Integer Holdings Corp
For the period ended Mar 28, 2025. Filed Apr 24, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 28, 2025 · Filed Apr 24, 2025
ITGR$126.56-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-27; filed 2024-10-24.
0001114483-24-000127
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-28; filed 2025-04-24.
0001114483-25-000084
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 118 current paragraphs.
49 unchanged; 49 reworded; 18 added; 21 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 10 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
•the timing for final sales of our Portable Medical products;
Current report
We operate our business in one segment and derive our revenues from three product lines: Cardio & Vascular, Cardiac Rhythm Management & Neuromodulation and Other Markets.
Current report
The first quarters of 2025 and 2024 ended on March 28, 2025 and March 29, 2024, respectively, and consisted of 87 days and 89 days, respectively.
Current report
2030 Convertible Notes Issuance and 2028 Convertible Notes Exchange Transactions
Current report
On March 18, 2025, we issued $1.0 billion in aggregate principal amount of 1.875% Convertible Senior Notes due in 2030 (the “2030 Convertible Notes”). The total net proceeds from the issuance of the 2030 Convertible Notes, after deducting initial purchasers' discounts and commissions and debt issuance costs, were $976.3 million. We used $71.0 million of the net proceeds from the offering to fund the cost of entering into capped call transactions relating to the 2030 Convertible Notes.
Current report
We used a portion of the remaining net proceeds from the issuance of the 2030 Convertible Notes to exchange $383.7 million in aggregate principal amount of our outstanding 2.125% Convertible Senior Notes due in 2028 (the “2028 Convertible Notes”) for an aggregate cash exchange consideration of $384.4 million in cash and 1,553,806 shares of Common Stock (the “Note Exchange Transactions”). The Note Exchange Transactions were considered an induced conversion and, as a result, we recorded $46.7 million during the three months ended March 28, 2025 in induced conversion expense within Other loss, net in the Condensed Consolidated Statements of Operations and Comprehensive Income. Contemporaneously with the Note Exchange Transactions, we terminated a portion of the capped call transactions related to the 2028 Convertible Notes and received 436,963 shares of Common Stock. We allotted the remainder of the net proceeds to pay the down our revolving credit facility (the “Revolving Credit Facility”) and five-year “term A” loan (the “TLA Facility”).
Current report
We selectively evaluate acquisitions as a means to acquire additional technology or manufacturing capabilities to expand our product offering in our key existing growth markets.
Current report
On January 7, 2025, we acquired substantially all of the assets and assumed certain liabilities of certain subsidiaries of Katahdin Industries, Inc., including its main operating subsidiary, Precision Coating LLC (collectively “Precision”). Prior to the acquisition, Precision was a privately-held manufacturer specializing in high value surface coating technology platforms, including fluoropolymer, anodic coatings, ion treatment solutions and laser processing. Based in Massachusetts, Precision has additional locations in the New England area and an additional facility in Costa Rica.
Current report
On February 28, 2025, we acquired substantially all of the assets and assumed certain liabilities of Vertical Solutions, Inc., d/b/a VSi Parylene (“VSi”). Headquartered in Colorado, prior to the acquisition, VSi was a privately-held full-service provider of parylene coating solutions, primarily focused on complex medical device applications.
Current report
Market Exit
Current report
During 2022, we announced plans to exit our portable medical market (the “Portable Medical Exit”) to enhance profitability and reallocate manufacturing capacity to support growth. Since that time, we have been working closely with impacted customers to support the transition of these products to other suppliers. Due to quality and regulatory requirements, we expected it would take three to four years to complete this transition. We currently expect Portable Medical sales to begin to wind down with the final sales and market exit occurring in 2025. Portable Medical sales are included in our Other Markets product line sales.
Current report
Discontinued Operations
Current report
On October 31, 2024, we completed the sale of our wholly-owned subsidiary Electrochem Solutions, Inc. (“Electrochem”), which focused on nonmedical applications for the energy, military and environmental sectors. As a result of the Electrochem divestiture, the results of operations of the Electrochem business have been classified as discontinued operations for all periods presented. Loss from discontinued operations for the first quarters of 2025 and 2024 were not material.
Current report
•Other loss, net for the first quarter of 2025 was $47.9 million compared to $1.0 million for the first quarter of 2024, primarily due to $46.7 million of debt conversion inducement expense related to the partial exchange of our outstanding 2028 Convertible Notes that was completed during the first quarter of 2025.
Current report
(b)Depreciation and amortization expense increased due to amortization of customer list intangible assets related to recent acquisitions.
Current report
(c)Professional fees decreased primarily due to lower audit and tax expense.
