Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37599 | |
Entity Incorporation, State or Country Code | X0 | |
Entity Tax Identification Number | 98-1268150 | |
Entity Address, Address Line One | 20 Eastbourne Terrace | |
Entity Address, City or Town | London | |
Entity Address, Country | GB | |
Entity Address, Postal Zip Code | W2 6LG | |
Country Region | 44 | |
City Area Code | 0 | |
Local Phone Number | 203 325-0660 | |
Title of 12(b) Security | Ordinary Shares - £1.00 par value per share | |
Trading Symbol | LIVN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 48,579,023 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | LIVANOVA PLC | |
Entity Central Index Key | 0001639691 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 242,397 | $ 250,801 |
Costs and expenses: | ||
Cost of sales - exclusive of amortization | 68,923 | 84,254 |
Product remediation | 1,466 | 2,947 |
Selling, general and administrative | 120,177 | 125,704 |
Research and development | 35,902 | 43,575 |
Merger and integration expenses | 3,474 | 3,251 |
Restructuring expenses | 1,580 | 2,533 |
Amortization of intangibles | 10,267 | 9,316 |
Operating income (loss) from continuing operations | 608 | (20,779) |
Interest income | 148 | 249 |
Interest expense | (4,849) | (1,662) |
Foreign exchange and other (losses) gains | (1,914) | 729 |
Loss from continuing operations before tax | (6,007) | (21,463) |
Income tax benefit | (44,714) | (6,614) |
Losses from equity method investments | (129) | 0 |
Net income (loss) from continuing operations | 38,578 | (14,849) |
Net loss from discontinued operations, net of tax | (995) | 0 |
Net income (loss) | $ 37,583 | $ (14,849) |
Basic income (loss) per share: | ||
Continuing operations (in dollars per share) | $ 0.80 | $ (0.31) |
Discontinued operations (in dollars per share) | (0.02) | 0 |
Earnings per share (in dollars per share) | 0.78 | (0.31) |
Diluted income (loss) per share: | ||
Continuing operations (in dollars per share) | 0.79 | (0.31) |
Discontinued operations (in dollars per share) | (0.02) | 0 |
Earnings per share (in dollars per share) | $ 0.77 | $ (0.31) |
Shares used in computing basic (loss) income per share (in shares) | 48,485 | 48,246 |
Shares used in computing diluted (loss) income per share (in shares) | 48,769 | 48,246 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 37,583 | $ (14,849) |
Other comprehensive (loss) income: | ||
Net change in unrealized loss on derivatives | (1,356) | (10) |
Tax effect | 325 | 2 |
Net of tax | (1,031) | (8) |
Foreign currency translation adjustment | (32,100) | (4,229) |
Total other comprehensive loss | (33,131) | (4,237) |
Total comprehensive income (loss) | $ 4,452 | $ (19,086) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents | $ 125,823 | $ 61,137 |
Current Assets: | ||
Cash and cash equivalents | 61,137 | |
Accounts receivable, net of allowance of $14,153 at March 31, 2020 and $13,105 at December 31, 2019 | 225,347 | 257,769 |
Inventories, net | 170,256 | 164,154 |
Prepaid and refundable taxes | 53,094 | 37,779 |
Prepaid expenses and other current assets | 42,402 | 28,604 |
Total Current Assets | 616,922 | 549,443 |
Property, plant and equipment, net | 183,534 | 181,354 |
Goodwill | 888,573 | 915,794 |
Intangible assets, net | 586,988 | 607,546 |
Operating lease assets | 52,677 | 54,372 |
Investments | 30,040 | 27,256 |
Deferred tax assets | 89,013 | 68,676 |
Other assets | 6,689 | 7,356 |
Total Assets | 2,454,436 | 2,411,797 |
Current Liabilities: | ||
Current debt obligations | 223,314 | 77,396 |
Accounts payable | 91,224 | 85,892 |
Accrued liabilities and other | 93,539 | 120,100 |
Current litigation provision liability | 43,025 | 146,026 |
Taxes payable | 7,884 | 12,719 |
Accrued employee compensation and related benefits | 70,738 | 70,420 |
Total Current Liabilities | 529,724 | 512,553 |
Long-term debt obligations | 315,561 | 260,330 |
Contingent consideration | 99,725 | 114,396 |
Litigation provision liability | 11,545 | 24,378 |
Deferred tax liabilities | 25,994 | 32,219 |
Long-term operating lease liabilities | 43,369 | 46,027 |
Long-term employee compensation and related benefits | 21,186 | 22,797 |
Other long-term liabilities | 14,624 | 15,380 |
Total Liabilities | 1,061,728 | 1,028,080 |
Commitments and contingencies (Note 10) | ||
Stockholders’ Equity: | ||
Ordinary Shares, £1.00 par value: unlimited shares authorized; 49,413,610 shares issued and 48,578,610 shares outstanding at March 31, 2020; 49,411,016 shares issued and 48,443,830 shares outstanding at December 31, 2019 | 76,259 | 76,257 |
Additional paid-in capital | 1,739,873 | 1,734,870 |
Accumulated other comprehensive loss | (52,523) | (19,392) |
Accumulated deficit | (369,811) | (406,755) |
Treasury stock at cost, 835,000 ordinary shares at March 31, 2020, 967,186 ordinary shares at December 31, 2019 | (1,090) | (1,263) |
Total Stockholders’ Equity | 1,392,708 | 1,383,717 |
Total Liabilities and Stockholders’ Equity | $ 2,454,436 | $ 2,411,797 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) $ in Thousands | Mar. 31, 2020USD ($)shares | Mar. 31, 2020£ / shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2019£ / shares |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful trade receivables | $ | $ 14,153 | $ 13,105 | ||
Ordinary shares, par value (in pounds per share) | £ / shares | £ 1 | £ 1 | ||
Ordinary shares issued (in shares) | 49,413,610 | 49,411,016 | ||
Ordinary shares outstanding (in shares) | 48,578,610 | 48,443,830 | ||
Treasury stock (in shares) | 835,000 | 967,186 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2018 | |
Operating Activities: | |||
Net income (loss) | $ 37,583 | $ (14,849) | |
Non-cash items included in net income (loss): | |||
Amortization | 10,267 | 9,316 | |
Stock-based compensation | 9,043 | 6,872 | |
Depreciation | 6,796 | 7,547 | |
Deferred tax benefit | (17,283) | 9,457 | |
Remeasurement of contingent consideration to fair value | (22,884) | 1,993 | |
Other | 1,711 | 4,765 | |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | 24,336 | 7,064 | |
Inventories, net | (12,513) | (8,292) | |
Other current and non-current assets | (25,700) | (23,377) | |
Accounts payable and accrued current and non-current liabilities | (1,349) | $ 6,384 | |
Litigation provision liability, net | (115,609) | 0 | |
Restructuring reserve | (443) | (4,906) | |
Net cash (used in) provided by operating activities | (106,045) | 1,974 | |
Investing Activities: | |||
Purchases of property, plant and equipment | (8,597) | (5,741) | |
Purchase of investment | (3,000) | 0 | |
Proceeds from asset sales | 834 | 100 | |
Other | (322) | 0 | |
Net cash used in investing activities | (11,085) | (5,641) | |
Financing Activities: | |||
Proceeds from long-term debt obligations | 162,899 | 2,973 | |
Proceeds from short term borrowings (maturities greater than 90 days) | 46,115 | 0 | |
Closing adjustment payment for sale of CRM business | (14,891) | 0 | |
Payment of contingent consideration | (4,604) | 0 | |
Shares repurchased from employees for minimum tax withholding | (3,997) | (4,606) | |
Change in short-term borrowing, net | (2,477) | 11,061 | |
Debt issuance costs | 0 | (1,750) | |
Other | 48 | (89) | |
Net cash provided by financing activities | 183,093 | 7,589 | |
Effect of exchange rate changes on cash and cash equivalents | (1,277) | (350) | |
Net increase in cash and cash equivalents | 64,686 | 3,572 | |
Cash and cash equivalents at beginning of period | 61,137 | 47,204 | |
Cash and cash equivalents at end of period | $ 125,823 | $ 50,776 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Financial Statements | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Unaudited Condensed Consolidated Financial Statements | Note 1. Unaudited Condensed Consolidated Financial Statements Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three months ended March 31, 2020 and 2019 , have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 2019 has been derived from audited financial statements contained in our 2019 Form 10-K, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries, for the three months ended March 31, 2020 , and are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 . The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our 2019 Form 10-K. Recent Developments Regarding COVID-19 In recent months, a new strain of coronavirus (COVID-19) has spread to many countries in the world and the outbreak has been declared a pandemic by the World Health Organization. The U.S. Secretary of Health and Human Services has also declared a public health emergency in the United States in response to the outbreak. Considerable uncertainty still surrounds the COVID-19 virus and its potential effects, and the extent of and effectiveness of responses taken on international, national and local levels. Measures taken to limit the impact of COVID-19, including shelter-in-place orders, social distancing measures, travel bans and restrictions, and business and government shutdowns, have already resulted in significant negative economic impacts on a global basis. Due to these impacts and measures, we have experienced and may continue to experience significant and unpredictable reductions in the demand for our products as healthcare customers divert medical resources and priorities towards the treatment of COVID-19. In addition, our customers may delay, cancel, or redirect planned purchases in order to focus resources on COVID-19 or in response to economic disruption related to COVID-19. For example, in the last two weeks of the quarter ended March 31, 2020, we experienced a significant decline in volumes in the U.S. and Europe, as healthcare systems diverted resources to meet the increasing demands of managing COVID-19. In addition, public health bodies have recommended delaying elective surgeries during the COVID-19 pandemic, which may continue to negatively impact the usage of our products, including the number of Neuromodulation procedures. Liquidity As of March 31, 2020, the Company had cash and cash equivalents of $125.8 million . In connection with our assessment of going concern considerations in accordance with ASU 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company determined that the projected reduction in sales primarily in the second quarter of 2020 would result in our inability to comply with certain debt covenants as of the end of the second and fourth quarters of 2020, which represents a condition that raises substantial doubt about our ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are available to be issued. In April 2020, the Company entered into amendments that modified the maximum consolidated net debt to EBITDA and the interest coverage ratio covenants in its debt agreements for the remainder of 2020. The Company also implemented cost-cutting measures, including reduced hiring, marketing, travel, capital expenditures and certain research and development activities. Management has concluded that the amendments to modify the covenants in its debt agreements, when combined with current and anticipated future operating cash flows, alleviates the substantial doubt about the Company’s ability to continue as a going concern over the twelve-month period from the issuance date of these condensed consolidated financial statements. Regardless, COVID-19 continues to create uncertainty in relation to its impact on future revenues, the ability of the Company to access supplies and personnel to continue the production of inventory to meet customer needs, and ultimately, the amount of time necessary for elective surgeries to return to previous levels. If current market conditions deteriorate further as a result of COVID-19, or management’s judgments and assumptions regarding future industry, market or operating conditions change, including our assumptions regarding the timing of when elective surgeries may be rescheduled, or if there are government interventions impacting our areas of operation, there is a risk of breaching the Company’s debt covenants in future periods and a risk that the Company may not have sufficient funds to meet future obligations as they fall due. If this were to occur, the Company may pursue further or more substantial cost-cutting measures. Also, while not entirely in our control, we may: • Execute additional amendments or waivers to existing debt covenants, • Obtain additional bank financing or alternative sources of liquidity, • Renegotiate the terms of our existing debt facilities, and • Explore additional funding options such as accounts receivable factoring. Goodwill and Indefinite-lived Intangible Assets As of March 31, 2020, the Company has a goodwill balance of approximately $888.6 million , of which, $489.8 million and $398.8 million are allocated between the Cardiovascular and Neuromodulation segments, respectively. The Company performs its annual goodwill impairment test as of October 1st of each year. Our 2019 goodwill impairment test indicated head room of 584% and 24% for our Neuromodulation and Cardiovascular segments, respectively. Despite the excess fair value for our Cardiovascular reporting unit identified in our 2019 goodwill impairment assessment, we assessed whether the delay of elective surgeries, reduced cash flow projections, and the significant decline in LivaNova’s market capitalization as a result of the COVID-19 pandemic indicate that it is more likely than not that the goodwill was impaired as of March 31, 2020. Our assessment included review of our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the estimated duration and extent of impact to our business from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in our market capitalization, (4) observable market transactions and (5) changes to the regulatory environment. As of March 31, 2020, the Company has IPR&D assets with a balance of $115.8 million . The Company tests these assets for impairment as of October 1st of each year. In evaluating whether it is more likely than not that these IPR&D assets were impaired as of March 31, 2020, we assessed whether the COVID-19 pandemic would delay clinical trials or impact the estimated commercialization timelines. Based on the consideration of all available evidence, we have determined that an interim impairment test of goodwill and indefinite-lived intangible assets is not required as of March 31, 2020 as it is not more likely than not that these assets are impaired. However, we are unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. If current market conditions deteriorate further as a result of COVID-19, or management’s judgments and assumptions regarding future industry, market or operating conditions change, including our assumptions regarding the timing of when elective surgeries may be rescheduled, or if there are government interventions impacting our areas of operation we may recognize an impairment of our goodwill or indefinite-lived intangible assets in future periods. Reclassifications We have reclassified certain prior period amounts for comparative purposes. These reclassifications did not have a material effect on our financial condition, results of operations or cash flows. Significant Accounting Policies |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Note 2. Business Combinations Miami Instruments On June 12, 2019, we acquired the minimally invasive cardiac surgery instruments business from Miami Instruments, LLC (“Miami Instruments”) for cash consideration of up to $17.0 million . The related operations have been integrated into our Cardiovascular segment as a part of our Heart Valves business. Cash of $10.8 million was paid at closing with up to $6.0 million in contingent consideration based on achieving certain milestones. In connection with this acquisition, we recognized $14.7 million in developed technology and in-process research and development (“IPR&D”) intangible assets and $1.5 million in goodwill. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 3. Discontinued Operations On April 30, 2018, we completed the sale of our Cardiac Rhythm Management (“CRM”) business franchise to MicroPort Cardiac Rhythm B.V. and MicroPort Scientific Corporation (“MicroPort”) for total cash proceeds of $195.9 million , less cash transferred of $9.2 million , subject to a closing working capital adjustment. In March 2020, we finalized the working capital adjustment and as a result, made a $16.4 million payment to MicroPort during the first quarter of 2020 and incurred an additional $1.1 million loss on sale. The following table represents the financial results of our former CRM business presented as net loss from discontinued operations, net of tax on our condensed consolidated statements of income (loss) (in thousands): Three Months Ended March 31, 2020 Loss on sale of CRM $ (1,080 ) Operating loss from discontinued operations (1,080 ) Loss from discontinued operations before tax (1,080 ) Income tax benefit (85 ) Net loss from discontinued operations $ (995 ) |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Note 4. Restructuring 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. Costs associated with these plans were reported as restructuring expenses in the operating results of our condensed consolidated statements of income (loss). The following table presents the accruals and other reserves recorded in connection with our restructuring plans (in thousands): Employee Severance and Other Termination Costs Other Total Balance at December 31, 2019 $ 4,097 $ 1,400 $ 5,497 Charges 1,487 93 1,580 Cash payments and other (4,172 ) (208 ) (4,380 ) Balance at March 31, 2020 (1) $ 1,412 $ 1,285 $ 2,697 (1) Cumulatively through March 31, 2020 , we have recognized a total of $113.1 million in restructuring expense from all of our restructuring plans. The following table presents restructuring expense by reportable segment (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 686 $ 422 Neuromodulation 503 432 Other 391 1,679 Total $ 1,580 $ 2,533 |
Product Remediation Liability
Product Remediation Liability | 3 Months Ended |
Mar. 31, 2020 | |
Product Remediation [Abstract] | |
Product Remediation Liability | Note 5. 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. At December 31, 2016, we recognized a liability for a product remediation plan related to our 3T Heater-Cooler device (“3T device”). The remediation plan we developed consists 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. These changes are intended 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. The deployment of this solution for commercially distributed devices has been dependent upon final validation and verification of the design changes and approval or clearance by regulatory authorities worldwide, including FDA clearance in the U.S. It is reasonably possible that our estimate of the remediation liability could materially change in future periods due to the various significant assumptions involved such as customer behavior, market reaction and the timing of approvals or clearance by regulatory authorities worldwide. In April 2017, we obtained CE Mark in Europe for the design change of the 3T device, and in May 2017 we completed our first vacuum canister and internal sealing upgrade on a customer-owned device. We are currently implementing the vacuum canister and internal sealing upgrade program in as many countries as possible until all devices are upgraded. In October 2018, after review of information provided by us, the FDA concluded that we could commence the vacuum canister and internal sealing upgrade program in the U.S., and 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. As a second part of the remediation plan, we continue to offer a no-charge deep disinfection service (deep cleaning service) for 3T device users as we receive the required regulatory approvals. The deep disinfection service was rolled out in Europe in the second half of 2015, and in April 2018, the FDA agreed to allow us to move forward with the deep cleaning service in the U.S., thereby adding to the growing list of countries around the world in which we offer this service. Finally, we are continuing to offer the loaner program for 3T devices, initiated in the fourth quarter of 2016, to provide existing 3T device users with a new loaner 3T device at no charge pending regulatory approval and implementation of the vacuum system addition and deep disinfection service worldwide. This loaner program is available on a global basis. The following table provides a reconciliation of the beginning and ending balance of the product remediation liability (in thousands): Balance at December 31, 2019 $ 3,251 Remediation activity (1,538 ) Effect of changes in foreign currency exchange rates (77 ) Balance at March 31, 2020 (1) $ 1,636 (1) At March 31, 2020 , the product remediation liability balance is included within accrued liabilities and other on the condensed consolidated balance sheet. We recognized product remediation expenses of $1.5 million and $2.9 million during the three months ended March 31, 2020 and 2019 , respectively. 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. At March 31, 2020 , our balance sheet includes a $54.6 million provision related to litigation involving our 3T device. For further information, please refer to “ Note 10. Commitments and Contingencies .” |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments [Abstract] | |
Investments | Note 6. 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. The below equity investments are included in investments on the condensed consolidated balance sheets (in thousands): Equity Investments Without Readily Determinable Fair Values March 31, 2020 December 31, 2019 Respicardia Inc. (1) $ 17,706 $ 17,706 ALung Technologies, Inc. (2) 3,000 — Ceribell, Inc. 3,000 3,000 ShiraTronics, Inc. 2,045 2,045 Rainbow Medical Ltd. 1,073 1,099 MD Start II 1,095 1,121 Highlife S.A.S. 1,039 1,064 Other 770 770 29,728 26,805 Equity method investment 312 451 $ 30,040 $ 27,256 (1) Respicardia Inc. (“Respicardia”) is a privately funded U.S. company developing an implantable device designed to restore a more natural breathing pattern during sleep in patients with central sleep apnea by transvenously stimulating the phrenic nerve. We have a loan outstanding to Respicardia, with a carrying amount of $0.6 million and $0.6 million as of March 31, 2020 and December 31, 2019 , respectively, which is included in prepaid expenses and other current assets on the condensed consolidated balance sheet. (2) During the first quarter of 2020, we invested in ALung Technologies, Inc. (“ALung”). ALung is a privately held medical device company focused on creating advanced medical devices for treating respiratory failure. ALung’s Hemolung Respiratory Assist System is a dialysis-like alternative or supplement to mechanical ventilation which removes carbon dioxide directly from the blood in patients with acute respiratory failure. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7. 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 three months ended March 31, 2020 and 2019 . 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): Fair Value as of March 31, 2020 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “FX”) $ 6 $ — $ 6 $ — Derivative assets - freestanding instruments (FX) 6,630 — 6,630 — $ 6,636 $ — $ 6,636 $ — Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 931 $ — $ 931 $ — Derivative liabilities - designated as cash flow hedges (interest rate swaps) 276 — 276 — Derivative liabilities - freestanding instruments (FX) 76 — 76 — Contingent consideration 114,534 — — 114,534 $ 115,817 $ — $ 1,283 $ 114,534 Fair Value as of December 31, 2019 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (FX) $ 535 $ — $ 535 $ — Derivative assets - freestanding instruments (FX) 26 — 26 — $ 561 $ — $ 561 $ — Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 169 $ — $ 169 $ — Derivative liabilities - designated as cash flow hedges (interest rate swaps) 374 — 374 — Derivative liabilities - freestanding instruments (FX) 3,137 — 3,137 — Contingent consideration 137,349 — — 137,349 $ 141,029 $ — $ 3,680 $ 137,349 Our recurring fair value measurements, using significant unobservable inputs (Level 3), relate solely to our contingent consideration liability. The following table provides a reconciliation of the beginning and ending balance of the contingent consideration liability (in thousands): Total contingent consideration liability at December 31, 2019 $ 137,349 Payments (1) (5,323 ) Changes in fair value (2) (3) (17,283 ) Effect of changes in foreign currency exchange rates (209 ) Total contingent consideration liability at March 31, 2020 114,534 Less current portion of contingent consideration liability at March 31, 2020 14,809 Long-term portion of contingent consideration liability at March 31, 2020 $ 99,725 (1) During the three months ended March 31, 2020 , we paid $5.0 million under the contingent consideration arrangement for the acquisition of TandemLife. Additionally, we made the final payment for the contingent consideration arrangement with Inversiones Drilltex SAS (“Drilltex”). (2) The change in fair value during the three months ended March 31, 2020 is primarily due to 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. (3) During the three months ended March 31, 2020 , the change in fair value resulted in a decrease of $8.8 million and $8.5 million recorded to cost of sales - exclusive of amortization and research and development, respectively. The following table provides the fair value of contingent consideration arrangements by acquisition (in thousands): March 31, 2020 December 31, 2019 ImThera Medical, Inc. (“ImThera”) $ 98,863 $ 113,503 TandemLife 9,721 17,311 Miami Instruments 5,252 5,338 Drilltex — 294 Other 698 903 $ 114,534 $ 137,349 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: ImThera Acquisition Valuation Technique Unobservable Input Ranges Regulatory milestone-based payment Discounted cash flow Discount rate 6.5 % - 6.6% Probability of payment 85 % - 95% Projected payment years 2023 - 2024 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 12.0% Credit risk discount rate 6.6 % - 6.9% Revenue volatility 32.5% Probability of payment 85 % - 95% Projected years of earnout 2024 - 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: TandemLife Acquisition Valuation Technique Unobservable Input Ranges Regulatory milestone-based payments Discounted cash flow Discount rate 5.8 % - 5.9% Probability of payments 75.0% Projected payment years 2020 The Miami Instruments business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement on certain regulatory milestones. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs: Miami Instruments Valuation Technique Unobservable Input Ranges Regulatory milestone-based payments Discounted cash flow Discount rate 5.8 % - 5.9% Probability of payments 82 % - 95% Projected payment years 2020 - 2021 |
Financing Arrangements
Financing Arrangements | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 8. Financing Arrangements The outstanding principal amount of our long-term debt as of March 31, 2020 and December 31, 2019 was as follows (in thousands, except interest rates): March 31, 2020 December 31, 2019 Maturity Interest Rate 2019 Debt Facility (1) $ 345,096 $ 184,275 March 2022 1.40 % - 3.33% 2017 European Investment Bank (2) 103,570 103,570 June 2026 2.82 % - 2.87% 2014 European Investment Bank (3) 27,390 28,053 June 2021 1.04% Mediocredito Italiano 6,088 6,222 December 2023 0.50 % - 2.96% Bank of America Merrill Lynch Banco Múltiplo S.A. 6,514 8,422 July 2021 7.55% Bank of America, U.S. 2,020 2,004 January 2021 3.48% Other 1,023 965 Total long-term facilities 491,701 333,511 Less current portion of long-term debt 176,140 73,181 Total long-term debt $ 315,561 $ 260,330 (1) The facility agreement with Bank of America Merrill Lynch International DAC, Barclays Bank PLC, BNP Paribas (London Branch) and Intesa Sanpaolo S.P.A. provides a multi-currency term loan facility in an aggregate amount of $350 million and terminates on March 26, 2022 (the “2019 Debt Facility”). Principal repayments of 20% of the outstanding borrowings under the 2019 Debt Facility are due in September 2020, March 2021 and September 2021, with the remainder of the outstanding borrowings due in March 2022. (2) The 2017 European Investment Bank (“2017 EIB”) loan was obtained to support certain product development projects. The interest rate for the 2017 EIB loan is reset by the lender each quarter based on LIBOR. Interest payments are paid quarterly and principal payments are paid semi-annually. (3) The 2014 European Investment Bank (“2014 EIB”) loan was obtained in July 2014 to support product development projects. The interest rate for the 2014 EIB loan is reset by the lender each quarter based on the Euribor. Interest payments are paid quarterly, and principal payments are paid semi-annually. Revolving Credit The outstanding principal amount of our short-term unsecured revolving credit agreements and other agreements with various banks was $47.2 million and $4.2 million , at March 31, 2020 and December 31, 2019 , respectively, with interest rates ranging from 2.72% to 7.55% and loan terms ranging from 30 days to 180 days , as of March 31, 2020 . Debt Covenant Amendments In connection with our assessment of going concern considerations during the first quarter of 2020, the Company determined that the projected reduction in sales primarily in the second quarter of 2020 as a result of COVID-19 would result in our inability to comply with certain debt covenants as of the end of the second and fourth quarters of 2020. As a result, in April 2020, the Company concluded a series of debt covenant amendments which materially modify the status of our current credit agreements. These amendments temporarily amend financial covenants relating to consolidated net financial indebtedness to consolidated EBITDA and consolidated EBITDA to consolidated net interest payable, waive certain events of default through December 31, 2020 relating to COVID-19, and implement a test period of 12 months for certification purposes. Management has concluded that current and anticipated future operating cash flows will be sufficient to comply with the amended covenants as of the end of the second and fourth quarters of 2020. |
