LEMAITRE VASCULAR INC

Previous wording

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

Current wording

We are a global provider of medical devices and human tissue cryopreservation services largely used in the treatment of peripheral vascular disease, end-stage renal disease, and cardiovascular disease. We develop, manufacture, and market vascular devices to address the needs of vascular surgeons and, to a lesser degree, other specialties such as cardiac surgeons, general surgeons, and neurosurgeons. Our diversified portfolio of devices consists of brand name products that are used in arteries and veins and are well known to vascular surgeons. Our principal product offerings are sold globally, primarily in the United States, Europe, Canada, and Asia Pacific, or APAC. We estimate that the annual worldwide market for peripheral vascular devices exceeds $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.

Previous wording

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In Q1 2025, biologics represented 52% of our worldwide sales. We believe our biologic devices represent differentiated and, in many cases, growing product segments.

Current wording

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In Q2 2025, biologics represented 51% 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 Asia Pacific headquarters is located in Singapore, and we also have Asia Pacific sales offices in Tokyo, Japan; Shanghai, China; Kensington, Australia; Seoul, Korea; and Bangkok, Thailand. During the quarter ended March 31, 2025, 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 May 1, 2025, our sales force comprised 164 sales representatives and export managers in North America, Europe, the UK, and Asia Pacific.

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 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 June 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 June 30, 2025, our sales force comprised 163 sales representatives and export managers in North America, Europe, and APAC.

Previous wording

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

Current wording

We obtain regulatory approvals for our devices and services in new product categories and geographies to further access the broader peripheral device market and 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.

Previous wording

Separately, in 2024, we received MDR CE marks allowing for the continued sale of eleven devices into the European Union, or EU. Previously in 2023 we obtained four MDR CE marks. In January 2025, we received MDR CE marks to market Burlington-manufactured CardioCel and VascuCel devices in the EU. In April 2025, we received MDR CE marks to market Artegraft devices in the EU. In total, we currently have 17 MDR CE marks as of May 1, 2025, and expect to hold 23 MDR CE marks by the end of 2025. The European Commission has designated the end of 2028 as the final MDR CE mark deadline.

Current 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 June 30, 2025, we have 19 MDR CE marks and 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.

Previous wording

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

Current wording

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

Previous wording

In February 2024, we began implementing a new ERP system to replace our financial reporting and planning system. We expect that the new ERP system will be beneficial in a number of areas, including inventory management, pricing programs, financial operations, and real-time reporting. We have been preparing for this transition since 2022 and hired an experienced consulting team to assist in this transition, and 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 March 31, 2025, we have capitalized costs on our balance sheet of $5.0 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. 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 June 30, 2025, we have capitalized costs on our balance sheet of $4.9 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 three months ended March 31, 2025, approximately 42% of our sales took place outside of the United States, largely in currencies other than the U.S. dollar. We expect foreign currencies will represent a significant percentage of future sales. Selling, marketing, and administrative costs related to these sales are also denominated in foreign currencies, thereby partially mitigating our bottom-line exposure to exchange rate fluctuations. However, if there is a decrease in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will record less revenue in U.S. dollars than we would have if the exchange rate had not changed. For the three months ended March 31, 2025, we estimate that the effects of changes in foreign exchange rates decreased our reported sales by approximately $0.8 million, as compared to rates in effect for the three months ended March 31, 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 six months ended June 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 six months ended June 30, 2025, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $0.3 million, as compared to rates in effect for the six months ended June 30, 2024.

