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, or APAC. 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 Q3 2025, biologics represented 54% 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 Q1 2026, 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. 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 Zurich, 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 quarter ended September 30, 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 September 30, 2025, our sales force comprised 152 sales representatives and export managers in North America, Europe, and APAC.

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 quarter ended March 31, 2026, approximately 96% 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 March 31, 2026, our sales force comprised 158 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 to further access the broader peripheral device market and select other markets, thus extending our geographic reach. We received 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. We received 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. We received approvals to sell the Artegraft bovine graft in the European Union (EU) in April 2025 and Australia in June 2025, the Pruitt Aortic Occlusion Catheter in the EU in May 2025, and the Pruitt Occlusion Catheter in China in June 2025.

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 clearance 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

Separately, our regulatory efforts to maintain approvals in the EU and the United Kingdom (UK) have shown steady progress and success as the EU transitions from the Medical Device Directive (MDD) to the Medical Device Regulation (MDR) and the UK transitions to the United Kingdom Conformity Assessed (UKCA) marks. In 2024, we received MDR CE and UKCA marks allowing for the continued sale of 11 devices into the EU and UK. In January 2025, we received MDR CE and UKCA marks to market Burlington-manufactured CardioCel and VascuCel devices in the EU and UK. As of October 31, 2025, we have 21 MDR CE marks and 18 UKCA approvals, and expect to hold 22 approvals by the end of 2025. Those 22 CE and UKCA marks will represent substantially all of our product offerings in the EU and UK. The European Commission has designated the end of 2028 as the final MDR CE mark transition deadline.

Current wording

Separately, our regulatory efforts to maintain approvals in the EU and the United Kingdom (UK) have succeeded ahead of the full EU transition from the Medical Device Directive (MDD) to the Medical Device Regulation (MDR) and the UK transition to the United Kingdom Conformity Assessed (UKCA) mark. As of April 10, 2026, we have 22 MDR CE marks and 22 UKCA which represent substantially all of our product approvals in the EU and UK. The European Commission has designated the end of 2028 as the final MDR CE mark transition deadline.

Previous wording

Additionally, we provide cryopreservation services for our Restoreflow allografts primarily in the US, UK, and Canada. In October 2025, we received approval from the German authority on tissue banking to allow sale of these services in the German market.

Current wording

Additionally, we provide cryopreservation services for our Restoreflow allografts primarily in the US, UK, and Canada. In October 2025, we received approval from the German authority on tissue banking to allow provision of these services in the German market.

Previous wording

In June 2020, we entered into an agreement with Artegraft to purchase the assets of their bovine graft business for $72.5 million plus additional payments of up to $17.5 million, contingent upon future unit sales.

Current wording

In December 2025, we entered into an agreement with Andramed GmbH to purchase the assets of their AndraValvulotome business for $1.8 million plus additional payments of up to $0.8 million, contingent upon the passage of time and, separately, receipt of a regulatory approval.

Previous wording

During 2025, we made the decision to end our cardiovascular porcine patch distribution agreement with Elutia. Previously, in April 2023, we had entered into an agreement with Elutia to become the exclusive U.S. distributor of their cardiovascular porcine patches. Under the agreement, we could distribute the products for three years with an option to acquire Elutia’s worldwide cardiovascular porcine patch business during the second and third years of the agreement. This product totaled approximately $1.8 million in 2025 revenues.

Current wording

During 2025, we made the decision to terminate our cardiovascular porcine patch distribution agreement with Elutia. Previously, in April 2023, we had entered into an agreement with Elutia to become the exclusive U.S. distributor of their cardiovascular porcine patches. Under the agreement, we could distribute the products for three years with an option to acquire Elutia’s worldwide cardiovascular porcine patch business during the second and third years of the agreement. This product totaled approximately $1.8 million in 2025 revenues.

Previous wording

During 2025, we made the decision to wind down the CardioCel 3D and DuraSure product lines. These product lines totaled approximately $0.5 million in revenue for the nine months ended September 30, 2025.

Current wording

During 2025, we made the decision to wind down the CardioCel 3D and DuraSure product lines. These product lines totaled approximately $0.5 million in 2025 revenues.

Previous wording

During 2024, we made the decision to wind down the PeriVu Angioscope product line. This product totaled approximately $0.9 million in 2024 revenues.

Current wording

During 2025, we made the decision to wind down the AnastoClip AC Closure System in North America. This product totaled approximately $0.7 million in 2025 revenues.

