LEMAITRE VASCULAR INC

Previous wording

We are a global provider of medical devices and human tissue cryopreservation services largely used in the treatment of peripheral vascular disease, end-stage renal disease, and cardiovascular disease. We develop, manufacture, and market vascular devices to address the needs of vascular surgeons and, to a lesser degree, other specialties such as cardiac surgeons, general surgeons and neurosurgeons. Our diversified portfolio of devices consists of brand name products that are used in arteries and veins and are well known to vascular surgeons. Our principal product offerings are sold globally, primarily in the United States, Europe, Canada and Asia Pacific. We estimate that the annual worldwide market for peripheral vascular devices exceeds $5 billion, within which we estimate that the market for our products is approximately $1 billion. We have grown our business using a three-pronged strategy: 1) pursuing a focused call point, 2) competing for sales of low-rivalry, niche products, and 3) expanding our worldwide direct sales force while acquiring complementary devices. We have used acquisitions as a primary means of further penetrating the peripheral vascular device market, and we expect to continue this strategy in the future. We currently manufacture most of our products in our Burlington, Massachusetts headquarters.

Current wording

We are a global provider of medical devices and human tissue cryopreservation services largely used in the treatment of peripheral vascular disease, end-stage renal disease, and cardiovascular disease. We develop, manufacture, and market vascular devices to address the needs of vascular surgeons and, to a lesser degree, other specialties such as cardiac surgeons, general surgeons, and neurosurgeons. Our diversified portfolio of devices consists of brand name products that are used in arteries and veins and are well known to vascular surgeons. Our principal product offerings are sold globally, primarily in the United States, Europe, Canada, and Asia Pacific, or APAC. We estimate that the annual worldwide market for peripheral vascular devices exceeds $9 billion, within which we estimate that the market for our products is approximately $1 billion. We have grown our business using a three-pronged strategy: 1) pursuing a focused call point, 2) competing for sales of low-rivalry, niche products, and 3) expanding our worldwide direct sales force while acquiring complementary devices. We have used acquisitions as a primary means of further penetrating the peripheral vascular device market, and we expect to continue this strategy in the future. We currently manufacture most of our products in our Burlington, Massachusetts headquarters.

Previous wording

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In 2024, biologics represented 52% of our worldwide sales. We believe our biologic devices represent differentiated and, in many cases, growing product segments.

Current wording

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In 2025, biologics represented 53% of our worldwide sales. We believe our biologic devices represent differentiated and, in many cases, growing product segments.

Previous wording

We sell our products and services primarily through a direct sales force. As of December 31, 2024, our sales force comprised 152 sales representatives in North America, Europe, the UK, and Asia Pacific, including four export managers. Our worldwide headquarters is located in Burlington, Massachusetts, and we also have a North American sales office in Vaughan, Canada. Our European headquarters is located in Sulzbach, Germany, and we also have European sales offices in Milan, Italy; Madrid, Spain; Hereford, England; Dublin, Ireland; and Maisons-Alfort, France. Our Asia Pacific headquarters is located in Singapore, and we also have Asia Pacific sales offices in Tokyo, Japan; Shanghai, China; Kensington, Australia; Seoul, Korea; and Bangkok, Thailand. During the year ended December 31, 2024, approximately 95% of our net sales were generated in territories in which we employ direct sales representatives. We sell our products in other countries through distributors.

Current wording

We sell our products and services primarily through a direct sales force. Our worldwide headquarters is located in Burlington, Massachusetts, and we also have a North American sales office in Vaughan, Canada. Our European headquarters is located in Sulzbach, Germany, and we also have European sales offices in Milan, Italy; Madrid, Spain; Hereford, England; Dublin, Ireland; Maisons-Alfort, France; and Glattbrugg, Switzerland. Our APAC headquarters is located in Singapore, and we also have APAC sales offices in Tokyo, Japan; Shanghai, China; Docklands, Australia; Seoul, Korea; and Bangkok, Thailand. During the year ended December 31, 2025, approximately 95% of our net sales were generated in territories in which we employ direct sales representatives. We sell our products in other countries through distributors. As of December 31, 2025, our sales force comprised 160 sales representatives and export managers in North America, Europe, and APAC.