Derivatives and Risk Management
Derivatives and Risk Management | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Risk Management | Note 9. Derivatives and Risk Management Due to the global nature of our operations, we are exposed to foreign currency exchange rate fluctuations. In addition, due to certain loans with floating interest rates, we are also subject to the impact of changes in interest rates on our interest payments. We enter into FX derivative contracts and interest rate swap contracts to reduce the impact of foreign currency exchange rate and interest rate fluctuations on earnings and cash flow. We measure all outstanding derivatives each period end at fair value and report the fair value as either financial assets or liabilities on the condensed 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 accumulated other comprehensive income (“AOCI”) until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to our condensed consolidated statements of income (loss) as shown in the tables below and interest rate swap gains and losses in AOCI are reclassified to interest expense on our condensed consolidated statements of income (loss). We evaluate hedge effectiveness at inception. Cash flows from derivative contracts are reported as operating activities on our condensed consolidated statements of cash flows. Freestanding FX Derivative Contracts The gross notional amount of FX derivative contracts not designated as hedging instruments outstanding at March 31, 2020 and December 31, 2019 was $220.7 million and $338.0 million , respectively. These derivative contracts are designed to offset the FX effects in earnings of various intercompany loans, our 2014 EIB loan, the Euro-denominated borrowings under the 2019 Debt Facility and trade receivables. We recorded net gains for these freestanding derivatives of $8.1 million and $3.7 million for the three months ended March 31, 2020 and 2019 , respectively. These gains are included in foreign exchange and other gains on our condensed consolidated statements of income (loss). Cash Flow Hedges The gross notional amounts of open derivative contracts designated as cash flow hedges at March 31, 2020 and December 31, 2019 were as follows (in thousands): Description of Derivative Contract March 31, 2020 December 31, 2019 FX derivative contracts to be exchanged for British Pounds $ 10,568 $ 10,128 FX derivative contracts to be exchanged for Japanese Yen 20,283 25,342 FX derivative contracts to be exchanged for Euros 48,255 48,838 Interest rate swap contracts 21,912 22,442 $ 101,018 $ 106,750 After-tax net loss 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 twelve months are as follows (in thousands): Description of Derivative Contract After-Tax Net Loss in AOCI as of March 31, 2020 Amount Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (453 ) $ (453 ) Interest rate swap contracts (65 ) (52 ) $ (518 ) $ (505 ) Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in other comprehensive income (loss) (“OCI”) and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended March 31, 2020 2019 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Losses Reclassified from AOCI to Earnings Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other (losses) gains $ (2,080 ) $ (605 ) $ 1,309 $ 1,642 FX derivative contracts SG&A — (91 ) — (310 ) Interest rate swap contracts Interest expense — (28 ) — (13 ) $ (2,080 ) $ (724 ) $ 1,309 $ 1,319 We offset fair value amounts associated with our derivative instruments on our condensed 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. The following tables present the fair value and the location of derivative contracts reported on the condensed consolidated balance sheets (in thousands): March 31, 2020 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Interest rate swap contracts Accrued liabilities $ 245 Interest rate swap contracts Other long-term liabilities 31 FX derivative contracts Prepaid expenses and other current assets $ 6 Accrued liabilities 931 Total derivatives designated as hedging instruments 6 1,207 Derivatives Not Designated as Hedging Instruments FX derivative contracts Prepaid expenses and other current assets 6,623 Accrued liabilities 76 FX derivative contracts Accrued liabilities 7 — Total derivatives not designated as hedging instruments 6,630 76 Total derivatives $ 6,636 $ 1,283 December 31, 2019 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Interest rate swap contracts Accrued liabilities $ 313 Interest rate swap contracts Other long-term liabilities 61 FX derivative contracts Prepaid expenses and other current assets $ 148 Accrued liabilities 169 FX derivative contracts Accrued liabilities 387 Total derivatives designated as hedging instruments 535 543 Derivatives Not Designated as Hedging Instruments FX derivative contracts Accrued liabilities 26 Accrued liabilities 3,104 FX derivative contracts Prepaid expenses and other current assets 33 Total derivatives not designated as hedging instruments 26 3,137 Total derivatives $ 561 $ 3,680 (1) For the classification of inputs used to evaluate the fair value of our derivatives, refer to “ Note 7. Fair Value Measurements .” |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. 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 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 the 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 of 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. We continue to work diligently to remediate the FDA’s inspectional observations for the Munich facility, as well as the additional issues identified in the Warning Letter. We take these matters seriously and intend to respond timely and fully to the FDA’s requests. 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 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. This loaner program is available on a global basis. We anticipate that this program will continue until we are able to address customer needs through a broader solution that includes implementation of the risk mitigation strategies described above. We are currently implementing the vacuum and sealing upgrade program in as many countries as possible until all devices are upgraded. On October 11, 2018, after review of information provided by us, the FDA concluded that we could commence the vacuum and sealing upgrade program in the U.S., and 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. Furthermore, we continue to offer a no-charge deep disinfection service (deep cleaning service) for 3T device users as we receive the required regulatory approvals. The deep disinfection service was rolled out in Europe in the second half of 2015, and on April 12, 2018, the FDA agreed to allow us to move forward with the deep cleaning service in the U.S. thereby adding to the growing list of countries around the world in which we offer this service. 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 November and December 2016, and furthermore, the cost associated with the plan was reasonably estimable. At March 31, 2020 , the product remediation liability was $1.6 million . Refer to “ Note 5. Product Remediation Liability ” for additional information. Litigation Product Liability The Company is currently involved in litigation involving our 3T device. The litigation includes a class action complaint in the U.S. District Court for the Middle District of Pennsylvania, 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. The class action, filed in February 2016, consists 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. Members of the class seek declaratory relief that the 3T devices are defective and unsafe for intended uses, medical monitoring, damages, and attorneys’ fees. 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 pending 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 courts in the U.S. and in jurisdictions outside the U.S. continue to progress. As of April 29, 2020 , 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 includes 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 March 31, 2020 , the provision for these matters was $54.6 million . While the amount accrued represents our best estimate, the actual liability for resolution of these matters may vary from our estimate. The changes in the litigation provision liability during the three months ended March 31, 2020 are as follows (in thousands): Litigation Provision Liability Total litigation provision liability at December 31, 2019 $ 170,404 Payments (115,609 ) FX and other (225 ) Total litigation provision liability at March 31, 2020 54,570 Less current portion of litigation provision liability at March 31, 2020 43,025 Long-term portion of litigation provision liability at March 31, 2020 $ 11,545 Environmental Liability Our subsidiary, Sorin S.p.A. (“Sorin”) was created as a result of a spin-off (the “Sorin spin-off”) from SNIA S.p.A. (“SNIA”) in January 2004. 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 are 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 have also 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. 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 $319,915 as of March 31, 2020 ) 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 $626.8 million as of March 31, 2020 ). Additionally the Court issued a separate order, staying the proceeding until a Panel of three experts can assess the environmental damages, the costs of clean-up, and the costs that the Public Administrations has already borne for the clean-up of the sites to allow the Court to decide on the second claim of the Public Administration against LivaNova, (i.e., to refund the Public Administrations for the SNIA environmental liabilities). In the interim, we are appealing the decision to the Italian Supreme Court (Corte di Cassazione). We have not recognized an expense in connection with this matter because any potential loss is not currently probable or reasonably estimable. In addition, we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. 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. The Patent Office instituted an IPR of all the challenged claims. The Court has stayed the litigation pending the outcome of the IPR proceeding. We have not recognized an expense in connection with this matter because any potential loss is not currently probable or reasonably estimable. In addition, we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. 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 an expense related to this matter because any potential loss is not currently probable or reasonably estimable. In addition, we cannot reasonably estimate a range of potential loss, if any, that may result from this matter. Tax Litigation In a tax audit report received on October 30, 2009, the Regional Internal Revenue Office of Lombardy (the “Internal Revenue Office”) informed Sorin Group Italia S.r.l. that, among several issues, it was disallowing in part (for a total of €102.6 million (approximately $112.4 million as of March 31, 2020 ), related to tax years 2002 through 2006) a tax-deductible write down of the investment in the U.S. company, Cobe Cardiovascular Inc., which Sorin Group Italia S.r.l. recognized in 2002 and deducted in five equal installments, beginning in 2002. In December 2009, the Internal Revenue Office issued notices of assessment for 2004. In December 2010 and October 2011, the Internal Revenue Office issued notices of assessment for 2005 and 2006, respectively. We challenged all three notices of assessment (for 2004, 2005 and 2006) before the relevant Provincial Tax Courts. The preliminary challenges filed for 2004, 2005 and 2006 were denied at the first jurisdictional level. We appealed these decisions. The appeal submitted against the first-level decision for 2004 was successful. The Internal Revenue Office appealed this second-level decision to the Italian Supreme Court (Corte di Cassazione) on February 3, 2017. The Italian Supreme Court’s decision is pending. The appeals submitted against the first-level decisions for 2005 and 2006 were rejected. We appealed these adverse decisions to the Italian Supreme Court. On November 16, 2018, the Supreme Court returned the decisions for years 2005 and 2006 to the previous-level Court (Regional Tax Court) due to lack of substance of the motivation given in the 2 nd level judgments that were appealed. In November 2012, the Internal Revenue Office served a notice of assessment for 2007, and in July 2013, served a notice of assessment for 2008. In these matters the Internal Revenue Office claims an increase in taxable income due to a reduction (similar to the previous notices of assessment for 2004, 2005 and 2006) of the losses reported by Sorin Group Italia S.r.l. for the 2002, 2003 and 2004 tax periods, and subsequently utilized in 2007 and 2008. We challenged both notices of assessment. The Provincial Tax Court of Milan has stayed its decision for years 2007 and 2008 pending resolution of the litigation regarding years 2004, 2005, and 2006. The total amount of losses in dispute is €62.6 million (approximately $68.6 million as of March 31, 2020 ). We have continuously reassessed our potential exposure in these matters, taking into account the recent, and generally adverse, trend to Italian taxpayers in this type of litigation. Although we believe that our defensive arguments are strong, noting the adverse trend in some of the court decisions, we have recognized a reserve for an uncertain tax position for the full amount of the potential liability. On May 31, 2019, we filed an application to settle the litigation according to law N. 136/2018 and paid the required settlement balance of €1.9 million . As per law N. 136/2018, the Italian Revenue Agency will review the settlement and decide to accept or reject the application by July 31, 2020. Until the settlement is accepted by the Italian Revenue Agency, we will continue to reserve for the full amount of the potential liability, by recognizing a €15.5 million reserve for uncertain tax position ( $17.0 million as of March 31, 2020 ), net of the settlement payment. 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 11. Stockholders’ Equity The tables below present the condensed consolidated statement of stockholders’ equity as of and for the three months ended March 31, 2020 and 2019 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity December 31, 2019 49,411 $ 76,257 $ 1,734,870 $ (1,263 ) $ (19,392 ) $ (406,755 ) $ 1,383,717 Adoption of ASU No. 2016-13 (1) — — — — — (639 ) (639 ) Stock-based compensation plans 3 2 5,003 173 — — 5,178 Net income — — — — — 37,583 37,583 Other comprehensive loss — — — — (33,131 ) — (33,131 ) March 31, 2020 49,414 $ 76,259 $ 1,739,873 $ (1,090 ) $ (52,523 ) $ (369,811 ) $ 1,392,708 December 31, 2018 49,323 $ 76,144 $ 1,705,111 $ (1,462 ) $ (24,476 ) $ (251,579 ) $ 1,503,738 Stock-based compensation plans 6 7 2,006 141 — — 2,154 Net loss — — — — — (14,849 ) (14,849 ) Other comprehensive loss — — — — (4,237 ) — (4,237 ) March 31, 2019 49,329 $ 76,151 $ 1,707,117 $ (1,321 ) $ (28,713 ) $ (266,428 ) $ 1,486,806 (1) Refer to “ Note 17. New Accounting Pronouncements ” 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 three months ended March 31, 2020 and 2019 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) ( 1) Total As of December 31, 2019 $ 513 $ (19,905 ) $ (19,392 ) Other comprehensive loss before reclassifications, before tax (2,080 ) (32,100 ) (34,180 ) Tax benefit 498 498 Other comprehensive loss before reclassifications, net of tax (1,582 ) (32,100 ) (33,682 ) Reclassification of loss from accumulated other comprehensive loss, before tax 724 724 Reclassification of tax benefit (173 ) (173 ) Reclassification of gain from accumulated other comprehensive loss, after tax 551 — 551 Net current-period other comprehensive loss, net of tax (1,031 ) (32,100 ) (33,131 ) As of March 31, 2020 $ (518 ) $ (52,005 ) $ (52,523 ) As of December 31, 2018 $ (944 ) $ (23,532 ) $ (24,476 ) Other comprehensive income (loss) before reclassifications, before tax 1,309 (4,229 ) (2,920 ) Tax expense (314 ) — (314 ) Other comprehensive income (loss) before reclassifications, net of tax 995 (4,229 ) (3,234 ) Reclassification of gain from accumulated other comprehensive loss, before tax (1,319 ) — (1,319 ) Reclassification of tax expense 316 — 316 Reclassification of gain from accumulated other comprehensive loss, after tax (1,003 ) — (1,003 ) Net current-period other comprehensive loss, net of tax (8 ) (4,229 ) (4,237 ) As of March 31, 2019 $ (952 ) $ (27,761 ) $ (28,713 ) (1) Taxes are 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. |