Previous wording

Comparison of the three-month period ended March 31, 2025, to the three-month period ended March 31, 2024:

Current wording

Comparison of the three- and six-month periods ended June 30, 2025, to the three- and six-month periods ended June 30, 2024:

Previous wording

Net sales. Net sales increased by $6.4 million, or 12%, to $59.9 million for the three months ended March 31, 2025, compared to $53.5 million for the three months ended March 31, 2024. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and additional sales representatives. Graft sales increased $3.1 million, patch sales increased $1.4 million, shunt sales increased $0.8 million, and valvulotome sales increased $0.7 million. We estimate that the stronger U.S. dollar decreased net sales by $0.8 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Current wording

Net sales. Net sales increased by $8.4 million, or 15%, to $64.2 million for the three months ended June 30, 2025, compared to $55.8 million for the three months ended June 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 $3.6 million, catheter sales increased $1.6 million, valvulotome sales increased $1.3 million, and shunt sales increased $0.8 million. We estimate that the weaker U.S. dollar increased net sales by $1.0 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Previous wording

Direct-to-hospital net sales were 94% and 95% of our total net sales for the three months ended March 31, 2025 and 2024.

Current wording

Direct-to-hospital net sales were 94% and 95% of our total net sales for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Net sales by geography. Net sales in the Americas increased $3.7 million, or 11%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase was driven primarily by increased sales of grafts of $1.7 million, patches of $1.0 million, and valvulotomes of $0.7 million.

Current wording

Net sales by geography. Net sales in the Americas increased $4.4 million, or 12%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was driven primarily by increased sales of grafts of $2.9 million, catheters of $0.7 million, and valvulotomes of $0.6 million.

Previous wording

Gross profit increased $4.8 million, or 13%, to $41.4 million for the three months ended March 31, 2025, as compared to $36.7 million for the three months ended March 31, 2024, and gross margin increased by 60 basis points to 69.2% in the period, as compared to 68.6% for the three months ended March 31, 2024. The increase in gross profit was driven primarily by increased sales, particularly from grafts, patches, and shunts. The increase in gross margin was driven primarily by greater manufacturing efficiencies, lower excess and obsolescence charges, and sales price increases, which were partially offset by unfavorable product mix.

Current wording

Gross profit increased $11.3 million, or 15%, to $86.4 million for the six months ended June 30, 2025, as compared to $75.1 million for the six months ended June 30, 2024, and gross margin increased by 90 basis points to 69.6% in the period, as compared to 68.7% for the six months ended June 30, 2024. The increase in gross profit was driven primarily by increased sales, particularly from grafts, catheters, and valvulotomes. The increase in gross margin was driven primarily by greater manufacturing efficiencies, sales price increases, and decreased scrap and excess and obsolescence charges, partially offset by increased shipping and warehousing costs and unfavorable product mix, including increased sales of our comparatively lower margin allograft preservation services.

Previous wording

Sales and marketing*.* For the three months ended March 31, 2025, sales and marketing expenses increased 22% to $14.2 million. The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $1.4 million. Additionally, general supplies and equipment expenses increased $0.4 million, professional services and outside services increased $0.4 million, and travel and training expenses increased $0.3 million in the three months ended 2025. As a percentage of net sales, sales and marketing expenses increased to 24% for the three months ended March 31, 2025, up from 22% in the prior year period.

Current wording

For the six months ended June 30, 2025, sales and marketing expenses increased 28% to $29.1 million. The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $4.3 million. Additionally, professional fees and outside services expenses increased $1.0 million and travel and training expenses increased $0.9 million. As a percentage of sales, sales and marketing expenses increased to 23% for the six months ended June 30, 2025, up from 21% for the six months ended June 30, 2024.

Previous wording

General and administrative. For the three months ended March 31, 2025, general and administrative expenses increased 16% as compared to the three months ended March 31, 2024, to $10.5 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $1.2 million. As a percentage of sales, general and administrative expenses increased to 18% for the three months ended March 31, 2025, up from 17% for the three months ended March 31, 2024.

Current wording

General and administrative. For the three months ended June 30, 2025, general and administrative expenses increased 18% to $10.4 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $1.2 million. Additionally, travel and training expenses increased $0.2 million. As a percentage of sales, general and administrative expenses remained consistent at 16% for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Research and development. For the three months ended March 31, 2025, research and development expenses remained flat at $4.1 million relative to the three months ended March 31, 2024. As a percentage of sales, research and development expenses decreased to 7% for the three months ended March 31, 2025, down from 8% for the three months ended March 31, 2024.

