MERIT MEDICAL SYSTEMS INC

Previous wording

For the three-month period ended June 30, 2024, we reported sales of $338.0 million, an increase of $17.9 million or 5.6% compared to sales for the three-month period ended June 30, 2023 of $320.1 million. For the six-month period ended June 30, 2024, we reported sales of $661.5 million, an increase of $43.9 million or 7.1% compared to sales for the six-month period ended June 30, 2023 of $617.6 million. Foreign currency fluctuations (net of hedging) decreased our net sales by ($3.0) million and ($4.7) million, respectively, for the three and six-month periods ended June 30, 2024, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Current wording

For the three-month period ended September 30, 2024, we reported sales of $339.8 million, an increase of $24.6 million or 7.8% compared to sales for the three-month period ended September 30, 2023 of $315.2 million. For the nine-month period ended September 30, 2024, we reported sales of $1,001.4 million, an increase of $68.5 million or 7.3% compared to sales for the nine-month period ended September 30, 2023 of $932.9 million. Foreign currency fluctuations (net of hedging) decreased our net sales by ($0.3) million and ($5.0) million, respectively, for the three and nine-month periods ended September 30, 2024, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Previous wording

Net income for the three-month period ended June 30, 2024 was $35.7 million, or $0.61 per share, compared to net income of $20.2 million, or $0.35 per share, for the three-month period ended June 30, 2023. Net income for the six-month period ended June 30, 2024 was $64.0 million, or $1.09 per share, compared to net income of $40.9 million, or $0.70 per share, for the six-month period ended June 30, 2023.

Current wording

Net income for the three-month period ended September 30, 2024 was $28.4 million, or $0.48 per share, compared to net income of $25.8 million, or $0.44 per share, for the three-month period ended September 30, 2023. Net income for the nine-month period ended September 30, 2024 was $92.4 million, or $1.57 per share, compared to net income of $66.8 million, or $1.14 per share, for the nine-month period ended September 30, 2023.

Previous wording

Sales for the three-month period ended June 30, 2024 increased by 5.6%, or $17.9 million, compared to the corresponding period in 2023. Sales for the six-month period ended June 30, 2024 increased by 7.1%, or $43.9 million, compared to the corresponding period in 2023. Listed below are the sales by product category within each of our financial reporting segments for the three and six-month periods ended June 30, 2024 and 2023 (in thousands, other than percentage changes):

Current wording

Sales for the three-month period ended September 30, 2024 increased by 7.8%, or $24.6 million, compared to the corresponding period in 2023. Sales for the nine-month period ended September 30, 2024 increased by 7.3%, or $68.5 million, compared to the corresponding period in 2023. Listed below are the sales by product category within each of our financial reporting segments for the three and nine-month periods ended September 30, 2024 and 2023 (in thousands, other than percentage changes):

Previous wording

Cardiovascular Sales. Our cardiovascular sales for the three-month period ended June 30, 2024 were $327.8 million, up 5.3% when compared to the corresponding period of 2023 of $311.3 million. Sales for the three-month period ended June 30, 2024 were favorably affected by increased sales of:

Current wording

Cardiovascular Sales. Our cardiovascular sales for the three-month period ended September 30, 2024 were $322.9 million, up 5.5% when compared to the corresponding period of 2023 of $306.1 million. Sales for the three-month period ended September 30, 2024 were favorably affected by increased sales of:

Previous wording

Our cardiovascular sales for the six-month period ended June 30, 2024 were $641.2 million, up 7.0% when compared to the corresponding period of 2023 of $599.3 million. Sales for the six-month period ended June 30, 2024 were favorably affected by increased sales of:

Current wording

Our cardiovascular sales for the nine-month period ended September 30, 2024 were $964.0 million, up 6.5% when compared to the corresponding period of 2023 of $905.3 million. Sales for the nine-month period ended September 30, 2024 were favorably affected by increased sales of:

Previous wording

Endoscopy Sales. Our endoscopy sales for the three-month period ended June 30, 2024 were $10.2 million, up 16.0% when compared to sales in the corresponding period of 2023 of $8.8 million. Sales for the three-month period ended June 30, 2024 compared to the corresponding period in 2023 were favorably affected by increased sales of our EndoMAXX fully covered esophageal stent, other stents, Elation Pulmonary Balloon Dilators, and ReSolve Thoracostomy Trays.

