LIVANOVA PLC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the corresponding notes included elsewhere
in this Annual Report on Form 10-K. Certain percentages presented in this
discussion and analysis are calculated from the underlying whole-dollar amounts
and therefore may not be recalculated from the rounded numbers used for
disclosure purposes. The following discussion, analysis and comparisons
generally focus on the operating results for the years ended December 31, 2021
("2021"), December 31, 2020 ("2020") and December 31, 2019 ("2019").

We have elected to omit certain discussions on the earliest of the three years
covered in this Annual Report on Form 10-K. Refer to Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations located
in our Form 10-K for the year ended December 31, 2020, filed on March 1, 2021,
for reference to discussion of the fiscal year ended December 31, 2019, the
earliest of the three fiscal years presented.

COVID-19[female[feminine

Since early 2020, the COVID-19 pandemic ("COVID-19") has caused and may continue
to cause unpredictable demand for our products. Throughout the pandemic,
healthcare customers have diverted medical resources and priorities towards the
treatment of COVID-19, and public health bodies have delayed elective
procedures, which has negatively impacted the usage of our products. Further,
some people have avoided seeking treatment for non-COVID-19 procedures and
hospitals and clinics have experienced staffing shortages, which have negatively
impacted the demand for our products. While we have seen improvement during
2021, we continue to experience ongoing COVID-19 related headwinds and are
monitoring the potential for various strains of the virus to cause a resumption
of high levels of infection and hospitalization, that in turn, may affect the
demand for our products.

While our RECOVER study and ANTHEM-HFrEF pivotal trial experienced delays during
2020 due to COVID-19, work continued to progress throughout 2021. Impacts
related to the Delta strain of COVID-19 created some delay in implants in the
RECOVER study, and we continue to monitor relevant conditions at participating
centers for both RECOVER and ANTHEM-HFrEF as there can be no assurance that
there will not be closures of sites in the future should COVID-19 or variants
thereof strengthen or reemerge.

Our business operations have been affected by a range of external factors
related to the pandemic that are not within our control. For example, many
jurisdictions have imposed, and in some cases reimposed, a wide range of
restrictions to limit the spread of COVID-19. We continue to evaluate the
evolving laws and regulations developing around the world and are working to
meet customer-specific requirements to operate in a COVID-19 business
environment. However, if the pandemic has a substantial impact on our employees,
vendors, suppliers or productivity, our operations may suffer, and in turn our
results of operations and overall financial performance may be harmed.

Importantly, we continue to take actions in managing the health and safety of
our employees throughout the pandemic. As guidance from authorities such as the
U.S. Centers for Disease Control and Prevention or the World Health Organization
evolves, we update our practices accordingly. For our manufacturing, operations,
and other personnel who have remained on site throughout the pandemic due to the
essential nature of their work, we have implemented safety measures such as the
use of personal protective equipment and social distancing measures. At the
start of the pandemic, we instructed the majority of our employees at many of
our facilities across the globe to work from home on a temporary basis and
implemented company-wide travel restrictions. Though there has been no
Company-wide mandate to return to the office, employees are encouraged to return
for purposeful collaboration. We continue to maintain enhanced safety protocols
and encourage our employees to seek vaccination. We have incurred additional
expenses in connection with our response to the COVID-19 pandemic, including
manufacturing inefficiencies and costs related to enabling our employees to
support our customers while working remotely.

We have successfully implemented our business continuity plans, and our
management team is responding to changes in our environment quickly and
effectively. We have not closed any of our manufacturing plants. Additionally,
while there are many supply chain, labor shortage, inflation and logistical
issues emerging in the wake of COVID-19 related disruptions, to date, the supply
of raw materials and the production and distribution of finished products remain
operational with no material constraints relating to COVID-19. We continue to
monitor the landscape for any potential disruptions.

We continue to implement cost reduction efforts. We have reduced expenses by
evaluating whether projects and initiatives are critical to meet the needs of
the Company, protecting strategic priorities for future growth, reducing
discretionary spending and tightening management of personnel costs.

The extent to which the COVID-19 pandemic continues to impact the Company's
results of operations and financial condition will depend on future developments
that are highly uncertain and cannot be predicted, including new information
that may emerge concerning the severity and longevity of COVID-19 and its
variants, the resurgence of COVID-19 in regions that

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have begun to recover from the initial impact of the pandemic, the impact of
COVID-19 on economic activity and the actions to contain its impact on public
health and the global economy.

For further discussion on COVID-19, refer to "Item 1A. Risk Factors" of this
Annual Report on Form 10-K under the section entitled "COVID-19 has had, and we
expect will continue to have, an adverse effect on our business, results of
operations, financial condition and cash flows, the nature and extent of which
are uncertain and unpredictable."

Company Description

We are a public limited company organized under the laws of England and Wales
and headquartered in London, England. We are a global medical device company
focused on the development and delivery of important products and therapies for
the benefit of patients, healthcare professionals and healthcare systems
throughout the world. We design, develop, manufacture and sell innovative
products and therapies that are consistent with our mission to provide hope to
patients through innovative technologies, delivering life-changing improvements
for both the Head and Heart.

Background

We were organized under the laws of England and Wales on February 20, 2015 for
the purpose of facilitating the business combination of Cyberonics, Inc., a
Delaware corporation, and Sorin S.p.A., a joint stock company organized under
the laws of Italy. The business combination became effective in October 2015.
LivaNova's ordinary shares are listed for trading on the NASDAQ Global Market
under the symbol "LIVN."

Business Segments

LivaNova is comprised of three reportable segments: Cardiopulmonary,
Neuromodulation and Advanced Circulatory Support, corresponding to our primary
business units. Other includes the results of our Heart Valves business, which
was disposed of on June 1, 2021, and corporate shared service expenses for
finance, legal, human resources, information technology and corporate business
development.

Effective in the fourth quarter of 2021, LivaNova changed its reportable
segments corresponding to changes in how the Company's chief operating decision
maker regularly reviews information, allocates resources and assesses
performance. The segment financial information presented herein reflects these
changes for all periods presented. The Company's changes to its reportable
segments are summarized as follows:

•The Company's Advanced Circulatory Support business is no longer assessed as
part of the Company's previously reported Cardiovascular reportable segment and
is evaluated independently as its own reportable segment.
•The Company's Cardiopulmonary business is no longer assessed as part of the
Company's previously reported Cardiovascular reportable segment and is evaluated
independently as its own reportable segment.
•The Company's Heart Valves business, which was disposed of on June 1, 2021, is
now included within Other.

Cardiopulmonary

Our Cardiopulmonary segment is engaged in the development, production and sale
of cardiopulmonary products, including oxygenators, heart-lung machines,
autotransfusion systems, perfusion tubing systems, cannulae and other related
accessories.

Approval of cardiopulmonary products

In April 2021, the FDA provided 510(k) clearance for B-Capta, the new in-line,
blood-gas monitoring system integrated into the Company's S5 heart-lung machine.
The system is designed to easily and accurately monitor arterial and venous
blood gas parameters even during long and complex pediatric and adult
cardiopulmonary bypass procedures. B-Capta, which received CE Mark in May 2020
and completed a successful limited commercial release in Europe, is now
available globally.

Product fix

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 and issued
inspectional observations on the FDA's Form-483 applicable to our Munich,
Germany facility.

The Warning Letter further stated that our 3T Heater-Cooler devices (the "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 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 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

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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. With this 510(k) clearance, all actions to remediate the FDA's
inspectional observations in the Warning Letter are complete, and at this time,
LivaNova is awaiting the FDA's close-out inspection.

