What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-07-27 compared with 2020-08-10 · 221 added, 298 removed, 1163 unchanged (31% of the section changed)

25 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended May 31, 2020, of the Company and our report dated August 7, 2020, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended May 31, 2021, of the Company and our report dated July 27, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

16 unchanged sentences

Boston, Massachusetts

August 7, 2020

July 27, 2021

Other Information.

34 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also 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 May 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 7, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also 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 May 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 27, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates 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 financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories – Excess Quantities and Obsolescence — Refer to Notes 1 & 6

Critical Audit Matter Description

The Company evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessment of economic conditions, and expected demand.

Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory.

As of May 31, 2021, the Company has inventories of $48.6 million, net of excess quantities and obsolescence reserves.

We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify and to record the reserve, including the determination of expected demand.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the methodology and the reasonableness of assumptions including expected demand.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the reserve for excess quantities and obsolete inventory including management’s estimate of expected demand, included the following, among others:

• We tested the effectiveness of controls over inventory, including those over the estimation of reserves for excess quantities and obsolescence.

• We evaluated the reasonableness of the Company's excess and obsolete inventory policy, considering historical experience and the underlying assumptions.

• We tested the calculation of the excess and obsolete reserve pursuant to the Company's policy, on a sample basis, including the completeness and accuracy of the data used in the calculation.

• We performed a retrospective review by comparing management’s prior year projections of future demand by product, with actual product sales in the current year to identify potential bias in the inventory reserve.

• We held discussions with senior financial and operating management to determine whether any strategic, regulatory, or operational changes in the business were consistent with the projections of future demand that were utilized as the basis for the reserves recorded.

• We considered the existence of contradictory evidence based on consideration of internal communication to management and the board of directors, Company press releases, and analysts' reports, as well as any changes within the business.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

August 7, 2020

July 27, 2021

We have served as the Company’s auditor since 2016.

20 unchanged sentences

Interest expense, net ( 861 ) ( 907 ) ( 5,099 )

Other expense ( 130 ) ( 207 ) ( 31 )

Other income (expense), net 92 ( 130 ) ( 207 )

Total other expenses, net ( 769 ) ( 1,037 ) ( 5,306 )

46 unchanged sentences

Property, plant and equipment, net 37,073 28,312

Other assets 15,338 3,835

Intangible assets, net 168,977 197,136

Goodwill 201,316 200,515

Other assets 13,193 15,338

Total Assets $ 561,438 $ 594,214

3 unchanged sentences

Accrued liabilities 35,459 29,380

Current portion of long-term debt — 7,500

Current portion of contingent consideration — 836

1 unchanged sentence

Total current liabilities 57,584 51,445

Long-term debt, net of current portion 40,000 124,407

Long-term debt 20,000 40,000

Deferred income taxes 19,955 24,057

9 unchanged sentences

Additional paid-in capital 573,507 561,871

Retained earnings ( 100,318 ) 66,469

Accumulated deficit ( 131,866 ) ( 100,318 )

Treasury stock, 370,000 shares, at cost at May 31, 2021 and 2020, respectively

12 unchanged sentences

comprehensive

loss Treasury Stock Total

income (loss) Treasury Stock Total

Shares Amount Shares Amount

Balance at May 31, 2018 37,594,493 $ 370 $ 543,762 $ 5,129 $ ( 952 ) ( 370,000 ) $ ( 5,714 ) $ 542,595

Adjustment for ASU 2016-09 199 ( 199 ) —

Net income 61,340 61,340

1 unchanged sentence

Issuance/cancellation of restricted stock units 177,538 ( 667 ) ( 667 )

Issuance of performance share units 5,235 —

Purchase of common stock under Employee Stock Purchase Plan 72,863 1 1,171 1,172

Stock-based compensation 9,249 9,249

Other comprehensive income, net of tax 372 372

Other comprehensive loss, net of tax ( 400 ) ( 400 )

Balance at May 31, 2019 37,984,382 $ 372 $ 555,040 $ 66,469 $ ( 1,352 ) ( 370,000 ) $ ( 5,714 ) $ 614,815

Net income 61,340 61,340

Net loss ( 166,787 ) ( 166,787 )

Exercise of stock options 50,636 1 560 561

Issuance/cancellation of restricted stock units 312,951 ( 2,537 ) ( 2,537 )

Issuance of performance share units 5,235 —

Purchase of common stock under Employee Stock Purchase Plan 100,567 1 1,216 1,217

Stock-based compensation 7,592 7,592

Other comprehensive loss, net of tax ( 400 ) ( 400 )

Other comprehensive income, net of tax 11 11

Balance at May 31, 2020 38,448,536 $ 374 $ 561,871 $ ( 100,318 ) $ ( 1,341 ) ( 370,000 ) $ ( 5,714 ) $ 454,872

15 unchanged sentences

Net income (loss) $ ( 31,548 ) $ ( 166,787 ) $ 61,340

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 25,916 23,805 25,880

17 unchanged sentences

Additions to property, plant and equipment ( 5,187 ) ( 7,235 ) ( 3,118 )

Additions to placement and evaluation units ( 8,524 ) — —

Proceeds from disposition of discontinued operations — — 169,242

5 unchanged sentences

Repayment of long-term debt ( 20,000 ) ( 132,500 ) ( 15,000 )

Proceeds from borrowings on revolving credit facility 40,000 55,000 —

Proceeds from borrowings on long-term debt — 40,000 55,000

Deferred financing costs on long-term debt — ( 775 ) —

27 unchanged sentences

The consolidated financial statements include the accounts of AngioDynamics, Inc.

and its wholly owned subsidiaries, (collectively, the “Company”).

and its wholly owned subsidiaries, (collectively, "us", "we", or the “Company”).

The Company designs, manufactures and sells a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and in oncology and surgical settings.

27 unchanged sentences

The Company writes off accounts receivable when they are determined to be uncollectible.

Inventories are stated at the lower of cost (using the first-in, first-out method) or market.

Appropriate consideration is given to deterioration, obsolescence, expiring and other factors in evaluating net realizable value.

Inventories are stated at the lower of cost or net realizable value based on the first-in, first-out cost method and consist of raw materials, work in process and finished goods.

The standard cost of finished goods and work-in-process inventory is composed of material, labor and manufacturing overhead, which approximates actual cost.

In addition to stating inventory at the lower of cost or net realizable value, we also evaluate inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessment of economic conditions and expected demand.

Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory An increase to inventory reserves results in a corresponding increase in cost of revenue.

Inventories are written off against the reserve when they are physically disposed.

Property, Plant and Equipment

1 unchanged sentence

Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

Placement and evaluation units represent capital equipment placed at customer locations under placement or evaluation agreements for which depreciation expense is included in cost of sales on the Consolidation Statements of Operations.

Refer below for useful lives by category:

Estimated useful lives

Building and building improvements 39 years

Machinery and equipment 5 to 8 years

Building and building improvements 4 to 39 years

Computer software and equipment 3 to 5 years

Machinery and equipment 5 to 8 years

Placement and evaluation units 5 years

The Company evaluates property, plant and equipment for impairment periodically to determine if changes in circumstances or the occurrence of events suggest the carrying value of the asset or asset group may not be recoverable.

2 unchanged sentences

Goodwill and Intangible Assets

Intangible assets other than goodwill, indefinite lived intangible assets and in process research and development ("IP R&D") are amortized over their estimated useful lives, which range between two to eighteen years , on either a straight-line basis over the expected period of benefit or as revenues are earned from the sales of the related product.