Previous wording

We obtain regulatory approvals for our devices and services in new product categories and geographies in order to further access the broader peripheral device market and selected other markets. While much of our regulatory effort is focused on maintaining regulatory approvals in various geographies, we will continue to obtain new product approvals in new geographies in order to extend our geographic reach. Recent approvals include the approval to sell the XenoSure patch for carotid indication in Japan in May 2023, the Pruitt Irrigation Occlusion Catheter in China in October 2023, the XenoSure patch for cardiac indication in China in December 2024, and the Artegraft bovine graft in Thailand and Malaysia in August 2024 and in South Africa in October 2024.

Current wording

We obtain regulatory approvals for our devices and services in new product categories and geographies to further access the broader peripheral device market and selected other markets, thus extending our geographic reach. Recent approvals include approvals to sell the XenoSure patch for carotid indication in Japan in May 2023, and the Pruitt Irrigation Occlusion Catheter in China in October 2023; approvals to sell the Artegraft bovine graft in Thailand and Malaysia in August 2024 and South Africa in October 2024, and the XenoSure patch for cardiac indications in China in December 2024; and approvals to sell the Artegraft bovine graft in the European Union (EU) in April 2025, Australia in June 2025, and Canada in December 2025, the Pruitt Aortic Occlusion Catheter in the EU in May 2025, and the Pruitt Occlusion Catheter in China in June 2025.

Previous wording

Our strategy for growing our business includes the acquisition of complementary product lines and companies, which can be difficult to identify, negotiate, and purchase. There can be no assurance that we will be able to do so in the future.

Current wording

Our strategy for growing our business includes acquisitions of complementary product lines and companies, which can be difficult to identify, negotiate, and purchase. There can be no assurance that we will be able to do so in the future.

Previous wording

From time to time we undertake SKU reductions and attempt to transition sales to other SKUs or products with similar features. For example, in 2022, we initiated the transition of sales of our Syntel spring tip catheter to our Syntel regular tip catheter. Any of these actions may result in inventory write-offs and temporary or permanent negative impacts to our sales, gross margin, and customer relationships.

Current wording

From time to time we undertake SKU reductions and attempt to transition sales to other SKUs or products with similar features. Any of these actions may result in inventory write-offs and temporary or permanent negative impacts to our sales, gross margin, and customer relationships.

Previous wording

Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins, we periodically enter into transactions with country-specific distributors to transition their sales of our medical devices into our direct sales organization:

Current wording

Because we believe that direct-to-hospital sales create closer customer relationships, and allow for higher selling prices and gross margins through elimination of an intermediary, we periodically enter into transactions with country-specific distributors to transition their sales of our medical devices into our direct sales organization:

Previous wording

In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate manufacturing into our Burlington facilities. We expect these plant consolidations and manufacturing transfers will result in improved control over production quality as well as reduced costs. Our most recent manufacturing transfers included:

Current wording

In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate manufacturing into our Burlington facilities. We expect these plant consolidations and manufacturing transfers will result in improved control over production quality as well as reduced costs. Our most recent manufacturing transfer was:

Previous wording

In February 2024, we began implementing a new ERP system to replace our financial reporting and planning system. We expect that the new ERP system will be beneficial in a number of areas, including inventory management, pricing programs, financial operations and real-time reporting. We have been preparing for this transition since 2022 and have hired an experienced consulting team to assist in this transition, and, in the U.S., we transitioned from our legacy ERP system to our newly implemented Microsoft Dynamics D365 system in February 2024. We expect to implement this new system in selected countries in Europe in 2025, starting with the UK. As of December 31, 2024, we have capitalized costs on our balance sheet of $4.7 million associated with this ERP system.

