LEMAITRE VASCULAR INC

Previous wording

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In Q2 2026, biologics represented 55% 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 Q3 2026, biologics represented 56% 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. We are moving our North American sales office to Mississauga, Canada in Q3 2026. 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 June 30, 2026, 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 June 30, 2026, our sales force comprised 163 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 Mississauga, 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 September 30, 2026, approximately 94% 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, 2026, our sales force comprised 171 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 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.

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, Canada in December 2025, and Brazil in September 2026, 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 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 June 30, 2026, we have 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.

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 June 30, 2026, we had substantially received 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

During 2026, we made the decision to wind down the Flexcel single-size pack offerings to simplify our Flexcel portfolio while continuing to offer the Flexcel multi-size packs to customers. These Flexcel single-size product packs totaled approximately $0.9 million in revenue for the six months ended June 30, 2026.

Current wording

During 2026, we made the decision to wind down the Flexcel single-size pack offerings to simplify our Flexcel portfolio while continuing to offer the Flexcel multi-size packs to customers. These Flexcel single-size product packs totaled approximately $1.3 million in revenue for the nine months ended September 30, 2026.

Previous wording

In 2026, in conjunction with the purchase of the AndraValvulotome assets from Andramed GmbH, we entered into several distribution transition agreements with existing distributors of the product line in European countries, including those in Germany, France, Italy, the UK, and other smaller markets. We have been selling direct-to-hospitals in these countries subsequent to the execution of the transition agreements in 2026. The total distribution termination fees for all AndraValvulotome related distributors are expected to total approximately $0.5 million.

Current wording

In 2026, in conjunction with the purchase of the AndraValvulotome assets from Andramed GmbH, we entered into several distribution transition agreements with existing distributors of the product line in European countries, including those in Germany, France, Italy, and other smaller markets. We have been selling direct-to-hospitals in these countries subsequent to the execution of the transition agreements in 2026. The total distribution termination fees for all AndraValvulotome related distributors are expected to total approximately $0.5 million.

Previous 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. We implemented this new system in the UK in February 2025, Ireland in April 2026, and Canada in July 2026. 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 June 30, 2026, we have net 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. We implemented this new system in the UK in February 2025, Ireland in April 2026, and Canada in July 2026. 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 September 30, 2026, we have net capitalized costs on our balance sheet of $4.8 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 six months ended June 30, 2026, approximately 45% 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 six months ended June 30, 2026, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $2.4 million, as compared to rates in effect for the six months ended June 30, 2025.

Current 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, 2026, approximately 45% 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, 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 nine months ended September 30, 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 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.

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 made 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

Comparison of the three- and six-month periods ended June 30, 2026, to the three- and six-month periods ended June 30, 2025:

Current wording

Comparison of the three and nine month periods ended September 30, 2026, to the three and nine month periods ended September 30, 2025:

Previous wording

Net sales. Net sales increased by $6.2 million, or 10%, to $70.4 million for the three months ended June 30, 2026, compared to $64.2 million for the three months ended June 30, 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 $5.1 million, shunt sales increased $1.1 million, and patches sales increased $0.6 million. Catheter sales decreased $0.9 million due to the increased sales volumes related to the April 2025 recall of our TufTex Over-the-Wire, Pruitt Occlusion, and Pruitt Irrigation catheters. We estimate that the weaker U.S. dollar increased net sales by $0.4 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

Current wording

Net sales. Net sales increased by $6.9 million, or 11%, to $68.0 million for the three months ended September 30, 2026, compared to $61.0 million for the three months ended September 30, 2025. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and the international sales growth of Artegraft subsequent to the European launch in the second half of 2025. Graft sales increased $4.5 million, shunt sales increased $0.9 million, and valvulotome sales increased $0.5 million. We estimate that the stronger U.S. dollar decreased net sales by $0.4 million during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Previous wording

Direct-to-hospital net sales were 95% and 94% of our total net sales for the six months ended June 30, 2026 and 2025.

Current wording

Direct-to-hospital net sales were 94% and 95% of our total net sales for the three months ended September 30, 2026 and 2025.

