LivaNova puts for sale sign on $250M cardiac rhythm unit

LivaNova CEO Damien McDonald (LivaNova)

LivaNova is exploring strategic options for its cardiac rhythm management (CRM) business. The medtech company decided to look to offload the $250 million-a-year pacemaker and defibrillator unit after concluding it no longer fits with its strategy.

CRM is one of three units at LivaNova, the others being cardiac surgery and neuromodulation, and last year accounted for about one-fifth of its sales. Products including high-voltage defibrillators, cardiac resynchronization therapy devices and low-voltage pacemakers generated those sales. But while CRM is competitive in some niches, notably in Europe and Japan, LivaNova thinks its best option is to part ways with the business.

“The CRM business franchise is a global business and strong regional player with attractive assets, a robust pipeline and growth potential,” LivaNova CEO Damien McDonald said in a statement. “However, it is no longer a strategic fit within LivaNova’s portfolio.” 

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London-based LivaNova has opted against setting a timeline for completing the review, nor has the company stated its preferred fate for the unit. Such reviews can lead to the sale of units to rivals or the spinning off of businesses to form standalone companies backed by public or private investors. Equally, the review could fail to find a future for CRM outside of LivaNova.

Discussions about the merits of divesting CRM have rumbled away for a while, driven by what one analyst called its “strategic nature, or perhaps lack thereof.” LivaNova has never closed the door on the possibility of offloading the unit in one way or another. But it has also never pretended it will be straightforward to do so. 

“The single biggest decision and discussion point for us around capital allocation is how we create shareholder value with the CRM portfolio. It's top of mind for the leadership team, and we're continuing to work on that,” McDonald said on a quarterly result conference call last month. “It's not a simple question as you might suspect. It's a quarter of our business with a global footprint and a lot of complexities.”

CRM sales fell 6% over the first six months of 2017. LivaNova attributed the decline to a dropoff in sales of implantable cardiac defibrillators as compared to a period in which it introduced a new product, as well as unfavorable foreign currency exchange rate fluctuations.