Current report
Gain on Equity Investments
Current report
Other loss, net for the first quarter of 2025 was $47.9 million compared to $1.0 million for the first quarter of 2024. Other loss, net for the first quarter of 2025 primarily includes debt conversion inducement expense of $46.7 million related to the partial exchange of $383.7 million in aggregate principal amount of the 2028 Convertible Notes. Other loss, net for the first quarter of 2024 primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies.
Removed paragraphs (21)
Previous report
•future development and expected growth of our business and industry;
Previous report
•our ability to refinance amounts that may become due upon a request for conversion of the 2028 Convertible Notes;
Previous report
•the timing for the consummation of the sale of the Electrochem business; and
Previous report
The third quarter and first nine months of 2024 ended on September 27, 2024 and consisted of 91 days and 271 days, respectively. The third quarter and first nine months of 2023 ended on September 29, 2023 and consisted of 91 days and 272 days, respectively.
Previous report
Divestiture and Discontinued Operations
Previous report
On September 27, 2024, we entered into a stock purchase agreement with Ultralife Corporation (“Ultralife”), pursuant to which we agreed to sell 100% of the issued and outstanding shares of common stock of Electrochem Solutions, Inc. (“Electrochem”) for $50 million in cash, subject to customary working capital adjustments. The consummation of the sale is expected to occur by the end of October 2024.
Previous report
The Electrochem business represented substantially all of the assets and operations in our previously reported Non-Medical reporting segment The pending divestiture of Electrochem represents a strategic shift in our business. Consequently, the Electrochem business has been reclassified as a discontinued operation. For all periods presented, the assets and liabilities that will be transferred in the Electrochem divestiture (the “disposal group”) are presented as held for sale in our Condensed Consolidated Balance Sheets (unaudited), and operating results related to the Electrochem business are reflected as discontinued operations in our Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited).
Previous report
Prior period amounts have been reclassified to conform to the continuing operations reporting presentation. All results and information presented exclude the Electrochem business unless otherwise noted specifically as discontinued operations.
Previous report
The divestiture of Electrochem also represents a sale of the Non-Medical segment as the Electrochem business constituted substantially all of the assets and liabilities and operations reported in the Non-Medical segment. Under the new organizational and reporting structure, the Company has one reportable segment. Consequently, segment reporting previously disclosed is no longer applicable.
Previous report
On January 5, 2024, we acquired 100% of the outstanding capital stock of Pulse Technologies, Inc. (“Pulse”), a technology, engineering and contract manufacturing company focused on complex micro machining of medical device components for high growth structural heart, heart pump, electrophysiology, leadless pacing, and neuromodulation markets. Pulse also provides proprietary advanced technologies, including hierarchical surface restructuring (HSRTM), scratch-free surface finishes, and titanium nitride coatings. Consistent with our tuck-in acquisition strategy, the acquisition of Pulse further increases our end-to-end development capabilities and manufacturing footprint in targeted growth markets and provides customers with expanded capabilities, capacity and resources to accelerate the time to market for customer products.
Previous report
Effective as of October 1, 2023, we acquired substantially all of the assets and assumed certain liabilities of InNeuroCo, Inc. (“InNeuroCo”), a recognized leader in neurovascular catheter innovation with strong development and manufacturing capabilities. InNeuroCo’s expertise and highly differentiated neurovascular catheter innovation complements our existing capabilities and market focus. Consistent with our acquisition strategy, the acquisition of InNeuroCo further increases our ability to provide enhanced solutions to our customers in the neurovascular catheter space.
Previous report
•Other loss, net for the third quarter and first nine months of 2024 were net losses of $0.9 million and $1.8 million, respectively, compared to net losses of $0.6 million and $1.7 million, respectively, for the third quarter and first nine months of 2023, primarily due to fluctuations in foreign currency gains and losses in the respective periods.
Previous report
NM - Calculated change not meaningful.
Previous report
(b)The changes in depreciation and amortization expense for the three and nine month periods were due to the mix and timing of depreciation and amortization of certain property, plant and equipment and intangible assets.
Previous report
(c)Professional fees increased primarily due to higher legal expense related to general corporate matters.
Previous report
(e)The increase in bank fees and charges during the first nine months of 2024 was driven by increased accounts receivable factoring and supplier financing fees primarily due to the launch of accounts receivable factoring arrangements during 2023.
Previous report
(Gain) Loss on Equity Investments
Previous report
During the third quarters of 2024 and 2023, we determined that, based upon available information, certain of our investments in non-marketable equity securities were impaired and determined the fair value to be zero. As a result, during the third quarters of 2024 and 2023 we recorded impairment charges of $0.3 million and $3.3 million, respectively. As of September 27, 2024 and December 31, 2023, the carrying value of our non-marketable equity securities was $0.2 million and $0.4 million, respectively.
