LivaNova PLCLIVN
LivaNova PLC Fair Value Disclosure
Note 8. 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. Excluding LivaNova’s investment in Ceribell, Inc., as discussed in “Note 6. Investments,” there were no transfers between Level 1, Level 2, or Level 3 for the years ended December 31, 2025, 2024, or 2023.
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):
| December 31, 2025 | Balance Sheet Location | Total | Fair Value Measurements Using Inputs Considered as: | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Derivative assets - freestanding instruments (FX) | Prepaid expenses and other current assets | $ | 165 | $ | — | $ | 165 | $ | — | |||||||||||||||||||||||
| Derivative assets - capped call derivatives (2029 Notes) | Long-term derivative assets | 36,551 | — | — | 36,551 | |||||||||||||||||||||||||||
Convertible notes receivable | Investments | 3,000 | — | — | 3,000 | |||||||||||||||||||||||||||
| $ | 39,716 | $ | — | $ | 165 | $ | 39,551 | |||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
Derivative liabilities - freestanding instruments (FX) | Accrued liabilities and other | $ | 99 | $ | — | $ | 99 | $ | — | |||||||||||||||||||||||
| Derivative liabilities - embedded derivative (2029 Notes) | Long-term derivative liabilities | 83,904 | — | — | 83,904 | |||||||||||||||||||||||||||
| ImThera contingent consideration arrangement | Current contingent consideration | 50,030 | — | — | 50,030 | |||||||||||||||||||||||||||
| ImThera contingent consideration arrangement | Long-term contingent consideration | 42,045 | — | — | 42,045 | |||||||||||||||||||||||||||
| $ | 176,078 | $ | — | $ | 99 | $ | 175,979 | |||||||||||||||||||||||||
| December 31, 2024 | Balance Sheet Location | Total | Fair Value Measurements Using Inputs Considered as: | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Derivative assets - freestanding instruments (FX) | Prepaid expenses and other current assets | $ | 738 | $ | — | $ | 738 | $ | — | |||||||||||||||||||||||
| Derivative assets - capped call derivatives (2025 Notes) | Prepaid expenses and other current assets | 2,624 | — | — | 2,624 | |||||||||||||||||||||||||||
| Derivative assets - capped call derivatives (2029 Notes) | Long-term derivative assets | 23,735 | — | — | 23,735 | |||||||||||||||||||||||||||
| Investment with readily determinable fair value | Investments | 10,144 | 10,144 | — | — | |||||||||||||||||||||||||||
| $ | 37,241 | $ | 10,144 | $ | 738 | $ | 26,359 | |||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Derivative liabilities - embedded derivative (2025 Notes) | Accrued liabilities and other | $ | 2,915 | $ | — | $ | — | $ | 2,915 | |||||||||||||||||||||||
| Derivative liabilities - embedded derivative (2029 Notes) | Long-term derivative liabilities | 51,819 | — | — | 51,819 | |||||||||||||||||||||||||||
| ImThera contingent consideration arrangement | Long-term contingent consideration | 84,218 | — | — | 84,218 | |||||||||||||||||||||||||||
| $ | 138,952 | $ | — | $ | — | $ | 138,952 | |||||||||||||||||||||||||
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):
| Capped Call Derivative Assets (2025 Notes) | Capped Call Derivative Assets (2029 Notes) | Convertible Notes Receivable | Embedded Derivative Liability (2025 Notes) | Embedded Derivative Liability (2029 Notes) | Contingent Consideration Liability Arrangements | |||||||||||||||||||||||||||||||||
As of December 31, 2023 | $ | 38,496 | $ | — | $ | 275 | $ | 45,569 | $ | — | $ | 94,652 | ||||||||||||||||||||||||||
| Additions | — | 31,637 | — | — | 87,457 | — | ||||||||||||||||||||||||||||||||
| Cash receipt | (22,524) | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Payment | — | — | — | (36,915) | — | (13,750) | ||||||||||||||||||||||||||||||||
Changes in fair value (1) (2) | (13,348) | (7,902) | (275) | (5,739) | (35,638) | 3,316 | ||||||||||||||||||||||||||||||||
As of December 31, 2024 | 2,624 | 23,735 | — | 2,915 | 51,819 | 84,218 | ||||||||||||||||||||||||||||||||
| Additions | — | — | 3,000 | — | — | — | ||||||||||||||||||||||||||||||||
Changes in fair value (1) (2) | (2,624) | 12,816 | — | (2,915) | 32,085 | 7,857 | ||||||||||||||||||||||||||||||||
As of December 31, 2025 | $ | — | $ | 36,551 | $ | 3,000 | $ | — | $ | 83,904 | $ | 92,075 | ||||||||||||||||||||||||||
(1)For the year ended December 31, 2025, the contingent consideration change in fair value resulted in an increase of $4.2 million recorded to and an increase of $3.6 million recorded to . For the year ended December 31, 2024, the contingent consideration change in fair value resulted in an increase of $1.3 million recorded to and an increase of $2.0 million recorded to .