Stock-Based Incentive Plans
Stock-Based Incentive Plans | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Incentive Plans | Note 12. Stock-Based Incentive Plans Stock-based incentive plans compensation expense is as follows (in thousands): Three Months Ended March 31, 2020 2019 Service-based restricted stock units (“RSUs”) $ 4,478 $ 2,970 Service-based stock appreciation rights (“SARs”) 2,684 2,008 Market performance-based restricted stock units 896 551 Operating performance-based restricted stock units 695 971 Employee stock purchase plan 290 372 Total stock-based compensation expense $ 9,043 $ 6,872 During the three months ended March 31, 2020 , 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 over four years , subject to forfeiture unless service conditions are met. Market performance-based awards cliff vest after three years subject to the rank of our total shareholder return for the three -year period ending December 31, 2022 relative to the total shareholder returns for a peer group of companies. Operating performance-based awards cliff vest after three years subject to the achievement of certain thresholds of cumulative adjusted free cash flow for the three year period ending December 31, 2022. Compensation expense related to awards granted during 2020 for the three months ended March 31, 2020 was $0.4 million . Stock-based compensation agreements issued during the three months ended March 31, 2020 , representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Three Months Ended March 31, 2020 Shares Weighted Average Grant Date Fair Value Service-based SARs 1,133 $ 15.73 Service-based RSUs 459 $ 43.57 Market performance-based RSUs 93 $ 39.83 Operating performance-based RSUs 93 $ 43.57 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 13. Income Taxes Our effective income tax rate from continuing operations for the three months ended March 31, 2020 was 744.4% compared with 30.8% for the three months ended March 31, 2019 . 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 three months ended March 31, 2019 , the change in the effective tax rate for the three months ended March 31, 2020 was primarily attributable to a realized discrete tax benefit of $41.3 million related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) as compared to the realized benefit from discrete tax items, including the release of an uncertain tax position, during the three months ended March 31, 2019. We operate in multiple jurisdictions throughout the world, and our tax returns are periodically audited or subjected to review by tax authorities. As a result, there is an uncertainty in income taxes recognized in our financial statements. Tax benefits totaling $12.6 million and $12.9 million were unrecognized as of March 31, 2020 and December 31, 2019 , respectively. 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 could decrease by up to approximately $11.7 million . We monitor income tax developments in countries where we conduct business. On March 27, 2020, the U.S. enacted the CARES Act which provided for a 5-year loss carryback for losses incurred in 2018-2020. We recorded a discrete tax benefit of $41.3 million to account for the effect of the CARES Act. Further regulations and notices as well as state legislative changes addressing conformity to the CARES Act are still pending. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 14. Earnings Per Share Reconciliation of the shares used in the basic and diluted earnings per share computations for the three months ended March 31, 2020 and 2019 are as follows (in thousands): Three Months Ended March 31, 2020 2019 Basic weighted average shares outstanding 48,485 48,246 Add effects of share-based compensation instruments (1) 284 — Diluted weighted average shares outstanding 48,769 48,246 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 1.5 million and 3.3 million for the three months ended March 31, 2020 and 2019 , respectively, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Informat
Geographic and Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Geographic and Segment Information | Note 15. Geographic and 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 two reportable segments: Cardiovascular and Neuromodulation. The Cardiovascular segment generates its revenue from the development, production and sale of cardiopulmonary products, heart valves and related products and advanced circulatory support. Cardiopulmonary products include oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories. Heart valves include mechanical heart valves, tissue heart valves, related repair products and minimally invasive surgical instruments. Advanced circulatory support includes temporary life support product kits that can include a combination of pumps, oxygenators, and cannulae. Our Neuromodulation segment generates its revenue from the design, development and marketing of neuromodulation therapy systems for the treatment of drug-resistant epilepsy, difficult-to-treat depression (“DTD”) and obstructive sleep apnea. 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. “Other” includes 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 they each develop and manufacture or distribute. We define segment income as operating income before merger and integration, restructuring and amortization of intangibles. 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): Three Months Ended March 31, 2020 2019 Cardiopulmonary United States $ 36,858 $ 39,123 Europe 34,234 35,561 Rest of World 45,275 46,886 116,367 121,570 Heart Valves United States 3,373 4,356 Europe 9,529 10,513 Rest of World 12,309 10,804 25,211 25,673 Advanced Circulatory Support United States 10,076 8,033 Europe 370 119 Rest of World 45 96 10,491 8,248 Cardiovascular United States 50,307 51,512 Europe 44,133 46,193 Rest of World 57,629 57,786 152,069 155,491 Neuromodulation United States 73,276 76,886 Europe 10,583 10,659 Rest of World 5,798 7,104 89,657 94,649 Other 671 661 Totals United States 123,583 128,398 Europe (1) 54,716 56,852 Rest of World 64,098 65,551 Total (2) $ 242,397 $ 250,801 (1) 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. (2) 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. The table below presents a reconciliation of segment income (loss) from continuing operations to consolidated loss from continuing operations before tax (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 8,681 $ 989 Neuromodulation 33,858 21,631 Other (26,610 ) (28,299 ) Total reportable segment income (loss) from continuing operations 15,929 (5,679 ) Merger and integration expenses 3,474 3,251 Restructuring expenses 1,580 2,533 Amortization of intangibles 10,267 9,316 Operating income (loss) from continuing operations 608 (20,779 ) Interest income 148 249 Interest expense (4,849 ) (1,662 ) Foreign exchange and other (losses) gains (1,914 ) 729 Loss from continuing operations before tax $ (6,007 ) $ (21,463 ) Assets by segment are as follows (in thousands): March 31, 2020 December 31, 2019 Cardiovascular $ 1,453,378 $ 1,546,520 Neuromodulation 685,190 749,069 Other 315,868 116,208 Total assets $ 2,454,436 $ 2,411,797 Capital expenditures by segment are as follows (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 5,292 $ 3,551 Neuromodulation 5,239 403 Other 1,843 929 Total $ 12,374 $ 4,883 The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2020 were as follows (in thousands): Neuromodulation Cardiovascular Total December 31, 2019 $ 398,754 $ 517,040 $ 915,794 Foreign currency adjustments — (27,221 ) (27,221 ) March 31, 2020 $ 398,754 $ 489,819 $ 888,573 Property, plant and equipment, net by geography are as follows (in thousands): March 31, 2020 December 31, 2019 United States $ 64,473 $ 61,410 Europe 110,669 110,270 Rest of World 8,392 9,674 Total $ 183,534 $ 181,354 |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Financial Information | Note 16. Supplemental Financial Information Inventories, net consisted of the following (in thousands): March 31, 2020 December 31, 2019 Raw materials $ 44,391 $ 45,225 Work-in-process 17,947 14,581 Finished goods 107,918 104,348 $ 170,256 $ 164,154 Inventories are reported net of the provision for obsolescence. This provision, which reflects normal obsolescence and includes components that are phased out or expired, totaled $13.0 million and $12.7 million at March 31, 2020 and December 31, 2019 , respectively. Accrued liabilities and other consisted of the following (in thousands): March 31, 2020 December 31, 2019 Contingent consideration (1) $ 14,809 $ 22,953 Operating lease liabilities 11,371 11,110 Legal and administrative costs 8,952 11,066 Contract liabilities 7,313 6,728 Research and development costs 5,896 5,160 Provisions for agents, returns and other 3,558 3,922 Restructuring related liabilities (2) 2,697 4,315 Product remediation (3) 1,636 3,251 Derivative contract liabilities (4) 1,245 3,173 Other amounts payable to MicroPort Scientific Corporation 597 1,340 CRM purchase price adjustment payable to MicroPort Scientific Corporation — 14,891 Other accrued expenses 35,465 32,191 $ 93,539 $ 120,100 (1) Refer to “ Note 7. Fair Value Measurements ” (2) Refer to “ Note 4. Restructuring ” (3) Refer to “ Note 5. Product Remediation Liability ” (4) Refer to “ Note 9. Derivatives and Risk Management ” As of March 31, 2020 and December 31, 2019 , contract liabilities of $9.1 million and $8.6 million , respectively, are included within accrued liabilities and other long-term liabilities on the condensed consolidated balance sheets. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | Note 17. New Accounting Pronouncements Adoption of New Accounting Pronouncements The following table provides a description of our adoption of new Accounting Standards Updates (“ASUs”) issued by the FASB and the impact of the adoption on our condensed financial statements: Issue Date & Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters June 2016 The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We adopted the update effective January 1, 2020, applying this standard to our accounts receivable by use of a provision matrix approach. This approach utilizes historical loss rates based on the number of days past due, adjusted to reflect current economic conditions and forecasts of future economic conditions. January 1, 2020 We recognized the following cumulative-effect adjustments, including to retained earnings, upon adoption at January 1, 2020: Accounts receivable, net decreased $0.6 million and accumulated deficit increased $0.6 million. January 2017 This update removes step 2 of the goodwill impairment test that compares the implied fair value of goodwill with its carrying amount. Instead, an impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge will be recorded by the amount a reporting unit’s carrying amount exceeds its fair value. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update removes, modifies and adds certain disclosure requirements related to fair value measurements. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update clarifies and aligns the accounting for implementation costs for hosting arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. Future Adoption of New Accounting Pronouncements The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted: Issue Date & Standard Description Projected Date of Adoption Effect on Financial Statements or Other Significant Matters 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 This update adds and removes certain disclosure requirements related to defined benefit plans. This ASU is to be implemented on a retrospective basis for all periods presented with early adoption permitted. January 1, 2021 We do not expect the adoption of this update to have a material effect on our condensed consolidated financial statement disclosures. |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Financial Statements (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of LivaNova as of, and for the three months ended March 31, 2020 and 2019 , have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated balance sheet of LivaNova at December 31, 2019 has been derived from audited financial statements contained in our 2019 Form 10-K, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair statement of the operating results of LivaNova and its subsidiaries, for the three months ended March 31, 2020 , and are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 . The financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto accompanying our 2019 Form 10-K. |
Derivatives | If the derivative qualifies for hedge accounting, changes in the fair value of the derivative will be recorded in accumulated other comprehensive income (“AOCI”) until the hedged item is recognized in earnings upon settlement/termination. FX derivative gains and losses in AOCI are reclassified to our condensed consolidated statements of income (loss) as shown in the tables below and interest rate swap gains and losses in AOCI are reclassified to interest expense on our condensed consolidated statements of income (loss). We evaluate hedge effectiveness at inception. Cash flows from derivative contracts are reported as operating activities on our condensed consolidated statements of cash flows. |