For further information, refer to "Note 13. Commitments and Contingencies" in
our consolidated financial statements and accompanying notes, beginning on page
F-1 of this Annual Report on Form 10-K.

Centers for Disaster Control and Prevention (“CDC”) and FDA Safety CommunicationsCompany Security Advisory Update and Product Remediation Plan

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 the CDC and its affiliates indicate that there appears to be genetic
similarity between both patient and 3T device strains of the non-tuberculous
mycobacterium ("NMT") 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. In April 2017,
we obtained CE Mark in Europe for the design change of the 3T device, and in
October 2018, the FDA concluded that we could commence the vacuum canister and
internal sealing upgrade program in the U.S. 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. We are in the process of
completing and closing out all recall activities with the FDA. While our vacuum
canister and internal sealing upgrade program and deep cleaning service in the
U.S. are substantially complete, these services will continue as a servicing
option outside of the U.S.

On December 31, 2016, we recognized a liability for a product remediation plan
related to our 3T Heater-Cooler device ("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 the fourth quarter of 2016, and furthermore, the cost associated
with the plan was reasonably estimable. At December 31, 2021, the product
remediation liability was $0.8 million. For further information, refer to "Note
6. Product Remediation Liability" in our consolidated financial statements and
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

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Product liability

The Company is currently involved in litigation involving our 3T device. The
litigation includes 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. A class action, filed in February 2016
in the U.S. District Court for the Middle District of Pennsylvania, consisting
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, was dismissed on July 16,
2021.

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 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 and federal courts in the U.S. and in jurisdictions outside the
U.S. continue to progress. As of March 1, 2022, 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 number includes seven 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 December 31, 2021, the provision for these matters was $39.5 million. While
the amount accrued represents our best estimate for those filed and unfiled
claims that are both probable and estimable, the actual liability for resolution
of these matters may vary from our estimate.

Neuromodulation

Our Neuromodulation segment designs, develops and markets devices that deliver
neuromodulation therapy to treat DRE, and DTD. It encompasses the development
and management of clinical testing of our aura6000 System for treating OSA, a
device that stimulates the hypoglossal nerve, which in turn, engages certain
muscles in the tongue in order to open the airway while a patient is sleeping,
as well as our VITARIA System for treating heart failure by stimulating the
right vagus nerve.

Epilepsy

We continue to make significant investments in R&D focused on improving the VNS
Therapy System with an enhanced pulse generator, lead and programming software,
and we are developing new products that provide additional features and
functionality. We also support studies for our product development efforts and
to build clinical evidence for the VNS Therapy System.

Peer reviewed evidence published in 2021 and 2022 continues to confirm the
safety, efficacy and cost effectiveness of VNS Therapy in both the adult and
pediatric patient population. In January 2022, the Journal of Neurology
published a meta-analysis and systematic review that demonstrated benefits of
VNS Therapy in adults with DRE that demonstrates that seizure frequency improves
without an increase in the rate of serious adverse events or discontinuations.
These data further support consideration of VNS Therapy for people who are not
responding to ASMs and those unsuitable or unwilling to undergo surgery.

Depression

we

In July 2005, the FDA approved the VNS Therapy System for the adjunctive
treatment of chronic or recurrent depression for patients 18 years or older who
are experiencing a major depressive episode and have not had an adequate
response to four or more antidepressant treatments. In May 2007, CMS issued a
national non-coverage determination within the U.S. with respect to
reimbursement of the VNS Therapy System for patients with DTD, significantly
limiting access to this therapeutic option for most patients.

In March 2017the American Journal of Psychiatry published the results of the longest and largest naturalistic study (the “D23 Study”) of treatments for patients with chronic and severe DTD. Results showed that adding the VNS Therapy System to traditional treatment is effective in significantly reducing symptoms of depression and well tolerated.

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compared to traditional treatment alone. Following the publication of the D23 study, we asked CMS to reconsider its previous NCD, and in May 2018CMS has issued a follow-up sheet to reconsider its NCD.

In February 2019, CMS produced a final decision providing coverage
for Medicare beneficiaries through CED when offered in a CMS-approved,
double-blind, randomized, placebo-controlled trial with a follow-up duration of
at least one year, as well as coverage of VNS Therapy device replacement. The
CED also includes the possibility to extend the study to a prospective
longitudinal registry.

In September 2019, CMS accepted the protocol for our RECOVER clinical study and
the first patient was enrolled. RECOVER will include up to 500 unipolar and up
to 500 bipolar patients at a maximum of 100 sites in the United States in the
randomized part of the trial and up to an additional 5,800 patients in an open
label registry.

In February 2020, we announced a research collaboration with Verily, a
subsidiary of Alphabet Inc., to capture clinical biomarkers of depression within
our RECOVER clinical study. Using technology and analytics by way of the Verily
Study Watch and related Verily mobile phone application, LivaNova and Verily aim
to gather quantitative data to further understand depressive episodes and a
patient's response to treatment. These complementary approaches are expected to
help investigators better understand the impact of depression and its treatment
on study participants' lives in a more objective and multi-dimensional manner.
In April 2021, LivaNova and Verily announced that the first patient had been
enrolled in their collaborative UNCOVER study, a subset of the RECOVER study.

Apart from we

In January 2018, we announced the launch and enrollment of the first patient in
our RESTORE-LIFE study, which evaluates the use of our VNS Therapy System in
patients who have DTD and failed to achieve an adequate response to standard
psychiatric management.

In March 2020our VNS Therapy System, Symmetry has received CE Mark approval for DTD.

Obstructive Sleep Apnea

In January 2018, we acquired full ownership of ImThera, a privately held,
emerging-growth company developing an implantable neurostimulation device system
for the treatment of obstructive sleep apnea. The device stimulates the
hypoglossal nerve, which in turn, engages certain muscles in the tongue in order
to open the airway while a patient is sleeping. We have a commercial presence in
the European market.

In June 2021, LivaNova received approval from the FDA to proceed with its
investigational device exemption clinical study, "Treating Obstructive Sleep
Apnea using Targeted Hypoglossal Neurostimulation (OSPREY)." The OSPREY study
seeks to confirm the safety and effectiveness of the aura6000 System, the
LivaNova implantable hypoglossal neurostimulation device intended to treat adult
patients with moderate to severe obstructive sleep apnea.

Heart failure

We are focused on the development and clinical testing of the VITARIA System for
treating heart failure through vagus nerve stimulation. The VITARIA System
provides a specific method of VNS called autonomic regulation therapy ("ART"),
and it includes elements similar to the VNS Therapy System: pulse generator,
lead, programming computer and wand. In 2012, we initiated a pilot study,
ANTHEM-HF, outside the U.S., and the published results support the safety and
efficacy of ART delivered to patients with advanced heart failure expressing
symptoms despite guideline-directed medical therapy. The study was extended to
continue follow-up of patients through 42 months, the results for which have
been published in a peer-reviewed cardiology journal. During 2014, we initiated
a second pilot study outside the U.S., ANTHEM-HFpEF, to study ART in patients
experiencing symptomatic heart failure with preserved ejection fraction. The
VITARIA System is not approved in the U.S. though it has been designated as a
breakthrough technology by the FDA. The VITARIA System received CE Mark approval
in 2015.