Current wording

Endoscopy Sales. Our endoscopy sales for the three-month period ended September 30, 2024 were $17.0 million, up 85.8% when compared to sales in the corresponding period of 2023 of $9.1 million. Sales for the three-month period ended September 30, 2024 compared to the corresponding period in 2023 were favorably affected by $6.8 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024 as well as increased sales of our EndoMAXX fully covered esophageal stent and ReSolve Thoracostomy Trays.

Previous wording

Our endoscopy sales for the six-month period ended June 30, 2024 were $20.3 million, up 10.6%, when compared to sales in the corresponding period of 2023 of $18.4 million. Sales for the six-month period ended June 30, 2024 compared to the corresponding period in 2023 were favorably affected by increased sales of our other stents, ReSolve Thoracostomy Trays, and Elation Pulmonary Balloon Dilators, offset partially by decreased sales of our AERO Tracheobronchial Stent andprobes.

Current wording

Our endoscopy sales for the nine-month period ended September 30, 2024 were $37.3 million, up 35.6%, when compared to sales in the corresponding period of 2023 of $27.5 million. Sales for the nine-month period ended September 30, 2024 compared to the corresponding period in 2023 were favorably affected by $6.8 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024 as well as by increased sales of our EndoMAXX fully covered esophageal stent, Elation Pulmonary Balloon Dilators, BIG60F Alpha™ inflation device, and AERO Tracheobronchial Stent.

Previous wording

Listed below are sales by geography for the three and six-month periods ended June 30, 2024 and 2023 (in thousands, other than percentage changes):

Current wording

Listed below are sales by geography for the three and nine-month periods ended September 30, 2024 and 2023 (in thousands, other than percentage changes):

Previous wording

United States Sales.* *U.S. sales for the three-month period ended June 30, 2024 were $194.7 million, or 57.6% of net sales, up 8.4% when compared to the corresponding period of 2023. The increase in our domestic sales for the three-month period ended June 30, 2024, compared to the corresponding period of 2023 was driven primarily by our U.S. Direct and Endoscopy businesses.

Current wording

United States Sales.* *U.S. sales for the three-month period ended September 30, 2024 were $206.5 million, or 60.8% of net sales, up 10.1% when compared to the corresponding period of 2023. The increase in our domestic sales for the three-month period ended September 30, 2024, compared to the corresponding period of 2023 was driven primarily by our U.S. Direct and Endoscopy businesses.

Previous wording

U.S. sales for the six-month period ended June 30, 2024 were $380.8 million, or 57.6% of net sales, up 8.5% when compared to the corresponding period of 2023. The increase in our domestic sales for the six-month period ended June 30, 2024, compared to the corresponding period of 2023 was driven primarily by our U.S. Direct, Oncology and Endoscopy businesses.

Current wording

U.S. sales for the nine-month period ended September 30, 2024 were $587.3 million, or 58.6% of net sales, up 9.1% when compared to the corresponding period of 2023. The increase in our domestic sales for the nine-month period ended September 30, 2024, compared to the corresponding period of 2023 was driven primarily by our U.S. Direct and Endoscopy businesses.

Previous wording

International Sales. International sales for the three-month period ended June 30, 2024 were $143.3 million, or 42.4% of net sales, up 2.0% when compared to the corresponding period of 2023 of $140.5 million. The increase in our international sales for the three-month period ended June 30, 2024, compared to the corresponding period of 2023 included increased sales in our EMEA operations of $2.7 million or 4.5% and in our ROW operations of $2.1 million or 17.1%, offset partially by decreased sales in our Asia Pacific (“APAC”) operations of ($1.9) million or (2.8%).

Current wording

International Sales. International sales for the three-month period ended September 30, 2024 were $133.4 million, or 39.2% of net sales, up 4.4% when compared to the corresponding period of 2023 of $127.7 million. The increase in our international sales for the three-month period ended September 30, 2024, compared to the corresponding period of 2023 included increased sales in our EMEA operations of $3.3 million or 5.9%, in our Rest of World (“ROW”) operations of $1.8 million or 14.3%, and in our APAC operations of $0.6 million or 0.9%.

