

10.12† Non-Employee Director Compensation Policy, adopted December 2017, incorporated by reference to Exhibit 10.74 

10.13

10.14

of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017
Form of Share Repurchase Contract, incorporated by reference to Appendix A of the Company’s Proxy Statement on 
Schedule 14A, filed on May 16, 2017 
Form of Rule 10b5-1 Repurchase Plan, incorporated by reference to Appendix B of the Company’s Proxy Statement 
on Schedule 14A, filed on May 16, 2017

10.15† Description of 2018 Long Term Incentive Plan, incorporated by reference to Exhibit 10.1 of the Company’s Current 

10.16†

10.17†

10.18†

10.19†

Report on Form 8-K, filed on March 16, 2018
Form of 2018 Long Term Incentive Plan RSU Award Agreement, incorporated by reference to Exhibit 10.2 of the 
Company’s Current Report on Form 8-K, filed on March 16, 2018
Form of 2018 Long Term Incentive Plan SAR Award Agreement, incorporated by reference to Exhibit 10.3 of the 
Company’s Current Report on Form 8-K, filed on March 16, 2018
Form of 2018 Long Term Incentive Plan PSU Award Agreement (rTSR condition), incorporated by reference to 
Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed on March 16, 2018
Form of 2018 Long Term Incentive Plan PSU Award Agreement (FCF condition), incorporated by reference to 
Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed on March 16, 2018

10.20† General Provisions of the Company’s Global Employee Share Purchase Plan dated 12 June 2018, incorporated by 

10.21†

reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018
2019 LivaNova Short-Term Incentive Plan approved February 20, 2019, incorporated by reference to Exhibit 10.1 of 
the Company’s Current Report on Form 8-K/A, filed on March 6, 2019

10.22† Description of 2019 Long Term Incentive Plan approved March 29, 2019, incorporated by reference to Exhibit 10.1

10.23†

10.24†

10.25†

10.26†

10.27†

10.28†

10.29

10.30

of the Company’s Current Report on Form 8-K, filed on April 1, 2019
Form of the Company’s 2019 Long Term Incentive Plan RSU Award Agreement, incorporated by reference to 
Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on April 1, 2019
Form of the Company’s 2019 Long Term Incentive Plan SAR Award Agreement, incorporated by reference to 
Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on April 1, 2019
Form of the Company’s 2019 Long Term Incentive Plan PSU Award Agreement (rTSR condition), incorporated by
reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed on April 1, 2019
Form of the Company’s 2019 Long Term Incentive Plan PSU Award Agreement (FCF condition), incorporated by
reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K, filed on April 1, 2019
Service Agreement, dated January 2, 2019, between Trui Hebbelinck and LivaNova PLC, incorporated by reference
to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019
Separation Agreement, dated December 2019, between Edward S. Andrle and LivaNova USA, Inc., incorporated by 
reference to Exhibit 10.47 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019
Credit Agreement, dated as of June 10, 2020 , among LivaNova USA, Inc., as Borrower, the Company, as 
Guarantor, the several lenders from time to time parties thereto, Ares Capital Corporation, as Administrative Agent, 
and Ares Capital Corporation, as Collateral Agent incorporated by reference to Exhibit 10.1 of the Company’s 
Current Report on Form 8-K, filed on June 11, 2020
Form of Capped Call Confirmation incorporated by reference to Exhibit 10.1 of the Company's Current Report on 
Form 8-K, filed on June 17, 2020

10.31† Amendment to Outstanding 2019 and 2020 Restricted Stock Unit Awards under the LivaNova PLC 2015 Incentive 
Award Plan, dated June 15, 2020, incorporated by reference to Exhibit 10.10 of the Company’s Quarterly Report on 
Form 10-Q for the quarter ended June 30, 2020

10.32† Amendment to Outstanding 2018 Restricted Stock Unit Awards under the LivaNova PLC 2015 Incentive Award 

Plan dated June 15, 2020, incorporated by reference to Exhibit 10.11 of the Company’s Quarterly Report on Form 
10-Q for the quarter ended June 30, 2020

54

10.33† Amendment to Outstanding 2018, 2019 and 2020 Performance Stock Unit Awards under the LivaNova PLC 2015 

Incentive Award Plan, dated June 15, 2020, incorporated by reference to Exhibit 10.12 of the Company’s Quarterly 
Report on Form 10-Q for the quarter ended June 30, 2020
Form of Long Term Incentive Plan Restricted Stock Unit Award Agreement, incorporated by reference to Exhibit 
10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020
Form of Long Term Incentive Plan Performance Stock Unit Award Agreement, incorporated by reference to Exhibit 
10.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020
Form of Long Term Incentive Plan Stock Appreciation Right Award Agreement, incorporated by reference to 
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020
Form of Director Restricted Stock Unit Award Grant Notice, dated June 2020 and Director Restricted Stock Unit 
Award Agreement under the Company’s 2015 Incentive Award Plan (Non-Employee Directors), incorporated by 
reference to Exhibit 10.42 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020
Form of Non-Executive Director Appointment Letter incorporated by reference to Exhibit 10.43 of the Company’s 
Annual Report on Form 10-K for the year ended December 31, 2020

10.34†

10.35†

10.36†

10.37†

10.38†

10.39† Alex Shvartsburg offer of employment in the role of Vice President Strategy and Innovation, dated 21 September 

2017 incorporated by reference to Exhibit 10.44 of the Company’s Annual Report on Form 10-K for the year ended 
December 31, 2020

10.40† Alex Shvartsburg letter, dated January 2019, regarding compensation increase incorporated by reference to Exhibit 

10.45 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020

10.41† Alex Shvartsburg letter, dated October 2020, regarding additive compensation package for interim CFO position 

incorporated by reference to Exhibit 10.46 of the Company’s Annual Report on Form 10-K for the year ended 
December 31, 2020
Service Agreement, effective August 1, 2021, between the Company and Alex Shvartsburg, incorporated by 
reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021

10.42†

10.43† Roy Khoury Separation and Settlement Agreement, dated February 2021 incorporated by reference to Exhibit 10.47 

10.44

10.45

of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020
Conformed Copy Incorporating Amendment No. 1, dated December 30, 2020, to Credit Agreement, dated June 10, 
2020, among LivaNova USA, Inc., as Borrower, the Company, as Guarantor, the several lenders from time to time 
parties thereto, Ares Capital Corporation, as Administrative Agent, and Ares Capital Corporation, as Collateral 
Agent incorporated by reference to Exhibit 10.48 of the Company’s Annual Report on Form 10-K for the year ended 
December 31, 2020
Amendment No. 2 to Credit Agreement among LivaNova USA, Inc., as Borrower, LivaNova PLC, as Holdings, and 
Ares Capital Corporation, as Administrative Agent and Collateral Agent, and certain other Lenders party thereto, 
dated as of February 24, 2021 incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 
8-K, filed on February 24, 2021

10.46† Marco Dolci Confirmation Letter, effective January 1, 2020, as SVP Global Operations & Global Research and 
Development, incorporated by reference to Exhibit 10.2 of the Company Quarterly Report on Form 10-Q for the 
quarter ended June 30, 2020

10.47† Executive Employment Contract between Sorin Group Italia S.r.l. and Marco Dolci, effective April 20, 2017, 

incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended 
March 31, 2021
Amended and Restated Share and Asset Purchase Agreement, dated as of April 9, 2021, by and between LivaNova 
PLC and Mitral Holdco S.a.r.l., incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 
8-K, filed on April 15, 2021
Underwriting Agreement dated August 3, 2021, by and between LivaNova PLC and Goldman Sachs & Co. LLC, 
Barclays Capital Inc. and UBS Securities LLC as representatives of the underwriters listed on Schedule I thereto, 
incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K, filed on August 3, 2021
First Lien Credit Agreement dated as of August 13, 2021 among LivaNova PLC, LivaNova USA, Inc., the lenders 
and issuing banks party thereto and Goldman Sachs Bank USA as First Lien Administrative Agent and First Lien 
Collateral Agent, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on 
August 16, 2021
Incremental Facility Amendment No. 1 to Credit Agreement, dated as of February 24, 2022, by and among 
LivaNova Plc, LivaNova USA, Inc., the lenders and issuing banks party thereto and Goldman Sachs Bank USA as 
First Lien Administrative Agent
Letter from PricewaterhouseCoopers SpA to the Securities and Exchange Commission, dated March 26, 2018, 
incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K, filed on March 26, 2018
List of Subsidiaries of LivaNova PLC
Consent of PricewaterhouseCoopers LLP

10.48

10.49

10.50

10.51*

16.1

21.1*
23.1*

55

31.1*

31.2*

32.1*

101*

104*

Certification of the Chief Executive Officer of LivaNova PLC pursuant to Section 302 of the Sarbanes-Oxley Act of 
2002
Certification of the Chief Financial Officer of LivaNova PLC pursuant to Section 302 of the Sarbanes-Oxley Act of 
2002
Certification of the Chief Executive Officer and of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, 
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 
Interactive Data Files Pursuant to Rule 405 of Regulation S-T formatted in Inline XBRL: (i) the Consolidated 
Statements of Income (Loss) for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, 
(ii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021,
December 31, 2020 and December 31, 2019, (iii) the Consolidated Balance Sheets as of December 31, 2021 and
December 31, 2020, (iv) the Consolidated Statements of Stockholders’ Equity for the years ended December 31,
2021, December 31, 2020 and December 31, 2019, (v) the Consolidated Statements of Cash Flows for the years
ended December 31, 2021, December 31, 2020 and December 31, 2019, and (vi) the Notes to the Consolidated
Financial Statements.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

56

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused 

this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

LIVANOVA PLC

By:

/s/ DAMIEN MCDONALD
Damien McDonald
Chief Executive Officer
(Principal Executive Officer)

LIVANOVA PLC

By:

/s/ ALEX SHVARTSBURG
Alex Shvartsburg
Chief Financial Officer
(Principal Accounting and Financial Officer)

Date: March 1, 2022

57

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following 

persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature

Title

Date

/s/  WILLIAM A. KOZY

William A. Kozy

Chairman of the Board of Directors

March 1, 2022

/s/  DAMIEN MCDONALD

Damien McDonald

Director, Chief Executive Officer
(Principal Executive Officer)

March 1, 2022

Chief Financial Officer 
(Principal Accounting and Financial Officer)

March 1, 2022

/s/  ALEX SHVARTSBURG

Alex Shvartsburg

/s/  FRANCESCO BIANCHI

Francesco Bianchi

/s/  DANIEL J. MOORE

Daniel J. Moore

/s/  ALFRED J. NOVAK

 Alfred J. Novak

/s/  SHARON O'KANE

Sharon O'Kane, Ph.D.

Director

Director

Director

Director

/s/  ARTHUR L. ROSENTHAL

Arthur L. Rosenthal, Ph.D.

Director

/s/  ANDREA L. SAIA

Andrea L. Saia

/s/  TODD C. SCHERMERHORN
Todd C. Schermerhorn

/s/  STACY ENXING SENG
Stacy Enxing Seng

Director

Director

Director

58

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

March 1, 2022

Item 16. Form 10-K Summary

None.

59

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of LivaNova PLC

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of LivaNova PLC and its subsidiaries (the 
“Company”) as of December 31, 2021 and 2020 and the related consolidated statements of income (loss), of 
comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period 
ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial 
statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, 
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of 
Sponsoring Organizations of the Treadway Commission (COSO).  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the 
financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash 
flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles 
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material 
respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in 
Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective 
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial 
reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. 
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's 
internal control over financial reporting based on our audits. We are a public accounting firm registered with the 
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with 
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations 
of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of 
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting 
was maintained in all material respects.  

Our audits of the consolidated financial statements included performing procedures to assess the risks of material 
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures 
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts 
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting 
principles used and significant estimates made by management, as well as evaluating the overall presentation of the 
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an 
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and 
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our 
audits also included performing such other procedures as we considered necessary in the circumstances. We believe 
that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance 
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in 
accordance with generally accepted accounting principles. A company’s internal control over financial reporting 
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable 
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance 
with generally accepted accounting principles, and that receipts and expenditures of the company are being made 
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable 
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect 
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 

F-1

controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies 
or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 
financial statements that was communicated or required to be communicated to the audit committee and that (i) 
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our 
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter 
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by 
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the 
accounts or disclosures to which it relates.

Goodwill Impairment Assessment – Cardiopulmonary (CP) and Advanced Circulatory Support (ACS) Reporting 
Units

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated goodwill 
balance was $899.5 million as of December 31, 2021, and the amount of goodwill associated with the CP and ACS 
reporting units was $398.2 million and $102.5 million, respectively.  Management conducts impairment testing of 
goodwill on October 1st each year. Management tests goodwill for impairment between annual tests if an event 
occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its 
carrying amount. Fair value refers to the price that would be received if management were to sell the unit as a whole 
in an orderly transaction. An impairment loss is recognized when the carrying amount of the reporting unit’s net 
assets exceeds the estimated fair value of the reporting unit, up to and including the carrying amount of the 
goodwill. Fair value is estimated using a discounted cash flow model and requires various assumptions, including 
revenue growth rates and discount rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment 
assessments of the CP and ACS reporting units is a critical audit matter are (i) the significant judgment by 
management when developing the fair value of the reporting units; (ii) a high degree of auditor judgment, 
subjectivity, and effort in performing procedures and evaluating management’s significant assumptions relating to 
revenue growth rates for CP and ACS, and discount rate for ACS; and (iii) the audit effort involved the use of 
professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming 
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of 
controls relating to management’s goodwill impairment assessments. These procedures also included, among others 
(i) testing management’s process for developing the fair value of the CP and ACS reporting units; (ii) evaluating the
appropriateness of the discounted cash flow model; (iii) testing the completeness and accuracy of underlying data
used in the model; and (iv) evaluating the reasonableness of the significant assumptions used by management
related to the revenue growth rates for CP and ACS, and the discount rate for ACS. Evaluating management’s
assumptions related to the revenue growth rates involved evaluating whether the assumptions used by management
were reasonable considering (i) the current and past performance of the reporting units; (ii) the consistency with
external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in
other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of
the Company’s discounted cash flow model and the discount rate assumption.

/s/  PricewaterhouseCoopers LLP
Houston, Texas
March 1, 2022

We have served as the Company’s auditor since 2018.

F-2

LIVANOVA PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

Net sales

Cost of sales

Gross Profit

Operating expenses:

Selling, general & administrative

Research & development

Impairment of disposal group

Impairment of goodwill

Impairment of long-lived assets

Other operating expenses

Operating loss from continuing operations

Interest income

Interest expense

Loss on debt extinguishment

Foreign exchange and other gains/(losses)

Loss from continuing operations before tax

Income tax expense (benefit)

Losses from equity method investments

Net loss from continuing operations

Net (loss) income from discontinued operations, net of tax

Net loss

Basic loss per share:

Continuing operations

Discontinued operations

Diluted loss per share:

Continuing operations

Discontinued operations

Year Ended December 31,
2020 (1)

2019 (1)

2021

$ 

1,035,365  $ 

934,241  $ 

1,084,170 

329,371 

705,994 

471,904 

183,414 

— 

— 

— 

51,460 

(784)

435 

(50,151) 

(60,238) 

(13,734) 

(124,472) 

11,198 

(148)

(135,818) 

— 

339,478 

594,763 

446,561 

152,902 

180,160 

21,269 

6,762 

61,008 

(273,899)

131 

(40,837) 

(1,407) 

(32,010) 

(348,022) 

(960)

(264)

(347,326) 

(1,493) 

360,365 

723,805 

528,466 

146,849 

— 

42,417 

142,517 

35,110 

(171,554) 

803 

(15,091) 

— 

(2,536) 

(188,378) 

(30,374)

— 

(158,004) 

365 

$ 

$ 

$ 

$ 

$ 

(135,818)  $ 

(348,819)  $ 

(157,639) 

(2.68)  $ 

— 

(2.68)  $ 

(2.68)  $ 

— 

(2.68)  $ 

(7.15)  $ 

(0.03) 

(7.18)  $ 

(7.15)  $ 

(0.03) 

(7.18)  $ 

(3.27) 

0.01 

(3.26) 

(3.27) 

0.01 

(3.26) 

Shares used in computing basic loss per share

Shares used in computing diluted loss per share

50,633 

50,633 

48,592 

48,592 

48,349 

48,349 

(1) The consolidated statements of income (loss) for the years ended December 31, 2020 and 2019 have been revised. For

further details refer to “Note 1. Nature of Operations.”

See accompanying notes to the consolidated financial statements
F-3

LIVANOVA PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Net loss

Other comprehensive (loss) income:

Net change in unrealized (loss) gain on derivatives

Tax effect

Net of tax

Foreign currency translation adjustment, net of tax

Total other comprehensive (loss) income

Total comprehensive loss

Year Ended December 31,
2020 (1)

2019 (1)

2021

$ 

(135,818)  $ 

(348,819)  $ 

(157,639) 

(3,997) 

733 

(3,264) 

(31,722) 

(34,986) 

2,379 

(573)

1,806 

45,395 

47,201 

1,917 

(460)

1,457 

3,627 

5,084 

$ 

(170,804)  $ 

(301,618)  $ 

(152,555) 

(1) The consolidated statements of comprehensive income (loss) for the years ended December 31, 2020 and 2019 have been

revised. For further details refer to “Note 1. Nature of Operations.”

See accompanying notes to the consolidated financial statements
F-4

LIVANOVA PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2021 and 2020 
(In thousands, except share data)

ASSETS

Current Assets:

Cash and cash equivalents
Accounts receivable, net of allowance of $13,512 at December 31, 2021 and $10,310 at 
December 31, 2020
Inventories
Prepaid and refundable taxes
Assets held for sale
Current derivative assets
Prepaid expenses and other current assets
Total Current Assets

Property, plant and equipment, net
Goodwill
Intangible assets, net
Operating lease assets (Note 12)
Investments
Deferred tax assets
Long-term derivative assets
Other assets

Total Assets

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:

Current debt obligations
Accounts payable
Accrued liabilities and other
Current derivative liabilities
Current litigation provision liability
Taxes payable
Accrued employee compensation and related benefits
Liabilities held for sale
Total Current Liabilities
Long-term debt obligations
Contingent consideration
Deferred tax liabilities
Long-term operating lease liabilities (Note 12)
Long-term employee compensation and related benefits
Long-term derivative liabilities
Other long-term liabilities

Total Liabilities

2021

2020 (1)

$ 

207,992  $ 

252,832 

$ 

$ 

185,354 
105,840 
37,621 
— 
106,629 
35,745 
679,181 
150,066 
899,525 
399,682 
40,600 
16,598 
2,197 
— 
13,102 
2,200,951  $ 

229,673  $ 

68,000 
88,937 
183,109 
32,845 
15,140 
79,266 
— 
696,970 
9,849 
86,830 
7,728 
35,919 
19,105 
— 
49,905 
906,306 

184,356 
115,285 
60,240 
70,539 
2,053 
22,739 
708,044 
163,805 
922,318 
437,636 
50,525 
31,094 
2,990 
72,302 
11,247 
2,399,961 

13,343 
73,668 
88,036 
7,372 
28,612 
16,463 
51,879 
29,679 
309,052 
642,298 
89,850 
7,089 
42,221 
20,628 
121,940 
57,618 
1,290,696 

Commitments and contingencies (Note 13)
Stockholders’ Equity:
Ordinary  Shares,  £1.00  par  value:  unlimited  shares  authorized;  53,761,510  shares  issued  and 
53,263,297 shares outstanding at December 31, 2021; 49,447,473 shares issued and 48,655,863
shares outstanding at December 31, 2020
Additional paid-in capital
Accumulated other comprehensive (loss) income
Accumulated deficit
Treasury stock at cost, 498,213 ordinary shares at December 31, 2021, 791,610 ordinary shares at 
December 31, 2020

Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity

82,295 
2,117,961 
(7,177) 
(897,784) 

(650)
1,294,645 
2,200,951  $ 

$ 

76,300 
1,768,156 
27,809 
(761,966) 

(1,034)
1,109,265 
2,399,961 

(1) The consolidated balance sheet as of December 31, 2020 has been revised. For further details refer to “Note 1. Nature of

Operations.”

See accompanying notes to the consolidated financial statements
F-5

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F-6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIVANOVA PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

2021

Year Ended December 31,
2020 (1)

2019 (1)

$ 

(135,818)  $ 

(348,819)  $ 

(157,639) 

Operating Activities:

Net loss

Non-cash items included in net loss:

Loss on debt extinguishment

Stock-based compensation

Amortization

Depreciation

Remeasurement of derivative instruments

Amortization of operating lease assets

Amortization of debt issuance costs

Deferred tax expense (benefit)

Remeasurement of contingent consideration to fair value

Impairment of long-lived assets

Impairment of disposal group and loss on sale

Impairment of goodwill

Other

Changes in operating assets and liabilities:

Accounts receivable, net

Inventories

Other current and non-current assets

Accounts payable and accrued current and non-current liabilities

Taxes payable

Litigation provision liability

Net cash provided by (used in) operating activities

Investing Activities:

Proceeds from sale of Heart Valves, net of cash disposed

Purchases of property, plant and equipment

Proceeds from sale of Respicardia investment and loan

Purchase of investments

Acquisitions, net of cash acquired

Other

Net cash provided by (used in) investing activities

Financing Activities:

Repayment of long-term debt obligations

Proceeds from issuance of ordinary shares, net

Payment of make-whole premium on long-term debt obligations

Shares repurchased from employees for minimum tax withholding

Payment of contingent consideration

Debt issuance costs

Proceeds from long-term debt obligations

Proceeds from short term borrowings (maturities greater than 90 days)

Repayments of short term borrowings (maturities greater than 90 days)

Purchase of capped call

Closing adjustment payment for sale of CRM business

Other

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

60,238 

40,564 

26,517 

24,536 

17,618 

16,935 

16,657 

2,852 

564 

— 

1,942 

— 

717 

(15,745) 

4,484 

24,127 

12,993 

103 

3,260 

102,544 

42,945 
(25,478) 

23,057 

(3,653) 

(1,694) 
1,727 

36,904 

(452,256) 

322,557 

(35,594) 

(12,942) 

(5,249) 

(2,450) 

— 

— 

— 

— 

— 

4,451 

(181,483) 

(2,805) 

(44,840) 

1,407 

35,089 

38,312 

29,031 

22,085 

13,977 

9,710 

37,068 

(20,463) 

6,762 

180,160 

21,269 

2,000 

58,796 

5,438 

(39,645) 

(923)

3,596 

(134,272) 

(79,422) 

— 
(35,024) 

— 

(3,184) 

(1,719) 
(1,917) 

(41,844) 

— 

32,553 

40,375 

30,317 

(26) 

12,297 

2,204 

(26,498) 

(29,406) 

142,517 

— 

42,417 

5,783 

(5,321) 

(7,924) 

(2,077) 

(38,577)

(8,442) 

(123,695) 

(91,142) 

— 
(24,691) 

— 

(2,500) 

(10,750) 
(3,349) 

(41,290) 

(482,065) 

(24,210) 

— 

— 

(5,601) 

(12,018) 

(23,736) 

886,899 

47,053 

(44,838) 

(43,096) 

(14,891) 

3,049 

310,756 

2,205 

191,695 

— 

— 

(7,064) 

(18,955) 

(3,795) 

197,160 

— 

— 

— 

— 

3,445 

146,581 

(216) 

13,933 

47,204 
61,137 

$ 

252,832 
207,992  $ 

61,137 
252,832  $ 

(1) The consolidated statements of cash flows for the years ended December 31, 2020 and 2019 have been revised. For further details refer to “Note 1.