Previous report
Income (loss) from discontinued operations
Previous report
For the third quarter and first nine months of 2024, we recognized losses from discontinued operations, net of income taxes, of $0.8 million and $0.9 million, respectively, compared to a loss of $0.9 million for the third quarter of 2023 and income of $2.0 million for the first nine months of 2023. Discontinued operations consists of the results of operations of the Electrochem business, the sale of which is expected to be completed by the end of October 2024.
Previous report
(a)Excludes current assets and liabilities held for sale at September 27, 2024 and December 31, 2023.
Reworded paragraphs (49)
Previous wording
Some statements contained in this report and other written and oral statements made from time to time by us and our representatives are not statements of historical or current fact. As such, they are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations, and these statements are subject to known and unknown risks, uncertainties and assumptions. Forward-looking statements include, but are not limited to, statements relating to:
Current wording
Some statements contained in this report and other written and oral statements made from time to time by us and our representatives are not statements of historical or current fact. As such, they are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations, and these statements are subject to known and unknown risks, uncertainties and assumptions. Forward-looking statements include, but are not limited to, statements relating to:
Previous wording
•having available sufficient cash and borrowing capacity to meet working capital, debt service and capital expenditure requirements for the next twelve months;
Current wording
•having available sufficient cash and borrowing capacity to meet working capital, debt service and capital expenditure requirements for the next twelve months; and
Previous wording
•operational risks, such as our dependence upon a limited number of customers; pricing pressures and contractual pricing restraints we face from customers; our reliance on third-party suppliers for raw materials, key products and subcomponents; interruptions in our manufacturing operations; our ability to attract, train and retain a sufficient number of qualified associates to maintain and grow our business; the potential for harm to our reputation and competitive advantage caused by quality problems related to our products; our dependence upon our information technology systems and our ability to prevent cyber-attacks and other failures; global climate change and the emphasis on Environmental, Social and Governance matters by various stakeholders; our dependence upon our senior management team and key technical personnel; our energy market revenues’ dependence on conditions in the historically volatile oil and natural gas industries; and consolidation in the healthcare industry resulting in greater competition;
Current wording
•operational risks, such as our dependence upon a limited number of customers; pricing pressures and contractual pricing restraints we face from customers; our reliance on third-party suppliers for raw materials, key products and subcomponents; interruptions in our manufacturing operations; our ability to attract, train and retain a sufficient number of qualified associates to maintain and grow our business; the potential for harm to our reputation and competitive advantage caused by quality problems related to our products; our dependence upon our information technology systems and our ability to prevent cyber-attacks and other failures; global climate change and the emphasis on Environmental, Social and Governance matters by various stakeholders; our dependence upon our senior management team and key technical personnel; and consolidation in the healthcare industry resulting in greater competition;
Previous wording
•financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results that often fluctuate; our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under the credit agreement governing our Senior Secured Credit Facilities; economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; the conditional conversion feature of the 2028 Convertible Notes adversely impacting our liquidity, the conversion of our 2028 Convertible Notes, if it were to occur, diluting ownership interests of existing holders of our common stock; the counterparty risk associated with our capped call transaction; the counter financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets;
Current wording
•financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results that often fluctuate; our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under the credit agreement governing our senior secured credit facilities (“Senior Secured Credit Facilities”); economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; the conditional conversion feature of the 2028 Convertible Notes (as defined below) and the 2030 Convertible Notes (as defined below), adversely impacting our liquidity; the conversion of our 2028 Convertible Notes, diluting ownership interests of existing holders of our common stock; the counterparty risk associated with our capped call transactions; the financial and market risks related to our international sales and operations; our complex international tax profile; and our ability to realize the full value of our intangible assets;
Previous wording
•legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual property and proprietary rights; our ability to comply with customer-driven policies and third-party standards or certification requirements; our ability to obtain and/or retain necessary licenses from third parties for new technologies; our ability and the cost to comply with environmental regulations; legal and regulatory risks from our international operations; the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and our business being indirectly subject to healthcare industry cost containment measures that could result in reduced sales of our products; and
Current wording
32 - property and proprietary rights; our ability to comply with customer-driven policies and third-party standards or certification requirements; our ability to obtain and/or retain necessary licenses from third parties for new technologies; our ability and the cost to comply with environmental regulations; legal and regulatory risks from our international operations; the fact that the healthcare industry is highly regulated and subject to various regulatory changes; and our business being indirectly subject to healthcare industry cost containment measures that could result in reduced sales of our products; and
Previous wording
Integer Holdings Corporation is one of the largest medical device contract development and manufacturing organizations in the world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. As a strategic partner of choice to medical device companies and OEMs, we are committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions.
