TELEFLEX INC

(all tabular amounts in thousands unless otherwise noted)

Note 1 —Basis of presentation

The accompanying unaudited condensed consolidated financial statements of Teleflex Incorporated and its subsidiaries (“we,” “us,” “our" and “Teleflex”) are prepared on the same basis as its annual consolidated financial statements.

In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for the fair statement of the financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("GAAP") and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X, which sets forth the instructions for the form and content of presentation of financial statements included in Form 10-Q. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the periods reported are not necessarily indicative of those that may be expected for a full year.

In accordance with applicable accounting standards and as permitted by Rule 10-01 of Regulation S-X, the accompanying condensed consolidated financial statements do not include all of the information and footnote disclosures that are required to be included in our annual consolidated financial statements. Therefore, our quarterly condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Supplemental balance sheet information

Cash, cash equivalents, and restricted cash equivalents consisted of the following at March 30, 2025 and December 31, 2024:

(1) Restricted cash equivalents represent surplus plan assets resulting from the termination of the Teleflex Incorporated Retirement Income Plan (the "TRIP") that were transferred to a suspense account within the Teleflex 401(k) Savings Plan in 2024. These assets are restricted for future use in accordance with our election to use the surplus plan assets from the TRIP to fund future employer contributions to participants in the Teleflex 401(k) Savings Plan. The restricted cash equivalents are included within prepaid and other current assets and other assets on the Condensed Consolidated Balance Sheet. Amounts expected to be transferred from the suspense account to employees within one year are classified as other current assets.

Note 2 —Recently issued accounting standards

In December 2023, the FASB issued new guidance designed to improve income tax disclosure requirements, primarily through increased disaggregation disclosures within the effective tax rate reconciliation as well as enhanced disclosures on income taxes paid. The guidance is effective for all fiscal years beginning after December 15, 2024. The new standard can be adopted on a prospective basis with an option for it to be adopted retrospectively. We are currently evaluating this guidance to determine its impact on our consolidated financial statements.

In November 2024, the FASB issued new guidance designed to enhance disclosures regarding the nature of expenses included in the income statement. The guidance requires tabular disclosures that disaggregate information about prescribed expense categories within relevant income statement expense captions. The guidance is effective for all fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. The new standard can be adopted on a prospective basis with an option to be adopted retrospectively and early adoption is permitted. We are currently evaluating this guidance to determine its impact on our consolidated financial statements.

From time to time, new accounting guidance is issued by the FASB or other standard setting bodies that is adopted by us as of the effective date or, in some cases where early adoption is permitted, in advance of the effective date. We have assessed the recently issued guidance that is not yet effective and, unless otherwise indicated above, believe the new guidance will not have a material impact on the consolidated results of operations, cash flows or financial position.

Note 3 —Net revenues

We primarily generate revenue from the sale of medical devices including single use disposable devices and, to a lesser extent, reusable devices, instruments and capital equipment. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; this occurs upon the transfer of control of the products. Generally, transfer of control to the customer occurs at the point in time when our products are shipped from the manufacturing or distribution facility. For our Original Equipment and Development Services ("OEM") product category, included within our Americas segment, most revenue is recognized over time because OEM generates revenue from the sale of custom products that have no alternative use and we have an enforceable right to payment to the extent that performance has been completed. We market and sell products through our direct sales force and distributors to customers within the following end markets: (1) hospitals and healthcare providers; (2) other medical device manufacturers; and (3) home care providers, which constituted 89%,9% and 2% of consolidated net revenues, respectively, for the three months ended March 30, 2025. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. With respect to the custom products sold in OEM, revenue is measured using the units produced output method. Payment is generally due 30 days from the date of invoice.

The following table disaggregates revenue by global product category for the three months ended March 30, 2025 and March 31, 2024.

(1) Includes revenues generated from sales of our respiratory and urology products (other than interventional urology products).

(2) The product categories listed above are presented on a global basis, as each of our reportable segments are defined based on the geographic location of its operations.

Note 4 —Acquisition

Biotronik Acquisition

On February 24, 2025, we executed a definitive agreement to acquire substantially all of the Vascular Intervention business (the "VI Business") of BIOTRONIK SE & Co. KG. The acquisition will include a broad suite of coronary and peripheral medical devices, such as drug-coated balloons, stents, and balloon catheters, which will complement our interventional product portfolio. Under the terms of the agreement, we will acquire the VI Business for an initial cash payment of €760 million reduced by certain adjustments as provided in the agreement, including certain working capital not transferring and other customary adjustments. The acquisition is subject to customary closing conditions, including receipt of certain regulatory approvals, and is expected to be completed in the third quarter of 2025.