Nature of Operations.”

Supplementary Disclosures of Cash Flow Information:

Cash paid for interest

Cash paid for income taxes, net

$ 

32,569  $ 

(13,583) 

28,573  $ 

7,493 

15,828 

2,011 

See accompanying notes to the consolidated financial statements
F-7

LIVANOVA PLC AND SUBSIDIARIES’

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share amounts)

Note 1. Nature of Operations 

Description of the Business

LivaNova PLC, headquartered in London, (collectively with its subsidiaries, the “Company,” “LivaNova,” “we” or “our”) is 
a global medical device company focused on the development and delivery of important products and therapies for the benefit 
of patients, healthcare professionals and healthcare systems throughout the world. We design, develop, manufacture and sell 
innovative products and therapies that are consistent with our mission to provide hope to patients through innovative medical 
technologies, delivering life-changing improvements for both the Head and Heart. We are a public limited company organized 
under the laws of England and Wales, and headquartered in London, England.

Business Segments

LivaNova is comprised of three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory 
Support, corresponding to our primary business units. Other includes the results of our Heart Valves business, which was 
disposed of on June 1, 2021, and corporate shared service expenses for finance, legal, human resources, information technology 
and corporate business development. 

Effective in the fourth quarter of 2021, LivaNova changed its reportable segments corresponding to changes in how the 
Company’s chief operating decision maker regularly reviews information, allocates resources and assesses performance. The 
segment financial information presented herein reflects these changes for all periods presented. The Company’s changes to its 
reportable segments are summarized as follows:

•

•

•

The Company’s Advanced Circulatory Support business is no longer assessed as part of the Company’s previously 
reported Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Cardiopulmonary business is no longer assessed as part of the Company’s previously reported 
Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Heart Valves business, which was disposed of on June 1, 2021, is now included within Other.

Recent Developments Regarding COVID-19

Since early 2020, the COVID-19 pandemic (“COVID-19”) has caused and may continue to cause unpredictable demand for 

our products. Throughout the pandemic, healthcare customers have diverted medical resources and priorities towards the 
treatment of COVID-19, and public health bodies have delayed elective procedures, which has negatively impacted the usage of 
our products. Further, some people have avoided seeking treatment for non-COVID-19 procedures and hospitals and clinics 
have experienced staffing shortages, which has negatively impacted the demand for our products. While we have seen 
improvement during 2021, we continue to experience lingering COVID-19 related headwinds and are monitoring the potential 
for various strains of the virus to cause a resumption of high levels of infection and hospitalization, that in turn, may affect the 
demand for our products. 

F-8

Revision of Previously Issued Financial Statements

During the fourth quarter of 2021, the Company identified and corrected an error related to foreign currency exchange rates 
utilized to calculate inventory and cost of sales for the years ended December 31, 2017 through 2020 and the nine months ended 
September 30, 2021. Using the guidance in ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-
S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when 
Quantifying Misstatements in Current Year Financial Statements, we evaluated whether our previously issued consolidated 
financial statements were materially misstated due to these errors. Based upon our evaluation of both quantitative and 
qualitative factors, we believe that the effects of these errors were not material individually or in the aggregate to any previously 
reported quarterly or annual period. Accordingly, we have revised our previously issued financial statements as shown in Note 
21 and below (in thousands):

Consolidated Statements of Income (Loss)

Cost of sales - exclusive of 
amortization
Operating loss from continuing 
operations
Loss from continuing operations 
before tax
Income tax benefit
Net loss from continuing 
operations
Net loss

Basic and diluted loss per share:

Continuing operations
Discontinued operations

Year Ended 
December 31, 2020

Year Ended 
December 31, 2019

As Previously 
Reported

Adjustments

As Revised

As Previously 
Reported

Adjustments

As Revised

$  308,062  $ 

4,035  $  312,097  $  323,517  $ 

2,684  $  326,201 

(269,864)   

(4,035) 

(273,899) 

(168,870) 

(2,684) 

(171,554) 

(343,987)   
(736)

(4,035) 
(224)

(348,022) 
(960)

(185,694) 
(30,153)

(343,515) 
(345,008) 

(3,811)
(3,811)

(347,326) 
(348,819) 

(155,541)
(155,176)

(2,684) 
(221)

(2,463) 
(2,463) 

(188,378) 
(30,374)

(158,004)
(157,639)

$ 

$ 

(7.07)  $ 
(0.03) 
(7.10)  $ 

(0.08)  $ 
— 
(0.08)  $ 

(7.15)  $ 
(0.03) 
(7.18)  $ 

(3.22)  $ 
0.01 
(3.21)  $ 

(0.05)  $ 
— 
(0.05)  $ 

(3.27) 
0.01 
(3.26) 

Consolidated Statements of Comprehensive Income (Loss)

Year Ended 
December 31, 2020

Year Ended 
December 31, 2019

As Previously 
Reported

Adjustments

As Revised

As Previously 
Reported

Adjustments

As Revised

Net loss
Total comprehensive loss

$  (345,008)  $ 
(297,807)   

Consolidated Balance Sheet

Inventories
Total Current Assets
Total Assets
Deferred tax liabilities
Total Liabilities
Accumulated deficit
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity

(3,811)  $  (348,819)  $  (155,176)  $ 
(3,811)   

(150,092)   

(301,618)   

(2,463)  $  (157,639) 
(152,555) 
(2,463)   

December 31, 2020

As Previously 
Reported

Adjustments

As Revised

$  126,675  $ 
719,434 
2,411,351 
8,915 
1,292,522 
(752,402) 
1,118,829 
2,411,351 

(11,390)  $  115,285 
708,044 
(11,390) 
2,399,961 
(11,390) 
7,089 
(1,826) 
1,290,696 
(1,826) 
(761,966) 
(9,564) 
1,109,265 
(9,564) 
2,399,961 
(11,390) 

F-9

 
 
 
Consolidated Statements of Stockholders’ Equity

As Previously Reported

Adjustments

As Revised

December 31, 2018
Net loss
December 31, 2019
Net loss
December 31, 2020

$ 

Total 
Stockholders’ 
Equity

Accumulated 
Deficit
(251,579)  $  1,503,738  $ 
(155,176) 
(406,755) 
(345,008) 
(752,402) 

(155,176) 
1,383,717 
(345,008) 
1,118,829 

Accumulated 
Deficit

Total 
Stockholders’ 
Equity

Total 
Stockholders’ 
Equity

Accumulated 
Deficit
(254,869)  $  1,500,448 
(157,639) 
(157,639) 
1,377,964 
(412,508) 
(348,819) 
(348,819) 
1,109,265 
(761,966) 

(3,290)  $ 
(2,463) 
(5,753) 
(3,811) 
(9,564) 

(3,290)  $ 
(2,463) 
(5,753) 
(3,811) 
(9,564) 

Consolidated Statements of Cash Flows

Net loss
Deferred tax expense (benefit)
Changes in operating assets and 
liabilities:
Inventories
Net cash used in operating 
activities

Year Ended 
December 31, 2020

Year Ended 
December 31, 2019

As Previously 
Reported

Adjustments

As Revised

As Previously 
Reported

Adjustments

As Revised

$  (345,008)  $ 
37,292 

(3,811)  $  (348,819)  $  (155,176)  $ 

(224)   

37,068 

(26,277) 

(2,463)  $  (157,639) 
(26,498)

(221)

1,403 

4,035 

5,438 

(10,608) 

2,684 

(7,924) 

(79,422) 

— 

(79,422) 

(91,142) 

— 

(91,142) 

Note 2. Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of LivaNova have been prepared in accordance with generally accepted 

accounting principles in the United States (“U.S.” and such principles, “U.S. GAAP”).

Consolidation

The accompanying consolidated financial statements for LivaNova include LivaNova’s wholly owned subsidiaries and the 

LivaNova PLC Employee Benefit Trust (“the Trust”). All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make 

estimates and assumptions that affect the amounts reported in such financial statements and accompanying notes. These 
estimates are based on management’s best knowledge of current events and actions we may undertake in the future. Estimates 
are used in accounting for, among other items, valuation and amortization of intangible assets, goodwill, measurement 
of deferred tax assets and liabilities, uncertain income tax positions, contingent consideration arrangements, legal and other 
contingencies, stock-based compensation, obsolete and slow-moving inventories, models, such as an impairment analysis, and 
in general, allocations to provisions and the fair value of assets and liabilities recorded in a business combination. Actual results 
could differ materially from those estimates.

Reclassifications

We have reclassified certain prior period amounts on the consolidated statements of income (loss), the consolidated balance 
sheets and the consolidated statements of cash flows for comparative purposes. These reclassifications did not have a material 
effect on our financial condition, results of operations or cash flows. The prior period reclassifications on the consolidated 
statements of income (loss) are summarized and presented below (in thousands):

Product remediation has been reclassified to cost of sales

•
• Merger and integration expenses have been reclassified to other operating expenses
•
•
•

Restructuring expenses have been reclassified to other operating expenses
Litigation provision, net has been reclassified to other operating expenses
Amortization of intangibles has been reclassified to cost of sales or selling, general and administrative based on the
nature of the underlying intangible asset

F-10

 
•
•

Decommissioning provision has been reclassified to other operating expenses and
Loss on debt extinguishment has been reclassified from foreign exchange and other gains/(losses) to loss on debt
extinguishment.

Year Ended 
December 31, 2020

Year Ended 
December 31, 2019

As Revised

Reclassifications

Current 
Presentation

As Revised

Reclassifications

Current 
Presentation

$  934,241  $ 

—  $  934,241  $  1,084,170  $ 

—  $  1,084,170 

27,381 

(7,860) 

339,478 

— 

(19,521) 

594,763 

326,201 

15,777 

742,192 

34,164 

(15,777) 

(18,387) 

360,365 

— 

723,805 

18,791 

— 

(7,333) 

(7,571) 

— 

— 

— 

(38,312) 

(42,198) 

(3,906) 

61,008 

446,561 

152,902 

— 

— 

180,160 

21,269 

6,762 

— 

— 

— 

61,008 

506,478 

146,849 

23,457 

12,254 

— 

42,417 

142,517 

40,375 

— 

(601)

— 

— 

— 

— 

(273,899) 

(171,554) 

131 

803 

(40,837) 

(15,091) 

21,988 

— 

(23,457) 

(12,254) 

— 

— 

— 

(40,375) 

— 

601

528,466 

146,849 

— 

— 

— 

42,417 

142,517 

— 

— 

— 

35,110

35,110 

— 

— 

— 

— 

— 

(171,554) 

803 

(15,091) 

— 

(2,536) 

— 

(1,407) 

(1,407) 

— 

(33,417) 

1,407 

(32,010) 

(2,536) 

$  (348,022)  $ 

—  $  (348,022)  $  (188,378)  $ 

—  $  (188,378) 

Impairment of disposal group

180,160 

312,097 

7,860 

614,284 

427,770 

152,902 

7,333 

7,571 

21,269 

6,762 

38,312 

42,198 

3,906 

— 

(273,899) 

131 

(40,837) 

Net sales

Cost of sales

Product remediation

Gross profit

Operating expenses:

Selling, general and 
administrative

Research and development

Merger and integration expenses

Restructuring expenses

Impairment of goodwill

Impairment of long-lived assets

Amortization of intangibles

Decommissioning provision

Litigation provision, net

Other operating expenses
Operating loss from continuing 
operations

Interest income

Interest expense

Loss on debt extinguishment
Foreign exchange and other gains/
(losses)

Loss from continuing operations 
before tax

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less, consisting of demand deposit 
accounts and money market mutual funds, to be cash equivalents. Cash equivalents are carried on the consolidated balance 
sheet at cost, which approximates their fair value.

Accounts Receivable

Our accounts receivable consisted of trade receivables from direct customers and distributors. We maintain an allowance for 

doubtful accounts for potential credit losses based on our estimates of the ability of customers to make required payments, 
historical credit experience, existing economic conditions and expected future trends. We write off uncollectible accounts 
against the allowance when all reasonable collection efforts have been exhausted.

Inventories

We state our inventories at the lower of cost, using the first-in first-out (“FIFO”) method, or net realizable value. Our 
calculation of cost includes the acquisition cost of raw materials and components, direct labor and overhead, including 
depreciation of manufacturing related assets. We reduce the carrying value of inventories for those items that are potentially 
excess, obsolete or slow moving based on changes in customer demand, technology developments or other economic factors. 

F-11

 
Property, Plant and Equipment (“PP&E”)

PP&E is carried at cost, less accumulated depreciation. Maintenance, repairs and minor replacements are charged to expense 

as incurred, while significant renewals and improvements are capitalized. We compute depreciation using the straight-line 
method over estimated useful lives. Leasehold improvements are depreciated over the shorter of the following terms: the useful 
life of the asset or a term that includes required lease periods and renewals that are deemed to be reasonably assured at the date 
the leasehold improvements are purchased. Capital improvements to the building are added as building components and 
depreciated over the useful life of the improvement or the building, whichever is less. 

Goodwill

We allocate the amounts we pay for an acquisition to the assets we acquire and liabilities we assume based on their fair 

values at the date of acquisition, including property, plant and equipment, inventories, accounts receivable, long-term debt, and 
identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. We base the fair 
value of identifiable intangible assets acquired in a business combination, including IPR&D, on valuations that use information 
and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a 
market participant would use. We allocate any excess purchase price over the fair value of the net tangible and identifiable 
intangible assets acquired to goodwill. Transaction costs associated with these acquisitions are expensed as incurred and are 
reported in selling, general and administrative on the consolidated statements of income (loss). We recognize adjustments to the 
provisional amounts identified during the measurement period with a corresponding adjustment to goodwill in the reporting 
period in which the adjustment amounts are determined. The effect on earnings of changes in depreciation, amortization or 
other income effects, if any, as a result of the change to the provisional amounts are recorded in the same period’s consolidated 
financial statements, calculated as if the accounting had been completed at the acquisition date. 

Intangible Assets, Other than Goodwill

Intangible assets shown on the consolidated balance sheets consist of finite-lived and indefinite-lived assets expected to 
generate future economic benefits and are recorded at their respective fair values as of their acquisition date. Finite-lived 
intangible assets consist primarily of developed technology and technical capabilities, including patents, related know-how and 
licensed patent rights, trade names and customer relationships. Customer relationships consist of relationships with hospitals 
and surgeons in the countries where we operate. Indefinite-lived intangible assets other than goodwill are composed of IPR&D 
assets acquired in acquisitions. We estimate the useful lives of our intangible assets, which requires significant management 
judgment. We amortize our finite-lived intangible assets over their useful lives using the straight-line method. 

Amortization expense is included on our consolidated statements of income (loss) within cost of sales or selling, general and 
administrative based on the nature of the underlying intangible asset. We evaluate our intangible assets each reporting period to 
determine whether events and circumstances indicate either a different useful life or impairment. If we change our estimate of 
the useful life of an asset, we amortize the carrying amount over the revised remaining useful life. 

Impairments of Long-Lived Assets and Goodwill

Long-lived Assets Impairment

Assets Held and Used

We evaluate the carrying value of our long-lived assets and investments for impairment when events or changes in 
circumstances indicate that the carrying value of such assets may not be recoverable. Such changes in circumstance may 
include, among other items, (i) an expectation of a sale or disposal of a long-lived asset or asset group, (ii) adverse changes in 
market or competitive conditions, (iii) an adverse change in legal factors or business climate in the markets in which we operate 
and (iv) operating or cash flow losses. 

For PP&E and intangible assets used in our operations, recoverability generally is determined by comparing the carrying 
value of an asset, or group of assets to their expected undiscounted future cash flows. If the carrying value of an asset (asset 
group) is not recoverable, the amount of impairment loss is measured as the difference between the carrying value of the asset 
(asset group) and its estimated fair value. The asset grouping as well as the determination of expected undiscounted cash flow 
amounts requires significant judgments, estimates, and assumptions, including cash flows generated upon disposition. We 
measure fair value as the price that would be received if we were to sell the assets in an orderly transaction. Assets to be 
disposed of are carried at the lower of their financial statement carrying amount or fair value less costs to sell. 

We conduct impairment testing of our indefinite-lived intangible assets on October 1st each year. We test indefinite-lived 

intangible assets for impairment between annual tests if an event occurs or circumstances change that would indicate the 
carrying amount may be impaired. An impairment loss is recognized when the asset's carrying value exceeds its fair value.

F-12

Assets Held for Sale

We classify long-lived assets as held for sale in the period in which we commit to a plan to sell the asset, the asset is available 

for immediate sale, the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value 
and the sale of the asset is probable within the next twelve months and when actions required to complete the plan indicate that 
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A long-lived asset classified as 
held for sale is measured at the lower of its carrying amount or fair value less cost to sell and depreciation is discontinued. We 
recognize an impairment for any excess of carrying value over the fair value less cost to sell.

When an impairment of a disposal group is deemed necessary and the amount of the impairment exceeds the carrying value 
of the long-lived assets, we record the impairment to the disposal group rather than long-lived assets. We also allocate goodwill 
of the associated reporting unit to the disposal group based upon the relative fair value of the businesses within the reporting 
unit. The goodwill allocated to the disposal group is then tested for impairment.   

Goodwill Impairment

We conduct impairment testing of our goodwill on October 1st each year. Testing is performed at the reporting unit level, 
which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial 
information is available and is regularly viewed by management. Our operating segments are deemed to be our reporting units 
for purposes of goodwill impairment testing. We test goodwill for impairment between annual tests if an event occurs or 
circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. 

If we determine that goodwill is more-likely-than-not impaired, we compare the fair value of the reporting unit to its carrying 

amount, including goodwill. Fair value refers to the price that would be received if we were to sell the unit as a whole in an 
orderly transaction. Fair value is estimated using a discounted cash flow model and requires various assumptions, including 
revenue growth rates and discount rates. If the carrying amount of our reporting unit is greater than zero and its fair value 
exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. An impairment loss is recognized when 
the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit, up to and including 
the carrying amount of the goodwill. 

If the aggregate fair value of our reporting units exceeds our market capitalization, we evaluate the reasonableness of the 
implied control premium which includes a comparison to implied control premiums from recent market transactions within our 
industry or other relevant benchmark data. 

Goodwill impairment evaluations are highly subjective. In most instances, they involve expectations of future cash flows that 

reflect our judgments and assumptions regarding future industry conditions and operations. The estimates, judgments and 
assumptions used in the application of our goodwill impairment policies reflect both historical experience and an assessment of 
current operational, industry, market, economic and political environments. The use of different estimates, judgments, 
assumptions and expectations regarding future industry and market conditions and operations would likely result in materially 
different asset carrying values and operating results. 

Quantitative factors used to determine the fair value of the reporting units reflect our best estimates, and we believe they are 

reasonable. Future declines in the reporting units’ operating performance or our anticipated business outlook may reduce the 
estimated fair value of our reporting units and result in an impairment. Factors that could have a negative impact on the fair 
value of the reporting units include, but are not limited to:

•
•
•
•
•

decreases in revenue as a result of the inability of our sales force to effectively market and promote our products;
increased competition, patent expirations or new technologies or treatments;
declines in anticipated growth rates;
the outcome of litigation, legal proceedings, investigations or other claims resulting in significant cash outflows; and
increases in the market-participant risk-adjusted Weighted Average Cost of Capital (“WACC”).

Derivatives and Risk Management

U.S. GAAP requires companies to recognize all derivatives as assets and liabilities on the balance sheet and to measure the 

instruments at fair value through earnings unless the derivative qualifies for hedge accounting. If the derivative qualifies for 
hedge accounting, depending on the nature of the hedge and hedge effectiveness, changes in the fair value of the derivative will 
either be recognized immediately in earnings or recorded in other comprehensive income (“OCI”) until the hedged item is 
recognized in earnings. The changes in the fair value of the derivative are intended to offset the change in fair value of the 
hedged asset, liability or probable commitment. We evaluate hedge effectiveness at inception. Cash flows from derivative 
contracts are reported as operating activities on the consolidated statements of cash flows. 

F-13

We use currency exchange rate derivative contracts to manage the impact of currency exchange on earnings and cash flows. 

Forward currency exchange rate contracts are designed to hedge anticipated foreign currency transactions and changes in the 
value of specific assets and liabilities. At inception of the forward contract, the derivative is designated as either a freestanding 
derivative or a cash flow hedge. We do not enter into derivative contracts for speculative purposes. All derivative instruments 
are recorded at fair value on the consolidated balance sheets, as assets or liabilities (current or non-current) depending upon the 
gain or loss position of the contract and contract maturity date. 

Forward contracts designated as cash flow hedges are designed to hedge the variability of cash flows associated with 

forecasted transactions denominated in a foreign currency that will take place in the future. For derivative instruments that are 
designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component 
of accumulated other comprehensive income (“AOCI”) and reclassified into earnings to offset exchange differences originated 
by the hedged item or the current earnings effect of the hedged item. We use freestanding derivative forward contracts to offset 
exposure to the variability of the value associated with assets and liabilities denominated in a foreign currency. These 
derivatives are not designated as hedges, and therefore changes in the value of these forward contracts are recognized in 
earnings, thereby offsetting the current earnings effect of the related change in value of foreign currency denominated assets 
and liabilities. 