Current wording
Integer Holdings Corporation is one of the largest medical device contract development and manufacturing organizations in the world, serving the cardiac rhythm management, neuromodulation, and cardio and vascular markets. As a strategic partner of choice to medical device companies and original equipment manufacturers (“OEMs”), we are committed to enhancing the lives of patients worldwide by providing innovative, high-quality products and solutions.
Previous wording
Global economic challenges, including the impact of military conflicts, severe and sustained inflation, fluctuations in global currencies, and supply chain disruptions may continue to cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business include increased borrowing costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, and delays in shipments to and from certain countries. We monitor economic conditions closely. In response to potential reductions in revenue, we can take actions to align our cost structure with changes in demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions and other developments.
Current wording
Our future results of operations and liquidity could be materially adversely affected by uncertainty surrounding macroeconomic and geopolitical factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, elevated interest rates, disruptions in the commodities’ markets as a result of the conflict between Russia and Ukraine and conflicts in the Middle East, including Israel and Iran, and the introduction of or changes in tariffs or trade barriers. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business include increased borrowing costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, delays in shipments to and from certain countries and potential increased expenses resulting from tariffs or other trade barriers. We monitor economic conditions closely. In response to reductions in revenue, we can take actions to align our cost structure with changes in demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions and other developments.
Previous wording
Refer to Note 2, “Business Acquisitions” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these acquisitions.
Current wording
Consistent with our tuck-in acquisition strategy, the acquisitions of Precision and VSi further increase our service offerings to include differentiated and proprietary coatings capabilities that position us to better meet customers’ evolving needs. Refer to Note 2, “Business Acquisitions” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information about these acquisitions.
Previous wording
Refer to Note 3, “Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for more information regarding the presentation of the disposal group in our financial statements.
Current wording
All results and information presented exclude discontinued operations unless otherwise noted. Refer to Note 3, “Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report for additional information on the divestiture of Electrochem and discontinued operations.
Previous wording
Income from continuing operations for the third quarter and first nine months of 2024 was $36.3 million, or $1.01 per diluted share, and $88.1 million, or $2.49 per diluted share, respectively, compared to $28.2 million, or $0.83 per diluted share, and $62.3 million, or $1.85 per diluted share for the third quarter and first nine months of 2023, respectively. These variances are primarily the result of the following:
Current wording
Income (loss) from continuing operations for the first quarter of 2025 was a loss of $22.5 million, or $0.66 per diluted share, compared to income of $20.6 million, or $0.59 per diluted share, for the first quarter of 2024. These variances are primarily the result of the following:
Previous wording
•Sales for the third quarter and first nine months of 2024 increased $34.6 million and $115.9 million, respectively, when compared to the same periods in 2023, driven by strong demand, new product ramps, growth from emerging customers with PMA (premarket approval) products and contributions from our recent acquisitions.
Current wording
•Sales for the first quarter of 2025 increased $29.6 million when compared to the same period in 2024, driven by strong demand, new product ramps, growth from emerging customers with PMA (premarket approval) products and contributions from our recent acquisitions.
Previous wording
•Gross profit for the third quarter and first nine months of 2024 increased $11.6 million and $41.9 million, respectively, primarily from higher sales volume leverage, efficiencies gained from the continued improvement in the supply chain and contributions from our recent acquisitions.
Current wording
•Gross profit for the first quarter of 2025 increased $12.0 million, primarily from higher sales volume leverage, efficiencies gained from the continued improvement in the supply chain and contributions from our recent acquisitions.
Previous wording
•Operating expenses for the third quarter and first nine months of 2024 increased $2.3 million and $10.5 million, respectively, when compared to the same periods in 2023, due to higher SG&A and Restructuring and other charges, partially offset by lower RD&E costs.
Current wording
•Operating expenses for the first quarter of 2025 increased $1.2 million when compared to the same period in 2024, primarily due to higher SG&A, partially offset by lower RD&E costs and Restructuring and other charges. Operating expenses as a percentage of sales improved to 16.2% for the first quarter of 2025 compared to 17.1% or the first quarter of 2024.
Previous wording
•Interest expense for the third quarter and first nine months of 2024 increased $3.1 million and $3.9 million, respectively, compared to the same periods in 2023, primarily due to higher average debt outstanding, partially offset by a decrease in losses from extinguishment of debt.