Previous wording

Net sales increased by $12.8 million, or 10%, to $136.9 million for the six months ended June 30, 2026, compared to $124.1 million for the six months ended June 30, 2025. The increase was driven 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 $9.2 million, shunt and valvulotome sales each increased $1.8 million, and clip sales increased $1.0 million, offset by decreased sales of catheters of $0.4 million, decreased sales of tape of $0.3 million, and decreased sales of patches of $0.2 million due to the termination of our distribution agreement with Elutia in 2025. We estimate that the weaker U.S. dollar increased net sales by $2.4 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

Current wording

Net sales increased by $19.8 million, or 11%, to $204.9 million for the nine months ended September 30, 2026, compared to $185.1 million for the nine months ended September 30, 2025. The increase was driven by higher average selling prices, higher unit volumes shipped to customers, and the international sales growth of Artegraft subsequent to the European launch in the second half of 2025. Graft sales increased $13.7 million, shunt sales increased $2.7 million, valvulotome sales increased $2.3 million, and clip sales increased $1.4 million, offset by decreased sales of catheters of $0.4 million. We estimate that the weaker U.S. dollar increased net sales by $2.0 million during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Previous wording

Direct-to-hospital net sales were 95% of our total net sales for both the three months ended June 30, 2026 and 2025.

Current wording

Direct-to-hospital net sales were 95% of our total net sales for both the nine months ended September 30, 2026 and 2025.

Previous wording

Net sales by geography. Net sales in the Americas increased $2.1 million, or 5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $2.4 million, shunts and patches of $0.3 million each, and valvulotomes of $0.1 million, offset by decreased sales of catheters of $0.7 million.

Current wording

Net sales by geography. Net sales in the Americas increased $3.5 million, or 9%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was driven primarily by increased sales of grafts of $2.6 million, clips of $0.4 million, valvulotomes and patches of $0.2 million each, and shunts of $0.1 million.

Previous wording

Net sales in the Americas increased $4.8 million, or 6%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $5.4 million, valvulotomes of $0.6 million, and shunts of $0.5 million, offset by decreased sales of patches of $1.1 million, due to the termination of our distribution agreement with Elutia in 2025, and catheters of $0.6 million.

Current wording

Net sales in the Americas increased $8.3 million, or 7%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase was driven primarily by increased sales of grafts of $8.0 million, clips of $0.9 million, valvulotomes of $0.8 million, and shunts of $0.5 million, offset by decreased sales of patches of $0.9 million, due to the termination of our distribution agreement with Elutia in 2025, catheters of $0.6 million, and tape of $0.3 million.

Previous wording

Net sales in Europe, Middle East, and Africa, or EMEA, increased $3.3 million, or 18%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $2.5 million, shunts of $0.7 million, patches of $0.3 million, and valvulotomes of $0.1 million, offset by decreased sales of catheters of $0.4 million.

Current wording

Net sales in Europe, Middle East, and Africa, or EMEA, increased $3.2 million, or 18%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was driven primarily by increased sales of grafts of $1.9 million, shunts of $0.8 million, valvulotomes of $0.3 million, and patches of $0.2 million.

Previous wording

Net sales in EMEA increased $6.6 million, or 19%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $3.5 million, shunts of $1.2 million, valvulotomes of $1.1 million, and patches of $0.7 million.

Current wording

Net sales in EMEA increased $9.8 million, or 18%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase was driven primarily by increased sales of grafts of $5.4 million, shunts of $2.0 million, valvulotomes of $1.4 million, and patches of $0.9 million.

Previous wording

Net sales in APAC increased $0.7 million, or 18%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of clips, grafts, and catheters of $0.2 million each and shunts of $0.1 million.

Current wording

Net sales in APAC increased $0.2 million, or 5%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was driven primarily by increased sales of patches and grafts of $0.1 million each.

Previous wording

Net sales in APAC increased $1.4 million, or 18%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of clips of $0.5 million, grafts of $0.3 million, patches, catheters, and shunts of $0.2 million each, and valvulotomes of $0.1 million.

Current wording

Net sales in APAC increased $1.7 million, or 14%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase was driven primarily by increased sales of clips and grafts of $0.4 million each, patches of $0.3 million, shunts and catheters of $0.2 million each, and valvulotomes of $0.1 million.