Previous wording

International sales for the six-month period ended June 30, 2024 were $280.8 million, or 42.4% of net sales, up 5.3% when compared to the corresponding period of 2023 of $266.7 million. The increase in our international sales for the six-month period ended June 30, 2024, compared to the six-month period ended June 30, 2023, included increased sales in our EMEA operations of $5.7 million or 4.8%, in our ROW operations of $5.0 million or 22.0%, and in our APAC operations of $3.4 million or 2.7%.

Current wording

International sales for the nine-month period ended September 30, 2024 were $414.1 million, or 41.4% of net sales, up 5.0% when compared to the corresponding period of 2023 of $394.4 million. The increase in our international sales for the nine-month period ended September 30, 2024, compared to the nine-month period ended September 30, 2023, included increased sales in our EMEA operations of $8.9 million or 5.2%, in our ROW operations of $6.8 million or 19.2%, and in our APAC operations of $4.0 million or 2.1%.

Previous wording

Our gross profit as a percentage of sales was 47.7% for both the three-month periods ended June 30, 2024 and 2023. The consistency in gross profit percentage was primarily due to increased sales combined with favorable changes in standard cost and product mix and lower obsolescence expense, offset by higher intangible amortization expense as a percentage of sales associated with acquisitions.

Current wording

Our gross profit as a percentage of sales increased to 46.4% for the three-month period ended September 30, 2024, compared to 45.1% for the three-month period ended September 30, 2023. The increase in gross profit percentage was primarily due to increased sales combined with favorable changes in product mix partially offset by higher obsolescence expense and higher intangible amortization expense as a percentage of sales associated with acquisitions.

Previous wording

Our gross profit as a percentage of sales increased to 47.3% for the six-month period ended June 30, 2024, compared to 47.1% for the six-month period ended June 30, 2023. The increase in gross profit percentage was primarily due to an increase in sales combined with favorable changes in standard cost and product mix, partially offset by unfavorable manufacturing variances and higher intangible amortization expense as a percentage of sales associated with acquisitions.

Current wording

Our gross profit as a percentage of sales increased to 47.0% for the nine-month period ended September 30, 2024, compared to 46.5% for the nine-month period ended September 30, 2023. The increase in gross profit percentage was primarily due to an increase in sales combined with favorable changes in product mix, partially offset by unfavorable manufacturing variances and higher intangible amortization expense as a percentage of sales associated with acquisitions.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses decreased ($6.3) million, or (6.3)%, for the three-month period ended June 30, 2024 compared to the corresponding period of 2023. As a percentage of sales, SG&A expenses were 28.0% for the three-month period ended June 30, 2024, compared to 31.5% for the corresponding period of 2023. For the three-month period ended June 30, 2024, SG&A expenses decreased compared to the corresponding period of 2023, primarily due to a decrease in loss on abandonment of property and equipment expense associated with the 2023 write-off of equipment related to our Spine business, a decrease in consulting costs in connection with the Foundations for Growth Program which was completed in 2023, a decrease in acquisition-related expenses associated with due diligence projects, and a decrease in costs associated with idle facilities during line transfers, offset partially by increased labor costs in our sales and marketing operations due to increased headcount to support growth and increased advertising and promotional expenses.

Current wording

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses increased $12.8 million, or 14.7%, for the three-month period ended September 30, 2024 compared to the corresponding period of 2023. As a percentage of sales, SG&A expenses were 29.3% for the three-month period ended September 30, 2024, compared to 27.6% for the corresponding period of 2023. For the three-month period ended September 30, 2024, SG&A expenses increased compared to the corresponding period of 2023, primarily due to an increase in labor related costs associated with headcount additions and employee termination benefits in connection with the integration activities for the EGS Acquisition, increased consulting and legal costs associated with acquisition due diligence, increased advertising and promotional expenses.

Previous wording

SG&A expenses decreased ($2.1) million, or (1.1)%, for the six-month period ended June 30, 2024 compared to the corresponding period of 2023. As a percentage of sales, SG&A expenses were 28.6% for the six-month period ended June 30, 2024, compared to 30.9% for the corresponding period of 2023. For the six-month period ended June 30, 2024, SG&A expenses decreased compared to the corresponding period of 2023 primarily due to a decrease in loss on abandonment of property and equipment expense associated with the 2023 write-off of equipment related to our Spine business, a decrease in consulting costs in connection with the Foundations for Growth Program which was completed in 2023, and a decrease in acquisition-related expenses associated with due diligence projects, offset partially by an increase in labor-related costs in our sales and marketing operations due to increased headcount to support growth, anincrease of variable compensation linked to company performance, an increase of stock-based compensation expense associated with new equity grants, and an increased investment in advertising and promotional expenses.