Adoption of New Accounting Pronouncements | Adoption of New Accounting Pronouncements The following table provides a description of our adoption of new Accounting Standards Updates (“ASUs”) issued by the FASB and the impact of the adoption on our condensed financial statements: Issue Date & Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters June 2016 The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We adopted the update effective January 1, 2020, applying this standard to our accounts receivable by use of a provision matrix approach. This approach utilizes historical loss rates based on the number of days past due, adjusted to reflect current economic conditions and forecasts of future economic conditions. January 1, 2020 We recognized the following cumulative-effect adjustments, including to retained earnings, upon adoption at January 1, 2020: Accounts receivable, net decreased $0.6 million and accumulated deficit increased $0.6 million. January 2017 This update removes step 2 of the goodwill impairment test that compares the implied fair value of goodwill with its carrying amount. Instead, an impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge will be recorded by the amount a reporting unit’s carrying amount exceeds its fair value. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update removes, modifies and adds certain disclosure requirements related to fair value measurements. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update clarifies and aligns the accounting for implementation costs for hosting arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. Future Adoption of New Accounting Pronouncements The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted: Issue Date & Standard Description Projected Date of Adoption Effect on Financial Statements or Other Significant Matters 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 This update adds and removes certain disclosure requirements related to defined benefit plans. This ASU is to be implemented on a retrospective basis for all periods presented with early adoption permitted. January 1, 2021 We do not expect the adoption of this update to have a material effect on our condensed consolidated financial statement disclosures. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Components of Discontinued Operations | The following table represents the financial results of our former CRM business presented as net loss from discontinued operations, net of tax on our condensed consolidated statements of income (loss) (in thousands): Three Months Ended March 31, 2020 Loss on sale of CRM $ (1,080 ) Operating loss from discontinued operations (1,080 ) Loss from discontinued operations before tax (1,080 ) Income tax benefit (85 ) Net loss from discontinued operations $ (995 ) |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The following table presents the accruals and other reserves recorded in connection with our restructuring plans (in thousands): Employee Severance and Other Termination Costs Other Total Balance at December 31, 2019 $ 4,097 $ 1,400 $ 5,497 Charges 1,487 93 1,580 Cash payments and other (4,172 ) (208 ) (4,380 ) Balance at March 31, 2020 (1) $ 1,412 $ 1,285 $ 2,697 (1) Cumulatively through March 31, 2020 , we have recognized a total of $113.1 million in restructuring expense from all of our restructuring plans. |
Schedule of Restructuring Expense by Reportable Segment | The following table presents restructuring expense by reportable segment (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 686 $ 422 Neuromodulation 503 432 Other 391 1,679 Total $ 1,580 $ 2,533 |
Product Remediation Liability (
Product Remediation Liability (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Product Remediation [Abstract] | |
Product Liability Contingencies | The following table provides a reconciliation of the beginning and ending balance of the product remediation liability (in thousands): Balance at December 31, 2019 $ 3,251 Remediation activity (1,538 ) Effect of changes in foreign currency exchange rates (77 ) Balance at March 31, 2020 (1) $ 1,636 (1) At March 31, 2020 , the product remediation liability balance is included within accrued liabilities and other on the condensed consolidated balance sheet. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments [Abstract] | |
Schedule of Long-term Investments | The below equity investments are included in investments on the condensed consolidated balance sheets (in thousands): Equity Investments Without Readily Determinable Fair Values March 31, 2020 December 31, 2019 Respicardia Inc. (1) $ 17,706 $ 17,706 ALung Technologies, Inc. (2) 3,000 — Ceribell, Inc. 3,000 3,000 ShiraTronics, Inc. 2,045 2,045 Rainbow Medical Ltd. 1,073 1,099 MD Start II 1,095 1,121 Highlife S.A.S. 1,039 1,064 Other 770 770 29,728 26,805 Equity method investment 312 451 $ 30,040 $ 27,256 (1) Respicardia Inc. (“Respicardia”) is a privately funded U.S. company developing an implantable device designed to restore a more natural breathing pattern during sleep in patients with central sleep apnea by transvenously stimulating the phrenic nerve. We have a loan outstanding to Respicardia, with a carrying amount of $0.6 million and $0.6 million as of March 31, 2020 and December 31, 2019 , respectively, which is included in prepaid expenses and other current assets on the condensed consolidated balance sheet. (2) During the first quarter of 2020, we invested in ALung Technologies, Inc. (“ALung”). ALung is a privately held medical device company focused on creating advanced medical devices for treating respiratory failure. ALung’s Hemolung Respiratory Assist System is a dialysis-like alternative or supplement to mechanical ventilation which removes carbon dioxide directly from the blood in patients with acute respiratory failure. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements 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): Fair Value as of March 31, 2020 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (foreign currency exchange rate “FX”) $ 6 $ — $ 6 $ — Derivative assets - freestanding instruments (FX) 6,630 — 6,630 — $ 6,636 $ — $ 6,636 $ — Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 931 $ — $ 931 $ — Derivative liabilities - designated as cash flow hedges (interest rate swaps) 276 — 276 — Derivative liabilities - freestanding instruments (FX) 76 — 76 — Contingent consideration 114,534 — — 114,534 $ 115,817 $ — $ 1,283 $ 114,534 Fair Value as of December 31, 2019 Fair Value Measurements Using Inputs Considered as: Level 1 Level 2 Level 3 Assets: Derivative assets - designated as cash flow hedges (FX) $ 535 $ — $ 535 $ — Derivative assets - freestanding instruments (FX) 26 — 26 — $ 561 $ — $ 561 $ — Liabilities: Derivative liabilities - designated as cash flow hedges (FX) $ 169 $ — $ 169 $ — Derivative liabilities - designated as cash flow hedges (interest rate swaps) 374 — 374 — Derivative liabilities - freestanding instruments (FX) 3,137 — 3,137 — Contingent consideration 137,349 — — 137,349 $ 141,029 $ — $ 3,680 $ 137,349 |
Reconciliation of Beginning and Ending Balances of Contingent Consideration | The following table provides a reconciliation of the beginning and ending balance of the contingent consideration liability (in thousands): Total contingent consideration liability at December 31, 2019 $ 137,349 Payments (1) (5,323 ) Changes in fair value (2) (3) (17,283 ) Effect of changes in foreign currency exchange rates (209 ) Total contingent consideration liability at March 31, 2020 114,534 Less current portion of contingent consideration liability at March 31, 2020 14,809 Long-term portion of contingent consideration liability at March 31, 2020 $ 99,725 (1) During the three months ended March 31, 2020 , we paid $5.0 million under the contingent consideration arrangement for the acquisition of TandemLife. Additionally, we made the final payment for the contingent consideration arrangement with Inversiones Drilltex SAS (“Drilltex”). (2) The change in fair value during the three months ended March 31, 2020 is primarily due to 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. (3) During the three months ended March 31, 2020 , the change in fair value resulted in a decrease of $8.8 million and $8.5 million recorded to cost of sales - exclusive of amortization and research and development, respectively. |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | The following table provides the fair value of contingent consideration arrangements by acquisition (in thousands): March 31, 2020 December 31, 2019 ImThera Medical, Inc. (“ImThera”) $ 98,863 $ 113,503 TandemLife 9,721 17,311 Miami Instruments 5,252 5,338 Drilltex — 294 Other 698 903 $ 114,534 $ 137,349 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | Both arrangements are Level 3 fair value measurements and include the following significant unobservable inputs: ImThera Acquisition Valuation Technique Unobservable Input Ranges Regulatory milestone-based payment Discounted cash flow Discount rate 6.5 % - 6.6% Probability of payment 85 % - 95% Projected payment years 2023 - 2024 Sales-based earnout Monte Carlo simulation Risk-adjusted discount rate 12.0% Credit risk discount rate 6.6 % - 6.9% Revenue volatility 32.5% Probability of payment 85 % - 95% Projected years of earnout 2024 - 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: TandemLife Acquisition Valuation Technique Unobservable Input Ranges Regulatory milestone-based payments Discounted cash flow Discount rate 5.8 % - 5.9% Probability of payments 75.0% Projected payment years 2020 The Miami Instruments business combination involved a contingent consideration arrangement composed of potential cash payments upon the achievement on certain regulatory milestones. The arrangement is a Level 3 fair value measurement and includes the following significant unobservable inputs: Miami Instruments Valuation Technique Unobservable Input Ranges Regulatory milestone-based payments Discounted cash flow Discount rate 5.8 % - 5.9% Probability of payments 82 % - 95% Projected payment years 2020 - 2021 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The outstanding principal amount of our long-term debt as of March 31, 2020 and December 31, 2019 was as follows (in thousands, except interest rates): March 31, 2020 December 31, 2019 Maturity Interest Rate 2019 Debt Facility (1) $ 345,096 $ 184,275 March 2022 1.40 % - 3.33% 2017 European Investment Bank (2) 103,570 103,570 June 2026 2.82 % - 2.87% 2014 European Investment Bank (3) 27,390 28,053 June 2021 1.04% Mediocredito Italiano 6,088 6,222 December 2023 0.50 % - 2.96% Bank of America Merrill Lynch Banco Múltiplo S.A. 6,514 8,422 July 2021 7.55% Bank of America, U.S. 2,020 2,004 January 2021 3.48% Other 1,023 965 Total long-term facilities 491,701 333,511 Less current portion of long-term debt 176,140 73,181 Total long-term debt $ 315,561 $ 260,330 (1) The facility agreement with Bank of America Merrill Lynch International DAC, Barclays Bank PLC, BNP Paribas (London Branch) and Intesa Sanpaolo S.P.A. provides a multi-currency term loan facility in an aggregate amount of $350 million and terminates on March 26, 2022 (the “2019 Debt Facility”). Principal repayments of 20% of the outstanding borrowings under the 2019 Debt Facility are due in September 2020, March 2021 and September 2021, with the remainder of the outstanding borrowings due in March 2022. (2) The 2017 European Investment Bank (“2017 EIB”) loan was obtained to support certain product development projects. The interest rate for the 2017 EIB loan is reset by the lender each quarter based on LIBOR. Interest payments are paid quarterly and principal payments are paid semi-annually. (3) The 2014 European Investment Bank (“2014 EIB”) loan was obtained in July 2014 to support product development projects. The interest rate for the 2014 EIB loan is reset by the lender each quarter based on the Euribor. Interest payments are paid quarterly, and principal payments are paid semi-annually. |
Derivatives and Risk Manageme_2
Derivatives and Risk Management (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amounts of Derivative Contracts Designated Cash Flow Hedges | The gross notional amounts of open derivative contracts designated as cash flow hedges at March 31, 2020 and December 31, 2019 were as follows (in thousands): Description of Derivative Contract March 31, 2020 December 31, 2019 FX derivative contracts to be exchanged for British Pounds $ 10,568 $ 10,128 FX derivative contracts to be exchanged for Japanese Yen 20,283 25,342 FX derivative contracts to be exchanged for Euros 48,255 48,838 Interest rate swap contracts 21,912 22,442 $ 101,018 $ 106,750 |
Schedule of Cash Flow Hedges Included in AOCI | After-tax net loss 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 twelve months are as follows (in thousands): Description of Derivative Contract After-Tax Net Loss in AOCI as of March 31, 2020 Amount Expected to be Reclassified to Earnings in Next 12 Months FX derivative contracts $ (453 ) $ (453 ) Interest rate swap contracts (65 ) (52 ) $ (518 ) $ (505 ) Pre-tax gains (losses) for derivative contracts designated as cash flow hedges recognized in other comprehensive income (loss) (“OCI”) and the amount reclassified to earnings from AOCI were as follows (in thousands): Three Months Ended March 31, 2020 2019 Description of Derivative Contract Location in Earnings of Reclassified Gain or Loss Losses Recognized in OCI Losses Reclassified from AOCI to Earnings Gains Recognized in OCI Gains (Losses) Reclassified from AOCI to Earnings FX derivative contracts Foreign exchange and other (losses) gains $ (2,080 ) $ (605 ) $ 1,309 $ 1,642 FX derivative contracts SG&A — (91 ) — (310 ) Interest rate swap contracts Interest expense — (28 ) — (13 ) $ (2,080 ) $ (724 ) $ 1,309 $ 1,319 |
Schedule of Fair Value of Derivative Instruments in Statement of Financial Position | The following tables present the fair value and the location of derivative contracts reported on the condensed consolidated balance sheets (in thousands): March 31, 2020 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Interest rate swap contracts Accrued liabilities $ 245 Interest rate swap contracts Other long-term liabilities 31 FX derivative contracts Prepaid expenses and other current assets $ 6 Accrued liabilities 931 Total derivatives designated as hedging instruments 6 1,207 Derivatives Not Designated as Hedging Instruments FX derivative contracts Prepaid expenses and other current assets 6,623 Accrued liabilities 76 FX derivative contracts Accrued liabilities 7 — Total derivatives not designated as hedging instruments 6,630 76 Total derivatives $ 6,636 $ 1,283 December 31, 2019 Asset Derivatives Liability Derivatives Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value (1) Balance Sheet Location Fair Value (1) Interest rate swap contracts Accrued liabilities $ 313 Interest rate swap contracts Other long-term liabilities 61 FX derivative contracts Prepaid expenses and other current assets $ 148 Accrued liabilities 169 FX derivative contracts Accrued liabilities 387 Total derivatives designated as hedging instruments 535 543 Derivatives Not Designated as Hedging Instruments FX derivative contracts Accrued liabilities 26 Accrued liabilities 3,104 FX derivative contracts Prepaid expenses and other current assets 33 Total derivatives not designated as hedging instruments 26 3,137 Total derivatives $ 561 $ 3,680 (1) For the classification of inputs used to evaluate the fair value of our derivatives, refer to “ Note 7. Fair Value Measurements .” |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation Provision Liabilities | The changes in the litigation provision liability during the three months ended March 31, 2020 are as follows (in thousands): Litigation Provision Liability Total litigation provision liability at December 31, 2019 $ 170,404 Payments (115,609 ) FX and other (225 ) Total litigation provision liability at March 31, 2020 54,570 Less current portion of litigation provision liability at March 31, 2020 43,025 Long-term portion of litigation provision liability at March 31, 2020 $ 11,545 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | The tables below present the condensed consolidated statement of stockholders’ equity as of and for the three months ended March 31, 2020 and 2019 (in thousands): Ordinary Shares Ordinary Shares - Amount Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity December 31, 2019 49,411 $ 76,257 $ 1,734,870 $ (1,263 ) $ (19,392 ) $ (406,755 ) $ 1,383,717 Adoption of ASU No. 2016-13 (1) — — — — — (639 ) (639 ) Stock-based compensation plans 3 2 5,003 173 — — 5,178 Net income — — — — — 37,583 37,583 Other comprehensive loss — — — — (33,131 ) — (33,131 ) March 31, 2020 49,414 $ 76,259 $ 1,739,873 $ (1,090 ) $ (52,523 ) $ (369,811 ) $ 1,392,708 December 31, 2018 49,323 $ 76,144 $ 1,705,111 $ (1,462 ) $ (24,476 ) $ (251,579 ) $ 1,503,738 Stock-based compensation plans 6 7 2,006 141 — — 2,154 Net loss — — — — — (14,849 ) (14,849 ) Other comprehensive loss — — — — (4,237 ) — (4,237 ) March 31, 2019 49,329 $ 76,151 $ 1,707,117 $ (1,321 ) $ (28,713 ) $ (266,428 ) $ 1,486,806 |