For the three months ended March 30, 2025, we incurred acquisition-related costs of $4.3 million, which were recognized in selling, general and administrative expenses in the Condensed Consolidated Statement of Income.

Note 5 —Restructuring charges, separation costs and impairment charges

We have ongoing restructuring initiatives consisting of the following:

•a plan initiated in 2024 aimed at optimizing operations, reducing costs and enhancing efficiencies across our business lines, including the relocation of select office administrative operations (the "2024 Restructuring plan"),

•a footprint realignment plan initiated in 2024 that includes the relocation of select manufacturing operations to existing lower-cost locations, the optimization of specific product portfolios through targeted rationalization efforts, the relocation of certain integral product development and manufacturing support functions, the optimization of certain supply chain activities and related workforce reductions (the "2024 Footprint realignment plan") and,

•a footprint realignment plan initiated in 2023 that involves the relocation of certain manufacturing operations to existing lower cost locations, the outsourcing of certain manufacturing processes and related workforce reductions (the “2023 Footprint realignment plan”).

The following tables provide a summary of our cost estimates and other information associated with these plans:

(1)Substantially all of the charges consist of employee termination benefit costs.

(2)2024 Restructuring plan restructuring related charges represent costs that are directly related to the program and consist primarily of retention bonuses offered to certain employees expected to remain with our company after completion of the program. Substantially all of the restructuring related charges are expected to be recognized within selling, general and administrative expenses.

(3)2024 Footprint realignment plan restructuring related charges represent costs that are directly related to the program and consist primarily of project management costs and costs to relocate manufacturing operations and support functions to the new locations. Substantially all of the restructuring related charges are expected to be recognized within cost of goods sold.

(4)2023 Footprint realignment plan restructuring related charges represent costs that are directly related to the program and principally constitute costs to transfer manufacturing operations to existing lower-cost locations and project management costs. Substantially all of these charges are expected to be recognized within cost of goods sold.

Restructuring charges, separation costs and impairment charges recognized for the three months ended March 30, 2025 and March 31, 2024 consisted of the following:

(1) Other costs include facility closure, contract termination and other exit costs.

(2) Includes activity primarily related to our 2023 Restructuring plan and our Respiratory divestiture plan.

(3) Includes activity primarily related to our 2022 and 2021 Restructuring plans, which have concluded.

Impairment charge

For the three months ended March 31, 2024, we recorded an impairment charge of $2.1 million related to a portion of our operating lease assets stemming from our cessation of occupancy of a specific facility.

Recently Announced Strategic Actions and Separation Costs

On February 27, 2025, we announced our intention to create a new, independently traded public company comprising Urology (consisting of our Interventional Urology and Urology product categories), Acute Care (consisting of our Respiratory product category, the majority of our Anesthesia product category and certain products within our Interventional Access and Surgical product categories) and our OEM businesses. Our Vascular Access product category, most of our products within our Interventional Access and Surgical product categories and the VI Business that we expect to acquire will remain with Teleflex. The completion of any separation transaction and the achievement of tax-free status for U.S. tax purposes will be contingent upon various conditions and approvals, including approval of our Board of Directors, receipt of requisite regulatory clearances and compliance with applicable SEC requirements. There can be no guarantees that the proposed separation will be completed on the terms and within the timeframe we announced, or at all. During the three months ended March 30, 2025, we recognized separation costs of $3.2 million, primarily consisting of consulting, legal, tax and other professional advisory services associated with the strategic actions.

Note 6 —Inventories

Inventories as of March 30, 2025 and December 31, 2024 consisted of the following:

Note 7 —Goodwill and other intangible assets

The following table provides information relating to changes in the carrying amount of goodwill by reportable operating segment for the three months ended March 30, 2025:

Our Interventional Urology North America reporting unit is at risk for future goodwill impairment charges, which could be material, if there is a deterioration in general economic, market or business conditions or significant unfavorable changes in our forecasted current or long-term revenue growth rates, operating margins and/or discount rate.