Current wording

SG&A expenses increased $10.7 million, or 3.9%, for the nine-month period ended September 30, 2024 compared to the corresponding period of 2023. As a percentage of sales, SG&A expenses were 28.8% for the nine-month period ended September 30, 2024, compared to 29.8% for the corresponding period of 2023. For the nine-month period ended September 30, 2024, SG&A expenses increased compared to the corresponding period of 2023 primarily due to an increase in labor-related costs in our sales and marketing operations due to increased headcount to support growth and acquisitions, anincrease of variable compensation linked to company performance, an increase of stock-based compensation expense associated with new equity grants, and an increased investment in advertising and promotional expenses.

Previous wording

Research and Development Expenses. Research and development (”R&D”) expenses for the three-month period ended June 30, 2024 were $20.3 million, up 0.7%, when compared to R&D expenses in the corresponding period of 2023 of $20.1 million. For the three-month period ended June 30, 2024, R&D expenses increased compared to the corresponding period of 2023 primarily due to increased facility and support costs and increased materials for projects, offset partially by decreased regulatory costs related to implementation ofthe Medical Device Regulation in the E.U. and decreased costs related toclinical studies.

Current wording

Research and Development Expenses. Research and development (”R&D”) expenses for the three-month period ended September 30, 2024 were $20.5 million, up 4.5%, when compared to R&D expenses in the corresponding period of 2023 of $19.6 million. For the three-month period ended September 30, 2024, R&D expenses increased compared to the corresponding period of 2023 primarily due to increased labor costs due to increased headcount and increased materials for projects, offset partially by decreased regulatory costs related to clinical studies.

Previous wording

R&D expenses for the six-month period ended June 30, 2024 were $41.7 million, up 0.7%, when compared to R&D expenses in the corresponding period of 2023 of $41.4 million. For the six-month period ended June 30, 2024, R&D expenses increased compared to the corresponding period of 2023 primarily due to increased labor costs due to increased headcount, increased materials for projects, and increased costs related toclinical studies, offset partially by lower regulatory costs related to implementation ofthe Medical Device Regulation in the E.U.

Current wording

R&D expenses for the nine-month period ended September 30, 2024 were $62.3 million, up 1.9%, when compared to R&D expenses in the corresponding period of 2023 of $61.1 million. For the nine-month period ended September 30, 2024, R&D expenses increased compared to the corresponding period of 2023 primarily due to increased labor costs due to increased headcount, increased materials for projects, and increased costs related toclinical studies, offset partially by lower regulatory costs related to implementation ofthe Medical Device Regulation in the E.U.

Previous wording

Impairment Charges. For the three and six-month periods ended June 30, 2024, we recognized no impairment charges. For the three and six-month periods ended June 30, 2023, we recorded impairment charges of $270 thousand due to the acquisition and subsequent write-off of our equity investment in Bluegrass.

Current wording

Impairment Charges. For the three and nine-month periods ended September 30, 2024, we recognized no impairment charges. For the three-month period ended September 30, 2023, we recognized no impairment charges. For the nine-month period ended September 30, 2023, we recorded impairment charges of $270 thousand due to the acquisition and subsequent write-off of our equity investment in Bluegrass.

Previous wording

Contingent Consideration Expense. For the three and six-month periods ended June 30, 2024, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $0.3 million and $0.2 million compared to contingent consideration expense of $1.1 million and $1.6 million for the three and six-month periods ended June 30, 2023, respectively. Expense in each period related to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.

Current wording

Contingent Consideration Expense. For the three and nine-month periods ended September 30, 2024, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $0.1 million and $0.3 million, respectively, compared to contingent consideration expense of $0.6 million and $2.2 million for the three and nine-month periods ended September 30, 2023, respectively. Expense in each period related to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.

Previous wording

Acquired In-process Research and Development. For the three and six-month periods ended June 30, 2024, we recognized no acquired in-process research and development costs. For the three and six-month periods ended June 30, 2023 we recognized $1.6 million in acquired in-process research and development costs primarily associated with the assets we acquired from Advanced Radiation Therapy, LLC (“ART”) on May 1, 2023.