Current wording

Research and development. For the three months ended June 30, 2025, research and development expenses decreased 17% to $3.5 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 $0.9 million, partially offset by increased facilities expenses of $0.1 million. As a percentage of sales, research and development expenses decreased to 6% for the three months ended June 30, 2025, down from 8% for the three months ended June 30, 2024.

Previous wording

***Income tax expense.***We recorded a tax provision of $3.2 million on pre-tax income of $14.2 million for the three months ended March 31, 2025, compared to a $2.9 million tax provision on pre-tax income of $12.8 million for the three months ended March 31, 2024. Our effective income tax rate was 22.7% for the three-month period ended March 31, 2025. Our tax expense for the current period is based on an estimated annual effective tax rate of 23.8%, 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 $4.3 million on pre-tax income of $18.1 million for the three months ended June 30, 2025, compared to a $3.7 million tax provision on pre-tax income of $15.5 million for the three months ended June 30, 2024. We recorded a tax provision of $7.5 million on pre-tax income of $32.3 million for the six months ended June 30, 2025, compared to a tax provision of $6.6 million on pre-tax income of $28.3 million for the six months ended June 30, 2024. Our effective income tax rate was 23.7% and 23.3% for the three- and six-month periods ended June 30, 2025. Our tax expense for the current period is based on an estimated annual effective tax rate of 23.8%, 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.

Previous wording

Our effective income tax rate was 22.7% for the three-month period ended March 31, 2024. Our 2024 provision was based on the estimated annual effective tax rate of 24.9%, 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, 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 23.7% and 23.3% for the three- and six-month periods ended June 30, 2024. Our 2024 provision was based on the estimated annual effective tax rate of 24.3%, 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, 2024 varied from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

Previous wording

As of March 31, 2025, our cash and cash equivalents were $25.3 million, as compared to $25.6 million as of December 31, 2024. We had $277.2 million in short-term marketable securities as of March 31, 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 March 31, 2025, our short-term marketable securities reflected an unrealized loss of $0.8 million as a result of increasing market interest rates.

Current wording

As of June 30, 2025, our cash and cash equivalents were $27.2 million, as compared to $25.6 million as of December 31, 2024. We had $292.3 million in short-term marketable securities as of June 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 June 30, 2025, our short-term marketable securities reflected an unrealized loss of $0.7 million as a result of increasing market interest rates.

Previous wording

The Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Convertible Notes bear interest at a rate of 2.50% per year, and interest is payable semiannually in arrears on August 1 and February 1 of each year. The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024. In connection with the payment by the Company on March 27, 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 8.3562 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.67 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 May 29, 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 Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Convertible Notes bear interest at a rate of 2.50% per year, and interest is payable semiannually in arrears on August 1 and February 1 of each year. The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024. In connection with the payment by us on May 29, 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 8.3602 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.61 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 September 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.

Previous wording

Noteholders may convert all or a portion of their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of the 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 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.

Previous wording

Prior to February 5, 2028, the Convertible Notes will not be redeemable. On or after February 5, 2028, until the fortieth scheduled trading day immediately before the maturity date, 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 its 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 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.

Previous wording

We recognized operating income of $12.6 million for the three months ended March 31, 2025, compared to $11.9 million for the three months ended March 31, 2024. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:

Current wording

We recognized operating income of $28.8 million for the six months ended June 30, 2025, compared to $26.3 million for the six months ended June 30, 2024. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:

Previous wording

Net cash provided by operating activities. Net cash provided by operating activities was $9.0 million for the three months ended March 31, 2025, consisting of $11.0 million in net income, adjustments for non-cash or non-operating items of $6.5 million (including primarily depreciation and amortization of $2.6 million, stock-based compensation of $2.0 million, interest and debt offering expense of $1.3 million, and provision for inventory write-offs and credit losses of $0.6 million), and a net use of working capital of $8.5 million. The net cash used for working capital was driven by an increase in accounts receivable of $4.6 million, an increase in inventory and other deferred costs of $1.3 million, and payments of accounts payable and other liabilities of $5.3 million. These cash uses were offset by a decrease in prepaid expenses and other assets of $2.7 million.