Fair Value Measurements

We follow the authoritative guidance on fair value measurements and disclosures with respect to assets and liabilities that are 
measured at fair value on both a recurring and nonrecurring basis. Under this guidance, fair value is defined as the exit price, or 
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 
participants as of the measurement date. The authoritative guidance also establishes a hierarchy for inputs used in measuring 
fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most 
observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or 
liability, based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our 
assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best 
information available in the circumstances. The categorization of financial assets and financial liabilities within the valuation 
hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down 
into three levels defined as follows:

•
•

•

Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities;
Level  2 - Inputs  include  quoted  prices  for  similar  assets  or  liabilities  in  active  markets,  quoted  prices  for  identical  or
similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the
asset or liability, either directly or indirectly; and
Level 3 - Inputs are unobservable for the asset or liability.

Our financial assets and liabilities classified as Level 2 include derivative instruments, primarily forward and option currency

contracts, which are valued using standard calculations and models that use readily observable market data as their basis. 

Our financial assets and liabilities classified as Level 3 include contingent consideration liability arrangements, derivative and 

embedded derivative instruments and convertible notes receivable. 

Contingent consideration liabilities are from arrangements resulting from acquisitions that involve potential future payment 

of consideration that is contingent upon the achievement of performance milestones and sales-based earn-outs. Contingent 
consideration is recognized at fair value at the date of acquisition based on the consideration expected to be transferred and 
estimated as the probability of future cash flows, discounted to present value in accordance with accepted valuation 
methodologies. The discount rate used is determined at the time of measurement. Contingent consideration is remeasured each 
reporting period with the change in fair value, including accretion for the passage of time, recorded in earnings. The change in 
fair value of contingent consideration based on the achievement of regulatory milestones is recorded as research and 
development expense while the change in fair value of sales-based earnout contingent consideration is recorded as cost of sales. 
Contingent consideration payments made soon after the acquisition date are classified as an investing activity. Contingent 
consideration payments that are not made soon after the acquisition date are classified as a financing activity up to the amount 
of the contingent consideration liability recognized at the acquisition date, with any excess classified as an operating activity. 
For further information on our Level 3 contingent consideration liability arrangements, please refer to “Note 9. Fair Value 
Measurements.” For further information on our Level 3 derivative and embedded derivative instruments, please refer to “Note 
10. Financing Arrangements” and “Note 9. Fair Value Measurements.” For further information on our Level 3 convertible notes
receivable, please refer to “Note 8. Investments.”

F-14

Investments in Equity Securities

Our investments in equity securities, and related loans, are investments in affiliates that are in varied stages of development 

and not publicly traded. Our equity investments are reported in investments, and related loans in other assets, on the 
consolidated balance sheets. 

We elect to measure investments that do not have readily determinable fair values, at cost minus impairment, if any, plus or 

minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the 
same issuer. 

Our investments in affiliates in which we have significant influence but not control are accounted for using the equity 
method. Our share of net income or loss is reflected as one line item on our consolidated statements of income (loss) under 
losses from losses from equity-method investments and will increase or decrease, as applicable, the carrying value of our equity 
method investments reported under investments on the consolidated balance sheets. We regularly review our investments for 
changes in circumstance or the occurrence of events that suggest our investment may not be recoverable, and if an impairment 
is considered to be other-than-temporary, the loss is recognized on the consolidated statements of income (loss) in the period 
the determination is made and reported as losses from equity-method investments. 

Warranty Obligation

We offer a warranty on various products. We estimate the costs that may be incurred under warranties and record a liability in 
the amount of such costs at the time the product is sold. The amount of the reserve recorded is equal to the net costs to repair or 
otherwise satisfy the claim. We include the warranty obligation in accrued liabilities and other on the consolidated balance 
sheets. Warranty expense is recorded to cost of goods sold on our consolidated statements of income (loss). 

Retirement Benefit Plan Assumptions

We sponsor various retirement benefit plans, including defined benefit pension plans (pension benefits), defined contribution 

savings plans and termination indemnity plans, covering substantially all U.S. employees and employees outside the U.S. 
Pension benefit costs include assumptions for the discount rate, retirement age, compensation rate increases and the expected 
return on plan assets.

Product Liability Accruals

Accruals for product liability claims are recorded when it is probable that a liability has been incurred and the amount of the 

liability can be reasonably estimated based on existing information. Accruals for product liability claims are adjusted 
periodically as additional information becomes available. 

Revenue Recognition

Refer to “Note 3. Revenue Recognition.” 

Research and Development

All R&D costs are expensed as incurred. R&D includes costs of basic research activities as well as engineering and technical 

effort required to develop a new product or make significant improvements to an existing product or manufacturing process. 
R&D costs also include regulatory and clinical study expenses, including post-market clinical studies.

Leases

On January 1, 2019, we adopted ASC Update (“ASU”) No 2016-02, Leases, including subsequent related accounting updates 

(collectively referred to as “Topic 842”), which supersedes the previous accounting model for leases. We adopted the standard 
using the modified retrospective approach with an effective date as of January 1, 2019. Prior year financial statements were not 
recast under the new standard. In addition, we elected the package of practical expedients permitted under the transition 
guidance within the new standard, which among other things, allowed us to carry forward our historical assessment of whether 
contracts are or contain leases and lease classification. We also elected the practical expedient to account for lease and non-
lease components together as a single combined lease component, which is applicable to all asset classes. We did not, however, 
elect the practical expedient related to using hindsight in determining the lease term as this was not relevant following our 
election of the modified retrospective approach. 

In addition, we elect certain practical expedients on an ongoing basis, including the practical expedient for short-term leases 

pursuant to which a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a 
lease liability and operating lease asset for leases with a term of 12 months or less and that do not include an option to purchase 
the underlying asset that the lessee is reasonably certain to exercise. We have applied this accounting policy to all asset classes 

F-15

in our portfolio and will recognize the lease payments for such short-term leases within profit and loss on a straight-line basis 
over the lease term.

Furthermore, from a lessor perspective, certain of our agreements that allow the customer to use, rather than purchase, our 

medical devices meet the criteria of being a lease in accordance with the new standard. While the amount of revenue and 
expenses recognized over the contract term will not be impacted, the timing of revenue and expense recognition will be 
impacted depending upon lease classification. We enacted appropriate changes to our business processes, systems and internal 
controls to support identification, recognition and disclosure of leases under the new standard.

We determine if an arrangement is or contains a lease at inception. Operating lease assets and operating lease liabilities are 

recognized based on the present value of the future minimum lease payments over the lease term at the latter of our lease 
standard effective date for adoption or the lease commencement date. Variable lease payments, such as common area rent 
maintenance charges and rent escalations not known upon lease commencement, are not included in determination of the 
minimum lease payments and will be expensed in the period in which the obligation for those payments is incurred. As most of 
our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at 
commencement in determining the present value of future payments. The incremental borrowing rate represents an estimate of 
the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized 
basis over the term of a lease within a particular currency environment. We used the incremental borrowing rate available 
nearest to our adoption date for leases that commenced prior to that date. The operating lease asset also includes any lease 
payments made in advance and excludes lease incentives. Our lease terms may include options to extend or terminate the lease 
when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a 
straight-line basis over the lease term. For additional information refer to “Note 12. Leases.”

Stock-Based Compensation

Stock-Based Incentive Awards

We may grant stock-based incentive awards to directors, officers, key employees and consultants. We measure the cost of 
employee services received in exchange for an award of equity instruments based on the grant date fair market value of the 
award. We recognize equity-based compensation expense ratably over the period that an employee is required to provide 
service in exchange for the entire award (all vesting periods). We issue new shares upon stock option exercises, otherwise 
issuance of stock for vesting of restricted stock units or exercises of stock appreciation rights are issued from treasury shares. 
We have the right to elect to pay the cash value of vested restricted stock units in lieu of the issuance of new shares. 

Stock Appreciation Rights (“SARs”)

A SAR confers upon an employee the contractual right to receive an amount of cash, stock, or a combination of both that 
equals the appreciation in the company’s stock from an award’s grant date to the exercise date. SARs may be exercised at the 
employee’s discretion during the exercise period and do not give the employee an ownership right in the underlying stock. 
SARs do not involve payment of an exercise price. We use the Black-Scholes option pricing methodology to calculate the grant 
date fair market value of SARs and compensation is expensed ratably over the service period. We determine the expected 
volatility of the awards based on historical volatility. Calculation of compensation for stock awards requires estimation of 
volatility, employee turnover and forfeiture rates. 

Restricted Stock Units (“RSUs”)

We may grant RSUs at no purchase cost to the grantee. The grantees of unvested RSUs have no voting rights or rights to 
dividends. Sale or transfer of the stock and stock units is restricted until they are vested. The fair market value of service-based 
RSUs is determined using the market closing price on the grant date, and compensation is expensed ratably over the service 
period. Calculation of compensation for stock awards requires estimation of employee turnover and forfeiture rates. 

Market Performance-Based RSU’s

We may grant market performance-based RSUs at no purchase cost to the grantee. The grantees of the units have no voting 

rights or rights to dividends. Sale or transfer of the units is restricted until they are vested. The number of shares that are 
ultimately transferred to the grantee is dependent upon the Company’s percentile rank of total shareholder return relative to a 
peer group. The fair market value of market performance-based RSUs is determined utilizing a Monte Carlo simulation on the 
grant date and compensation is expensed ratably over the service period. Calculation of compensation for market performance-
based stock awards requires estimation of employee turnover, historical volatility and forfeiture rates.

F-16

Operating Performance-Based Awards RSU’s

We may grant operating performance-based RSUs at no purchase cost to the grantee. The grantees of the units have no voting 

rights or rights to dividends. Sale or transfer of the units is restricted until they are vested. The number of shares that are 
ultimately transferred to the grantee is dependent upon the Company’s achievement of certain thresholds for cumulative 
adjusted free cash flow and return on invested capital. The fair market value of operating performance-based RSUs is 
determined using the market closing price on the grant date. Compensation is expensed ratably over the service period and 
adjusted based upon the percent achievement of cumulative adjusted free cash flow. Calculation of compensation for operating 
performance-based stock awards requires estimation of employee turnover, adjusted free cash flow, return on invested capital 
and forfeiture rates.

Income Taxes

We are a UK corporation, and we operate through our various subsidiaries in a number of countries throughout the world. 
Our provision for income taxes is based on the tax laws and rates applicable in the jurisdictions in which we operate and earn 
income. We use significant judgment and estimates in accounting for our income taxes. We recognize deferred tax assets and 
liabilities for the anticipated future tax effects of temporary differences between the financial statements basis and the tax basis 
of our assets and liabilities, which are measured using enacted tax rates expected to apply to taxable income in the years in 
which those temporary differences are expected to be recovered or settled. 

We periodically assess the recoverability of our deferred tax assets by considering whether it is more-likely-than-not that 
some or all of the actual benefit of those assets will be realized. To the extent that realization does not meet the “more-likely-
than-not” criterion, we establish a valuation allowance. We periodically review the adequacy and necessity of the valuation 
allowance by considering significant positive and negative evidence relative to our ability to recover deferred tax assets and to 
determine the timing and amount of valuation allowance that should be released. This evidence includes: profitability in the 
most recent quarters; internal forecasts for the current and next two future years; size of deferred tax asset relative to estimated 
profitability; the potential effects on future profitability from increasing competition, healthcare reforms and overall economic 
conditions; limitations and potential limitations on the use of our net operating losses due to ownership changes, pursuant to 
IRC Section 382; and the implementation of prudent and feasible tax planning strategies, if any. 

We file federal and local tax returns in many jurisdictions throughout the world and are subject to income tax examinations 
for our fiscal year 2015 and subsequent years, with certain exceptions. While we believe that our tax return positions are fully 
supported, tax authorities may disagree with certain positions we have taken and assess additional taxes and as a result, we may 
establish reserves for uncertain tax positions, which require a significant degree of management judgment. We regularly assess 
the likely outcomes of our tax positions in order to determine the appropriateness of our reserves; however, the actual outcome 
of an audit can be significantly different than our expectations, which could have a material impact on our tax provision. Our 
tax positions are evaluated for recognition using a more-likely-than-not threshold. Uncertain tax positions requiring recognition 
are measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon effective 
settlement with a taxing authority that has full knowledge of all relevant information. Some of the reasons a reserve for an 
uncertain tax benefit may be reversed are: completion of a tax audit; a change in applicable tax law including a tax case or 
legislative guidance; or an expiration of the statute of limitations. We recognize interest and penalties associated with 
unrecognized tax benefits and record interest in interest expense, and penalties in selling, general and administrative expense, 
on our consolidated statements of income (loss). 

Foreign Currency

Our functional currency is the U.S. dollar; however, a portion of the revenues earned and expenses incurred by certain of our 
subsidiaries are denominated in currencies other than the U.S. dollar. We determine the functional currency of our subsidiaries 
that exist and operate in different economic and currency environments based on the primary economic environment in which 
the subsidiary operates, that is, the currency of the environment in which an entity primarily generates and expends cash. Our 
significant foreign subsidiaries are located in Europe and the U.S. The functional currency of our significant European 
subsidiaries is the Euro, and the functional currency of our significant U.S. subsidiaries is the U.S. dollar. 

Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. dollars based on 

a combination of both current and historical exchange rates, while their revenues earned and expenses incurred are translated 
into U.S. dollars at average period exchange rates. Translation adjustments are included as AOCI on the consolidated balance 
sheets. Gains and losses arising from transactions denominated in a currency different from an entity’s functional currency are 
included in foreign exchange and other gains/(losses) on our consolidated statements of income (loss). Taxes are not provided 
on cumulative translation adjustments, as substantially all translation adjustments are related to earnings which are intended to 
be indefinitely reinvested in the countries where earned.

F-17

Contingencies

We are subject to product liability claims, environmental obligations, government investigations and other legal proceedings 
in the ordinary course of business. Legal fees and other expenses related to litigation are expensed as incurred and included in 
selling, general and administrative expenses on our consolidated statements of income (loss). Contingent liabilities are recorded 
when we determine that a loss is both probable and reasonably estimable. Due to the fact that legal proceedings and other 
contingencies are inherently unpredictable, our assessments involve significant judgment regarding future events.

Note 3. Revenue Recognition 

We generate our revenue through contracts with customers that primarily consist of hospitals, healthcare institutions, 

distributors and other organizations. Revenue is measured based on consideration specified in a contract with a customer, and 
excludes amounts collected on behalf of third parties. We measure the consideration based upon the estimated amount to be 
received. The amount of consideration we ultimately receive varies depending upon the return terms, sales rebates, discounts, 
and other incentives that we may offer, which are accounted for as variable consideration when estimating the amount of 
revenue to recognize. The estimate of variable consideration requires significant judgment.

We have historically experienced a low rate of product returns, and the total dollar value of product returns has not been 

significant to our consolidated financial statements.

We recognize revenue when a performance obligation is satisfied by transferring the control of a product or providing service 

to a customer. Some of our contracts include the purchase of multiple products and/or services. In such cases, we allocate the 
transaction price based upon the relative estimated stand-alone price of each product and/or service sold. We record state and 
local sales taxes net; that is, we exclude sales tax from revenue. Typically, our contracts do not have a significant financing 
component.

We incur incremental commission fees paid to the sales force associated with the sale of products. We apply the practical 
expedient within ASC 606-10-50-22 and have elected to recognize the incremental costs of obtaining a contract as an expense 
when incurred if the amortization period of the asset the entity would otherwise recognize is one year or less. As a result, no 
commissions have been capitalized as contract costs since adoption of ASC 606. The following is a description of the principal 
activities (separated by reportable segments) from which we generate our revenue. For more detailed information about our 
reportable segments including disaggregated revenue results by major product line and primary geographic markets, see “Note 
19. Geographic and Segment Information.”

Cardiopulmonary Products and Services

Cardiopulmonary products include oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, 

cannulae and other related accessories. 

Cardiopulmonary products may include performance obligations associated with assembly and installation of equipment. 
Accordingly, we allocate a portion of the sales prices to installation obligations and recognize that revenue when the service is 
provided. We recognize revenue for equipment and accessory product sales when control of the equipment or product passes to 
the customer.

Technical services include installation, repair and maintenance of cardiopulmonary equipment under service contracts or 
upon customer request. Technical service agreements generally provide for upfront payments in advance of rendering services 
or periodic billing over the contract term. Amounts billed in advance are deferred and recognized as revenue when the 
performance obligation is satisfied. Technical services are not a significant component of Cardiopulmonary revenue and have 
been presented with the related equipment and accessories revenue.

Neuromodulation Products

Neuromodulation segment products are comprised of neuromodulation therapy systems for the treatment of DRE, DTD and 
OSA. Our Neuromodulation product line includes the VNS Therapy System, which consists of an implantable pulse generator, 
a lead that connects the generator to the vagus nerve, and other accessories. Our Neuromodulation product line also includes an 
implantable device for the treatment of obstructive sleep apnea that stimulates multiple tongue muscles via the hypoglossal 
nerve, which in turn, engages certain muscles in the tongue in order to open the airway while a patient is sleeping. We 
recognize revenue for Neuromodulation product sales when control passes to the customer.

F-18

Advanced Circulatory Support Products

Advanced Circulatory Support includes temporary life support product kits that can include a combination of pumps, 

oxygenators, and cannulae. Advanced Circulatory Support revenue is recognized when control passes to the customer, usually 
at the point of shipment.

Contract Balances

Due to the nature of our products and services, revenue producing activities may result in contract assets and contract 
liabilities. These activities relate primarily to Cardiopulmonary technical services contracts for short-term and multi-year 
service agreements. Contract assets are primarily comprised of unbilled revenues, which occur when a performance obligation 
has been completed, but not billed to the customer. Contract liabilities are made up of deferred revenue, which occurs when a 
customer pays for a service, before a performance obligation has been completed. Contract assets are included within prepaid 
expenses and other current assets on the consolidated balance sheets and were insignificant at December 31, 2021 and 2020. As 
of December 31, 2021 and December 31, 2020, contract liabilities of $9.8 million and $8.6 million, respectively, were included 
within accrued liabilities and other and other long-term liabilities on the consolidated balance sheets.

Note 4. Divestiture of Heart Valve Business

Heart Valves

On December 2, 2020, LivaNova entered into a Purchase Agreement with Mitral Holdco S.à r.l., a company incorporated 

under the laws of Luxembourg and wholly owned and controlled by funds advised by Gyrus Capital S.A., a Swiss private 
equity firm. The Purchase Agreement provides for the divestiture of certain of LivaNova’s subsidiaries as well as certain other 
assets and liabilities relating to the Company’s Heart Valve business and site management operations conducted by the 
Company’s subsidiary LSM at the Company’s Saluggia campus for €60.0 million (approximately $68.1 million as of 
December 31, 2021). On April 9, 2021, LivaNova and the Purchaser entered into an A&R Purchase Agreement which amends 
and restates the original Purchase Agreement to, among other things, defer the closing of the sale and purchase of LSM by up to 
two years and include or amend certain additional terms relating to such deferral, including certain amendments relating to the 
potential hazardous substances liabilities of LSM and the related expense reimbursement provisions.

As a result of entering into the Purchase Agreement, during the fourth quarter of 2020 the Company concluded that the assets 
and liabilities of the Heart Valve business being sold met the criteria to be classified as held for sale. As a result, we recognized 
an impairment of $180.2 million during the fourth quarter of 2020 to record the Heart Valves disposal group at fair value less 
estimated cost to sell. Additionally, we recorded a $21.3 million impairment to the goodwill allocated to the Heart Valves 
disposal group based upon the relative fair values of the businesses within Other.

The initial closing of the sale of the Heart Valve business occurred on June 1, 2021 and we received €34.8 million 

(approximately $42.5 million as of June 1, 2021), subject to customary trade working capital and net indebtedness adjustments, 
as set forth in the Purchase Agreement. We also received $3.0 million on December 17, 2021. An additional €9.3 million 
(approximately $10.6 million as of December 31, 2021) is payable to LivaNova in 2022. During the year ended December 31, 
2021, we recognized a loss from the sale of the Heart Valve business of $1.9 million, which is included within other operating 
expenses on the consolidated statements of income (loss).

In conjunction with the sale, we entered into a transition services agreement to provide certain support services generally for 

up to twelve months from the closing date of the sale. These services include, among others, accounting, information 
technology, human resources, quality assurance, regulatory affairs, supply chain, clinical affairs and customer support. During 
the year ended December 31, 2021, we recognized income of $1.9 million for providing these services. Income recognized 
related to the transition services agreements is recorded as a reduction to the related expenses in the associated expense line 
items in the consolidated statements of income (loss).

F-19

The major classes of assets and liabilities of the Heart Valves business held for sale on the consolidated balance sheet as of 

December 31, 2020 were as follows (in thousands):

December 31, 2020

Accounts receivable, net

Inventories

Prepaid and refundable taxes

Prepaid expenses and other current assets

Property, plant and equipment, net

Intangible assets, net

Operating lease assets

Impairment charge of disposal group

Total assets held for sale

Accounts payable

Accrued liabilities and other

Taxes payable

Accrued employee compensation and related benefits

Deferred tax liabilities

Long-term employee compensation and related benefits

Long-term operating lease liabilities

Other long-term liabilities

Total liabilities held for sale

Note 5. Restructuring

$ 

$ 

$ 

20,059 

45,081 

2,751 

2,436 

25,042 

153,632 

1,698 

(180,160) 

70,539 

9,518 

4,205 

363 

8,781 

671 

4,994 

841 

306 

$ 

29,679 

We initiate restructuring plans to leverage economies of scale, streamline distribution and logistics, and strengthen 

operational and administrative effectiveness in order to reduce overall costs.

In November 2019, we initiated a reorganization plan (the “2019 Plan”) to streamline our organizational structure in order to 

address new regulatory requirements, create efficiencies, improve profitability and ensure business continuity. As a result, we 
incurred restructuring expenses of $4.4 million during the year ended December 31, 2019 and $1.9 million during the year 
ended December 31, 2020, primarily associated with severance costs for approximately 35 impacted employees. The 2019 Plan 
was completed during 2020.