Current wording

Acquired In-process Research and Development. For the three and nine-month periods ended September 30, 2024, we recognized no acquired in-process research and development costs. For the three-month period ended September 30, 2023, we recognized no acquired in-process research and development costs. For the nine-month period ended September 30, 2023, we recognized $1.6 million in acquired in-process research and development costs primarily associated with the assets we acquired from Advanced Radiation Therapy, LLC (“ART”) on May 1, 2023.

Previous wording

The following table sets forth our operating income by financial reporting segment for the three and six-month periods ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table sets forth our operating income by financial reporting segment for the three and nine-month periods ended September 30, 2024 and 2023 (in thousands):

Previous wording

Cardiovascular Operating Income. Our cardiovascular operating income for the three-month period ended June 30, 2024 was $42.9 million, compared to cardiovascular operating income in the corresponding period of 2023 of $26.5 million. The increase in cardiovascular operating income during the three-month period ended June 30, 2024 compared to the corresponding period of 2023 was primarily a result of higher sales ($327.8 million compared to $311,3 million), lower SG&A expenses, lower acquired in-process research and development charges, lower impairment charges, and lower contingent consideration expense, partially offset by higher R&D expenses.

Current wording

Cardiovascular Operating Income. Our cardiovascular operating income for the three-month period ended September 30, 2024 was $37.6 million, compared to cardiovascular operating income in the corresponding period of 2023 of $32.6 million. The increase in cardiovascular operating income during the three-month period ended September 30, 2024 compared to the corresponding period of 2023 was primarily a result of higher sales ($322.9 million compared to $306.1 million), higher gross margin, and lower contingent consideration expense, partially offset by higher SG&A and R&D expenses.

Previous wording

Our cardiovascular operating income for the six-month period ended June 30, 2024 was $75.8 million, compared to cardiovascular operating income in the corresponding period of 2023 of $50.4 million. The increase in cardiovascular operating income during the six-month period ended June 30, 2024 compared to the corresponding period of 2023 was primarily a result of higher sales ($641.2 million compared to $599.3 million), higher gross margin, lower SG&A, lower acquired in-process research and development charges, lower impairment charges, and lower contingent consideration expense, partially offset by higher R&D expenses.

Current wording

Our cardiovascular operating income for the nine-month period ended September 30, 2024 was $113.4 million, compared to cardiovascular operating income in the corresponding period of 2023 of $83.0 million. The increase in cardiovascular operating income during the nine-month period ended September 30, 2024 compared to the corresponding period of 2023 was primarily a result of higher sales ($964.0 million compared to $905.3 million), higher gross margin, lower acquired in-process research and development charges, lower impairment charges, and lower contingent consideration expense, partially offset by higher SG&A and R&D expenses.

Previous wording

Endoscopy Operating Income*.* Our endoscopy operating income for the three-month period ended June 30, 2024 was $3.0 million, compared to endoscopy operating income of $2.3 million for the corresponding period of 2023. Our endoscopy operating income for the six-month period ended June 30, 2024 was $6.0 million, compared to endoscopy operating income of $4.8 million for the corresponding period of 2023. The increase in endoscopy operating income for the three and six-month periods ended June 30, 2024 compared to the corresponding periods of 2023 was primarily a result of increased sales and lower SG&A expenses as a percentage of sales.

Current wording

Endoscopy Operating Income (Loss). Our endoscopy operating loss for the three-month period ended September 30, 2024 was ($0.3) million, compared to endoscopy operating income of $2.5 million for the corresponding period of 2023. Our endoscopy operating income for the nine-month period ended September 30, 2024 was $5.8 million, compared to endoscopy operating income of $7.4 million for the corresponding period of 2023. The decrease in endoscopy operating income for the three and nine-month periods ended September 30, 2024 compared to the corresponding periods of 2023 was primarily a result of increased SG&A expenses associated with higher labor related costs due to headcount additions and employee termination benefits in connection with the integration activities for the EGS Acquisition, partially offset by increased sales.

Previous wording

Our other expense for the three-month periods ended June 30, 2024 and 2023 was $0.1 million and $3.9 million, respectively. Our other expense for the six-month periods ended June 30, 2024 and 2023 was $1.7 million and $4.8 million, respectively. The changes in other expense for the three and six-month periods ended June 30, 2024 compared to the corresponding periods of 2023 were primarily related to increased interest expense associated with the Convertible Note offering completed in December 2023, partially offset by an increase in interest income associated with higher cash and cash equivalents balances.

