What changed in this filing

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Item 1. Financial Statements

2024-01-08 compared with 2023-10-05 · 152 added, 94 removed, 512 unchanged (32% of the section changed)

4 unchanged sentences

(in thousands of dollars, except per share data)

Three Months Ended

Aug 31, 2023 Aug 31, 2022

Three Months Ended Six Months Ended

Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

Net sales $ 79,073 $ 85,429 $ 157,752 $ 166,966

14 unchanged sentences

Other expense, net ( 32 ) ( 252 ) ( 320 ) ( 427 )

Total other expense, net ( 169 ) ( 556 )

Total other income (expense), net 502 ( 936 ) 333 ( 1,492 )

Income (loss) before income tax benefit ( 12,618 ) ( 9,051 ) 22,243 ( 22,908 )

Income tax benefit ( 11,023 ) ( 853 )

Income tax expense (benefit) 16,430 ( 565 ) 5,407 ( 1,418 )

Net income (loss) $ ( 29,048 ) $ ( 8,486 ) $ 16,836 $ ( 21,490 )

11 unchanged sentences

(in thousands of dollars)

Three Months Ended

Aug 31, 2023 Aug 31, 2022

Three Months Ended Six Months Ended

Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

Net income (loss) $ ( 29,048 ) $ ( 8,486 ) $ 16,836 $ ( 21,490 )

Other comprehensive loss, before tax:

Foreign currency translation loss ( 930 ) ( 550 )

Other comprehensive loss, before tax ( 930 ) ( 550 )

Other comprehensive income (loss), before tax:

Foreign currency translation gain (loss) 945 ( 1,095 ) 15 ( 1,645 )

Other comprehensive income (loss), before tax 945 ( 1,095 ) 15 ( 1,645 )

Income tax expense related to items of other comprehensive loss — — — —

Other comprehensive loss, net of tax ( 930 ) ( 550 )

Other comprehensive income (loss), net of tax 945 ( 1,095 ) 15 ( 1,645 )

Total comprehensive income (loss), net of tax $ ( 28,103 ) $ ( 9,581 ) $ 16,851 $ ( 23,135 )

5 unchanged sentences

(in thousands of dollars, except share data)

Aug 31, 2023 May 31, 2023

Nov 30, 2023 May 31, 2023

Current assets

29 unchanged sentences

Common stock, par value $ 0.01 per share, 75,000,000 shares authorized;

40,586,641 and 39,981,422 shares issued and 40,216,641 and 39,611,422 shares outstanding at August 31, 2023 and May 31, 2023, respectively

40,594,406 and 39,981,422 shares issued and 40,224,406 and 39,611,422 shares outstanding at November 30, 2023 and May 31, 2023, respectively

Additional paid-in capital 605,284 599,206

Accumulated deficit ( 194,019 ) ( 210,855 )

Treasury stock, 370,000 shares at August 31, 2023 and May 31, 2023, respectively

Treasury stock, 370,000 shares at November 30, 2023 and May 31, 2023, respectively

( 5,714 ) ( 5,714 )

8 unchanged sentences

(in thousands of dollars)

Three Months Ended

Aug 31, 2023 Aug 31, 2022

Six Months Ended

Nov 30, 2023 Nov 30, 2022

Cash flows from operating activities:

21 unchanged sentences

Additions to placement and evaluation units ( 2,006 ) ( 3,442 )

Acquisition of intangibles — ( 540 )

Cash paid for acquisitions — ( 540 )

Proceeds from sale of assets 100,000 —

8 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 202 ( 129 )

Increase (decrease) in cash and cash equivalents 12,966 ( 4,261 )

Increase in cash and cash equivalents 16,276 1,032

Cash and cash equivalents at beginning of period 44,620 28,825

21 unchanged sentences

Balance at August 31, 2023 40,586,641 $ 383 $ 603,759 $ ( 164,971 ) $ ( 5,653 ) ( 370,000 ) $ ( 5,714 ) $ 427,804

Net loss ( 29,048 ) ( 29,048 )

Issuance/Cancellation of restricted stock units 7,765 ( 16 ) ( 16 )

Issuance/Cancellation of performance share units ( 336 ) ( 336 )

Stock-based compensation 1,877 1,877

Other comprehensive income (loss), net of tax 945 945

Balance at November 30, 2023 40,594,406 $ 383 $ 605,284 $ ( 194,019 ) $ ( 4,708 ) ( 370,000 ) $ ( 5,714 ) $ 401,226

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Common Stock Additional

1 unchanged sentence

comprehensive

income Treasury Stock

income (loss) Treasury Stock

Shares Amount Shares Amount Total

8 unchanged sentences

Balance at August 31, 2022 39,847,751 $ 381 $ 589,984 $ ( 171,417 ) $ 807 ( 370,000 ) $ ( 5,714 ) $ 414,041

Net loss ( 8,486 ) ( 8,486 )

Exercise of stock options 15,000 184 184

Issuance/Cancellation of restricted stock units 11,393 ( 36 ) ( 36 )

Stock-based compensation 3,350 3,350

Other comprehensive loss, net of tax ( 1,095 ) ( 1,095 )

Balance at November 30, 2022 39,874,144 $ 381 $ 593,482 $ ( 179,903 ) $ ( 288 ) ( 370,000 ) $ ( 5,714 ) $ 407,958

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended August 31, 2023 and 2022, the Consolidated Balance Sheet as of August 31, 2023, the Consolidated Statements of Cash Flows for the three months ended August 31, 2023 and 2022, and the Consolidated Statements of Stockholders’ Equity for the three months ended August 31, 2023 and 2022 have been prepared by the Company and are unaudited.

The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended November 30, 2023 and 2022, the Consolidated Balance Sheet as of November 30, 2023, the Consolidated Statements of Cash Flows for the six months ended November 30, 2023 and 2022, and the Consolidated Statements of Stockholders’ Equity for the six months ended November 30, 2023 and 2022 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of May 31, 2023 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended August 31, 2023 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three months ended August 31, 2023 and 2022 include the accounts of AngioDynamics, Inc.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended November 30, 2023 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three and six months ended November 30, 2023 and 2022 include the accounts of AngioDynamics, Inc.

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

28 unchanged sentences

The following table summarizes net sales by Med Tech, Med Device and by geography:

Three Months Ended August 31, 2023 Three Months Ended August 31, 2022

Three Months Ended November 30, 2023 Three Months Ended November 30, 2022

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

2 unchanged sentences

Total $ 64,002 $ 15,071 $ 79,073 $ 71,631 $ 13,798 $ 85,429

Six Months Ended November 30, 2023 Six Months Ended November 30, 2022

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

Med Tech $ 43,189 $ 8,035 $ 51,224 $ 40,991 $ 6,327 $ 47,318

Med Device 85,212 21,316 106,528 99,664 19,984 119,648

Total $ 128,401 $ 29,351 $ 157,752 $ 140,655 $ 26,311 $ 166,966

Net Product Revenue

19 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.

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

3 unchanged sentences

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

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Variable Consideration

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The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls.

During the three months ended August 31, 2023, such product returns were not material.

During the six months ended November 30, 2023, such product returns were not material.

Contract Balances with Customers

4 unchanged sentences

The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers:

(in thousands) Aug 31, 2023 May 31, 2023

(in thousands) Nov 30, 2023 May 31, 2023

Receivables $ 51,603 $ 52,826

1 unchanged sentence

Contract liabilities $ 552 $ 499

During the three months ended August 31, 2023, the Company had immaterial additions to contract liabilities.

This was offset by $ 0.1 million in revenue that was recognized during the three months ended August 31, 2023.

During the six months ended November 30, 2023, the Company had additions to contract liabilities of $ 0.2 million.

This was offset by $ 0.2 million in revenue that was recognized during the six months ended November 30, 2023.

Costs to Obtain or Fulfill a Customer Contract

3 unchanged sentences

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

Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer.

Amounts charged to customers for shipping and handling are recorded in net sales.

Shipping and handling costs, associated with the distribution of finished products to

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customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer.

Amounts charged to customers for shipping and handling are recorded in net sales.

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

Inventories consisted of the following:

(in thousands) Aug 31, 2023 May 31, 2023

(in thousands) Nov 30, 2023 May 31, 2023

Raw materials $ 34,112 $ 28,679

5 unchanged sentences

Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow-moving inventory.

The total inventory reserve at August 31, 2023 and May 31, 2023 was $ 3.1 million and $ 3.1 million, respectively.

The total inventory reserve at November 30, 2023 and May 31, 2023 was $ 3.2 million and $ 3.1 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

10 unchanged sentences

Goodwill for each reporting unit is allocated as follows:

Three months ended Aug 31, 2023

Six months ended Nov 30, 2023

(in thousands) Med Tech Med Device Total

2 unchanged sentences

Balance, August 31, 2023 $ 159,017 $ — $ 159,017

Foreign currency translation adjustments 209 — 209

Balance, November 30, 2023

$ 159,226 $ — $ 159,226

There were no adjustments to goodwill for the three months ended August 31, 2023 other than foreign currency translation adjustments.

Even though the Company determined that there was no goodwill impairment at August 31, 2023, 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 one of the reporting units or a significant portion of either of the reporting units will be sold or disposed of, would require an interim assessment for the reporting units prior to the next required annual assessment as of April 30, 2024.

There were no adjustments to goodwill for the six months ended November 30, 2023 other than foreign currency translation adjustments.

Even though the Company determined that there was no goodwill impairment at November 30, 2023, 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 one of the reporting units or a significant portion of either of the reporting units will be sold or disposed of, would require an interim assessment for the reporting units prior to the next required annual assessment as of April 30, 2024.

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Definite Lived Intangible Assets

1 unchanged sentence

Useful lives range from two to eighteen years .

The Company periodically reviews, and adjusts, if necessary, the estimated useful lives of its intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate

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that the carrying value of the assets or asset groups may not be recoverable.

If an intangible asset or asset group is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.

12 unchanged sentences

$ 281,547 $ ( 170,403 ) $ 111,144

Amortization expense for the three months ended August 31, 2023 and 2022 was $ 3.6 million and $ 4.8 million, respectively.

Amortization expense for the three months ended November 30, 2023 and 2022 was $ 3.6 million and $ 4.8 million, respectively.

Amortization expense for the six months ended November 30, 2023 and 2022 was $ 7.2 million and $ 9.6 million, respectively.

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

2 unchanged sentences

2029 and thereafter 43,256

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ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

(in thousands) Aug 31, 2023 May 31, 2023

(in thousands) Nov 30, 2023 May 31, 2023

Payroll and related expenses $ 11,013 $ 9,232

Outside services 9,276 7,088

Royalties 1,649 2,874

Research and development 2,202 1,525

Royalties 1,886 2,874

Sales and franchise taxes 608 480

Accrued payroll taxes 484 441

Deferred Warranties 498 475

Rebates 488 469

Accrued Freight 450 450

Deferred Warranties 492 475

Accrued severance 119 262

1 unchanged sentence

$ 29,237 $ 26,617

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LONG-TERM DEBT

4 unchanged sentences

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year adjusted for any discrete events, which are recorded in the period that they occur.

The estimated annual effective tax rate prior to discrete items was 32.0 % as of the first quarter of fiscal year 2024, as compared to 5.5 % for the same period in fiscal year 2023.

The estimated annual effective tax rate prior to discrete items was 23.7 % as of the second quarter of fiscal year 2024, as compared to 5.8 % for the same period in fiscal year 2023.

In fiscal year 2024, the Company’s effective tax rate differs from the U.S.

4 unchanged sentences

Based on the review of all available evidence, the Company determined that it has not yet attained a sustained level of profitability and the objectively verifiable negative evidence outweighed the positive evidence.

Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets that have a limited life and are not supportable by the naked credit deferred tax liability sourced income as of August 31, 2023.

The Company will continue to assess the level of the valuation allowance required.

3 unchanged sentences

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.

On November 3, 2022 the Company's shareholders approved an amendment to the 2020 Plan to increase the reserve of shares of common stock available for future grants by 1,950,000 shares.

As of August 31, 2023, there was a maximum of 1.1 million shares of common stock available for future grant under the 2020 Plan.

On November 14, 2023 the Company's shareholders approved an amendment to the 2020 Plan to increase the reserve of shares of common stock available for future grants by 1.5 million shares.

As of November 30, 2023, there was a maximum of 2.6 million shares of common stock available for future grant 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.

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The Company also has an employee stock purchase plan.

On November 3, 2022 the Company's shareholders approved an amendment to the employee stock purchase plan to increase the reserve of shares of common stock available for future grants by 1,000,000 shares.

As of August 31, 2023, there was a maximum of 3.0 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended August 31, 2023 and 2022, share-based compensation expense was $ 4.1 million and $ 3.0 million, respectively.

During the three months ended August 31, 2023 and 2022, the Company granted stock options and restricted stock units under the 2020 Plan to certain employees and members of the Board of Directors.

As of November 30, 2023, there was a maximum of 3.0 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended November 30, 2023 and 2022, share-based compensation expense was $ 1.9 million and $ 3.4 million, respectively.

For the six months ended November 30, 2023 and 2022, share-based compensation expense was $ 6.0 million and $ 6.4 million, respectively.

During the six months ended November 30, 2023 and 2022, the Company granted stock options and restricted stock units under the 2020 Plan to certain employees and members of the Board of Directors.

Stock option awards are valued using the Black-Scholes option-pricing model and then amortized on a straight-line basis over the requisite service period of the award.

1 unchanged sentence

In July 2023, the Board of Directors approved a change in terms of restricted stock units granted to non-employee directors to provide for immediate vesting upon grant of the award.

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During the three months ended August 31, 2023 and 2022, the Company granted performance share units under the 2020 Plan to certain employees.

During the six months ended November 30, 2023 and 2022, the Company granted performance share units under the 2020 Plan to certain employees.

The awards may be earned by achieving performance levels over the requisite service period.

1 unchanged sentence

The fair value of these awards is based on a Monte Carlo simulation model.

As of August 31, 2023, there was $ 25.3 million of unrecognized compensation expense related to share-based payment arrangements.

As of November 30, 2023, there was $ 20.3 million of unrecognized compensation expense related to share-based payment arrangements.

These costs are expected to be recognized over a weighted-average period of approximately three years .

5 unchanged sentences

The following table reconciles basic to diluted weighted-average shares outstanding:

Three Months Ended

(in thousands) Aug 31, 2023 Aug 31, 2022

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

Basic 40,219 39,490 40,030 39,394

11 unchanged sentences

therefore, the CEO does not review any asset information by operating segment and, accordingly, asset information is not reported or evaluated by operating segment.

Total assets were $ 493.9 million as of August 31, 2023.

The table below summarizes net sales and gross margin by Med Tech and Med Device:

Total assets were $ 499.6 million as of November 30, 2023.

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Three Months Ended

(in thousands) Aug 31, 2023 Aug 31, 2022

The table below summarizes net sales and gross margin by Med Tech and Med Device:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

Med Tech Net Sales $ 25,363 $ 24,502 $ 51,224 $ 47,318

9 unchanged sentences

The table below summarizes net sales by geographic area based on external customer location:

Three Months Ended

(in thousands) Aug 31, 2023 Aug 31, 2022

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

United States $ 64,002 $ 71,631 $ 128,401 $ 140,655

1 unchanged sentence

Total $ 79,073 $ 85,429 $ 157,752 $ 166,966

For the three months ended August 31, 2023 and 2022, international sales as a percentage of total net sales were 18.1 % and 15.3 %, respectively.

For the three months ended November 30, 2023 and 2022, international sales as a percentage of total net sales were 19.1 % and 16.2 %, respectively.

For the six months ended November 30, 2023 and 2022, international sales as a percentage of total net sales were 18.6 % and 15.8 %, respectively.

Sales to any one country outside the U.S., as determined by shipment destination, did not comprise a material portion of net sales in any of the last three fiscal years.

14 unchanged sentences

Fair Value Measurements using inputs considered as:

Fair Value at Aug 31, 2023

Fair Value at Nov 30, 2023

(in thousands) Level 1 Level 2 Level 3

8 unchanged sentences

Total Financial Liabilities $ — $ — $ 19,296 $ 19,296

There were no transfers between Level 1, 2 and 3 for the three months ended August 31, 2023 and 2022.

There were no transfers between Level 1, 2 and 3 for the three and six months ended November 30, 2023 and 2022.

The table below presents the changes in fair value components of Level 3 instruments:

Three Months Ended Aug 31, 2023

Three Months Ended Nov 30, 2023

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

Balance, August 31, 2023 $ 9,167

Change in present value of contingent consideration (1)

Currency gain from remeasurement ( 1 )

Contingent consideration payment —

Balance, November 30, 2023

Six Months Ended Nov 30, 2023

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

Balance, May 31, 2023 $ 19,296

2 unchanged sentences

Contingent consideration payment ( 10,000 )

Balance, August 31, 2023

Balance, November 30, 2023

(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.

4 unchanged sentences

The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within change in fair value of contingent consideration in the Consolidated Statements of Operations.

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The Company measures the initial liability and remeasures the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements, which is determined using a discounted cash flow model applied to projected net sales, using probabilities of achieving projected net sales and projected payment dates.

1 unchanged sentence

Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future.

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of August 31, 2023:

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The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of November 30, 2023:

(in thousands) Fair Value Valuation Technique Unobservable Input Range

2 unchanged sentences

Projected fiscal year of payment 2024 - 2025

At August 31, 2023, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 10.0 million.

At November 30, 2023, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 10.0 million.

The milestones, including revenue projections and technical milestones associated with the contingent consideration, must be reached in future periods ranging from fiscal years 2024 to 2029 in order for the associated consideration to be paid.

5 unchanged sentences

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

(in thousands) Balance Sheet Location Aug 31, 2023 May 31, 2023

(in thousands) Balance Sheet Location Nov 30, 2023 May 31, 2023

Operating lease ROU asset Other assets $ 4,104 $ 5,113

7 unchanged sentences

Weighted average discount rate 4.6 %

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

(in thousands) Aug 31, 2023

(in thousands) Nov 30, 2023

Remainder of 2024 $ 992

5 unchanged sentences

Long-term lease obligations $ 2,568

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During the three months ended August 31, 2023 and 2022, the Company recognized $ 0.6 million and $ 0.7 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the three months ended November 30, 2023 and 2022, the Company recognized $ 0.6 million and $ 0.7 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the six months ended November 30, 2023 and 2022, the Company recognized $ 1.3 million and $ 1.4 million of operating lease expense, respectively, which includes immaterial short-term leases.

The expenses on the Consolidated Statement of Operations were classified as follows:

Three Months Ended

(in thousands) Aug 31, 2023

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2023

Nov 30, 2022 Nov 30, 2023

Cost of sales $ 219 $ 221 $ 416 $ 440

2 unchanged sentences

General and administrative 329 365 661 725

$ 627 $ 680 $ 1,254 $ 1,350

The following table presents supplemental cash flow and other information related to leases:

Three Months Ended

(in thousands) Aug 31, 2023 Aug 31, 2022

Six Months Ended

(in thousands) Nov 30, 2023 Nov 30, 2022

Cash paid for amounts included in the measurement of lease liabilities

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On July 22, 2021, in another case against a different defendant, the District of Utah invalidated multiple claims of the ‘302, ‘022, and ‘615 Patents under 35 USC §101, including claims asserted against the Company.

On December 27, 2021, the District of Delaware stayed the case pending the Federal Circuit's resolution of Bard's appeal from the Utah Decision.

On December 27, 2021, the District of Delaware stayed the case pending the Federal Circuit's resolution of Bard's appeal from the

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Utah Decision.

On February 17, 2023, the Federal Circuit Reversed-in-Part, Vacated-in-Part, and Remanded the Utah Decision.

The District of Delaware lifted the stay on February 28, 2023 and held a status conference on March 23, 2023.

A scheduling order has been entered, and a jury trial is currently scheduled for April 29, 2024.

The parties each filed motions for summary judgement, and a jury trial is currently scheduled for April 29, 2024.

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.

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The issue of damages was bifurcated by the Court during trial, and was not determined by the jury.

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2023, following post-trial briefing, the Court issued its decision on the Company's Renewed Judgement as a Matter of Law.

On June 1, 2023, following post-trial briefing, the Court issued its decision on the Company's Renewed Judgement as a Matter of Law.

The Court held the asserted patent claims were invalid as anticipated, indefinite, ineligible and not willfully infringed.

The Court entered Judgement the same day in favor of the Company.

Bard has filed a Notice of Appeal to the Federal Circuit and that appeal remains pending.

Bard has appealed to the Federal Circuit, where the Company has a brief in response to Bard's appeal brief due at the end of January 2024.

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

4 unchanged sentences

Following the Federal Circuit’s decision on appeal, the District of Delaware lifted the stay on February 28, 2023, and held a scheduling conference on March 23, 2023.

A scheduling order has been entered, and a jury trial is currently scheduled for June 9, 2025.

A Markman hearing was held on December 18, 2023.

A jury trial is currently scheduled for June 9, 2025.

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

3 unchanged sentences

Acquisition, restructuring and other items, net, consisted of:

Three Months Ended

(in thousands) Aug 31, 2023 Aug 31, 2022

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2023 Nov 30, 2022 Nov 30, 2023 Nov 30, 2022

$ 5,322 $ 2,422 $ 7,139 $ 4,285

Mergers and acquisitions (2)

Manufacturing relocation (3)

689 602 1,277 738

Transition service agreement (4)

( 177 ) — ( 323 ) —

Israeli Innovation Authority prepayment (5)

102 35 1,055 73

Total $ 6,188 $ 3,059 $ 9,400 $ 8,640

(1) Legal expenses related to litigation that is outside the normal course of business.

(2) Expenses to relocate certain manufacturing lines from Queensbury, NY to Costa Rica.

(2) Mergers and acquisitions expense related to legal and due diligence.

(3) Expenses to relocate certain manufacturing lines out of Queensbury, NY.

(4) Transition services agreement that was entered into as a result of the sale of the dialysis and BioSentry businesses.

(5) I n the first quarter of fiscal year 2023, a $ 3.5 million payment was made to the Israeli Innovation Authority to fully satisfy the obligation related to grant funds that were provided to Eximo for development of the Auryon laser prior to the acquisition in the second quarter of fiscal year 2020.

(5) Included in other is $0.9 million of deferred financing fees that were written-off in conjunction with the sale of the Dialysis and BioSentry businesses and concurrent extinguishment of the debt.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(6) Included in the $ 1.1 million in other for the six months ended November 30, 2023 is $ 0.9 million of deferred financing fees that were written-off in conjunction with the sale of the Dialysis and BioSentry businesses and concurrent extinguishment of the debt.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in each component of accumulated other comprehensive income, net of tax, are as follows:

Three Months Ended Aug 31, 2023

Three Months Ended Nov 30, 2023

(in thousands) Foreign currency translation income

Balance at August 31, 2023 $ ( 5,653 )

Other comprehensive income, net of tax 945

Net other comprehensive loss $ 945

Balance at November 30, 2023

Six Months Ended Nov 30, 2023

(in thousands) Foreign currency translation income

Balance at May 31, 2023 $ ( 4,723 )

1 unchanged sentence

Net other comprehensive loss $ 15

Balance at August 31, 2023

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Balance at November 30, 2023

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

5 unchanged sentences

June 1, 2023 The Company adopted the new standard in the first quarter of fiscal year 2024 and it did not have an impact on the Company's consolidated financial statements.

There have been no material changes to our critical accounting policies since our Annual Report on Form 10-K for fiscal year ended May 31, 2023.

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.

Standard Description Effective Date Effect on the Consolidated Financial Statements

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

This ASU improves the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

June 1, 2024 The Company plans to adopt the new standard in the first quarter of fiscal year 2025 and does not expect there to be a material impact to the consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

This ASU improves the income tax disclosure requirements on an annual basis by (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

June 1, 2025 The Company plans to adopt the new standard in the first quarter of fiscal year 2026 and does not expect there to be a material impact to the consolidated financial statements.

There have been no material changes to our critical accounting policies since our Annual Report on Form 10-K for fiscal year ended May 31, 2023.

Table of Content

SUBSEQUENT EVENTS

On January 5, 2024, the Company announced a plan to shift its manufacturing operations from company-owned facilities in upstate New York to a fully outsourced model.

This plan will reduce structural and overhead costs.

The restructuring activities associated with the plan are expected to be completed in the third quarter of fiscal year 2026.

Table of Content

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-Q

Item 1. Financial Statements