Additionally, we ended our Caisson TMVR program effective December 31, 2019 after determining that it was no longer 
viable to continue to invest in the program. As a result, we recognized restructuring expenses of $3.5 million during the year 
ended December 31, 2019 and $0.3 million during the year ended December 31, 2020, primarily associated with severance 
costs for approximately 50 impacted employees. The Caisson TMVR restructuring plan was completed during 2020.

During the fourth quarter of 2020, we initiated a reorganization plan (the “2020 Plan”) to reduce our cost structure. We 
incurred restructuring expenses of $5.3 million during the year ended December 31, 2020 primarily associated with severance 
costs for 54 employees, and $9.7 million during 2021, primarily associated with severance costs for 27 additional employees 
during 2021 under the 2020 Plan and lease abandonment costs. 

F-20

The following table provides a reconciliation of the beginning and ending balance of the accruals and other reserves recorded 

in connection with our restructuring plans included within accrued liabilities on the consolidated balance sheet (in thousands):

Employee 
Severance and 
Other 
Termination 
Costs

Other

Total

Balance at December 31, 2018

$ 

10,195  $ 

3,069  $ 

Charges

Cash payments

Balance at December 31, 2019

Charges

Cash payments

Balance at December 31, 2020

Charges

Cash payments
Balance at December 31, 2021 (1)

11,472 

(17,570) 

4,097 

7,571 

(5,919) 

5,749 

7,963 

$ 

(12,876) 

836  $ 

782 

(2,451) 

1,400 

— 

(854)

546 

1,750 

(2,296) 

—  $ 

13,264 

12,254 

(20,021) 

5,497 

7,571 

(6,773)

6,295 

9,713 

(15,172) 

836 

(1) Cumulatively, we have recognized a total of $128.8 million in restructuring expense, inclusive of discontinued operations.

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

Cardiopulmonary

Neuromodulation
Other (1)
Total (2)

Year Ended December 31,
2020

2019

2021

$ 

$ 

2,844  $ 

1,040  $ 

1,531 

5,338 

3,223 

3,308 

9,713  $ 

7,571  $ 

1,483 

1,082 

9,689 

12,254 

(1) Other restructuring expense for the year ended December 31, 2019 included $3.5 million of Caisson restructuring expenses.
(2) Restructuring expense is included within other operating expenses on the consolidated statements of income (loss).

Note 6. Product Remediation Liability

On December 29, 2015, we received an FDA Warning Letter (the “Warning Letter”) alleging certain violations of FDA 
regulations applicable to medical device manufacturing at our Munich, Germany and Arvada, Colorado facilities. On October 
13, 2016, the CDC and FDA separately released safety notifications regarding 3T Heater-Cooler devices in response to which 
we issued a Field Safety Notice Update for U.S. users of our 3T Heater-Cooler devices to proactively and voluntarily contact 
facilities to facilitate implementation of the CDC and FDA recommendations.

On December 31, 2016, we recognized a liability for a product remediation plan related to our 3T device. The remediation 

plan consisted primarily of a modification of the 3T device design to include internal sealing and the addition of a vacuum 
system to new and existing devices to address regulatory actions and to reduce further the risk of possible dispersion of aerosols 
from 3T devices in the operating room. We concluded that it was probable that a liability had been incurred upon management’s 
approval of the plan and the commitments made by management to various regulatory authorities globally in November and 
December 2016, and furthermore, the cost associated with the plan was reasonably estimable. 

In April 2017, we obtained CE Mark in Europe for the design change of the 3T device, and in October 2018, the FDA 
concluded that we could commence the vacuum canister and internal sealing upgrade program in the U.S. On February 25, 
2020, LivaNova received clearance for K191402, a 510(k) for the 3T devices that addressed issues contained in the 2015 
Warning Letter along with design changes that further mitigate the potential risk of aerosolization. Concurrent with this 
clearance, (1) 3T devices manufactured in accordance with K191402 will not be subjected to the import alert and (2) LivaNova 
initiated a correction to distribute the updated Operating Instructions cleared under K191402. We are in the process of 
completing and closing out all recall activities with the FDA. While our vacuum canister and internal sealing upgrade program 
and deep cleaning service in the U.S. are substantially complete, these services will continue as a servicing option outside of the 
U.S.

F-21

Changes in the carrying amount of the product remediation liability are as follows (in thousands):

Balance at December 31, 2018

Adjustments

Remediation activity

Effect of changes in foreign currency exchange rates

Balance at December 31, 2019

Adjustments

Remediation activity

Effect of changes in foreign currency exchange rates

Balance at December 31, 2020

Adjustments

Remediation activity

Effect of changes in foreign currency exchange rates

Balance at December 31, 2021

$ 

$ 

14,745 

3,663 

(14,909) 

(248) 

3,251 

3,199 

(5,743) 

349 

1,056 

712 

(880) 

(81) 

807 

We recognized product remediation expenses during the years ended December 31, 2021, 2020 and 2019 of $0.8 million, 

$7.9 million and $15.8 million, respectively. In addition to changes to the estimated product remediation liability, product 
remediation expenses include internal labor costs, costs to remediate certain inspectional observations made by the FDA at our 
Munich facility and costs associated with the incorporation of the modification of the 3T device design into the next generation 
3T device. These costs and related legal costs are expensed as incurred and are not included within the product remediation 
liability presented above. During the fourth quarter of 2018, we recognized a $294.1 million liability related to the litigation 
involving the 3T device. As of December 31, 2021, the liability was $39.5 million. Our related legal costs are expensed as 
incurred. For further information, please refer to “Note 13. Commitments and Contingencies.”

F-22

Note 7. Goodwill and Intangible Assets

The following table represents our finite-lived and indefinite-lived intangible assets as of December 31, 2021 and 2020 (in 

thousands):

Finite-lived intangible assets:

Customer relationships

Developed technology

Trade names

Other intangible assets

Total gross finite-lived intangible assets

Accumulated amortization - Customer relationships

Accumulated amortization - Developed technology

Accumulated amortization - Trade names

Accumulated amortization - Other intangible assets

Total accumulated amortization

Net finite-lived intangible assets

Indefinite-lived intangible assets:

IPR&D

Goodwill

Total indefinite-lived intangible assets

2021

2020

$ 

192,800  $ 

219,706 

25,154 

616 

438,276 

65,106 

68,488 

16,500 

506 

150,600 

287,676  $ 

112,006  $ 

899,525 

202,546 

227,247 

26,261 

1,035 

457,089 

56,787 

56,933 

16,837 

902 

131,459 

325,630 

112,006 

922,318 

1,011,531  $ 

1,034,324 

$ 

$ 

$ 

The amortization periods for our finite-lived intangible assets as of December 31, 2021, are as follows: 

Customer relationships

Developed technology

Trade names

Minimum Life 
in years

Maximum Life 
in years

8

14

15

18

17

15

The estimated future amortization expense based on our finite-lived intangible assets at December 31, 2021, is as follows (in 

thousands):

2022

2023

2024

2025

2026

Thereafter

Total

$ 

$ 

25,980 

25,980 

25,980 

25,980 

25,980 

157,776 

287,676 

Intangible Asset Impairments

In November 2019, we announced that we would be ending our Caisson TMVR program. The announcement triggered an 
evaluation of finite and indefinite lived assets for impairment. As a result, we fully impaired the IPR&D asset and goodwill of 
$89.0 million and $42.4 million, respectively. 

During the second quarter of 2019, we determined that there would be a delay in the estimated commercialization date of our 

obstructive sleep apnea product currently under development, which was acquired in the ImThera acquisition. This delay 
constituted a triggering event that required an evaluation of the IPR&D asset arising from the ImThera acquisition for 
impairment. Based on the assessment performed, we determined that the IPR&D asset was impaired and as a result, recorded an 
impairment of $50.3 million, which is included in our Neuromodulation segment. The estimated fair value of IPR&D was 
determined using the income approach. Estimating the fair value of the IPR&D asset requires various assumptions, including 

F-23

revenue growth rates, timing and probability of commercialization and the discount rate. Future delays in commercialization or 
changes in management estimates could result in further impairment. 

Intangible Asset Reclassification

During the third quarter of 2019, upon receiving FDA approval of the LifeSPARC system, we reclassified the IPR&D asset 

of $107.5 million from the acquisition of TandemLife to finite-lived developed technology intangible assets and began 
amortizing the intangible asset over a useful life of 15 years. 

Goodwill 

The following table represents the changes in the carrying amount of goodwill by reportable segment (in thousands):

December 31, 2019
Impairment (2)
Foreign currency adjustments

December 31, 2020

Foreign currency adjustments

Cardiopulmonary Neuromodulation

Advanced 
Circulatory 
Support

Other (1)

Total

$ 

394,735  $ 

398,754  $ 

102,526  $ 

19,779  $ 

915,794 

— 

26,303 

421,038 

(22,793) 

— 

— 

— 

— 

(21,269) 

1,490 

398,754 

102,526 

— 

— 

— 

— 

(21,269) 

27,793 

922,318 

(22,793) 

December 31, 2021

$ 

398,245  $ 

398,754  $ 

102,526  $ 

—  $ 

899,525 

(1) Other includes goodwill associated the Company’s Heart Valves business, which was disposed of on June 1, 2021.
(2) During the year ended December 31, 2020, the Company recognized a $21.3 million impairment of goodwill allocated to

Heart Valves. Refer to “Note 4. Divestiture of Heart Valve Business” for additional information.

Due to our change in reportable segments, as discussed in “Note 1. Nature of Operations,” we performed a quantitative 
assessment as of October 1, 2021 of the goodwill associated with the previously reported Cardiovascular reporting unit and 
concluded that the goodwill was not impaired. We then allocated $403.9 million and $102.5 million of the previously reported 
Cardiovascular goodwill to the new Cardiopulmonary and Advanced Circulatory Support reporting units, respectively, based on 
their relative fair values.

We performed a quantitative assessment for our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support 
reporting units as of October 1, 2021. The quantitative impairment assessment was performed using management’s current 
estimate of future cash flows. We concluded that the fair value of our Cardiopulmonary, Neuromodulation and Advanced 
Circulatory Support segments exceeded the carrying value of the respective reporting units by 60%, 658% and 45%, 
respectively, as evidenced by the estimated fair value of our Cardiopulmonary, Neuromodulation and Advanced Circulatory 
Support reporting units calculated for the purpose of reconciling the fair value of our reporting units to our market 
capitalization. Therefore, we concluded that our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support 
reporting units’ goodwill was not impaired on the October 1, 2021 test date.

On December 2, 2020, LivaNova entered into a Purchase Agreement for the divestiture of certain of LivaNova’s subsidiaries 
as  well  as  certain  other  assets  and  liabilities  relating  to  the  Company’s  Heart  Valve  business.  We  performed  a  quantitative 
assessment as of December 2, 2020 of the goodwill associated with the previously reported Cardiovascular reporting unit and 
concluded  that  the  goodwill  was  not  impaired.  We  then  allocated  $21.3  million  of  the  previously  reported  Cardiovascular 
goodwill to the Heart Valves disposal group based on the relative fair values of the businesses within the previously reported 
Cardiovascular reporting unit and recognized a $21.3 million impairment to the allocated goodwill. For additional information 
refer to “Note 4. Divestiture of Heart Valve Business.”

Cumulative goodwill impairments from continuing operations since the merger of Cyberonics, Inc. and Sorin S.p.A. in 

October 2015 total $63.7 million.

F-24

Note 8. Investments

The following table details the carrying value of our investments in equity securities of non-consolidated affiliates without 
readily determinable fair values for which we do not exert significant influence over the investee. These equity investments are 
reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly 
transactions for the identical or similar investment of the same issuer. These below equity investments are included in 
investments on the consolidated balance sheets as of December 31, 2021 and 2020 (in thousands):

2021

2020

ShiraTronics, Inc.

Noctrix Health, Inc.
ALung Technologies, Inc. (1)
Ceribell, Inc.
MD Start II (2)
Rainbow Medical Ltd.

Highlife S.A.S.
Respicardia Inc. (3)

Equity method investment (4)

$ 

3,331  $ 

3,159 

3,000 

3,000 

1,135 

1,111 

1,075 

— 

15,811 

787 

$ 

16,598  $ 

2,045 

1,359 

3,000 

3,000 

1,227 

1,201 

1,163 

17,706 

30,701 

393 

31,094 

(1) ALung Technologies, Inc. (“ALung”) is a privately held medical device company focused on creating advanced medical
devices for treating respiratory failure. We have a loan outstanding to ALung with a carrying amount of $2.5 million and
$2.5 million as of December 31, 2021 and 2020, respectively, which is included in prepaid expenses and other current assets
on the consolidated balance sheet.

(2) During the second quarter of 2021 the Company received a cash dividend from its investment in MD Start II of $3.1 million,

(3)

which is included in foreign exchange and other gains/(losses) on the consolidated statements of income (loss) for the year
ended December 31, 2021.
In April 2021, Zoll Medical Corporation acquired Respicardia Inc. As a result of the acquisition we received proceeds of
$23.1 million for our investment and loan receivable with carrying values of $17.7 million and $0.8 million as of December
31, 2020, respectively. The Company recorded a gain of $4.6 million during the first quarter of 2021 to adjust the
investment and loans receivable to fair value, which is included in foreign exchange and other gains/(losses) on the
consolidated statements of income (loss) for the year ended December 31, 2021.

(4) We are required to fund follow-on investments up to a total of approximately €5.0 million (approximately $5.7 million as of

December 31, 2021) based on cash calls.

Note 9. Fair Value Measurements

We review the 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 within the fair value hierarchy. There were no transfers between Level 
1, Level 2, or Level 3 during the years ended December 31, 2021, 2020 or 2019.

F-25

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis 

(in thousands):

Assets:

Fair Value as of 
December 31, 
2021

Fair Value Measurements Using Inputs 
Considered as:
Level 2

Level 3

Level 1

Derivative assets - designated as cash flow hedges (foreign 
currency exchange rate “FX”)

$ 

Derivative assets - freestanding instruments (FX)

Derivative assets - capped call derivatives

Convertible notes receivable

243  $ 

—  $ 

243  $ 

61 

106,629 

2,767 

— 

— 

— 

61 

— 

— 

— 

— 

106,629 

2,767 

$ 

109,700  $ 

—  $ 

304  $ 

109,396 

Liabilities:

Derivative liabilities - designated as cash flow hedges (FX)

$ 

1,286  $ 

—  $ 

1,286  $ 

— 

Derivative liabilities - freestanding instruments (FX)
Derivative liabilities - embedded exchange feature

Contingent consideration arrangements

427 
181,700 

98,382 

— 
— 

— 

427 
— 

— 

— 
181,700 

98,382 

$ 

281,795  $ 

—  $ 

1,713  $ 

280,082 

Fair Value as of 
December 31, 
2020

Fair Value Measurements Using Inputs 
Considered as:
Level 2

Level 3

Level 1

Assets:

Derivative assets - designated as cash flow hedges (foreign 
currency exchange rate “FX”)
Derivative assets - freestanding instruments (FX)

Derivative assets - capped call derivatives

Convertible notes receivable

Liabilities:

Derivative liabilities - designated as cash flow hedges (FX)
Derivative liabilities - freestanding instruments (interest 
rate swaps)

Derivative liabilities - freestanding instruments (FX)

Derivative liabilities - embedded exchange feature

Derivative liabilities - other

Contingent consideration arrangements

$ 

$ 

$ 

2,893  $ 
55 

72,302 

2,775 

—  $ 
— 

2,893  $ 
55 

— 

— 

— 

— 

— 
— 

72,302 

2,775 

78,025  $ 

—  $ 

2,948  $ 

75,077 

14  $ 

—  $ 

14  $ 

74 

4,073 

121,756 

4,290 

103,818 

— 

— 

— 

— 

— 

74 

4,073 

— 

— 

— 

— 

— 

— 

121,756 

4,290 

103,818 

$ 

234,025  $ 

—  $ 

4,161  $ 

229,864 

F-26

The following table provides a reconciliation of the beginning and ending balances of our recurring fair value measurements, 

using significant unobservable inputs (Level 3) (in thousands):

Capped Call 
Derivative 
Asset

Convertible 
Notes 
Receivable

Embedded 
Exchange 
Feature 
Derivative 
Liability

Other 
Derivative 
Liabilities

December 31, 2019
Additions 
Payments (1)
Changes in fair value (2) (3) (4)
Effect of changes in FX
December 31, 2020
Additions
Payments (1)
Changes in fair value (2) (4)
Effect of changes in FX
December 31, 2021
Less current portion at December 31, 2021
Long-term portion at December 31, 2021

$ 

—  $ 

—  $ 

—  $ 

43,096 
— 
29,206 
— 
72,302 
— 
— 
34,327 
— 
106,629 
106,629 

2,691 
— 
84 
— 
2,775 
— 
— 
(8)   
— 
2,767 
2,495 

74,951 
— 
46,805 
— 
121,756 
— 
— 
59,944 
— 
181,700 
181,700 

$ 

—  $ 

272  $ 

—  $ 

Contingent 
Consideration 
Liability 
Arrangements
137,349 
— 
(12,868) 
(20,463) 
(200) 
103,818 
— 
(6,000) 
564 
— 
98,382 
11,552 
86,830 

—  $ 
— 
— 
4,290 
— 
4,290 
— 
— 
(4,290)   
— 
— 
— 
—  $ 

(1) During the year ended December 31, 2021, we paid $6.0 million under the contingent consideration arrangement for the 
acquisition of Miami Instruments, LLC (“Miami Instruments”). During the year ended December 31, 2020, we paid 
$11.8 million under the contingent consideration arrangement for the acquisition of TandemLife. Additionally, we made 
final payments under contingent consideration arrangements resulting from the acquisitions of two distributors.  
(2) During the year ended December 31, 2021, the contingent consideration change in fair value resulted in a decrease of 

$8.5 million recorded to cost of sales and an increase of $9.1 million recorded to research and development. During the year 
ended December 31, 2020, the contingent consideration change in fair value resulted in a decrease of $13.0 million and 
$7.5 million recorded to cost of sales and research and development, respectively. 

(3) The contingent consideration change in fair value during the year ended December 31, 2020 is primarily due to a one-year 
delay in the projected achievement of a certain regulatory milestone and timing of sales-based earnout payments for 
ImThera, and the impact of an increase in discount rates utilized in the valuation of contingent consideration. Refer to the 
tables below for further information regarding the fair value measurements of contingent consideration.

(4) Changes in the fair value of the embedded exchange feature derivative, capped call derivatives and other derivative 

liabilities are recognized in foreign exchange and other gains/(losses) in the consolidated statements of income (loss).

Embedded Exchange Feature and Capped Call Derivatives

In June 2020, the Company issued $287.5 million in cash exchangeable senior notes and entered into related capped call 

transactions. The cash exchangeable senior notes include an embedded exchange feature that is bifurcated from the cash 
exchangeable senior notes. Please refer to “Note 10. Financing Arrangements” for further details. The embedded exchange 
feature derivative is measured at fair value using a binomial lattice model and discounted cash flows that utilize observable and 
unobservable market data. The capped call derivative is measured at fair value using the Black-Scholes model utilizing 
observable and unobservable market data, including stock price, remaining contractual term, expected volatility, risk-free 
interest rate and expected dividend yield, as applicable.

The embedded exchange feature and capped call derivatives are classified as Level 3 as the Company uses historical volatility 

and implied volatility from options traded to determine expected stock price volatility which is an unobservable input that is 
significant to the valuation. In general, an increase in our stock price or stock price volatility would increase the fair value of the 
embedded exchange feature and capped call derivatives which would result in an increase in expense. As time to the expiration 
of the derivatives decreases with passage of time, the fair value of the derivatives would decrease. The future impact on net 
income depends on how significant inputs such as stock price, stock price volatility and time to the expiration of the derivatives 
change in relation to other inputs.

The stock price volatility as of December 31, 2021 was 33%. As of December 31, 2021, a 10% lower volatility, holding other 

inputs constant, would result in approximate fair value for the embedded exchange feature derivative of $166.1 million and a 
10% higher volatility, holding other inputs constant, would result in approximate fair value of $200.0 million. As of 
December 31, 2021, a 10% lower volatility, holding other inputs constant would result in approximate fair value for the capped 

F-27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
call derivatives of $119.6 million and a 10% higher volatility, holding other inputs constant, would result in approximate fair 
value of $95.8 million.

Contingent Consideration Arrangements

The following table provides the fair value of our Level 3 contingent consideration arrangements by acquisition (in 

thousands):

ImThera

TandemLife

Miami Instruments

December 31,

2021

2020

$ 

$ 

86,830  $ 

11,552 

— 

89,436 

8,809 

5,573 

98,382  $ 

103,818 

The ImThera business combination involved contingent consideration arrangements composed of potential cash payments 
upon the achievement of a certain regulatory milestone and a sales-based earnout associated with sales of products. The sales-
based earnout is valued using projected sales from our internal strategic plan. Both arrangements are Level 3 fair value 
measurements and include the following significant unobservable inputs as of December 31, 2021:

ImThera Acquisition

Valuation Technique

Unobservable Input

Regulatory milestone-based payment

Discounted cash flow

Discount rate

Probability of payment

Projected payment year

Ranges
3.6%

85%

2024

Sales-based earnout

Monte Carlo simulation

Risk-adjusted discount rate

12.4% - 12.8%

Credit risk discount rate

3.9% - 4.6%

Revenue volatility

Probability of payment

32.5%

85%

Projected years of earnout

2025 -

2028

The TandemLife business combination involved a contingent consideration arrangement composed of potential cash 
payments upon the achievement of certain regulatory milestones. The arrangement is a Level 3 fair value measurement and 
includes the following significant unobservable inputs as of December 31, 2021:

TandemLife Acquisition

Valuation Technique

Unobservable Input

Ranges

Regulatory milestone-based payment Discounted cash flow

Discount rate

Probability of payments

Projected payment years

2.4%

90%

2022

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Our investments in equity securities of non-consolidated affiliates without readily determinable fair values are reported at 
cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the 
identical or similar investment of the same issuer. Our investments in non-financial assets such as, goodwill, intangible assets, 
and PP&E, are measured at fair value if there is an indication of impairment and recorded at fair value only when an 
impairment is recognized. We classify the measurement input for these assets as Level 3 inputs within the fair value hierarchy.

