v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Note 4. Fair Value Measurements
LivaNova reviews its 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 in the fair value hierarchy. There were no transfers between Level 1, Level 2, or Level 3 for the six months ended June 30, 2026 and 2025.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the level in the fair value hierarchy at which the Company’s assets and liabilities are measured on a recurring basis (in thousands):
TotalFair Value Measurements Using Inputs Considered as:
June 30, 2026Level 1Level 2Level 3
Assets:
Derivative assets - freestanding instruments (FX)$525 $— $525 $— 
Derivative assets - 2029 Capped Calls
57,293 — — 57,293 
Investment in convertible notes receivable
3,000 — — 3,000 
$60,818 $— $525 $60,293 
Liabilities:
Derivative liabilities - freestanding instruments (FX) $61 $— $61 $— 
Derivative liabilities - 2029 Embedded Derivative
152,904 — — 152,904 
ImThera contingent consideration arrangements
42,121 — — 42,121 
$195,086 $— $61 $195,025 
Total
Fair Value Measurements Using Inputs Considered as:
December 31, 2025Level 1Level 2Level 3
Assets
Derivative assets - freestanding instruments (FX)$165 $— $165 $— 
Derivative assets - 2029 Capped Calls
36,551 — — 36,551 
Investment in convertible notes receivable
3,000 — — 3,000 
$39,716 $— $165 $39,551 
Liabilities
Derivative liabilities - freestanding instruments (FX)
$99 $— $99 $— 
Derivative liabilities - 2029 Embedded Derivative
83,904 — — 83,904 
ImThera contingent consideration arrangements
92,075 — — 92,075 
$176,078 $— $99 $175,979 
Reconciliation of Level 3 Assets and Liabilities
The tables below present reconciliations of recurring fair value measurements that use significant unobservable inputs (Level 3) (in thousands):
Derivative Assets - 2029 Capped Calls (1)
Investment in Convertible Notes Receivable
Derivative Liabilities - 2029 Embedded Derivative (1)
ImThera Contingent Consideration Arrangements Liability
March 31, 2026$38,277 $3,000 $93,254 $102,730 
Payment— — — (60,458)
Changes in fair value (2)
19,016 — 59,650 (151)
June 30, 2026$57,293 $3,000 $152,904 $42,121 
Derivative Assets - 2025 Capped Calls (1)
Derivative Assets - 2029 Capped Calls (1)
Derivative Liabilities - 2025 Embedded Derivative (1)
Derivative Liabilities - 2029 Embedded Derivative (1)
ImThera Contingent Consideration Arrangements Liability
March 31, 2025$805 $17,190 $874 $37,226 $85,140 
Changes in fair value (2)
498 4,468 489 10,867 2,787 
June 30, 2025$1,303 $21,658 $1,363 $48,093 $87,927 
Derivative Assets - 2029 Capped Calls (1)
Investment in Convertible Notes Receivable
Derivative Liabilities - 2029 Embedded Derivative (1)
ImThera Contingent Consideration Arrangements Liability
December 31, 2025$36,551 $3,000 $83,904 $92,075 
Payment— — — (60,458)
Changes in fair value (2)
20,742 — 69,000 10,504 
June 30, 2026$57,293 $3,000 $152,904 $42,121 
Derivative Assets - 2025 Capped Calls (1)
Derivative Assets - 2029 Capped Calls (1)
Derivative Liabilities - 2025 Embedded Derivative (1)
Derivative Liabilities - 2029 Embedded Derivative (1)
ImThera Contingent Consideration Arrangements Liability
December 31, 2024$2,624 $23,735 $2,915 $51,819 $84,218 
Changes in fair value (2)
(1,321)(2,077)(1,552)(3,726)3,709 
June 30, 2025$1,303 $21,658 $1,363 $48,093 $87,927 
(1)Gains and losses are recorded in foreign exchange and other income/(expense) in the condensed consolidated statements of income (loss).
(2)For the three months ended June 30, 2026, the contingent consideration changes in fair value resulted in a decrease of $1.0 million and an increase of $0.8 million recorded to cost of sales and R&D, respectively. For the comparable 2025 period, the contingent consideration changes in fair value resulted in increases of $1.5 million and $1.2 million recorded to cost of sales and R&D, respectively. For the six months ended June 30, 2026, the contingent consideration changes in fair value resulted in increases of $0.1 million and $10.4 million recorded to cost of sales and R&D, respectively. For the comparable 2025 period, the contingent consideration changes in fair value resulted in increases of $1.8 million and $1.9 million recorded to cost of sales and R&D, respectively.
Share Price Volatility
The share price volatility utilized in determining the fair value of LivaNova’s 2029 Capped Call derivative assets and 2029 Embedded Derivative liability as of June 30, 2026 was 37%. In general, an increase in LivaNova’s share price or share price volatility would increase the fair value of the embedded and capped call derivatives, which would result in an increase in net expense. As the remaining time to the expiration of the derivatives decreases, the fair value of the derivatives decreases. The future impact of the derivatives on net income (loss) depends on how significant inputs, such as share price volatility, and time to the expiration of the derivatives, change in relation to other inputs.
Contingent Consideration Arrangements
The ImThera acquisition involved contingent consideration arrangements comprised of potential cash payments upon the achievement of a certain regulatory milestone and a sales-based earnout associated with sales of products. In March 2026, the Company received PMA from the FDA for the aura6000 System, thereby achieving the regulatory milestone and, in June 2026, paid $60.5 million, fully satisfying the related regulatory-based contingent consideration liability. Of this payment, $10.0 million was classified as an operating cash outflow in the condensed consolidated statements of cash flows, representing the portion of the payment that exceeded the acquisition-date fair value of the liability, with the remainder classified as a financing cash outflow on the condensed consolidated statements of cash flows. The remaining sales-based earnout is valued using projected sales from LivaNova’s internal strategic plan. These arrangements are Level 3 fair value measurements. The table below presents the significant unobservable inputs of the sales-based earnout arrangement from the ImThera acquisition as of June 30, 2026:
Valuation TechniqueUnobservable InputInputs
Monte-Carlo simulationRisk-adjusted discount rate
12.0%
Credit risk discount rate
6.9% - 7.4%
Revenue volatility24.1%
Probability of payment95%
Projected payment years
2028 - 2030
Other
The carrying value of LivaNova’s long-term debt, including the current portion as of June 30, 2026 and December 31, 2025, was $290.1 million and $376.1 million, respectively. The fair value of the 2029 Notes, excluding the conversion feature, as of June 30, 2026 and December 31, 2025, was $312.0 million and $315.2 million, respectively. The fair value was estimated using a discounted cash flow model and is classified as Level 2 within the fair value hierarchy. For all other long-term debt obligations, LivaNova believes the carrying value approximates fair value. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.