Schedule of 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 three months ended March 31, 2020 and 2019 (in thousands): Change in Unrealized Gain (Loss) on Derivatives Foreign Currency Translation Adjustments Gain (Loss) ( 1) Total As of December 31, 2019 $ 513 $ (19,905 ) $ (19,392 ) Other comprehensive loss before reclassifications, before tax (2,080 ) (32,100 ) (34,180 ) Tax benefit 498 498 Other comprehensive loss before reclassifications, net of tax (1,582 ) (32,100 ) (33,682 ) Reclassification of loss from accumulated other comprehensive loss, before tax 724 724 Reclassification of tax benefit (173 ) (173 ) Reclassification of gain from accumulated other comprehensive loss, after tax 551 — 551 Net current-period other comprehensive loss, net of tax (1,031 ) (32,100 ) (33,131 ) As of March 31, 2020 $ (518 ) $ (52,005 ) $ (52,523 ) As of December 31, 2018 $ (944 ) $ (23,532 ) $ (24,476 ) Other comprehensive income (loss) before reclassifications, before tax 1,309 (4,229 ) (2,920 ) Tax expense (314 ) — (314 ) Other comprehensive income (loss) before reclassifications, net of tax 995 (4,229 ) (3,234 ) Reclassification of gain from accumulated other comprehensive loss, before tax (1,319 ) — (1,319 ) Reclassification of tax expense 316 — 316 Reclassification of gain from accumulated other comprehensive loss, after tax (1,003 ) — (1,003 ) Net current-period other comprehensive loss, net of tax (8 ) (4,229 ) (4,237 ) As of March 31, 2019 $ (952 ) $ (27,761 ) $ (28,713 ) (1) Taxes are 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. |
Stock-Based Incentive Plans (Ta
Stock-Based Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation, Stock Options, Activity | Stock-based compensation agreements issued during the three months ended March 31, 2020 , representing potential shares and their weighted average grant date fair values by type follows (shares in thousands, fair value in dollars): Three Months Ended March 31, 2020 Shares Weighted Average Grant Date Fair Value Service-based SARs 1,133 $ 15.73 Service-based RSUs 459 $ 43.57 Market performance-based RSUs 93 $ 39.83 Operating performance-based RSUs 93 $ 43.57 Stock-based incentive plans compensation expense is as follows (in thousands): Three Months Ended March 31, 2020 2019 Service-based restricted stock units (“RSUs”) $ 4,478 $ 2,970 Service-based stock appreciation rights (“SARs”) 2,684 2,008 Market performance-based restricted stock units 896 551 Operating performance-based restricted stock units 695 971 Employee stock purchase plan 290 372 Total stock-based compensation expense $ 9,043 $ 6,872 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Income Per Share | Reconciliation of the shares used in the basic and diluted earnings per share computations for the three months ended March 31, 2020 and 2019 are as follows (in thousands): Three Months Ended March 31, 2020 2019 Basic weighted average shares outstanding 48,485 48,246 Add effects of share-based compensation instruments (1) 284 — Diluted weighted average shares outstanding 48,769 48,246 (1) Excluded from the computation of diluted earnings per share were stock options, SARs and restricted share units totaling 1.5 million and 3.3 million for the three months ended March 31, 2020 and 2019 , respectively, because to include them would have been anti-dilutive under the treasury stock method. |
Geographic and Segment Inform_2
Geographic and Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Revenue from External Customers by Geographic Areas | The table below presents net sales by operating segment and geographic region (in thousands): Three Months Ended March 31, 2020 2019 Cardiopulmonary United States $ 36,858 $ 39,123 Europe 34,234 35,561 Rest of World 45,275 46,886 116,367 121,570 Heart Valves United States 3,373 4,356 Europe 9,529 10,513 Rest of World 12,309 10,804 25,211 25,673 Advanced Circulatory Support United States 10,076 8,033 Europe 370 119 Rest of World 45 96 10,491 8,248 Cardiovascular United States 50,307 51,512 Europe 44,133 46,193 Rest of World 57,629 57,786 152,069 155,491 Neuromodulation United States 73,276 76,886 Europe 10,583 10,659 Rest of World 5,798 7,104 89,657 94,649 Other 671 661 Totals United States 123,583 128,398 Europe (1) 54,716 56,852 Rest of World 64,098 65,551 Total (2) $ 242,397 $ 250,801 (1) 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. (2) 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. |
Schedule of Segment Reporting Information, by Segment | The table below presents a reconciliation of segment income (loss) from continuing operations to consolidated loss from continuing operations before tax (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 8,681 $ 989 Neuromodulation 33,858 21,631 Other (26,610 ) (28,299 ) Total reportable segment income (loss) from continuing operations 15,929 (5,679 ) Merger and integration expenses 3,474 3,251 Restructuring expenses 1,580 2,533 Amortization of intangibles 10,267 9,316 Operating income (loss) from continuing operations 608 (20,779 ) Interest income 148 249 Interest expense (4,849 ) (1,662 ) Foreign exchange and other (losses) gains (1,914 ) 729 Loss from continuing operations before tax $ (6,007 ) $ (21,463 ) Assets by segment are as follows (in thousands): March 31, 2020 December 31, 2019 Cardiovascular $ 1,453,378 $ 1,546,520 Neuromodulation 685,190 749,069 Other 315,868 116,208 Total assets $ 2,454,436 $ 2,411,797 Capital expenditures by segment are as follows (in thousands): Three Months Ended March 31, 2020 2019 Cardiovascular $ 5,292 $ 3,551 Neuromodulation 5,239 403 Other 1,843 929 Total $ 12,374 $ 4,883 |
Schedule of Goodwill | The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2020 were as follows (in thousands): Neuromodulation Cardiovascular Total December 31, 2019 $ 398,754 $ 517,040 $ 915,794 Foreign currency adjustments — (27,221 ) (27,221 ) March 31, 2020 $ 398,754 $ 489,819 $ 888,573 |
Long-lived Assets by Geographic Areas | Property, plant and equipment, net by geography are as follows (in thousands): March 31, 2020 December 31, 2019 United States $ 64,473 $ 61,410 Europe 110,669 110,270 Rest of World 8,392 9,674 Total $ 183,534 $ 181,354 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | Inventories, net consisted of the following (in thousands): March 31, 2020 December 31, 2019 Raw materials $ 44,391 $ 45,225 Work-in-process 17,947 14,581 Finished goods 107,918 104,348 $ 170,256 $ 164,154 |
Accrued Liabilities | Accrued liabilities and other consisted of the following (in thousands): March 31, 2020 December 31, 2019 Contingent consideration (1) $ 14,809 $ 22,953 Operating lease liabilities 11,371 11,110 Legal and administrative costs 8,952 11,066 Contract liabilities 7,313 6,728 Research and development costs 5,896 5,160 Provisions for agents, returns and other 3,558 3,922 Restructuring related liabilities (2) 2,697 4,315 Product remediation (3) 1,636 3,251 Derivative contract liabilities (4) 1,245 3,173 Other amounts payable to MicroPort Scientific Corporation 597 1,340 CRM purchase price adjustment payable to MicroPort Scientific Corporation — 14,891 Other accrued expenses 35,465 32,191 $ 93,539 $ 120,100 (1) Refer to “ Note 7. Fair Value Measurements ” (2) Refer to “ Note 4. Restructuring ” (3) Refer to “ Note 5. Product Remediation Liability ” (4) Refer to “ Note 9. Derivatives and Risk Management ” |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table provides a description of our adoption of new Accounting Standards Updates (“ASUs”) issued by the FASB and the impact of the adoption on our condensed financial statements: Issue Date & Standard Description Date of Adoption Effect on Financial Statements or Other Significant Matters June 2016 The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We adopted the update effective January 1, 2020, applying this standard to our accounts receivable by use of a provision matrix approach. This approach utilizes historical loss rates based on the number of days past due, adjusted to reflect current economic conditions and forecasts of future economic conditions. January 1, 2020 We recognized the following cumulative-effect adjustments, including to retained earnings, upon adoption at January 1, 2020: Accounts receivable, net decreased $0.6 million and accumulated deficit increased $0.6 million. January 2017 This update removes step 2 of the goodwill impairment test that compares the implied fair value of goodwill with its carrying amount. Instead, an impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge will be recorded by the amount a reporting unit’s carrying amount exceeds its fair value. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update removes, modifies and adds certain disclosure requirements related to fair value measurements. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. August 2018 This update clarifies and aligns the accounting for implementation costs for hosting arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. January 1, 2020 There was no material impact to our consolidated financial statements as a result of adopting this ASU. The following table provides a description of future adoptions of new accounting standards that may have an impact on our financial statements when adopted: Issue Date & Standard Description Projected Date of Adoption Effect on Financial Statements or Other Significant Matters 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 This update adds and removes certain disclosure requirements related to defined benefit plans. This ASU is to be implemented on a retrospective basis for all periods presented with early adoption permitted. January 1, 2021 We do not expect the adoption of this update to have a material effect on our condensed consolidated financial statement disclosures. |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Financial Statements (Narrative) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | |||||
Cash and cash equivalents | $ 125,823 | $ 61,137 | $ 50,776 | $ 47,204 | |
Goodwill | 888,573 | 915,794 | |||
Cardiovascular | |||||
Segment Reporting Information [Line Items] | |||||
Goodwill | 489,819 | 517,040 | |||
Goodwill impairment head room | 584.00% | ||||
Neuromodulation | |||||
Segment Reporting Information [Line Items] | |||||
Goodwill | 398,754 | $ 398,754 | |||
Goodwill impairment head room | 24.00% | ||||
In Process Research and Development | |||||
Segment Reporting Information [Line Items] | |||||
Research and development in process | $ 115,800 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | Jun. 12, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 888,573 | $ 915,794 | |
Miami Instruments | |||
Business Acquisition [Line Items] | |||
Fair value of consideration transferred | $ 17,000 | ||
Cash | 10,800 | ||
Contingent consideration | 6,000 | ||
Goodwill | 1,500 | ||
Miami Instruments | Developed technology and in process research and development | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 14,700 |
Discontinued Operations (Operat
Discontinued Operations (Operating Gains and Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net loss from discontinued operations | $ (995) | $ 0 |
CRM Business Franchise | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Loss on sale of CRM | (1,080) | |
Operating loss from discontinued operations | (1,080) | |
Loss from discontinued operations before tax | (1,080) | |
Income tax expense (benefit) | (85) | |
Net loss from discontinued operations | $ (995) |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) - CRM Business Franchise - Discontinued Operations - USD ($) $ in Millions | Apr. 30, 2018 | Mar. 31, 2020 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Consideration transferred | $ 195.9 | |
Consideration transferred, cash | $ 9.2 | |
Working capital adjustment | $ 16.4 | |
Operating loss from discontinued operations | $ 1.1 |
Restructuring Restructuring and
Restructuring Restructuring and Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Reserve [Roll Forward] | ||
Charges | $ 1,580 | $ 2,533 |
Restructuring costs incurred to date | 113,100 | |
Reorganization Plans | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 5,497 | |
Charges | 1,580 | |
Cash payments and other | (4,380) | |
Balance at end of period | 2,697 | |
Reorganization Plans | Employee Severance and Other Termination Costs | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 4,097 | |
Charges | 1,487 | |
Cash payments and other | (4,172) | |
Balance at end of period | 1,412 | |
Reorganization Plans | Other | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 1,400 | |
Charges | 93 | |
Cash payments and other | (208) | |
Balance at end of period | $ 1,285 |
Restructuring Restructuring Exp
Restructuring Restructuring Expense by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 1,580 | $ 2,533 |
Operating Segments | Cardiovascular | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 686 | 422 |
Operating Segments | Neuromodulation | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | 503 | 432 |
Other | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges | $ 391 | $ 1,679 |
Product Remediation Liability_2
Product Remediation Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Accrual for Environmental Loss Contingencies [Roll Forward] | |||
Product remediation, beginning | $ 3,251 | ||
Remediation activity | (1,538) | ||
Effect of changes in foreign currency exchange rates | (77) | ||
Product remediation, ending | 1,636 | ||
Product remediation expense | 1,466 | $ 2,947 | |
Product Liability | |||
Product Liability Contingency [Line Items] | |||