Other

The carrying values of our cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities 

approximate their fair values due to the short-term nature of these items.

The carrying value of our long-term debt including the current portion, as of December 31, 2021, was $236.8 million, which 

we believe approximates fair value.

F-28

Note 10. Financing Arrangements

The outstanding principal amount of our long-term debt as of December 31, 2021 and 2020, was as follows (in thousands, 

except interest rates): 

2020 Cash Exchangeable Senior Notes
Bank of America Merrill Lynch Banco Múltiplo S.A.
Mediocredito Italiano
Bank of America, U.S.
2020 Senior Secured Term Loan
Other

$ 

Total long-term facilities

Less current portion of long-term debt
Total long-term debt

2021
225,140  $ 
6,113 
3,379 
1,500 
— 
663 
236,795 
226,946 

Interest Rate
3.00%
7.24%
 0.50 % - 2.74%
2.66%

2020
212,073  December 2025

Maturity

July 2023

6,515 
5,406  December 2023
2,019 
January 2023
424,002 
660 
650,675 
8,377 
642,298 

$ 

9,849  $ 

Contractual annual principal maturities of our long-term debt facilities as of December 31, 2021, are as follows (in 

thousands):

2022
2023

2024

2025

2026

Thereafter

Total payments

Less: Debt issuance costs 

Total long-term facilities

Revolving Credit 

$ 

$ 

1,806 
9,431 

87 

287,560 

— 

327 

299,211 

62,416 

236,795 

The outstanding principal amount of our short-term unsecured revolving credit agreements and other agreements with various 
banks was $2.7 million and $4.2 million at December 31, 2021 and December 31, 2020, respectively, with interest rates ranging 
from 2.85% to 7.24% and loan terms ranging from overnight to 364 days.

On August 13, 2021, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. (the “Borrower”) entered into a 

First Lien Credit Agreement with the lenders and issuing banks party thereto and Goldman Sachs Bank USA, as First Lien 
Administrative Agent and First Lien Collateral Agent, and Goldman Sachs Bank USA, Barclays Bank PLC and UBS AG, 
Stamford Branch as lenders, relating to a $125 million senior secured multi-currency revolving credit facility to be made 
available to the Borrower (the “2021 Revolving Credit Facility”). The 2021 Revolving Credit Facility expires on August 13, 
2026 and bears interest at a rate equal to, for U.S. dollar-denominated loans, an adjusted LIBOR (with LIBOR fallback 
language to address the announced future cessation of specified dollar LIBOR) with a floor of 0.00%, or a Base Rate, plus, in 
each case, a variable margin based on the Company’s senior secured net leverage ratio. As of December 31, 2021, the 
applicable margin for Eurodollar loans was 3.00% per annum. Interest is paid monthly or quarterly, as selected by the 
Borrower, with any outstanding principal due at maturity. The 2021 Revolving Credit Facility also contemplates the payment of 
commitment fees on the unused portion of the commitments, at a variable percentage based on the Company’s senior secured 
net leverage ratio. At December 31, 2021, the applicable commitment fee percentage was 0.25% per annum. The 2021 
Revolving Credit Facility is available for working capital and other general corporate purposes and, if drawn, can be repaid at 
any time without premium or penalty. The 2021 Revolving Credit Facility contains customary representations, warranties and 
covenants, including the requirement to maintain a senior secured first lien net leverage ratio of less than 4.50 to 1.00 for as 
long as there are any revolving loans outstanding under the 2021 Revolving Credit Facility, as well as in order for the Company 
to borrow additional revolving loans. 

There were no outstanding borrowings under the 2021 Revolving Credit Facility as of December 31, 2021.

On August 12, 2021, the Company terminated its previous $50.0 million revolving credit facility agreement with ACF 

FINCO I LP, which was undrawn, resulting in a loss on debt extinguishment of $1.6 million recognized during the year ended 

F-29

December 31, 2021 primarily associated with the write-off of unamortized debt issuance costs, and is included within loss on 
debt extinguishment on the consolidated statements of income (loss).

Bridge Loan Facility

On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. entered into an Incremental 

Facility Amendment No. 1 to the First Lien Credit Agreement with Goldman Sachs Bank USA, relating to a €200 million 
bridge loan facility. The proceeds may be used to secure the first demand bank surety of €270.0 million required in connection 
with the SNIA litigation or, alternatively, for payment of court ordered damages or settlements (including interest, expenses and 
charges in connection therewith) in the event of a negative decision by the Italian Supreme Court. The Bridge Loan Facility has 
an availability period until June 30, 2022 and a maturity date 15 months after drawing. Borrowings under the Bridge Loan 
Facility bear interest at a rate equal to an adjusted EURIBOR (with a floor of 0.00%) plus 3.50% increasing by 0.25% 15 days 
after drawing and by an additional 0.5% 90 days after drawing and every 90 days thereafter, with a maximum margin of 5.25% 
over adjusted EURIBOR. For additional information regarding the SNIA litigation, please refer to “Note 13. Commitments and 
Contingencies.”

2020 Cash Exchangeable Senior Notes

On June 17, 2020, our wholly-owned subsidiary, LivaNova USA, Inc., issued $287.5 million aggregate principal amount of 
3.00% Notes by private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as 
amended. The sale of the Notes resulted in approximately $278.0 million in net proceeds to the Company after deducting 
issuance costs. Interest is payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 
15, 2020. The effective interest rate of the Notes at December 31, 2021 was 9.95%. The Notes mature on December 15, 2025 
unless earlier exchanged, repurchased, or redeemed.

Debt discounts and issuance costs related to the Notes were approximately $82.0 million and included $75.0 million of 
discount attributable to the embedded exchange feature, discussed below, and $7.0 million of allocated issuance costs to the 
Notes related to legal, bank and accounting fees. Amortization of debt discount and issuance costs was $13.1 million for the 
year ended December 31, 2021 and is included in interest expense on the consolidated statement of income (loss). The 
unamortized discount related to the Notes as of December 31, 2021 was $62.4 million.

Holders of the Notes are entitled to exchange the Notes at any time during specified periods, at their option. This includes the 

right to exchange the Notes during any calendar quarter, if the last reported sale price of LivaNova’s ordinary shares, with a 
nominal value of £1.00 per share, is greater than or equal to 130% of the exchange price, or $79.27 per share for at least 20 
trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last 
trading day of the immediately preceding calendar quarter. The exchange condition was satisfied on December 20, 2021, which 
allows the holders of the Notes to request to exchange the Notes through March 31, 2022. As a result, we have reclassified our 
obligations from the Notes and the associated embedded exchange feature derivative as a current liability on the consolidated 
balance sheet as of December 31, 2021. However, as of the date of filing of this Form 10-K, no holders have elected to 
exchange the Notes. The Notes are exchangeable solely into cash and are not exchangeable into ordinary shares of LivaNova or 
any other security under any circumstances. The initial exchange rate for the Notes is 16.3980 ordinary shares per $1,000 
principal amount of Notes (equivalent to an initial exchange price of approximately $60.98 per share). The exchange rate is 
subject to adjustment in certain circumstances, as set forth in the indenture governing the Notes.

The Company may redeem the Notes at its option, on or after June 20, 2023 and prior to the 51st scheduled trading day 
immediately preceding the maturity date, in whole or in part, if the last reported sale price per ordinary share has been at least 
130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive), including the trading day 
immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day 
period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of 
redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid 
interest to, but excluding, the redemption date. Additionally, the Company may redeem the Notes at its option, prior to their 
stated maturity, in whole but not in part, in connection with certain tax-related events.

F-30

Embedded Exchange Feature

The embedded exchange feature of the Notes requires bifurcation from the Notes and is accounted for as a derivative liability. 

The fair value of the Notes’ embedded exchange feature derivative at the time of issuance was $75.0 million and was recorded 
as debt discount on the Notes. This discount is amortized as interest expense using the effective interest method over the term of 
the Notes. The Notes’ embedded exchange feature derivative is carried on the consolidated balance sheets at its estimated fair 
value and is adjusted at the end of each reporting period, with unrealized gain or loss reflected in the consolidated statements of 
income (loss). The fair value of the embedded exchange feature derivative liability was $181.7 million as of December 31, 
2021.

Capped Call Transactions

In connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions with 
certain of the initial purchasers of the Notes or their respective affiliates. The capped call transactions cover, subject to anti-
dilution adjustments substantially similar to those applicable to the Notes, the number of LivaNova’s ordinary shares 
underlying the Notes and are expected generally to offset any cash payments the Company is required to make upon exchange 
of the Notes in excess of the principal amount thereof in the event that the market value per ordinary share, as measured under 
the capped call transactions, is greater than the strike price of the capped call transactions, with such offset being subject to an 
initial cap price of $100.00 per share. The capped call transactions expire on December 15, 2025 and must be settled in cash. If 
the capped call transactions are converted or redeemed early, settlement occurs at their termination value, which is equal to their 
fair value at the time of the redemption. The capped call transactions are carried on the 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 within foreign exchange and other gains/(losses) in the consolidated statements of income (loss). The fair value of the 
capped call derivative assets was $106.6 million as of December 31, 2021. As of December 31, 2021, the capped call derivative 
assets are classified as current.

2020 Senior Secured Term Loan

The Company used the net proceeds from the 2020 senior secured term loan, together with a portion of the net proceeds of 
the Notes, after fees, discounts, commissions and other expenses, to repay outstanding indebtedness under the Company’s 2017 
European Investment Bank loan, 2014 European Investment Bank loan, Banca Nazionale del Lavoro S.p.A loan, and 2019 Debt 
Facility and related expenses. The Company repaid approximately $528.0 million in aggregate outstanding principal, accrued 
interest and associated fees, including breakage fees and legal fees. The Company recognized a loss on debt extinguishment of 
$1.4 million during the year ended December 31, 2020. The loss on debt extinguishment was recognized in foreign exchange 
and other gains/(losses) in the consolidated statements of income (loss). The remainder of the proceeds from the concurrent 
financing transactions were used to pay the cost of capped call transactions and for general corporate purposes.

On August 12, 2021, the Company repaid in full and terminated its previously outstanding $450 million 2020 senior secured 

term loan, resulting in a loss on debt extinguishment of $58.6 million recognized during the year ended December 31, 2021, 
which is comprised of a $35.6 million make-whole premium and $23.0 million associated with the write-off of unamortized 
debt issuance costs, and is included within loss on debt extinguishment on the consolidated statements of income (loss). For 
additional information, please refer to “Note 14. Stockholders' Equity.”

Note 11. Derivatives and Risk Management 

Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. We enter into FX 
derivative contracts to reduce the impact of foreign currency exchange rate fluctuations on earnings and cash flow. We are also 
exposed to equity price risk in connection with our Notes, including exchange and settlement provisions based on the price of 
our ordinary shares at exchange or maturity of the Notes. In addition, the capped call transactions associated with the Notes also 
include settlement provisions that are based on the price of our ordinary shares, subject to a capped price per share.

We measure all outstanding derivatives each period end at fair value and report the fair value as either financial assets or 

liabilities on the consolidated balance sheets. We do not enter into derivative contracts for speculative purposes. At inception of 
the contract, the derivative is designated as either a freestanding derivative or a hedge. Derivatives that are not designated as 
hedging instruments are referred to as freestanding derivatives with changes in fair value included in earnings.

If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in AOCI until the 
hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to 
our consolidated statements of income (loss) as shown in the tables below. We evaluate hedge effectiveness at inception. Cash 
flows from derivative contracts are reported as operating activities on our consolidated statements of cash flows.

F-31

Freestanding FX Derivative Contracts

The gross notional amount of FX derivative contracts not designated as hedging instruments outstanding at December 31, 
2021 and December 31, 2020 was $136.7 million and $352.6 million, respectively. These derivative contracts are designed to 
offset the FX effects in earnings of various intercompany loans and trade receivables. We recorded net gains (losses) for these 
freestanding derivatives of $10.9 million, $(16.6) million and $3.1 million for the years ended December 31, 2021, 2020 and 
2019, respectively. These (losses) and gains are included in foreign exchange and other gains/(losses) on our consolidated 
statements of income (loss). 

Counterparty Credit Risk

We are exposed to credit risk in the event of non-performance by the counterparties to our derivatives.

The two counterparties to the capped call transactions are financial institutions. To limit our credit risk, we selected financial 
institutions with a minimum long-term investment grade credit rating. Our exposure to the credit risk of the counterparties is not 
secured by any collateral. If a counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor 
in those proceedings, with a claim equal to our exposure at that time under the capped call transactions with that counterparty.

To manage credit risk with respect to our other derivatives, the Company selects and periodically reviews counterparties 
based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market positions. However, if 
one or more of these counterparties were in a liability position to the Company and were unable to meet their obligations, any 
transactions with the counterparty could be subject to early termination, which could result in substantial losses for the 
Company.

Cash Flow Hedges

We utilize FX derivative contracts, designed as cash flow hedges, to hedge the variability of cash flows associated with our 
12 months U.S. dollar forecasts of revenues and costs denominated in British Pound, Japanese Yen and the Euro. We transfer to 
earnings from AOCI the gain or loss realized on the FX derivative contracts at the time of invoicing.

The gross notional amounts of open derivative contracts designated as cash flow hedges as of December 31, 2021 and 2020, 

were as follows (in thousands):

Description of Derivative Contract

FX derivative contracts to be exchanged for British Pounds

FX derivative contracts to be exchanged for Japanese Yen

FX derivative contracts to be exchanged for Euros

2021

2020

11,160  $ 

6,648 

58,224 

76,032  $ 

9,545 

18,637 

47,444 

75,626 

$ 

$ 

After-tax net gain associated with derivatives designated as cash flow hedges recorded in the ending balance of AOCI and the 

amount expected to be reclassified to earnings in the next 12 months are as follows (in thousands):

Description of Derivative Contract

FX derivative contracts

After-tax Net Loss in 
AOCI as of December 31, 
2021

After-tax Net Loss 
Expected to be 
Reclassified to Earnings 
in Next 12 Months

$ 

(945) $

(945) 

Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in OCI and the amount reclassified 

to earnings from AOCI were as follows (in thousands): 

Description of Derivative Contract

FX derivative contracts

FX derivative contracts

Location in Earnings of 
Reclassified Gain or Loss
Foreign exchange and other 
gains/(losses)

SG&A

$ 

$ 

Year Ended December 31, 2021

Losses Recognized in 
OCI

(Losses) Gains 
Reclassified from AOCI 
to Earnings:

(3,922)  $ 

— 

(3,922)  $ 

(2,333) 

2,408 

75 

F-32

Description of Derivative Contract

FX derivative contracts

FX derivative contracts

Location in Earnings of 
Reclassified Gain or Loss
Foreign exchange and other 
gains/(losses)

SG&A

Interest rate swap contracts

Interest expense

Description of Derivative Contract

FX derivative contracts
FX derivative contracts
Interest rate swap contracts

Location in Earnings of 
Reclassified Gain or Loss
Foreign exchange and other 
gains/(losses)
SG&A
Interest expense

Year Ended December 31, 2020

Gains Recognized in 
OCI

(Losses) Gains 
Reclassified from AOCI 
to Earnings:

1,724  $ 

— 

— 

1,724  $ 

(1,522) 

980 

(113) 

(655) 

Year Ended December 31, 2019

Gains Recognized in 
OCI

Gains (Losses) 
Reclassified from AOCI 
to Earnings:

2,757  $ 
— 
— 

2,757  $ 

3,003 
(2,071) 
(92) 

840 

$ 

$ 

$ 

$ 

We offset fair value amounts associated with our derivative instruments on our consolidated balance sheets that are executed 

with the same counterparty under master netting arrangements. Our netting arrangements include a right to set off or net 
together purchases and sales of similar products in the settlement process.

F-33

The following tables present the fair value and the location of derivative contracts reported on the consolidated balance sheets 

(in thousands):

December 31, 2021
Derivatives Designated as Hedging 
Instruments
FX derivative contracts

Total derivatives designated as 
hedging instruments
Derivatives Not Designated as 
Hedging Instruments
FX derivative contracts

Capped call derivatives

Embedded exchange feature

Total derivatives not designated as 
hedging instruments
Total derivatives

December 31, 2020
Derivatives Designated as Hedging 
Instruments

FX derivative contracts
FX derivative contracts
Total derivatives designated as 
hedging instruments
Derivatives Not Designated as 
Hedging Instruments
Interest rate swap contracts
FX derivative contracts

Capped call derivatives

Embedded exchange feature

Other derivatives
Other derivatives

Total derivatives not designated as 
hedging instruments
Total derivatives

Asset Derivatives

Liability Derivatives

Balance Sheet 
Location

Accrued liabilities

Fair Value (1) Balance Sheet Location
243  Accrued liabilities
$ 

Fair Value (1)
1,286 
$ 

243 

Accrued liabilities

61  Accrued liabilities

Current derivative 
assets

106,629 

1,286 

427 

Current derivative 
liabilities

181,700 

106,690 
106,933 

$ 

182,127 
183,413 

$ 

Asset Derivatives

Liability Derivatives

Balance Sheet 
Location
Prepaid expenses and 
other current assets
Accrued liabilities

Prepaid expenses and 
other current assets
Long-term derivative 
assets

Fair Value (1) Balance Sheet Location

Fair Value (1)

$ 

1,998  Accrued liabilities

$ 

895 

2,893 

Accrued liabilities

14 

14 

74 

55  Accrued liabilities

4,073 

72,302 

Long-term derivative 
liability
Accrued liabilities
Long-term derivative 
liability

72,357 
75,250 

$ 

121,756 
4,106 

184 

130,193 
130,207 

$ 

(1) For the classification of inputs used to evaluate the fair value of our derivatives, refer to “Note 9. Fair Value 

Measurements.”

F-34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 12. Leases

We have operating leases primarily for (i) office space, (ii) manufacturing, warehouse and research and development 

facilities and (iii) vehicles. Our leases have remaining lease terms up to 11 years, some of which include options to extend the 
leases, and some of which include options to terminate the leases at our sole discretion. The components of operating lease 
assets, liabilities and costs are as follows (in thousands):

Operating Lease Assets and Liabilities

Assets

Operating lease right-of-use assets

Liabilities

Accrued liabilities and other

Long-term operating lease liabilities

Total lease liabilities

Operating Lease Cost
Operating lease cost
Variable lease cost
Short-term lease cost
Total lease cost

December 31,

2021

2020

40,600  $ 

50,525 

$ 

$ 

$ 

11,261  $ 

35,919 

47,180  $ 

2021

Year Ended December 31,
2020

2019

$ 

$ 

18,070  $ 
1,200 
1,084 
20,354  $ 

14,156  $ 
1,097 
415 
15,668  $ 

Contractual maturities of our lease liabilities as of December 31, 2021, are as follows (in thousands):

11,276 

42,221 

53,497 

14,002 
873 
788 
15,663 

12,635 

10,146 

7,861 

5,011 

3,803 

13,023 

52,479 

5,299 

47,180 

$ 

$ 

December 31, 2021

December 31, 2020

5.8 years

 3.2 %

6.3 years

 2.4 %

Year Ended December 31,
2020

2021

2019

2022

2023

2024

2025

2026

Thereafter

Total lease payments

Less: Amount representing interest

Present value of lease liabilities

Lease Term and Discount Rate

Weighted Average Remaining Lease Term

Weighted Average Discount Rate

Other information
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

Operating lease assets obtained in exchange for lease liabilities

$ 
$ 

13,650  $ 
9,037  $ 

14,601  $ 
8,547  $ 

13,522 
8,712 

Note 13. Commitments and Contingencies

FDA Warning Letter

On December 29, 2015, the FDA issued a Warning Letter alleging certain violations of FDA regulations applicable to 

medical device manufacturers at our Munich, Germany and Arvada, Colorado facilities. 

The FDA inspected the Munich facility from August 24, 2015 to August 27, 2015 and the Arvada facility from August 24, 
2015 to September 1, 2015. On August 27, 2015, the FDA issued a Form 483 identifying two observed non-conformities with 

F-35

certain regulatory requirements at the Munich facility. We did not receive a Form 483 in connection with the FDA’s inspection 
of the Arvada facility. Following receipt of the Form 483, we provided written responses to the FDA describing corrective and 
preventive actions that were underway or to be taken to address the FDA’s observations at the Munich facility. The Warning 
Letter responded in part to our responses and identified other alleged violations related to the manufacture of our 3T Heater-
Cooler device that were not previously included in the Form 483. 

The Warning Letter further stated that our 3T devices and other devices we manufactured at our Munich facility were subject 

to refusal of admission into the U.S. until resolution of the issues set forth by the FDA in the Warning Letter. The FDA had 
informed us that the import alert was limited to the 3T devices, but that the agency reserved the right to expand the scope of the 
import alert if future circumstances warranted such action. The Warning Letter did not request that existing users cease using 
the 3T device, and manufacturing and shipment of all our products other than the 3T device were unaffected by the import 
limitation. To help clarify these issues for current customers, we issued an informational Customer Letter in January 2016 and 
that same month agreed with the FDA on a process for shipping 3T devices to existing U.S. users pursuant to a certificate of 
medical necessity program. 

Finally, the Warning Letter stated that premarket approval applications for Class III devices to which certain Quality System 

regulation deviations identified in the Warning Letter were reasonably related would not be approved until the violations had 
been corrected; however, this restriction applied only to the Munich and Arvada facilities, which do not manufacture or design 
devices subject to Class III premarket approval. 

On February 25, 2020, LivaNova received clearance for K191402, a 510(k) for the 3T devices that addressed issues 
contained in the 2015 Warning Letter along with design changes that further mitigate the potential risk of aerosolization. 
Concurrent with this clearance, (1) 3T devices manufactured in accordance with K191402 will not be subjected to the import 
alert and (2) LivaNova initiated a correction to distribute the updated Operating Instructions cleared under K191402. With this 
510(k) clearance, all actions to remediate the FDA’s inspectional observations in the Warning Letter are complete, and at this 
time, LivaNova is awaiting the FDA’s close-out inspection.