Current wording

In February 2024, we began implementing a new enterprise resource planning, or ERP, system to replace our financial reporting and planning system. In the United States, we transitioned from our legacy ERP system to our newly implemented Microsoft Dynamics D365 system in February 2024. In February 2025, we implemented this new system in the UK. We intend to continue rolling out the new system in our other international locations on a staged basis. The new ERP system has been beneficial in a number of areas, including inventory management, pricing programs, financial operations and real-time reporting. As of December 31, 2025, we have net capitalized costs on our balance sheet of $4.6 million associated with this ERP system.

Previous wording

Fluctuations in the exchange rates between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the year ended December 31, 2024, approximately 41% of our sales took place outside of the United States, largely in currencies other than the U.S. dollar. We expect foreign currencies will represent a significant percentage of future sales. Selling, marketing, and administrative costs related to these sales are also denominated in foreign currencies, thereby partially mitigating our bottom-line exposure to exchange rate fluctuations. However, if there is a decrease in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will record less revenue in U.S. dollars than we did before the exchange rate changed. For 2024, we estimate that the effects of changes in foreign exchange rates decreased our reported sales by approximately $0.4 million, as compared to rates in effect for 2023.

Current wording

Fluctuations in the exchange rates between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the year ended December 31, 2025, approximately 43% of our sales took place outside of the United States, largely in currencies other than the U.S. dollar. We expect foreign currencies will represent a significant percentage of future sales. Selling, marketing, and administrative costs related to these sales are also denominated in foreign currencies, thereby partially mitigating our bottom-line exposure to exchange rate fluctuations. If there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require less of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will record more revenue in U.S. dollars than we would have if the exchange rate had not changed. For the year ended December 31, 2025, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $2.7 million, as compared to rates in effect for the year ended December 31, 2024.

Previous wording

Net sales. We derive our net sales from the sale of our products and services, less discounts and returns. Net sales include the shipping and handling fees paid for by our customers. Most of our sales are generated by our direct sales force and are shipped and billed to hospitals or clinics throughout the world. In countries where we do not have a direct sales force, sales are primarily to distributors, who in turn sell to hospitals and clinics. In certain cases our products are held on consignment at a hospital or clinic prior to purchase; in those instances we recognize revenue at the time the product is used in surgery rather than at shipment.

Current wording

Net sales. We derive our net sales from the sale of our products and services, less discounts and returns. Net sales include the shipping and handling fees paid by our customers. Most of our sales are generated by our direct sales force and are shipped and billed to hospitals or clinics globally. In countries where we do not have a direct sales force, sales are primarily to distributors, who in turn sell to hospitals and clinics. In limited cases our products are held on consignment at a hospital or clinic prior to purchase; in those instances we recognize revenue at the time the product is used in surgery rather than at shipment.

Previous wording

Cost of sales. We manufacture the majority of the products that we sell. Our cost of sales consists primarily of manufacturing personnel, raw materials and components, depreciation of property and equipment, and other allocated manufacturing overhead, as well as the freight expense we pay to ship products to customers.

Current wording

Cost of sales. We manufacture the majority of the products that we sell. Cost of sales consists primarily of manufacturing personnel wages, raw materials and components, depreciation of property and equipment, and other allocated manufacturing overhead, including an allocation of our quality department expenses. Additionally, cost of sales includes the freight expenses we pay to ship products to customers, inventory scrap charges, and excess and obsolescence expenses.

Previous wording

Sales and marketing. Our sales and marketing expense consists primarily of salaries, commissions, stock-based compensation, travel and entertainment, sales meetings, attendance at vascular and cardiac congresses, training programs, advertising and product promotions, direct mail, and other marketing costs.

Current wording

Sales and marketing. Sales and marketing expense consists primarily of salaries, commissions, contests, stock-based compensation, travel and entertainment, sales meetings, attendance at vascular and cardiac congresses, training programs, advertising and product promotions, direct mail, and other marketing costs. Additionally, sales and marketing expense includes customer service department personnel charges.