Current wording

Our other expense for the three-month periods ended September 30, 2024 and 2023 was $0.6 million and $4.9 million, respectively. Our other expense for the nine-month periods ended September 30, 2024 and 2023 was $2.3 million and $9.7 million, respectively. The changes in other expense for the three and nine-month periods ended September 30, 2024 compared to the corresponding periods of 2023 were primarily related to increased interest expense associated with the Convertible Note offering completed in December 2023, partially offset by an increase in interest income associated with higher cash and cash equivalents balances.

Previous wording

Our provision for income taxes for the three-month periods ended June 30, 2024 and 2023 was a tax expense of $10.1 million and $4.7 million, respectively, which resulted in an effective tax rate of 22.1% and 18.7%, respectively. Our provision for income taxes for the six-month periods ended June 30, 2024 and 2023 was a tax expense of $16.2 million and $9.5 million, respectively, which resulted in an effective tax rate of 20.2% and 18.8%, respectively. The increase in the effective income tax rate for the three and six-month periods ended June 30, 2024, when compared to the prior-year periods, was primarily due to decreased benefit from discrete items such as share-based compensation and deferred compensation and decreased foreign tax credit utilization. The increase in the income tax expense for the three and six-month periods ended June 30, 2024, when compared to the prior-year period, was primarily due to increased pre-tax book income.

Current wording

Our provision for income taxes for the three-month periods ended September 30, 2024 and 2023 was a tax expense of $8.2 million and $4.4 million, respectively, which resulted in an effective tax rate of 22.4% and 14.5%, respectively. Our provision for income taxes for the nine-month periods ended September 30, 2024 and 2023 was a tax expense of $24.4 million and $13.8 million, respectively, which resulted in an effective tax rate of 20.9% and 17.2%, respectively. The increase in the effective income tax rate for the three and nine-month periods ended September 30, 2024, when compared to the prior-year period, was primarily due to decreased benefit from discrete items such as share-based compensation and decreased foreign tax credit utilization. The increase in the income tax expense for the nine-month period ended September 30, 2024, when compared to the prior-year period, was primarily due to increased pre-tax book income.

Previous wording

Our net income for the three-month periods ended June 30, 2024 and 2023 was $35.7 million and $20.2 million, respectively. The increase in our net income for the three-month period ended June 30, 2024 was primarily the result of higher sales, lower SG&A expenses, lower impairment charges, lower acquired in-process research and development charges, and lower contingent consideration expense, partially offset by higher R&D expenses and higher income tax expense.

Current wording

Our net income for the three-month periods ended September 30, 2024 and 2023 was $28.4 million and $25.8 million, respectively. The increase in our net income for the three-month period ended September 30, 2024 was primarily a result of higher sales, higher gross margin associated and lower contingent consideration expense, partially offset by higher SG&A and R&D expenses and higher income tax expense.

Previous wording

Our net income for the six-month periods ended June 30, 2024 and 2023 was $64.0 million and $40.9 million, respectively. The increase in our net income for the six-month period ended June 30, 2024 was the result of several principal factors, including higher sales and gross margin, lower SG&A expenses, lower impairment charges, lower acquired in-process research and development charges, and lower contingent consideration expense, partially offset by higher R&D expenses and higher income tax expense.

Current wording

Our net income for the nine-month periods ended September 30, 2024 and 2023 was $92.4 million and $66.8 million, respectively. The increase in our net income for the nine-month period ended September 30, 2024 was the result of several principal factors, including higher sales and gross margin, lower impairment charges, lower acquired in-process research and development charges, and lower contingent consideration expense, partially offset by higher SG&A and R&D expenses and higher income tax expense.

Previous wording

As of June 30, 2024 and December 31, 2023, our current assets exceeded current liabilities by $976.3 million and $904.9 million, respectively, and we had cash, cash equivalents and restricted cash of $638.7 million and $589.1 million, respectively, of which $54.0 million and $48.7 million, respectively, were held by foreign subsidiaries. We currently believe future repatriation of cash and other property held by our foreign subsidiaries will generally not be subject to U.S. federal income tax. As a result, we are not permanently reinvested with respect to our historic unremitted foreign earnings. In addition, cash held by our subsidiary in China is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside of China. As of June 30, 2024, and December 31, 2023, we had cash, cash equivalents and restricted cash of $22.0 million and $17.6 million, respectively, within our subsidiary in China.