The gross carrying amount of, and accumulated amortization relating to, intangible assets as of March 30, 2025 and December 31, 2024 were as follows:

We test the recoverability of long-lived assets whenever events or circumstances indicate the carrying value of an asset may not be recoverable. As of March 30, 2025, we identified indicators of a potential impairment related to the long-lived assets associated with our Titan SGS asset group, which primarily consists of intangible assets. The indicators of a potential impairment primarily arose from lower than expected sales of our Titan SGS product line and anticipated continuing reduced demand for bariatric surgery procedures in future periods driven by the growing adoption of GLP-1 products. We performed a recoverability test, utilizing an updated long-term forecast reflecting higher uncertainty of revenue growth in future periods compared to previous estimates. We concluded that the undiscounted cash flows of the Titan SGS product line exceeded the carrying value of the related assets by approximately 10% andno impairment was recognized. If actual future revenues are lower than forecasted, it may result in future impairment charges, which could be material. The carrying value of the intangible assets as of March 30, 2025 was $130.0 million.

Note 8 —Borrowings

Our borrowings at March 30, 2025 and December 31, 2024 were as follows:

Concurrent with the execution of the agreement to acquire the VI Business described in Note 4, we entered into an amendment to our Third Amended and Restated Credit Agreement (the “Credit Agreement”), which, among other things, (a) provides for a delayed draw term loan facility in an aggregate principal amount of $500 million, which will be available to be drawn on the date on which we consummate the VI Business acquisition and (b) permits us to borrow up to $550 million under the revolving facility provided for under the Credit Agreement on a limited condition basis on the date on which the VI Business acquisition is consummated. Borrowings under the delayed draw term loan will bear interest at a rate per annum equal to the applicable margin plus, at our option, either (1) the highest of (i) the “Prime Rate” in the U.S. last quoted by The Wall Street Journal, (ii)0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight euro transactions denominated in U.S. dollars and (iii)1.00% above the Term SOFR Rate for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on our total net leverage ratio or (2) a Term Secured Overnight Financing Rate (“SOFR”) rate (which includes a credit spread adjustment of 10 basis points). The applicable margin for borrowings under the delayed draw term loan range from 1.125% to 2.00% for SOFR borrowings and from 0.125% to 1.00% for base-rate borrowings, in each case, depending on, at our election, either (x) our public corporate family rating or (y) our consolidated total net leverage ratio, in each case, based on the most recently ended fiscal quarter. The obligations under the delayed draw term loan will be guaranteed and secured on the same basis as the facilities provided for under the Credit Agreement. The delayed draw term loan will not amortize and will mature on the earlier of (x) the date that istwo years after the date on which such loans are funded and (y) the maturity date for the revolving facility provided for under the Credit Agreement. As of March 30, 2025, we have made no borrowings under the delayed draw term loan facility.

We capitalized $2.5 million related to transaction fees, including underwriters' discounts and commissions incurred in connection with the delayed draw term loan facility.

Note 9 —Financial instruments

Foreign currency forward contracts

We use derivative instruments for risk management purposes. Foreign currency forward contracts designated as cash flow hedges are used to manage foreign currency transaction exposure. Foreign currency forward contracts not designated as hedges for accounting purposes are used to manage exposure related to near term foreign currency denominated monetary assets and liabilities. We typically enter into the non-designated foreign currency forward contracts for periods consistent with our currency translation exposures, which generally approximate one month. In February 2025, we also entered into non-designated foreign currency forward contracts concurrent with the execution of the agreement to acquire the VI Business, as described in Note 4, to economically hedge against the foreign currency exposure associated with the cash consideration required to complete the acquisition. For the three months ended March 30, 2025 and March 31, 2024, we recognized gains of $22.6 million and $3.6 million, respectively, from non-designated foreign currency forward contracts within selling, general and administrative expenses.

The total notional amount for all open foreign currency forward contracts designated as cash flow hedges as of March 30, 2025 and December 31, 2024 was $312.5 million and $270.9 million, respectively. The total notional amount for all open non-designated foreign currency forward contracts as of March 30, 2025 and December 31, 2024 was $910.7 million and $168.6 million, respectively. All open foreign currency forward contracts as of March 30, 2025 have durations of 12 months or less.