Current wording
•Interest expense for the first quarter of 2025 increased $0.8 million compared to the same period in 2024, primarily due to $0.7 million of losses from early extinguishment of debt.
Previous wording
•During the third quarter and first nine months of 2024, we recognized gains on equity investments of $0.9 million and $2.0 million, respectively, compared to losses of $3.5 million for the third quarter and first nine months of 2023. Gains and losses on equity investments are generally unpredictable in nature.
Current wording
•During the first quarters of 2025 and 2024, we recognized gains on equity investments of $0.2 million and $1.1 million, respectively. Gains and losses on equity investments are generally unpredictable in nature.
Previous wording
•We recorded provisions for income taxes for the third quarter and first nine months of 2024 of $7.1 million and $20.2 million, respectively, compared with provisions for income taxes of $5.1 million and $13.1 million, respectively, for the third quarter and first nine months of 2023. The changes in income tax expense were primarily due to relative changes in pre-tax income and the impact of discrete tax items.
Current wording
•We recorded provisions for income taxes for the first quarters of 2025 and 2024 of $9.5 million and $4.2 million, respectively. The change in income tax expense was primarily due to relative changes in pre-tax income and the impact of discrete tax items.
Previous wording
For the third quarter and first nine months of 2024, Cardio & Vascular (“C&V”) sales increased $27.0 million, or 13%, and $80.6 million, or 13%, respectively, versus the comparable 2023 periods. The increase in C&V sales was driven by new product ramps in electrophysiology and structural heart, and the InNeuroCo and Pulse acquisitions. C&V sales for the third quarter and first nine months of 2024 included $13.5 million and $40.3 million, respectively, of sales from the recent Pulse and InNeuroCo acquisitions. Foreign currency exchange rate fluctuations did not have a material impact on C&V sales during the third quarter and first nine months of 2024 in comparison to 2023.
Current wording
For the first quarter of 2025, Cardio & Vascular (“C&V”) sales increased $37.0 million, or 17%, versus the comparable 2024 period. The increase in C&V sales was driven by new product ramps in electrophysiology and acquisitions, partially offset by the impact of fewer shipping days in the first quarter 2025 versus the first quarter 2024. C&V sales for the first quarter of 2025 included $13.3 million of aggregate sales from the recent Precision and VSi acquisitions. Foreign currency exchange rate fluctuations decreased C&V sales for the first quarter of 2025 by $0.4 million in comparison to the 2024 period, primarily due to U.S. dollar fluctuations relative to the Euro.
Previous wording
For the third quarter and first nine months of 2024, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $5.0 million, or 3%, and $30.4 million, or 7%, respectively, versus the comparable 2023 periods, driven by strong growth in emerging neuromodulation customers with PMA (premarket approval) products, and the Pulse acquisition. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the third quarter and first nine months of 2024 in comparison to 2023.
Current wording
For the first quarter of 2025, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $3.4 million, or 2%, versus the comparable 2024 period, driven by strong growth in emerging neuromodulation customers with PMA (pre-market approval) products and normalized cardiac rhythm management growth, offset by the impact of fewer shipping days in the first quarter 2025 versus the first quarter 2024. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the first quarter of 2025 in comparison to 2024.
Previous wording
Advanced Surgical, Orthopedic & Portable Medical (“AS&O”) sales for the third quarter and first nine months of 2024 increased $2.6 million, or 12%, and $4.9 million, or 6%, respectively, versus the comparable 2023 periods, primarily driven by fulfillment timing of last-time-buy orders related to the planned multi-year Portable Medical exit announced in 2022. Foreign currency exchange rate fluctuations did not have a material impact on AS&O sales during the third quarter and first nine months of 2024 in comparison to the 2023 periods.
Current wording
Other Markets sales for the first quarter of 2025 decreased $10.8 million, or 37%, versus the comparable 2024 period, primarily driven by the planned multi-year Portable Medical Exit. Foreign currency exchange rate fluctuations did not have a material impact on Other Markets sales during the first quarter of 2025 in comparison to the 2024 period.
Previous wording
Gross margin for the third quarter and first nine months of 2024 increased 50 basis points and 90 basis points, respectively, compared to the comparable 2023 periods, primarily driven by higher sales volume leverage and efficiencies realized through our manufacturing excellence initiatives.
Current wording
Gross margin for the first quarter of 2025 increased 90 basis points compared to the comparable 2024 period, primarily driven by higher sales volume leverage and efficiencies realized through our manufacturing excellence initiatives.
Previous wording
Changes to SG&A expenses from the prior year were due to the following (in thousands):
Current wording
Changes to SG&A expenses from the prior year period were due to the following (in thousands):
Previous wording
(a)Compensation and benefits increased primarily due to annual merit increases and an increase in headcount related to the recent Pulse and InNeuroCo acquisitions.