Previous wording

From time to time we may 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 may 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 engender 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 transfer was:

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 transfers are:

Previous wording

In October 2019, we acquired the CardioCel and VascuCel biologic patch businesses from Anteris. The transfer to Burlington was substantially completed in 2023. In June 2023, the MDR CE mark application for these Burlington-produced devices was submitted, and we obtained approval in January 2025, allowing for distribution of these patches in the EU in 2025. We began distributing these Burlington-produced patches in the United States, Canada, and select APAC markets in 2024.

Current wording

In October 2019, we acquired the CardioCel and VascuCel biologic patch businesses from Anteris. The transfer to Burlington was substantially completed in 2023. In June 2023, the MDR CE mark application for these Burlington-produced devices was submitted, and we obtained approval in January 2025, allowing for distribution of these patches in the EU. We began distributing these Burlington-produced patches in the United States, Canada, and select APAC markets in 2024.

Previous wording

In February 2024, we began implementing a new enterprise resource planning, or 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 hired an experienced consulting team to assist in this transition. 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. As of September 30, 2025, we have capitalized costs on our balance sheet of $4.8 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 March 31, 2026, 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 nine months ended September 30, 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 nine months ended September 30, 2025, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $1.2 million, as compared to rates in effect for the nine months ended September 30, 2024.

Current wording

Fluctuations in the exchange rates between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the three months ended March 31, 2026, approximately 44% 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 three months ended March 31, 2026, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $2.0 million, as compared to rates in effect for the three months ended March 31, 2025.

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 for 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. Our 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. 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 Senior Convertible Notes, foreign currency gains (losses), and other miscellaneous gains (losses).

Previous wording

Comparison of the three- and nine-month periods ended September 30, 2025, to the three- and nine-month periods ended September 30, 2024:

Current wording

Comparison of the three month period ended March 31, 2026, to the three month period ended March 31, 2025:

Previous wording

Net sales. Net sales increased by $6.2 million, or 11%, to $61.0 million for the three months ended September 30, 2025, compared to $54.8 million for the three months ended September 30, 2024. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and additional sales representatives. Graft sales increased $4.2 million, shunt sales increased $1.0 million, and valvulotome sales increased $0.9 million. We estimate that the weaker U.S. dollar increased net sales by $1.0 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

Current wording

Net sales. Net sales increased by $6.7 million, or 11%, to $66.6 million for the three months ended March 31, 2026, compared to $59.9 million for the three months ended March 31, 2025. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and the European launch of Artegraft in the second half of 2025. Graft sales increased $4.1 million, valvulotome sales increased $1.6 million, and shunt sales increased $0.7 million. We estimate that the weaker U.S. dollar increased net sales by $2.0 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Previous wording

Direct-to-hospital net sales were 95% of our total net sales for both the three months ended September 30, 2025 and 2024.

Current wording

Direct-to-hospital net sales were 96% and 94% of our total net sales for the three months ended March 31, 2026 and 2025.

Previous wording

Net sales by geography. Net sales in the Americas increased $3.4 million, or 10%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was driven primarily by increased sales of grafts of $3.0 million, valvulotomes of $0.7 million, and shunts of $0.3 million.

Current wording

Net sales by geography. Net sales in the Americas increased $2.6 million, or 7%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was driven primarily by increased sales of grafts of $3.0 million, valvulotomes of $0.5 million, and catheters of $0.1 million, offset by decreased sales of patches of $1.4 million due to the termination of our cardiovascular porcine patch distribution agreement with Elutia in 2025.

Previous wording

Europe, Middle East, and Africa, or EMEA, net sales increased $2.6 million, or 18%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was driven primarily by increased sales of grafts of $1.1 million, shunts of $0.6 million, and patches of $0.4 million each.

Current wording

Europe, Middle East, and Africa, or EMEA, net sales increased $3.3 million, or 20%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was driven primarily by increased sales of grafts and valvulotomes of $1.0 million each, shunts of $0.5 million, and patches of $0.4 million.

Previous wording

APAC net sales increased $0.2 million, or 5%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was driven primarily by increased sales of grafts and shunts of $0.1 million each.

Current wording

APAC net sales increased $0.7 million, or 18%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was driven primarily by increased sales of clips and patches of $0.2 million each and shunts and grafts of $0.1 million each.

Previous wording

Gross profit increased $8.8 million, or 24%, to $46.0 million for the three months ended September 30, 2025, as compared to $37.2 million for the three months ended September 30, 2024, and gross margin increased by 750 basis points to 75.3% in the period, as compared to 67.8% for the three months ended September 30, 2024. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and valvulotomes, and the receipt of the ERC. The increase in gross margin was driven primarily by the ERC, greater manufacturing efficiencies, sales price increases, and favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with Elutia. The increase was partially offset by increased shipping and warehousing costs. The ERC received in the quarter had a favorable impact of $2.7 million, or 444 basis points, to the gross margin.