Previous wording

Research and development. Research and development expense primarily includes costs associated with obtaining and maintaining regulatory approval of our products, salaries, laboratory testing, and supply costs. It also includes costs associated with the design and execution of clinical studies, costs to register, maintain, and defend our intellectual property, and costs to transfer the manufacturing of acquired product lines to our Burlington facility. Also included are costs associated with the design, development, testing, and enhancement of new or existing products.

Current wording

Research and development. Research and development expense primarily includes costs associated with obtaining and maintaining regulatory approval of our products, salaries, laboratory testing, and supply costs. It also includes costs associated with the design and execution of clinical studies and costs to transfer the manufacturing of acquired product lines to our Burlington facility. Additionally, research and development expense includes costs associated with the design, development, testing, and enhancement of new or existing products.

Previous wording

Other income (expense). Other income (expense) primarily includes interest income and expense, foreign currency gains (losses), and other miscellaneous gains (losses).

Current wording

Other income (expense). Other income (expense) primarily includes interest and dividend income, realized gains (losses) from the sale of debt and equity investments, unrealized gains (losses) from equity investments, interest expense for the convertible senior notes, foreign currency gains (losses), and other miscellaneous gains (losses).

Previous wording

Income tax expense. We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses or profits in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned foreign subsidiaries. Our consolidated tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S. tax reporting purposes.

Current wording

Income tax expense. We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses or profits in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned foreign subsidiaries. Our consolidated income tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S. tax reporting purposes.

Previous wording

Net sales. Net sales increased by $26.4 million, or 14%, to $219.9 million for the year ended December 31, 2024, compared to $193.5 million for the year ended December 31, 2023. The increase was driven primarily by higher average selling prices, higher hospital procedure volumes, and additional sales representatives. Graft sales increased $11.1 million, patch sales increased $6.4 million, shunt sales increased $3.7 million and catheter sales increased $3.0 million. We estimate that the stronger U.S. dollar decreased net sales by $0.4 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Current wording

Net sales. Net sales increased by $29.7 million, or 14%, to $249.6 million for the year ended December 31, 2025, compared to $219.9 million for the year ended December 31, 2024. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, the European launch of Artegraft, and additional sales representatives. Graft sales increased $16.0 million, valvulotome sales increased $4.7 million, shunt sales increased $3.5 million, catheter sales increased $2.8 million, and patch sales increased $1.8 million. We estimate that the weaker U.S. dollar increased net sales by $2.7 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024.

Previous wording

Direct-to-hospital net sales were 95% and 96% of our total net sales for the years ended December 31, 2024 and 2023, respectively.

Current wording

Direct-to-hospital net sales were 95% of our total net sales for both the years ended December 31, 2025 and 2024, respectively.

Previous wording

Net sales by geography. Net sales in the Americas increased $14.3 million, or 11%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase was driven primarily by increased sales of grafts of $8.5 million, patches of $3.4 million and valvulotomes of $1.2 million.

Current wording

Net sales by geography. Net sales in the Americas increased $15.1 million, or 10%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase was driven primarily by increased sales of grafts of $10.4 million, valvulotomes of $3.1 million, and catheters of $0.9 million.

Previous wording

EMEA net sales increased $9.2 million, or 22%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was driven primarily by increased sales of patches of $3.3 million, grafts of $3.0 million, shunts of $1.9 million, and valvulotomes of $1.1 million.

Current wording

EMEA net sales increased $13.2 million, or 22%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase was driven primarily by increased sales of grafts of $5.1 million, which includes the launch of Artegraft, shunts of $2.8 million, catheters of $2.1 million, patches of $1.8 million, and valvulotomes of $1.3 million.

Previous wording

Asia Pacific net sales increased $1.7 million, or 17%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase was driven primarily by increased sales of catheters of $0.7 million, patches of $0.6 million, grafts of $0.3 million, and shunts of $0.2 million.

