What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 226 added, 237 removed, 459 unchanged (50% of the section changed)

4 unchanged sentences

(in thousands, except per share data)

ASSETS  

Current assets:

28 unchanged sentences

LIABILITIES AND STOCKHOLDERS ’

EQUITY  

Current liabilities:

16 unchanged sentences

Preferred stock, $ 0.01 par value;

1,250 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

1,250 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value;

90,000 shares authorized, 14,741 and 14,625 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

90,000 shares authorized, 14,816 issued and 14,657 outstanding and 14,625 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital

2 unchanged sentences

Accumulated other comprehensive loss

( 6,171 )  

Retained earnings

12 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Cost of revenue

16 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31, 2023

Comprehensive

Stockholders'

Six Months Ended June 30, 2023

Additional Paid

Other Comprehensive

Total Stockholders'

Balance, January 1, 2023

3 unchanged sentences

Retirement of common stock for minimum tax withholdings

Other comprehensive loss

Other comprehensive income

Balance, March 31, 2023

Three Months Ended March 31, 2022

Comprehensive

Stockholders'

Issuance of common stock for equity awards

Vesting of restricted stock units

Issuance of ESPP shares

Stock-based compensation expense

Repurchase of common stock

Retirement of common stock for minimum tax withholdings

Other comprehensive income

Balance, June 30, 2023

Six Months Ended June 30, 2022

Additional Paid

Other Comprehensive

Total Stockholders'

Balance, January 1, 2022

3 unchanged sentences

Retirement of common stock for minimum tax withholdings

Other comprehensive loss

Other comprehensive income

Balance, March 31, 2022

Vesting of restricted stock units

Issuance of ESPP shares

Stock-based compensation expense

Retirement of common stock for minimum tax withholdings

Other comprehensive loss

Balance, June 30, 2022

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

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

$ ( 10,350 )  

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

3 unchanged sentences

Deferred income taxes

( 2,373 )  

Provision for credit losses

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable

( 3,063 )  

Accounts receivable, net

Prepaid expenses, other current and long-term assets

( 462 )  

Accounts payable

( 713 )  

Operating lease liabilities

( 523 )  

Accrued expenses, other current and long-term liabilities

Net cash used in operating activities

( 3,618 )  

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

( 1,389 )  

Net cash used in investing activities

( 1,389 )  

Cash flows from financing activities:

Proceeds from employee stock purchase program

Cash paid for tax withheld on vested restricted stock awards

( 1,620 )  

Proceeds from exercises of equity awards

Payments made on finance leases

Repurchases of common stock

Net cash used in financing activities

( 1,613 )  

Exchange rate impact on cash

Decrease in cash and cash equivalents

( 6,590 )  

Cash and cash equivalents at beginning of period

86,327  

94,386  

Cash and cash equivalents at end of period

$ 79,737  

$ 90,325  

Supplemental disclosure of cash flow information:

Non-cash investing activities:

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

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

23 unchanged sentences

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s annual financial statements filed with its Annual Report on Form 10 -K for the year ended December 31, 2022.

The results of operations for the three -month period ended March 31, 2023 are not indicative of the results to be expected for the year ending December 31, 2023.

The results of operations for the three -month and six -month periods ended June 30, 2023 are not indicative of the results to be expected for the year ending December 31, 2023.

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 as of March 31, 2023 was its President and Chief Executive Officer.

The Company’s chief operating decision maker as of June 30, 2023 was its President and Chief Executive Officer.

Based on the criteria established by Accounting Standards Codification 280, Segment Reportin g, the Company has one operating and reportable segment.

3 unchanged sentences

The components of the Company’s accounts receivable are as follows:

December 31,  

Accounts Receivable

$ 32,166  

$ 36,235  

Allowance for credit losses

Net balance, end of period

30,629  

34,627  

A summary of activity in the allowance for credit losses is as follows:

As of March 31,

As of June 30,

Balance, beginning of the period

$ 1,608  

$ 1,442  

Amounts provided

Amounts recovered

( 78 )  

Amounts written off

( 106 )  

Translation adjustments

Balance, end of period

$ 1,537  

$ 1,350  

Fair Value Measurements

1 unchanged sentence

For cash, accounts receivables, accounts payable, and accrued interest, the carrying amounts approximate fair value, because of the short maturity of these instruments, and therefore fair value information is not included in the table below.

There were no transfers between fair value levels during the three -month periods ended March 31, 2023 or 2022.

There were no transfers between fair value levels during the six -month periods ended June 30, 2023 or 2022.

The classification of the Company’s cash equivalents within the fair value hierarchy was as follows:

March 31,  

for Identical

Assets  

Inputs  

Amortized  

Cash equivalents:

Money Market Funds

$ 63,450  

December 31,  

for Identical

Assets  

Inputs  

Amortized  

Cash equivalents:

Money Market Funds

$ 67,801  

Inventories consist of the following:

17 unchanged sentences

$ 56,489  

Inventories are stated net of inventory reserves of approximately $ 11.3 million and $ 9.9 million, as of March 31, 2023 and December 31, 2022, respectively.

Inventories are stated net of inventory reserves of approximately $ 10.2 million and $ 9.9 million, as of June 30, 2023 and December 31, 2022, respectively.

