What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-17 compared with 2024-03-15 · 184 added, 254 removed, 674 unchanged (39% of the section changed)

27 unchanged sentences

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Reserve for Excess and Obsolete Inventories — Refer to Notes 2 and 5 to the financial statements

14 unchanged sentences

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

Fair Value of Intangible Assets within the Arthrosurface and Parcus Asset Groups — Refer to Notes 2 and 6 to the financial statements

Critical Audit Matter Description

The Company has amortizing definite lived intangible assets consisting of the developed technology, tradenames, and customer relationships, which arose from the prior acquisitions for Parcus Medical and Arthrosurface.

The Company's evaluation of the intangible assets for impairment involves the comparison of the fair value to the recorded carrying value.

Management estimated the fair value of these intangible assets upon identification of impairment indicators, using the income approach method of valuation, including a combination of the distributor method for the customer relationships asset and the relief of royalty method for each of the developed technology and tradename assets.

The determination of fair value requires management to make significant estimates and assumptions related to forecasted revenues, including growth rates, the royalty rate, and the discount rate used to estimate the fair value of the intangible assets.

Changes in these assumptions could have a significant impact on the fair value of the intangible assets and the amount of any impairment charge.

As of December 31, 2023, the carrying value of each of the developed technology, customer relationships, and tradename assets were $2.0 million, $0.4 million, and $0.6 million, respectively.

During the year ended December 31, 2023, the Company recognized an impairment charge of $62.2 million related to these intangible assets, since their fair values were lower than the carrying values.

We identified the valuation of these intangible assets as a critical audit matter because of the significant judgments and assumptions management makes in estimating the fair value of these intangible assets.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s forecasted revenues, the selection of the royalty rate and the selection of the discount rate, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasted revenues, the selected royalty rate, and the selected discount rate utilized in estimating the fair value of the intangible assets included the following, among others:

We tested the effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value of the intangible assets, such as controls related to management’s forecasts of future revenue, and the selection of the royalty rate and the discount rate.

We evaluated management’s ability to accurately forecast revenues by comparing actual revenues to management’s historical forecasts.

We evaluated the reasonableness of management’s forecasts by comparing forecasted revenues to:

The Company’s business strategies and growth plans including consideration of the effects of new products;

Historical results and trends;

Industry reports.

With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and management’s assumptions including the royalty rate and the discount rate by:

Testing the source information underlying the determination of the royalty rate, the discount rate, and the mathematical accuracy of the calculations.

Developing a range of independent estimates for the discount rate and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

8 unchanged sentences

Cash and cash equivalents

$ 72,867 $ 86,327

Accounts receivable, net

35,961 34,627

46,386 39,765

Prepaid expenses and other current assets

Current assets held for sale

Total current assets

163,309 169,547

Property and equipment, net

46,198 48,279

Right-of-use assets

28,767 30,696

Other long-term assets

18,672 17,219

Notes receivable

Deferred tax assets

Intangible assets, net

$ 270,632 $ 349,128

Non-current assets held for sale

LIABILITIES AND STOCKHOLDERS ’ EQUITY

1 unchanged sentence

Accounts payable

$ 9,860 $ 9,074

Accrued expenses and other current liabilities

21,199 18,840

Current liabilities held for sale

Total current liabilities

31,059 27,914

Other long-term liabilities

Deferred tax liability

Lease liabilities

26,904 28,817

Non-current liabilities held for sale

Commitments and contingencies (Note 11)

5 unchanged sentences

Additional paid-in-capital

90,009 81,141

Accumulated other comprehensive loss

( 5,943 ) ( 6,443 )

Retained earnings

128,052 210,719

Total stockholders’ equity

212,265 285,563

Total liabilities and stockholders’ equity

$ 270,632 $ 349,128

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

8 unchanged sentences

Selling, general & administrative

Impairment of intangible assets

Change in fair value of contingent consideration

Total operating expenses

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(Loss) income before income taxes