Current wording
(a)Compensation and benefits increased primarily due to annual merit increases and an increase in headcount related to the recent Precision and VSi acquisitions.
Previous wording
RD&E expense for the third quarter and first nine months of 2024 was $11.9 million and $42.8 million, respectively, compared to $14.1 million and $48.9 million, respectively, for the third quarter and first nine months of 2023. The decreases in RD&E expense during the third quarter and first nine months of 2024 compared to the same periods in 2023 were primarily due to lower labor costs and the timing of program milestone achievements for customer funded programs. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.
Current wording
RD&E expense for the first quarter of 2025 was $14.2 million, compared to $15.3 million for the first quarter of 2024. The decrease in RD&E expense for 2025 compared to 2024 was primarily due to lower labor costs and the timing of program milestone achievements for customer funded programs. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.
Previous wording
(a)Restructuring charges for the first nine months of 2024 and 2023 primarily consist of costs associated with our strategic reorganization and alignment and manufacturing alignment to support growth initiatives.
Current wording
(a)Restructuring charges for the first quarters of 2025 and 2024 primarily consist of costs associated with our strategic reorganization and alignment and manufacturing alignment to support growth initiatives.
Previous wording
(b)Amounts for the first nine months of 2024 primarily include acquisition expenses related to the InNeuroCo and Pulse acquisitions. Amounts for the first nine months of 2023 primarily included integration expenses related to the Aran and Oscor acquisitions, partially offset by a benefit of $0.5 million to adjust the fair value of acquisition-related contingent consideration liabilities.
Current wording
(b)Amounts for the first quarter of 2025 primarily include acquisition expenses related to the Precision and VSi acquisitions. Amounts for the first quarter of 2024 primarily included acquisition expenses related to the InNeuroCo and Pulse acquisitions.
Previous wording
(c)Amounts include gains and losses in connection with the disposal of property, plant and equipment. In addition, during the second quarter of 2024 we recorded $1.2 million of loss recoveries relating to property damage which occurred in the fourth quarter of 2023 at one of our manufacturing facilities.
Current wording
(c)Amounts include gains and losses in connection with the disposal of property, plant and equipment.
Previous wording
During 2024, contractual interest expense has increased due to higher average debt balance outstanding. The higher average debt balance outstanding is primarily the result of borrowings on our Revolving Credit Facility to fund the Pulse and InNeuroCo acquisitions.
Current wording
During 2025, contractual interest expense has decreased due to a lower combined interest rate, partially offset by higher average debt balance outstanding. The higher average debt balance outstanding is primarily the result of borrowings on our Revolving Credit Facility to fund the Precision and VSi acquisitions.
Previous wording
Other components of interest expense on borrowings include gains on an interest rate swap contract and non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Gain on interest rate swap includes realized gains on an interest rate swap contract which matured as of June 30, 2023. Amortization of deferred debt issuance costs and original issue discount increased during 2024 compared to the same periods in 2023 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first nine months of 2023 were related to prepayments of portions of the TLA Facility and full repayment of our seven-year “term B” loan (the “TLB Facility”) in connection with issuance of the 2028 Convertible Notes.
Current wording
Other components of interest expense on borrowings include non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Amortization of deferred debt issuance costs and original issue discount increased during the first quarter of 2025 compared to the same periods in 2024 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first quarter of 2025 were related to prepayments of portions of the TLA Facility in connection with issuance by the Company of its 2030 Convertible Notes.
Previous wording
As of September 27, 2024 and December 31, 2023, approximately 46% and 51%, respectively, of our principal amount of debt are fixed rate borrowings.
Current wording
As of March 28, 2025 and December 31, 2024, approximately 89% and 50%, respectively, of our principal amount of debt are fixed rate borrowings.
Previous wording
(Gain) loss on equity investments for each period were as follows (in thousands):
Current wording
Gain on equity investments for each period were as follows (in thousands):
Previous wording
Equity method investment (gain) loss for both periods in 2024 and 2023 relates to our share of equity method investee (gains) losses including unrealized appreciation/depreciation of the underlying interests of the investee. As of September 27, 2024 and December 31, 2023, the carrying value of our equity method investment was $10.1 million and $7.8 million, respectively.
Current wording
During the first quarters of 2025 and 2024, we recognized gains on equity investments of $0.2 million and $1.1 million, respectively. The amounts for both the first quarters of 2025 and 2024 relate to our share of equity method investee losses including unrealized depreciation of the underlying interests of the investee. As of March 28, 2025 and December 31, 2024, the carrying value of our equity investments was $7.6 million and $7.4 million, respectively.