Current wording

Gross profit increased $7.0 million, or 17%, to $48.4 million for the three months ended March 31, 2026, as compared to $41.4 million for the three months ended March 31, 2025, and gross margin increased by 350 basis points to 72.7% in the period, as compared to 69.2% for the three months ended March 31, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, valvulotomes, and shunts. The increase in gross margin was driven primarily by sales price increases, greater manufacturing efficiencies, and favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with Elutia. The increase was partially offset by higher scrap and excess and obsolescence charges during the period.

Previous wording

Sales and marketing. For the three months ended September 30, 2025, sales and marketing expenses increased 4% to $11.9 million. The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $1.6 million, which was partially offset by the ERC. Additionally, travel and training expenses decreased $0.3 million and professional fees and outside services expenses increased $0.1 million. Sales force headcount was 152 as of September 30, 2025, a 4% increase from September 30, 2024. The ERC received in the quarter had a favorable impact of $0.8 million. As a percentage of sales, sales and marketing expenses decreased to 20% for the three months ended September 30, 2025, down from 21% for the three months ended September 30, 2024.

Current wording

Sales and marketing. For the three months ended March 31, 2026, sales and marketing expenses increased 2% to $14.5 million. The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $0.6 million, partially offset by decreased general supplies expenses of $0.3 million. Sales force headcount was 158 as of March 31, 2026, a 3% increase from March 31, 2025. As a percentage of net sales, sales and marketing expenses decreased to 22% for the three months ended March 31, 2025, down from 24% for the three months ended March 31, 2025.

Previous wording

General and administrative. For the three months ended September 30, 2025, general and administrative expenses increased 20% to $10.8 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $1.3 million, which was partially offset by the ERC. The ERC received in the quarter had a favorable impact of $0.3 million, offset by fees due to our third party consultant of $0.7 million. As a percentage of sales, general and administrative expenses increased to 18% for the three months ended September 30, 2025, up from 16% for the three months ended September 30, 2024.

Current wording

General and administrative. For the three months ended March 31, 2026, general and administrative expenses increased 15% to $12.0 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $0.8 million. General supplies increased $0.4 million and professional fees and outside services increased $0.3 million. As a percentage of net sales, general and administrative expenses remained consistent at 18% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Research and development. For the three months ended September 30, 2025, research and development expenses decreased 19% to $3.0 million. The decrease was driven primarily by lower third-party service fees, which resulted in decreased professional fees and outside services expenses related to MDR related activities of $0.3 million, as well as decreased compensation and related expenses of $0.1 million and the ERC received in the quarter. The ERC received in the quarter has a favorable impact of $0.3 million. As a percentage of sales, research and development expenses decreased to 5% for the three months ended September 30, 2025, down from 7% for the three months ended September 30, 2024.

Current wording

Research and development. For the three months ended March 31, 2026, research and development expenses decreased 1% to $4.1 million. The decrease was driven primarily by lower third-party service fees, which resulted in decreased professional fees and outside services expenses related to MDR related activities of $0.4 million, partially offset by general supplies increased $0.2 million and compensation and related expenses increased $0.1 million. As a percentage of net sales, research and development expenses decreased to 6% for the three months ended March 31, 2026, down from 7% for the three months ended March 31, 2025.

Previous wording

Income tax expense. We recorded a tax provision of $5.2 million on pre-tax income of $22.6 million for the three months ended September 30, 2025, compared to a $3.4 million tax provision on pre-tax income of $14.6 million for the three months ended September 30, 2024. We recorded a tax provision of $12.7 million on pre-tax income of $54.9 million for the nine months ended September 30, 2025, compared to a tax provision of $10.0 million on pre-tax income of $42.9 million for the nine months ended September 30, 2024. Our effective income tax rate was 23.0% and 23.2% for the three- and nine-month periods ended September 30, 2025. Our tax expense for the current period is based on an estimated annual effective tax rate of 23.9%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items. Our income tax expense for the current period 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.

Current wording

Income tax expense. We recorded a tax provision of $4.0 million on pre-tax income of $19.7 million for the three months ended March 31, 2026, compared to a $3.2 million tax provision on pre-tax income of $14.2 million for the three months ended March 31, 2025. Our effective income tax rate was 20.3% for the three month period ended March 31, 2026. Our tax expense for the current period is based on an estimated annual effective tax rate of 22.9%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items. Our income tax expense for the current period 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 23.4% and 23.3% for the three- and nine-month periods ended September 30, 2024. Our 2024 provision was based on the estimated annual effective tax rate of 24.1%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items. Our income tax expense for the three- and nine-month periods ended September 30, 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.

Current wording

Our effective income tax rate was 22.7% for the three month period ended March 31, 2025. Our 2025 provision was based on the estimated annual effective tax rate of 23.8%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items. Our income tax expense for the three month period ended March 31, 2025 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

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act ("OBBBA") into law, which is considered the enactment date under GAAP. Key corporate tax provisions include the restoration of 100% bonus depreciation for qualifying assets, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, updates to GILTI and FDII rules, amendments to energy credits, and expanded Section 162(m) aggregation requirements.

Current wording

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act ("OBBBA") into law. Key corporate tax provisions include the restoration of 100% bonus depreciation for qualifying assets, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, updates to GILTI and FDII rules, amendments to energy credits, and expanded Section 162(m) aggregation requirements. The impact of these adjustments is reflected in our tax provision and financial statements for the three months ended March 31, 2026. We will continue to monitor future legislative developments and assess their impact on our tax position and financial reporting.

Previous wording

As of September 30, 2025, our cash and cash equivalents were $25.5 million, as compared to $25.6 million as of December 31, 2024. We had $317.6 million in short-term marketable securities as of September 30, 2025, and $274.1 million as of December 31, 2024. 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 September 30, 2025, our short-term marketable securities reflected an unrealized loss of $0.6 million as a result of increasing market interest rates.

Current wording

As of March 31, 2026, our cash and cash equivalents were $26.9 million, as compared to $28.2 million as of December 31, 2025. We had $340.4 million in short-term marketable securities as of March 31, 2026, as compared to $330.9 million as of December 31, 2025. 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, and money market investments with maturities of 90 days or less at the date of purchase held outside of our operating bank accounts. liquid investments with maturities of 90 days or less at the date of purchase and consist primarily of operating bank accounts. As of March 31, 2026, our short-term marketable securities reflected an unrealized loss of $0.9 million as a result of market interest rates.

Previous wording

On February 18, 2025, our Board of Directors authorized the repurchase of up to $75.0 million of our 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

On December 19, 2024, we issued $172.5 million aggregate principal amount of convertible senior notes due 2030, or the Convertible Notes, in a Rule 144A private placement to qualified institutional buyers pursuant to an indenture dated December 19, 2024, by and between us and U.S. Bank Trust Company, National Association, or the Indenture.

Current wording

On December 19, 2024, we issued $172.5 million aggregate principal amount of convertible senior notes due 2030, or the Senior Convertible Notes, in a Rule 144A private placement to qualified institutional buyers pursuant to an indenture dated December 19, 2024, by and between us and U.S. Bank Trust Company, National Association, or the Indenture.

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. For the three- and nine-months ended September 30, 2025, we made $2.7 million in interest payments. We did not make any interest payments for the three- and nine-months ended September 30, 2024. 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. In connection with the payment by us on September 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 8.3637 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.56 per share of common stock. A similar adjustment to the conversion rate will be made upon payment of the quarterly cash dividend of $0.20 on December 4, 2025, 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.

Current wording

The Senior Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Senior Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Senior 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 three months ended March 31, 2026, we made $2.2 million in interest payments. We did not make any interest payments for the three months ended March 31, 2025. The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Senior 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 March 26, 2026 of a quarterly cash dividend of $0.25 per share (an increase from the quarterly dividend amount of $0.16 per share as of the time of issuance of the Senior Convertible Notes), the conversion rate of the Senior Convertible Notes was increased to 8.3746 shares of common stock per $1,000 principal amount of the Senior Convertible Notes, which represents a conversion price of approximately $119.41 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 June 4, 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 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 the 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 our common stock.

Current wording

Noteholders may convert all or a portion of their Senior 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 Senior 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 the our common stock, as described in the Indenture; (4) if we call (or are deemed to have called) any Senior 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 our common stock.

Previous wording

Prior to February 5, 2028, the Convertible Notes will not be redeemable. On or after February 5, 2028, until the 40 th 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.

Current wording

Prior to February 5, 2028, the Senior Convertible Notes will not be redeemable. On or after February 5, 2028, until the 40 th scheduled trading day immediately before the maturity date, we may redeem for cash all or any portion of the Senior 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 Senior Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Senior Convertible Note, in which case the conversion rate applicable to the conversion of that Senior Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.