Benefit from for income taxes

Net (loss) income

Net income (loss) per share:

Provision for income taxes

(Loss) income from continuing operations

Loss from discontinued operations, net of tax

(Loss) earnings per share:

Continuing operations

Discontinued operations

Continuing operations

Discontinued operations

Weighted average common shares outstanding:

Net (loss) income

Foreign currency translation adjustment

Comprehensive (loss) income

Comprehensive loss

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

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Vesting of restricted stock units

Issuance of common stock from employee purchase plan

Stock-based compensation expense

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Stock-based compensation expense

Repurchase of common stock

Retirement of common stock for minimum tax withholdings

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Cash flows from operating activities:

Net (loss) income

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

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

Amortization of acquisition related intangible assets

Amortization of acquisition related inventory step-up

Non-cash operating lease cost

Change in fair value of contingent consideration

Loss on disposal of fixed assets

Loss on impairment of intangible assets

Loss on impairment of long-lived assets

Stock-based compensation expense

8 unchanged sentences

Accrued expenses, other current and long-term liabilities

Payments of contingent consideration

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Acquisition of Parcus Medical and Arthrosurface, net of cash acquired

Proceeds from maturities of investments

Purchases of property and equipment

Acquisition of intangible asset

Net cash used in investing activities

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

Notes receivable

The cash flows related to discontinued operations and held-for-sale assets and liabilities have not been segregated and remain included in the major classes of assets and liabilities.

Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

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

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Anika Therapeutics, Inc.

(“the Company”) is a global joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care, including in the areas of osteoarthritis (“OA”) pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions.

(“Arthrosurface”), a company specializing in less invasive, bone preserving partial and total joint replacement solutions.

(the “Company”) is a global joint preservation company in the osteoarthritis (“OA”) pain management and regenerative solutions spaces, focusing on early intervention orthopedics.

The Company offers differentiated advancements in regenerative therapies and OA Pain Management, all designed to restore active living, empower surgeon choice, and enhance patient outcomes worldwide.

In early 2020, the Company expanded its overall technology platform through its strategic acquisitions of Parcus Medical, LLC (“Parcus Medical”), a sports medicine implant and instrumentation company, and Arthrosurface Incorporated (“Arthrosurface”), a company specializing in less invasive, bone preserving partial and total joint replacement solutions.

These acquisitions broadened the Company's product portfolio, developed over its 30 years of expertise in hyaluronic acid technology, into joint preservation and restoration, added higher-growth revenue streams, increased its commercial capabilities, diversified its revenue base, and expanded its product pipeline and research and development expertise.

In October 2024, the Company announced a strategic shift to concentrate on OA Pain Management and Regenerative Solutions.

This strategic decision resulted in the sale of Arthrosurface on October 31.

2024 and the sale of Parcus Medical on March 7, 2025, both of which were acquired in early 2020.

The Company is subject to risks common to companies in the life sciences industry including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, commercialization of existing and new products, and compliance with U.S.

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Actual results could differ from those estimates.

Principles of Consolidation

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Anika Therapeutics, Inc.

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All intercompany balances and transactions have been eliminated in consolidation.

As noted above , the Company made a strategic decision in October 2024 that resulted in the sales of Arthrosurface and Parcus Medical.

The consolidated financial statements reflect the Arthrosurface and Parcus results of operations as discontinued operations, and the related assets and liabilities as held-for-sale for all periods presented.

Certain reclassifications have been made to prior period financial operations to reflect discontinued operations presentation.

Unless otherwise noted, amounts and disclosures throughout these consolidated financial statements relate solely to continuing operations and exclude all discontinued operations.

Foreign Currency Translation

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Revenues and expenses are translated using the average exchange rates for the period.

The translation adjustments resulting from this process are included in stockholders’ equity as a component of accumulated other comprehensive income (loss) which resulted in a gain (loss) from foreign currency translation of $ 0.5 million, ($ 0.7 ) million, and ($ 1.2 ) million for the years ended December 31, 2023, 2022, and 2021, respectively.