In September 2018, we announced the first successful implantation of the VITARIA
System in a patient randomized in the ANTHEM-HFrEF Pivotal Study, an
international, multi-center, randomized trial (adaptive sample size) to evaluate
the VITARIA System (FDA's Breakthrough Technology designation) for the treatment
of advanced heart failure. The trial was paused temporarily in March 2020 due to
COVID-19 restrictions, but we were able to re-initiate enrollment and screening
activities shortly thereafter in more than half of the sites. We continue to
monitor relevant conditions at medical centers participating in the trial. In
December 2021, we enrolled the 400th patient in the trial, and in January 2022,
the 300th patient completed the nine-month follow-up visit. Given these
milestone achievements, the first interim analysis is being conducted by
independent statisticians.

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Advanced Circulatory Support

Our Advanced Circulatory Support segment is engaged in the development, production and sale of advanced temporary life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life monitors and product kits that can include a combination of pumps, oxygenators and cannulas.

In July 2019, the FDA approved our LifeSPARC system, a new generation of the
Advanced Circulatory Support pump and controller. In the fourth quarter of 2019,
we began a limited commercial release in the U.S., followed by a full commercial
launch in the second half of 2020.

Disposal of the Heart Valves business

On December 2, 2020, LivaNova entered into a Share and Asset Purchase Agreement
("Purchase Agreement") with Mitral Holdco S.à r.l., a company incorporated under
the laws of Luxembourg and wholly owned and controlled by funds advised by Gyrus
Capital S.A., a Swiss private equity firm. The Purchase Agreement provided for
the divestiture of certain of LivaNova's subsidiaries as well as certain other
assets and liabilities relating to the Company's Heart Valve business and site
management operations conducted by the Company's subsidiary LSM at the Company's
Saluggia campus for €60.0 million (approximately $68.1 million as of
December 31, 2021). On April 9, 2021, LivaNova and the Purchaser entered into an
Amended and Restated Share and Asset Purchase Agreement (the "A&R Purchase
Agreement") which amends and restates the original Purchase Agreement to, among
other things, defer the closing of the sale and purchase of LSM by up to two
years and include or amend certain additional terms relating to such deferral,
including certain amendments relating to the potential hazardous substances
liabilities of LSM and the related expense reimbursement provisions. The closing
of the sale of the Heart Valve business occurred on June 1, 2021 and we received
€34.8 million (approximately $42.5 million as of June 1, 2021), subject to
customary trade working capital and net indebtedness adjustments, as set forth
in the Purchase Agreement. We received $3.0 million in additional proceeds
during the fourth quarter of 2021. An additional €9.3 million (approximately
$10.6 million as of December 31, 2021) is payable to LivaNova in 2022.

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Operating results

The following table summarizes our consolidated results for the years ended
December 31, 20212020 and 2019 (in thousands):

Year ended the 31st of December,

                                                                2021               2020 (1)             2019 (1)
Net sales                                                  $ 1,035,365          $   934,241          $ 1,084,170
Cost of sales                                                  329,371              339,478              360,365
Gross profit                                                   705,994              594,763              723,805
Operating expenses:
Selling, general and administrative                            471,904              446,561              528,466
Research and development                                       183,414              152,902              146,849
Impairment of disposal group                                         -              180,160                    -
Impairment of goodwill                                               -               21,269               42,417
Impairment of long-lived assets                                      -                6,762              142,517
Other operating expenses                                        51,460               61,008               35,110
Operating loss from continuing operations                         (784)            (273,899)            (171,554)
Interest income                                                    435                  131                  803
Interest expense                                               (50,151)             (40,837)             (15,091)
Loss on debt extinguishment                                    (60,238)              (1,407)                   -
Foreign exchange and other gains/(losses)                      (13,734)             (32,010)              (2,536)
Loss from continuing operations before tax                    (124,472)            (348,022)            (188,378)
Income tax expense (benefit)                                    11,198                 (960)             (30,374)
Losses from equity method investments                             (148)                (264)                   -
Net loss from continuing operations                           (135,818)            (347,326)            (158,004)
Net (loss) income from discontinued operations, net
of tax                                                               -               (1,493)                 365
Net loss                                                   $  (135,818)         $  (348,819)         $  (157,639)


(1)The consolidated results the years ended December 31, 2020 and 2019 have been
revised. For further details refer to "Note 1. Nature of Operations" in our
consolidated financial statements and accompanying notes, beginning on page F-1
of this Annual Report on Form 10-K.

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Net sales by Segment and Geographic Area:

The following table presents net sales by operating segment and by geographical area (in thousands, except for percentages):

                                                                Year Ended December 31,                                           % Change
                                                      2021                2020                2019                2021 vs 2020                2020 vs 2019
Cardiopulmonary
United States                                    $   154,073          $ 132,543          $   161,471                        16.2  %                    (17.9) %
Europe (1)                                           134,562            122,062              135,632                        10.2  %                    (10.0) %
Rest of World                                        194,344            192,127              207,613                         1.2  %                     (7.5) %
                                                     482,979            446,732              504,716                         8.1  %                    (11.5) %
Neuromodulation
United States                                        358,476            282,509              335,332                        26.9  %                    (15.8) %
Europe (1)                                            51,435             39,019               46,262                        31.8  %                    (15.7) %
Rest of World                                         46,261             32,916               42,953                        40.5  %                    (23.4) %
                                                     456,172            354,444              424,547                        28.7  %                    (16.5) %
Advanced Circulatory Support
United States                                         53,821             41,094               30,781                        31.0  %                     33.5  %
Europe (1)                                             1,120              1,027                  741                         9.1  %                     38.6  %
Rest of World                                            518                200                  401                       159.0  %                    (50.1) %
                                                      55,459             42,321               31,923                        31.0  %                     32.6  %
Other (2)
United States                                          4,929             12,488               18,900                       (60.5) %                    (33.9) %
Europe (1)                                            14,407             31,259               40,548                       (53.9) %                    (22.9) %
Rest of World                                         21,419             46,997               63,536                       (54.4) %                    (26.0) %
                                                      40,755             90,744              122,984                       (55.1) %                    (26.2) %
Totals
United States                                        571,299            468,634              546,484                        21.9  %                    (14.2) %
Europe (1)                                           201,525            193,367              223,183                         4.2  %                    (13.4) %
Rest of World                                        262,541            272,240              314,503                        (3.6) %                    (13.4) %
Total                                            $ 1,035,365          $ 934,241          $ 1,084,170                        10.8  %                    (13.8) %

(1)Includes the countries of Europe where we have a direct sales presence. Countries where sales are made through distributors are included in the “Rest of the world”. (2)Other mainly includes net sales of the Company’s Heart Valves business, which was divested on June 1, 2021.

The following table presents segment income (loss) from continuing operations
(in thousands):
                                                        Year Ended December 31,                                          % Change
                                              2021             2020 (1)            2019 (1)             2021 vs 2020                 2020 vs 2019
Cardiopulmonary                           $  (6,429)         $   35,735          $  50,533                      (118.0) %                     (29.3) %
Neuromodulation                             169,499             109,273             83,333                        55.1  %                      31.1  %
Advanced Circulatory Support                  2,195                (575)             3,941                      (481.7) %                    (114.6) %
Other (2)                                  (129,082)           (365,116)          (233,275)                      (64.6) %                      56.5  %
Total reportable segment income
(loss) from continuing operations
(3)                                       $  36,183          $ (220,683)         $ (95,468)                     (116.4) %                     131.2  %


(1)Segment loss from continuing operations for the years ended December 31, 2020
and 2019 have been revised. For further details refer to "Note 1. Nature of
Operations" in our consolidated financial statements and accompanying notes,
beginning on page F-1 of this Annual Report on Form 10-K.
(2)Other includes the results of the Company's Heart Valves business, which was
disposed of on June 1, 2021, and corporate shared service expenses for finance,
legal, human resources, information technology and corporate business
development.
(3)For a reconciliation of segment income (loss) from continuing operations to
our consolidated loss from continuing operations before tax, refer to "Note 19.
Geographic and Segment Information" in our consolidated financial statements and
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

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Cardiopulmonary

Cardiopulmonary net sales for the year ended December 31, 2021 compared to the
year ended December 31, 2020 increased 8.1% to $483.0 million primarily due to
growth in oxygenator sales resulting from an increase in procedure volumes,
across all regions, growth in heart-lung machine sales in the U.S. region, as
well as the favorable impact of foreign currency fluctuations, partially offset
by a reduction in capital equipment purchases in the Rest of World region.

