Geographic and Segment Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Geographic and Segment Information

Note 12. Geographic and Segment Information

We identify operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources, developing and executing our strategy, and assessing performance. We have three reportable segments: Cardiopulmonary, Neuromodulation and Advanced Circulatory Support.

Our Cardiopulmonary segment is engaged in the development, production and sale of cardiopulmonary products, including oxygenators, heart-lung machines, autotransfusion systems, perfusion tubing systems, cannulae and other related accessories.

Our Neuromodulation segment is engaged in the design, development and marketing of devices that deliver neuromodulation therapy to treat drug-resistant epilepsy (“DRE”), difficult-to-treat depression (“DTD”) and obstructive sleep apnea (“OSA”). Neuromodulation products include the VNS Therapy System, which consists of an implantable pulse generator, a lead that connects the generator to the vagus nerve, and other accessories.

Our Advanced Circulatory Support segment is engaged in the development, production and sale of leading-edge temporary life support products. These products include cardiopulmonary and respiratory support solutions consisting of temporary life support controllers and product kits that can include a combination of pumps, oxygenators, and cannulae.

“Other” includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. For 2021, other also includes the results of our Heart Valves business, which was disposed of on June 1, 2021.

Net sales of our reportable segments include revenues from the sale of products that each reportable segment develops and manufactures or distributes. We define segment income as operating income before merger and integration, restructuring and amortization of intangibles.

We operate under three geographic regions: U.S., Europe, and Rest of World. The table below presents net sales by operating segment and geographic region (in thousands):

	Three Months Ended March 31,
	2022		2021
Cardiopulmonary
United States	$	38,096	$	35,759
Europe	32,067		30,626
Rest of World	46,912		42,334
	117,075		108,719
Neuromodulation
United States	87,210		82,300
Europe	12,456		11,679
Rest of World	10,561		9,720
	110,227		103,699
Advanced Circulatory Support
United States	10,963		12,560
Europe	603		228
Rest of World	117		204
	11,683		12,992
Other (1)
United States	—		2,717
Europe	—		8,284
Rest of World	1,190		11,192
	1,190		22,193
Totals
United States	136,269		133,336
Europe (2)	45,126		50,817
Rest of World	58,780		63,450
Total (3)	$	240,175	$	247,603

(1)For 2021, other primarily includes the net sales of the Company’s Heart Valves business, which was disposed of on June 1, 2021.

(2)Europe includes those countries in which we have a direct sales presence, whereas European countries in which we sell through distributors are included in Rest of World.

(3)No single customer represented over 10% of our consolidated net sales. No country’s net sales exceeded 10% of our consolidated sales except for the U.S.

The table below presents a reconciliation of segment income to consolidated income (loss) before tax (in thousands):

	Three Months Ended March 31,
	2022		2021 (1)
Cardiopulmonary	$	6,895	$	1,442
Neuromodulation	37,478		34,083
Advanced Circulatory Support	(5,438)		2,393
Other (2)	(23,082)		(30,195)
Total reportable segment income	15,853		7,723
Other expenses (3)	6,348		13,421
Operating income (loss)	9,505		(5,698)
Interest expense	(7,840)		(15,936)
Foreign exchange and other gains/(losses)	3,904		(6,443)
Income (loss) before tax	$	5,569	$	(28,077)

(1)Segment income for the three months ended March 31, 2021 has been revised. For further details refer to “Note 1. Unaudited Condensed Consolidated Financial Statements.”

(2)Other includes corporate shared service expenses for finance, legal, human resources, information technology and corporate business development. For 2021, other also includes the results of the Company’s Heart Valves business, which was disposed of on June 1, 2021.

(3)Other expenses primarily consist of amortization of intangible assets for the three months ended March 31, 2022, as well as merger and integration expense and restructuring expense during the three months ended March 31, 2021.

Assets by segment are as follows (in thousands):

	March 31, 2022		December 31, 2021
Cardiopulmonary	$	905,140	$	921,481
Neuromodulation	653,484		646,394
Advanced Circulatory Support	230,278		231,846
Other	627,981		401,230
Total	$	2,416,883	$	2,200,951

Capital expenditures by segment are as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Cardiopulmonary	$	1,829	$	3,049
Neuromodulation	84		40
Advanced Circulatory Support	684		556
Other	2,983		1,469
Total	$	5,580	$	5,114

The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2022 were as follows (in thousands):

	Cardiopulmonary		Neuromodulation		Advanced Circulatory Support		Total
December 31, 2021	$	398,245	$	398,754	$	102,526	$	899,525
Foreign currency adjustments	(2,926)		—		—		(2,926)
March 31, 2022	$	395,319	$	398,754	$	102,526	$	896,599

Property, plant and equipment, net by geography are as follows (in thousands):

	March 31, 2022		December 31, 2021
United States	$	62,099	$	60,852
Europe	80,987		85,313
Rest of World	4,871		3,901
Total	$	147,957	$	150,066