Intangible Assets

Intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following:

Three Months Ended March 31, 2023

Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:

Six Months Ended June 30, 2023

Developed technology

2 unchanged sentences

$ 64,286  

$ 62,837  

$ 64,286  

( 1,006 )  

Customer relationships

( 2,852 )  

Distributor relationships

2 unchanged sentences

$ 74,599  

( 692 )  

( 3,301 )  

$ 112,136  

$ ( 3,218 )  

$ ( 36,265 )  

$ 72,653  

$ 74,599  

The aggregate amortization expense related to intangible assets was $ 1.9 million for the three -month periods ended March 31, 2023 and 2022.

The aggregate amortization expense related to intangible assets was $ 2.0 million and $ 1.9 million for the three -month periods ended June 30, 2023 and 2022, respectively, and $ 3.9 million for each of the six -month periods ended June 30, 2023 and 2022, respectively.

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 three -month ended March 31, 2023 were as follows:

Three Months Ended

Balance, beginning of period

$ 7,339  

Changes in the carrying value of goodwill for the six months ended June 30, 2023 were as follows:

Six Months Ended

Balance, beginning of period

Effect of foreign currency adjustments

Balance, ending of period

$ 7,462  

Balance, ending of period

Accrued Expenses

1 unchanged sentence

Compensation and related expenses

$ 7,715  

$ 11,303  

Professional fees

Parcus arbitration settlement

Operating lease liability - current

1 unchanged sentence

Income taxes payable

$ 19,745  

$ 18,840  

Commitments and Contingencies

5 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 March 31, 2023 or December 31, 2022 and has no history of claims paid.

The Company had no accrued warranties as of June 30, 2023 or December 31, 2022 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.

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On April 24, 2023, the Company and the former unitholders of Parcus Medical entered into a settlement agreement to end the arbitration case.

The Company recorded a liability of $ 3.25 million at March 31, 2023 which was paid to the former unitholders of Parcus Medical in April 2023.

The Company recorded a charge to the statement of operations and a liability of $ 3.3 million at March 31, 2023 which was paid to the former unitholders of Parcus Medical in April 2023.

Revenue and Geographic Information

Revenue by product family is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

OA Pain Management

1 unchanged sentence

$ 24,093  

$ 51,967  

$ 45,058  

Joint Preservation and Restoration

1 unchanged sentence

12,095  

26,113  

24,234  

Non-Orthopedic

1 unchanged sentence

$ 39,657  

$ 82,226  

$ 76,350  

Effective January 1, 2023, the Company beganto report revenue from product sales to veterinary customers within the Non-Orthopedic product family whereas such revenue had been previously reported within the OA Pain Management product family.

Revenue from product sales to veterinary customers amounted to $ 0.5 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, respectively, and are included within the Non-Orthopedic product family for all periods presented.

Revenue from product sales to veterinary customers amounted to $ 1.1 million and $ 1.6 million for the three months ended June 30, 2023 and 2022, respectively, and $ 1.6 million and $ 3.4 million for the six months ended June 30, 2023 and 2022, respectively, and are included within the Non-Orthopedic product family for all periods presented.

Accordingly, revenue from product sales to veterinary customers in the prior period have been reclassified to conform to the current period presentation.

Revenue from the Company’s sole significant customer, DePuy Synthes Mitek Sports Medicine, part of the Johnson & Johnson Medical Companies, as a percentage of the Company’s total revenue was 43 % and 39 % for the three months ended March 31, 2023 and 2022, respectively.

Revenue from the Company’s sole significant customer, DePuy Synthes Mitek Sports Medicine, part of the Johnson & Johnson Medical Companies, as a percentage of the Company’s total revenue was 48 % and 45 % for the three months ended June 30, 2023 and 2022, respectively, and 46 % and 42 % for the six months ended June 30, 2023 and 2022, respectively.

Total revenue by geographic location based on the location of the customer in total and as a percentage of total revenue were as follows:

Three Months Ended March 31,  

Three Months Ended June 30,

Percentage of

6 unchanged sentences

$ 39,657  

Six Months Ended June 30,

Percentage of

Geographic Location:

United States

$ 60,155  

$ 56,459  

11,337  

11,088  

10,734  

$ 82,226  

$ 76,350  

Equity Incentive Plan

1 unchanged sentence

The Anika Therapeutics, Inc.

2017 Omnibus Incentive Plan (the “2017 Plan”) was approved by the Company’s stockholders on June 13, 2017 and subsequently amended on June 18, 2019, June 16, 2020, June 16, 2021 and June 8, 2022.

On June 8, 2022, the Company’s stockholders approved an amendment to the 2017 Plan increasing the number of shares by 250,000 shares from 4.6 million shares to 4.85 million shares.

2017 Omnibus Incentive Plan (the “2017 Plan”) was approved by the Company’s stockholders on June 13, 2017 and subsequently amended on June 18, 2019, June 16, 2020, June 16, 2021, June 8, 2022 and June 14, 2023.

On June 14, 2023, the Company’s stockholders approved an amendment to the 2017 Plan increasing the number of shares by 435,000 shares from 4,850,000 shares to 5,285,000 shares.

The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock awards, performance restricted stock units (“PSUs”), restricted stock units (“RSUs”), total shareholder return options (“TSRs”) and performance options that may be settled in cash, stock, or other property.

In accordance with the 2017 Plan approved by the Company’s stockholders, including the amendments thereto, each share award other than stock options or SARs will reduce the number of total shares available for grant by two shares.

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 0.4 million shares available for future grant at March 31, 2023 under the 2017 Plan.

Subject to adjustment for specified types of changes in the Company’s capitalization, no more than 5,285,000 shares of common stock may be issued under the 2017 Plan.

There were 0.8 million shares available for future grant at June 30, 2023 under the 2017 Plan.

The Anika Therapeutics, Inc.

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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 March 31, 2023 under the Inducement Plan.

There were 10,374 shares available for future grant at June 30, 2023 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.

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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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

Research and development

Selling, general and administrative

Research & development

Selling, general & administrative

Total stock-based compensation expense

1 unchanged sentence

$ 4,081  

$ 7,867  

$ 6,626  

Stock Options

10 unchanged sentences

$ 18.30  

$ 10.87  

Forfeited and canceled

$ 36.61  

$ 39.77  

Outstanding as of March 31, 2023

Outstanding as of June 30, 2023

1,844,456  

$ 33.84  

Vested, March 31, 2023

Vested, June 30, 2023

955,429  

$ 36.75  

Vested or expected to vest, March 31, 2023

Vested or expected to vest, June 30, 2023

1,844,456  

$ 33.84  

The aggregate intrinsic value of options exercised for the three -month period ended March 31, 2023 was immaterial.

The Company granted 339,145 stock options during the three -month ended March 31, 2023.

The aggregate intrinsic value of options exercised for the six -month period ended June 30, 2023 was immaterial.

The Company granted 361,745 stock options during the six -month period ended June 30, 2023.

The Company uses the Black-Scholes pricing model to determine the fair value of options granted.

The calculation of the fair value of stock options is affected by the stock price on the grant date, the expected volatility of the Company’s common stock over the expected term of the award, the expected life of the award, the risk-free interest rate and the dividend yield.

The assumptions used in the Black-Scholes pricing model for options granted during the three months ended March 31, 2023 and 2022, along with the weighted-average grant-date fair values, were as follows:

Three Months Ended  

March 31,  

The assumptions used in the Black-Scholes pricing model for options granted during the six months ended June 30, 2023 and 2022, along with the weighted-average grant-date fair values, were as follows:

Six Months Ended

Risk free interest rate

Expected volatility

48.7 %  

49.4 %  

53.8 %  

Expected life (years)

Expected dividend yield

Fair value per option

 $ 11.71  

 $ 11.37  

As of March 31, 2023, there was $ 9.9 million of unrecognized compensation cost related to unvested stock options.

$ 11.74  

$ 11.28  

As of June 30, 2023, there was $ 8.5 million of unrecognized compensation cost related to unvested stock options.

This expense is expected to be recognized over a weighted average period of 2.0 years.

3 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 three -month period ended March 31, 2023 was as follows:

RSU activity for the six -month period ended June 30, 2023 was as follows:

Outstanding as of December 31, 2022

4 unchanged sentences

$ 28.93  

$ 28.98  

Forfeited and cancelled

$ 27.49  

$ 27.34  

Outstanding as of March 31, 2023

Outstanding as of June 30, 2023

823,414  

$ 27.52  

The weighted-average grant-date fair value per share of RSUs granted was $ 26.91 and $ 25.75 for the three -month periods ended March 31, 2023 and 2022, respectively.

The total fair value of RSUs vested was $ 5.7 million and $ 3.3 million for the three -month periods ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, there was $ 19.4 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 2.3 years.

The weighted-average grant-date fair value per share of RSUs granted was $ 26.93 and $ 25.18 for the six -month periods ended June 30, 2023 and 2022, respectively.

The total fair value of RSUs vested was $ 6.6 million and $ 5.4 million for the six -month periods ended June 30, 2023 and 2022, respectively. 

As of June 30, 2023, there was $ 17.9 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 2.1 years.

Performance Stock Units

PSU activity for the three -month ended March 31, 2023 was as follows:

PSU activity for the six -month ended June 30, 2023 was as follows:

Outstanding as of December 31, 2022

3 unchanged sentences

$ 34.98  

Outstanding as of March 31, 2023

The total fair value of PSUs vested was $ 0 and $ 0.6 million for the three -month period ended March 31, 2023 and 2022.

As of March 31, 2023, there are no outstanding PSUs.

The Company recorded an income tax benefit of $ 1.7 million for the three -month period ended March 31, 2023, resulting in an effective tax rate of 13.9 %.

The income tax benefit was $ 0.8 million for the three -month period ended March 31, 2022, resulting in an effective tax rate of 20.9 %.

The net change in the effective tax rate for the three -month period ended March 31, 2023, as compared to the same period in 2022, was primarily due to a valuation allowance being recorded against domestic deferred tax assets.

Outstanding as of June 30, 2023

The total fair value of PSUs vested was $ 0 and $ 0.6 million for the six -month periods ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, there are no outstanding PSUs.

The Company recorded an income tax benefit of $ 0.3 million and $ 2.0 million for the three - and six -month periods ended June 30, 2023, resulting in effective tax rates of 10.7 % and 13.2 %, respectively.

The income tax benefit 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 change in the effective tax rate for the three -months ended June 30, 2023, as compared to the same period in 2022, is primarily due to a discrete charge of $ 0.4 million related to non-deductible stock compensation during the three -months ended June 30, 2022, partially offset by the valuation allowance recorded against domestic deferred tax assets of $ 0.3 million during the three -months ended June 30, 2023.

The change in the effective tax rate for the six -months ended June 30, 2023, as compared to the same period in 2022, is primarily due to the valuation allowance recorded against domestic deferred tax assets of $ 1.2 million for the six -months ended June 30, 2023, partially offset by a discrete charge of $ 0.6 million related to non-deductible stock compensation during the six -months ended June 30, 2022.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

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are not more likely than not to be realizable.

Accordingly, the estimated annual effective tax rate used to compute the income tax provision for the three -month period ended March 31, 2023 includes an adjustment for the valuation allowance required against the U.S deferred tax assets.

As of March 31, 2023, the Company continues to believe its foreign deferred tax assets are realizable based upon future reversals of existing taxable temporary differences and projected future taxable income.

Accordingly, the estimated annual effective tax rate used to compute the income tax provision for the three - and six -month periods ended June 30, 2023 includes an adjustment for the valuation allowance required against the U.S deferred tax assets.

As of June 30, 2023, the Company continues to believe its foreign deferred tax assets are realizable based upon future reversals of existing taxable temporary differences and projected future taxable income.

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.

Share Repurchase

In April 2023, the Company agreed to establish a share repurchase program for an aggregate purchase price of $ 20.0 million.

Of the $ 20.0 million, the first $ 5.0 million would be effected through an accelerated stock repurchase program, the second $ 5.0 million is to be purchased in the open market and the remaining $ 10.0 million is to be purchased in the open market subject to positive cash flow.

On May 12, 2023, the Company entered into an accelerated share repurchase agreement with Bank of America, N.A.

(“Bank of America”) pursuant to a Fixed Dollar Accelerated Share Repurchase Transaction (“ASR Agreement”) to purchase $ 5.0 million of shares of its common stock.

Pursuant to the terms of the ASR Agreement, the Company delivered $ 5.0 million in cash to Bank of America and received an initial delivery of 158,983 shares of the Company’s common stock on May 12, 2023 based on a closing market price of $ 25.16 and the applicable contractual discount. 

This was approximately 80 % of the then estimated total number of shares expected to be repurchased under the ASR Agreement.

The Company has recorded the shares being repurchased under the ASR agreement as an equity forward sales contact and the repurchase amount of $ 5.0 million plus excise taxes was included in additional paid-in capital in stockholders’

equity on the condensed consolidated balance sheet at June 30, 2023.

Per the terms of the ASR Agreement, the final number of shares and average purchase price would be determined at the end of the applicable purchase period, which was completed in July 2023. 

Upon final settlement in July 2023, the Company received 29,046 additional shares at a final settlement price based on the average purchase price of $ 26.59 per share. 

Earnings Per Share ( “

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Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding share-based awards using the treasury stock method.

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

Three Months Ended March 31,

Shares used in the calculation of basic EPS

14,653  

14,466  

Effect of dilutive securities:

Share based awards

Diluted shares used in the calculation of EPS

14,653  

14,466  

The Company had a net loss during the three -month ended March 31, 2023 and 2022, respectively, and therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS. Stock options of 1.9 million shares and 1.5 million shares were outstanding for the three -month periods ended March 31, 2023 and 2022, respectively.

Restricted stock units and performance stock units totaling 0.9 million and 0.8 million were outstanding for the three -month periods ended March 31, 2023 and 2022, respectively.

Due to the Company's loss position, the share-based payment awards are anti-dilutive.

The Company had a net loss during the three - and six -month periods ended June 30, 2023 and 2022, respectively, and therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS.

Stock options of 1.8 million shares and 1.5 million shares were outstanding at June 30, 2023 and 2022, respectively.

Restricted stock units and performance stock units totaling 0.8 million were outstanding at each of June 30, 2023 and 2022.

These securities were not included in the computation of diluted EPS because the awards’

impact on EPS would have been anti-dilutive.

Subsequent Event

On April 13, 2023, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with Caligan Partners LP (collectively with each of their respective affiliates and associates, the “Investor Group”).

Pursuant to the Cooperation Agreement, the Company has agreed to increase the size of the board of directors to eight directors and appointed an additional independent director.

The Company also agreed to commit to a return of capital program, subject to market conditions, applicable legal requirements and other relevant factors, by establishing a share repurchase program for an aggregate purchase price equal to $ 20,000,000 to occur within twelve months from the date of the Cooperation Agreement as follows:

(i) the first $ 5,000,000 of which will be effected through an accelerated stock repurchase program with an investment bank commencing with the Company’s next open trading window, which will open on or before May 12, 2023, ( ii) the second $ 5,000,000 of which to be purchased in the open market, and (iii) the remaining $ 10,000,000 of which to be purchased in the open market subject to positive cash flow.

MANAGEMENT ’

17 unchanged sentences

Based on our collaborations with clinicians to understand what they need most to treat their patients, we develop minimally invasive products that restore active living for people around the world.

We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis, or OA, pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions (previously Bone Preserving Joint Technologies).

We have over thirty years of global expertise developing, manufacturing and commercializing products our hyaluronic acid, or HA, technology platform.

We are committed to leading in high opportunity spaces within orthopedics, including osteoarthritis, or OA, pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions.

We have over thirty years of global expertise developing, manufacturing and commercializing products with our hyaluronic acid, or HA, technology platform.

HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function.

Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.

Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses and in multiple forms, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our regenerative solutions portfolio.

In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, or Parcus Medical, a sports medicine and instrumentation solutions provider, and Arthrosurface, Inc, or Arthrosurface, a company specializing in bone preserving partial and total joint replacement solutions.

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Utilizing HA-based technology and manufacturing expertise to provide new and differentiated solutions for the faster growing joint preservation and regenerative medicine markets;

Introducing key HA-based products into the U.S.

market upon FDA approval/clearance, such as Cingal, Hyalofast and our arthroscopic patch system for rotator cuff repair;

Robust network of stakeholders in our target markets that will allow us to identify evolving unmet patient treatment needs;

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

COVID-19 Pandemic

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

This pandemic has caused an economic downturn globally, which created volatility in our results due to the worldwide cancellation or delay of elective procedures, staffing shortages and supply chain disruptions, as well as the impact on timelines associated with certain clinical studies.

Please see the section captioned “Part I.

Risk Factors”

of our Annual Report on Form 10-K for additional information with respect to the risks faced by our business in light of the COVID-19 pandemic.

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 or supply chain disruptions due to COVID-19 and current or new variants in certain jurisdictions.

The impact of these challenges is currently unknown but could be significant and we continue to take precautions so as not to disrupt our business.

OA Pain Management

Our OA Pain Management product family consists of Monovisc and Orthovisc, our single- and multi-injection, HA-based viscosupplement offerings that are indicated to provide pain relief from osteoarthritis conditions;

and Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid, designed to provide both short- and long-term pain relief, which is currently sold outside the United States in over 35 countries.

Our OA Pain Management product family consists of Monovisc and Orthovisc, our single- and multi-injection, HA-based, high molecular weight viscosupplement offerings that are indicated to provide pain relief from osteoarthritis conditions;

and Cingal, our novel, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid.

Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven osteoarthritis pain product which is designed to provide both short- and long-term pain relief through at least six months.

It is currently sold outside the United States in over 35 countries.

In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint.

Cingal is not currently approved for commercial use in the United States.

Joint Preservation and Restoration

Our Joint Preservation and Restoration product family consists of:

(a) Our portfolio of orthopedic regenerative solutions products, including Hyalofast and Tactoset;

(a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Hyalofast, currently available outside the United States in over 30 countries and Tactoset products and the planned upcoming release of our arthroscopic regenerative patch system for rotator cuff repair;

(b) our line of sports medicine solutions used to repair and reconstruct damaged ligaments and tendons due to sports injuries, trauma and disease;

and (c) our portfolio of over 150 bone preserving joint technologies, including partial joint replacement, joint resurfacing, and minimally invasive and bone sparing implants, designed to treat upper and lower extremity orthopedic conditions caused by trauma, injury and arthritic disease.

and (c) our Arthrosurface portfolio of bone preserving joint technologies, including partial joint replacement, joint resurfacing, and minimally invasive and bone sparing implants, designed to treat upper and lower extremity orthopedic conditions caused by trauma, injury and arthritic disease.

Non-Orthopedic

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Results of Operations

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Three Months Ended March 31,

(in thousands, except percentages)  

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except percentages)

Cost of revenue

Operating expenses:

Research and development

Selling, general and administrative

Research & development

Selling, general & administrative

Total operating expenses

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Loss before income taxes

Benefit from for income taxes

The following table presents revenue by product family for the three-month period ended March 31, 2023 and 2022 as follows:

Three Months Ended March 31,

Benefit from income taxes

The following table presents revenue by product family for the three- and six-month periods ended June 30, 2023 and 2022, respectively, as follows:

Three Months Ended June 30,

(in thousands, except percentages)

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Non-Orthopedic

Revenue from our OA Pain Management product family increased 8% for the three-month period ended March 31, 2023, as compared to the same period in 2022, due primarily to favorable strategic partner ordering patterns and sales growth on increasing customer demand, offset in part by unfavorable international distributor ordering patterns as strategic partner and distributor ordering patterns can vary significantly on a quarterly basis.

Revenue from our Joint Preservation and Restoration product family increased 11% for the three-month period ended March 31, 2023, as compared to the same period in 2022, due primarily due to improving elective procedure volumes and rapidly growing commercial adoption of our newest products.

Revenue from our Non-Orthopedic product family decreased 49% for the three-month ended March 31, 2023, as compared to the same period in 2022, primarily due to unfavorable timing of distributor ordering patterns as well as due to end of life of certain legacy products.

Six Months Ended June 30,

(in thousands, except percentages)

OA Pain Management

Joint Preservation and Restoration

Non-Orthopedic

Revenue from our OA Pain Management product family increased 22% and 15%, respectively, for the three- and six-month periods ended June 30, 2023, as compared to the same period in 2022, due to growing customer demand and favorable strategic partner ordering patterns from U.S.

and international customers.

Revenue from our Joint Preservation and Restoration product family increased 5% and 8%, respectively, for the three- and six-month periods ended June 30, 2023, as compared to the same period in 2022, due primarily to improving elective procedure volumes and growing commercial adoption of our newest products.

Revenue from our Non-Orthopedic product family decreased 33% and 41%, respectively, for the three- and six-month periods ended June 30, 2023, as compared to the same period in 2022, primarily due to unfavorable timing of distributor ordering patterns as well as due to end of life of certain legacy products.

Gross Profit and Margin

Gross profit for the three-month period ended March 31, 2023 increased $1.0 million to $22.8 million, representing a 60% gross margin for the period as compared to 59% in the prior year.

The increase in gross profit for the three-month period ended March 31, 2023, as compared to the same period in 2022, was primarily resulted from increased revenue.

Gross margin for the three-month period ended March 31, 2023, increased compared to the same period of prior year due primarily to improved production volumes.

Gross profit for the three- and six-month periods ended June 30, 2023 increased $4.1 million and $5.1 million, to $29.0 million and $51.8 million, respectively.

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

The increases in gross profit for the three- and six-month periods ended June 30, 2023, as compared to the same period in 2022, primarily resulted from revenue growth and favorable product mix in the period.

Gross margin for the three- and six-month periods ended June 30, 2023 was 65% and 63%, respectively.

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

The increases in gross margin compared to the same periods of the prior year were due primarily to higher revenue, particularly on Mitek sales and improved production volumes.

Research and Development

Research and development expenses for the three-month period ended March 31, 2023 were $8.4 million, an increase of $2.2 million as compared to the same period in 2022.

The increase was primarily related to increased costs to comply with growing regulatory requirements globally as well as new product development associated with our research and development pipeline and scale-up manufacturing activities.

Research and development expenses for the three- and six-month periods ended June 30, 2023 were $8.9 million and $17.3 million, an increase of $1.9 million and $4.2 million respectively as compared to the same periods in 2022.

The increase was primarily related to increased costs to comply with growing regulatory requirements globally as well as new product development associated with our research and development pipeline.

Selling, General and Administrative

Selling, general and administrative expenses for the three-month period ended March 31, 2023 were $27.0 million, an increase of $7.8 million, as compared to the same period in 2022.

This increase for the three-month period ended March 31, 2023 was primarily due to $5.8 million of non-recurring costs incurred during the quarter related to the Parcus Medical unitholder arbitration settlement, shareholder activism and other non-recurring corporate costs.

The growth in SG&A expenses also reflects expansion of our commercial capabilities and marketing activities, as well as higher stock-based compensation expense in part driven by forfeitures in the first quarter of 2022.

The benefit from income taxes was $1.7 million for the three-month period ended March 31, 2023, resulting in an effective tax rate of 13.9%.

The benefit from income taxes was $0.8 million for the three-month period ended March 31, 2022, resulting in an effective tax rate of 20.9%.

The net change in the effective tax rate for the three-month period ended March 31, 2023, as compared to the same period in 2022, was primarily due to a valuation allowance in 2023 being recorded against domestic deferred tax assets.

For the three-month period ended March 31, 2023, net loss was $10.4 million, or $0.71 per diluted share, compared to net income of $2.9 million, or $0.20 per diluted share, for the same period in prior year.

The decrease in net income and diluted earnings per share was primarily due to the non-recurring expenses related to the Parcus Medical arbitration settlement, shareholder activism and other non-recurring corporate costs.

Selling, general and administrative expenses for the three- and six-month periods ended June 30, 2023 were $23.7 million and $50.7 million representing an increase of $2.4 million and $10.2 million, respectively, as compared to the same periods in 2022.

This increase for the three- and six-month periods ended June 30, 2023 was primarily due to $2.7 million and $8.5 million of non-recurring costs incurred during the three- and six-month periods ended June 30, 2023, respectively, related to the Parcus Medical unitholder arbitration settlement, shareholder activism and other non-recurring corporate costs.

The growth in SG&A expenses also was due to expansion of our commercial capabilities and marketing activities.

The benefit from income taxes was $0.3 million and $2.0 million for the three- and six-month periods ended June 30, 2023, resulting in an effective tax rate of 10.7% and 13.2%, respectively.

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 change in the effective tax rate for the three-months ended June 30, 2023, as compared to the same period in 2022, is primarily due to a discrete charge of $0.4 million related to non-deductible stock compensation during the three-months ended June 30, 2022, partially offset by the valuation allowance recorded against domestic deferred tax assets of $0.3 million during the three-months ended June 30, 2023.

The change in the effective tax rate for the six-months ended June 30, 2023, as compared to the same period in 2022, is primarily due to the valuation allowance recorded against domestic deferred tax assets of $1.2 million for the six-months ended June 30, 2023, partially offset by a discrete charge of $0.6 million related to non-deductible stock compensation during the six-months ended June 30, 2022.

For the three- and six-month periods ended June 30, 2023, net loss was $2.7 million and $13.1 million, or $0.19 per diluted share and $0.89 per diluted share, respectfully, compared to net loss of $2.8 million and $5.8 million, or $0.20 per diluted share and $0.44 per diluted share, for the same periods in prior year.

The increase in net loss and diluted loss per share for the six-months ended June 30, 2023 was primarily due to the non-recurring expenses related to the Parcus Medical arbitration settlement, shareholder activism and other non-recurring corporate costs.

Non-GAAP Financial Measures

We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, adjusted diluted earnings per share or adjusted EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted gross profit and adjusted gross margin, adjusted EBITDA, adjusted net income, adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business.

We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income (loss), adjusted diluted earnings per share or adjusted EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or U.S.

GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.

We have presented adjusted gross profit and adjusted gross margin, adjusted EBITDA, adjusted net income (loss), adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business.

We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude.

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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-month periods ended March 31, 2023 and 2022, respectively:

Three-Month Periods Ended March 31,

The following is a reconciliation of GAAP gross profit to Non-GAAP adjusted gross profit for the three- and six-month periods ended June 30, 2023 and 2022, respectively:

For the Three Months Ended

For the Six Months Ended

Acquisition related intangible asset amortization

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Adjusted gross margin

Adjusted gross profit for the three-month period ended March 31, 2023 increased $1.0 million to $24.4 million representing adjusted gross margin of 64%.

Adjusted gross profit for the three-month period ended March 31, 2022 was $23.4 million, or adjusted gross margin of 64%.

There was no change in adjusted gross margin for the three-month period ended March 31, 2023 as compared to 2022, as the impact of improved production volumes was offset by unfavorable product mix in 2023.

Adjusted gross profit for the three- and six-month periods ended June 30, 2023 increased $4.1 million and $5.1 million to $30.5 million and $54.9 million, respectively, representing adjusted gross margin of 69% and 67%, respectively.

Adjusted gross profit for the three- and six-month periods ended June 30, 2022 was $26.4 million and $49.8 million, respectively, or adjusted gross margin of 67% and 65%, respectively.

The increases in adjusted gross margin for the three- and six-month periods ended June 30, 2023 as compared to 2022, was largely due to revenue growth, favorable product mix and the impact of improved production volumes in 2023.

Adjusted EBITDA

We present information below with respect to adjusted EBITDA, which we define as our net income (loss) excluding interest and other expense, net, income tax benefit, depreciation and amortization, stock-based compensation, and acquisition-related expenses.

Adjusted EBITDA is not prepared in accordance with US GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with US GAAP.

There are a number of limitations related to the use of adjusted EBITDA rather than net (loss) income, which is the nearest US GAAP equivalent.

Adjusted EBITDA is not prepared in accordance with U.S.

GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S.

There are a number of limitations related to the use of adjusted EBITDA rather than net (loss) income, which is the nearest U.S.

GAAP equivalent.

Some of these limitations are:

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we exclude acquisition related expenses, including, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of revenue;

we exclude certain other non-recurring expenses, such as Parcus arbitration settlement and costs associated with shareholder activism;

the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results;

The following is a reconciliation of adjusted EBITDA to net loss for the three-month periods ended March 31, 2023 and 2022, respectively:

Three Months Ended March 31,

(in thousands)

Interest and other (income) expense, net

The following is a reconciliation of GAAP Net loss to Non-GAAP Adjusted EBITDA for the three- and six-month periods ended June 30, 2023 and 2022, respectively:

For the Three Months Ended

For the Six Months Ended

Interest and other expense, net

Benefit from income taxes

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Adjusted EBITDA

Adjusted EBITDA in the three-month period ended March 31, 2023 decreased $3.8 million as compared with the same period in 2022.

The decrease in adjusted EBITDA for the period was primarily due to an increase in operating expenses largely attributable to costs to comply with growing regulatory requirements globally, expansion of our operational capabilities to support our continued growth as well as certain non-recurring corporate costs.

Adjusted EBITDA in the three-month period ended June 30, 2023 increased $1.9 million as compared with the same period in 2022.

The increase in adjusted EBITDA for the period was primarily due to an increase in revenues partially offset by $0.5 million of certain non-recurring corporate costs.

Adjusted EBITDA for the six-month period ended June 30, 2023, decreased $1.9 million as compared with the same period in 2022.

The decrease in adjusted EBITDA for the period was due to $2.2 million of certain non-recurring corporate costs.

Adjusted Net (Loss) Income and Adjusted EPS

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These assets include the estimated fair value of certain identified assets acquired in acquisitions, including in-process research and development, developed technology, customer relationships and acquired tradenames.

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

The following is a reconciliation of adjusted net (loss) income to net (loss) income for the three-month periods ended March 31, 2023 and 2022, respectively:

Three Months Ended March 31,

(in thousands)

We define adjusted EPS as U.S.

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

The following is a reconciliation of GAAP Net Loss to Non-GAAP Adjusted net (loss) income to net (loss) income for the three- and six-month periods ended June 30, 2023 and 2022, respectively:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Arbitration settlement, tax effected

Acquisition related intangible asset amortization, tax effected

Acquisition related intangible asset amortization;

Costs of shareholder activism, tax effected

Adjusted net loss

The following is a reconciliation of adjusted diluted EPS to diluted EPS for the three-month periods ended March 31, 2023 and 2022, respectively:

Three Months Ended March 31,

Diluted loss per share

Adjusted net income (loss)

The following is a reconciliation of GAAP Diluted loss per share (EPS) to Non-GAAP Adjusted diluted earnings (loss) per share EPS for the three- and six-month periods ended June 30, 2023 and 2022, respectively:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Diluted (loss) earnings per share (EPS)

Arbitration settlement, tax effected

Acquisition related intangible asset amortization, tax effected

Costs of shareholder activism, tax effected

Adjusted diluted loss per share

Adjusted net loss and adjusted diluted loss per share in the three-month period ended March 31, 2023 increased $3.8 million and $0.25, respectively, as compared with the same period in 2022.

The increase for the period was primarily due to an increase in operating expenses largely attributable to expansion of our operational capabilities to support our growing business needs as well as non-recurring expenses related to the Parcus Medical arbitration settlement, shareholder activism and other non-recurring corporate costs.

Acquisition related intangible asset amortization;

Cost of shareholder activism, tax effected

Adjusted diluted (loss) earnings per share (EPS)

Adjusted net income (loss) and adjusted diluted income (loss) per share in the three-month period ended June 30, 2023 increased $2.5 million and $0.18, respectively, as compared with the same period in 2022.

The increase in adjusted net income for the period was primarily due to higher revenue offset in part by certain non-recurring corporate costs.

Adjusted net loss and adjusted diluted loss per share in the six-month period ended June 30, 2023, increased $1.4 million or $0.09, as compared with the same period in 2022.

The increase in adjusted net loss for the period was due to certain non-recurring corporate costs.

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 $79.7 million and $86.3 million, and working capital totaled $131.6 million and $141.6 million, at March 31, 2023 and December 31, 2022, respectively.

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

Cash, cash equivalents, and investments aggregated $65.1 million and $86.3 million, and working capital totaled $128.7 million and $141.6 million, at June 30, 2023 and December 31, 2022, respectively.

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

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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 March 31, 2023, and December 31, 2022, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

As of June 30, 2023, and December 31, 2022, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.

Summary of Cash Flows (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash provided by (used in)

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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 March 31, 2023 as compared to the same period in 2022.

The following changes contributed to the net change in cash and cash equivalents in the six-month period ended June 30, 2023 as compared to the same period in 2022.

Operating Activities

Cash used in operating activities was $3.6 million for the three-month period ended March 31, 2023, as compared to cash used in operating activities of $1.9 million for the same period in 2022.

The increase in cash used in operating activities in 2023 was primarily due to a higher net loss and an increase in inventories.

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

Cash used in operating activities was $11.9 million for the six-month period ended June 30, 2023, as compared to cash provided by operating activities of $1.2 million for the same period in 2022.

The increase in cash used in operating activities in 2023 was primarily due payment of $8.5 million in non-recurring costs incurred during the six-month period ended June 30, 2023 related to the Parcus Medical unitholder arbitration settlement, shareholder activism and other non-recurring corporate costs, as well as an increase in working capital associated with the growth of the business. 

For the foreseeable future, we expect to continue to invest in research and development as well as our commercial and operational 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 $1.4 million for the three-month period ended March 31, 2023, as compared to cash used in investing activities of $1.3 million for the same period in 2022.

The change was primarily due to an increase in capital expenditures to support commercial growth of the business in the three-month period ended March 31, 2023.

Cash used in investing activities was $2.8 million for the six-month period ended June 30, 2023, as compared to cash used in investing activities of $3.3 million for the same period in 2022.

The change was primarily due to a decrease in capital expenditures related to software development that occurred in 2022.

Financing Activities

Cash used in financing activities was $1.6 million for the three-month period ended March 31, 2023, as compared to cash used in financing activities of $0.9 million for the same period in 2022.

In both periods, the cash used in financing activities was primarily attributable to utilization of cash for employee tax withholding in exchange for shares surrendered by equity award holders.

Cash used in financing activities was $6.6 million for the six-month period ended June 30, 2023, as compared to cash used in financing activities of $0.9 million for the same period in 2022.

The increase in cash used in financing activities was primarily attributable to the repurchase of common stock for $5.0 million during the three-months ended June 30, 2023.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

The preparation of our condensed consolidated financial statements in conformity with U.S.

GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

We believe that our accounting policies for revenue recognition, accounts receivable and allowance for credit losses, goodwill, acquired in-process research and development, inventory and contingencies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties.

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in our 2022 Form 10-K for the year ended December 31, 2022.

There were no material changes to our contractual obligations reported in our 2022 Form 10-K during the three months ended March 31, 2023.

There were no material changes to our contractual obligations reported in our 2022 Form 10-K during the six months ended June 30, 2023.

For additional discussion, see Note 9 to the condensed consolidated financial statements included in this report.

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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