Cardiopulmonary segment operating loss for the year ended December 31, 2021 was
$6.4 million as compared to segment operating income for the year ended December
31, 2020 of $35.7 million. The decrease in segment operating income was
primarily due to an increase in the litigation provision related to our 3T
Heater-Cooler device and related legal costs of $37.8 million, as well as an
increase in sales and marketing expenses due to lower 2020 commercial related
variable and discretionary spending as a result of COVID-19 during the year
ended December 31, 2020 and an increase in research and development expenses due
to the upcoming launch of our next-generation heart-lung machine. These
increases in expenses were partially offset by an increase in sales, as
discussed above.

Cardiopulmonary net sales for the year ended December 31, 2020 compared to the
year ended December 31, 2019 decreased 11.5% to $446.7 million primarily due to
declines in heart lung machines ("HLM") and oxygenator sales. HLM sales were
negatively impacted due to COVID-19 impacts on hospital budgets for capital
equipment, while oxygenator sales were negatively impacted by a decline of
non-emergent cardiac surgery procedures globally resulting from COVID-19.

Cardiopulmonary segment operating profit decreased 29.3% for the year ended
December 31, 2020 compared to the year ended December 31, 2019primarily due to lower net sales as noted above.

Neuromodulation

Neuromodulation net sales for the year ended December 31, 2021 compared to the
year ended December 31, 2020 increased 28.7% to $456.2 million primarily due to
improving market dynamics across all regions resulting from increased hospital
access and patient willingness to return to clinics.

Neuromodulation segment operating income increased 55.1% for the year ended
December 31, 2021 compared to the year ended December 31, 2020 primarily from an
increase in sales, as discussed above. This increase was partially offset by the
net impact of the change in fair value of the sales-based and milestone-based
contingent consideration arrangement associated with the acquisition of ImThera
of $21.5 million, as well as an increase in sales and marketing expenses due to
lower 2020 commercial related variable and discretionary spending as a result of
COVID-19 during the year ended December 31, 2020 and an increase in research and
development expenses due to our DTD and heart failure clinical trials.

Neuromodulation net sales for the year ended December 31, 2020 compared to the
year ended December 31, 2019 decreased 16.5% to $354.4 million. The decrease in
net sales for the year ended December 31, 2020 was primarily due to declines in
both new patient and end of service implants globally as patients and physicians
delayed implant procedures due to COVID-19.

Neuromodulation segment operating income increased 31.1% for the year ended
December 31, 2020 compared to the year ended December 31, 2019 primarily due to
an increase in operating income resulting from the net impact of the change in
fair value of contingent consideration arrangements of $27.6 million, a decrease
in selling, general and administrative expense driven by cost containment
actions, as well as a $50.3 million impairment of an IPR&D asset during the year
ended December 31, 2019, partially offset by overall declines in net sales, as
discussed above.

Advanced Circulatory Support

Advanced Circulatory Support net sales for the year ended December 31, 2021
compared to the year ended December 31, 2020 increased 31.0% to $55.5 million,
resulting from continued adoption and utilization of LifeSPARC in the U.S. and
an increase in procedure volumes.

Advanced Circulatory Support segment operating income increased 481.7% for the
year ended December 31, 2021 compared to the year ended December 31, 2020
primarily from an increase in sales, as discussed above. This increase was
partially offset by an increase in sales and marketing expenses due to lower
commercial related variable and discretionary spending as a result of COVID-19
during the year ended December 31, 2020.

Advanced Circulatory Support net sales for the year ended December 31, 2020
compared to the year ended December 31, 2019 increased 32.6% to $42.3 million
for the year ended December 31, 2020, resulting from the full U.S. commercial
release of LifeSPARC during the second half of 2020.

Advanced Circulatory Support segment operating income decreased 114.6% for the
year ended December 31, 2020 compared to the year ended December 31, 2019
primarily due to an increase in R&D expense resulting from the net impact of the
change

                                       40
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at fair value of a milestone contingent consideration agreement $8.5 millionpartially offset by an increase in net sales, as indicated above.

Costs and expenses

The following table illustrates our comparative costs and expenses as a
percentage of net sales:

                                                      Year Ended December 31,
                                                   2021                2020        2019
Cost of sales                                             31.8  %     36.3  %     33.2  %
Selling, general and administrative                       45.6  %     47.8  %     48.7  %
Research and development                                  17.7  %     16.4  %     13.5  %
Impairment of disposal group                                 -  %     19.3  %        -  %
Impairment of goodwill                                       -  %      2.3  %      3.9  %
Impairment of long-lived assets                              -  %      0.7  %     13.1  %
Other operating expenses                                   5.0  %      6.5  %      3.2  %


Cost of Sales

Cost of sales primarily includes direct labor, allocated manufacturing overhead, cost of raw materials and component acquisitions.

Cost of sales as a percentage of net sales was 31.8% for the year ended December
31, 2021, a decrease of 4.5% as compared to 2020. The decrease was primarily due
to favorable product mix, partially due to the sale of the Heart Valves business
during the second quarter of 2021, unfavorable manufacturing variances during
the year ended December 31, 2020, as well as a decline in product remediation
expenses associated with our 3T Heater-Cooler device of $7.0 million. These
decreases were partially offset by the net impact of the change in fair value of
a sales-based contingent consideration arrangement of $4.5 million for the year
ended December 31, 2021 compared to the year ended December 31, 2020.

Cost of sales as a percentage of net sales was 36.3% for the year ended December
31, 2020, an increase of 3.1% as compared to 2019. The increase was primarily
due to product mix and unfavorable manufacturing variances of $20.0 million for
the year ended December 31, 2020 due to the decline in demand resulting from
COVID-19.

Selling, general and administrative (“SG&A”) expenses

SG&A expenses include sales, marketing, general and administrative activities.

SG&A expenses as a percentage of net sales decreased for the year ended December
31, 2021 as compared to 2020 primarily due to an increase in sales, partially
offset by an increase in sales and marketing expenses due to lower commercial
related variable and discretionary spending as a result of COVID-19 during the
year ended December 31, 2020.

SG&A expenses as a percentage of net sales decreased for the year ended December
31, 2020 as compared to 2019 primarily due to sales and marketing reductions
from cost containment actions resulting from COVID-19, a decrease in 3T legal
expenses and the settlement of tax litigation that resulted in the release of an
uncertain tax position of $4.3 million.

Research and development costs

R&D expenditures include product design and development efforts, clinical study programs and regulatory activities, which are critical to our strategic portfolio initiatives, including DTD, OSA and Heart Failure.