Previous wording
The impact of exchange rates on transactions denominated in foreign currencies included in Other loss, net for the third quarter and first nine months of 2024 were net losses of $0.8 million and $1.7 million, respectively, compared to losses of $0.5 million and $1.7 million for the third quarter and first nine months of 2023, respectively. We continually monitor our foreign currency exposures and seek to take steps to mitigate these risks. However, fluctuations in exchange rates could have a significant impact, positive or negative, on our financial results in the future.
Current wording
Our foreign currency transaction gains/losses are based primarily on fluctuations of the U.S. dollar relative to the Euro, Mexican peso, Uruguayan peso, Malaysian ringgits or Dominican peso. The impact of exchange rates on transactions denominated in foreign currencies included in Other loss, net for the first quarters of 2025 and 2024 were net losses of $1.1 million for both periods. We continually monitor our foreign currency exposures and seek to take steps to mitigate these risks. However, fluctuations in exchange rates could have a significant impact, positive or negative, on our financial results in the future.
Previous wording
We recognized income tax expense of $7.1 million for the third quarter of 2024 on $43.4 million of income before taxes (effective tax rate of 16.4%), compared to an income tax expense of $5.1 million on $33.3 million of income before taxes (effective tax rate of 15.3%) for the same period of 2023. The income tax expense for the first nine months of 2024 was $20.2 million on $108.3 million of income before taxes (effective tax rate of 18.7%), compared to income tax expense of $13.1 million on income before taxes of $75.4 million (effective tax rate of 17.3%) for the same period of 2023. Income tax expense for the third quarter and first nine months of 2024 included discrete benefits of $1.6 million and $1.9 million, respectively. For the third quarter and first nine months of 2023, we recorded discrete tax expense of $0.8 million and $0.4 million, respectively.
Current wording
We recognized income tax expense of $9.5 million for the first quarter of 2025 on a loss before taxes of $13.0 million (effective tax rate of (72.8)%), compared to an income tax expense of $4.2 million on $24.8 million of income before taxes (effective tax rate of 17.1%) for the same period of 2024. Income tax expense for the first quarters of 2025 and 2024 included discrete tax benefits of $1.5 million and $0.8 million, respectively. The discrete tax benefits for the first quarter of 2025 and 2024 are predominately related to excess tax benefits, net of deductibility limitations, recognized upon vesting of RSUs.
Previous wording
Our effective tax rate for 2024 differs from the U.S. federal statutory tax rate of 21% due principally to the estimated impact of Federal Tax Credits (including R&D credits and Foreign tax credits), stock-based compensation windfalls or shortfalls, and the impact of U.S taxes on foreign earnings, including the GILTI provision which requires us to include foreign subsidiary earnings in excess of a deemed return on a foreign subsidiary’s tangible assets in our U.S. income tax return. The U.S. tax on foreign earnings is reflected net of a statutory deduction of 50% of the GILTI inclusion (subject to limitations based on U.S. taxable income, if any) and net of FDII that provides a 37.5% deduction to domestic companies for certain foreign sales and services income. In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico (30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). We previously operated under a tax holiday in Malaysia. We met the conditions of the Malaysian tax holiday and the holiday expired in accordance with its original terms on April 30, 2023. Our manufacturing operations in the Dominican Republic operate under a free trade zone agreement through March 2034.
Current wording
Our effective tax rate for 2025 differs from the U.S. federal statutory tax rate of 21% due principally to the impact of the 2028 Convertible Notes Exchange Transactions, including the nondeductible induced conversion expense and reduction of future original issue discount amortization for U.S. income tax. Other items impacting the rate include the estimated impact of Federal Tax Credits (including R&D credits and foreign tax credits), stock-based compensation windfalls, and the impact of U.S taxes on foreign earnings, including the GILTI provision which requires us to include foreign subsidiary earnings in excess of a deemed return on a foreign subsidiary’s tangible assets in our U.S. income tax return. The U.S. tax on foreign earnings is reflected net of a statutory deduction of 50% of the GILTI inclusion (subject to limitations based on U.S. taxable income, if any) and net of FDII that provides a 37.5% deduction to domestic companies for certain foreign sales and services income. In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico (30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). Our manufacturing operations in the Dominican Republic operate under a free trade zone agreement through March 2034. In addition, we acquired manufacturing operations in Costa Rica as part of the acquisition of Precision Coating, and are operating under a free trade zone agreement with respect thereto in Costa Rica through April 2031.
Previous wording
On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. The effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We continue to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries. Our 2024 provision for income taxes includes the impact of the Pillar Two 15% Global Minimum Tax, with an enactment date of January 1, 2024.
