LivaNova, a UK-based medical device maker, announced late Friday that its CEO, Damien McDonald, has resigned. At the same time, it reported preliminary first-quarter earnings that beat the expectations of analysts.
The firm’s chairman, William Kozy, will take over as interim CEO, while McDonald will remain a consultant until his replacement is hired.
“We are not surprised by the news of McDonald's departure,” Needham analyst Mike Matson wrote in a research report on Monday, noting that LivaNova shares have fallen 11% from their close on the day when McDonald was appointed CEO in 2016, against a 97% increase in the S&P 500 over the same period.
McDonald's departure comes after “several pipeline disappointments,” including the Caisson transcatheter mitral valve replacement and a heart failure indication for vagal nerve stimulation, and the lack of an early end to enrollment in a difficult-to-treat depression trial to support Medicare coverage, Matson wrote.
He said investors should learn more about what drove the revenue growth when LivaNova reports earnings on May 3. Management did not provide any additional detail beyond the headline number.
Matson said the company could also be acquired by a strategic investor or a private equity investor.
Stifel analyst Rick Wise said in a note Monday that his team was “disappointed” to learn of McDonald’s departure, calling the former CEO “the architect of many positive operational and strategic changes over his seven-year tenure.”
As the company announced McDonald will stay on as a consultant, the news “suggests a reasonably amicable departure that reflects positively on Mr. McDonald’s [LivaNova] tenure,” Wise wrote. He called Kozy the “real deal.”