Current wording

Asia Pacific net sales increased $1.5 million, or 10%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase was driven primarily by increased sales of grafts and patches of $0.5 million each, valvulotomes of $0.3 million, and clips of $0.2 million.

Previous wording

Gross profit increased $23.9 million, or 19%, to $150.9 million for the year ended December 31, 2024, and gross margin increased by 290 basis points to 68.6% in the period. The increase in gross profit was driven primarily by increased sales, particularly from allograft preservation services, bovine vascular patches, carotid shunts and bovine grafts. The increase in gross margin was driven primarily by greater manufacturing efficiencies and sales price increases, which was partially offset by unfavorable product mix, including sales of comparatively lower margin allograft preservation services, and increased excess and obsolescence charges.

Current wording

Gross profit increased $27.6 million, or 18%, to $178.5 million for the year ended December 31, 2025, as compared to $150.9 million for the year ended December 31, 2024, and gross margin increased by 290 basis points to 71.5% in the period, as compared to 68.6% for the year ended December 31, 2024. The increase in gross profit was driven primarily by increased sales, particularly from grafts, valvulotomes, and shunts, and the receipt of the U.S. Employee Retention Credit ("ERC"). The increase in gross margin was driven primarily by the ERC, greater manufacturing efficiencies, and sales price increases, partially offset by increased shipping and warehousing costs and unfavorable product mix, including increased sales of comparatively lower margin allograft preservation services, ovine grafts, and single lumen embolectomy catheters. The ERC received in 2025 had a favorable impact of $2.7 million, or 109 basis points, to the gross margin.

Previous wording

Sales and marketing*.* For the year ended December 31, 2023, sales and marketing expenses increased 25% to $41.1 million. The increase was driven primarily by higher sales and associated commissions, contest and bonus expenses, increased sales rep and marketing headcounts, and an increase in salaries and wages. Compensation and related expenses increased by $6.1 million, travel and training expenses increased by $0.8 million, and sales meetings and trade show expenses increased by $0.7 million. Sales rep headcount was 136 as of December 31, 2023, a 4% increase from December 31, 2022. As a percentage of net sales, sales and marketing expenses increased to 21% for the year ended December 31, 2023, up from 20% in the prior period.

Current wording

Sales and marketing. For the year ended December 31, 2025, sales and marketing expenses increased 17% to $54.5 million. The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $6.6 million, which was partially offset by the ERC. Additionally, professional fees and outside services expenses increased $1.1 million and travel and training expenses increased $0.6 million. Sales force headcount was 160 as of December 31, 2025, a 5% increase from December 31, 2024. The ERC received in 2025 had a favorable impact, reducing sales and marketing expenses by $0.8 million. As a percentage of net sales, sales and marketing expenses increased to 22% for the year ended December 31, 2025, up from 21% for the year ended December 31, 2024.

Previous wording

General and administrative. For the year ended December 31, 2024, general and administrative expenses increased 14% to $36.3 million. The increase was driven primarily by higher headcount and related recruiting fees, accrued bonus, and stock compensation expenses, which resulted in increased compensation and related expenses of $2.1 million. Additionally, professional fees and outside services expenses increased $1.2 million and facilities expenses increased $0.8 million. As a percentage of sales, general and administrative expenses remained consistent at 16% for the year ended December 31, 2024 versus the prior period.

Current wording

General and administrative. For the year ended December 31, 2025, general and administrative expenses increased 16% to $42.0 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $4.1 million, which was partially offset by the ERC. Additionally, facilities expenses increased $1.0 million and travel and training expenses increased $0.2 million. The ERC received in 2025 had a favorable impact, reducing general and administrative expenses by $0.3 million, offset by third party consultant fees of $0.7 million. As a percentage of net sales, general and administrative expenses increased to 17% for the year ended December 31, 2025, up from 16% for the year ended December 31, 2025.