R&D expenses as a percentage of net sales increased for the year ended December
31, 2021 as compared to 2020 primarily due to an increase in R&D expense
resulting from the net impact of changes in fair value of milestone-based
contingent consideration arrangements of $16.6 million as well as an increase in
research and development expenses due to the upcoming launch of our
next-generation heart-lung machine and due to our DTD and heart failure clinical
trials.

R&D expenses as a percentage of net sales increased for the year ended December
31, 2020 as compared to 2019 primarily due to a decline in net sales as well as
an increase in R&D expense resulting from the net impact of changes in fair
value of milestone-based contingent consideration arrangements of $8.8 million.

The deficiencies of Elimination group, Good will and long-term assets

During the year ended December 31, 2020, we recognized an impairment of $180.2
million to record the Heart Valves disposal group at fair value less estimated
cost to sell. Additionally, during the year ended December 31, 2020, we recorded
a

                                       41
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$21.3 million impairment to the goodwill allocated to the Heart Valves disposal
group based upon the relative fair values of the businesses. For further
information refer to "Note 4. Divestiture of Heart Valve Business" in our
consolidated financial statements and accompanying notes, beginning on page F-1
of this Annual Report on Form 10-K.

During the second quarter of 2019, we determined that there would be a delay in
the estimated commercialization date of the Company's obstructive sleep apnea
product currently under development. This delay constituted a triggering event
that required evaluation of the IPR&D asset arising from the ImThera acquisition
for impairment. Based on the assessment performed, we determined that the IPR&D
asset was impaired and as a result, recorded an impairment of $50.3 million,
which is included in our Neuromodulation segment. The estimated fair value of
IPR&D was determined using the income approach. Future delays in
commercialization or changes in management estimates could result in further
impairment.

The announcement of the effective end of our Caisson TMVR program
December 31, 2019, triggered an assessment of finite and indefinite-lived assets for impairment. Consequently, we fully impaired the goodwill and the IPR&D asset associated with the Casing activity of $42.4 million and $89.0 millionrespectively during the year ended December 31, 2019.

Other operating expenses

Other operating expenses consists primarily of the provision for litigation
involving our 3T Heater-Cooler device, the provision for the decommissioning of
hazardous substances at our site in Saluggia, Italy, merger and integration
expense, restructuring expense, and the loss on the on sale of our Heart Valves
business.

Other operating expenses as a percentage of net sales for the year ended
December 31, 2021 compared to the year ended December 31, 2020 decreased
primarily due to a $42.2 million provision recognized in 2020 for our obligation
to clean and dismantle contaminated buildings and equipment at our Saluggia,
Italy campus as well as to deliver hazardous substances to a national
repository. For further information, refer to "Note 13. Commitments and
Contingencies" in our consolidated financial statements and accompanying notes,
beginning on page F-1 of this Annual Report on Form 10-K. This decrease was
partially offset by an increase in the litigation provision related to our 3T
Heater-Cooler device of $34.2 million.

Other operating expenses as a percentage of net sales for the year ended
December 31, 2020 compared to the year ended December 31, 2019 increased
primarily due to a $42.2 million provision for our obligation to clean and
dismantle contaminated buildings and equipment at our Saluggia, Italy campus as
well as to deliver hazardous substances to a national repository, as discussed
above. This increase was partially offset by a decrease in merger and
integration expenses primarily due to completion of certain integration
activities associated with our merger and acquisitions.

Interest charges

We incurred interest expense of $50.2 million for the year ended December 31,
2021, as compared to $40.8 million and $15.1 million for 2020 and 2019,
respectively. The increase for the year ended December 31, 2021 as compared to
2020 was primarily due to $10.5 million in increased interest expense in 2021
from the exchangeable notes that were entered into in June 2020. The increase
for the year ended December 31, 2020 as compared to 2019 was primarily due to
increased average debt borrowings at increased effective borrowing rates. For
further information on our debt refer to "Note 10. Financing Arrangements" in
our consolidated financial statements and accompanying notes, beginning on page
F-1 of this Annual Report on Form 10-K.

Loss on extinguishment of debt

Loss on debt extinguishment for the year ended December 31, 2021 resulted from
the early repayment and termination of the Company's 2020 senior secured term
loan and revolving credit facility with ACF FINCO I LP, respectively, totaling
$60.2 million. For further details on the loss on debt extinguishment, refer to
"Note 10. Financing Arrangements" in our consolidated financial statements and
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

Exchange gains/(losses) and others

Foreign exchange and other gains/(losses) consist primarily of gains and losses
arising from transactions denominated in a currency different from an entity's
functional currency, foreign currency exchange rate derivative gains and losses
and changes in the fair value of embedded and capped call derivatives.

Foreign exchange and other gains/(losses) was a loss of $13.7 million for the
year ended December 31, 2021, as compared to losses of $32.0 million and $2.5
million for 2020 and 2019, respectively. For further details, refer to "Note 20.
Supplemental Financial Information" in our consolidated financial statements and
accompanying notes, beginning on page F-1 of this Annual Report on Form 10-K.

                                       42

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Income taxes

LivaNova PLC is resident in the UK. Our subsidiaries conduct operations and earn
income in numerous countries and are subject to the laws of taxing jurisdictions
within those countries, and the income tax rates imposed in the tax
jurisdictions in which our subsidiaries conduct operations vary. As a result of
the changes in the overall level of our income, the earnings mix in various
jurisdictions, changes in valuation allowances, and the changes in tax laws, our
consolidated effective income tax rate may vary substantially from one reporting
period to another.

Our effective income tax rate from continuing operations was (9.0%), 0.3% and
16.1% for the years ended December 31, 2021, 2020 and 2019, respectively. 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 year ended December 31, 2020, the decrease in the effective
tax rate for 2021 was primarily attributable to changes in valuation allowances,
the tax impact of the sale of the Heart Valve business and the early repayment
and termination of the Company's 2020 senior secured term loan. Comparatively,
the effective tax rate for 2020 included the tax benefits related to the
Coronavirus Aid, Relief and Economic Security ("CARES") Act, the release of the
uncertain tax positions upon the settlement of tax litigation in Italy and other
items, offset by an increase to the valuation allowance of the UK and other
jurisdictions.

Compared with the year ended December 31, 2019, the decrease in the effective
tax rate for 2020 was primarily attributable to a tax benefit related to the
Coronavirus Aid, Relief and Economic Security ("CARES") Act, the tax benefit due
to the release of the uncertain tax positions upon the settlement of tax
litigation in Italy and other items, offset by an increase to the valuation
allowance of the UK and other jurisdictions. Comparatively, the effective tax
rate for 2019 included a release of uncertain tax positions and a U.S. federal
tax benefit from a return to provision reconciliation, partly offset by the
valuation allowance for a portion of the U.S. federal and state net operating
losses and attributes.

Critical Accounting Estimates

We have adopted various accounting policies to prepare the consolidated
financial statements in accordance with accounting principles generally accepted
in the U.S. ("U.S. GAAP"). Our most significant accounting policies are
disclosed in "Note 2. Basis of Presentation, Use of Accounting Estimates and
Significant Accounting Policies" and "Note 3. Revenue Recognition" in our
consolidated financial statements and accompanying notes, beginning on page F-1
of this Annual Report on Form 10-K. New accounting pronouncements are disclosed
in "Note 22. New Accounting Pronouncements" in our consolidated financial
statements and accompanying notes, beginning on page F-1 of this Annual Report
on Form 10-K.