The Company periodically reviews the estimated useful lives of intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

13 unchanged sentences

If the carrying value of the reporting unit exceeds the fair value of the reporting unit, the carrying value is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge.

As detailed in Note 9, "Goodwill and Intangible Assets," the Company recorded a goodwill impairment loss of $158.6 million for the year ended May 31, 2020 as the fair value of the reporting unit was less than its carrying value.

Contingent Consideration

33 unchanged sentences

Generally, the changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair value of hedged items that relate to the hedged risks.

Changes in the fair value of derivatives accounted for as cash flow hedges, to the

extent they are effective as hedges, are recorded in accumulated other comprehensive income (loss).

Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive income (loss).

There were no derivative instruments held by the Company as of May 31, 2021 and 2020.

9 unchanged sentences

Standard Description Date Adopted Effect on the Consolidated Financial Statements

ASU 2016-02, Leases (Topic 842)

This ASU increases transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements.

For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities.

June 1, 2019 Refer to Note 16, Leases, for the required disclosures related to adopting this standard.

Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted

Standard Description Effective Date Effect on the Consolidated Financial Statements

ASU 2018-13, Fair Value Measurement (Topic 820)

1 unchanged sentence

Disclosures related to transfers between fair value hierarchy levels will be removed and further detail around changes in unrealized gains and losses for the period and unobservable inputs used in determining level 3 fair value measurements will be added, among other changes.

June 1, 2020 The Company plans to adopt the new standard in the first quarter of fiscal year 2021 and does not expect there to be a material impact to the consolidated financial statements.

June 1, 2020 The Company adopted the new standard in the first quarter of fiscal year 2021 and it did not have an impact on the Company's consolidated financial statements.

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

1 unchanged sentence

This ASU replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates.

June 1, 2020 The Company plans to adopt the new standard in the first quarter of fiscal year 2021 and does not expect there to be a material impact to the consolidated financial statements.

June 1, 2020 The Company adopted the new standard in the first quarter of fiscal year 2021 and it did not have an impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted

There are no new accounting pronouncements issued that are expected to have a material impact on our consolidated financial statements.

C3 Wave Tip Location Acquisition

On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc.

for an aggregate purchase price of $ 10.0 million with $ 5.0 million of potential future contingent consideration related to technical milestones.

This acquisition fills a gap in the Vascular Access portfolio and supports the Company's strategic plan.

On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc.("MedComp") for an aggregate purchase price of $ 10.0 million with $ 5.0 million of potential future contingent consideration related to technical milestones.

This acquisition filled a gap in the Vascular Access portfolio and supports the Company's strategic plan.

The Company accounted for this acquisition as an asset purchase.

3 unchanged sentences

Eximo Acquisition

On October 2, 2019, the Company entered into a share purchase agreement to acquire Eximo Medical, Ltd., a pre-commercial stage medical device company and its proprietary 355nm laser atherectomy technology.

On October 2, 2019, the Company entered into a share purchase agreement to acquire Eximo Medical, Ltd., a pre-commercial stage medical device company with a proprietary 355nm laser atherectomy technology.

The aggregate purchase price of $ 60.7 million included an upfront payment of $ 45.8 million and contingent consideration with an estimated fair value of $ 14.9 million.

This acquisition expands and complements the Company’s Vascular Interventions and Therapies product portfolio by adding the 355nm laser atherectomy technology which treats Peripheral Artery Disease.

This acquisition expanded and complemented the Company’s Endovascular Therapies product portfolio by adding the 355nm laser atherectomy technology (Auryon) which treats Peripheral Artery Disease.

The Company accounted for the Eximo acquisition under the acquisition method of accounting for business combinations.

4 unchanged sentences

Acquisition-related costs associated with the Eximo acquisition, which are included in "acquisition, restructuring and other items, net" in the accompanying Consolidated Statements of Operations, were approximately $ 0.6 million in fiscal year 2020.

The following table summarizes the preliminary and final aggregate purchase price allocated to the net assets acquired:

(in thousands) Preliminary allocation Adjustments (1)

Final allocation

The following table summarizes the final aggregate purchase price allocated to the net assets acquired:

(in thousands) Final allocation

Accounts receivable $ 50

13 unchanged sentences

Net assets acquired $ 60,660

(1) Measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods.

There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented.

Amounts represent adjustments to the preliminary purchase price allocation first presented in the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2019 resulting from revising the Company's purchase price allocation for this acquisition.

The Company finalized the allocation of the purchase price to the assets acquired and liabilities assumed in the fourth quarter of fiscal year 2020.

The value assigned to the product technology was derived using the multi-period excess earnings method under the income approach.

This approach estimates the excess earnings generated over the lives of the customers that existed as of the

acquisition date and discounts such earnings to present value.

This approach estimates the excess earnings generated over the lives of the customers that existed as of the acquisition date and discounts such earnings to present value.

The product technology is deemed to have a useful life of fifteen years and will be amortized on a straight-line basis over the useful life.

3 unchanged sentences

The aggregate purchase price of $ 75.0 million included an upfront payment of $ 47.9 million, contingent consideration with an estimated fair value of $ 22.3 million, an indemnification holdback of $ 4.6 million and a purchase price holdback of $ 0.2 million.

The fair value of contingent consideration of $ 22.3 million is comprised of $ 16.5 million for the revenue milestones and $ 5.8 million for the technical milestones.

The indemnification holdback is recorded in accrued liabilities at May 31, 2020 and the purchase price holdback was initially recorded in accrued liabilities, but was paid during the third quarter of fiscal year 2019.

This acquisition expands the Company’s growing Oncology business by adding RadiaDyne’s early-stage, proprietary OARtrac® real-time radiation dose monitoring platform and other market-leading oncology solutions, including the IsoLoc®/ImmobiLoc® and Alatus® balloon stabilizing technologies.

The fair value of contingent consideration of $ 22.3 million was comprised of $ 16.5 million for the revenue milestones and $ 5.8 million for the technical milestones.

The indemnification holdback was recorded in accrued liabilities at May 31, 2020 and was released during fiscal year 2021.

This acquisition expanded the Company’s growing Oncology business by adding RadiaDyne’s oncology solutions, including the IsoLoc/ImmobiLoc and Alatus balloon stabilizing technologies.

The Company accounted for the RadiaDyne acquisition under the acquisition method of accounting for business combinations.

4 unchanged sentences

Acquisition-related costs associated with the RadiaDyne acquisition, which are included in "acquisition, restructuring and other items, net" in the accompanying Consolidated Statements of Operations, were approximately $ 1.6 million in fiscal year 2019.

The following table summarizes the preliminary and final aggregate purchase price allocated to the net assets acquired:

The following table summarizes the final aggregate purchase price allocated to the net assets acquired:

(in thousands) Final allocation

19 unchanged sentences

This approach is used to estimate the cost savings that accrue for the owner of an intangible asset who would otherwise have to pay royalties or licensing fees on revenues earned through the use of the asset if they had not owned the rights to use the assets.

The net after-tax royalty savings are calculated for each year in the

remaining economic life of the intangible asset and discounted to present value.

The trademarks are deemed to have a useful life of five to seven years and the product technologies are deemed to have a useful life of seven to ten years .

The net after-tax royalty savings are calculated for each year in the remaining economic life of the intangible asset and discounted to present value.