Previous wording

Income tax expense**.** We recorded a tax provision of $12.8 million on pre-tax income of $56.9 million for the twelve months ended December 31, 2024, compared to $9.4 million on pre-tax income of $39.5 million for the twelve months ended December 31, 2023.

Current wording

Income tax expense. We recorded a tax provision of $17.5 million on pre-tax income of $75.2 million for the year ended December 31, 2025, compared to $12.8 million on pre-tax income of $56.9 million for the year ended December 31, 2024.

Previous wording

Our effective income tax rate was 25.3% and 23.7% for the three- and twelve-month periods ended December 31, 2023 respectively. Our tax expense for 2023 is based on an estimated annual effective tax rate of 26.1%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items. Our income tax expense for 2023 varies from the statutory rate mainly due to federal and state tax credits, permanent items, different statutory rates from our foreign entities, and stock option exercises.

Current wording

Our effective income tax rate was 23.2% for the year ended December 31, 2025. Our tax expense for 2025 is based on an estimated annual effective tax rate of 25.1%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items. Our income tax expense for 2025 varies from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

Previous wording

Our effective income tax rate was 25.3% and 23.7% for the three- and twelve-month periods ended December 31, 2023, respectively. Our 2023 provision was based on an estimated annual effective tax rate of 26.1%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items. Our income tax expense for 2023 varied from the statutory rate mainly due to permanent items, different statutory rates from our foreign entities, and stock option exercises.

Current wording

Our effective income tax rate was 22.6% for the year ended December 31, 2024. Our 2024 provision was based on an estimated annual effective tax rate of 24.5%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items. Our income tax expense for 2024 varied from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

Previous wording

We assess the likelihood that our deferred tax assets will be realized through future taxable income and record a valuation allowance to reduce gross deferred tax assets to an amount we believe is more likely than not to be realized. As of December 31, 2024, we have provided a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized.

Current wording

We assess the likelihood that our deferred tax assets will be realized through future taxable income and record a valuation allowance to reduce gross deferred tax assets to an amount we believe is more likely than not to be realized. As of December 31, 2025, we have a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized.

Previous wording

The Inflation Reduction Act, or IRA, was enacted into law on August 16, 2022. Included in the IRA was a provision to implement a 15% corporate alternative minimum tax on “adjusted financial statement income” for applicable corporations and a 1% excise tax on repurchases of stock. These provisions are effective for tax years beginning after December 31, 2022. We do not currently believe the IRA will have a material impact on our reported results, cash flows, or financial position.

Current wording

The Inflation Reduction Act ("IRA") was enacted into law on August 16, 2022. Included in the IRA was a provision to implement a 15% corporate alternative minimum tax on “adjusted financial statement income” for applicable corporations and a 1% excise tax on repurchases of stock. These provisions are effective for tax years beginning after December 31, 2022. We do not currently believe the IRA will have a material impact on our reported results, cash flows, or financial position.

Previous wording

As of December 31, 2024, our cash and cash equivalents were $25.6 million as compared to $24.3 million as of December 31, 2023. We had $274.1 million in short-term marketable securities as of December 31, 2024, and $80.8 million as of December 31, 2023. Our cash and cash equivalents are liquid investments with maturities of 90 days or less at the date of purchase and consist primarily of operating bank accounts. Our short-term marketable securities consist of a U.S. government money market fund investing mainly in high-quality, short-term securities that are issued or guaranteed by the U.S. government or by U.S. government agencies and instrumentalities, and a short-duration bond fund. As of December 31, 2024 our short-term marketable securities reflected an unrealized loss of $1.0 million as a result of increasing market interest rates.

