LivaNova Saw Solid Growth as Delayed Patients Returned in Third Quarter; No Change to Our FVE

Narrow-moat LivaNova saw third-quarter revenue and adjusted earnings growth that weren’t far from our expectations, and the firm remains on track to reach our full-year projections. We’re leaving our fair value estimate unchanged for now. The firm posted solid quarterly revenue growth of 5% in constant currency, but the consolidated number doesn’t fully capture the see-saw that LivaNova has been riding across its different product segments thanks to the pandemic. On one hand, advanced circulatory support saw a quarterly decline of 44% as the number of severely ill, hospitalized COVID-19 patients has significantly diminished. On the other hand, the cardiopulmonary and neuromodulation segments grew 7% and 10%, respectively, as non-pandemic cardiac surgeries and less-urgent epilepsy patients return for treatment. We anticipate this general pattern to hold into 2023.