To prepare our consolidated financial statements in conformity with U.S. GAAP,
management makes estimates and assumptions that may affect the reported amounts
of our assets and liabilities, the disclosure of contingent liabilities as of
the date of our consolidated financial statements and the reported amounts of
our revenue and expenses during the reporting period. Our actual results may
differ from these estimates. We consider estimates to be critical if we are
required to make assumptions about material matters that are uncertain at the
time of estimation, or if materially different estimates could have been made or
it is reasonably likely that the accounting estimate will change from period to
period. The following are areas requiring management's judgment that we consider
critical:

Good will and long-term assets

We allocate the purchase price consideration for an acquisition to the assets we
acquire and liabilities we assume based on their fair values at the date of
acquisition, including property, plant and equipment, inventories, accounts
receivable, long-term debt, and identifiable intangible assets which either
arise from a contractual or legal right or are separable from goodwill. We
allocate any excess purchase price over the fair value of the net tangible and
identifiable intangible assets acquired to goodwill. We base the fair value of
identifiable intangible assets acquired in a business combination, including
IPR&D, on valuations that use information and assumptions provided by
management, which consider management's best estimates of inputs and assumptions
that a market participant would use.

Intangible assets shown on the consolidated balance sheets consist of
finite-lived and indefinite-lived assets expected to generate future economic
benefits and are recorded at their respective fair values as of their
acquisition date. Finite-lived intangible assets consist primarily of developed
technology and technical capabilities, including patents, related know-how and
licensed patent rights, trade names and customer relationships. Customer
relationships consist of relationships with hospitals and surgeons in the
countries where we operate. Indefinite-lived intangible assets other than
goodwill are composed of IPR&D assets acquired in acquisitions.

                                       43

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We review, each reporting period if there are circumstances that warrant an
evaluation of the carrying amounts of our property and equipment and our
finite-lived intangible assets to determine whether such carrying amounts
continue to be recoverable. Such changes in circumstance may include, among
other items, an expectation of a sale or disposal of a long-lived asset or asset
group, adverse changes in market or competitive conditions, an adverse change in
legal factors or business climate in the markets in which we operate and
operating or cash flow losses. Long-lived assets held and used are assessed for
possible impairment by comparing their carrying values with their associated
undiscounted, future cash flows. In order to calculate the impairment charge, we
generally measure fair value by considering sale prices for similar assets,
discounted estimated future cash flows using an appropriate discount rate and/or
estimated replacement cost.

We estimate the useful lives of our finite-lived intangible assets, which requires significant management judgment. We evaluate our intangible assets at each reporting period to determine whether events and circumstances indicate a different useful life.

We evaluate the goodwill and indefinite-lived intangible assets for impairment
at least annually on October 1st and whenever other facts and circumstances
indicate that the carrying amounts of goodwill and other indefinite-lived
intangible assets may not be recoverable. Estimating the fair value of goodwill
requires various assumptions, including revenue growth rates and discount rates.
We performed a sensitivity analysis for our Cardiopulmonary, Neuromodulation and
Advanced Circulatory Support reporting units, as of October 1, 2021, for each of
these assumptions and determined that an increase of 0.5% in the discount rate
used, or a decrease of 0.5% in the expected revenue growth rate would not result
in an impairment of goodwill. Estimating the fair value of indefinite-lived
intangible assets requires various assumptions, including revenue growth rates,
timing and probability of commercialization, and discount rates. We performed a
sensitivity analysis, as of October 1, 2021, for each of these assumptions and
determined that an increase of 0.5% in the discount rate, or a decrease of 0.5%
in the expected revenue growth rate would not result in an impairment of our
indefinite-lived intangible asset. For additional information, please refer to
"Note 4. Divestiture of Heart Valve Business" and "Note 7. Goodwill and
Intangible Assets" in the consolidated financial statements in this Annual
report on Form 10-K.

Income taxes

We are a UK corporation, and we operate through our various subsidiaries in a
number of countries throughout the world. Our provision for income taxes is
based on the tax laws and rates applicable in the jurisdictions in which we
operate and earn income. We use significant judgment and estimates in accounting
for our income taxes. We recognize deferred tax assets and liabilities for the
anticipated future tax effects of temporary differences between the financial
statements basis and the tax basis of our assets and liabilities, which are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.

We file federal and local tax returns in many jurisdictions throughout the world
and are subject to income tax examinations for our fiscal year 2015 and
subsequent years, with certain exceptions. While we believe that our tax return
positions are fully supported, tax authorities may disagree with certain
positions we have taken and assess additional taxes and as a result, we may
establish reserves for uncertain tax positions, which require a significant
degree of management judgment. We regularly assess the likely outcomes of our
tax positions in order to determine the appropriateness of our reserves;
however, the actual outcome of an audit can be significantly different than our
expectations, which could have a material impact on our tax provision. The total
amount of unrecognized tax benefit, as of December 31, 2021, if recognized,
would reduce our income tax expense by approximately $1.7 million.

We periodically assess the recoverability of our deferred tax assets by
considering whether it is more-likely-than-not that some or all of the actual
benefit of those assets will be realized. To the extent that realization does
not meet the "more-likely-than-not" criterion, we establish a valuation
allowance. We periodically review the adequacy and necessity of the valuation
allowance by considering significant positive and negative evidence relative to
our ability to recover deferred tax assets and to determine the timing and
amount of valuation allowance that should be released. This evidence includes:
profitability in the most recent quarters; internal forecasts for the current
and next two future years; size of deferred tax asset relative to estimated
profitability; the potential effects on future profitability from increasing
competition, healthcare reforms and overall economic conditions; limitations and
potential limitations on the use of our net operating losses due to ownership
changes, pursuant to IRC Section 382; and the implementation of prudent and
feasible tax planning strategies, if any.

For more information, please see “Note 17. Income Taxes” to the consolidated financial statements of this Annual Report on Form 10-K.

                                       44

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Legal and other contingencies

Provisions for legal contingencies are recognized when the Company determines it
is probable that a loss has been incurred and the amount is reasonably
estimable, the determination of which requires significant judgment. Estimates
are used in assessing the likelihood of a loss being incurred and when
determining a reasonable estimate of the loss for each claim. Final settlement
amounts may be materially different from the provision recorded. For additional
information, please refer to "Note 13. Commitments and Contingencies" in the
consolidated financial statements in this Annual report on Form 10-K.

Contingent consideration liabilities

Contingent consideration liabilities are from arrangements resulting from
acquisitions that involve potential future payment of consideration that is
contingent upon the achievement of performance milestones and sales-based
earn-outs. Contingent consideration liabilities are measured at fair value each
reporting period, the determination of which requires significant judgements and
estimates. The fair value of contingent consideration is determined based on the
consideration expected to be transferred and estimated as the probability of
future cash flows, discounted to present value in accordance with accepted
valuation methodologies. For additional information, please refer to "Note 9.
Fair Value Measurements" in the consolidated financial statements in this Annual
report on Form 10-K.

Integrated exchange function and capped call derivatives

In June 2020, the Company issued cash exchangeable senior notes and entered into
related capped call transactions. The cash exchangeable senior notes include an
embedded exchange feature that is bifurcated from the cash exchangeable senior
notes. The embedded exchange feature derivative is measured at fair value using
a binomial lattice model and discounted cash flows that utilize observable and
unobservable market data. The capped call derivative is measured at fair value
using the Black-Scholes model utilizing observable and unobservable market data,
including stock price, remaining contractual term, expected volatility,
risk-free interest rate and expected dividend yield, as applicable. The Company
uses historical volatility and implied volatility from options traded to
determine expected stock price volatility which is an unobservable input that is
significant to the valuation. For additional information, please refer to "Note
9. Fair Value Measurements" and "Note 10. Financing Arrangements" in the
consolidated financial statements in this Annual report on Form 10-K.

