Envista Holdings Corp
For the period ended Dec 31, 2024. Filed Feb 13, 2025.
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FY2024 · Filed Feb 13, 2025
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Reports of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Envista Holdings Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Envista Holdings Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Goodwill Impairment | |
| Description of the Matter | As discussed in Note 2 to the consolidated financial statements, the Company tests for goodwill impairment annually, at the reporting unit level, on the first business day of its fiscal fourth quarter or more frequently if an event occurs or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company identified certain triggering events that occurred as of the interim date of June 28, 2024 that required an interim goodwill impairment test at the reporting unit level. Reporting units are tested for impairment by comparing the fair value of each reporting unit to its carrying value. As discussed in Note 9 to the financial statements, as a result of the interim impairment assessment, the Company recorded an impairment loss of certain reporting units in the amount of $960.5 million. Total goodwill as of December 31, 2024 was $2.3 billion and represented 42% of total assets. |
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| Auditing the Company’s goodwill impairment test as of June 28, 2024 for the impaired reporting units was challenging and judgmental due to the estimation required to determine the fair value of the impaired reporting units. In particular, the significant assumptions include inputs into the discount rates used to discount future cash flows. The discount rates related to the impaired reporting units could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s goodwill impairment evaluation process for the impaired reporting units. For example, we tested controls over management’s development of the above-described assumptions used in the valuation model. |
| To test the estimated fair values of the Company’s impaired reporting units, our principal audit procedures included (i) assessing the historical results compared to projected results, (ii) involving valuation specialists to assess the methods, models, and assumptions used within the valuation, and (iii) evaluating underlying significant assumptions utilized by management in the valuation of the reporting units. For example, we compared the significant assumptions discussed above used by management to the Company’s business models and other relevant factors. | |
| Indefinite-lived Intangible Asset Impairment | |
| Description of the Matter | As discussed in Note 9 to the consolidated financial statements, the Company tests for the impairment of indefinite-lived intangible assets annually on the first business day of its fiscal fourth quarter or more frequently if an event occurs or circumstances indicate it is more likely than not that the estimated fair value of an indefinite-lived intangible asset is less than its carrying amount. The Company identified certain triggering events that occurred as of the interim date of June 28, 2024 that required an interim indefinite-lived intangible asset impairment test. The indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of each indefinite-lived intangible asset to its carrying value. As discussed in Note 9 to the financial statements, as a result of the interim impairment assessment, the Company recorded an impairment loss of certain indefinite-lived intangible assets in the amount of $101.1 million. Total indefinite-lived intangible assets as of December 31, 2024 was $0.3 billion and represented 6.3% of total assets. |
| Auditing the Company’s indefinite-lived intangible asset impairment test as of June 28, 2024 for one of the Company’s impaired indefinite-lived intangible assets was challenging and judgmental due to the estimation required to determine the fair value of the indefinite-lived intangible asset. In particular, the significant assumptions include inputs into the discount rate used to discount future cash flows. The discount rate related to the impaired indefinite-lived intangible asset could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s indefinite-lived intangible asset impairment evaluation process. For example, we tested controls over management’s development of the above-described assumption used in the valuation model. |
| To test the estimated fair value of the impaired indefinite-lived intangible asset, our principal audit procedures included (i) assessing the historical results compared to projected results, (ii) involving valuation specialists to assess the methods, models, and assumptions used within the valuation, and (iii) evaluating underlying assumptions utilized by management in the valuation of the indefinite-lived intangible asset, including the significant assumption used in the model, as described above. For example, we compared the significant assumption discussed above used by management to the Company’s business models and other relevant factors. |
| /s/ | Ernst & Young LLP |
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We have served as the Company's auditor since 2018.
Irvine, California
February 13, 2025
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Envista Holdings Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Envista Holdings Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Envista Holdings Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 13, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Envista Holdings Corporation’s Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Irvine, California
February 13, 2025
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