Cross-currency interest rate swaps

On April 25, 2024, we executedtwo separate term cross-currency swap agreements set to expire on February 26, 2027 and February 28, 2029, respectively, to hedge against the effect of variability in the U.S. dollar to euro exchange rate (the "2024 Cross-currency swap agreements"). Each of the swap agreements had a notional principal amount of $250 million and were designated as a net investment hedge. The cross-currency swap agreements expiring in 2027 include five different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.44%. The cross-currency swap agreements expiring in 2029 include four different financial institution counterparties and notionally exchanged $250 million at an annual interest rate of 4.25% for €233.4 million at an annual interest rate of 2.45%. Both of the 2024 Cross-currency swap agreements are designated as a net investment hedge.

During 2023, we executed cross-currency swap agreements withsix different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate, (the "2023 Cross-currency swaps"). Under the terms of the cross-currency swap agreements, we have notionally exchanged $500 million at an annual interest rate of 4.63% for €474.7 million at an annual interest rate of 3.05%. The swap agreements are designated as net investment hedges and expire on October 4, 2025.

Shortly after the execution of the 2023 Cross-currency swaps, we entered into a zero cost foreign exchange collar contract that aligns with the notional amount and expiration date of the 2023 Cross-currency swaps. We sold a put option with a lower strike price and bought a call option with a higher strike price to manage the foreign exchange risk related to the final settlement of the $500 million notional cross currency swaps. Upon the execution of the zero cost foreign exchange collar contract, we have de-designated the 2023 Cross-currency swaps and re-designated the combined $500 million notional cross currency swaps and zero cost collar into a new hedging instrument. At redesignation, the existing $500 million notional cross-currency swaps were off-market due to changes in foreign exchange rates and interest rates. The off-market value due to interest rates will be amortized ratably into earnings through October 2025 and the off-market value due to foreign exchange rates will remain in accumulated other comprehensive income until the underlying net investment is sold. The combined cross-currency swaps and zero cost collar have been designated as a net investment hedge for accounting purposes.

The swap agreements described above require an exchange of the notional amounts upon expiration or earlier termination of the agreements. We and the counterparties have agreed to effect the exchange through a net settlement.

The cross-currency swaps are marked to market at each reporting date and any changes in fair value are recognized as a component of accumulated other comprehensive income (loss) ("AOCI"). The following table summarizes the foreign exchange gains and losses recognized within AOCI and the interest benefit recognized within interest expense related to cross currency swap for the three months ended March 30, 2025 and March 31, 2024:

Balance sheet presentation

The following table presents the locations in the condensed consolidated balance sheet and fair value of derivative financial instruments as of March 30, 2025 and December 31, 2024:

See Note 11 for information on the location and amount of gains and losses attributable to derivatives that were reclassified from AOCI to expense (income), net of tax. There wasno ineffectiveness related to our cash flow hedges during the three months ended March 30, 2025 and March 31, 2024.

Trade receivables

The allowance for credit losses as of March 30, 2025 and December 31, 2024 was $8.2 million and $10.0 million, respectively. The current portion of the allowance for credit losses, which was $4.0 million and $6.1 million as of March 30, 2025 and December 31, 2024, respectively, was recognized as a reduction of accounts receivable, net.

Note 10 —Fair value measurement

The following tables provide information regarding our financial assets and liabilities measured at fair value on a recurring basis as of March 30, 2025 and December 31, 2024:

Valuation Techniques

Our financial assets valued based upon Level 1 inputs are comprised of investments in marketable securities, including money market funds. The investment assets are valued using quoted market prices.

Our financial assets and liabilities valued based upon Level 2 inputs are comprised of foreign currency forward contracts and cross-currency interest rate swap agreements. We use foreign currency forward contracts and cross-currency interest rate swap agreements to manage foreign currency transaction exposure as well as exposure to foreign currency denominated monetary assets and liabilities. We measure the fair value of the foreign currency forwards and cross-currency swap agreements by calculating the amount required to enter into offsetting contracts with similar remaining maturities, based on quoted market prices, and taking into account the creditworthiness of the counterparties.

Our financial liabilities valued based upon Level 3 inputs are comprised of contingent consideration arrangements pertaining to our acquisitions. Our primary non-recurring fair value estimates, which utilize Level 3 inputs, typically include the following: business acquisitions (Note 4); goodwill impairment testing (Note 7); and asset impairments (Note 5).

Contingent consideration

Contingent consideration liabilities, which primarily consist of payment obligations that are contingent upon the achievement of revenue-based goals, but also can be based on other milestones such as regulatory approvals, are remeasured to fair value each reporting period using assumptions including revenue growth rates (based on internal operational budgets and long-range strategic plans), revenue volatility, discount rates, probability of payment and projected payment dates.