New accounting statements

For a discussion of new accounting standards and disclosure requirements, please
refer to "Note 22. New Accounting Pronouncements" in our consolidated financial
statements and accompanying notes, beginning on page F-1 of this Annual Report
on Form 10-K.

Cash and capital resources

Based on our current business plan, we believe that our sources of liquidity,
which primarily consist of cash and cash equivalents, future cash generated from
operations and available borrowings under our current debt facilities, will be
sufficient to fund our uses of liquidity, primarily consisting of purchase
obligations for expected operating, working capital and R&D needs, capital
expenditures, and debt service requirements over the twelve-month period
beginning from the issuance date of these consolidated financial statements.
From time to time, we may decide to access debt and/or equity markets to
optimize our capital structure, raise additional capital or increase liquidity
as necessary, including to satisfy liabilities that may arise in connection with
the SNIA litigation. On February 21, 2022, the Court of Appeal notified the
Company that it granted the Company a suspension with respect to the payment of
damages in the amount of €453.6 million (approximately U.S. $514.6 million at
December 31, 2021) in the SNIA litigation until a decision has been reached on
our appeal to the Italian Supreme Court. This suspension is subject to providing
a first demand bank surety of €270.0 million (approximately U.S. $306.2 million)
within 30 calendar days. On February 24, 2022, LivaNova PLC and its wholly-owned
subsidiary, LivaNova USA, Inc. entered into an Incremental Facility Amendment
No. 1 to the First Lien Credit Agreement with Goldman Sachs Bank USA, relating
to a €200 million bridge loan facility (the "Bridge Loan Facility"). We intend
to use the proceeds to secure the first demand bank surety of €270.0 million or,
alternatively, for payment of court ordered damages or settlements (including
interest, expenses and charges in connection therewith) in the event of a
negative decision by the Italian Supreme Court. The Bridge Loan Facility has an
availability period until June 30, 2022 and a maturity date 15 months after
drawing. Borrowings under the Bridge Loan Facility bear interest at a rate equal
to an adjusted EURIBOR (with a floor of 0.00%) plus 3.5% increasing by 0.25% 15
days after drawing and by an additional 0.5% 90 days after drawing and every 90
days thereafter, with a maximum margin of 5.25% over adjusted EURIBOR. Our
liquidity could be adversely affected by the factors affecting future operating
results, including those referred to in "Item 1A. Risk Factors" above and by the
contingencies referred to in "Note 13. Commitments and Contingencies" in the
consolidated financial statements in this Annual report on Form 10-K.

                                       45

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Our operating, working capital and R&D purchase obligations primarily consist of
obligations arising from the normal course of business including inventory
supply contract obligations, the future settlement of derivative instruments,
and future payments of operating leases, as well as contingent consideration
arrangements resulting from acquisitions, and obligations associated with legal
and other accruals. The following table presents selected financial information
related to our liquidity as of December 31, 2021 and 2020 (in thousands):
                                                                 December 31,
                                                             2021           2020
Sources of liquidity
Cash and cash equivalents                                 $ 207,992      $ 252,832
Accounts receivable, net                                    185,354        184,356
Inventories                                                 105,840        115,285
Short term derivative assets (1)                            106,629         

2,053

Availability under revolving credit facilities (2)          125,000         50,000
Short term uses of liquidity
Short term derivative liabilities (1)                     $ 183,109      $  

7,372

Short term debt (2)                                         229,673         

13,343

Short term operating leases (3)                              11,261         

11,276

Short term contingent consideration (4)                      11,552         

13,968

Short term 3T litigation provision (5)                       32,845         

28,612

Long-term uses of liquidity
Long-term debt (2)                                        $   9,849      $ 

642 298

Long-term operating leases (3)                               35,919         

42,221

Long-term contingent consideration (4)                       86,830         

89,850

Long-term Saluggia site liability (5)                        38,788         

42,476

Long-term 3T litigation provision (5)                         6,625         

7,878


(1)For additional information, please refer to "Note 11. Derivatives and Risk
Management" in the consolidated financial statements in this Annual Report on
Form 10-K.
(2)For additional information, please refer to "Note 10. Financing Arrangements"
in the consolidated financial statements in this Annual Report on Form 10-K.
(3)For additional information, please refer to "Note 12. Leases" in the
consolidated financial statements in this Annual Report on Form 10-K.
(4)For additional information, please refer to "Note 9. Fair Value Measurements"
in the consolidated financial statements in this Annual Report on Form 10-K.
(5)For additional information, please refer to "Note 13. Commitments and
Contingencies" in the consolidated financial statements in this Annual Report on
Form 10-K.

Debt and Capital

Our capital structure consists of debt and equity. As of December 31, 2021, our
total debt of $239.5 million was 18.5% of total equity of $1,294.6 million. As
of December 31, 2020, our total debt of $655.6 million was 59.1% of total equity
of $1,109.3 million.

During the year ended December 31, 2021, we repaid $452.3 million in long-term
debt and paid $35.6 million for the make-whole premium associated with the early
retirement of long-term debt. We received $322.6 million in net proceeds from
the issuance of ordinary shares. Additionally, we reduced our short-term
unsecured revolving credit agreements and other agreements with various banks by
$2.0 million.

During the year ended December 31, 2020, we borrowed $886.9 million in long-term
debt, incurred $23.7 million in debt issuance costs, and repaid $482.1 million
in long-term debt. Additionally, we increased our short-term unsecured revolving
credit agreements and other agreements with various banks by $1.3 million.

On June 17, 2020, our wholly-owned subsidiary, LivaNova USA, Inc., issued $287.5
million aggregate principal amount of 3.00% Cash Exchangeable Senior Notes due
in 2025 (the "Notes"). Holders of the Notes are entitled to exchange the Notes
at any time during specified periods, at their option. This includes the right
to exchange the Notes during any calendar quarter, if the last reported sale
price of LivaNova's ordinary shares, with a nominal value of £1.00 per share, is
greater than or equal to

                                       46
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130% of the exchange price, or $79.27 per share for at least 20 trading days
(whether or not consecutive) during a period of 30 consecutive trading days
ending on, and including, the last trading day of the immediately preceding
calendar quarter. The exchange condition was satisfied on December 20, 2021,
which allows the holders of the Notes to request to exchange the Notes through
March 31, 2022. As a result, we have reclassified our obligations from the Notes
and the associated embedded exchange feature derivative as a current liability
on the consolidated balance sheet as of December 31, 2021. However, as of the
date of filing of this Form 10-K, no holders have elected to exchange the Notes.
The Notes are exchangeable solely into cash and are not exchangeable into
ordinary shares of LivaNova or any other security under any circumstances. The
initial exchange rate for the Notes is 16.3980 ordinary shares per $1,000
principal amount of Notes (equivalent to an initial exchange price of
approximately $60.98 per share). The exchange rate is subject to adjustment in
certain circumstances, as set forth in the indenture governing the Notes. If
holders elect to exchange their Notes during the current period or any future
periods in the event an exchange condition is met, we would be required to
settle our exchange obligation through the payment of cash, which could
adversely affect our liquidity. Currently, the Company believes it is unlikely
the holders of the Notes will exchange significant amounts of the Notes.