The trademarks were deemed to have a useful life of five to seven years and the product technologies were deemed to have a useful life of seven to ten years .

Both are amortized on a straight-line basis over their useful life.

3 unchanged sentences

The goodwill arising from the acquisition consists largely of synergies and economies of scale the Company hopes to achieve from combining the acquired assets with the Company's current operations.

During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark.

This resulted in an impairment charge of $ 14.0 million.

The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statement of Operations (see Note 19).

At May 31, 2021, the fair value of the contingent liability for RadiaDyne is zero (see Note 5).

BioSentry Acquisition

7 unchanged sentences

Acquisition-related costs associated with the BioSentry acquisition, which are included in acquisition, restructuring and other expenses, net in the accompanying Consolidated Statements of Operations, were approximately $ 1.0 million in fiscal year 2019.

The following table summarizes the preliminary and revised final purchase price allocated to the net assets acquired:

The following table summarizes the final purchase price allocated to the net assets acquired:

(in thousands) Final allocation

22 unchanged sentences

On June 3, 2019, a portion of the net proceeds were used to retire the outstanding balance on the Term Loan and Revolving Facility and the remaining net proceeds will continue to be invested in the business.

Pursuant to a transition services agreement entered into and effective on the closing of the transaction, the Company will supply certain services to Medline.

Medline will receive certain legal, human resource, tax, accounting and information technology services from the Company for a period generally not to exceed 24 months.

As a result of the Divestiture, the results of operations from the Fluid Management business are reported in the accompanying consolidated statements of operations as “Income from discontinued operations, net of income tax” for the years ended May 31, 2019 and 2018.

Pursuant to a transition services agreement entered into and effective on the closing of the transaction, the Company supplied certain services to Medline.

Medline received certain legal, human resource, tax, accounting and information technology services from the Company which ended in the fourth quarter of fiscal year 2021.

The following table summarizes the financial results of discontinued operations:

Year ended May 31,

(in thousands) 2019 2018

(in thousands) May 31, 2019

Net sales $ 88,850

12 unchanged sentences

Income from discontinued operations $ 72,486

In accordance with accounting principles generally accepted in the United States (“GAAP”), only expenses specifically identifiable and related to a business to be disposed may be allocated to discontinued operations.

In accordance with GAAP, only expenses specifically identifiable and related to a business to be disposed may be allocated to discontinued operations.

As such, the selling and marketing, research and development and general and administrative expenses recorded in discontinued operations include corporate costs incurred directly in support of the Fluid Management portfolio.

17 unchanged sentences

Proceeds from the sale of Fluid Management have been presented in the Consolidated Statements of Cash Flows under investing activities for the fiscal year ended May 31, 2019.

Total operating and investing cash flows of discontinued operations for the fiscal year ended May 31, 2019 and 2018 are comprised of the following, which exclude the effect of income taxes:

Total operating and investing cash flows of discontinued operations for the fiscal year ended May 31, 2019 is comprised of the following, which exclude the effect of income taxes:

(in thousands) 2019

12 unchanged sentences

Disaggregation of Revenue

The following tables summarize net product revenue by Global Business Unit ("GBU") and geography for the year ended May 31, 2020 and for the year ended May 31, 2019:

The following tables summarize net product revenue by Global Business Unit and geography for the years ended May 31, 2021, 2020 and 2019:

Year ended May 31, 2021 Year ended May 31, 2020

(in thousands) United States International Total United States International Total

Vascular Interventions & Therapies $ 98,965 $ 13,741 $ 112,706 $ 106,767 $ 13,134 $ 119,901

Endovascular Therapies $ 121,427 $ 13,652 $ 135,079 $ 98,965 $ 13,741 $ 112,706

Vascular Access 81,088 20,222 101,310 76,768 17,531 94,299

1 unchanged sentence

Total $ 237,043 $ 53,967 $ 291,010 $ 207,980 $ 56,177 $ 264,157

Year ended May 31, 2019

(in thousands) United States International Total

Endovascular Therapies $ 106,767 $ 13,134 $ 119,901

Vascular Access 79,611 15,119 94,730

Oncology 30,579 25,424 56,003

Total $ 216,957 $ 53,677 $ 270,634

Net Product Revenue

2 unchanged sentences

Most of the Company's products are intended to be used once and then discarded, or they may be implanted for short or long term use.

The Company sells its products to its distribution partners and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.

The Company sells its products to its distributors and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.

Contracts and Performance Obligations

5 unchanged sentences

Transaction prices of products are typically based on contracted rates.

Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer.

To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method.

As such, revenue is recorded net of rebates, returns and other deductions.

Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below.

If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

6 unchanged sentences

As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers.

The Company enters into agreements to place placement and evaluation units (“units”) at customer sites, but the Company retains title to the units.

The duration of these agreements are typically a year and the customer has the right to use the unit at no upfront charge in connection with the customer’s ongoing purchase of disposables.

These types of agreements include an embedded operating lease for the right to use the units.

In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposal revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value.

Sales, value added, and other taxes collected on behalf of third parties are excluded from revenue.

Variable Consideration

Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers.

These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a current liability.

Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers.

These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a contra asset.

Rebates and Allowances:

The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized.

The Company establishes a liability for such amounts, which is included in accrued expenses in the accompanying consolidated balance sheets.

The Company establishes reserves for such amounts, which is included in accrued expenses in the accompanying consolidated balance sheets.

These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes and administrative fees the Company is required to pay to group purchasing organizations.

7 unchanged sentences

Contract Balances with Customers

A receivable is recognized in the period the Company ships the product.

A receivable is generally recognized in the period the Company ships the product.

Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition.

11 unchanged sentences

The Company’s sales incentive compensation plans qualify for capitalization since these plans are directly related to sales achieved during a period of time.

However, the Company has elected the practical expedient under

ASC 340-40-25-4 to expense the costs as they are incurred within selling and marketing expenses since the amortization period is less than one year.

However, the Company has elected the practical expedient under ASC 340-40-25-4 to expense the costs as they are incurred within selling and marketing expenses since the amortization period is less than one year.

The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products.

5 unchanged sentences

FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements.

The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.

The categorization of financial assets

and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.

The three levels of the hierarchy are defined as follows:

14 unchanged sentences

Financial Liabilities

Contingent consideration for acquisition earn out $ — $ — $ 13,486 $ 13,486

Contingent consideration for acquisition earn outs $ — $ — $ 15,647 $ 15,647

Total Financial Liabilities $ — $ — $ 15,647 $ 15,647

There were no transfers in and out of Level 1, 2 and 3 measurements for the years ended May 31, 2021 and 2020.

The table below presents the changes in fair value components of Level 3 instruments in the year ended May 31, 2020:

The table below presents the changes in fair value components of Level 3 instruments for the year ended May 31, 2021:

Financial Liabilities

1 unchanged sentence

Balance at May 31, 2020 $ 15,647

Contingent consideration liability recorded as a result of the acquisition (Note 2) 14,900

Change in present value of contingent consideration (1)

Contingent consideration payments ( 1,208 )

Currency (gain) loss from remeasurement 5

Balance at May 31, 2021 $ 15,741

(1) Change in the fair value of contingent consideration is included in earnings and comprised of changes in estimated earn out payments based on projections of Company performance and amortization of the present value discount.

During fiscal year 2020, the Company revised the sales projections for RadiaDyne products as a result of reviews performed by executive management.

The adjustments to the sales projections over the contractual earn-out period resulted in a $ 9.2 million reduction in the fair value of the contingent liability.