CDC and FDA Safety Communications and Company Field Safety Notice

On October 13, 2016, the CDC and the FDA separately released safety notifications regarding the 3T devices. The CDC’s 
Morbidity and Mortality Weekly Report (“MMWR”) and Health Advisory Notice (“HAN”) reported that tests conducted by the 
CDC and its affiliates indicate that there appears to be genetic similarity between both patient and 3T device strains of the non-
tuberculous mycobacterium (“NTM”) bacteria M. chimaera isolated in hospitals in Iowa and Pennsylvania. Citing the 
geographic separation between the two hospitals referenced in the investigation, the report asserts that 3T devices manufactured 
prior to August 18, 2014 could have been contaminated during the manufacturing process. The CDC’s HAN and FDA’s Safety 
Communication, issued contemporaneously with the MMWR report, each assess certain risks associated with 3T devices and 
provide guidance for providers and patients. The CDC notification states that the decision to use the 3T device during a surgical 
operation is to be taken by the surgeon based on a risk approach and on patient need. Both the CDC’s and FDA’s 
communications confirm that 3T devices are critical medical devices and enable doctors to perform life-saving cardiac surgery 
procedures.

Also on October 13, 2016, concurrent with the CDC’s HAN and FDA’s Safety Communication, we issued a Field Safety 
Notice Update for U.S. users of 3T devices to proactively and voluntarily contact facilities to aid in implementation of the CDC 
and FDA recommendations. In the fourth quarter of 2016, we initiated a program to provide existing 3T device users with a 
new loaner 3T device at no charge pending regulatory approval and implementation of additional risk mitigation strategies 
worldwide, including a vacuum canister and internal sealing upgrade program and a deep disinfection service. In April 2017, 
we obtained CE Mark in Europe for the design change of the 3T device, and in October 2018, the FDA concluded that we could 
commence the vacuum canister and internal sealing upgrade program in the U.S. On February 25, 2020, LivaNova received 
clearance for K191402, a 510(k) for the 3T devices that addressed issues contained in the 2015 Warning Letter along with 
design changes that further mitigate the potential risk of aerosolization. We are in the process of completing and closing out all 
recall activities with the FDA. While our vacuum canister and internal sealing upgrade program and deep cleaning service in 
the U.S. are substantially complete, these services will continue as a servicing option outside of the U.S.

On December 31, 2016, we recognized a liability for our product remediation plan related to our 3T device. We concluded 
that it was probable that a liability had been incurred upon management’s approval of the plan and the commitments made by 
management to various regulatory authorities globally in the fourth quarter of 2016, and furthermore, the cost associated with 
the plan was reasonably estimable. At December 31, 2021, the product remediation liability was $0.8 million.

F-36

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. The Saluggia campus is the location of manufacturing facilities of third parties, including 
those who acquired our Cardiac Rhythm Management and Heart Valve businesses, a cafeteria for workers, and storage facilities 
for hazardous substances and equipment used between the 1960s and the late 1990s by a nuclear research center that evolved 
into a nuclear medicine business. Pursuant to authorization from the Italian government, LSM has, and continues to, perform 
ordinary maintenance, secure the facilities, monitor air and water quality and file applicable reports with the competent 
environmental authorities. 

During 2020, LSM received correspondence from ISIN (a sub-body of the Italian Ministry of Economic Development) 

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. This 
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. In January 2021, a list of 
67 potential sites for the national repository was published. There is no legal obligation to begin any work or deliver the 
hazardous substances, as the performance of these obligations is contingent on the construction of the as-yet unbuilt national 
repository.

 As a result of the above correspondence and publication from ISIN and the publication of potential sites for the national 
repository, some of the substantial uncertainties regarding the obligation became more certain. In connection with developing 
the plan required by ISIN, we retained a third party specialist to assist in the estimation of the potential costs. Based on the 
aforementioned factors, the Company concluded its obligation to clean, dismantle, and deliver any hazardous substances to a 
national repository, was probable and reasonably estimable as of December 31, 2020. Accordingly, in the fourth quarter of 
2020, we recognized a $42.2 million provision for this matter, which is included within other operating expenses on the 
consolidated statements of income (loss). The liability as of December 31, 2020 was $43.0 million which represented the low 
end of the estimated range of loss of $43.0 million to $55.0 million. At December 31, 2021 the liability was $39.3 million. The 
decrease in the liability from December 31, 2020 was primarily due to the effects of foreign currency changes during the year 
ended December 31, 2021.

Litigation

Product Liability

The Company is currently involved in litigation involving our 3T device. The litigation includes federal multi-district 

litigation in the U.S. District Court for the Middle District of Pennsylvania, various U.S. state court cases and cases in 
jurisdictions outside the U.S. A class action, filed in February 2016 in the U.S. District Court for the Middle District of 
Pennsylvania, consisting of all Pennsylvania residents who underwent open heart surgery at WellSpan York Hospital and Penn 
State Milton S. Hershey Medical Center between 2011 and 2015 and who currently are asymptomatic for NTM infection, was 
dismissed on July 16, 2021.

On March 29, 2019, we announced a settlement framework that provides for a comprehensive resolution of the personal 
injury cases pending in the multi-district litigation in U.S. federal court, the related class action in federal court, as well as 
certain cases in state courts across the United States. The agreement, which makes no admission of liability, is subject to certain 
conditions, including acceptance of the settlement by individual claimants and provides for a total payment of up to $225 
million to resolve the claims covered by the settlement. Per the agreed-upon terms, the first payment of $135 million was paid 
into a qualified settlement fund in July 2019 and the second payment of $90 million was paid in January 2020. Cases covered 
by the settlement are being dismissed as amounts are disbursed to individual plaintiffs from the qualified settlement fund.

Cases in state and federal courts in the U.S. and in jurisdictions outside the U.S. continue to progress. As of March 1, 2022, 
including the cases encompassed in the settlement framework described above that have not yet been dismissed, we are aware 
of approximately 90 filed and unfiled claims worldwide, with the majority of the claims in various federal or state courts 
throughout the United States. This number includes seven cases that have settled but have not yet been dismissed. 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.

During the years ended December 31, 2021, 2020 and 2019 we recognized additional litigation provisions of $38.1 million, 

$3.9 million and $33.2 million, respectively, due to new information received about the nature of certain claims. At 
December 31, 2021, the provision for these matters was $39.5 million. While the amount accrued represents our best estimate 

F-37

for those filed and unfiled claims that are both probable and estimable, the actual liability for resolution of these matters may 
vary from our estimate.

Changes in the carrying amount of the litigation provision liability are as follows (in thousands):

Total litigation provision liability at December 31, 2018

Payments
Adjustments (1)
FX and other

Total litigation provision liability at December 31, 2019

Payments
Adjustments (1)
FX and other

Total litigation provision liability at December 31, 2020 

Payments
 Adjustments (1)
FX and other

Total litigation provision liability at December 31, 2021

Less current portion of litigation provision liability at December 31, 2021

Long-term portion of litigation provision liability at December 31, 2021 (2)

$ 

$ 

294,061 

(156,928) 

33,233 

38 

170,404 

(138,178) 

3,906 

358 

36,490 

(34,808) 

38,068 

(280) 

39,470 
32,845 

6,625 

(1) Adjustments to the litigation provision are included within other operating expenses on the consolidated statements of 

income (loss).
Included within other long-term liabilities on the consolidated balance sheet.

(2)

Environmental Liability

Sorin was created as a result of a spin-off (the “Sorin spin-off”) from SNIA in January 2004, and in October 2015, Sorin was 
merged into LivaNova. SNIA subsequently became insolvent and the Italian Ministry of the Environment and the Protection of 
Land and Sea (the “Italian Ministry of the Environment”), sought compensation from SNIA in an aggregate amount of 
approximately $4 billion for remediation costs relating to the environmental damage at chemical sites previously operated by 
SNIA’s other subsidiaries.

In September 2011 and July 2014, the Bankruptcy Court of Udine and the Bankruptcy Court of Milan held (in proceedings to 

which we were not parties) that the Italian Ministry of the Environment and other Italian government agencies (the “Public 
Administrations”) were not creditors of either SNIA or its subsidiaries in connection with their claims in the Italian insolvency 
proceedings. The Public Administrations appealed and in January 2016, the Court of Udine rejected the appeal. The Public 
Administrations appealed that decision to the Supreme Court. In addition, the Bankruptcy Court of Milan’s decision has been 
appealed.

In January 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. On April 1, 2016, the Court of Milan dismissed all legal 
actions of SNIA and of the Public Administrations further requiring the Public Administrations to pay Sorin approximately 
€292,000 (approximately $331,000 as of December 31, 2021) for legal fees. The Public Administrations appealed the 2016 
Decision to the Court of Appeal of Milan. On March 5, 2019, the Court of Appeal issued a partial decision on the merits 
declaring Sorin/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 Sorin spin-off, an estimated €572.1 million (approximately $649.1 million as of 
December 31, 2021). We appealed the partial decision on liability to the Italian Supreme Court in August 2019.

In November 2021, the Court of Appeal delivered the remainder of its decision, ordering LivaNova to pay damages of 

approximately €453.6 million (approximately $514.6 million as of December 31, 2021). We appealed the decision on damages 
in December 2021, and in early 2022, the Italian Supreme Court agreed to combine the appeals on liability and damages. On 
February 21, 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 has been reached on the appeal to the Italian Supreme Court. This suspension is subject to 
providing a first demand bank surety of €270.0 million (approximately U.S. $306.2 million) within 30 calendar days. 

F-38

 
 
 
 
 
 
 
 
 
 
 
 
 
On February 24, 2022, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA, Inc. entered into an Incremental 

Facility Amendment No. 1 to the First Lien Credit Agreement with Goldman Sachs Bank USA, relating to a €200 million 
bridge loan facility. The proceeds may be used to secure the first demand bank surety of €270.0 million or, alternatively, for 
payment of court ordered damages or settlements (including interest, expenses and charges in connection therewith) in the event 
of a negative decision by the Italian Supreme Court.

In 2011, Caffaro, a former SNIA subsidiary, sold its Brescia chemical business to Caffaro Brescia, a third party belonging to 

the Todisco group, and as part of the acquisition, Caffaro Brescia agreed to secure hydraulic barriers at the site and maintain 
existing environmental security measures. In September 2020, Caffaro Brescia declared it was withdrawing from its agreement 
to maintain the environmental measures. In January 2021, we (in addition to Caffaro Brescia, and other non-LivaNova entities) 
received an administrative order (“Order”) from the Italian Ministry of the Environment requiring us to ensure the maintenance 
of the environmental measures and to guarantee that such works remain fully operational, the annual management and 
maintenance for which is estimated at approximately €1 million per year. LivaNova’s receipt of the Order appears to be based 
on the aforementioned Court of Appeals decision regarding our alleged joint liability with SNIA for SNIA’s environmental 
liabilities. Our response, dated February 16, 2021, disputes the grounds upon which the Order is based. We also appealed the 
Order in the Administrative Court in Brescia.

We have not recognized a liability in connection with these related matters because any potential loss is not currently 

probable.

Patent Litigation

On May 11, 2018, Neuro and Cardiac Technologies LLC (“NCT”), a non-practicing entity, filed a complaint in the United 
States District Court for the Southern District of Texas asserting that the VNS Therapy System, when used with the SenTiva 
Model 1000 generator, infringes the claims of U.S. Patent No. 7,076,307 owned by NCT. The complaint requests damages that 
include a royalty, costs, interest, and attorneys’ fees. On September 13, 2018, we petitioned the Patent Trial and Appeal Board 
of the U. S. Patent and Trademark Office (the “Patent Office”) for an inter partes review (“IPR”) of the validity of the ‘307 
patent, and on May 18, 2020, the Patent Office issued a Final Written Decision determining that all challenged claims are 
unpatentable. On November 16, 2021, the district court dismissed NCT’s compliant with prejudice, which concluded the 
litigation.

Contract Litigation

On November 25, 2019, LivaNova received notice of a lawsuit initiated by former members of Caisson Interventional, LLC 

(“Caisson”), a subsidiary of the Company acquired in 2017. The lawsuit, Todd J. Mortier, as Member Representative of the 
former Members of Caisson Interventional, LLC v. LivaNova USA, Inc., is currently pending in the United States District 
Court for the District of Minnesota. The complaint alleges (i) breach of contract, (ii) breach of the covenant of good faith and 
fair dealing and (iii) unjust enrichment in connection with the Company’s operation of Caisson’s Transcatheter Mitral Valve 
Replacement (“TMVR”) program and the Company’s November 20, 2019 announcement that it was ending the TMVR 
program at the end of 2019. The lawsuit seeks damages arising out of the 2017 acquisition agreement, including various 
regulatory milestone payments. We intend to vigorously defend this claim. The Company has not recognized a liability related 
to this matter because any potential loss is not currently probable or reasonably estimable.

Other Matters

Additionally, we are the subject of various pending or threatened legal actions and proceedings that arise in the ordinary 
course of our business. These matters are subject to many uncertainties and outcomes that are not predictable and that 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 our consolidated net income, financial position or liquidity.

Note 14. Stockholders' Equity 

On August 6, 2021, the Company closed an offering and issued 4,181,818 ordinary shares, par value £1.00 per share, at an 

offering price of $82.50 per share. Net proceeds from the offering were approximately $322.6 million, after deducting 
underwriting discounts, commissions and offering expenses. Proceeds from the offering were used to repay the Company’s 
$450 million 2020 senior secured term loan.

F-39

Accumulated other comprehensive income (loss)

The table below presents the change in each component of AOCI, net of tax and the reclassifications out of AOCI into net 

income for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Change in 
Unrealized Gain 
(Loss) on Cash 
Flow Hedges

Foreign 
Currency 
Translation 
Adjustments (1)

Total

As of December 31, 2018

$ 

Other comprehensive income before reclassifications, before tax
Tax expense
Other comprehensive income before reclassifications, net of tax
Reclassification of gain from accumulated other comprehensive 
income (loss), before tax
Reclassification of tax expense
Reclassification of gain from accumulated other comprehensive 
income (loss), after tax
Net current-period other comprehensive income, net of tax

As of December 31, 2019

Other comprehensive income before reclassifications, before tax
Tax expense
Other comprehensive income before reclassifications, net of tax
Reclassification of loss from accumulated other comprehensive 
income (loss), before tax
Reclassification of tax benefit
Reclassification of loss from accumulated other comprehensive 
income (loss), after tax
Net current-period other comprehensive income, net of tax

As of December 31, 2020

Other comprehensive loss before reclassifications, before tax
Tax benefit
Other comprehensive loss before reclassifications, net of tax
Reclassification of gain from accumulated other comprehensive 
income (loss), before tax
Reclassification of tax expense
Reclassification of gain from accumulated other comprehensive 
income (loss), after tax
Net current-period other comprehensive loss, net of tax

As of December 31, 2021

$ 

(944)  $ 
2,757 
(661)   
2,096 

(23,532)  $ 
3,627 
— 
3,627 

(840)   
201 

(639)   
1,457 
513 
1,724 
(415)   
1,309 

655 
(158)   

497 
1,806 
2,319 
(3,922)   
719 
(3,203)   

(75)   
14 

(61)   
(3,264)   
(945)  $ 

— 
— 

— 
3,627 
(19,905)   
45,395 
— 
45,395 

— 
— 

— 
45,395 
25,490 
(31,722)   

— 

(31,722)   

— 
— 

— 

(31,722)   
(6,232)  $ 

(24,476) 
6,384 
(661) 
5,723 

(840) 
201 

(639) 
5,084 
(19,392) 
47,119 
(415) 
46,704 

655 
(158) 

497 
47,201 
27,809 
(35,644) 
719 
(34,925) 

(75) 
14 

(61) 
(34,986) 
(7,177) 

(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 15. Stock-Based Incentive Plans

Stock-Based Incentive Plans

Stock-based awards may be granted under the 2015 Incentive Award Plan (the “2015 Plan”) in the form of stock options, 
SARs, RSUs and other stock-based and cash-based awards. As of December 31, 2021, there were approximately 3,098,419
shares available for future grants under the 2015 Plan. During the year ended December 31, 2021, we issued stock-based 
compensatory awards with terms approved by the Compensation Committee of our Board of Directors. The awards with service 
conditions generally vest ratably from two to four years and are subject to forfeiture unless service conditions are met. Market 
performance-based awards were issued that cliff vest after three years subject to the rank of our total shareholder return for the 
three-year period ending December 31, 2023 relative to the total shareholder returns for a peer group of companies. Operating 
performance-based awards were issued that cliff vest after three years subject to the achievement of a target based on the 
adjusted free cash flow for fiscal year 2021. Additionally, operating performance-based awards were issued that cliff vest after 
three years subject to the achievement of a target based on the return on invested capital for fiscal year 2021.

F-40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On January 1, 2019, we initiated the LivaNova Global Employee Share Purchase Plan (“ESPP”). Compensation expense 
related to the ESPP for the years ended December 31, 2021, 2020 and 2019 was $1.5 million, $1.2 million and $1.3 million, 
respectively.

Stock-Based Compensation

Amounts of stock-based compensation recognized on our consolidated statements of income (loss), by expense category, are 

as follows (in thousands):

Year Ended December 31,
2020

2019

2021

Cost of goods sold

Selling, general and administrative

Research and development

Total stock-based compensation expense

Income tax benefit

$ 

2,451  $ 

1,898  $ 

29,449 

8,664 

40,564 

588 

29,661 

3,530 

35,089 

992 

Total expense, net of income tax benefit

$ 

39,976  $ 

34,097  $ 

1,343 

25,588 

5,622 

32,553 

6,590 

25,963 

Amounts of stock-based compensation expense recognized on our consolidated statements of income (loss), by type of 

arrangement, are as follows (in thousands):

Service-based restricted stock units

Service-based stock appreciation rights

Market performance-based restricted stock units

Operating performance-based restricted stock units 

Employee stock purchase plan
Total stock-based compensation expense from continuing 
operations

Unrecognized Stock-Based Compensation

Year Ended December 31,
2020

2019

2021

$ 

19,614  $ 

18,320  $ 

12,489 

3,522 

3,434 

1,505 

12,715 

3,200 

(370)

1,224 

14,113 

10,349 

2,900 

3,918

1,273

$ 

40,564  $ 

35,089  $ 

32,553 

Amounts of stock-based compensation cost not yet recognized related to non-vested awards, including awards assumed or 

issued, as of December 31, 2021, are as follows (in thousands):

Service-based stock appreciation rights

Service-based restricted stock unit awards
Performance-based restricted stock unit awards

Total stock-based compensation cost unrecognized

Unrecognized 
Compensation 
Cost

Weighted Average 
Remaining Vesting 
Period (in years)

$ 

$ 

25,025 

35,770 

11,208 

72,003 

2.59

2.46

2.03

2.36

F-41

 
Stock Appreciation Rights and Stock Options

We use the Black-Scholes option pricing methodology to calculate the grant date fair market value of SARs. The following 

table lists the assumptions we utilized as inputs to the Black-Scholes model:

Dividend yield (1)
Risk-free interest rate (2)
Expected option term - in years (3)
Expected volatility at grant date (4)

Year Ended December 31,

2021

—

1.0%

5.6

42.1%

2020

—

0.4%

5.4

2019

—

 1.4 % -

 2.2 %

5.0 - 5.1

39.5%

 32.2 % -  35.7 %

(1) We have not paid dividends and no future dividends have been approved.
(2) We use yield rates on U.S. Treasury securities for a period that approximates the expected term of the awards granted to

estimate the risk-free interest rate.

(3) We estimated the expected term of the awards granted using historic data of actual time elapsed between the date of grant

and the exercise or forfeiture of options or SARs for employees.

(4) We determine the expected volatility of the awards based on historical volatility.

The following tables detail the activity for service-based SARs and stock option awards:

SARs and Stock Options
Outstanding — at December 31, 2020

Granted

Exercised

Forfeited

Expired

Outstanding — at December 31, 2021

Fully vested and exercisable — end of year
Fully vested and expected to vest — end of year (2)

Number of 
Optioned 
Shares

Wtd. Avg. 
Exercise 
Price per 
Share

Wtd. Avg. 
Remaining 
Contractual 
Term (years)

Aggregate 
Intrinsic Value 
(in thousands)

(1)

2,884,020  $ 

594,617  $ 

(424,122)  $ 

(291,534)  $ 

(128,608)  $ 

2,634,373  $ 

1,154,459  $ 

2,579,659  $ 

63.20 

73.25 

52.95 

62.36 

88.67 

65.94 

68.18 

66.01 

7.2

5.6

7.1

$ 

$ 

$ 

61,693 

25,149 

60,305 

(1) The aggregate intrinsic value of SARs and options is based on the difference between the fair market value of the underlying

stock at December 31, 2021, using the market closing stock price, and exercise price for in-the-money awards.
Includes the impact of expected future forfeitures.

(2)

Weighted average grant date fair value of SARs granted during the 
year (per share)
Aggregate intrinsic value of SARs and stock options exercised 
during the year (in thousands)

$ 

$ 

29.22  $ 

15.73  $ 

12,223  $ 

773  $ 

31.22 

2,064 

Year Ended December 31,
2020

2019

2021

Restricted Stock Units Awards

The following tables detail the activity for service-based RSU awards:

RSUs
Non-vested shares at December 31, 2020

Granted

Vested

Forfeited

Non-vested shares at December 31, 2021

F-42

Number of 
Shares

Wtd. Avg. 
Grant Date Fair 
Value

848,459  $ 

363,372  $ 

(279,064)  $ 

(141,610)  $ 

791,157  $ 

58.00 

74.17 

61.82 

55.85 

64.53 

Weighted average grant date fair value of service-based RSUs 
issued during the year (per share)
Aggregate fair value of RSUs that vested during the year (in 
thousands)

$ 

$ 

74.17  $ 

44.28  $ 

92.54 

21,501  $ 

13,674  $ 

12,710 

The following tables detail the activity for performance-based and market-based RSU awards:

Year Ended December 31,
2020

2019

2021

Performance-based and market-based RSUs
Non-vested shares at December 31, 2020

Granted
Vested
Forfeited

Non-vested shares at December 31, 2021

Number of Shares

Wtd. Avg. Grant 
Date Fair Value

380,799  $ 
123,956  $ 
(107,455)  $ 
(51,356)  $ 
345,944  $ 

Year Ended December 31,
2020

2019

2021

56.55 
89.29 
67.09 
28.42 
68.36 

98.50 

6,697 

Weighted average grant date fair value of performance and 
market-based restricted share units granted during the year (per 
share)
Aggregate fair value of performance and market-based restricted 
share units that vested during the year (in thousands)

$ 

$ 

89.29  $ 

41.70  $ 

8,268  $ 

4,106  $ 

Note 16. Employee Retirement Plans

Defined Benefit Plans

We sponsor several defined benefit pension plans, which include plans in the U.S., Italy, Germany, Japan and France. We 
maintain a frozen cash balance retirement plan in the U.S. that is a contributory, defined benefit plan designed to provide the 
benefit in terms of a stated account balance dependent on the employer's promised interest-crediting rate. In Italy and France, 
we maintain a severance pay defined benefit plan that obligates the employer to pay a severance payment in case of resignation, 
dismissal or retirement. In other jurisdictions, we sponsor non-contributory, defined benefit plans designated to provide a 
guaranteed minimum retirement benefits to eligible employees.