The Company has also entered into privately negotiated capped call transactions
with terms substantially similar to those applicable to the Notes. The capped
call transactions are expected generally to offset any cash payments the Company
is required to make upon exchange of the Notes in excess of the principal amount
thereof in the event that the market value per ordinary share, as measured under
the capped call transactions, is greater than the strike price of the capped
call transactions, with such offset being subject to an initial cap price of
$100.00 per share. The capped call transactions expire on December 15, 2025 and
must be settled in cash. If the capped call transactions are converted or
redeemed early, settlement occurs at their termination value, which is equal to
their fair value at the time of the redemption. The capped call transactions are
included at their estimated fair value as of December 31, 2021 within current
derivative assets on the consolidated balance sheet.

On August 13, 2021, LivaNova PLC and its wholly-owned subsidiary, LivaNova USA,
Inc. (the "Borrower") entered into a First Lien Credit Agreement with the
lenders and issuing banks party thereto and Goldman Sachs Bank USA, as First
Lien Administrative Agent and First Lien Collateral Agent, relating to a $125
million senior secured multi-currency revolving credit facility to be made
available to the Borrower (the "2021 Revolving Credit Facility"). The 2021
Revolving Credit Facility is available for working capital and other general
corporate purposes and, if drawn, can be repaid at any time without premium or
penalty. There were no outstanding borrowings under the 2021 Revolving Credit
Facility as of December 31, 2021.

On August 6, 2021, the Company closed an offering and issued 4,181,818 ordinary
shares, par value £1.00 per share, at an offering price of $82.50 per share. Net
proceeds from the offering were approximately $322.6 million, after deducting
underwriting discounts, commissions and offering expenses. Proceeds from the
offering were used to repay the Company's $450 million 2020 senior secured term
loan.

Cash Flows

Net cash and cash equivalents provided by (used in) operating, investing and
financing activities and the net (decrease) increase in the balance of cash and
cash equivalents were as follows (in thousands):
                                                                     Year Ended December 31,
                                                          2021                 2020                 2019
Operating activities                                 $   102,544          $   (79,422)         $   (91,142)
Investing activities                                      36,904              (41,844)             (41,290)
Financing activities                                    (181,483)             310,756              146,581
Effect of exchange rate changes on cash and
cash equivalents                                          (2,805)               2,205                 (216)
Net (decrease) increase                              $   (44,840)         $   191,695          $    13,933


Operating Activities

Cash provided by operating activities for the year ended December 31, 2021
increased $182.0 million as compared to the same prior-year period. The increase
is primarily due to a decrease in 3T litigation settlement payments of $103.4
million, the receipt of a CARES Act tax refund of $24.5 million during the year
ended December 31, 2021, and an increase in sales.

Cash used in operating activities for the year ended December 31, 2020 decreased
$11.7 million as compared to 2019, primarily due to the effect of improved
working capital management of $77.7 million, partially offset by a decrease in
net income adjusted for non-cash items of $66.0 million, 3T litigation
settlement payments made during 2019 and the change in operating assets and
liabilities.

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Investing activities

Cash provided by investing activities during the year ended December 31, 2021
increased $78.7 million as compared to the same prior-year period. The increase
is primarily due to proceeds from the sale of Heart Valves of $42.9 million,
proceeds from the sale of LivaNova's investment in and loan to Respicardia
totaling $23.1 million, as well as a decrease in purchases in property, plant
and equipment of $9.5 million.

Cash used in investing activities during the year ended December 31, 2020
increased $0.6 million as compared to 2019. The increase is primarily due to an
increase in purchases of property, plant and equipment of $10.3 million and an
increase in purchases of investments and loans to investees totaling $3.4
million, partially offset by a decrease of $9.0 million in cash paid for
acquisitions and a decrease in purchases of intangible assets of $3.3 million.

Fundraising activities

Cash used in financing activities during the year ended December 31, 2021
increased $492.2 million as compared to the same prior year period. The increase
is primarily due to a net repayment of borrowings during the year ended December
31, 2021 of $456.7 million compared to net proceeds from borrowings of $382.4
million in the prior year period, as well as a payment of $35.6 million for the
make-whole premium on long-term debt obligations made during the year ended
December 31, 2021. These increases were partially offset by the net proceeds
from the issuance of ordinary shares of $322.6 million during the year ended
December 31, 2021, as well as the purchase of a capped call associated with our
Notes of $43.1 million and a closing adjustment payment for the sale of our
former Cardiac Rhythm Management ("CRM") business of $14.9 million made during
the year ended December 31, 2020.

Cash provided by financing activities during the year ended December 31, 2020
increased $164.2 million as compared to 2019, primarily due to an increase in
net borrowings and associated costs of $214.5 million and a decrease in payments
of contingents consideration of $6.9 million, partially offset by the purchase
of a capped call associated with our Notes of $43.1 million and a closing
adjustment payment for the sale of our former CRM business of $14.9 million.

Market risk

We are exposed to certain market risks as part of our ongoing business
operations, including risks from foreign currency exchange rates, interest rate
risks and concentration of procurement suppliers, that could adversely affect
our consolidated financial position, results of operations or cash flows.

We manage these risks through regular operating and financing activities and, at times, through derivative financial instruments.

Exchange rate risk

Due to the global nature of our operations, we are exposed to foreign currency
exchange rate fluctuations. We maintain a foreign currency exchange rate risk
management strategy that utilizes derivatives to reduce our exposure to
unanticipated fluctuations in forecast revenue and costs and fair values of
debt, inter-company debt and accounts receivable caused by changes in foreign
currency exchange rates.

We mitigate our credit risk relating to counter-parties of our derivatives
through a variety of techniques, including transacting with multiple,
high-quality financial institutions, thereby limiting our exposure to individual
counter-parties and by entering into International Swaps and Derivatives
Association, Inc. ("ISDA") Master Agreements, which include provisions for a
legally enforceable master netting agreement, with almost all of our derivative
counter-parties. The terms of the ISDA agreements may also include credit
support requirements, cross default provisions, termination events, and set-off
provisions. Legally enforceable master netting agreements reduce credit risk by
providing protection in bankruptcy in certain circumstances and generally
permitting the closeout and netting of transactions with the same counter-party
upon the occurrence of certain events.

Interest rate risk

We are subject to interest rate risk on our investments and debt. If interest rates were to increase or decrease by 0.5%, the effects on our Consolidated Statement of Income would not be material.

Concentration of credit risk

Our trade accounts receivable represent potential concentrations of credit risk.
This risk is limited due to the large number of customers and their dispersion
across a number of geographic areas, as well as our efforts to control our
exposure to credit risk by monitoring our receivables and the use of credit
approvals and credit limits. In addition, we have historically had strong
collections and minimal write-offs. While we believe that our reserves for
credit losses are adequate, essentially all of our trade

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receivables are concentrated in the hospital and healthcare sectors worldwide,
and accordingly, we are exposed to their respective business, economic and
country-specific variables. Although we do not currently foresee a concentrated
credit risk associated with these receivables, repayment is dependent on the
financial stability of these industry sectors and the respective countries'
national economies and healthcare systems.

Factors Affecting Future Operating Results and Share Price

Important factors affecting our future results of operations and stock prices are disclosed under “Item 1A. Risk Factors” of this Annual Report on Form 10-K.

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Item 7A. Quantitative and qualitative information on market risk

The information required under 7A. has been incorporated by reference to the
information contained in "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this Annual Report on Form
10-K under the section entitled "Market Risk."

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