(2)Changes in the fair value of the embedded derivative liabilities and capped call derivative assets are recognized in foreign exchange and other income/(expense) in the consolidated statements of income (loss). For additional information on changes in fair value as it relates to the embedded and capped call derivatives, refer to “Note 7. Derivatives and Risk Management.”
Share Price Volatility
The following table presents the share price volatility utilized in determining the fair value of LivaNova’s capped call derivative assets and embedded derivative liabilities:
Share Price Volatility (1) | Capped Call Derivative Assets (2025 Notes) | Capped Call Derivative Assets (2029 Notes) | Embedded Derivative Liability (2025 Notes) | Embedded Derivative Liability (2029 Notes) | ||||||||||||||||||||||
| December 31, 2025 | N/A | 37 | % | N/A | 37 | % | ||||||||||||||||||||
December 31, 2024 | 37 | % | 35 | % | 37 | % | 35 | % | ||||||||||||||||||
(1)The embedded and capped call derivatives are classified as Level 3 because the Company uses historical volatility and implied volatility from actual options traded to determine expected share price volatility, an unobservable input that is significant to the valuation. 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 (loss) income depends on how significant inputs, such as share price, share price volatility, and time to the expiration of the derivatives, change in relation to other inputs.
Contingent Consideration Arrangements
The ImThera business combination 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. The sales-based earnouts are valued using projected sales from LivaNova’s internal strategic plan. These arrangements are Level 3 fair value measurements and include the following significant unobservable inputs as of December 31, 2025:
| ImThera Acquisition | Valuation Technique | Unobservable Inputs | ||||||||||||||||||
| Regulatory milestone-based payment | Discounted cash flow | Discount rate | 5.4% | |||||||||||||||||
| Probability of payment | 85% | |||||||||||||||||||
| Projected payment year | 2026 | |||||||||||||||||||
| ImThera Acquisition | Valuation Technique | Unobservable Inputs | ||||||||||||||||||
| Sales-based earnout | Monte Carlo simulation | Risk-adjusted discount rate | 11.5% - 11.6% | |||||||||||||||||
| Credit risk discount rate | 5.7% - 6.3% | |||||||||||||||||||
| Revenue volatility | 23.3% | |||||||||||||||||||
| Probability of payment | 85% | |||||||||||||||||||
| Projected years of earnout | 2027 - 2030 | |||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
LivaNova’s investments in equity securities of non-consolidated affiliates without readily determinable fair values are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. LivaNova’s investments in non-financial assets such as goodwill, intangible assets, and PP&E are measured at fair value if there is an indication of impairment and adjusted to the new fair value when an impairment is recognized. LivaNova classifies the measurement input for these assets as Level 3 inputs within the fair value hierarchy.
Other
The carrying value of LivaNova’s long-term debt including the current portion as of December 31, 2025 and 2024 was $376.1 million and $627.0 million, respectively. The fair value of the 2029 Notes as of December 31, 2025 and 2024 was $399.1 million and $343.7 million, respectively. The fair value of the 2025 Notes as of December 31, 2024 was $58.7 million. For all other long-term debt obligations, LivaNova believes the carrying value approximates fair value. The fair value was estimated using quoted market prices for the publicly registered Senior Notes, which are classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.
The carrying values of LivaNova’s cash, cash equivalents, and restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to the short-term nature of these items.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.