Litigation provision liability | $ 54,570 | $ 170,404 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of Equity Method Investments [Line Items] | ||
Investments | $ 29,728 | $ 26,805 |
Equity method investment | 312 | 451 |
Total investments | 30,040 | 27,256 |
Cost Method Investee | Respicardia Inc. | Prepaid expenses and other current assets | ||
Schedule of Equity Method Investments [Line Items] | ||
Outstanding loans | 600 | 600 |
Respicardia Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 17,706 | 17,706 |
ALung Technologies, Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 3,000 | 0 |
Ceribell, Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 3,000 | 3,000 |
ShiraTronics, Inc. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 2,045 | 2,045 |
Rainbow Medical Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 1,073 | 1,099 |
MD Start II | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 1,095 | 1,121 |
Highlife S.A.S. | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | 1,039 | 1,064 |
Other | ||
Schedule of Equity Method Investments [Line Items] | ||
Investments | $ 770 | $ 770 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Contingent consideration | $ 99,725 | $ 114,396 |
Fair Value, Recurring | ||
Assets: | ||
Total assets | 6,636 | 561 |
Liabilities: | ||
Contingent consideration | 114,534 | 137,349 |
Total liabilities | 115,817 | 141,029 |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 6 | 535 |
Liabilities: | ||
Derivative liabilities | 931 | 169 |
Fair Value, Recurring | Derivatives Designated as Hedging Instruments | Interest Rate Contract | ||
Liabilities: | ||
Derivative liabilities | 276 | 374 |
Fair Value, Recurring | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 6,630 | 26 |
Liabilities: | ||
Derivative liabilities | 76 | 3,137 |
Fair Value, Recurring | Level 1 | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Designated as Hedging Instruments | Interest Rate Contract | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 1 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 2 | ||
Assets: | ||
Total assets | 6,636 | 561 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Total liabilities | 1,283 | 3,680 |
Fair Value, Recurring | Level 2 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 6 | 535 |
Liabilities: | ||
Derivative liabilities | 931 | 169 |
Fair Value, Recurring | Level 2 | Derivatives Designated as Hedging Instruments | Interest Rate Contract | ||
Liabilities: | ||
Derivative liabilities | 276 | 374 |
Fair Value, Recurring | Level 2 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 6,630 | 26 |
Liabilities: | ||
Derivative liabilities | 76 | 3,137 |
Fair Value, Recurring | Level 3 | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Contingent consideration | 114,534 | 137,349 |
Total liabilities | 114,534 | 137,349 |
Fair Value, Recurring | Level 3 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 3 | Derivatives Designated as Hedging Instruments | Interest Rate Contract | ||
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Fair Value, Recurring | Level 3 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contract | ||
Assets: | ||
Derivative asset | 0 | 0 |
Liabilities: | ||
Derivative liabilities | $ 0 | $ 0 |
Fair Value Measurements (Contin
Fair Value Measurements (Contingent Consideration Reconciliation) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration paid | $ 5,000 | |
Deferred tax benefit | (17,283) | $ 9,457 |
Cost of sales - exclusive of amortization | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Deferred tax benefit | 8,800 | |
Research and development | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Deferred tax benefit | 8,500 | |
Fair Value, Recurring | Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Total contingent consideration liability at December 31, 2019 | 137,349 | |
Payments | (5,323) | |
Changes in fair value | (17,283) | |
Effect of changes in foreign currency exchange rates | (209) | |
Total contingent consideration liability at March 31, 2020 | 114,534 | |
Less current portion of contingent consideration liability at March 31, 2020 | 14,809 | |
Long-term portion of contingent consideration liability at March 31, 2020 | $ 99,725 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Contingent Consideration by Acquisition) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | $ 99,725 | $ 114,396 |
Fair Value, Recurring | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 114,534 | 137,349 |
Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 114,534 | 137,349 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value | 114,534 | 137,349 |
ImThera Medical, Inc. (“ImThera”) | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 98,863 | 113,503 |
TandemLife | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 9,721 | 17,311 |
Miami Instruments | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 5,252 | 5,338 |
Drilltex | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | 0 | 294 |
Other | Fair Value, Recurring | Level 3 | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration | $ 698 | $ 903 |
Fair Value Measurements (Level
Fair Value Measurements (Level 3 Valuations) (Details) - Level 3 | Mar. 31, 2020 |
ImThera Medical, Inc. (“ImThera”) | Monte Carlo simulation | Risk-adjusted discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.120 |
ImThera Medical, Inc. (“ImThera”) | Monte Carlo simulation | Revenue volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.325 |
ImThera Medical, Inc. (“ImThera”) | Minimum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.065 |
ImThera Medical, Inc. (“ImThera”) | Minimum | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.85 |
ImThera Medical, Inc. (“ImThera”) | Minimum | Monte Carlo simulation | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.85 |
ImThera Medical, Inc. (“ImThera”) | Minimum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.066 |
ImThera Medical, Inc. (“ImThera”) | Maximum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.066 |
ImThera Medical, Inc. (“ImThera”) | Maximum | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.95 |
ImThera Medical, Inc. (“ImThera”) | Maximum | Monte Carlo simulation | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.95 |
ImThera Medical, Inc. (“ImThera”) | Maximum | Monte Carlo simulation | Credit risk discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.069 |
TandemLife | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.750 |
TandemLife | Minimum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.058 |
TandemLife | Maximum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.059 |
Miami Instruments | Minimum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.058 |
Miami Instruments | Minimum | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.82 |
Miami Instruments | Maximum | Discounted cash flow | Discount rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.059 |
Miami Instruments | Maximum | Discounted cash flow | Probability of payment | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 0.95 |
Financing Arrangements Schedule
Financing Arrangements Schedule of Debt (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 491,701,000 | $ 333,511,000 |
Less current portion of long-term debt | 176,140,000 | 73,181,000 |
Total long-term debt | 315,561,000 | 260,330,000 |
Loans Payable | 2019 Debt Facility | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 345,096,000 | 184,275,000 |
Semi-annual periodic payment, as a percentage of principal | 20.00% | |
Loans Payable | 2019 Debt Facility | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 1.40% | |
Loans Payable | 2019 Debt Facility | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 3.33% | |
Loans Payable | 2017 European Investment Bank | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 103,570,000 | 103,570,000 |
Loans Payable | 2017 European Investment Bank | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 2.82% | |
Loans Payable | 2017 European Investment Bank | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 2.87% | |
Loans Payable | 2014 European Investment Bank | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 27,390,000 | 28,053,000 |
Interest rate (percent) | 1.04% | |
Loans Payable | Mediocredito Italiano | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 6,088,000 | 6,222,000 |
Loans Payable | Mediocredito Italiano | Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 0.50% | |
Loans Payable | Mediocredito Italiano | Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 2.96% | |
Loans Payable | Bank of America Merrill Lynch Banco Múltiplo S.A. | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 6,514,000 | 8,422,000 |
Interest rate (percent) | 7.55% | |
Loans Payable | Bank of America, U.S. | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 2,020,000 | 2,004,000 |
Interest rate (percent) | 3.48% | |
Other | ||
Debt Instrument [Line Items] | ||
Total long-term facilities | $ 1,023,000 | $ 965,000 |
Letter of credit | 2019 Debt Facility | ||
Debt Instrument [Line Items] | ||
Finance contract, borrowing base | $ 350,000,000 |
Financing Arrangements Narrativ
Financing Arrangements Narrative (Details) - Revolving Credit Facility - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Short-term debt | $ 47.2 | $ 4.2 |
Minimum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 2.72% | |
Debt instrument, term | 30 years | |
Maximum | ||
Debt Instrument [Line Items] | ||
Interest rate (percent) | 7.55% | |
Debt instrument, term | 180 years |
Derivatives and Risk Manageme_3
Derivatives and Risk Management Narrative (Details) - Derivatives Not Designated as Hedging Instruments - Foreign Exchange Contract - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Derivative [Line Items] | |||
Notional amount | $ 220.7 | $ 338 | |
Foreign exchange and other (losses) gains | |||
Derivative [Line Items] | |||
Gain (loss) on derivative | $ 8.1 | $ 3.7 |
Derivatives and Risk Manageme_4
Derivatives and Risk Management Derivative Notional Amounts (Details) - Derivatives Designated as Hedging Instruments - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Notional amount | $ 101,018 | $ 106,750 |
After-Tax Net Loss in AOCI as of Period End | (518) | |
Amount Expected to be Reclassified to Earnings in Next 12 Months | (505) | |
Foreign Exchange Contract | ||
Derivative [Line Items] | ||
After-Tax Net Loss in AOCI as of Period End | (453) | |
Amount Expected to be Reclassified to Earnings in Next 12 Months | (453) | |
Foreign Exchange Contract | United Kingdom, Pounds | ||
Derivative [Line Items] | ||
Notional amount | 10,568 | 10,128 |
Foreign Exchange Contract | Japan, Yen | ||
Derivative [Line Items] | ||
Notional amount | 20,283 | 25,342 |
Foreign Exchange Contract | Euro Member Countries, Euro | ||
Derivative [Line Items] | ||
Notional amount | 48,255 | 48,838 |
Interest Rate Swap Contracts | ||
Derivative [Line Items] | ||
Notional amount | 21,912 | $ 22,442 |
After-Tax Net Loss in AOCI as of Period End | (65) | |
Amount Expected to be Reclassified to Earnings in Next 12 Months | $ (52) |
Derivatives and Risk Manageme_5
Derivatives and Risk Management Amount of Gain (Loss) Recognized in OCI and Income Statement (Details) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Losses Recognized in OCI | $ (2,080) | $ 1,309 |
Losses Reclassified from AOCI to Earnings | (724) | 1,319 |
Foreign Exchange Contract | Foreign exchange and other (losses) gains | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Losses Recognized in OCI | (2,080) | 1,309 |
Losses Reclassified from AOCI to Earnings | (605) | 1,642 |
Foreign Exchange Contract | SG&A | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Losses Recognized in OCI | 0 | 0 |
Losses Reclassified from AOCI to Earnings | (91) | (310) |
Interest Rate Swap Contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Losses Recognized in OCI | 0 | 0 |
Losses Reclassified from AOCI to Earnings | $ (28) | $ (13) |
Derivatives and Risk Manageme_6
Derivatives and Risk Management Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | $ 6,636 | $ 561 |
Total liability derivatives | 1,283 | 3,680 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 6 | 535 |
Total liability derivatives | 1,207 | 543 |
Derivatives Designated as Hedging Instruments | Prepaid expenses and other current assets | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 6 | 148 |
Derivatives Designated as Hedging Instruments | Accrued liabilities | Interest Rate Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | 245 | 313 |
Derivatives Designated as Hedging Instruments | Accrued liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 387 | |
Total liability derivatives | 931 | 169 |
Derivatives Designated as Hedging Instruments | Other long-term liabilities | Interest Rate Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total liability derivatives | 31 | 61 |
Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 6,630 | 26 |
Total liability derivatives | 76 | 3,137 |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 7 | |
Total liability derivatives | 0 | |
Derivatives Not Designated as Hedging Instruments | Prepaid expenses and other current assets | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 6,623 | |
Total liability derivatives | 33 | |
Derivatives Not Designated as Hedging Instruments | Accrued liabilities | Foreign Exchange Contract | ||
Derivatives, Fair Value [Line Items] | ||
Total asset derivatives | 26 | |
Total liability derivatives | $ 76 | $ 3,104 |
Commitments and Contingencies N
Commitments and Contingencies Narrative (Details) € in Thousands | Apr. 01, 2016USD ($) | Apr. 01, 2016EUR (€) | Jul. 31, 2019USD ($) | Jan. 31, 2004USD ($) | Mar. 31, 2020USD ($)installmentnotice | Apr. 29, 2020claim | Mar. 31, 2020EUR (€)installmentnotice | Dec. 31, 2019USD ($) | May 31, 2019EUR (€) | Mar. 05, 2019USD ($) | Mar. 05, 2019EUR (€) | Aug. 27, 2015non-conformity | Oct. 30, 2009USD ($) | Oct. 30, 2009EUR (€) |
Other Commitments [Line Items] | ||||||||||||||
Product remediation | $ 1,636,000 | $ 3,251,000 | ||||||||||||
Unrecognized tax benefits, net of settlement payment | 17,000,000 | € 15,500 | ||||||||||||
Regional Internal Revenue Office of Lombardy | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Application pending approval, payments for legal settlements | € | € 1,900 | |||||||||||||
Pending Litigation | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Loss Contingency, Estimate of Possible Loss | $ 626,800,000 | € 572,100 | ||||||||||||
Settled Litigation | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Reimbursed legal fees | $ 319,915 | € 292 | ||||||||||||
Threatened Litigation | Regional Internal Revenue Office of Lombardy | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Losses under dispute | $ 68,600,000 | € 62,600 | ||||||||||||
Number of equal installments | installment | 5 | 5 | ||||||||||||
Number of notice of assessments | notice | 3 | 3 | ||||||||||||
FDA Warning Letter | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Number of observed non-conformities | non-conformity | 2 | |||||||||||||