It was also determined that one of the technical milestones would not be achieved, which resulted in an additional reduction in the liability of $ 2.7 million.

The table below presents the changes in fair value components of Level 3 instruments in the year ended May 31, 2019:

Financial Assets Financial Liabilities

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

The table below presents the changes in fair value components of Level 3 instruments for the year ended May 31, 2020:

Financial Liabilities

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Balance at May 31, 2019 $ 13,486

1 unchanged sentence

Change in fair value of contingent consideration (1)

Fair market value adjustments 33 —

Proceeds from sale of marketable securities ( 1,350 ) —

Contingent consideration payments ( 1,208 )

1 unchanged sentence

In the fourth quarter of fiscal year 2019, the Company revised the sales projections for RadiaDyne products as a result of reviews performed by executive management.

During fiscal year 2020, the Company revised the sales projections for RadiaDyne products as a result of reviews performed by executive management.

The adjustments to the sales projections over the contractual earn-out period resulted in a $ 9.2 million reduction in the fair value of the contingent liability.

It was also determined that one of the technical milestones would not be achieved, which resulted in an additional reduction in the liability of $ 2.7 million.

At May 31, 2021, there are no remaining amounts payable for the RadiaDyne contingent consideration.

Contingent Liability for Acquisition Earn Outs

11 unchanged sentences

Projected fiscal year of payment 2024 - 2025

Technical milestones 836 Estimated probability Estimated probability 90 %

Projected year of payment 2021

At May 31, 2021, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 20.0 million.

1 unchanged sentence

Items Measured at Fair Value on a Nonrecurring Basis

During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark.

This resulted in an impairment charge of $ 14.0 million.

The Company recorded a goodwill impairment charge of $ 158.6 million as of May 31, 2020 to write down the carrying value of the reporting unit to fair value using Level 3 inputs.

There were no other items measured at fair value on a nonrecurring basis during the year ended May 31, 2020.

There were no other items measured at fair value on a nonrecurring basis during the year ended May 31, 2020 or May 31, 2021.

Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method).

12 unchanged sentences

(in thousands) May 31, 2021 May 31, 2020

TSA receivable $ 2,911 $ —

Deposits $ 2,795 $ 689

Employee Retention Tax Credit 1,911 —

Software licenses 1,286 1,002

TSA receivable 2 2,911

License fees 166 203

4 unchanged sentences

PROPERTY, PLANT AND EQUIPMENT, NET

P roperty, plant and equipment are summarized as follows:

Property, plant and equipment are summarized as follows:

(in thousands) May 31, 2021 May 31, 2020

Building and building improvements $ 28,979 $ 27,119

Machinery and equipment 13,602 14,029

Computer software and equipment 26,302 24,730

Machinery and equipment 14,208 13,602

Placement and evaluation units 9,530 —

Construction in progress 3,217 3,050

82,236 68,501

Less accumulated depreciation and amortization ( 40,661 ) ( 41,608 )

Less accumulated depreciation ( 45,635 ) ( 40,661 )

36,601 27,840

3 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.

The Company's annual testing for impairment of goodwill was completed as of December 31, 2020.

The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole.

The Company determines the fair value of the reporting unit based on the market valuation approach and concluded that it was not more-likely-than-not that the fair value of the Company's reporting unit was less than its carrying value as of December 31, 2019.

As a result of the current economic environment and the impact that the COVID-19 global pandemic has had on the global capital markets, the Company’s market capitalization was below its reporting unit’s carry value as of February 29, 2020;

however, it was concluded that this decline in market capitalization was temporary.

In the fourth quarter of fiscal year 2020, the Company concluded that the sustained decline in its market capitalization represented an impairment indicator that required the Company to perform an interim test for goodwill impairment as of May 31, 2020.

To determine the fair value of the single reporting unit as of May 31, 2020, the Company utilized a weighting of fair values derived from the income approach and the market approach.

The income approach is based on the projected cash flows that are discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows.

Fair value is estimated using internally developed forecasts and assumptions.

The discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics.

Other significant assumptions include revenue growth rates, profitability projections, and terminal value growth rates.

The market approach estimates fair values based on the determination of appropriate publicly traded market comparison companies and market multiples of revenue and earnings derived from those companies with similar operating and investment characteristics as the Company being valued.

Finally, the Company compared and reconciled the Company’s overall fair value to its market capitalization in order to assess the reasonableness of the calculated fair values of the reporting unit.

Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $158.6 million as of May 31, 2020 to write down the carrying value of the reporting unit to fair value.

The impairment loss is disclosed separately on the face of the accompanying consolidated statements of operations.

The assumptions related to the development of fair value could deviate materially from actual results and forecasts used to support the assets carrying value and may change in the future, which could result in impairment charges that would adversely affect financial results of operations.

The changes in the carrying amount of goodwill for the year ended May 31, 2020 were as follows:

(in thousands)

Goodwill balance at May 31, 2019 $ 347,666

Additions for Eximo acquisition (Note 2) 11,427

Goodwill impairment (158,578)

Goodwill balance at May 31, 2020 $ 200,515

Even though the Company determined that there was no goodwill impairment as of December 31, 2020, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require an interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2021.

There were no adjustments to goodwill for the year ended May 31, 2021 other than foreign currency translation adjustments.

For the year ended May 31, 2020 the Company recorded a goodwill impairment charge of $ 158.6 million to write down the carrying value of the reporting unit to fair value.

Definite Lived Intangible Assets

1 unchanged sentence

Amortization expense was $ 18.1 million, $ 18.1 million and $ 17.1 million for fiscal years 2021, 2020 and 2019, respectively.

During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark.

This resulted in an impairment charge of $ 14.0 million.

The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statement of Operations (see Note 19).

There were no impairment charges on definite lived intangible assets for the years ended May 31, 2020 and 2019.

16 unchanged sentences

$ 327,966 $ ( 130,830 ) $ 197,136

Annual amortization of these intangible assets is expected to approximate the following amounts for each of the next five fiscal years:

Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows:

(in thousands)

11 unchanged sentences

(in thousands) 2021 2020 2019

Federal $ — $ — $ ( 148 )

State and local 96 128 152

Deferred ( 1,568 ) ( 3,973 ) ( 11,113 )

( 3,375 ) ( 1,122 ) ( 3,948 )

( 1,430 ) ( 446 ) ( 25 )

( 4,805 ) ( 1,568 ) ( 3,973 )

Income tax benefit $ ( 4,504 ) $ ( 1,348 ) $ ( 3,556 )

24 unchanged sentences

The Company has Israel tax net operating losses of $ 13.5 million that can be carried forward indefinitely.

Beginning in 2018, except for GILTI, the Company will no longer record United States federal income tax on its share of the income of its foreign subsidiaries, nor will it record a benefit for foreign tax credits related to that income.

Beginning in 2018, except for the Global Intangible Low-Taxed Income, the Company will no longer record United States federal income tax on its share of the income of its foreign subsidiaries, nor will it record a benefit for foreign tax credits related to that income.

Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to withholding taxes payable, where applicable, to foreign countries, but would have no further federal income tax liability.

The Company intends to indefinitely reinvest the unremitted foreign earnings of all other subsidiaries as of May 31, 2021, as well as all subsequent earnings generated by all of our foreign subsidiaries.

Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practical.

The Company regularly assesses its ability to realize its deferred tax assets.

