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LivaNova PLC LIVN

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LivaNova's Recovery in Neuromodulation Provides Tailwind for 2021; No Change to Our FVE

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Narrow-moat LivaNova posted first-quarter results that demonstrated a mixed bag on recovery of non-pandemic businesses. After making slight adjustments to our projections for the full year, we plan to leave our fair value estimate unchanged, with more optimistic expectations for neuromodulation and cardiopulmonary offset by the divestiture of heart valves. Quarterly growth in constant currency was largely flat year over year, but this obscured product lines that were moving in opposite directions. The cardiopulmonary business fell 10% while the neuromodulation business rose 15%, both in constant currency compared with the prior-year period. These two product groups account for roughly 85% of LivaNova’s total revenue and have seen different rates of procedure resumption. As we’ve seen with other medical device firms, much of the favorable movement in the first quarter was fueled by recovery in the U.S. where vaccinations accelerated through the quarter, while performance in Europe remains hampered by slower vaccination, the rise of new variants, and various states of lockdown. This dynamic had an outsized effect on LivaNova’s neuromodulation business, as close to 80% of it is derived from the U.S.

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Company Profile

Business Description

U.K.-based LivaNova was born of a combination between Cyberonics in the U.S. and Sorin in Italy. The medical device firm is primarily focused on cardiovascular and cardiopulmonary solutions (with surgical heart valves, heart-lung machines, and oxygenation equipment) as well as neuromodulation devices for treatment-resistant epilepsy and depression. LivaNova derives roughly half of its revenue from the U.S. market, another 21% from Europe, and the remainder from the rest of the world.

Contact
20 Eastbourne Terrace
London, W2 6LG, United Kingdom
T +44 2033250660
Sector Healthcare
Industry Medical Devices
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 4,000

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