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Derivatives and Risk Management | 12 Months Ended
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Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Risk Management | Note 7. Derivatives and Risk Management Due to the global nature of LivaNova’s operations, the Company is exposed to FX fluctuations. LivaNova enters into FX derivative contracts to reduce the impact of FX fluctuations on earnings and cash flow. LivaNova is also exposed to equity price risk in connection with its 2029 Notes, including exchange/conversion and settlement provisions based on the price of its ordinary shares at exchange/conversion or maturity of the 2029 Notes. The Capped Call Transactions associated with the 2029 Notes also include settlement provisions that are based on the price of LivaNova’s ordinary shares, subject to a capped price per share. These derivatives are intended to serve as economic hedges and follow the cash flows of the economic hedged item. LivaNova does not enter into derivative contracts for speculative purposes. LivaNova had no designated hedging instruments as of December 31, 2025 and 2024. Freestanding FX Derivatives LivaNova uses freestanding derivative forward contracts to offset exposure to the variability of the value associated with intercompany loans denominated in a foreign currency. The gross notional amount of freestanding FX derivative contracts outstanding as of December 31, 2025 and 2024 was $113.2 million and $442.3 million, respectively. LivaNova recorded net gains of $25.9 million and $5.2 million for the years ended December 31, 2025 and 2024, respectively, and a net loss of $1.3 million for the year ended December 31, 2023 from freestanding derivatives. These amounts are included in foreign exchange and other income/(expense) in LivaNova’s consolidated statements of income (loss). Capped Call Derivatives The Capped Call Transactions are carried on the consolidated balance sheets as a derivative asset at their estimated fair value and are adjusted at the end of each reporting period, with unrealized gain or loss reflected in foreign exchange and other income/(expense) in the consolidated statements of income (loss). The Capped Call Transactions are measured at fair value using the Black-Scholes model utilizing observable and unobservable market data, including share price, remaining contractual term, expected volatility, risk-free interest rate, and expected dividend yield, as applicable. For additional information, refer to “Note 8. Fair Value Measurements,” “Note 9. Financing Arrangements,” and “Note 18. Supplemental Financial Information.” 2029 Capped Calls In March 2024, LivaNova issued the 2029 Notes. In connection with the pricing of the 2029 Notes, the Company entered into related privately-negotiated capped call transactions with certain financial institutions. Under the 2029 Capped Calls, the Company purchased a capped call option with an initial strike price of $69.40 and an initial cap price of $94.28 per share. The strike price, which is subject to certain adjustments, corresponds to the initial conversion price of the 2029 Notes. The 2029 Capped Calls are intended to offset any cash payments and/or cash equivalent value of ordinary shares upon conversion of the 2029 Notes if the market value per ordinary share is greater than the strike price, with such offsets being subject to the initial cap price of $94.28 per share. However, the proceeds under the 2029 Capped Calls are limited to the initial cap price in the event the Company’s share price exceeds the cap price at the time of conversion. The 2029 Capped Calls expire on March 15, 2029, and must be settled in cash. The 2029 Capped Calls are subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes and cover the number of LivaNova’s ordinary shares underlying the 2029 Notes. If the 2029 Capped Calls are terminated early, settlement occurs at their termination value, which is equal to their fair value at the time of the early termination. 2025 Capped Calls In June 2020, LivaNova issued the 2025 Notes. In connection with the pricing of the 2025 Notes, the Company entered into related privately-negotiated capped call transactions with certain financial institutions. Under the 2025 Capped Calls, the Company purchased a capped call option with an initial strike price of $60.98 and an initial cap price of $100.00 per share. The strike price, subject to certain adjustments, corresponds to the initial exchange price of the 2025 Notes. The 2025 Capped Calls were intended to offset any cash payments upon exchange of the 2025 Notes in excess of the principal amount. In connection with the issuance of the 2029 Notes, the Company repurchased an aggregate principal amount of $230.0 million of the 2025 Notes and unwound a corresponding portion of the 2025 Capped Calls at the fair value of such portion of the 2025 Capped Calls. The Company received $22.5 million in cash consideration, the fair value of the terminated portion, upon settlement. The remaining 2025 Capped Calls expired with a fair value of zero on December 15, 2025. Embedded Derivatives The 2025 Notes included, and the 2029 Notes include, terms resulting in a bifurcated embedded derivative. The Embedded Derivatives are measured at fair value using a binomial lattice model and estimated discounted cash flows that utilize observable and unobservable market data and are adjusted at the end of each reporting period, with the unrealized gain or loss reflected in foreign exchange and other income/(expense) in the consolidated statements of income (loss). For additional information, refer to “Note 18. Supplemental Financial Information.” Counterparty Credit Risk LivaNova is exposed to credit risk in the event of non-performance by the counterparties to the Company’s derivatives. The Option Counterparties are financial institutions. To limit LivaNova’s credit risk, the Company selected financial institutions with a minimum long-term investment grade credit rating. LivaNova’s exposure to the credit risk of the Option Counterparties is not secured by any collateral. If one or more of the Option Counterparties becomes subject to insolvency proceedings, LivaNova will become an unsecured creditor in those proceedings, with a claim equal to the Company’s exposure at that time under the 2029 Capped Calls, as applicable, with that Option Counterparty. To manage credit risk with respect to LivaNova’s FX derivatives, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors their respective market positions. However, if one or more of these counterparties were in a liability position to the Company and were unable to meet their obligations, any transactions with the counterparty could be subject to early termination, which could result in losses for the Company. Balance Sheet Presentation LivaNova offsets fair value amounts associated with its derivative instruments that are executed with the same counterparty under master netting arrangements on the Company’s consolidated balance sheets. Master netting arrangements include a right to set off or net together purchases and sales of similar products in the settlement process. The following tables present the fair value and the location of derivative contracts reported on the consolidated balance sheets (in thousands):
December 31, 2025 |  | Derivative Assets |  | Derivative Liabilities
Derivatives Not Designated as Hedging Instruments: |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Capped call derivatives (2029 Notes) |  | Long-term derivative assets |  | $ | 36,551 |  |  |  |  |
Embedded derivative (2029 Notes) |  |  |  |  |  | Long-term derivative liabilities |  | $ | 83,904 |
FX derivative contracts |  | Prepaid expenses and other current assets |  | 165 |  |  | Accrued liabilities and other |  | 99 |
Total derivatives not designated as hedging instruments |  |  |  | $ | 36,716 |  |  |  |  | $ | 84,003 |
December 31, 2024 |  | Derivative Assets |  | Derivative Liabilities
Derivatives Not Designated as Hedging Instruments: |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Capped call derivatives (2025 Notes) |  | Prepaid expenses and other current assets |  | $ | 2,624 |  |  |  |  |
Capped call derivatives (2029 Notes) |  | Long-term derivative assets |  | 23,735 |  |  |  |  |
Embedded derivative (2025 Notes) |  |  |  |  |  | Accrued liabilities and other |  | $ | 2,915 |
Embedded derivative (2029 Notes) |  |  |  |  |  | Long-term derivative liabilities |  | 51,819 |
FX derivative contracts |  | Prepaid expenses and other current assets |  | 738 |  |  |  |  |
Total derivatives not designated as hedging instruments |  |  |  | $ | 27,097 |  |  |  |  | $ | 54,734 |

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