We determine the fair value of certain contingent consideration liabilities using a Monte Carlo simulation (which involves a simulation of future revenues during the earn-out period using management's best estimates) or discounted cash flow analysis. Increases in projected revenues, estimated cash flows and probabilities of payment may result in significantly higher fair value measurements; decreases in these items may have the opposite effect. Increases in the discount rates in periods prior to payment may result in significantly lower fair value measurements and decreases in the discount rates may have the opposite effect.

The table below provides additional information regarding the valuation technique and inputs used in determining the fair value of our significant contingent consideration liabilities.

The following table provides information regarding changes in our contingent consideration liabilities for the three months ended March 30, 2025:

Note 11 —Shareholders' equity

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner except that the weighted average number of shares is increased to include dilutive securities. The following table provides a reconciliation of basic to diluted weighted average number of common shares outstanding:

The weighted average number of shares that were antidilutive and therefore excluded from the calculation of earnings per share were 1.1 million for the three months ended March 30, 2025 and 0.8 million for the three months ended March 31, 2024.

On July 30, 2024, the Board of Directors authorized a share repurchase program for up to $500 million of our common stock. On February 28, 2025, we entered into an accelerated share repurchase agreement for $300 million of our common stock, representing the remainder of the share repurchase program approved by the Board of Directors in 2024. Under this agreement,1,725,253 shares of common stock, representing 80% of the $300 million aggregate, were delivered and included in treasury stock during the three months ended March 30, 2025. The initial shares received were calculated based on a price per share of $139.11, which was the closing share price of our common stock on February 27, 2025. Final settlement under the agreement occurred on April 9, 2025, at which time we received 493,150 additional shares of common stock. The total shares received were calculated based on a price per share of $135.23, which was based on volume-weighted average prices of our common stock during the accelerated share repurchase period less a discount.

The following tables provide information relating to the changes in accumulated other comprehensive loss, net of tax, for the three months ended March 30, 2025 and March 31, 2024:

The following table provides information relating to the location in the statements of operations and amount of reclassifications of losses/(gains) in accumulated other comprehensive (loss)/income into (income)/expense, net of tax, for the three months ended March 30, 2025 and March 31, 2024:

(1) These accumulated other comprehensive (loss) income components are included in the computation of net benefit expense for pension and other postretirement benefit plans.

Note 12 —Taxes on income from continuing operations

(1) The effective income tax rate for the three months ended March 30, 2025 represents an income tax expense. The effective income tax rate for the three months ended March 31, 2024 represents an income tax benefit.

The effective income tax rates for the three months ended March 30, 2025 and March 31, 2024 were 12.7% and 161.0%, respectively. The effective income tax rates for both periods reflect a tax benefit from research and development tax credits. Additionally, the effective income tax rate for the three months ended March 30, 2025 reflects a non-taxable favorable adjustment incurred in relation to foreign currency exchange rates, largely stemming from non-designated foreign currency forward contracts designed to hedge against the cash consideration for the VI Business acquisition. The effective income tax rate for the three months ended March 31, 2024 reflects a tax benefit associated with a pension charge recognized in connection with the termination of the TRIP defined benefit plan.

Note 13 —Commitments and contingent liabilities

Environmental: We are subject to contingencies as a result of environmental laws and regulations that in the future may require us to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by us or other parties. Much of this liability results from the U.S. Comprehensive Environmental Response, Compensation and Liability Act, often referred to as Superfund, the U.S. Resource Conservation and Recovery Act and similar state laws. These laws require us to undertake certain investigative and remedial activities at sites where we conduct or once conducted operations or at sites where Company-generated waste was disposed.

Remediation activities vary substantially in duration and cost from site to site. The nature of these activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, the regulatory agencies involved and their enforcement policies, as well as the presence or absence of other potentially responsible parties. At March 30, 2025, we have recorded $0.5 million and $3.3 million in accrued liabilities and other liabilities, respectively, relating to these matters. Considerable uncertainty exists with respect to these liabilities and, if adverse changes in circumstances occur, the potential liability may exceed the amount accrued as of March 30, 2025. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 10-15 years.

