While the CEO turnover trend has been shadowed somewhat by medtech layoffs in 2023, there's still a fair amount of exits happening in medtech C-suites. The most recent addition to the Great Medtech CEO Reshuffle that began last year is LivaNova CEO Damien McDonald.

London, UK-based LivaNova immediately appointed board chair William Kozy interim CEO to help the executive leadership team "maintain the focus on growth and profitability." The company did not say what prompted the sudden leadership change, but Mike Matson, a medtech analyst at Needham & Co., noted in a report Monday that McDonald's departure follows several pipeline disappointments.

In 2019, LivaNova scrapped its Caisson transcatheter mitral valve replacement (TMVR) program because of declines its heart valve business has seen over the previous five years. The company had been an investor in Caisson since 2012 and acquired the TMVR specialist for $72 million in 2017.

Other pipeline disappointments Matson noted include a heart failure indication for vagal nerve stimulation, and the lack of an early end to enrollment in the RECOVER difficult-to-treat depression (DTD) trial to support Medicare coverage of DTD. The analyst said the trial could still prove successful, however.

Matson also pointed out in his report that LivaNova's shares are down 11% from where they closed on Nov. 2, 2016 ($48), when McDonald was named CEO, despite a 97% increase in the S&P 500 over the same period. He also noted that LivaNova's earnings per share (EPS) dropped from $3.05 in 2016 to $2.39 in 2022 and an estimated 2.57 in 2023.

"Given all of this, we are not surprised by the news of McDonald's departure," Matson wrote. "We think there are opportunities for a new CEO to create value." 

The analyst estimates that LivaNova has been spending roughly $60 million or about $1 of EPS on its pipeline initiatives, so the company's earnings power could increase meaningfully if these expenses were pared back.

"We also believe that there could be additional cost reduction opportunities in the general and administrative and the sales and marketing categories," Matson wrote.

Kozy joined the LivaNova board in 2018. He brings a depth of experience to strategy execution, operations, and financial discipline after his 42-year career at Becton Dickinson (currently ranked #5 on MD+DI's Top 100 list) where he retired as COO in 2016. Kozy is also the vice chair and lead director at The Cooper Companies (#34 on the Top 100 list) where he has served since 2016.

“I am excited to lead LivaNova in this interim capacity as we maintain our focus on helping patients around the world with our differentiated portfolio of medical therapies, our commitment to longer-term innovation and shareholder value creation,” Kozy said.

Any takers for LivaNova?

Back in February 2020, it was rumored that Medtronic was in early-stage acquisition talks with LivaNova, news that was well received by LivaNova shareholders. Reorg Research also reported at the time, however, that Boston Scientific, Edwards Life Sciences, and Johnson & Johnson may also be interested in the company. No deal ever materialized from that rumor, but Matson's report suggests that LivaNova could still become an M&A target.