F-43

The change in benefit obligations and funded status of our U.S. pension benefits is as follows (in thousands):

Accumulated benefit obligations at year end

Change in projected benefit obligation:

Projected benefit obligation at beginning of year

Interest cost

Plan settlement

Actuarial loss

Benefits paid

Projected benefit obligation at end of year

Change in plan assets:

Fair value of plan assets at beginning of year

Actual return on plan assets

Employer contributions

Plan settlement

Benefits paid

Fair value of plan assets at end of year

Funded status at end of year:

Fair value of plan assets

Projected benefit obligations

Underfunded status of the plans

Recognized liability
Amounts recognized on the consolidated balance sheets 
consist of:

Non-current liabilities

Recognized liability

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

U.S. Pension Benefits
Year Ended December 31,
2020

2021

2019

12,578  $ 

13,085  $ 

11,232 

13,085  $ 

11,232  $ 

10,591 

224 

(972)

527 

(286)

290 

(384)

2,225

(278)

382 

(366) 

871 

(246) 

12,578  $ 

13,085  $ 

11,232 

8,688  $ 

7,574  $ 

189 

401 

(972)

(286)

646 

1,130 

(384)

(278)

8,020  $ 

8,688  $ 

8,020  $ 

8,688  $ 

12,578 

4,558 

13,085 

4,397 

4,558  $ 

4,397  $ 

4,558  $ 

4,558  $ 

4,397  $ 

4,397  $ 

6,767 

628 

546 

(366) 

(1) 

7,574 

7,574 

11,232 

3,658 

3,658 

3,658 

3,658 

F-44

 
The change in benefit obligations and funded status of our non-U.S. pension benefits is as follows (in thousands):

Non-U.S. Pension Benefits
Year Ended December 31,
2020

2021

2019

10,522  $ 

12,091  $ 

17,744 

Accumulated benefit obligations at year end

Change in projected benefit obligation:

Projected benefit obligation at beginning of year

Service cost

Interest cost

Actuarial loss (gain) 

Benefits paid
Reclassified to liabilities held for sale (1)
Foreign currency exchange rate changes and other

Projected benefit obligation at end of year

Change in plan assets:

Fair value of plan assets at beginning of year

Actual return on plan assets

Employer contributions

Benefits paid
Reclassified to liabilities held for sale (1)
Foreign currency exchange rate changes and other

Fair value of plan assets at end of year

Funded status at end of year:

Fair value of plan assets

Projected benefit obligations
Underfunded status of the plans (2)

Recognized liability
Amounts recognized on the consolidated balance sheets 
consist of:

Non-current liabilities

Recognized liability

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

13,039  $ 

18,087  $ 

354 

56 

(1,372)   

(294)   

— 

(966)   

691 

121 

(208)   

(1,245)   

(6,012)   

1,605 

10,817  $ 

13,039  $ 

2,816  $ 

3,423  $ 

61 

302 

(78)   

— 

41 

3,142  $ 

52 

454 

(290)   

(1,018)   

195 

2,816  $ 

3,142  $ 

2,816  $ 

10,817 

7,675 

13,039 

10,223 

7,675  $ 

10,223  $ 

7,675  $ 

7,675  $ 

10,223  $ 

10,223  $ 

(1) Refer to “Note 4. Divestiture of Heart Valve Business.”
(2)

In certain non-U.S. countries, fully funding pension plans is not a common practice. Consequently, certain pension plans 
have been partially funded.

The tables below present net periodic benefit cost of the defined benefit pension plans by component (in thousands):

U.S. Pension Benefits
Year Ended December 31,
2020

2021

2019

Interest cost

Expected return on plan assets

Settlement and curtailment loss

Amortization of net actuarial loss

Net periodic benefit cost

$ 

$ 

224  $ 

(358)   

471 

264 

601  $ 

290  $ 

(318)   

180 

182 

334  $ 

F-45

18,975 

478 

232 

1,071 

(2,380) 

— 

(289) 

18,087 

3,341 

(34) 

383 

(332) 

— 

65 

3,423 

3,423 

18,087 

14,664 

14,664 

14,664 

14,664 

382 

(298) 

— 

148 

232 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. Pension Benefits
Year Ended December 31,
2020

2021

2019

Service cost

Interest cost

Expected return on plan assets

Amortization of net actuarial loss (gain)

Net periodic benefit cost

$ 

$ 

354  $ 

56 

(61) 

(1,372) 

(1,023)  $ 

691  $ 

121 

(52) 

(208)

552  $ 

478 

232 

34 

1,071

1,815 

To determine the discount rate for our U.S. benefit plan, we used the FTSE Above Median Pension Discount Curve. For the 

discount rate used for the other non-U.S. benefit plans we consider local market expectations of long-term returns, primarily 
utilizing the Iboxx Corporate Index Bond rating AA, duration higher than 10 years. The resulting discount rates are consistent 
with the duration of plan liabilities. 

The expected long-term rate of return on plan assets assumption for our U.S. benefit plan was derived from a study conducted 

by our investment managers. The study includes a review of anticipated future long-term performance of individual asset 
classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the plan to determine 
the average rate of earnings expected on the funds invested to provide for the pension plan benefits.

Major actuarial assumptions used in determining the benefit obligations and net periodic benefit cost for our significant U.S. 

benefit plans as of December 31, 2021, 2020 and 2019, are presented in the following table:

Weighted-average assumptions used to determine 
benefit obligation:
Discount rate
Weighted-average assumptions used to determine 
net periodic benefit cost:
Discount rate
Expected return on plan assets

2021

2.41%

1.91%
5.00%

U.S. Pension Benefits
2020

1.91%

2.88%
5.00%

2019

2.88%

3.97%
5.00%

Major actuarial assumptions used in determining the benefit obligations and net periodic benefit cost for our significant non-

U.S. benefit plans as of December 31, 2021, 2020 and 2019, are presented in the following table:

Weighted-average assumptions used to determine 
benefit obligation:
Discount rate
Rate of compensation increase
Weighted-average assumptions used to determine 
net periodic benefit cost:
Discount rate
Rate of compensation increase

Retirement Benefit Plan Investment Strategy

2021

Non-U.S. Pension Benefits
2020

2019

0.15% -
2.50% -

1.00%
3.00%

0.23% -
2.50% -

0.35%
3.00%

0.20% -
2.50% -

0.71%
3.00%

0.15% -
2.50% -

1.00%
3.00%

0.23% -
2.50% -

0.35%
3.00%

0.20% -
2.50% -

0.71%
3.00%

In the U.S., we have an account that holds the defined benefit frozen balance pension plan assets. The Qualified Plan 

Committee (the “Plan Committee”) sets investment guidelines for U.S. pension plans. The plan assets in the U.S. are invested in 
accordance with sound investment practices that emphasize long-term fundamentals. The investment objectives for the plan 
assets in the U.S. are to achieve a positive rate of return that would be expected to close the current funding deficit and so 
enable us to terminate the frozen pension plan at a reasonable cost. The Plan Committee also oversees the investment allocation 
process, selects the investment managers, and monitors asset performance. The investment portfolio contains a diversified 
portfolio of fixed income and equity index funds. Securities are also diversified in terms of domestic and international 
securities, short- and long-term securities, growth and value styles, large cap and small cap stocks.

F-46

Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees. There is a significant 
variation in policy asset allocation from country to country. Local regulations, local funding rules, and local financial and tax 
considerations are part of the funding and investment allocation process in each country. 

The table below presents our U.S. pension plan target allocations by asset category as of December 31, 2021:

Equity securities

Debt securities

Other

Retirement Benefit Fair Values

29%

70%

1%

The following is a description of the valuation methodologies used for retirement benefit plan assets measured at fair value:

Equity Mutual Funds: Valued based on the year-end net asset values of the investment vehicles. The net asset values of the 
investment vehicles are based on the fair values of the underlying investments of the partnerships valued at the closing price 
reported in the active markets in which the individual security is traded. Equity mutual funds have a daily reported net asset 
value. 

Fixed Income Mutual Funds: Valued based on the year-end net asset values of the investment vehicles. The net asset values 
of the investment vehicles are based on the fair values of the underlying investments of the partnerships valued based on inputs 
other than quoted prices that are observable.

Money Markets: Valued based on quoted prices in active markets for identical assets.

The following tables provide information by level for the retirement benefit plan assets that are measured at fair value, as 

defined by U.S. GAAP (in thousands): 

Equity mutual funds

Fixed income mutual funds

Money market funds and cash

Equity mutual funds

Fixed income mutual funds

Money market funds

Fair Value as of 
December 31, 2021

Fair Value Measurement Using Inputs Considered as:

Level 1

Level 2

Level 3

$ 

$ 

2,341  $ 

—  $ 

2,341  $ 

5,587 

82 

— 

82 

5,587 

— 

8,010  $ 

82  $ 

7,928  $ 

— 

— 

— 

— 

Fair Value as of 
December 31, 2020

Fair Value Measurement Using Inputs Considered as:

Level 1

Level 2

Level 3

$ 

$ 

2,405  $ 

—  $ 

2,405  $ 

5,788 

94 

— 

94 

5,788 

— 

8,287  $ 

94  $ 

8,193  $ 

— 

— 

— 

— 

Refer to “Note 2. Basis of Presentation, Use of Accounting Estimates and Significant Accounting Policies” for discussion of 

the fair value measurement terms of Levels 1, 2, and 3.

Defined Benefit Retirement Funding

We make the minimum required contribution to fund the U.S. pension plan as determined by MAP - 21 and the Highway and 

Transportation Funding Act of 2014 (“HAFTA”). We contributed $0.7 million, $1.6 million and $0.9 million to the pension 
plans (U.S. and non-U.S.) during the years ended December 31, 2021, 2020 and 2019, respectively. We anticipate that we will 
make contributions to the U.S. pension plan of approximately $0.4 million during the year ended December 31, 2022.

F-47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit payments, including amounts to be paid from our assets, and reflecting expected future service as of December 31, 

2021, are expected to be paid as follows (in thousands):

2022

2023

2024

2025

2026

2027 - 2031

Defined Contribution Plans

U.S. Plans

Non-U.S. Plans

4,487 

744 

764 

928 

941 

2,633 

476 

738 

526 

572 

5,632 

3,087 

We sponsor defined contribution plans in the U.S. including the Cyberonics, Inc. Employee Retirement Savings Plan, which 

qualifies under Section 401(k) of the IRC covering U.S. employees and the Cyberonics, Inc. Non-Qualified Deferred 
Compensation Plan (the “Deferred Compensation”), covering certain U.S. middle and senior management. In addition, we 
sponsor the Belgium Defined Contribution Pension Plan for Cyberonics’ Belgium employees. We incurred expenses for our 
defined contribution plans of $10.2 million, $11.8 million and $12.4 million for the years ended December 31, 2021, 2020 and 
2019, respectively.

Note 17. Income Taxes

Earnings Before Income Taxes and Components of Income Tax Provision

The U.S. and non-U.S. components of income (loss) from continuing operations before income taxes and our income tax 

expense (benefit) from continuing operations (in thousands):

Income (loss) from continuing operations before income taxes:

UK and Non-U.S.

U.S.

Total income tax expense (benefit) from continuing operations 
consisted of the following:

Current:

UK and Non-U.S.

U.S.

Deferred:

UK and Non-U.S.

U.S.

$ 

$ 

$ 

Year Ended December 31,
2020 (1)

2019 (1)

2021

22,094  $ 

(262,501)  $ 

(146,566) 

(85,521) 

(124,472)  $ 

(348,022)  $ 

26,104 

(214,482) 

(188,378) 

4,296  $ 

2,899  $ 

4,050 

8,346 

2,852 

— 

2,852 

(41,010) 

(38,111) 

37,151 

— 

37,151 

1,112 

(4,988) 

(3,876) 

(7,628) 

(18,870) 

(26,498) 

(30,374) 

Total income tax expense (benefit) from continuing operations

$ 

11,198  $ 

(960) $

(1)

Income (loss) from continuing operations before income taxes and deferred income tax expense for UK and Non-U.S. for
the years ended December 31, 2020 and 2019 have been revised. For further details refer to “Note 1. Nature of Operations.”

Effective Income Tax Rate Reconciliation

LivaNova PLC is resident in the UK for tax purposes. Our subsidiaries conduct operations and earn income in numerous 
countries and are subject to the laws of taxing jurisdictions within those countries, and the income tax rates imposed in the tax 
jurisdictions in which our subsidiaries conduct operations vary. As a result of the changes in the overall level of our income, the 
earnings mix in various jurisdictions and the changes in tax laws, our consolidated effective income tax rate may vary from one 
reporting period to another. 

F-48

The following table is a reconciliation of the statutory income tax rate to our effective income tax rate expressed as a 

percentage of income from continuing operations before income taxes:

Year Ended December 31,
2020 (1)

2019 (1)

2021

Statutory tax rate at UK Rate
Deferred tax valuation allowance 
Foreign tax rate differential
U.S. state and local tax expense, net of federal benefit
Effect of changes in tax rate
Write-off/impairment of investments
Reserve for uncertain tax positions
Research and development tax credits
UK CFC tax
U.S. tax on non-U.S. operations
Base erosion anti-abuse tax
Exempt income
Foreign tax withholding and credits
CARES Act rate differential
Disallowable professional fees
Other, net
Effective tax rate

 19.0 %
 (47.7) 
 7.1 
 (0.3) 
 18.9 
 (1.8) 
 — 
 0.3 
 — 
 — 
 (3.1) 
 — 
 (0.2) 
 — 
 (1.5) 
 0.3 
 (9.0) %

 19.0 %
 (34.9) 
 6.6 
 1.5 
 2.2 
 1.8 
 0.8 
 0.9 
 — 
 — 
 (0.7) 
 — 
 (0.2) 
 2.8 
 — 
 0.5 
 0.3 %

 19.0 %
 (17.3) 
 6.4 
 6.1 
 (3.1) 
 (2.7) 
 2.5 
 2.2 
 2.1 
 (1.6) 
 1.5 
 1.2 
 — 
 — 
 — 
 (0.2) 
 16.1 %

(1) Reconciliation amounts for the years ended December 31, 2020 and 2019 have been revised. For further details refer to 

“Note 1. Nature of Operations.”

CARES Act

On March 27, 2020, the U.S. enacted the CARES Act, which contains numerous income tax provisions and other stimulus 

measures. Of the tax measures that impact our income tax provision, the ability to carry back, U.S. tax net operating losses 
(“NOL”) generated in 2018, 2019, or 2020 to tax years with a higher statutory tax rate has the most significant impact. Based 
on our analysis as of December 31, 2021, we recorded an overall tax benefit of approximately $43.2 million with a permanent 
benefit of $9.6 million. This tax benefit reflects the carryback of all of the 2019 and a portion of the 2020 U.S. tax losses, 
inclusive of release of valuation allowance previously recorded on these losses.

UK Tax Increase

Due to the change in law effective April 1, 2023, which received royal assent in July 2021, and provided for the UK tax rate 
to increase to 25%, there was a revaluation to increase deferred taxes in 2021. Similarly, the UK valuation allowance was also 
increased by the revaluation.

F-49

Deferred Income Tax Assets and Liabilities

The significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020, are as follows (in 

thousands):

Deferred tax assets:

Net operating loss carryforwards

Tax credit carryforwards

Interest expense carryforward

Accruals and reserves

Deferred compensation
Inventories
Other

Gross deferred tax assets

Valuation allowance

Net deferred tax assets
Deferred tax liabilities:

Property, equipment & intangible assets

Gain on sale of intellectual property

Investments

Other

Gross deferred tax liabilities:

Net deferred tax liabilities
Reported on the consolidated balance sheet as (after valuation allowance and 
jurisdictional netting):
Net deferred tax assets

Net deferred tax liabilities
Net deferred tax liabilities

2021

2020 (1)

$ 

152,491  $ 

133,504 

40,931 

65,141 

36,796 

13,262 
8,844 

19,119 

336,584 

(244,978) 

91,606 

(70,573) 

(26,564) 

— 

— 

37,629 

43,155 

25,589 

11,868 
8,454 

17,522 

277,721 

(186,425) 

91,296 

(54,326) 

(41,069) 

— 

— 

(97,137) 

(5,531)  $ 

(95,395) 

(4,099) 

2,197  $ 

(7,728) 

(5,531)  $ 

2,990 

(7,089) 

(4,099) 

$ 

$ 

$ 

(1) Deferred tax assets for inventories, the valuation allowance and net deferred tax liabilities as of December 31, 2020 have

been revised. For further details refer to “Note 1. Nature of Operations.”

Net operating loss (“NOL”) and tax credit carryforwards as of December 31, 2021, which can be used to reduce our income 

tax payable in future years (in thousands): 

Region

Europe NOL

U.S. Federal NOL

U.S. State NOL

S. America & other regions NOL

Far East NOL

U.S. foreign tax credits

U.S. tax credits

U.S. State research & development tax credits

Other non-U.S. tax credits

Gross 
Amount

Tax Benefit

Amount 
with No 
Expiration

Amount 
with 
Expiration

Carryforward 
Period

$  395,393  $ 

94,681  $ 

94,621  $ 

60  2026 - 2026

169,127 

275,780 

18,054 

3,150 

— 

— 

— 

— 

35,517 

15,434 

6,066 

795 

15,850 

16,623 

6,499 

1,959 

4,456 

2,673 

6,035 

152 

— 

— 

1,068 

824 

31,061  2023 - 2038

12,761  2022 - 2041

31  2029 - 2037

643  2025 - 2031

15,850  2025 - 2029

16,623  2022 - 2041

5,431  2030 - 2041

1,135  2022 - 2034

$  861,504  $ 

193,424  $ 

109,829  $ 

83,595 

We review the realizability of our deferred tax assets by jurisdiction regularly. As of December 31, 2021 and 2020, we had 
valuation allowances of $245.0 million and $188.1 million, respectively. These valuation allowances were primarily related to 
continuing operations and are a result of significant negative evidence in the form of cumulative losses in certain jurisdictions, 
including the extended impact of COVID-19 globally. 

F-50

 No provision has been made for income taxes on undistributed earnings of foreign subsidiaries as of December 31, 2021

because it is our intention to indefinitely reinvest undistributed earnings of our foreign subsidiaries. In the event of the 
distribution of those earnings in the form of dividends, a sale of the subsidiaries, or certain other transactions, we may be liable 
for income taxes and withholding taxes. As of December 31, 2021, it was not practicable to determine the exact amount of the 
deferred tax liability related to those investments.

Uncertain Income Tax Positions

The following is a roll-forward of our total gross unrecognized tax benefit (in thousands):

Balance at beginning of year

Increases:

Tax positions related to current year

Decreases:

Year Ended December 31,
2020

2019

2021

$ 

3,433  $ 

15,995  $ 

22,883 

— 

— 

176 

Tax positions related to prior years for settlement with tax 
authorities
Tax positions related to prior years for lapses of statute of 
limitations

Impact of foreign currency exchange rates

Balance at end of year

(1,434)   

(13,989)   

(2,104) 

— 
(258)   

— 
1,427 

$ 

1,741  $ 

3,433  $ 

(4,632) 
(328) 

15,995 

The $1.4 million decrease in the 2021 tax positions related to prior years for settlements with tax authorities reflects a 
settlement of the Germany tax audit for the years 2014-2018. The $14.0 million decrease in the 2020 tax positions related to 
prior years for settlements with tax authorities reflects a decrease of $13.3 million due to the settlement of the outstanding Cobe 
tax litigation in Italy.

Unrecognized tax benefits of $11.4 million at December 31, 2019, respectively, included in the table above are presented in 

the balance sheet as a reduction to the related deferred tax assets for net operating loss carryforwards.

Accrued interest and penalties totaled $0.2 million, $0.4 million and $5.7 million as of December 31, 2021, 2020 and 2019, 

respectively, and were included in other long-term liabilities on our consolidated balance sheets.

We operate in multiple jurisdictions with complex legal and tax regulatory environments and our tax returns are periodically 

audited or subjected to review by tax authorities. We monitor tax law changes and the potential impact to our results of 
operations. Tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess 
the likely outcomes of our tax positions in order to determine the appropriateness of our reserves for uncertain tax positions. 
However, there can be no assurance that we will accurately predict the outcome of these audits and the actual outcome of an 
audit could have a material impact on our consolidated results of income, financial position or cash flows. If all of our 
unrecognized tax benefits as of December 31, 2021 were recognized, $1.7 million would impact our effective tax rate. We 
believe it is reasonably possible that, within the next twelve months, due to the settlement of uncertain tax positions with 
various tax authorities and the expiration of statutes of limitations, unrecognized tax benefits should decrease by up to 
approximately $0.6 million.

We record accrued interest and penalties related to unrecognized tax benefits in interest expense and foreign exchange and 

other gains/(losses), respectively, on our consolidated statements of income (loss).

The major jurisdictions where we are subject to income tax examinations are as follows:

Jurisdiction

U.S. - federal and state

Italy

Germany

England and Wales

Canada

Earliest Year Open

2015

2015

2019

2020

2017

F-51

 
 
 
 
 
 
 
 
 
Note 18. Earnings Per Share

The following table sets forth the basic and diluted weighted-average shares outstanding used in the computation of basic and 

diluted net income per share (in thousands of shares):

Basic and diluted weighted average shares outstanding (1)

50,633 

48,592 

48,349 

(1) Excluded from the computation of diluted earnings per share for the years ended December 31, 2021, 2020 and 2019 were
stock options, SARs and RSUs totaling 3.9 million, 4.1 million and 2.9 million because to include them would have been
anti-dilutive under the treasury stock method.