Legal matters: We are a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability and product warranty, intellectual property, commercial disputes, acquisition and divestiture related matters, contracts, employment, environmental and other matters. As of March 30, 2025, we have recorded accrued liabilities of $0.8 million in connection with such contingencies, representing our best estimate of the cost within the range of estimated possible losses that will be incurred to resolve these matters. Amounts accrued for legal contingencies are often determined based on a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions, including as to the timing of related payments. The ability to make such estimates and judgments can be affected by various factors including whether, among other things, damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has commenced or is complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute, or procedural or jurisdictional issues; there is uncertainty or unpredictability regarding the number of potential claims; there is the potential to achieve comprehensive multi-party settlements; there is complexity regarding related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against us, we do not record an accrual until a loss is determined to be probable and can be reasonably estimated.

While the results of such litigation or claims cannot be predicted with certainty, based on information currently available, advice of counsel, established reserves and other resources, we do not believe that the outcome of any outstanding litigation and claims is likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to selling, general and administrative expenses in the period incurred.

Other: In 2015, the Italian parliament enacted legislation that, among other things, imposed a “payback” measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies, including Teleflex, under the payback measure in the fourth quarter of 2022 seeking payment with respect to excess expenditures for the years 2015 through 2018. Following the issuance of the invoices, we and numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, primarily on the basis that the law was unconstitutional. The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional. As of March 30, 2025, our reserve related to this matter was $38.7 million, of which $2.1 million was recorded as a reduction of revenue during the three months ended March 30, 2025. Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court will proceed with respect to the remaining legal arguments asserted by the appellants with regard to the enforceability of the payback law.

As part of our acquisition of Palette Life Sciences AB ("Palette") in 2023, we identified certain foreign tax liabilities that had not been properly recognized and paid by Palette prior to our acquisition. As part of our acquisition accounting, we have established a liability of $3.5 million, representing our best estimate of the outstanding tax liabilities including interest as of March 30, 2025. In February 2024, we requested the relevant foreign tax authority to re-assess Palette’s previously filed tax returns for the related periods. In April 2025, we received a notice from the tax authority indicating our request may be subject to challenge. We intend to defend the position stated in our reassessment request vigorously should the tax authority ultimately disagree with the basis for our request and decide to challenge our request. If we are unsuccessful in defending our position, we may be required to pay an amount in excess of our current established liability, which could be material.

Tax audits and examinations: We are routinely subject to tax examinations by various tax authorities. As of March 30, 2025, the most significant tax examinations in process were in Germany and the United States. We may establish reserves with respect to our uncertain tax positions, after we adjust the reserves to address developments with respect to our uncertain tax positions, including developments in these tax examinations. Accordingly, developments in tax audits and examinations, including resolution of uncertain tax positions, could result in increases or decreases to our recorded tax liabilities, which could impact our financial results.

Note 14 —Segment information

An operating segment is a component (a) that engages in business activities from which it may earn revenues and incur expenses, (b) whose operating results are regularly reviewed by the chief operating decision maker (in our case, our President and Chief Executive Officer) to make decisions about resources to be allocated to the segment and to assess its performance, and (c) for which discrete financial information is available. The chief operating decision maker utilizes segment operating profit to evaluate operating expenses through a comparison of budget to actual results as well as an analysis of operating expenses as a percentage of revenue. We do not evaluate our operating segments using discrete asset information.

We have three reportable segments: Americas, EMEA (Europe, the Middle East and Africa) and Asia (Asia Pacific). Our reportable segments primarily design, manufacture and distribute medical devices primarily used in critical care and surgical applications and generally serve two end-markets: hospitals and healthcare providers, and home health. The products of these segments are most widely used in the acute care setting for a range of diagnostic and therapeutic procedures and in general and specialty surgical applications. The Americas also includes our OEM product portfolio that designs, manufactures and supplies devices and instruments for other medical device manufacturers.

The following tables present our segment results for the three months ended March 30, 2025 and March 31, 2024:

(1)Segment operating profit represents income from continuing operations before interest, loss on extinguishment of debt and taxes adjusted to exclude unallocated corporate expenses manufacturing variances other than fixed manufacturing cost absorption variances, restructuring and impairment charges. See reconciliation of segment operating profit measures for further details.

(1) Other unallocated expenses include expenses within costs of goods sold, research and development and selling, general and administrative costs and primarily consist of manufacturing variances other than fixed manufacturing cost absorption variances and unallocated corporate function expenses.

(1)Reflects depreciation and amortization included within other allocated expenses per reconciliation of segment operating profit measure.