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LivaNova Posts Strong Q3, but Neuromodulation Bears Brunt of Delta Variant; No Change to Our FVE

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

LivaNova delivered strong third-quarter results that slightly outpaced our expectations, however, our adjustments for the near term weren’t material enough to shift our fair value estimate. Our more optimistic revenue growth expectations for 2021 and 2022, as well as lower interest expense, were generally offset by the increased share count and higher weighted average cost of capital, reflecting the late-summer capital raise that was partially used to pay down debt. Overall, we think these latest moves put LivaNova on stronger financial footing, with debt-to-EBITDA less than 1 time, by our estimates (compared with 3.6 times previously). Nonetheless, we do not see much in the latest quarter to change our thinking on the firm’s narrow economic moat.

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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, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 4,000