15 unchanged sentences

Research and development tax credit ( 1,303 ) ( 1,152 ) ( 936 )

Impact of tax reform — — 12,860

Meals and entertainment 116 171 190

Goodwill impairment — 33,301 —

Non-deductible interest on contingent payments 99 — —

Non-taxable gain on revaluation of contingent consideration liability ( 118 ) — —

Change in valuation allowance 3,921 1,426 175

25 unchanged sentences

Payroll and related expenses $ 20,408 $ 13,059

Outside services 4,256 2,222

Royalties 2,663 2,392

1 unchanged sentence

Sales and franchise taxes 631 634

Outside services 2,222 3,514

Litigation matters (Note 17) — 2,700

Litigation matters 975 —

Indemnification holdback — 5,000

7 unchanged sentences

The Credit Agreement has a five year maturity.

Interest on the facility will be based, at the Company’s option, on a base rate of LIBOR plus an applicable margin tied to the Company’s total leverage ratio and having ranges between 0.25 % and 0.75 % for base rate loans and between 1.25 % and 1.75 % for LIBOR loans.

Interest on the facility is based, at the Company’s option, on either a base rate of LIBOR or alternate base rate, plus an applicable margin tied to the Company’s total leverage ratio and having ranges between 0.25 % and 0.75 % for base rate loans and between 1.25 % and 1.75 % for LIBOR loans.

After default, the interest rate may be increased by 2.0 %.

The facility will also carry a commitment fee of 0.20 % to 0.25 % per annum on the unused portion.

The facility also carries a commitment fee of 0.20 % to 0.25 % per annum on the unused portion.

The Company's obligations under the Revolving Facility are unconditionally guaranteed, jointly and severally, by the Company's material direct and indirect domestic subsidiaries (the “Guarantors”).

3 unchanged sentences

• Fixed charge coverage ratio of consolidated EBITDA minus consolidated capital expenditures* to consolidated interest expense* paid or payable in cash plus scheduled principal payments in respect of indebtedness under the Credit Agreement of not less than 1.25 to 1.00.

* The definitions of consolidated total indebtedness and consolidated EBITDA are maintained in the credit agreement included as an exhibit to Form 8-k filed on June 6, 2019.

* The definitions of consolidated total indebtedness, consolidated EBITDA, consolidated capital expenditures and consolidated interest expense are specifically defined in the credit agreement included as an exhibit to Form 8-K filed on June 6, 2019.

As of May 31, 2021 there was $ 20.0 million outstanding on the Revolving Facility.

18 unchanged sentences

Stock Options

2004 Stock and Incentive Award Plan

The 2004 Stock and Incentive Award Plan (the “2004 Plan”) provides for the grant of incentive options to employees and for the grant of non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other incentive awards to employees, directors and other service providers.

A total of 7,750,000 shares of common stock have been reserved for issuance under the 2004 Plan, of which up to 800,000 shares may be issued upon the exercise of incentive stock options.

The Compensation Committee of the Board of Directors administers the 2004 Plan.

The Committee determines vesting terms and the exercise price of options granted under the 2004 Plan, but for all incentive stock options the exercise price must at least be equal to the fair market value of common stock on the date of grant.

The term of an incentive stock option may not exceed ten years .

On October 25, 2016, the Company amended the 2004 Stock and Incentive Award Plan to increase the shares of common stock reserved for issuance by 250,000 shares.

On October 10, 2018, the Company amended the 2004 Stock and Incentive Award Plan to increase the shares of common stock reserved for issuance by 750,000 shares.

On October 13, 2020, the Company's shareholders approved the 2020 Stock and Incentive Award Plan (the “2020 Plan”).

The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers.

A total of 2.4 million shares of common stock have been reserved for issuance under the 2020 Plan.

Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”).

The adoption of the 2020 Plan did not impact the administration of equity awards issued under the 2004 Plan but following the adoption of the 2020 Plan, equity award grants are no longer made under the 2004 Plan.

As of May 31, 2021, there remained approximately 2.3 million shares available for granting under the 2020 Plan.

5 unchanged sentences

Forfeited ( 132,895 ) $ 18.38

Expired ( 50,470 ) $ 12.33

Outstanding at end of year - May 31, 2021 2,146,960 $ 15.59 6.24 $ 16,176

3 unchanged sentences

Options vest 25 % per year over four years for employees.

Grants to directors vest 33.33 % per year over three years .

Stock options granted prior to May 1, 2007 and after June 1, 2017 expire on the tenth anniversary of the grant date.

15 unchanged sentences

Due to the valuation allowance there was no tax benefit realized from stock option exercises during the years ended May 31, 2021, 2020 and 2019.

Performance Share and Restricted Stock Unit Awards

The Company grants restricted stock units to certain employees under the 2004 Plan which give the recipients the right to receive shares of Company stock upon vesting.

Restricted Stock Unit and Performance Share Awards

The Company grants restricted stock units to certain employees under the 2020 Plan, and historically under the 2004 Plan, which give the recipients the right to receive shares of Company stock upon vesting.

The restricted stock unit awards vest in four equal annual installments beginning on the first anniversary of the grant date.

10 unchanged sentences

The weighted average grant date fair value of restricted stock units granted during the years ended May 31, 2021, 2020 and 2019 was $ 10.40 , $ 20.35 and $ 20.87 , respectively.

The total intrinsic value of restricted stock units (meaning the fair value of the units on the date of vest) vesting during the years ended May 31, 2020, 2019 and 2018 was $ 3.9 million, $ 4.6 million, and $ 2.7

million, respectively.

The total intrinsic value of restricted stock units (meaning the fair value of the units on the date of vest) vesting during the years ended May 31, 2021, 2020 and 2019 was $ 2.1 million, $ 3.9 million, and $ 4.6 million, respectively.

As of May 31, 2021, there was $ 6.5 million of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a weighted average period of 3 years.

The Company grants performance share awards to certain employees under the 2004 Plan which gives the recipients the right to receive shares of Company stock if certain criteria is met.

The Company grants performance share awards to certain employees under the 2020 Plan, and historically under the 2004 Plan, which gives the recipients the right to receive shares of Company stock if certain criteria is met.

The following table summarizes information about performance unit award activity for the year ended May 31, 2021:

2 unchanged sentences

Granted 232,236 $ 9.72

Vested ( 235,580 ) $ 21.68

Canceled ( 129,066 ) $ 21.28

Non-vested at end of year, May 31, 2021 376,291 $ 14.72

During fiscal year 2020, the Company granted performance unit awards.

Performance unit awards subject to vesting are based on the Company's level of attainment of the performance targets which are set for each of the three performance years along with continued employment of the grantee.

During fiscal year 2021 and 2020, the Company granted performance unit awards.

Performance unit awards subject to vesting are based on the Company's level of attainment of the performance targets which are set for each of the three

performance years along with continued employment of the grantee.

At the end of the three year period, the vested shares are subject to modification based on the Company’s TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year period.

During fiscal years 2019 and 2018, the Company granted performance unit awards that include a three-year market condition.

During fiscal year 2019, the Company granted performance unit awards that include a three-year market condition.

Vesting of the performance unit awards is based on the Company's level of attainment of specified TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year periods.

3 unchanged sentences

Compensation cost is recognized over the performance period which is typically three years .

As of May 31, 2020, there was $ 2.0 million of unrecognized compensation cost which is expected to be recognized over a weighted average period of one year.

As of May 31, 2021, there was $ 2.1 million of unrecognized compensation cost which is expected to be recognized over a weighted average period of 2 years.