Product Liability | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Litigation settlement, amount awarded to other party | $ 225,000,000 | |||||||||||||
Payments for legal settlements | $ 135,000,000 | |||||||||||||
Litigation provision liability | $ 54,570,000 | $ 170,404,000 | ||||||||||||
SNIA | Pending Litigation | SNIA s.p.a | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Compensation sought | $ 4,000,000,000 | |||||||||||||
Tax Years 2002 - 2006 | Threatened Litigation | Regional Internal Revenue Office of Lombardy | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Losses under dispute | $ 112,400,000 | € 102,600 | ||||||||||||
Subsequent Event | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Pending claims, number | claim | 90 | |||||||||||||
Second Payment | Product Liability | ||||||||||||||
Other Commitments [Line Items] | ||||||||||||||
Payments for legal settlements | $ 90,000,000 |
Commitments and Contingencies S
Commitments and Contingencies Schedule of Product Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Litigation Provision Liability | ||
Less current portion of litigation provision liability at March 31, 2020 | $ 43,025 | $ 146,026 |
Long-term portion of litigation provision liability at March 31, 2020 | 11,545 | |
Product Liability | ||
Litigation Provision Liability | ||
Total litigation provision liability at December 31, 2019 | 170,404 | |
Payments | (115,609) | |
FX and other | (225) | |
Total litigation provision liability at March 31, 2020 | 54,570 | |
Less current portion of litigation provision liability at March 31, 2020 | 43,025 | |
Long-term portion of litigation provision liability at March 31, 2020 | $ 11,545 |
Stockholders' Equity Statement
Stockholders' Equity Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jan. 01, 2020 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance (in shares) | 49,411,016 | ||
Beginning Balance | $ 1,383,717 | $ 1,503,738 | |
Adoption of ASU No. 2016-13 | $ (639) | ||
Stock-based compensation plans | 5,178 | 2,154 | |
Net income (loss) | 37,583 | (14,849) | |
Other comprehensive income (loss) | $ (33,131) | (4,237) | |
Ending Balance (in shares) | 49,413,610 | ||
Ending Balance | $ 1,392,708 | $ 1,486,806 | |
Ordinary Shares | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance (in shares) | 49,411,000 | 49,323,000 | |
Beginning Balance | $ 76,257 | $ 76,144 | |
Stock-based compensation plans (in shares) | 3,000 | 6,000 | |
Stock-based compensation plans | $ 2 | $ 7 | |
Ending Balance (in shares) | 49,414,000 | 49,329,000 | |
Ending Balance | $ 76,259 | $ 76,151 | |
Additional Paid-In Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | 1,734,870 | 1,705,111 | |
Stock-based compensation plans | 5,003 | 2,006 | |
Ending Balance | 1,739,873 | 1,707,117 | |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | (1,263) | (1,462) | |
Stock-based compensation plans | 173 | 141 | |
Ending Balance | (1,090) | (1,321) | |
Accumulated Other Comprehensive Loss | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | (19,392) | (24,476) | |
Other comprehensive income (loss) | (33,131) | (4,237) | |
Ending Balance | (52,523) | (28,713) | |
Accumulated Deficit | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | (406,755) | (251,579) | |
Adoption of ASU No. 2016-13 | $ (639) | ||
Net income (loss) | 37,583 | (14,849) | |
Ending Balance | $ (369,811) | $ (266,428) |
Stockholders' Equity (Comprehen
Stockholders' Equity (Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | $ 1,383,717 | $ 1,503,738 |
Other comprehensive loss before reclassifications, before tax | (34,180) | (2,920) |
Tax benefit | 498 | (314) |
Other comprehensive loss before reclassifications, net of tax | (33,682) | (3,234) |
Reclassification of loss from accumulated other comprehensive loss, before tax | 724 | (1,319) |
Reclassification of tax benefit | (173) | 316 |
Reclassification of gain from accumulated other comprehensive loss, after tax | 551 | (1,003) |
Total other comprehensive loss | (33,131) | (4,237) |
Ending Balance | 1,392,708 | 1,486,806 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | (19,392) | (24,476) |
Total other comprehensive loss | (33,131) | (4,237) |
Ending Balance | (52,523) | (28,713) |
Change in Unrealized Gain (Loss) on Derivatives | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | 513 | (944) |
Other comprehensive loss before reclassifications, before tax | (2,080) | 1,309 |
Tax benefit | 498 | (314) |
Other comprehensive loss before reclassifications, net of tax | (1,582) | 995 |
Reclassification of loss from accumulated other comprehensive loss, before tax | 724 | (1,319) |
Reclassification of tax benefit | (173) | 316 |
Reclassification of gain from accumulated other comprehensive loss, after tax | 551 | (1,003) |
Total other comprehensive loss | (1,031) | (8) |
Ending Balance | (518) | (952) |
Foreign Currency Translation Adjustments Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | (19,905) | (23,532) |
Other comprehensive loss before reclassifications, before tax | (32,100) | (4,229) |
Tax benefit | 0 | |
Other comprehensive loss before reclassifications, net of tax | (32,100) | (4,229) |
Reclassification of loss from accumulated other comprehensive loss, before tax | 0 | |
Reclassification of tax benefit | 0 | |
Reclassification of gain from accumulated other comprehensive loss, after tax | 0 | 0 |
Total other comprehensive loss | (32,100) | (4,229) |
Ending Balance | $ (52,005) | $ (27,761) |
Stock-Based Incentive Plans (Co
Stock-Based Incentive Plans (Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 9,043 | $ 6,872 |
Share-based compensation arrangement, vesting period | 4 years | |
Share-based compensation arrangement, compensation cost | $ 400 | |
Service-based restricted stock units (“RSUs”) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 4,478 | 2,970 |
Service-based stock appreciation rights (“SARs”) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 2,684 | 2,008 |
Market performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 896 | 551 |
Share-based compensation arrangement, vesting period | 3 years | |
Operating performance-based restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 695 | 971 |
Share-based compensation arrangement, vesting period | 3 years | |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 290 | $ 372 |
Stock-Based Incentive Plans (Ex
Stock-Based Incentive Plans (Executed Agreements) (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Service-based stock appreciation rights (“SARs”) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 1,133 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 15.73 |
Service-based restricted stock units (“RSUs”) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 459 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 43.57 |
Market performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 93 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 39.83 |
Operating performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares (in shares) | shares | 93 |
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 43.57 |
Income Taxes Narrative (Details
Income Taxes Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate (percent) | 744.40% | 30.80% | |
Unrecognized tax benefits | $ 12.6 | $ 12.9 | |
Unrecognized tax benefits, potential decrease amount | 11.7 | ||
Other tax expense (benefit) | $ 41.3 |
Earnings Per Share Schedule of
Earnings Per Share Schedule of Earnings Per Share, Basic and Diluted (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding (in shares) | 48,485 | 48,246 |
Add effects of share-based compensation instruments (in shares) | 284 | 0 |
Diluted weighted average shares outstanding (in shares) | 48,769 | 48,246 |
Earnings Per Share Narrative of
Earnings Per Share Narrative of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock Compensation Plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 1.5 | 3.3 |
Geographic and Segment Inform_3
Geographic and Segment Information Segment Info (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)geographic_regionsegment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Reportable segments | segment | 2 | ||
Number of geographic regions in which entity operates | geographic_region | 3 | ||
Net sales | $ 242,397 | $ 250,801 | |
Total reportable segment income (loss) from continuing operations | 15,929 | (5,679) | |
Merger and integration expenses | 3,474 | 3,251 | |
Restructuring expenses | 1,580 | 2,533 | |
Amortization of intangibles | 10,267 | 9,316 | |
Operating income (loss) from continuing operations | 608 | (20,779) | |
Interest income | 148 | 249 | |
Interest expense | 4,849 | 1,662 | |
Foreign exchange and other (losses) gains | (1,914) | 729 | |
Loss from continuing operations before tax | (6,007) | (21,463) | |
Assets | 2,454,436 | $ 2,411,797 | |
Capital expenditures | 12,374 | 4,883 | |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Net sales | 242,397 | 250,801 | |
Operating Segments | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 152,069 | 155,491 | |
Restructuring expenses | 686 | 422 | |
Operating Segments | Neuromodulation | |||
Segment Reporting Information [Line Items] | |||
Net sales | 89,657 | 94,649 | |
Restructuring expenses | 503 | 432 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Restructuring expenses | 391 | 1,679 | |
Continuing Operations | Operating Segments | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Total reportable segment income (loss) from continuing operations | 8,681 | 989 | |
Assets | 1,453,378 | 1,546,520 | |
Capital expenditures | 5,292 | 3,551 | |
Continuing Operations | Operating Segments | Neuromodulation | |||
Segment Reporting Information [Line Items] | |||
Total reportable segment income (loss) from continuing operations | 33,858 | 21,631 | |
Assets | 685,190 | 749,069 | |
Capital expenditures | 5,239 | 403 | |
Continuing Operations | Other | |||
Segment Reporting Information [Line Items] | |||
Total reportable segment income (loss) from continuing operations | (26,610) | (28,299) | |
Assets | 315,868 | $ 116,208 | |
Capital expenditures | 1,843 | 929 | |
United States | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Net sales | 123,583 | 128,398 | |
United States | Operating Segments | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 50,307 | 51,512 | |
United States | Operating Segments | Neuromodulation | |||
Segment Reporting Information [Line Items] | |||
Net sales | 73,276 | 76,886 | |
Europe | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Net sales | 54,716 | 56,852 | |
Europe | Operating Segments | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 44,133 | 46,193 | |
Europe | Operating Segments | Neuromodulation | |||
Segment Reporting Information [Line Items] | |||
Net sales | 10,583 | 10,659 | |
Rest of World | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Net sales | 64,098 | 65,551 | |
Rest of World | Operating Segments | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 57,629 | 57,786 | |
Rest of World | Operating Segments | Neuromodulation | |||
Segment Reporting Information [Line Items] | |||
Net sales | 5,798 | 7,104 | |
Rest of World | Other | |||
Segment Reporting Information [Line Items] | |||
Net sales | 671 | 661 | |
Cardiopulmonary | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 116,367 | 121,570 | |
Cardiopulmonary | United States | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 36,858 | 39,123 | |
Cardiopulmonary | Europe | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 34,234 | 35,561 | |
Cardiopulmonary | Rest of World | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 45,275 | 46,886 | |
Heart Valves | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 25,211 | 25,673 | |
Heart Valves | United States | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 3,373 | 4,356 | |
Heart Valves | Europe | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 9,529 | 10,513 | |
Heart Valves | Rest of World | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 12,309 | 10,804 | |
Advanced Circulatory Support | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 10,491 | 8,248 | |
Advanced Circulatory Support | United States | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 10,076 | 8,033 | |
Advanced Circulatory Support | Europe | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | 370 | 119 | |
Advanced Circulatory Support | Rest of World | Cardiovascular | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 45 | $ 96 |
Geographic and Segment Inform_4
Geographic and Segment Information Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill | |
Goodwill, beginning | $ 915,794 |
Foreign currency adjustments | (27,221) |
Goodwill, ending | 888,573 |
Neuromodulation | |
Goodwill | |
Goodwill, beginning | 398,754 |
Foreign currency adjustments | 0 |
Goodwill, ending | 398,754 |
Cardiovascular | |
Goodwill | |
Goodwill, beginning | 517,040 |
Foreign currency adjustments | (27,221) |
Goodwill, ending | $ 489,819 |
Geographic and Segment Inform_5
Geographic and Segment Information Geographic Areas (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 183,534 | $ 181,354 |
United States | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 64,473 | 61,410 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | 110,669 | 110,270 |
Rest of World | ||
Segment Reporting Information [Line Items] | ||
Property, plant and equipment, net | $ 8,392 | $ 9,674 |
Supplemental Financial Inform_3
Supplemental Financial Information (Summary of Inventory) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 44,391 | $ 45,225 |
Work-in-process | 17,947 | 14,581 |
Finished goods | 107,918 | 104,348 |
Inventory, Net | 170,256 | 164,154 |
Provision for obsolescence | $ 13,000 | $ 12,700 |
Supplemental Financial Inform_4
Supplemental Financial Information (Summary of Accrued Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Contingent consideration | $ 14,809 | $ 22,953 |
Operating lease liabilities | 11,371 | 11,110 |
Legal and administrative costs | 8,952 | 11,066 |
Contract liabilities | 7,313 | 6,728 |
Research and development costs | 5,896 | 5,160 |
Provisions for agents, returns and other | 3,558 | 3,922 |
Restructuring related liabilities | 2,697 | 4,315 |
Product remediation | 1,636 | 3,251 |
Derivative contract liabilities | 1,245 | 3,173 |
CRM purchase price adjustment payable to MicroPort Scientific Corporation | 0 | 14,891 |
Other amounts payable to MicroPort Scientific Corporation | 597 | 1,340 |
Other accrued expenses | 35,465 | 32,191 |
Accrued liabilities | 93,539 | 120,100 |
Contract liability | $ 9,100 | $ 8,600 |
New Accounting Pronouncements_2
New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase (decrease) in accounts receivable | $ 225,347 | $ 257,769 | |
Increase (decrease), retained earnings (deficit) | $ (639) | ||
Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase (decrease) in accounts receivable | (600) | ||
Retained Earnings | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase (decrease), retained earnings (deficit) | (639) | ||
Retained Earnings | Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase (decrease), retained earnings (deficit) | $ (600) |