Current wording

As of December 31, 2025, our cash and cash equivalents were $28.2 million, as compared to $25.6 million as of December 31, 2024. We had $330.9 million in short-term marketable securities as of December 31, 2025, as compared to $274.1 million as of December 31, 2024. Our cash and cash equivalents are bank deposits and liquid investments with maturities of 90 days or less at the date of purchase held in our operating bank accounts. Our short-term marketable securities primarily include corporate debt securities, U.S. government agency securities, money market investments with maturities of 90 days or less at the date of purchase held outside of our operating bank accounts, and a short-duration bond equity fund. As of December 31, 2025, our short-term marketable securities reflected an unrealized gain of less than $0.1 million.

Previous wording

On February 18, 2025, our Board of Directors authorized the repurchase of up to $75.0 million of the Company’s common stock through transactions on the open market, in privately negotiated purchases or otherwise until February 17, 2026. The repurchase program may be suspended or discontinued at any time. To date we have not made any repurchases under this or any prior program.

Current wording

On February 19, 2026, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through transactions on the open market, in privately negotiated purchases, or otherwise until February 18, 2027. The repurchase program may be suspended or discontinued at any time. To date we have not made any repurchases under this or any prior program.

Previous wording

The Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Convertible Notes bear interest at a rate of 2.50% per year and interest is payable semiannually in arrears on August 1 and February 1 of each year. The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.

Current wording

The Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Convertible Notes bear interest at a rate of 2.50% per year, and interest is payable semiannually in arrears on August 1 and February 1 of each year. For the year ended December 31, 2025, we paid $2.7 million in interest payments. We did not make interest payments for the year ended December 31, 2024. The initial conversion rate was 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represented an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024. In connection with the most recent payment made on December 4, 2025 of a quarterly cash dividend of $0.20 per share (an increase from the quarterly dividend amount of $0.16 per share as of the time of issuance of the Convertible Notes), the conversion rate of the Convertible Notes was increased to 8.3676 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.51 per share of common stock. A similar adjustment to the conversion rate will be made upon payment of the quarterly cash dividend of $0.25 on March 26, 2026, and upon payment of subsequent quarterly dividends in excess of $0.16 per share. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.

Previous wording

Noteholders may convert all or a portion of their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the Indenture; (4) if the Company calls (or is deemed to have called) any Convertible Notes for redemption; and (5) at any time from, and including, August 1, 2029 until the close of business on the second scheduled trading day immediately before the maturity date. The Company has the right to elect to settle conversions either in cash, shares of common stock, or in a combination of cash and shares of its common stock.

Current wording

Noteholders may convert all or a portion of their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the Indenture; (4) if we call (or are deemed to have called) any Convertible Notes for redemption; and (5) at any time from, and including, August 1, 2029, until the close of business on the second scheduled trading day immediately before the maturity date. We have the right to elect to settle conversions either in cash, shares of common stock, or in a combination of cash and shares of its common stock.

Previous wording

Prior to February 5, 2028, the Convertible Notes will not be redeemable. On or after February 5, 2028 until the fortieth scheduled trading day immediately before the maturity date, the Company may redeem for cash all or any portion of the Convertible Notes (subject to the partial redemption limitation set forth in the Indenture), at its option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. In addition, calling any Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Current wording

Prior to February 5, 2028, the Convertible Notes will not be redeemable. On or after February 5, 2028 until the 40th scheduled trading day immediately before the maturity date, we may redeem for cash all or any portion of the Convertible Notes (subject to the partial redemption limitation set forth in the Indenture), at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. In addition, calling any Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

Previous wording

We recognized operating income of $52.3 million for the year ended December 31, 2024, $36.7 million for the year ended December 31, 2023, and $26.8 million for the year ended December 31, 2022. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:

Current wording

We recognized operating income of $67.9 million for the year ended December 31, 2025, $52.3 million for the year ended December 31, 2024, and $36.7 million for the year ended December 31, 2023. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents and short-term marketable securities, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:

Previous wording

We believe that our cash, cash equivalents, investments, and the interest we earn on these balances will enable us to fund our operating expenses, capital expenditures requirements, and Convertible Note payments for at least twelve months following the filing of our annual report on Form 10-K and to meet our known long-term cash requirements.