Current wording

As of September 30, 2024 and December 31, 2023, our current assets exceeded current liabilities by $877.2 million and $904.9 million, respectively, and we had cash, cash equivalents and restricted cash of $525.3 million and $589.1 million, respectively, of which $55.8 million and $48.7 million, respectively, were held by foreign subsidiaries. We currently believe future repatriation of cash and other property held by our foreign subsidiaries will generally not be subject to U.S. federal income tax. As a result, we are not permanently reinvested with respect to our historic unremitted foreign earnings. In addition, cash held by our subsidiary in China is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside of China. As of September 30, 2024, and December 31, 2023, we had cash, cash equivalents and restricted cash of $23.1 million and $17.6 million, respectively, within our subsidiary in China.

Previous wording

Cash flows provided by operating activities*.* We generated cash from operating activities of $104.7 million and $31.8 million during the six-month periods ended June 30, 2024 and 2023, respectively. Significant factors affecting operating cash flows during these periods included:

Current wording

Cash flows provided by operating activities*.* We generated cash from operating activities of $152.1 million and $82.9 million during the nine-month periods ended September 30, 2024 and 2023, respectively. Significant factors affecting operating cash flows during these periods included:

Previous wording

Cash flows used in investing activities. We used cash in investing activities of $38.5 million and $157.8 million for the six-month periods ended June 30, 2024 and 2023, respectively. We used cash for capital expenditures of property and equipment of $22.3 million and $18.6 million in the six-month periods ended June 30, 2024 and 2023, respectively. Capital expenditures in each period were primarily related to investments in property and equipment to support development and production of our products. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately $50 to $60 million in 2024 for property and equipment.

Current wording

Cash flows used in investing activities. We used cash in investing activities of $154.2 million and $167.0 million for the nine-month periods ended September 30, 2024 and 2023, respectively. We used cash for capital expenditures of property and equipment of $31.7 million and $27.2 million in the nine-month periods ended September 30, 2024 and 2023, respectively. Capital expenditures in each period were primarily related to investments in property and equipment to support development and production of our products. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately $50 million in 2024 for property and equipment.

Previous wording

Cash outflows for the issuance of notes receivable were $6.2 million for the six-month period ended June 30, 2024 and were related to loans issued to Selio of $1.7 million, Solo Pace of $1.5 million and Fluidx of $3.0 million. Cash outflows invested in acquisitions for the six-month period ended June 30, 2024 were $8.5 million and were related to assets acquired from SSI ($3.0 million), our investments in Fluidx ($0.3 million) and CrannMed ($3.2 million), and payment of the first deferred payment from our asset purchase agreement with Restore Endosystems, LLC ($2.0 million). Cash outflows invested in acquisitions for the six-month period ended June 30, 2023 were $138.3 million and were primarily related to payments in our asset purchase agreements with AngioDynamics ($100 million), Bluegrass ($32.7 million) and ART ($1.5 million), and our investment in Solo Pace ($4.0 million).

Current wording

Cash outflows for the issuance of notes receivable were $6.6 million for the nine-month period ended September 30, 2024 and were related to loans issued to Selio of $1.7 million, Solo Pace of $2.0 million and Fluidx of $3.0 million. Cash outflows invested in acquisitions for the nine-month period ended September 30, 2024 were $113.7 million and were related to assets acquired from EGS ($105.0 million), assets acquired from SSI ($3.0 million), our investments in Fluidx ($0.3 million) and CrannMed ($3.2 million), and payment of the first deferred payment from our asset purchase agreement with Restore Endosystems, LLC ($2.0 million). Cash outflows invested in acquisitions for the nine-month period ended September 30, 2023 were $138.3 million and were primarily related to payments in our asset purchase agreements with AngioDynamics ($100 million), Bluegrass ($32.7 million) and ART ($1.5 million), and our investment in Solo Pace ($4.0 million).