Compensation Expense

24 unchanged sentences

In addition, diluted earnings per share include the dilutive effect of potential common stock consisting of stock options, restricted stock units and performance stock units, provided that the inclusion of such securities is not anti-dilutive.

In periods with a net loss, stock options and restricted stock units are not included in the computation of basic loss per share as the impact would be anti-dilutive.

In periods with a net loss, stock

options and restricted stock units are not included in the computation of basic loss per share as the impact would be anti-dilutive.

The following table reconciles basic to diluted weighted average shares outstanding for the years ended May 31, 2021, 2020 and 2019:

21 unchanged sentences

The following table presents supplemental balance sheet information related to leases:

(in thousands) Balance Sheet Location May 31, 2020

(in thousands) Balance Sheet Location May 31, 2021 May 31, 2020

Operating lease ROU asset Other assets $ 9,382 $ 10,146

5 unchanged sentences

The following table presents the weighted average remaining lease term and discount rate:

May 31, 2021 May 31, 2020

Weighted average remaining term (in years) 4.12 5.00

Weighted average discount rate 3.8 % 4.2 %

The following table presents the maturities of the lease liabilities:

The maturities of the lease liabilities for each of the following fiscal years is:

(in thousands) May 31, 2021

5 unchanged sentences

Long-term lease obligations $ 7,319

Included in the total lease obligations is a 7 -year building operating lease with undiscounted payment obligations of $ 6.4 million that commenced during the third quarter of fiscal year 2020 and a 5 -year building operating lease with undiscounted payment obligations of $ 1.5 million that commenced during the fourth quarter of fiscal year 2020.

During the year ended May 31, 2020, the Company recognized $ 3.4 million of operating lease expense which includes immaterial short-term leases.

Rent expense prior to adoption of ASC 842 amounted to $ 2.5 million and $ 2.8 million for the years ended May 31, 2019 and 2018, respectively.

As of May 31, 2020, the expenses on the Consolidated Statement of Operations were classified as follows:

(in thousands) May 31, 2020

During the years ended May 31, 2021 and May 31, 2020, the Company recognized operating lease expense which includes immaterial short-term leases of $ 3.2 million and $ 3.4 million, respectively.

Rent expense prior to adoption of ASC 842 amounted to $ 2.5 million for the year ended May 31, 2019.

As of May 31, 2021 and 2020, the expenses on the Consolidated Statement of Operations were classified as follows:

(in thousands) May 31, 2021 May 31, 2020

Cost of sales $ 820 $ 1,138

2 unchanged sentences

General and administrative 1,123 1,233

The following table presents supplemental cash flow and other information related to leases for the year ended:

(in thousands) May 31, 2020

$ 3,207 $ 3,351

The following table presents supplemental cash flow and other information related to leases for the year ended May 31, 2021 and 2020:

(in thousands) May 31, 2021 May 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

2 unchanged sentences

Operating leases 1,585 6,918

Future annual payments under non-cancelable operating leases in the aggregate at May 31, 2019, are summarized as follows:

(in thousands) May 31, 2019

2024 and thereafter 3,227

Total lease payments $ 12,749

COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

(“Bard”) filed a suit in the United States District Court of Utah claiming certain of the Company's implantable port products infringe on three U.S.

patents held by Bard (the "Utah Action").

Bard’s complaint

sought unspecified damages and other relief.

The Company filed petitions for reexamination in the US Patent and Trademark Office ("USPTO") seeking to invalidate all three patents asserted by Bard in the litigation.

The Company's petitions were granted and 40 of Bard's 41 patent claims were rejected and, following further proceedings, the Patent Office issued a Final Rejection of all 40 claims subject to reexamination.

Thereafter, Bard filed appeals to the USPTO Board of Appeals and Interferences for all three reexaminations which were decided as follows:

For US Patent No.

7,785,302, the rejections of six of the ten claims under reexamination were affirmed, but were reversed on four of the ten claims.

7,959,615 the rejections of eight of the ten claims under reexamination were affirmed but the rejections of the other two of the ten claims were reversed.

In the third, for U.S.

7,947,022 the rejections of all twenty claims under reexamination were affirmed.

Thereafter, Bard sought Rehearing in all three appeals and the Company sought Rehearing in the ‘302 and ‘615 appeals.

The PTO denied all three Rehearing Requests, but modified its characterization of one prior art reference for the ‘302 and ‘022 decisions.

Bard filed appeals to the Federal Circuit Court of Appeals in all three reexams and the Company Cross-Appealed for the ‘302 and the ‘615 reexams.

MedComp also filed an Amicus Brief in support of the Company on November 22, 2017.

Meanwhile, on July 12, 2017 Bard assigned the asserted patents to Bard Peripheral Vascular, Inc.

(“BPV”) which was added as co-Appellant before the Federal Circuit and as a co-Plaintiff in the Utah action.

An oral hearing was held on September 5, 2018 and the Court rendered its decision on September 28, 2018, affirming that claims 1-5 and 10 of the ‘615 patent were invalid, but that claims 6-7 of the 615 patent and claims 1-4 of the 302 patent were valid over the prior art references considered in the Reexamination proceedings.

The Federal Circuit also reversed the PTAB’s claim construction ruling and remanded for consideration of obviousness for the remaining claims under the new claim construction ruling and for further findings with respect to whether one of the asserted references qualified as a printed publication.

On January 28, 2019, on remand, the USPTO reversed the rejections of the ‘302 claims 1-10, ‘022 claims 1-20 and ‘615 claims 8-9.

The USPTO has since issued Inter Partes Reexamination Certificates for the ‘302 Patent for the ‘022 patent and for the ‘615 patent.

The Company thereafter filed a Motion to Unstay the Utah Case and that motion was granted.

On November 4, 2019 the Court held a joint Status Conference among the Company’s Utah Action and two other cases filed by Bard on the same patents against MedComp and Smiths.

The Court set a schedule for defendant's Motions to Dismiss or Transfer.

The Company filed its motion on November 25, 2019;

and Bard filed a responsive brief and a motion for venue discovery on December 9, 2019.

The Company filed a responsive brief on December 16, 2019 and Bard filed a reply on December 23, 2019.

On February 27, 2020, the Court referred all non-dispositive motions to the presiding Magistrate and on March 3, 2020 the Court granted Bard’s Motion for Venue Discovery and denied the Company’s transfer motion without prejudice to re-filing after completion of the venue discovery, but no later than June 30, 2020.

The parties have since engaged in venue discovery and AngioDynamics re-filed its Motion to Dismiss or Transfer on June 30, 2020.

Bard filed an opposition brief on July 28, 2020, and the Company’s Reply is due 14 days thereafter.

patents held by Bard (US Patent Nos.

7,785,302, 7,959,615 (“615”) and 7,947,022).

The case was stayed pending reexamination in the US Patent and Trademark Office ("USPTO").

Following the reexamination proceedings, and the parties’ related appeals to the Federal Circuit which resulted in further proceedings at the USPTO, certain claims of the 615 patent were held invalid, while the remaining claims of the 615 patent and the other two patents were upheld over the prior art references considered in the reexamination proceedings.

Thereafter, the case was transferred from the District of Utah to the United States District Court for the District of Delaware (“District of Delaware”).

A scheduling order was entered on March 23, 2021.

The Company filed a Motion to Amend its Answer and Counterclaims on April 14, 2021.

This motion seeks to add counterclaims for infringement of U.S.

and 10,632,295, as well as a counterclaim of inequitable conduct, and remains pending.