Current wording

We believe that our cash and cash equivalents, short-term marketable securities, and the interest we earn on these balances will enable us to fund our operating expenses, capital expenditures requirements, and Convertible Note interest payments for at least twelve months following the filing of this Form 10-K and, together with our anticipated future cash, cash equivalents, and short-term marketable securities, to meet our known long-term cash requirements.

Previous wording

Net cash provided by operating activities. Net cash provided by operating activities was $44.1 million for the year ended December 31, 2024, consisting of $44.0 million net income, adjusted for non-cash items of $20.2 million (including primarily depreciation and amortization of $9.7 million, stock-based compensation of $6.6 million, provisions for inventory write-offs and credit losses of $3.9 million, foreign currency transaction effect on income of $0.4 million, and fair value adjustments to contingent consideration obligations of $0.1 million, offset by a provision for deferred income taxes of $0.5 million), as well as cash used for working capital of $20.1 million. The net cash used for working capital was driven by increases in inventory and other deferred costs of $10.6 million, increases in accounts receivable of $6.4 million, increases in prepaid expenses and other assets of $2.3 million, and decreases in accounts payable and other liabilities of $0.8 million.

Current wording

Net cash provided by operating activities was $44.1 million for the year ended December 31, 2024, consisting of $44.0 million net income, adjusted for non-cash items of $20.2 million (including primarily depreciation and amortization of $9.6 million, stock-based compensation of $6.6 million, provisions for inventory write-offs and credit losses of $3.9 million, foreign currency transaction effect on income of $0.4 million, amortization of issuance costs on convertible senior notes of $0.1 million, and fair value adjustments to contingent consideration obligations of $0.1 million, offset by a provision for deferred income taxes of $0.5 million), as well as cash used for working capital of $20.1 million. The net cash used for working capital was driven by increases in inventory and other deferred costs of $10.6 million, increases in accounts receivable of $6.4 million, increases in prepaid expenses and other assets of $2.3 million, and decreases in accounts payable and other liabilities of $0.9 million, offset by increases in accrued interest of 0.1 million.

Previous wording

Net cash used in investing activities. Net cash used in investing activities was $200.1 million for the year ended December 31, 2024, consisting of purchases of marketable securities of $277.9 million and purchases of property and equipment of $7.0 million, offset by proceeds from the sale of marketable securities of $84.8 million.

Current wording

Net cash used in investing activities was $200.1 million for the year ended December 31, 2024, consisting of purchases of marketable securities of $277.9 million and purchases of property and equipment of $7.0 million, offset by proceeds from the sale of marketable securities of $84.8 million.

Previous wording

Net cash used in financing activities was $9.2 million for the year ended December 31, 2022, consisting of dividend payments of $11.0 million and deferred payments for acquisitions of $1.1 million, offset by proceeds from stock option exercises of $2.8 million, net of shares repurchased to cover employee payroll taxes.

Current wording

Net cash (used in) provided by financing activities. Net cash used in financing activities was $14.5 million for the year ended December 31, 2025, consisting of dividend payments of $18.1 million and deferred payments for acquisitions of $1.4 million, offset by proceeds from stock options exercises of $5.0 million, net of shares repurchased used to pay employee payroll taxes.

Previous wording

Net cash provided by (used in) financing activities. Net cash provided by financing activities was $158.1 million for the year ended December 31, 2024, consisting of proceeds from issuance of the Convertible Notes, net of issuance costs paid, of $167.8 million, and proceeds from stock options exercises of $4.7 million, net of shares repurchased used to pay employee payroll taxes. These proceeds of cash were offset by dividend payments of $14.4 million.

Current wording

Net cash provided by financing activities was $158.1 million for the year ended December 31, 2024, consisting of proceeds from issuance of the Convertible Notes, net of issuance costs paid, of $167.8 million, and proceeds from stock options exercises of $4.7 million, net of shares repurchased used to pay employee payroll taxes. These proceeds of cash were offset by dividend payments of $14.4 million.