Livanova plc has inked an agreement with Gyrus Capital SA to divest its heart valve business. The sale has an enterprise value of €60 million (US$73 million) and is expected to wrap up in the first half of next year.

The Livanova board has already given its unanimous assent for the deal. Livanova now expects to strengthen its focus on its neuromodulation and cardiovascular platforms. The divestiture excludes the French heart valve business for now, as Livanova has been granted a binding offer by a Gyrus affiliate and a decision remains to be made as it works through the works council processes.

Livanova (NASDAQ:LIVN) closed at $54.84 Dec. 3, up $1.56 or 2.93%.

Portfolio includes Perceval

Perceval, a sutureless aortic valve, is a key part of the Livanova heart valve business, which also includes tissue and mechanical valves. In October, Livanova revealed favorable new data from the Perceval Sutureless Implant Versus Standard-Aortic Valve Replacement clinical study and the Sorin Universal Registry on Aortic Valve Replacement during presentations at the 34th Annual Meeting of the European Association for Cardio-Thoracic Surgery.

The heart valve business employs about 900 people worldwide with manufacturing operations in Saluggia, Italy, and Vancouver, British Columbia. Christian Mazzi has been tapped as the future CEO of the heart valve company. Mazzi promised to move forward and grow with the Perceval valve and Memo 4D mitral repair ring.

“The Livanova [heart valve] business is a global player in surgical heart valves with world-class products and compelling growth opportunities,” said Guy Semmens, managing partner at Geneva-based Gyrus Capital. “This business fits squarely within our strategy to invest in transformational projects in the health care and sustainability sectors. We believe that, with a focus on the core products, this new independent company can maximize its potential through our investment in its products and people.”

Shareholder letter

Word of the proposed divestiture comes about two months after Primestone Capital LLP, which started investing in London-based Livanova earlier this year, sent a letter outlining certain business steps it wanted the company to consider. That group asserted that Livanova possesses attractive assets; however, it believed the company’s shares “are significantly undervalued versus their full potential due to the combination of a misconceived strategy and poor execution.”

The group recommended that the company refocus on neuromodulation; improve transparency so stakeholders can understand how the company makes and spends its money; boost the board’s corporate financial skills and review management’s compensation; and consider appointing a new chairman and hire a new CFO.

Shortly after Livanova acknowledged the note, it reported that CFO Thad Huston was leaving his position by Oct. 31. Alex Shvartsburg, the company’s corporate vice president of financial planning & analysis and the international region, became interim CFO.

Huston’s departure was disclosed the same day the company held its third-quarter earnings call Oct. 29. At the time, Livanova reported heart valve sales of $21 million, a figure that represented a decrease of 27% vs. the same period last year.

“Perceval performed well in the rest-of-the-world region, returning to double-digit growth, driven by a solid performance in Japan,” explained CEO Damien McDonald. “For the full-year sales in our cardiovascular portfolio, we are still estimated to be in the range of flat to down 15%, with continued growth from Lifesparc largely offset by tighter capital spending budgets and the impact from lower cardiac surgery procedure volumes on both oxygenators and heart valves.”

Following this update, analyst Adam Maeder with Piper Sandler asked for additional details about the Primestone letter. McDonald responded that the company always was eyeing its strategic footprint when assessing its portfolio. “And we've done, I think, our best in the past to ensure that we've got the right portfolio and continue to have discussions with the board about what we think is the most appropriate investment opportunity for us,” he added.

This is not the first time Livanova made a big move related to valve replacement. In November 2019, the company said it was exiting its Caisson transcatheter mitral valve replacement program as part of a restructuring effort. At that point, the company said it had seen five years of losses in that business.