The Company served its initial invalidity contentions on July 2, 2021, consistent with the scheduling order.

The Company believes these claims are without merit and intends to defend them vigorously.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

On March 10, 2015, Bard and BPV filed suit in the United States District Court for the District of Delaware (the “Delaware Action") claiming certain of the Company's implantable port products infringe on three other U.S.

patents held by Bard, which are different from those asserted in the Utah action.

Bard's complaint seeks unspecified damages and other relief.

On June 1, 2015, the Company filed two motions in response to Bard’s Complaint - one sought transfer to the District of Utah where the Utah Action is currently pending, and the other sought dismissal of the entire complaint on grounds that none of the claims in the asserted patents is directed to patent eligible subject matter under Section 101 of the Patent Statute and in light of recent authority from the U.

Supreme Court.

On January 12, 2016, the Court issued a decision denying both motions.

A Markman hearing was held on March 10, 2017 and the Court issued its Claim Construction Order on May 19, 2017.

On May 19, 2017, Bard served its Final Infringement Contentions and on June 2, 2017, the Company served its Final Invalidity Contentions.

On October 20, 2017, the scheduling order for the case was amended to, among other things, set a trial date commencing July 23, 2018.

The parties completed Expert Discovery in January 2018 and completed briefing on their respective case dispositive motions on April 27, 2018.

On June 26, 2018, the Court denied all case dispositive motions, ruling that issues of material fact remained in dispute.

On July 9, 2018, the Court continued the trial until March 2019.

On January 9, 2019 the Court held a further claim construction hearing to resolve two outstanding claim construction issues prior to trial.

A Report and Recommendation (by Magistrate-Judge Fallon) was issued on February 11, 2019 and entered by the Court on February 28, 2019.

Jury selection was held on Friday March 1, 2019 and trial began on March 4, 2019.

On day four of the jury trial, at the close of C.R.

Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law under rule 50(a) as well as its motions for summary judgement on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

On April 5, 2019, Bard filed a precautionary Notice of Appeal to the Federal Circuit.

On April 26, 2019, the District Court issued a Memorandum and Order confirming the grant of judgment in the Company’s favor of patent ineligibility, non-infringement, patent invalidity and no willful infringement.

Meanwhile, on May 10, 2019, the Company filed

a Motion for Attorney fees and non-taxable expenses under 35 USC Sec.

On May 21, 2019, the Court issued a Memorandum and Order which, inter alia, stayed proceedings on the Company’s fee Motion and the Company’s equitable claims pending appeal;

and entered Final Judgment on May 21, 2019 as well.

Bard filed a second Notice of Appeal on May 23, 2019.

Both appeals have since been consolidated and Bard’s opening brief was filed on September 27, 2019;

the Company's answering brief was filed on January 15, 2020;

and Bard’s reply brief was filed on March 4, 2020.

A hearing date was held on June 1, 2020, and the Company is currently awaiting a decision from the Federal Circuit .

On March 10, 2015, Bard and Bard Peripheral Vascular filed suit in the District of Delaware claiming certain of the Company's implantable port products infringe on three U.S.

patents held by Bard (US Patent Nos.

8,475,417, 8,545,460, 8,805,478).

The case proceeded through trial which began on March 4, 2019.

On day four of the jury trial, at the close of Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law as well as its motions for summary judgment on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

On May 10, 2019, the Company filed a motion for attorney fees and non-taxable expenses under 35 USC Sec.

Bard appealed the judgment to the Federal Circuit and on November 10, 2020, the Federal Circuit reversed the judgment in part with respect to Section 101, and vacated and remanded the trial court’s invalidity and non-infringement judgments.

The Company filed a combined Petition for rehearing and rehearing en banc on December 10, 2020, which was denied on January 15, 2021.

The Federal Circuit issued its mandate on January 22, 2021.

On March 15, 2021, the District of Delaware entered an order requiring the parties to submit status reports and denied as moot the Company’s motion for attorney’s fees and expenses.

The parties submitted status reports on March 29, 2021.

The matter remains pending.

The Company maintains its belief that Bard’s claims are without merit.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

On March 8, 2021, Bard filed suit in the District of Delaware asserting certain of the Company’s port products (including certain related infusion sets) infringe U.S.

8,025,639, 9,603,992 (“992”) and 9,603,993 (“993”).

On May 20, 2021, the Company filed a Motion to Dismiss Bard’s claims with respect to the 992 and 993 patents, and the motion remains pending.

The Company maintains its belief that Bard’s claims are without merit.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

AngioDynamics, Inc.

6 unchanged sentences

On August 6, 2018 the court denied Bard’s motion in its entirety.

Discovery is largely complete, summary judgment will be fully briefed by September 11, 2020, and the case will subsequently proceed to trial thereafter.

Bard made a motion for summary judgment which was denied in its entirety in a decision issued by the Court on May 5, 2021.

Bard also raised a series of challenges targeted at one of AngioDynamics’ expert witnesses, which the Court denied in part and granted in part in decisions on May 5, 2021 and June 11, 2021.

Discovery is largely complete, and the case is expected to proceed to trial in 2022.

Merz North America Settlement

16 unchanged sentences

Net sales by Product Category

Vascular Interventions & Therapies $ 112,706 $ 119,901 $ 119,704

Endovascular Therapies $ 135,079 $ 112,706 $ 119,901

Vascular Access 101,310 94,299 94,730

19 unchanged sentences

Mergers and acquisitions (2)

782 4,030 1,660

Transition service agreement (3)

2 unchanged sentences

Intangible and other asset impairment (5)

13,953 — 1,704

Restructuring — 26 289

5 unchanged sentences

(4) Divestiture expenses incurred to transition manufacturing from Glens Falls, NY to Queensbury, NY.

(5) During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark.

This resulted in an impairment charge of $ 14.0 million

Included in legal for fiscal year 2021, is a $ 1.0 million settlement expense.

Included in legal for fiscal years 2020 and 2019 are settlements received for the Biolitec litigation of $ 0.5 million and $ 3.4 million, respectively.

The settlement received offsets legal expenses paid related to the settlement proceedings.

The settlement received partially offsets legal expenses paid related to the settlement proceedings.

In addition, the $ 2.5 million accrual for the settlement of the Merz contract termination is included in legal expenses for fiscal year 2019.

Restructuring

The Company evaluates its performance and looks for opportunities to improve the overall operations of the Company on an ongoing basis.

As a result of this evaluation, certain restructuring initiatives are taken to enhance the Company’s overall operations.

Operational Consolidation

On February 1, 2017, the Company announced to employees an operational consolidation plan (the “plan”) to consolidate manufacturing facilities in Manchester, GA and Denmead, UK into the Glens Falls and Queensbury, NY facilities.

This plan will streamline and optimize the manufacturing functions into one centralized location increasing the utilization of the Glens Falls and Queensbury facilities, optimizing inventory and reducing cost of goods sold through savings in overhead expenses and direct labor.

The restructuring activities associated with the plan were completed in the fourth quarter of fiscal year 2018 with immaterial validation and regulatory costs incurred in fiscal year 2019.

The Company recorded restructuring charges related to the plan during the year ended May 31, 2020, 2019 and 2018 of $ 0.0 million, $ 0.3 million and $ 4.7 million, respectively.

Total restructuring charges recorded as part of the plan were $ 6.3 million.

Termination benefits were only earned if an employee stays until their termination date;

therefore, the expenses related to termination benefits were recorded ratably over the service period.

