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LivaNova Maintains Stability in the Fourth Quarter; We Anticipate a Modest Recovery in 2021

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

In the fourth quarter, narrow-moat LivaNova saw a continuation of the stabilization and improvement seen in the third quarter. For the full year, revenue growth and R&D expense came in slightly higher than expected, but this was offset by better-than-expected gross margin and S&GA expense, and we’re leaving our fair value estimate unchanged. As seen in earlier quarters, the greatest area of strength came from advanced circulatory support (up 53% versus the prior-year period) where treatment of COVID-19 patients has accelerated adoption of extracorporeal membrane oxygenation. Nonetheless, this wasn’t enough to steady the ship at LivaNova, as this product line only accounts for roughly 5% of consolidated revenue. The rest of the firm’s product segments remained hampered by declines in the quarter, with the most dramatic decreases in heart valves and cardiovascular, though the 6% fall in quarterly revenue was still considerably improved from the 34% dip seen in the second quarter.

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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.

20 Eastbourne Terrace
London, W2 6LG, United Kingdom
T +44 2033250660
Sector Healthcare
Industry Medical Devices
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 4,000