Current wording
On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework. The effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We continue to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries. Our 2025 provision for income taxes includes the impact of the Pillar Two 15% Global Minimum Tax.
Previous wording
There is a potential for volatility of our effective tax rate due to several factors, including changes in the mix of pre-tax income and the jurisdictions to which it relates, business acquisitions, settlements with taxing authorities, changes in tax rates, and foreign currency exchange rate fluctuations. We continue to closely monitor developments related to proposed changes in tax laws and tax rates. In addition, we continue to explore planning opportunities that may have a material impact on our effective tax rate.
Current wording
There is a potential for volatility of our effective tax rate due to several factors, including changes in the mix of pre-tax income and the jurisdictions to which it relates, business acquisitions, settlements with taxing authorities, changes in tax rates, and foreign currency exchange rate fluctuations. In addition, we continue to explore tax planning opportunities that may have a material impact on our effective tax rate.
Previous wording
Cash and cash equivalents at September 27, 2024 increased by $11.9 million from December 31, 2023, primarily as a result of cash generated by operating activities and net borrowings on our Revolving Credit Facility, mostly offset by purchases of property, plant and equipment and cash paid to acquire Pulse.
Current wording
Cash and cash equivalents at March 28, 2025 decreased by $14.8 million from December 31, 2024, primarily as a result of cash generated by operating activities of $31.3 million offset by purchases of property, plant and equipment of $25.2 million and tax withholding payments related to net share settlements of restricted stock unit awards of $14.1 million. The payment of the cash portion of the purchase price payable at closing for acquisitions of each of Precision and VSi were fully funded by borrowings on our Revolving Credit Facility. Net proceeds from the issuance of our 2030 Convertible Notes were utilized to purchase capped call options relating to the 2030 Convertible Notes, exchange of a portion of our 2028 Convertible Notes, and pay down our Revolving Credit Facility and TLA Facility.
Previous wording
Working capital from continuing operations increased by $75.2 million from December 31, 2023, or $63.3 million excluding the increase in cash and cash equivalents. The increase in working capital, exclusive of cash and cash equivalents, primarily relates to positive fluctuations in accounts receivable, inventory and contract assets. Inventory increased from higher sales volume and product demand which also contributed to the increase in contract assets and accounts receivable.
Current wording
Working capital from continuing operations increased by $51.9 million from December 31, 2024, or $66.7 million excluding the increase in cash and cash equivalents. The increase in working capital, exclusive of cash and cash equivalents, primarily relates to positive fluctuations in accounts receivable, inventory and accrued expenses. Inventory increased from higher sales volume and product demand which also contributed to the increase in accounts receivable. Accrued expenses primarily decreased from the payment of our calendar 2024 short-term incentive plan pay-out.
Previous wording
At September 27, 2024, $21.9 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.
Current wording
At March 28, 2025, $21.0 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.
Previous wording
As of September 27, 2024, our capital structure consisted of $1.079 billion of debt, net of deferred debt issuance costs and unamortized discounts and 34 million shares of common stock outstanding. As of September 27, 2024, we had access to $580.5 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of September 27, 2024, our contractual debt service obligations for the next twelve months, consisting of principal and interest on our outstanding debt, are estimated to be approximately $54 million. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
Current wording
As of March 28, 2025, our capital structure consisted of $1.235 billion of debt, net of deferred debt issuance costs and unamortized discounts and 35 million shares of common stock outstanding. As of March 28, 2025, we had access to $794.7 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of March 28, 2025, our contractual debt service obligations for the next twelve months, consisting of interest on our outstanding debt, are estimated to be approximately $32 million. As of March 28, 2025, we have prepaid all contractual principal payments on our outstanding indebtedness required in the next twelve months. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•legal and compliance risks, such as regulatory issues resulting from product complaints, recalls or regulatory audits; the potential of becoming subject to product liability or intellectual property claims; our ability to protect our intellectual
Current report — wording carried from elsewhere
See Note 7, “Debt,” of the Notes to the Consolidated Financial Statements contained in Item 1 of this report for additional information about these transactions.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other loss, net for the third quarter and first nine months of 2024 were net losses of $0.9 million and $1.8 million, respectively, compared to net losses of $0.6 million and $1.7 million for the third quarter and first nine months of 2023, respectively. Other loss, net primarily includes gains/losses from the impact of exchange rates on transactions denominated in foreign currencies. Our foreign currency transaction gains/losses are based primarily on fluctuations of the U.S. dollar relative to the Euro, Mexican peso, Uruguayan peso, Malaysian ringgits or Dominican peso.