The following table presents a rollforward of the restructuring reserve for the years ended May 31, 2020, 2019 and 2018:

Termination Plant Regulatory Cancellation Other

(in thousands) Benefits Consolidation Filings Costs Costs Total

Balance at May 31, 2017 $ 851 $ 111 $ — $ — $ — $ 962

Charges 1,440 2,892 68 200 74 4,674

Non-cash adjustments — ( 276 ) — — — ( 276 )

Cash payments ( 1,453 ) ( 2,706 ) ( 56 ) — ( 74 ) ( 4,289 )

Balance at May 31, 2018 $ 838 $ 21 $ 12 $ 200 $ — $ 1,071

Charges — 244 44 — — 288

Non-cash adjustments — — — ( 9 ) — ( 9 )

Cash payments ( 838 ) ( 265 ) ( 44 ) ( 191 ) — ( 1,338 )

Balance at May 31, 2019 $ — $ — $ 12 $ — $ — $ 12

Charges — — 26 — — 26

Cash payments — — ( 38 ) — — ( 38 )

Balance at May 31, 2020 $ — $ — $ — $ — $ — $ —

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in each component of accumulated other comprehensive income (loss), net of tax, are as follows for fiscal years 2021 and 2020:

(in thousands) Foreign currency translation gain (loss) Unrealized gain (loss) on marketable securities Total

(in thousands) Foreign currency translation gain (loss)

Balance at May 31, 2019 $ ( 1,352 )

Other comprehensive income before reclassifications, net of tax 11

Amounts reclassified from accumulated other comprehensive income — ( 116 ) ( 116 )

Net other comprehensive income $ 11

3 unchanged sentences

Balance at May 31, 2021 $ 3,153

QUARTERLY INFORMATION (unaudited)

Quarterly results of operations during the fiscal years ended May 31, 2020 and 2019 are as follows:

(in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter

Net sales $ 66,042 $ 70,003 $ 69,780 $ 58,332

Gross profit 38,217 41,544 40,299 30,212

$ ( 1,275 ) $ ( 2,736 ) $ ( 5,709 ) $ ( 157,067 )

Earnings per share net income

Basic $ ( 0.03 ) $ ( 0.07 ) $ ( 0.15 ) $ ( 4.14 )

Diluted $ ( 0.03 ) $ ( 0.07 ) $ ( 0.15 ) $ ( 4.14 )

(1) Net loss in the fourth quarter of fiscal year 2020 included the goodwill impairment charge of 158.6 million .

(in thousands, except per share data) First quarter Second quarter Third quarter Fourth quarter

Net sales $ 63,943 $ 69,985 $ 65,524 $ 71,182

Gross profit 35,953 40,552 38,163 41,332

Net income (loss) from continuing operations ( 5,704 ) ( 3,587 ) ( 4,609 ) 2,753

Net income from discontinued operations 5,235 5,727 5,405 56,120

Net income (loss) (1)

$ ( 469 ) $ 2,140 $ 796 $ 58,873

Loss per share from continuing operations

Basic $ ( 0.15 ) $ ( 0.10 ) $ ( 0.12 ) $ 0.07

Diluted $ ( 0.15 ) $ ( 0.10 ) $ ( 0.12 ) $ 0.07

Earnings per share from discontinued operations

Basic $ 0.14 $ 0.15 $ 0.14 $ 1.49

Diluted $ 0.14 $ 0.15 $ 0.14 $ 1.47

Earnings per share net income

Basic $ ( 0.01 ) $ 0.06 $ 0.02 $ 1.57

Diluted $ ( 0.01 ) $ 0.06 $ 0.02 $ 1.54

(1) Net income in the fourth quarter of fiscal year 2019 was driven by the gain on the sale of the Fluid Management business.

The data in the schedules above has been intentionally rounded to the nearest thousand and therefore the quarterly amounts may not sum to the full year amounts.

On May 31, 2019, the Company completed the sale of the Fluid Management business and all of the assets used primarily in connection with the Fluid Management business (Note 3).

The Company has adjusted the consolidated financial statements to reflect the Fluid Management business as a discontinued operation for the current year and all prior periods presented.

The quarterly information for fiscal year 2019 reflect the Fluid Management business as a discontinued operation.

AngioDynamics, Inc.

32 unchanged sentences

10.1.6 AngioDynamics 2017 Total Shareholder Return Performance Unit Agreement Program.

10-Q 10.1 October 5, 2016

10.1.6 AngioDynamics 2017 Total Shareholder Return Performance Unit Agreement Program.

10-Q 10.1 September 29, 2017

4 unchanged sentences

10.1.9 AngioDynamics, Inc.

2020 Stock and Incentive Award Plan

DEF 14A September 3, 2020

10.2 AngioDynamics, Inc.

Employee Stock Purchase Plan (as amended).

DEF 14A August 30, 2018

DEF 14A September 3, 2020

10.3 Form of Non-Statutory Stock Option Agreement pursuant to the AngioDynamics, Inc.

13 unchanged sentences

10-K 10.4.5 July 23, 2018

10.4.6 Form of 2020 Performance Share Award Agreement pursuant to the AngioDynamics, Inc.

2004 Stock and Incentive Award Plan

10-Q 10.4.6 January 8, 2021

10.5 Form of Restricted Stock Award Agreement pursuant to the AngioDynamics, Inc.

22 unchanged sentences

8-K 10.1 April 6, 2016

10.11.2 Employment letter, dated August 18, 2016, between AngioDynamics, Inc.

and Michael C.

8-K 10.1 July 25, 2016

10.12 Change in Control Agreement, dated April 1, 2016, between AngioDynamics, Inc.

1 unchanged sentence

10.12.2 Form of Severance Agreement of AngioDynamics, Inc.

10-K 10.12.2 August 10, 2020

10.13 Form of Change in Control Agreement.

12 unchanged sentences

8-K 10.1 April 27, 2016

10.19 Amended and Restated Change in Control Agreement, by and between AngioDynamics, Inc.

8-K 10.1 February 3, 2021

10.2 Form of Amended and Restated Change in Control Agreement with AngioDynamics, Inc.

8-K 10.2 February 3, 2021

14 Code of Ethics.

16 unchanged sentences

ANGIODYNAMICS, INC.

July 27, 2021 By:

/ S / H OWARD W.

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

August 7, 2020 / S / H OWARD W.

July 27, 2021 / S / H OWARD W.

Chairman of the Board, Director

August 7, 2020 / S / JAMES C.

July 27, 2021 / S / J AMES C.

President, Chief Executive Officer

(Principal Executive Officer)

August 7, 2020 / S / STEPHEN A.

July 27, 2021 / S / S TEPHEN A.

Executive Vice President, Chief Financial Officer,

(Principal Financial and Accounting Officer)

August 7, 2020 / S / W ESLEY E.

July 27, 2021 / S / W ESLEY E.

J OHNSON , J R .

Johnson, Jr.,

August 7, 2020 / S / D ENNIS S.

August 7, 2020 / S / K EVIN J.

August 7, 2020 / S / JAN S.

August 7, 2020 / S / EILEEN O.

August 7, 2020 / S / KAREN A.

August 7, 2020 / S / MICHAEL E.

July 27, 2021 / S / D ENNIS S.

July 27, 2021 / S / J AN S.

July 27, 2021 / S / E ILEEN O.

July 27, 2021 / S / K AREN A.

July 27, 2021 / S / M ICHAEL E.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures