What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-04 · 222 added, 240 removed, 845 unchanged (35% of the section changed)

4 unchanged sentences

(in thousands, except per share data)

June 30,  

September 30,

Current assets:

2 unchanged sentences

$ 94,386  

Accounts receivable, less allowance for credit losses of $ 1,405 and $ 1,442 at June 30, 2022 and December 31, 2021, respectively

Accounts receivable, less allowance for credit losses of $ 1,566 and $ 1,442 at September 30, 2022 and December 31, 2021, respectively

34,168  

42 unchanged sentences

Preferred stock, $ 0.01 par value;

1,250 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

1,250 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.01 par value;

90,000 shares authorized, 14,598 and 14,441 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

90,000 shares authorized, 14,607 and 14,441 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in-capital

2 unchanged sentences

Accumulated other comprehensive loss

( 6,646 )  

Retained earnings

13 unchanged sentences

(unaudited)  

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

$ 40,264  

2 unchanged sentences

$ 111,973  

Cost of product revenue

Cost of revenue

17,485  

16 unchanged sentences

Change in fair value of contingent consideration

( 13,650 )  

Total operating expenses

5 unchanged sentences

11,738  

( 6,935 )  

10,438  

Interest and other income (expense), net

( 50 )  

( 58 )  

(Loss) income before income taxes

11,597  

( 6,993 )  

10,345  

(Benefit from) provision for income taxes

( 442 )  

( 1,217 )  

Net (loss) income

$ 9,927  

$ 6,531  

$ ( 5,776 )  

$ 9,369  

Net (loss) income per share:

3 unchanged sentences

$ 0.68  

$ ( 0.20 )  

$ 0.45  

$ ( 0.40 )  

$ 0.64  

Weighted average common shares outstanding:

9 unchanged sentences

$ 9,927  

$ 6,531  

$ ( 5,776 )  

$ 9,369  

Foreign currency translation adjustment

( 847 )  

( 928 )  

Comprehensive (loss) income

$ 9,150  

$ 6,730  

$ ( 6,704 )  

$ 9,059  

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

3 unchanged sentences

(in thousands)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Additional Paid

36 unchanged sentences

$ 286,153  

Six Months Ended June 30, 2021

Vesting of restricted stock units

Issuance of ESPP shares

Stock-based compensation expense

Retirement of common stock for minimum tax withholdings

( 66 )  

( 4,175 )  

Other comprehensive income

( 851 )  

Balance, September 30, 2022

14,607  

$ 76,661  

$ 215,627  

$ ( 7,497 )  

$ 284,937  

Nine Months Ended September 30, 2021

Additional Paid

6 unchanged sentences

$ 272,400  

Issuance of common stock for equity awards

Vesting of restricted stock units

Stock-based compensation expense

Retirement of common stock for minimum tax withholdings

Other comprehensive income

Balance, March 31, 2021

14,366  

$ 57,281  

$ 224,282  

$ 276,656  

Issuance of common stock for equity awards

Vesting of restricted stock units

Forfeiture of restricted stock awards

Stock-based compensation expense

1 unchanged sentence

( 19 )  

Repurchase of common stock

Other comprehensive income

( 509 )  

Balance, March 31, 2021

Balance, June 30, 2021

14,418  

9 unchanged sentences

Other comprehensive income

Balance, June 30, 2021

( 467 )  

Balance, September 30, 2021

14,436  

2 unchanged sentences

$ ( 5,319 )  

$ 290,060  

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

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended

Cash flows from operating activities:

Net (loss) income

$ ( 5,776 )  

$ 9,369  

Adjustments to reconcile net income to net cash provided by operating activities:

6 unchanged sentences

Deferred income taxes

( 2,020 )  

Provision (recovery) for doubtful accounts

2 unchanged sentences

Accounts receivable

( 3,103 )  

( 1,541 )  

Prepaid expenses, other current and long-term assets

( 948 )  

Accounts payable

Operating lease liabilities

( 764 )  

Accrued expenses, other current and long-term liabilities

( 1,169 )  

Contingent consideration

Net cash provided by operating activities

3 unchanged sentences

Purchases of property and equipment

( 3,266 )  

Net cash used in investing activities

( 3,266 )  

Cash flows from financing activities:

Payments made on finance leases

( 53 )  

Cash paid for tax withheld on vested restricted stock awards

( 870 )  

Proceeds from exercises of equity awards

Net cash (used in) provided by financing activities

( 908 )  

Contingent consideration payout

Net cash used in financing activities

Exchange rate impact on cash

( 39 )  

(Decrease)/Increase in cash and cash equivalents

( 2,994 )  

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

94,386  

95,817  

Cash and cash equivalents at end of period

$ 91,392  

$ 97,181  

Supplemental disclosure of cash flow information:

1 unchanged sentence

Right-of-use assets obtained in exchange for operating lease liabilities

$ 11,589  

Purchases of property and equipment included in accounts payable and accrued expenses

12 unchanged sentences

Food and Drug Administration and foreign regulations and approval requirements, as well as the ability to grow the Company’s business through appropriate commercial strategies.

There continue to be uncertainties regarding the pandemic of the novel coronavirus (“COVID- 19”

There continue to be uncertainties regarding the pandemic of the ongoing coronavirus (“COVID- 19”

), and the Company is closely monitoring the impact of COVID- 19 on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, business partners and a broader impact on elective surgeries.

12 unchanged sentences

10 -K for the year ended December 31, 2021.

The results of operations for the three -month and six -month periods ended June 30, 2022, are not indicative of the results to be expected for the year ending December 

The results of operations for the three -month and nine -month periods ended September 30, 2022, are not indicative of the results to be expected for the year ending December 

Segment Information

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is its President and Chief Executive Officer as of June 30, 2022.

The Company’s chief operating decision maker is its President and Chief Executive Officer as of September 30, 2022.

Based on the criteria established by Accounting Standards Codification 280,  

16 unchanged sentences

The liability for contingent consideration was included in current liabilities on the condensed consolidated balance sheets and will be remeasured at each reporting period until the contingency is resolved.

As of June 30, 2022, the net sales related contingent consideration amounted to $ 4.3 million which was included in current liabilities and the Company does not expect any further milestones to be achieved.

During the three months ended September 30, 2022, the Company paid the contingent consideration related to net sales in the amount of $ 4.3 million which was included in current liabilities as of December 31, 2021.

The Company does not expect any further milestones to be achieved.

Acquisition-related costs were not included as a component of consideration transferred but were expensed in the periods in which the costs are incurred.

23 unchanged sentences

$ 75,136  

Subsequent to the acquisition date, during the three -month period ended September 30, 2020, the Company completed the identification and confirmation of Parcus Medical inventory in the possession of its direct and distributor sales force, which resulted in an increase to the fair value of inventory of $ 1.9 million as of the January 24, 2020 acquisition date.

As a result, the Company recorded this addition to inventory with a corresponding reduction to goodwill as a measurement period adjustment which was reflected to the goodwill amount included in the table above.

The acquired intangible assets based on estimates of fair value as of January 24, 2020 were as follows:

22 unchanged sentences

The Company paid $ 5.0 million in October 2020 and $ 10.0 million in July 2021 based upon the achievement of two distinct regulatory milestones.

As of June 30, 2022, there were no milestones remaining.

As of September 30, 2022, there were no milestones remaining.

Acquisition-related costs were not included as a component of consideration transferred but were expensed in the periods in which the costs are incurred.

38 unchanged sentences

Contingent consideration related to the previously described business combinations are classified within Level 3 of the fair value hierarchy as the determination of fair value uses considerable judgement and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

There were no transfers between fair value levels during the six -month periods ended June 30, 2022 or 2021.

See Note 3, Business Combinations for additional discussion of contingent consideration as of June 30, 2022.

There were no transfers between fair value levels during the nine -month periods ended September 30, 2022 or 2021.

See Note 3, Business Combinations for additional discussion of contingent consideration as of September 30, 2022.

Active Markets

Significant Other

for Identical Assets

Observable Inputs

Unobservable Inputs

June 30, 2022

for Identical

September 30, 2022

Amortized Cost

6 unchanged sentences

Contingent Consideration - Short Term

$ 4,315  

Active Markets

Significant Other

for Identical Assets

Observable Inputs

Unobservable Inputs

for Identical

December 31, 2021

11 unchanged sentences

The following table provides a rollforward of the contingent consideration related to business acquisitions discussed in Note 3, Business Combinations

Six Months Ended June 30,

Nine Months Ended

September 30, 2022

September 30, 2021

Balance, beginning

1 unchanged sentence

$ 35,410  

( 4,315 )  

Change in fair value

1 unchanged sentence

$ 3,490  

$ 16,940  

Inventories consist of the following:

September 30,

Raw materials

16 unchanged sentences

$ 55,054  

Inventories are stated net of inventory reserves of $ 7.2 million and $ 9.1 million as of June 30, 2022 and December 31, 2021, respectively.

Inventories are stated net of inventory reserves of $ 10.0 million and $ 9.1 million as of September 30, 2022 and December 31, 2021, respectively.

Intangible Assets

Six Months Ended June 30, 2022

Nine Months Ended

September 30, 2022

Currency Translation

4 unchanged sentences

$ 70,081  

$ 67,183  

$ 70,081  

( 1,006 )  

Customer relationships

( 2,177 )  

Distributor relationships

2 unchanged sentences

$ 82,382  

( 656 )  

( 2,521 )  

$ 112,136  

$ ( 3,218 )  

$ ( 30,428 )  

$ 78,490  

$ 82,382  

The aggregate amortization expense related to intangible assets was $ 1.9 million and $ 2.0 million for the three -month periods ended June 30, 2022 and 2021, respectively, and $ 3.9 million for each of the six -month periods ended June 30, 2022 and 2021.

The aggregate amortization expense related to intangible assets was $ 1.9 million and $ 2.0 million for the three -month periods ended September 30, 2022 and 2021, respectively, and $ 5.8 million and $ 5.9 million for each of the nine -month periods ended September 30, 2022 and 2021.

The Company assesses goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment.

Changes in the carrying value of goodwill for the six months ended June 30, 2022 were as follows:

Six Month Ended June 30, 2022

Changes in the carrying value of goodwill for the nine months ended September 30, 2022 were as follows:

Nine Months Ended September 30, 2022

Balance, beginning

4 unchanged sentences

The Company leases its buildings and manufacturing facilities under operating leases.

As of June 30, 2022, the Company had real estate leases in Bedford, Massachusetts, Franklin, Massachusetts, Sarasota, Florida, Warsaw, Indiana and Padova, Italy.

As of September 30, 2022, the Company had real estate leases in Bedford, Massachusetts, Franklin, Massachusetts, Sarasota, Florida, Warsaw, Indiana and Padova, Italy.

In June 2022, the Company finalized renewal options to extend the current term of its leases for its building and manufacturing facility in Bedford as well as its two facilities in Sarasota.

2 unchanged sentences

The current term of the Franklin lease extends to 2023 and the current term of the Padova lease extends to 2032, with a right to terminate at the Company’s option without penalty.

The following table summarizes the Company’s significant commitments under lease agreements as of June 30, 2022:

The following table summarizes the Company’s significant commitments under lease agreements as of September 30, 2022:

Operating Leases

Financing Leases

2022 (Remainder of Year)

27,873  

$ 1,370  

27,873  

Present value adjustment

( 9,636 )  

Present value of lease payments

31,105  

31,713  

Less current portion included in accrued expenses and other current liabilities

( 1,742 )  

( 132 )  

Total lease liabilities

$ 29,183  

$ 29,839  

During the three and six months ended June 30, 2022, the Company incurred lease expense of $ 0.6 million and $ 1.3 million, respectively.

During the three and six months ended June 30, 2021, the Company incurred lease expense of $ 0.7 million and $ 1.3 million, respectively.

As of June 30, 2022, the weighted average remaining operating lease term was 15.2 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 3.6 %.

During the three and nine months ended September 30, 2022, the Company incurred lease expense of $ 0.8 million and $ 2.1 million, respectively.

During the three and nine months ended September 30, 2021, the Company incurred lease expense of $ 0.6 million and $ 1.9 million, respectively.

As of September 30, 2022, the weighted average remaining operating lease term was 15.0 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 3.6 %.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

June 30, 

December 31, 

September 30, 2022

December 31, 2021

Compensation and related expenses

14 unchanged sentences

Based on the Company’s historical activity, in combination with its liability insurance coverage, the Company believes the estimated fair value of these indemnification agreements is immaterial.

The Company had no accrued warranties as of June 30, 2022 or December 31, 2021 and has no history of claims paid.

The Company had no accrued warranties as of September 30, 2022 or December 31, 2021 and has no history of claims paid.

The Company is also involved from time-to-time in various legal proceedings arising in the normal course of business.

7 unchanged sentences

Revenue by product family was as follows: 

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

OA Pain Management

13 unchanged sentences

$ 111,973  

Revenue from the Company’s sole significant customer, DePuy Synthes Mitek Sports Medicine (“Mitek”), part of the Johnson & Johnson Medical Companies, as a percentage of the Company’s total revenue was 45 % and 46 % for the three months ended June 30, 2022 and 2021, respectively, and 42 % and 44 % for the six months ended June 30, 2022 and 2021, respectively

Revenue from the Company’s sole significant customer, DePuy Synthes Mitek Sports Medicine (“Mitek”), part of the Johnson & Johnson Medical Companies, as a percentage of the Company’s total revenue was 45 % and 51 % for the three months ended September 30, 2022 and 2021, respectively, and 43 % and 46 % for the nine months ended September 30, 2022 and 2021, respectively

The Company receives payments from our customers based on billing schedules established in each contract.

1 unchanged sentence

Amounts are recorded as accounts receivable when our right to consideration is unconditional.

Deferred revenue was $ 0.3 million and $ 1.0 million as of June 30, 2022 and December 31, 2021, respectively.

Deferred revenue was $ 0.1 million and $ 1.0 million as of September 30, 2022 and December 31, 2021, respectively.

Total revenue by geographic location was as follows:

Three Months Ended June 30,

Three Months Ended September 30,

Percentage of

6 unchanged sentences

$ 39,536  

Six Months Ended June 30,

Nine Months Ended September 30,

Percentage of

8 unchanged sentences

11,181  

$ 116,614  

$ 111,973  

Equity Incentive Plan

6 unchanged sentences

Subject to adjustment for specified types of changes in the Company’s capitalization, no more than 4.85 million shares of common stock may be issued under the 2017 Plan.

There were 1.2 million shares available for future grant at June 30, 2022 under the 2017 Plan.

There were 1.2 million shares available for future grant at September 30, 2022 under the 2017 Plan.

The Anika Therapeutics, Inc.

3 unchanged sentences

The Inducement Plan provides for the grant of awards under terms substantially similar to the 2017 Plan (as amended).

There were 4,883 shares available for future grant at June 30, 2022 under the Inducement Plan.

There were 4,883 shares available for future grant at September 30, 2022 under the Inducement Plan.

The Company may satisfy the awards upon exercise, or upon fulfillment of the vesting requirements for other equity-based awards, with either newly issued shares or shares reacquired by the Company.

2 unchanged sentences

The Company presents the expenses related to stock-based compensation awards in the same expense line items as cash compensation paid to each of its employees as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Cost of product revenue

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

Research & development

22 unchanged sentences

$ 9.10  

Forfeited and canceled

$ 44.08  

$ 44.25  

Outstanding as of June 30, 2022

Outstanding as of September 30, 2022

1,505,785  

$ 35.21  

Vested, June 30, 2022

Vested, September 30, 2022

499,617  

$ 40.00  

Vested or expected to vest, June 30, 2022

Vested or expected to vest, September 30, 2022

1,505,785  

$ 35.21  

The aggregate intrinsic value of options exercised for the six -month period ended June 30, 2022 was immaterial.

The Company granted 464,775 stock options during the six -month ended June 30, 2022, of which 382,201 shares were premium-priced options.

As of June 30, 2022, there was $ 10.4 million of unrecognized compensation cost related to unvested stock options.

The aggregate intrinsic value of options exercised for the nine -month period ended September 30, 2022 was immaterial.

The Company granted 486,901 stock options during the nine -month ended September 30, 2022, of which 398,314 shares were premium-priced options.

As of September 30, 2022, there was $ 8.7 million of unrecognized compensation cost related to unvested stock options.

This expense is expected to be recognized over a weighted average period of 1.8 years.

3 unchanged sentences

The actual number of TSR options that may be earned ranges from 0 % to 150 % of the target number, depending on the total shareholder return of the Company relative to the peer group over the vesting period of 2.7 years.

There were 104,638 TSRs as of June 30, 2022.

The assumptions used in the Black-Scholes pricing model for options granted during the six months ended June 30, 2022 and 2021, along with the weighted-average grant-date fair values, were as follows:

Six Months Ended June 30,

There were 104,638 TSRs as of September 30, 2022.

The assumptions used in the Black-Scholes pricing model for options granted during the nine months ended September 30, 2022 and 2021, along with the weighted-average grant-date fair values, were as follows:

Nine Months Ended September 30,

Risk free interest rate

1.3% - 3.0%  

0.3% - 0.6%  

Expected volatility

53.8 % - 55.2 %  

54.8 % - 55.9 %  

Expected life (years)

5 unchanged sentences

The Company determines the fair value of RSUs based on the closing price of its common stock on the date of grant.

RSU activity for the six -month period ended June 30, 2022 was as follows:

RSU activity for the nine -month period ended September 30, 2022 was as follows:

Number of Shares

6 unchanged sentences

$ 36.48  

$ 36.26  

Forfeited and cancelled

$ 32.45  

$ 33.75  

Outstanding as of June 30, 2022

Outstanding as of September 30, 2022

692,922  

$ 28.48  

The weighted-average grant-date fair value per share of RSUs granted was $ 34.99 for the six -month ended June 30, 2021.

The total fair value of RSUs vested was $ 5.4 million and $ 3.5 million for the six -month periods ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, there was $ 17.6 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 2.2 years.

The weighted-average grant-date fair value per share of RSUs granted was $ 25.14 for the nine -month period ended September 30, 2022.

The total fair value of RSUs vested was $ 5.8 million and $ 3.9 million for the nine -month periods ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, there was $ 14.8 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 2.0 years.

Performance Stock Units

PSU activity for the six -month ended June 30, 2022 was as follows:

PSU activity for the nine -month ended September 30, 2022 was as follows:

Number of Shares

6 unchanged sentences

$ 32.53  

Forfeited and cancelled

$ 41.86  

Outstanding as of June 30, 2022

Outstanding as of September 30, 2022

117,897  

$ 34.98  

The total fair value of PSUs vested was $ 0.6 million and $ 0 for the six -month period ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, none of the milestones related to the outstanding PSUs were expected to be achieved.

The total fair value of PSUs vested was $ 0.6 million and $ 0 for the nine -month period ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, none of the milestones related to the outstanding PSUs were expected to be achieved.

The Company recorded an income tax benefit of $ 1.2  million and $ 2.4  million for the 

three - and 

six -month periods ended 

June 30, 2022, 

resulting in effective tax rates of 

nine -month periods ended  

September 30, 2022 ,  resulting in effective tax rates of 

22.1 % and 

2 unchanged sentences

three - and 

six -month periods ended 

June 30, 2021, 

nine -month periods ended  

September 30, 2021, 

based on effective tax rates of 

3 unchanged sentences

three -month period ended 

June 30, 2022 ,  as compared to the same period in 

2021 ,  was primarily due to $ 0.7 million recorded as tax expense for the change in the fair value of contingent consideration, recognized as a discrete charge in the second quarter of 2021 and a discrete charge of $ 0.6 million during second quarter of 2022 related to non-deductible stock compensation.

September 30, 2022, 

as compared to the same period in 

2021,  was primarily due to non-deductible stock-option activity during the three -month period ended 

September 30, 2021.

The increase in the effective tax rate for the 

six -month period ended 

June 30, 2022 ,  as compared to the same period in 

2021 ,  was primarily due to the year-to-date net tax benefit in 2021 on the change in the fair value of contingent consideration, in the amount of $ 1.1 million resulting in a net decrease in the effective tax rate for the six -month period ended June 30, 2021.

nine -month period ended  

September 30, 2022, 

as compared to the same period in 

2021,  was primarily due to the year-to-date net tax benefit in 

2021  on the change in the fair value of contingent consideration, in the amount of $ 1.1  million, and a year-to-date discrete charge of $ 0.7  million in 

2022  related to non-deductible stock compensation.

The Company files income tax returns in the United States on a federal basis, in certain U.S.

1 unchanged sentence

The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate, which varies by jurisdiction.

In connection with the preparation of the financial statements, the Company assessed whether it is more likely than not that it will be able to utilize, in future periods, the Company’s deferred income tax assets to offset future taxable income and tax liabilities.

The Company concluded that it is more likely than not that its deferred tax assets will be realized, after evaluation and consideration of both the positive and negative evidence.

On December 31, 2021, the Company released a valuation allowance that had been previously recorded related to its net deferred tax assets in Italy in the amount of $ 0.9 million.

The Company did not record a valuation allowance on its deferred tax balances as of June 30, 2022.

In connection with the preparation of the financial statements, the Company assessed whether it is more likely than 

not  that it will be able to utilize, in future periods, the Company’s deferred income tax assets to offset future taxable income and tax liabilities.

The Company concluded that it is more likely than 

not  that its deferred tax assets will be realized, after evaluation and consideration of both the positive and negative evidence.

December 31, 2021, 

the Company released a valuation allowance that had been previously recorded related to its net deferred tax assets in Italy in the amount of $ 0.9  million.

The Company did 

not  record a valuation allowance on its deferred tax balances as of 

September 30, 2022.

Earnings Per Share ( “

3 unchanged sentences

The following table provides share information used in the calculation of the Company's basic and diluted earnings per share (in thousands):

Three Month Period Ended June 30,

Six Months Ended June 30,

Three Month Period Ended

September 30,

Nine Months Ended

September 30,

Shares used in the calculation of basic earnings per share

10 unchanged sentences

14,588  

The Company had a net loss during the three and six -months ended June 30, 2022, and therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS.

Stock options of 1.1 million shares were outstanding for the six -month period ended June 30, 2021, respectively, and were not included in the computation of diluted EPS because the awards’

The Company had a net loss during the three and nine -months ended September 30, 2022, and therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS.

Stock options of 1.1 million shares were outstanding for the nine -month period ended September 30, 2021, respectively, and were not included in the computation of diluted EPS because the awards’

impact on EPS would have been anti-dilutive.

34 unchanged sentences

Energized and experienced team focused on strong values, talent, and culture.

COVID-19 Pandemic

COVID-19 Pandemic and Resulting Supply Chain and Staffing Challenges

In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic.

9 unchanged sentences

Our commercial day-to-day operations have been impacted due to the worldwide cancellations and/or delays of elective procedures and restrictions on travel for both our employees and our clinician customers, and timelines associated with certain clinical studies and research and development programs have been delayed.

While the impact has been limited to these items to date, we caution that there continues to be a possibility for potential future implementation of certain additional restrictions or other challenges associated with infections, staffing shortages, volatility in elective surgical procedures or supply chain disruptions due to COVID-19 and its current or new variants in certain jurisdictions. In particular, supply constraints that have continued into 2022 that we have partially been able to mitigate to date could be expected to impact our ability to produce and supply our products.

While the impact has been limited to these items to date, we caution that there continues to be a possibility for potential future implementation of certain additional restrictions or other challenges associated with infections, staffing shortages, volatility in elective surgical procedures or supply chain disruptions due to COVID-19 and its current or new variants in certain jurisdictions. In particular, supply constraints that have continued into 2022 that we have partially been able to mitigate to date have impacted and could be expected to impact our ability to produce and supply our products.

The impact of these challenges is currently unknown but could be significant.

3 unchanged sentences

Our OA Pain Management products are generally administered to patients in an office setting.

In the United States, Monovisc and Orthovisc are marketed exclusively by DePuy Synthes Mitek Sports Medicine, part of the Johnson & Johnson Medical Companies.

In the United States, Monovisc and Orthovisc are marketed exclusively by DePuy Synthes Mitek Sports Medicine, or “Mitek”, part of the Johnson & Johnson Medical Companies.

In December 2011, we entered into a fifteen-year licensing agreement with Mitek to exclusively market Monovisc in the United States through December 2026.

In December 2003, we entered into a ten-year licensing agreement with Mitek to exclusively market Orthovisc in the United States.

Mitek extended this agreement for additional five-year terms in 2007, 2012, 2017 and most recently in August 2022.

The current agreement expires on December 20, 2028 unless extended at the option of Mitek.

The Monovisc and Orthovisc products have been the market leaders, based on combined overall revenue in the viscosupplement market, since 2018.

3 unchanged sentences

Cingal is CE Mark approved and for several years has been sold outside the United States directly in over 35 countries through our network of distributors.

In the United States, Cingal is a pipeline product currently under clinical trial studies and is not available for commercial sale.

In the United States, Cingal is a pipeline product currently in clinical development and is not available for commercial sale.

Hyvisc, our high molecular weight injectable HA veterinary product approved for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA.

19 unchanged sentences

Results of Operations

Three and Six Months Ended June 30, 2022 Compared to Three and Six Months Ended June 30, 2021

Three Months Ended June 30,

Six Months Ended June 30,

Three and Nine Months Ended September 30, 2022 Compared to Three and Nine Months Ended September 30, 2021

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except percentages)

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Total operating expenses

Loss (income) from operations

(Loss) income  from operations

Interest and other income (expense), net

2 unchanged sentences

Net (loss) income

Revenue for the three-month period ended June 30, 2022 was $39.7 million, an increase of $1.6 million as compared to $38.1 million for the three-month period ended June 30, 2021.

Revenue for the six-month period ended June 30, 2022 was $76.4 million, an increase of $4.0 million as compared to $72.4 million for the six-month period ended June 30, 2021.

For the three- and six-month periods ended June 30, 2021, the increases in revenue were mainly due an increase in OA Pain Management revenues, primarily related to the continued recovery from the impact of the COVID-19 pandemic on global sales volumes as well as favorable timing of ordering patterns from international distributors and strategic partners.

Revenue for the three-month period ended September 30, 2022 was $40.3 million, an increase of $0.8 million as compared to $39.5 million for the three-month period ended September 30, 2021.

Revenue for the nine-month period ended September 30, 2022 was $116.6 million, an increase of $4.6 million as compared to $112.0 million for the nine-month period ended September 30, 2021.

The following tables present product revenue by product family:

Three Months Ended June 30,

Three Months Ended September 30,

OA Pain Management

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Non-Orthopedic

Six Months Ended June 30,

Nine Months Ended September 30,

OA Pain Management

1 unchanged sentence

Non-Orthopedic

Revenue from our OA Pain Management product family increased 6% and 11%, respectively, for the three-month and six-month periods ended June 30, 2022, as compared to the same periods in 2021, due primarily to continued recovery from the impact of the COVID-19 pandemic on global sales volumes as well as favorable timing of ordering patterns from international distributors and strategic partners which can vary significantly on a quarterly basis.

Revenue from our Joint Preservation and Restoration product family increased 2% and 1%, respectively, for the three-month and six-month periods ended June 30, 2022, as compared to the same periods in 2021, due primarily to recovery in elective procedures from the COVID-19 pandemic, which however remained limited due in part to constraints on staffing.

Revenue from our Non-Orthopedic product family decreased 6% and 22%, respectively, for the three-month and six-month periods ended June 30, 2022, respectively, as compared to the same periods in 2021, primarily due to timing of distributor sales as well as due to higher revenues in 2021 from certain legacy products related to end-of-life purchases.

For the three-month period ended September 30, 2022, the increase in revenue was mainly due to growth in Joint Preservation and Restoration revenues as hospitals and ASCs recover from the COVID 19 pandemic and higher Non-Orthopedic revenues from the sales of certain legacy products related to end-of-life purchases.

This revenue increase was offset by lower US OA Pain Management revenue primarily related to ordering patterns from Mitek in the prior year.

For the nine-month period ended September 30, 2022, the increase in revenue was mainly due an increase in OA Pain Management revenues from international viscosupplement distributors and Hyvisc equine product sales due to recovery from the COVID 19 pandemic as well as favorable ordering patterns, offset by lower US OA Pain Management sales to Mitek as a result of ordering patterns in the prior year.

The increase in total revenue was also due to an increase in Joint Preservation and Restoration revenues as hospitals and ASCs performing more procedures as they recover from COVID 19 pandemic, which however remained limited due in part to constraints on staffing, offset by lower Non-Orthopedic revenue in part related to the timing of orders on legacy products.

Gross Profit and Margin

Gross profit for the three -and six -month periods ended June 30, 2022 increased $4.1 million and $4.9 million, to $24.9 million and $46.7 million, respectively.

Gross profit for the three- and six-month periods ended June 30, 2021, was $20.8 million and $41.8 million, respectively.

The increases in gross profit for the three-month and six-month periods ended June 30, 2022, as compared to the same period in 2021 were primarily due to increased revenue as well as the impact of inventory step-up charges associated with the acquisitions of Arthrosurface and Parcus Medical in 2021 and product rationalization charges taken in the second quarter of 2021.

Gross margin for the three- and six-month periods ended June 30, 2022 was 63% and 61%, respectively.

Gross margin for the three- and six-month periods ended June 30, 2021 was 55% and 58%, respectively.

The increases to gross margin for the three-month and six-month periods ended June 30, 2022 was due primarily to the unfavorable impact of inventory step-up charges associated with the Arthrosurface and Parcus Medical in 2021 and product rationalization charges taken in the second quarter of 2021.

Gross profit for the three -and nine -month periods ended September 30, 2022 decreased by $0.2 million and increased by $4.6 million, to $22.8 million and $69.4 million, respectively.

The decrease in gross profit for the three-month period ended September 30 2022 was related to a reserve of $2.6 million primarily associated with inventory for certain legacy Non-Orthopedic products that the Company no longer expects to sell.

The increase in gross profit for the nine-month period ended September 30, 2022, as compared to the same period in 2021 was primarily due to increased revenue as well as the impact of inventory step-up charges associated with the acquisitions of Arthrosurface and Parcus Medical in 2021.

Gross margin for the three- and nine-month periods ended September 30, 2022 was 57% and 60%, respectively.

Gross margin for the three- and nine-month periods ended September 30, 2021 was 58% for each period.

The decrease in gross margin for the three-month period ended September 30, 2022 was due primarily to product rationalization charges in the third quarter of 2022.

The increase in gross margin for the nine-month period ended September 30, 2022 was due primarily to the unfavorable impact of inventory step-up charges associated with the Arthrosurface and Parcus Medical in 2021.

Research and Development

Research and development expenses for the three- and six-month periods ended June 30, 2022 were $7.0 million and $13.1 million, a decrease of $0.3 million and $0.6 million respectively as compared to the same period in 2021.

The decreases for the three-month and six-month periods ended June 30, 2022 was primarily due to lower clinical trial spending, primarily on Cingal pilot study which is expected to be complete in 2022.

Research and development expenses for the three- and nine-month periods ended September 30, 2022 were $7.3 million and $20.4 million, a decrease of $0.4 million and $0.9 million, respectively as compared to the same period in 2021.

The decreases for the three-month and nine-month periods ended September 30, 2022 were primarily due to lower clinical trial spending, associated with the conclusion of our Cingal Phase III trial in 2022.

Selling, General and Administrative

Selling, general and administrative, or SG&A expenses for the three- and six-month periods ended June 30, 2022 were $21.3 million and $40.5 million representing an increase of $3.3 million and $4.3 million, respectively as compared to the same period in 2021.

This increase in SG&A expense for the three-month and six-month periods ended June 30, 2022, was primarily due to expansion of our commercial capabilities in the United States and expanded marketing activities and other operational capabilities to support the growing business needs.

Selling, general and administrative, or SG&A expenses for the three- and nine-month periods ended September 30, 2022 were $21.3 million and $61.7 million representing an increase of $3.8 million and $8.0 million, respectively as compared to the same period in 2021.

This increase in SG&A expense for the three-month and nine-month periods ended September 30, 2022, was primarily due to expansion of our commercial capabilities in the United States and expanded marketing activities and other operational capabilities to support the growing business needs.

Certain marketing and medical education activities also were more limited in 2021 due to the COVID-19 pandemic.

The increase in SG&A expense was also due to higher stock-based compensation expense in 2022 driven by additional headcount associated with the Company’s strategic transformation that accelerated in 2020 and 2021.

The increase in SG&A expense was also due to higher stock-based compensation expense in 2022 driven by a change in headcount associated with the Company’s strategic transformation that accelerated in 2020 and 2021.

Contingent Consideration Fair Value Change

The fair value of contingent consideration as of June 30, 2022 did not change compared to December 31, 2021.

During the three-month and six-month periods ended June 30, 2021, the change in the fair value of contingent consideration liabilities was $13.7 million and $18.5 million, respectively, resulting in a non-cash benefit to net income.

The benefit from income taxes was $0.4 million and $1.2 million for the three- and six-month periods ended June 30, 2022, resulting in effective tax rates of 13.5% and 17.4%, respectively.

The provision for income taxes was $2.6 million and $1.0 million for the three- and six-month periods ended June 30, 2021, based on effective tax rates of 28.5% and 9.4%, respectively.

The decrease in the effective tax rate for the three-month period ended June 30, 2022 ,  as compared to the same period in 2021 ,  was primarily due to $0.7 million recorded as tax expense for the change in the fair value of contingent consideration, recognized as a discrete charge in the second quarter of 2021 and a discrete charge of $0.6 million during second quarter of 2022 related to non-deductible stock compensation.

The increase in the effective tax rate for the six-month period ended June 30, 2022 ,  as compared to the same period in 2021 ,  was primarily due to the year to date net tax benefits in 2021 on the change in the fair value of contingent consideration, in the amount of $1.1 million resulting in a net decrease in the effective tax rate for the six-month period ended June 30, 2021.

The fair value of contingent consideration as of September 30, 2022 did not change compared to December 31, 2021.

During the three-month and six-month periods ended September 30, 2021, the change in the fair value of contingent consideration liabilities was $3.5 million and $21.9 million, respectively, resulting in a non-cash benefit to net income in those periods.

The benefit from income taxes was $1.2 million and $2.4 million for the three- and six-month periods ended September 30, 2022, resulting in effective tax rates of 22.1% and 19.5%, respectively.

The provision for income taxes was $0.7 million and $1.7 million for the three- and nine-month periods ended September 30, 2021, based on effective tax rates of 55.4% and 14.4%, respectively.

The decrease in the effective tax rate for the three-month period ended September 30, 2022, as compared to the same period in 2021, was primarily due to non-deductible stock-option activity during the three-month period ended September 30, 2021.

The increase in the effective tax rate for the nine-month period ended  September 30, 2022, as compared to the same period in 2021, was primarily due to the net tax benefit in 2021 on the change in the fair value of contingent consideration and non-deductible stock compensation in 2022.

Net (Loss) Income

For the three and six-month period ended June, 2022, net loss was $2.8 million and $5.8 million, or $0.20 per diluted share and $0.44 per diluted share, respectively, compared to net income of $6.5 million and $9.4 million, or $0.45 per diluted share and $0.64 per diluted share, for the same periods in prior year.

The decrease in net income and diluted earnings per share was primarily due to gains recorded in the three-month and six-month periods ended June 30, 2021 related to the change in fair value of contingent consideration, as well as increased spending to expand our commercial capability in the United States, partially offset by increased revenue.

For the three and nine-month periods ended September, 2022, net loss was $4.2 million and $10.0 million, or $0.29 per diluted share and $0.68 per diluted share, respectively, compared to net income of $0.6 million and $9.9 million, or $0.04 per diluted share and $0.68 per diluted share, for the same periods in prior year.

The decrease in net income and diluted earnings per share was primarily due to the change in fair value of contingent consideration of $21.9 million for the nine-months ended September 30, 2021, as well as increased spending to expand our commercial capability in the United States, partially offset by increased revenue.

Non-GAAP Financial Measures

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We define adjusted gross margin as adjusted gross profit divided by total revenue.

The following is a reconciliation of adjusted gross profit to gross profit for the three- and six-month periods ended June 30, 2022 and 2021, respectively:

The following is a reconciliation of adjusted gross profit to gross profit for the three- and nine-month periods ended September 30, 2022 and 2021, respectively:

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

Product rationalization related charges

3 unchanged sentences

Adjusted Gross Margin

Adjusted gross profit for the three- and six-month periods ended June 30, 2022 decreased $0.2 million and $2.0 million to $26.4 million and $49.8 million, respectively, representing 67% and 65% of revenue.

Adjusted gross profit for the three- and six-month periods ended June 30, 2021 was $26.6 million and $51.8 million, respectively, or 70% and 71% of revenue for the periods, respectively.

The decrease in adjusted gross profit for the three- and six-month periods ended June 30, 2022, was primarily due to unfavorable revenue mix and production inefficiencies caused in part by supply chain and staffing challenges.

Adjusted gross profit for the three- and nine-month periods ended September 30, 2022 increased by $1.0 million and decreased $1.0 million to $27.0 million and $76.8 million, respectively, representing adjusted gross margin of 67% and 66%.

Adjusted gross profit for the three- and nine-month periods ended September 30, 2021 was $26.0 million and $77.8 million, respectively, representing gross margin of 66% and 69%, respectively.

The decrease in adjusted gross margin for the nine-month period ended September 30, 2022, was primarily due to higher manufacturing costs and production inefficiencies caused in part by supply chain and staffing challenges.

Adjusted EBITDA  

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adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.

The following is a reconciliation of net income (loss) to adjusted EBITDA for the three- and six-month periods ended June 30, 2022 and 2021, respectively:

The following is a reconciliation of net income (loss) to adjusted EBITDA for the three- and nine-month periods ended September 30, 2022 and 2021, respectively:

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

Net (loss) income

Interest and other expense, net

Benefit from income taxes

(Benefit from) provision for income taxes

Depreciation and amortization

5 unchanged sentences

Adjusted EBITDA

Adjusted EBITDA for the three-month period ended June 30, 2022, decreased $1.7 million as compared with the same period in 2021.

Adjusted EBITDA for the three-month period ended September 30, 2022, decreased by $1.6 million as compared with the same period in 2021.

The decrease in adjusted EBITDA for the period was primarily due to increased commercial spending to support future growth as certain marketing and medical education activities were more limited in 2021.

Adjusted EBITDA for the six-month period ended June 30, 2022, decreased $3.9 million as compared with the same period in 2021.

The decrease in adjusted EBITDA for the period was primarily due to lower adjusted gross profit, from unfavorable revenue mix and production inefficiencies caused in part by supply chain and staffing challenges, as well as an increase in operating expenses primarily attributable to expansion of our commercial capability in the United States.

Adjusted EBITDA for the nine-month period ended September 30, 2022, decreased $5.9 million as compared with the same period in 2021.

The decrease in adjusted EBITDA for the period was primarily due to lower adjusted gross profit, from higher manufacturing costs and production inefficiencies caused in part by supply chain and staffing challenges, as well as an increase in operating expenses primarily attributable to expansion of our commercial capability in the United States.

Adjusted Net Income (Loss) and Adjusted EPS

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We define adjusted EPS as US GAAP diluted earnings (loss) per share excluding the above adjustments to net income used in calculating adjusted net income, each on a per share and tax effected basis.

The following is a reconciliation of adjusted net income (loss) to net income (loss) for the three- and six-month periods ended June 30, 2022 and 2021, respectively:

For the Three Months Ended June 30,

For the Six Months Ended 

The following is a reconciliation of adjusted net income (loss) to net income (loss) for the three- and nine-month periods ended September 30, 2022 and 2021, respectively:

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Net (loss) income

Product rationalization, tax effected

Impairment on property and equipment;

Acquisition related intangible asset amortization;

2 unchanged sentences

Adjusted net (loss) income

The following is a reconciliation of adjusted EPS to diluted earnings (loss) per share for the three- and six-month periods ended June 30, 2022 and 2021:

For the Three Months Ended 

For the Six Months Ended 

The following is a reconciliation of adjusted EPS to diluted earnings (loss) per share for the three- and nine-month periods ended September 30, 2022 and 2021:

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Diluted (loss) earnings per share (EPS)

Product rationalization, tax effected

Impairment on Property and Equipment

Acquisition related intangible asset amortization;

2 unchanged sentences

Adjusted diluted (loss) earnings per share (EPS)

Adjusted net (loss) income and adjusted diluted (loss) income per share in the three-month period ended June 30, 2022 decreased by $3.0 million or $0.21, respectively, as compared with the same period in 2021.

Adjusted net (loss) income and adjusted diluted (loss) income per share in the three-month period ended September 30, 2022 decreased by $1.5 million or $0.10, respectively, as compared with the same period in 2021.

The decrease for the period was primarily due to increased commercial spending to support future growth as certain marketing and medical education activities were more limited in 2021.

Adjusted net (loss) income in and adjusted diluted (loss) income per share the six-month period ended June 30, 2022, decreased $5.3 million or $0.36, as compared with the same period in 2021.

The decrease in adjusted net income for the period was primarily due to lower adjusted gross profit, from unfavorable revenue mix and production inefficiencies caused in part by supply chain and staffing challenges due largely to the impact of the COVID-19 pandemic, as well as an increase in selling and marketing expenses primarily attributable to increased cost to support our commercial capability in the United States and an increase in stock-based compensation expense driven by incremental headcount associated with the Company’s strategic transformation that accelerated in 2020 and 2021.

Adjusted net (loss) income in and adjusted diluted (loss) income per share the nine-month period ended September 30, 2022, decreased $6.9 million or $0.48, as compared with the same period in 2021.

The decrease in adjusted net income for the period was primarily due to lower adjusted gross profit, from higher manufacturing costs and production inefficiencies caused in part by supply chain and staffing challenges due largely to the impact of the COVID-19 pandemic, as well as an increase in selling and marketing expenses primarily attributable to increased cost to support our commercial capability in the United States and an increase in stock-based compensation expense driven by incremental headcount associated with the Company’s strategic transformation that accelerated in 2020 and 2021.

Liquidity and Capital Resources

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We continue to generate cash from operating activities and believe that our operating cash flows, cash currently on our condensed consolidated balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs.

Cash, cash equivalents, and investments aggregated $91.4 million and $94.4 million, and working capital totaled $138.4 million and $138.7 million, at June 30, 2022 and December 31, 2021, respectively.

Cash, cash equivalents, and investments aggregated $87.8 million and $94.4 million, and working capital totaled $141.4 million and $138.7 million, at September 30, 2022 and December 31, 2021, respectively.

We are closely monitoring our liquidity and capital resources for any potential impact that the COVID-19 pandemic may have on our operations.

On November 12, 2021, we entered into a Third Amendment to Credit Agreement with Bank of America N.A.

as administrative agent, amended and restated our existing revolving line of credit agreement dated October 24, 2017 which provides up to $75.0 million in the form of a senior revolving line of credit.

as administrative agent, which amended our existing revolving line of credit agreement dated October 24, 2017 which provides up to $75.0 million in the form of a senior revolving line of credit.

Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million.

As of June 30, 2022, and December 31, 2021, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Six Months Ended June 30,

As of September 30, 2022, and December 31, 2021, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Nine Months Ended

September 30,

Cash provided by (used in)

4 unchanged sentences

Net decrease in cash and cash equivalents

The following changes contributed to the net change in cash and cash equivalents in the three-month period ended June 30, 2022 as compared to the same period in 2021.

The following changes contributed to the net change in cash and cash equivalents in the nine-month period ended September 30, 2022 as compared to the same period in 2021.

Operating Activities

Cash provided by operating activities was $1.2 million for the six-month period ended June 30, 2022, as compared to cash provided by operating activities of $1.9 million for the same period in 2021.

The decrease in cash provided operating activities in 2022 was primarily due to net loss incurred in 2022 and offset by an improvement in working capital attributable to timing of collections and inventory purchases and lower income tax payments.

For the foreseeable future, we expect to continue to invest substantial resources in research and development for new products and clinical studies as well as continued investment in our commercial infrastructure to support our growth strategy.

Cash provided by operating activities was $3.9 million for nine-month period ended September 30, 2022 was consistent with the same period in 2021, as the higher net loss was in part a result of higher non-cash stock compensation expense, and was offset by an improvement in working capital attributable to timing of collections and inventory purchases.

For the foreseeable future, we expect to continue to invest in research and development for new products and clinical studies as well as continued investment in our commercial infrastructure to support our growth strategy.

These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations. 

Investing Activities

Cash used in investing activities was $3.3 million for the six-month period ended June 30, 2022, as compared to cash used in investing activities of $0.6 million for the same period in 2021.

The change was primarily due to an increase in capital expenditures to support commercial growth of the business in the six-month period ended June 30, 2022 and proceeds from maturities of investments that occurred in 2021.

Cash used in investing activities was $5.0 million for the nine-month period ended September 30, 2022, as compared to cash used in investing activities of $1.9 million for the same period in 2021.

The change was primarily due to an increase in capital expenditures to support commercial growth of the business in the nine-month period ended September 30, 2022 and proceeds from maturities of investments that occurred in 2021.

Financing Activities

Cash used in financing activities was $0.9 million for the six-month period ended June 30, 2022, as compared to cash provided by financing activities of $0.1 million for the same period in 2021.

The change was primarily attributable to an increase in the utilization of cash for employee tax withholding in exchange for shares surrendered by equity award holders and lower stock option exercises in 2022.

Cash used in financing activities was $5.5 million for the nine-month period ended September 30, 2022, as compared to cash used in financing activities of $6.8 million for the same period in 2021.

The change was primarily attributable to lower contingent consideration payments in 2022 and lower stock option exercises in 2022.

Critical Accounting Policies and Estimates

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in our 2021 Form 10-K for the year ended December 31, 2021.

There were no material changes to our contractual obligations reported in our 2021 Form 10-K during the six months ended June 30, 2022 other than changes in operating leases reported in Note 8.

There were no material changes to our contractual obligations reported in our 2021 Form 10-K during the nine months ended September 30, 2022 other than changes in operating leases reported in Note 8.

For additional discussion, see Note 10 to the condensed consolidated financial statements included in this report.

4 unchanged sentences

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