Previous wording

Gross profit increased $5.8 million, or 13%, to $50.8 million for the three months ended June 30, 2026, as compared to $45.0 million for the three months ended June 30, 2025, and gross margin increased by 210 basis points to 72.1% in the period, as compared to 70.0% for the three months ended June 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and patches. The increase in gross margin was driven primarily by sales price increases, favorable product mix, and lower shipping costs. The increase was partially offset by unfavorable manufacturing efficiencies and higher excess and obsolescence charges during the period.

Current wording

Gross profit increased $2.8 million, or 6%, to $48.7 million for the three months ended September 30, 2026, as compared to $46.0 million for the three months ended September 30, 2025, and gross margin decreased by 360 basis points to 71.7% in the period, as compared to 75.3% for the three months ended September 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and valvulotomes, offset by the receipt of the Employee Retention Credit, or ERC, in September 2025 which reduced cost of sales by $2.7 million. The decrease in gross margin was driven primarily by the ERC and higher excess and obsolescence charges related to the wind-down of the PhasTIPP product line by $0.5 million, offset by sales price increases, favorable product mix, and lower shipping costs.

Previous wording

Gross profit increased $12.8 million, or 15%, to $99.2 million for the six months ended June 30, 2026, as compared to $86.4 million for the six months ended June 30, 2025, and gross margin increased by 280 basis points to 72.4% in the period, as compared to 69.6% for the six months ended June 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and valvulotomes. The increase in gross margin was driven primarily by sales price increases, favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with

Current wording

Gross profit increased $15.5 million, or 12%, to $147.9 million for the nine months ended September 30, 2026, as compared to $132.3 million for the nine months ended September 30, 2025, and gross margin increased by 70 basis points to 72.2% in the period, as compared to 71.5% for the nine months ended September 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and valvulotomes, offset by the receipt of the ERC in September 2025. The increase in gross margin was driven primarily by sales price increases, favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with Elutia, and lower shipping costs. The increase was partially offset by the receipt of the ERC in September 2025, which reduced cost of sales by $2.7 million, and higher excess and obsolescence charges.

Previous wording

Sales and marketing. For the three months ended June 30, 2026, sales and marketing expenses decreased 3% to $14.4 million. The decrease was driven primarily by lower compensation and related expenses of $0.4 million, including lower commissions and contest expenses of $0.2 million. Sales force headcount was 163 as of June 30, 2026, a 2% increase from June 30, 2025. As a percentage of net sales, sales and marketing expenses decreased to 20% for the three months ended June 30, 2026, down from 23% for the three months ended June 30, 2025.

Current wording

Sales and marketing. For the three months ended September 30, 2026, sales and marketing expenses increased 22% to $14.5 million. The increase was driven primarily by higher compensation and related expenses of $1.3 million, including $0.8 million of the ERC received in September 2025. Additionally, travel and training expenses increased $0.6 million and professional fees and outside services expenses increased $0.3 million. Sales force headcount was 171 as of September 30, 2026, a 13% increase from September 30, 2025. As a percentage of net sales, sales and marketing expenses increased to 21% for the three months ended September 30, 2026, up from 20% for the three months ended September 30, 2025.

Previous wording

For the six months ended June 30, 2026, sales and marketing expenses decreased 1% to $28.9 million. The decrease was driven primarily by lower commissions and contest expenses of $0.5 million, offset by increased sales meetings and trade show expenses of $0.3 million. As a percentage of net sales, sales and marketing expenses decreased to 21% for the six months ended June 30, 2026, down from 23% for the six months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2026, sales and marketing expenses increased 6% to $43.4 million. The increase was driven primarily by higher compensation and related expenses of $1.3 million, including $0.8 million of the ERC received in September 2025. Additionally, sales meeting and trade show expenses increased $0.6 million and travel and training expenses increased $0.4 million. As a percentage of net sales, sales and marketing expenses decreased to 21% for the nine months ended September 30, 2026, down from 22% for the nine months ended September 30, 2025.

Previous wording

General and administrative. For the three months ended June 30, 2026, general and administrative expenses increased 7% to $11.1 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $0.5 million. Professional fees and outside services expenses increased $0.4 million, offset by decreased travel and training expenses of $0.1 million. As a percentage of net sales, general and administrative expenses remained consistent at 16% for the three months ended June 30, 2026 and 2025, respectively.

Current wording

General and administrative. For the three months ended September 30, 2026, general and administrative expenses increased 12% to $12.1 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $0.9 million, including $0.3 million of the ERC received in September 2025. Additionally, general supplies expenses increased $0.3 million and bad debt expenses increased $0.2 million, offset by lower professional fees and outside services expenses of $0.2 million, including $0.7 million of 2025 ERC third party consultant fees. As a percentage of net sales, general and administrative expenses remained consistent at 18% for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

For the six months ended June 30, 2026, general and administrative expenses increased 11% to $23.2 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $1.3 million. Professional fees and outside services expenses increased $0.8 million and general supplies expenses increased $0.5 million, offset by lower facility expenses of $0.2 million. As a percentage of net sales, general and administrative expenses remained consistent at 17% for the six months ended June 30, 2026 and 2025, respectively.

Current wording

For the nine months ended September 30, 2026, general and administrative expenses increased 11% to $35.2 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $2.2 million, including $0.3 million of the ERC received in September 2025. Additionally, general supplies expenses increased $0.8 million and professional fees and outside services expenses increased $0.6 million, including $0.7 million of 2025 ERC third party consultant fees. As a percentage of net sales, general and administrative expenses remained consistent at 17% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

For the six months ended June 30, 2026, research and development expenses increased 17% to $8.9 million. The increase was driven primarily by higher facility expenses of $0.6 million, general supplies expenses of $0.5 million, and professional fees and outside services expenses of $0.1 million. As a percentage of net sales, research and development expenses increased to 7% for the six months ended June 30, 2026, up from 6% for the six months ended June 30, 2025.

Current wording

Research and development. For the three months ended September 30, 2026, research and development expenses increased 49% to $4.4 million. The increase was driven primarily by higher third-party service fees and general supplies expenses associated with the current transfer of our allograft tissue processing from our Fox River Grove facility to Burlington, which resulted in increased expenses of $0.7 million. Additionally, compensation and related expenses increased $0.6 million, including $0.3 million of the ERC received in September 2025. As a percentage of net sales, research and development expenses increased to 7% for the three months ended September 30, 2026, up from 5% for the three months ended September 30, 2025.

Previous wording

Research and development. For the three months ended June 30, 2026, research and development expenses increased 37% to $4.8 million. The increase was driven primarily by higher third-party service fees and general supplies associated with the current transfer of our allograft tissue processing from our Fox River Grove facility to Burlington, which resulted in increased expenses of $0.9 million. Facility expenses increased $0.4 million due to start-up costs associated with the new Billerica shipping warehouse since the inception of the lease beginning on January 1, 2026. The transfer of shipping operations to the Billerica shipping warehouse started in June 2026. As a percentage of net sales, research and development expenses increased to 7% for the three months ended June 30, 2026, up from 6% for the three months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2026, research and development expenses increased 26% to $13.3 million. The increase was driven primarily by higher third-party service fees and general supplies expenses associated with the current transfer of our allograft tissue processing from our Fox River Grove facility to Burlington, which resulted in increased expenses of $1.3 million. Additionally, compensation and related expenses increased $0.7 million, including $0.3 million of the ERC received in September 2025, and facility expenses increased $0.5 million due to start-up costs associated with the new Billerica shipping warehouse since the lease commenced on January 1, 2026. The transfer of shipping operations to the Billerica shipping warehouse started in June 2026. As a percentage of net sales, research and development expenses increased to 7% for the nine months ended September 30, 2026, up from 6% for the nine months ended September 30, 2025.

Previous wording

Income tax expense. We recorded a tax provision of $5.1 million on pre-tax income of $22.2 million for the three months ended June 30, 2026, compared to a $4.3 million tax provision on pre-tax income of $18.1 million for the three months ended June 30, 2025. We recorded a tax provision of $9.1 million on pre-tax income of $41.9 million for the six months ended June 30, 2026, compared to a tax provision of $7.5 million on pre-tax income of $32.3 million for the six months ended June 30, 2025. Our effective income tax rate was 23.2% and 21.8% for the three- and six-month periods ended June 30, 2026. Our tax expense for the current period is based on an estimated annual effective tax rate of 22.8%, 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 $4.6 million on pre-tax income of $19.7 million for the three months ended September 30, 2026, compared to a $5.2 million tax provision on pre-tax income of $22.6 million for the three months ended September 30, 2025. We recorded a tax provision of $13.8 million on pre-tax income of $61.5 million for the nine months ended September 30, 2026, compared to a tax provision of $12.7 million on pre-tax income of $54.9 million for the nine months ended September 30, 2025. Our effective income tax rate was 23.6% and 22.4% for the three- and nine-month periods ended September 30, 2026. Our tax expense for the current period is based on an estimated annual effective tax rate of 23.0%, 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 23.7% and 23.3% for the three- and six-month periods ended June 30, 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- and six-month periods ended June 30, 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.

Current wording

Our effective income tax rate was 23.0% and 23.2% for the three- and nine-month periods ended September 30, 2025. Our 2025 provision was based on the estimated annual effective tax rate of 23.9%, 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,

Previous 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- and six-month periods ended June 30, 2026. We will continue to monitor future legislative developments and assess their impact on our tax position and financial reporting.

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 and nine month periods ended September 30, 2026. We will continue to monitor future legislative developments and assess their impact on our tax position and financial reporting.

Previous wording

As of June 30, 2026, our cash and cash equivalents were $26.6 million, as compared to $28.2 million as of December 31, 2025. We had $349.6 million in short-term marketable securities as of June 30, 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. As of June 30, 2026, our short-term marketable securities reflected an unrealized loss of $1.0 million as a result of market interest rates.

Current wording

As of September 30, 2026, our cash and cash equivalents were $27.5 million, as compared to $28.2 million as of December 31, 2025. We had $362.2 million in short-term marketable securities as of September 30, 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. As of September 30, 2026, our short-term marketable securities reflected a net unrealized loss of $1.7 million as a result of market interest rates.

Previous wording

February 1 of each year. For the six months ended June 30, 2026, we made $2.2 million in interest payments. We did not make any interest payments for the six months ended June 30, 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 June 4, 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 8.3820 shares of common stock per $1,000 principal amount of the Senior Convertible Notes, which represents a conversion price of approximately $119.30 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 September 3, 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.

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 nine months ended September 30, 2026 and 2025, we made $4.3 million and $2.7 million in interest payments, respectively. 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 September 3, 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 8.3910 shares of common stock per $1,000 principal amount of the Senior Convertible Notes, which represents a conversion price of approximately $119.18 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 December 3, 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

We recognized operating income of $38.2 million for the six months ended June 30, 2026, compared to $28.8 million for the six months ended June 30, 2025. 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:

Current wording

We recognized operating income of $55.9 million for the nine months ended September 30, 2026, compared to $49.1 million for the nine months ended September 30, 2025. 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

Net cash provided by operating activities. Net cash provided by operating activities was $31.1 million for the six months ended June 30, 2026, consisting of $32.7 million in net income, adjusted for non-cash items of $11.0 million (including primarily depreciation and amortization of $5.3 million, stock-based compensation of $4.0 million, provisions for inventory write-offs and credit losses of $1.9 million, amortization of issuance costs on convertible senior notes of $0.4 million, foreign currency transaction effect on income of $0.1 million, offset by non-cash investment income of $0.8 million), and a net use of working capital of $12.7 million. The net cash used for working capital was driven by decreases in accounts payable and other liabilities of $6.5 million, increases in accounts receivable of $2.9 million, increases in inventory and other deferred costs of $1.9 million, and increases in prepaid expenses and other assets of $1.4 million.

Current wording

Net cash provided by operating activities. Net cash provided by operating activities was $53.0 million for the nine months ended September 30, 2026, consisting of $47.8 million in net income, adjusted for non-cash items of $18.2 million (including primarily depreciation and amortization of $8.2 million, stock-based compensation of $6.1 million, provisions for inventory write-offs and credit losses of $3.2 million, amortization of issuance costs on convertible senior notes of $0.7 million, foreign currency transaction effect on income of $0.3 million, offset by non-cash investment income of $0.3 million), and a net use of working capital of $12.9 million. The net cash used for working capital was driven by increases in prepaid expenses and other assets of $4.2 million, increases in inventory and other deferred costs of $3.6 million, increases in accounts receivable of $3.3 million, decreases in accrued interest of $1.1 million, and decreases in accounts payable and other liabilities of $0.6 million.

Previous wording

Net cash provided by operating activities was $29.3 million for the six months ended June 30, 2025, consisting of $24.8 million in net income, adjusted for non-cash items of $10.7 million (including primarily depreciation and amortization of $5.2 million, stock-based compensation of $4.0 million, provisions for inventory write-offs and credit losses of $1.4 million, and amortization of issuance costs on convertible senior notes of $0.4 million, offset by foreign currency effect on income of $0.3 million), and net use of working capital of $6.2 million. The net cash used for working capital was driven by increases in accounts receivable of $5.3 million, increases in inventory and other deferred costs of $3.5 million, and decreases in accounts payable and other liabilities of $1.3 million, offset by increases in accrued interest of $2.2 million and decreases in prepaid expenses and other liabilities of $1.7 million.

Current wording

Net cash provided by operating activities was $58.1 million for the nine months ended September 30, 2025, consisting of $42.2 million in net income, adjusted for non-cash items of $16.5 million (including primarily depreciation and amortization of $7.8 million, stock-based compensation of $5.7 million, provisions for inventory write-offs and credit losses of $2.3 million, and amortization of issuance costs on convertible senior notes of $0.7 million), and net use of working capital of $0.5 million. The net cash used for working capital was driven by increases in accounts receivable of $1.4 million and an increase in inventory and other deferred costs of $6.8 million, offset by increases in accounts payable of $5.3 million, decreases in prepaid expenses and other assets of $1.6 million, and increases in accrued interest of $0.7 million.

Previous wording

Net cash used in investing activities. Net cash used in investing activities was $24.2 million for the six months ended June 30, 2026, consisting of purchases of short-term marketable securities of $231.4 million, purchases of property and equipment of $5.1 million, and payments related to acquisitions of $0.2 million, offset by proceeds from short-term marketable securities of $212.5 million.

Current wording

Net cash used in investing activities. Net cash used in investing activities was $40.4 million for the nine months ended September 30, 2026, consisting of purchases of short-term marketable securities of $391.0 million, purchases of property and equipment of $7.4 million, and payments related to acquisitions of $0.2 million, offset by proceeds from short-term marketable securities of $358.2 million.

Previous wording

Net cash used in investing activities was $20.7 million for the six months ended June 30, 2025, consisting of purchases of short-term marketable securities of $17.8 million, purchases of property and equipment of $2.7 million, and payments related to acquisitions of $0.1 million.

Current wording

Net cash used in investing activities was $48.1 million for the nine months ended September 30, 2025, consisting of purchases of short-term marketable securities of $43.0 million, purchases of property and equipment of $5.0 million, and payments related to acquisitions of $0.1 million.

Previous wording

Net cash used in financing activities. Net cash used in financing activities was $8.3 million for the six months ended June 30, 2026, consisting of dividend payments of $11.4 million and deferred payments for acquisitions of $0.1 million, offset by proceeds from stock option exercises of $3.3 million, net of shares repurchased to pay employee payroll taxes.

Current wording

Net cash used in financing activities. Net cash used in financing activities was $13.2 million for the nine months ended September 30, 2026, consisting of dividend payments of $17.1 million and deferred payments for acquisitions of $0.1 million, offset by proceeds from stock option exercises of $4.0 million, net of shares repurchased to pay employee payroll taxes.

Previous wording

Net cash used in financing activities was $8.0 million for the six months ended June 30, 2025, consisting of dividend payments of $9.0 million and deferred payments for acquisitions of $1.4 million, offset by proceeds from stock option exercises of $2.5 million, net of shares repurchases to pay employee payroll taxes.

Current wording

Net cash used in financing activities was $11.0 million for the nine months ended September 30, 2025, consisting of dividend payments of $13.6 million and deferred payments for acquisitions of $1.4 million, offset by proceeds from stock option exercises of $4.1 million, net of shares repurchased to pay employee payroll taxes.