LivaNova shares tumble on CEO exit, Q3 earnings report

LivaNova (NSDQ:LIVN) shares slid nearly 15% today after the company announced the resignation of CEO André-Michel Ballester and released its 3rd quarter earnings.

The London-based company said its current CEO Ballester will resign effective December 31 this year, to be replaced by current COO Damien McDonald.

Ballester served as CEO at Sorin from 2007 to 2015, up to the merger that created LivaNova when the company joined with Cyberonics, the company said.

“On behalf of the LivaNova board of directors, I would like to thank André-Michel for his highly successful 12-year career with LivaNova and Sorin. André-Michel integrated two remarkable companies into one, creating a stronger and well-positioned medical-device company with significant opportunities for growth. Damien’s background and credentials are ideally suited to assume leadership of LivaNova. The Board is highly confident in his ability and readiness to further develop and deliver on LivaNova’s mission to continue to improve health worldwide,” board chair Dan Moore said in a press release.

McDonald joined LivaNova from a position as corp veep & group exec at Danaher, the company said, and previously worked as group prez of Kerr and operated as Zimmer’s spine division head.

“I am honored to succeed André-Michel, and I want to thank him for his service and substantial contributions. LivaNova is united in its passion, focus and commitment in serving our customers and patients around the world. I wish to thank the Board for their vote of confidence in me leading this great company and express my firm commitment to grow the business through advancing medical technology and transforming lives,” McDonald said in a prepared statement.

LivaNova saw shares sink on the news, despite posting a 3rd quarter that beat The Street on earnings per share and barely missed on revenue.

The company posted losses of $1.6 million, or 3¢ per share, on sales of $295.3 million for the 3 months ended September 30. Sales grew 3.2% compared with the same period last year.

After adjusting to exclude 1-time items, sales were at $38.3 million with earnings per share at 78¢, a solid 3¢ above The Street’s analysts expectations. Revenue fell just short of The Street however, which expected LivaNova to bring in $299.4 million.

Shares have slid $7.97, or 14.2%, to trade at $48.31 as of 1:12 p.m. EDT.

“While sales performance was below expectations for the quarter, earnings results were positive due to significant leverage in the income statement. Many of our new products continue to perform well, including – AspireSR used for VNS Therapy, Perceval sutureless heart valves, Inspire oxygenators, Kora 250 pacemakers and Platinum defibrillators.  However, we have experienced challenges in cardiac surgery, and as a result, we are increasing our focus on driving merger synergies, implementing restructuring activities, maintaining disciplined cost controls and reprioritizing internal research and development spending to focus our efforts on the highest growth drivers.  Overall, I am extremely pleased in our ability to align operating expenses and deliver strong bottom line performance, while investing in short and long-term growth opportunities,” CEO Ballester said in a prepared statement.

The company narrowed its earnings per share guidance for the full year, expecting to see adjusted earnings per share of $2.95 to $3.05 with revenue growth between 1 and 2%.

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