Current wording

Net cash provided by operating activities. 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, adjustments for non-cash or non-operating items of $12.9 million (including primarily depreciation and amortization of $5.2 million, stock-based compensation of $4.0 million, interest and debt offering expense of $2.6 million, and provision for inventory write-offs and credit losses of $1.4 million), and a net use of working capital of $8.3 million. The net cash used for working capital was driven by an increase in accounts receivable of $5.3 million, an increase in inventory and other deferred costs of $3.5 million, and payments of accounts payable and other liabilities of $1.3 million. These cash uses were offset by a decrease in prepaid expenses and other assets of $1.7 million.

Previous wording

Net cash provided by operating activities was $5.1 million for the three months ended March 31, 2024, consisting of $9.9 million in net income, adjustments for non-cash or non-operating items of $5.0 million (including primarily depreciation and amortization of $2.4 million, stock-based compensation of $1.6 million, and provisions for inventory write-offs and credit losses of $1.1 million), and a net use of working capital of $9.9 million. The net cash used for working capital was driven by an increase in accounts receivable of $5.8 million, an increase in inventory and other deferred costs of $3.5 million, and payments of accounts payable and other liabilities of $2.8 million. These cash uses were offset by a decrease in prepaid expenses and other assets of $2.2 million.

Current wording

Net cash provided by operating activities was $14.7 million for the six months ended June 30, 2024, consisting of $21.7 million in net income, adjustments for non-cash or non-operating items of $10.4 million (including primarily depreciation and amortization of $4.8 million, stock-based compensation of $3.2 million, provisions for inventory write-offs and credit losses of $1.7 million, and foreign currency effect on net income of $0.7 million), and a net use of working capital of $17.4 million. The net cash used for working capital was driven by an increase in accounts receivable of $6.5 million, an increase in inventory and other deferred costs of $7.3 million, and payments of accounts payable and other liabilities of $4.3 million. These cash uses were offset by a decrease in prepaid expenses and other assets of $0.7 million.

Previous wording

Net cash used in investing activities. Net cash used in investing activities was $4.3 million for the three months ended March 31, 2025, consisting of purchases of marketable securities of $2.9 million, expenditures on property and equipment of $1.4 million, and payments related to acquisitions of less than $0.1 million.

Current wording

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

Previous wording

Net cash used in investing activities was $2.4 million for the three months ended March 31, 2024, consisting of expenditures on property and equipment of $1.4 million and purchases of marketable securities of $1.0 million.

Current wording

Net cash used in investing activities was $13.4 million for the six months ended June 30, 2024, consisting of purchases of marketable securities of $10.1 million and expenditures on property and equipment of $3.2 million.

Previous wording

***Net cash (used in) provided by financing activities.***Net cash used in financing activities was $5.2 million for the three months ended March 31, 2025, consisting primarily of a dividend payment of $4.5 million and deferred payments for acquisitions of $1.4 million. This use of cash was offset by stock option exercises of $0.7 million, net of shares repurchased used to pay employee payroll taxes.

Current wording

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

Previous wording

Net cash provided by financing activities was less than $0.1 million for the three months ended March 31, 2024, consisting primarily of proceeds from stock option exercises of $3.6 million, net of shares repurchased used to pay employee payroll taxes. This proceed of cash was offset by a dividend payment of $3.6 million.

Current wording

Net cash used in financing activities was $2.8 million for the six months ended June 30, 2024, consisting of proceeds from stock option exercises of $4.4 million, net of shares repurchased used to pay employee payroll taxes. This proceed of cash was offset by dividend payments of $7.2 million.