Previous wording

Cash flows used in financing activities. Cash (used in) provided by financing activities for the six-month periods ended June 30, 2024 and 2023 was ($14.9) million and $141.0 million, respectively. For the six-month period ended June 30, 2024, we decreased our net borrowings under our Amended Fourth A&R Credit Agreement by ($24.1) million. During the six-month period ended June 30, 2023 we increased our net borrowings by approximately $141.8 million to finance the acquisitions of AngioDynamics and Bluegrass. We had cash proceeds from the issuance of common stock of $10.9 million and $9.5 million for the six-month periods ended June 30, 2024 and 2023, respectively, related to the exercise of non-qualified stock options. We completed payment ofcontingent consideration of ($0.1) million and ($3.4) million for the six-month periods ended June 30, 2024 and 2023, respectively, principally related to sales milestone payments connected to our acquisition of Brightwater Medical, Inc. in 2019.

Current wording

Cash flows (used in) provided by financing activities. Cash (used in) provided by financing activities for the nine-month periods ended September 30, 2024 and 2023 was $(62.4) million and $86.5 million, respectively. For the nine-month period ended September 30, 2024, we decreased our net borrowings under our Amended Fourth A&R Credit Agreement by $(76.1) million. During the nine-month period ended September 30, 2023 we increased our net borrowings by approximately $88.9 million to finance the acquisitions of AngioDynamics and Bluegrass. We had cash proceeds from the issuance of common stock of $15.4 million and $11.5 million for the nine-month periods ended September 30, 2024 and 2023, respectively, related to the exercise of non-qualified stock options. We completed payment ofcontingent consideration of $(0.2) million and $(3.5) million for the nine-month periods ended September 30, 2024 and 2023, respectively, principally related to sales milestone payments connected to our acquisitions of Brightwater Medical, Inc. in 2019 and Cianna Medical, Inc. in 2018.

Previous wording

As of June 30, 2024, we had outstanding borrowings of $822.5 million and had issued letter of credit guarantees of $2.4 million, with additional available borrowings of approximately $680 million under the Amended Fourth A&R Credit Agreement, based on the maximum net leverage ratio and the aggregate revolving credit commitment pursuant to the Amended Fourth A&R Credit Agreement. Our interest rate as of June 30, 2024 was a fixed rateof 3.0% on our Convertible Notes and a fixed rateof 3.39% with respect to the principal amount outstanding under the Amended Fourth A&R Credit Agreement as a result of an interest rate swap. Our interest rate as of December 31, 2023 was a fixed rate of 3.0% on our Convertible Notes, a fixed rate of 3.39% on $75 million as a result of an interest rate swap, and a variable floating rate of 7.21% on $24.1 million.

Current wording

As of September 30, 2024, we had outstanding borrowings of $770.5 million and had issued letter of credit guarantees of $2.4 million, with additional available borrowings of approximately $697 million under the Amended Fourth A&R Credit Agreement, based on the maximum net leverage ratio and the aggregate revolving credit commitment pursuant to the Amended Fourth A&R Credit Agreement. Our interest rate as of September 30, 2024 was a fixed rateof 3.0% on our Convertible Notes and avariable rate of 6.70% with respect to the principal amount outstanding under the Amended Fourth A&R Credit Agreement. Our interest rate as of December 31, 2023 was a fixed rate of 3.0% on our Convertible Notes, a fixed rate of 3.39% on $75 million as a result of an interest rate swap, and a variable floating rate of 7.21% on $24.1 million.

Previous wording

Our financial results are affected by the selection and application of accounting policies and methods. In the six-month period ended June 30, 2024 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of the 2023 Annual Report on Form 10-K.

Current wording

Our financial results are affected by the selection and application of accounting policies and methods. In the nine-month period ended September 30, 2024 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of the 2023 Annual Report on Form 10-K.

Previous wording

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this report, other than statements of historical fact, are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of our management for future operations, any statements concerning proposed new products or services, any statements regarding the integration, development or commercialization of the business or any assets acquired from other parties, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “potential,” “forecasts,” “continue,” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results will likely differ, and could differ materially, from those projected or assumed in the forward-looking statements. Investors are cautioned not to unduly rely on any such forward-looking statements.

Current wording

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this report, other than statements of historical fact, are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues or other financial items, any statements of the plans and objectives of our management for future operations, any statements concerning proposed new products or services, any statements regarding the integration, development or commercialization of the business or any assets acquired from other parties, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “potential,” “forecasts,” “continue,” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology.

Previous wording

All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections.

Current wording

All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results will likely differ, and could differ materially, from those projected or assumed in the forward-looking statements. Investors are cautioned not to unduly rely on any such forward-looking statements.