Year Ended December 31,
2020

2019

2021

Note 19. Geographic and Segment Information

Segment Information

We identify operating segments based on the way we manage, evaluate and internally report our business activities for 

purposes of allocating resources, developing and executing our strategy, and assessing performance. We have three reportable 
segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory Support.

Effective in the fourth quarter of 2021, LivaNova changed its reportable segments corresponding to changes in how the 
Company’s chief operating decision maker regularly reviews information, allocates resources and assesses performance. The 
segment financial information presented herein reflects these changes for all periods presented. The Company’s changes to its 
reportable segments are summarized as follows:

•

•

•

The Company’s Advanced Circulatory Support business is no longer assessed as part of the Company’s previously
reported Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Cardiopulmonary business is no longer assessed as part of the Company’s previously reported
Cardiovascular reportable segment and is evaluated independently as its own reportable segment.
The Company’s Heart Valves business, which was disposed of on June 1, 2021, is now included within Other.

Our Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including 
oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. 

Our Neuromodulation segment generates its revenue from the design, development and marketing of devices that deliver 
neuromodulation therapy to treat DRE, DTD and OSA. 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. 

Our Advanced Circulatory Support segment is engaged in the development, production and sale of leading-edge temporary 
life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life 
support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae.

“Other” includes the results of our Heart Valves business, which was disposed of on June 1, 2021, and corporate shared 

service expenses for finance, legal, human resources, information technology and corporate business development. 

Net sales of our reportable segments include revenues from the sale of products that each reportable segment develops and 
manufactures or distributes. We define segment income as operating income before merger and integration, restructuring and 
amortization of intangibles.

F-52

We operate under three geographic regions: U.S., Europe, and Rest of World. The table below presents net sales by operating 

segment and geographic region (in thousands): 

Year Ended December 31,
2020

2019

2021

Cardiopulmonary

United States

Europe

Rest of World

Neuromodulation

United States

Europe

Rest of World

Advanced Circulatory Support

United States

Europe

Rest of World

Other (1)

United States

Europe

Rest of World

Totals

United States
Europe (2)
Rest of World
Total (3) (4)

$ 

154,073  $ 

132,543  $ 

134,562 

194,344 

482,979 

358,476 

51,435 

46,261 

456,172 

53,821 

1,120 

518 

55,459 

4,929 

14,407 

21,419 

40,755 

571,299 

201,525 

262,541 

122,062 

192,127 

446,732 

282,509 

39,019 

32,916 

354,444 

41,094 

1,027 

200 

42,321 

12,488 

31,259 

46,997 

90,744 

468,634 

193,367 

272,240 

161,471 

135,632 

207,613 

504,716 

335,332 

46,262 

42,953 

424,547 

30,781 

741 

401 

31,923 

18,900 

40,548 

63,536 

122,984 

546,484 

223,183 

314,503 

$ 

1,035,365  $ 

934,241  $ 

1,084,170 

(1) Other primarily includes the net sales of the Company’s Heart Valves business, which was disposed of on June 1, 2021.
(2) Europe sales include those countries in which we have a direct sales presence, whereas European countries in which we sell 

through distributors are included in Rest of World. 

(3) Net sales to external customers includes $35.8 million, $29.7 million and $37.7 million in the United Kingdom, our country 

of domicile, for the years ended December 31, 2021, 2020 and 2019, respectively.

(4) No single customer represented over 10% of our consolidated net sales. No country’s net sales exceeded 10% of our 

consolidated sales except for the U.S. 

F-53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The table below presents a reconciliation of segment income (loss) from continuing operations to consolidated 

loss from continuing operations before tax (in thousands):

Cardiopulmonary (2)
Neuromodulation (3)
Advanced Circulatory Support
Other (4) (5)
Total reportable segment income (loss) from continuing operations
Other expenses (6)
Operating loss from continuing operations

Interest income

Interest expense

Loss on debt extinguishment

Foreign exchange and other gains/(losses)

Loss from continuing operations before tax

Year Ended December 31,
2020 (1)

2019 (1)

2021

$ 

(6,429)  $ 

35,735  $ 

169,499 

2,195 

(129,082) 
36,183 

36,967 

(784)

435 

(50,151) 

(60,238) 

(13,734) 

109,273 

(575)

(365,116) 
(220,683) 

53,216 

(273,899)

131 

(40,837) 

(1,407) 

(32,010) 

50,533 

83,333 

3,941

(233,275)
(95,468) 

76,086 

(171,554) 

803 

(15,091) 

— 

(2,536) 

$ 

(124,472)  $ 

(348,022)  $ 

(188,378) 

(1) Segment loss from continuing operations for the years ended December 31, 2020 and 2019 have been revised. For further

details refer to “Note 1. Nature of Operations.”

(2) Results for the years ended December 31, 2021, 2020 and 2019 include a Litigation provision, net of $38.1 million,
$3.9 million and $(0.6) million, respectively. Refer to “Note 13. Commitments and Contingencies” for additional
information.

(3) Results for the year ended December 31, 2019 include the ImThera impairment of the IPR&D asset of $50.3 million. Refer

to “Note 7. Goodwill and Intangible Assets” for additional information.

(4) Results for the year ended December 31, 2020 include $180.2 million and $21.3 million in impairments of the Heart Valves

disposal group and allocated goodwill, respectively. Refer to “Note 4. Divestiture of Heart Valve Business” for additional
information. Additionally, the results for the year ended December 31, 2020 include a $42.2 million decommissioning
provision at our Saluggia site. Refer to “Note 13. Commitments and Contingencies” for additional information. Results for
the year ended December 31, 2019 include the Caisson impairments of goodwill and the IPR&D asset of $42.4 million and
$89.0 million, respectively. Refer to “Note 7. Goodwill and Intangible Assets” for additional information.

(5) Other includes the results of the Company’s Heart Valves business, which was disposed of on June 1, 2021, and corporate
shared service expenses for finance, legal, human resources, information technology and corporate business development.

(6) Other expenses consists of merger and integration expense, restructuring expense and amortization of intangible assets.

Assets by reportable segment as of December 31, 2021 and 2020, was as follows (in thousands): 

Total Assets

Cardiopulmonary

Neuromodulation

Advanced Circulatory Support
Other (2)

2021

2020 (1)

$ 

921,481  $ 

1,040,318 

646,394 

231,846 
401,230 

673,579 

239,404 
446,660 

$ 

2,200,951  $ 

2,399,961 

(1) Total assets as of December 31, 2020 have been revised. For further details refer to “Note 1. Nature of Operations.”
(2) Other includes corporate assets as of December 31, 2021 and 2020, and the assets of the Company’s Heart Valves business,

which was disposed of on June 1, 2021 as of December 31, 2020.

F-54

Capital expenditures by segment were as follows (in thousands):

Capital Expenditures

Cardiopulmonary

Neuromodulation

Advanced Circulatory Support
Other (1)

Year Ended December 31,
2020

2019

2021

$ 

14,824  $ 

20,975  $ 

179 

1,326 

5,984 

7,318 

733 

6,890 

$ 

22,313  $ 

35,916  $ 

16,302 

3,415 

540 

7,720 

27,977 

(1) Other includes corporate capital expenditures as well as capital expenditures for the Company’s Heart Valves business, 

which was disposed of on June 1, 2021. 

Geographic Information

Property, plant and equipment, net by geographic region as of December 31, 2021 and 2020, was as follows (in thousands):

Property, Plant and Equipment, Net

United States

Europe

Rest of World

2021

2020

60,852  $ 

85,313 

3,901 

64,553 

93,821 

5,431 

150,066  $ 

163,805 

$ 

$ 

Note 20. Supplemental Financial Information

Inventories as of December 31, 2021 and 2020, consisted of the following (in thousands):

Inventories
Raw materials

Work-in-process

Finished goods

2021

2020 (1)

43,958  $ 

14,161 

47,721 

43,257 

8,055 

63,973 

105,840  $ 

115,285 

$ 

$ 

(1) Finished goods and total inventories as of December 31, 2020 have been revised. For further details refer to “Note 1. Nature 

of Operations.”

Inventories included adjustments totaling $8.9 million and $6.6 million at December 31, 2021 and 2020, respectively, to 

record balances at lower of cost or net realizable value.

Property, plant and equipment, net as of December 31, 2021 and 2020, consisted of the following (in thousands):

Property, Plant and Equipment, Net
Land
Building and building improvements
Equipment, software, furniture and fixtures
Other
Capital investment in process
Total gross property, plant and equipment

Accumulated depreciation

Property, plant and equipment, net

2021

2020

Lives in Years

$ 

$ 

15,099  $ 
79,475 
195,919 
9,246 
12,112 
311,851 
(161,785)   
150,066  $ 

15,750 
77,061 
200,696 
9,390 
19,531 
322,428 
(158,623) 
163,805 

3 to 39
3 to 18
3 to 15

F-55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities and other as of December 31, 2021 and 2020, consisted of the following (in thousands):

Accrued Liabilities and Other
Contingent consideration (1)
Amount payable to Gyrus Capital S.A.
Operating lease liabilities (2)
Legal and other administrative costs

Contract liabilities

Research and development costs

Provisions for agents, returns and other
Restructuring related liabilities (3)
Other accrued expenses

2021

2020

$ 

11,552  $ 

13,968 

11,418 

11,261 

8,948 

8,419 

5,329 

2,535 

836 

28,639 

$ 

88,937  $ 

— 

11,276 

15,820 

6,929 

4,257 

3,063 

6,258 

26,465 

88,036 

(1) Refer to “Note 9. Fair Value Measurements.”
(2) Refer to “Note 12. Leases.”
(3) Refer to “Note 5. Restructuring.”

The table below presents the items included within foreign exchange and other gains/(losses) on the 

consolidated statements of income (loss) (in thousands):

Foreign exchange and other gains/(losses)
Exchangeable Notes fair value adjustment (1)
Capped call fair value adjustment (1)
Investment revaluation (2)
Other derivative liabilities fair value adjustment (1)
Dividend income (2)
Foreign exchange rate fluctuations

Exchangeable Notes issuance costs

Other

Year Ended December 31, 2021
2020

2019

2021

$ 

(59,944)  $ 

(46,805)  $ 

34,327 

4,642 

4,290 

3,415 

(1,243) 

— 

779 

29,206 

— 

(4,290) 

— 

(4,851) 

(2,482) 

(2,788) 

$ 

(13,734)  $ 

(32,010)  $ 

— 

— 

— 

— 

— 

(570) 

— 

(1,966) 

(2,536) 

(1) Refer to “Note 9. Fair Value Measurements.”
(2) Refer to “Note 8. Investments.”

Note 21. Quarterly Financial Information (Unaudited)

The tables below present the quarterly results for the years ended December 31, 2021 and 2020 
(in thousands except for share data):

Year Ended December 31, 2021
Net sales
Gross profit

Operating (loss) income from continuing operations
Net loss from continuing operations
Net loss

Diluted (loss) earnings per share:

Continuing operations
Discontinued operations

First 
Quarter (1)
$ 

Second 
Quarter (1)

Third 
Quarter (1)

Fourth 
Quarter

247,603  $ 
163,408 
(5,698) 
(30,761) 
(30,761) 

264,483  $ 
172,279 
(36,262) 
(56,487) 
(56,487) 

253,215  $ 
168,664 
16,422 
(43,443) 
(43,443) 

270,064 
201,643 
24,754 
(5,127) 
(5,127) 

$ 

$ 

(0.63)  $ 
— 
(0.63)  $ 

(1.15)  $ 
— 
(1.15)  $ 

(0.84)  $ 
— 
(0.84)  $ 

(0.10) 
— 
(0.10) 

F-56

Year Ended December 31, 2020
Net sales
Gross profit

Operating loss from continuing operations
Net income (loss) from continuing operations
Net loss from discontinued operations, net of tax
Net income (loss)

Diluted earnings (loss) per share:

Continuing operations
Discontinued operations

First 
Quarter (1)
$ 

242,397  $ 
165,307 

(581)   

37,455 

(995)   

Second 
Quarter (1)

Third 
Quarter (1)

182,206  $ 
114,970 
(16,743)   
(89,415)   

240,083  $ 
147,591 

(7,552)   
(14,814)   

— 

— 

36,460 

(89,415)   

(14,814)   

Fourth 
Quarter (1)
269,555 
166,895 
(249,023) 
(280,552) 
(498) 
(281,050) 

$ 

$ 

0.77  $ 
(0.02)   
0.75  $ 

(1.84)  $ 
— 
(1.84)  $ 

(0.30)  $ 
— 
(0.30)  $ 

(5.77) 
(0.01) 
(5.78) 

(1) This period’s quarterly financial information has been revised. For further details refer to “Note 1. Nature of Operations.”

Note 22. New Accounting Pronouncements

Adoption of New Accounting Pronouncements

The following table provides a description of our adoption of new ASUs issued by the FASB and the impact of the adoption 

on our consolidated financial statements:

Issue Date & Standard

Description

August 2018
ASU No. 2018-14, Compensation—
Retirement Benefits—Defined Benefit 
Plans—General (Subtopic 715-20): 
Changes to the Disclosure Requirements 
for Defined Benefit Plans
December 2019
ASU No. 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting 
for Income Taxes

August 2020
ASU No. 2020-06, Debt-Debt with 
Conversion and Other Options 
(Subtopic 470-20) and Derivatives and 
Hedging-Contracts in Entity’s Own 
Equity (Subtopic 815-40): Accounting 
for Convertible Instruments and 
Contracts in an Entity’s Own Equity

This update adds and removes certain 
disclosure requirements related to defined 
benefit plans.

This update simplifies various aspects 
related to the accounting for income taxes. 
The standard removes certain exceptions to 
the general principles in Topic 740 and also 
clarifies and modifies existing guidance to 
improve consistent application of Topic 740.
This update simplifies the accounting for 
convertible debt instruments by removing 
certain accounting separation models as well 
as the accounting for debt instruments with 
embedded conversion features that are not 
required to be accounted for as derivative 
instruments. The update also improves the 
consistency of earnings per share 
calculations for convertible instruments.

Date of 
Adoption
January 1, 
2021

January 1, 
2021

January 1, 
2021

Effect on Financial 
Statements or Other 
Significant Matters
There was no material 
impact to our 
consolidated financial 
statements as a result 
of adopting this ASU.

There was no material 
impact to our 
consolidated financial 
statements as a result 
of adopting this ASU.

There was no material 
impact to our 
consolidated financial 
statements as a result 
of adopting this ASU.

F-57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted 
Financial 
Measures

15.8%

15.0%

Restructuring 

Expenses       

(H)

--

Note: The shareholder letter contains forward-looking statements,
including statements about LivaNova’s plans, strategies,
financial performance and outlook. Factors that could cause actual results to differ materially from management’s expectations
are disclosed in LivaNova’s most recent filings with the U.S. Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 31, 2021 (included herewith) and its Quarterly Reports on Form 10-Q. The shareholder
letter also contains non-GAAP financial measures. See the tables below for a reconciliation of these measures to the most directly
comparable GAAP measures.

RRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES – UNAUDITED

Twelve Months Ended December 31, 2021

Research & Development %

Operating Margin %

GAAP      

Financial 
Measures

17.7%

(0.1)%

Depreciation 
and 
Amortization 
Expenses
(A)

Heart Valves  
(B)

--

--

Product 
Remediation 

Expenses      

(C)

--

Certain Legal, 
Contingent 
Consideration 
and Other      

(E)

Stock-based 
Compensation 
Costs
(F)

Merger and 
Integration 
Expenses
(G)

(1.1)%

(0.8)%

--

Restructuring 
Expenses      

(H)

--

2.7%

0.2%

0.1%

7.2%

3.9%

0.1%

0.9%

Twelve Months Ended December 31, 2020

Depreciation 
and 
Amortization 
Expenses
(A)

GAAP      

Financial 
Measures

Heart Valves  
(B)

Research & Development %

16.4%

--

--

Product 
Remediation 

Expenses       

(C)

--

Financing 
Transactions    
(D)

--

Operating Margin %

(29.3)%

4.4%

22.3%

0.8%

0.3%

Certain Legal, 
Contingent 
Consideration 
and Other      

(E)

0.2%

6.2%

Stock-based 
Compensation 
Costs
(F)

Merger and 
Integration 
Expenses
(G)

(0.4)%

3.8%

--

0.8%

0.8%

Adjusted 
Financial 
Measures

16.2%

10.0%

GAAP results include:

(A)
(B)

(C)
(D)
(E)

(F)
(G)
(H)
*

Includes depreciation and amortization associated with purchase price accounting.
Loss associated with the sale of Heart Valves in the twelve-month period ending December 31, 2021, and impairment primarily associated with the classification of Heart Valves as held
for sale in the twelve-month period ending December 31, 2020.
Costs related to the 3T Heater-Cooler remediation plan.
Costs associated with the June 2020 financing transactions, including the mark-to-market adjustment for the exchangeable option feature and capped call derivatives.
3T Heater-Cooler litigation provision, legal expenses primarily related to 3T Heater-Cooler defense, settlements and other matters, remeasurement of contingent consideration related to
acquisitions, and for the twelve-month period ending December 31, 2021, includes, gain from remeasurement of an investment and dividend income, and for the twelve month-period
ending December 31, 2020, provision for decommissioning at our Saluggia site
.
Non-cash expenses associated with stock-based compensation costs.
Merger and integration expenses related to our legacy companies and recent acquisitions.
Restructuring expenses related to organizational changes.
Numbers may not add precisely due to rounding.

ADJUSTED FREE CASH FLOW RECONCILIATION – UNAUDITED
(U.S. dollars in millions) 

Twelve Months Ended December 31, 

Net cash provided by (used in) operating activities

Less: Purchases of plant, property and equipment

Less: Cash received from tax stimulus

Less: Dividends received from investment

Add: 3T litigation payments

Adjusted free cash flow

2021

$102.5

(25.5)

(24.5)

(3.4)

34.8

$84.0

2020

$(79.2)

(35.0)

--

--

138.2

$24.0

NET SALES: COMPARISON OF ACTUAL RESULTS TO CONSTANT CURRENCY – UNAUDITED (1)
(U.S. dollars in millions) 

Total Net Sales

Less: Heart Valves net sales(2)

Total Net Sales, Excluding Heart Valves

Twelve Months Ended December 31, 

2021

$1,035.4

36.2

$999.2

2020

$934.2

88.0

$846.2

% Change at 
Actual Currency 
Rates 

% Change at 
Constant-Currency 
Rates 

10.8%

**

18.1%

9.7%

**

17.1%

(1)

(2)
*
**

Constant-currency growth, a non-GAAP financial measure, measures the change in sales between current and prior-year periods using average exchange rates in effect during the 
applicable prior-year period. 
Includes results for the Heart Valves business, which was divested effective June 1, 2021.
Numbers may not add or recalculate precisely due to rounding.
Indicates that variance as a percentage is not meaningful.

Board of Directors

William Kozy 
Chair of the Board, LivaNova.
Former Executive Vice President and 
Chief Operating Officer at Becton, 
Dickinson and Company.

Damien McDonald
Chief Executive Officer, LivaNova.
Previously served as Chief Operating
Officer at LivaNova. Former Group 
Executive and Corporate Vice 
President at Danaher Corporation.

Francesco Bianchi
Chair of Seven Capital Partners. 
Former member of the board of 
directors of Sorin. Former General 
Manager and Head of M&A and 
Corporate Finance at Bankers Trust.

Stacy Enxing Seng
Former President of Covidien 
Vascular Therapies and former
President of Covidien  
Peripheral Vascular.

Daniel Moore
Former Chief Executive Officer and 
member of the board of directors  
of Cyberonics.

Alfred J. Novak
Former member of the board of
directors of Cyberonics. Former 
Chair and Chief Executive 
Officer of OrbusNeich Medical 
Technology Company.

Dr. Sharon O’Kane
Non-executive director of Health 
Products Regulatory Authority 
Board in Ireland.
Co-Founder and former Chief 
Scientific Officer and Executive 
Director of Renovo Group.

Dr. Arthur L. Rosenthal
Former member of the board
of directors of Cyberonics.  
Co-Founder and former Chief 
Executive Officer of EyeCue, Inc.

Andrea L. Saia
Former executive at Novartis, 
including roles as President and  
Chief Executive Officer of the 
CibaVision subsidiary and Global 
Head of the Vision Care Division.

Todd C. Schermerhorn
Former Senior Vice President 
and Chief Financial Officer  
of C.R. Bard, Inc.

Executive Management

Damien McDonald
Chief Executive Officer

Alex Shvartsburg
Chief Financial Officer

Keyna Skeffington
Senior Vice President,  
General Counsel  
and Company Secretary

Stephanie Bolton
President, International Region 

Paul Buckman
President, Advanced Circulatory 
Support

Matthew Dodds
Senior Vice President,  
Corporate Development and IT 

Marco Dolci
President, Cardiopulmonary

Trui Hebbelinck 
Chief Human Resources Officer 

Ryan Miller
Senior Vice President, Strategy 

Bryan Olin, PhD
Senior Vice President and 
Head of Product Development, 
Neuromodulation

Key Worldwide Locations

Europe

LivaNova PLC (Headquarters)
20 Eastbourne Terrace 
London
W2 6LG
United Kingdom

Mirandola, Italy 
Munich, Germany 
Milan, Italy  
Paris, France

North America

Houston, Texas
Arvada, Colorado
Pittsburgh, Pennsylvania

South America

Sao Paulo, Brazil

Asia-Pacific 

Melbourne, Australia 
Shanghai, China
Singapore
Tokyo, Japan

Additional Information

Additional information about LivaNova, 
including news and financial data, 
is available by visiting the company’s 
website: www.livanova.com

Any forward-looking statements are 
subject to risks and uncertainties such 
as those described in our periodic 
reports on file with the U.S. Securities 
and Exchange Commission. Actual results 
may differ materially from anticipated 
results. These statements are not 
guarantees of future performance, and 
stockholders should not place undue 
reliance on forward-looking statements.

LivaNova PLC    
LivaNova PLC
20 Eastbourne Terrace 
20 Eastbourne Terrace 
London, W2 6LG  
London, W2 6LG  
United Kingdom
United Kingdom
+44 20 3325 0660
+44 20 3325 0660
www.livanova.com
www.livanova.com