The translation adjustments resulting from this process are included in stockholders’ equity as a component of accumulated other comprehensive income (loss) which resulted in a (loss) gain from foreign currency translation of $( 0.8 ) million, $ 0.5 million, and ($ 0.7 ) million for the years ended December 31, 2024, 2023, and 2022, respectively.

Gains and losses resulting from foreign currency transactions are recognized in the consolidated statements of operations.

Recorded balances that are denominated in a currency other than the functional currency are remeasured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the statements of operations.

The Company recognized a gain (loss) from foreign currency transactions of ($ 0.1 ) million, ($ 0.5 ) million, and ($ 0.4 ) million during the years ended December 31, 2023, 2022, and 2021, respectively.

The Company recognized a loss from foreign currency transactions of ($ 0.2 ) million, ($ 0.1 ) million, and ($ 0.5 ) million during the years ended December 31, 2024, 2023, and 2022, respectively.

Accounts Receivable

4 unchanged sentences

Accounts Receivable

$ 37,580 $ 36,235

Allowance for credit losses

Net balance, end of the year

$ 35,961 $ 34,627

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

1 unchanged sentence

Balance, beginning of the year

$ 1,608 $ 1,442 $ 1,523

Amounts provided

Amounts recovered

( 318 ) ( 180 ) ( 92 )

Amounts written off

( 153 ) ( 158 ) ( 73 )

Translation adjustments

( 26 ) ( 50 ) ( 72 )

Balance, end of the year

$ 1,619 $ 1,608 $ 1,442

Revenue Recognition

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These arrangements may include the grant of certain licenses, performance of development services, and the supply of product.

The Company’s largest such customer, DePuy Synthes Mitek Sports Medicine, a division of DePuy Orthopedics, Inc., part of the Johnson & Johnson Medical Companies (“Mitek”), represented 45 %, 43 % and 45 % of total revenues for the years-ended December 31, 2023, 2022 and 2021 respectively.

The Company completed the performance obligations related to granted licenses and development services under the agreements with Mitek prior to 2016 and has no remaining material performance obligations.

The Company’s largest such customer, Johnson & Johnson MedTech (“J&J MedTech”) (previously known as DePuy Synthes Mitek Sports Medicine), a division of DePuy Orthopedics, Inc., part of the Johnson & Johnson Medical Companies, represented 57 %, 62 % and 60 % of total revenues for the years-ended December 31, 2024, 2023 and 2022 respectively.

The Company completed the performance obligations related to granted licenses and development services under the agreements with J&J MedTech prior to 2016 and has no remaining material performance obligations.

The Company recognizes revenue from product sales when the customer obtains control of the Company’s product, which typically occurs upon shipment to the customer.

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The Company assesses if these options provide a material right to the licensee, and if so, they are accounted for as separate performance obligations.

Substantially all of the Company’s supply agreements do not provide options that are considered material rights.

Substantially all the Company’s supply agreements do not provide options that are considered material rights.

For sales to hospitals and ASCs, which generally pairs in-house sales representatives with local or regional distributors, the inventory is generally consigned so that products are available when needed for surgical procedures.

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The Company’s general product warranty does not extend beyond an assurance that the product or services delivered will be consistent with stated contractual specifications, which does not create a separate performance obligation.

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred as the amortization period of the assets that the Company otherwise would have recognized is one year or less in accordance with the practical expedient in paragraph ASC 340 - 40 - 25 - 4.

These costs are included in selling, general and administrative expenses.

Licensing, Milestone and Contract Revenue

The agreements with Mitek include variable consideration such as contingent development and regulatory milestones.

Since 2016, there have been no remaining regulatory milestones related to the Mitek agreements.

The agreements with J&J MedTech include variable consideration such as contingent development and regulatory milestones.

Since 2016, there have been no remaining regulatory milestones related to the J&J MedTech agreements.

In general, variable consideration is included in the transaction price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable to occur.

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As a result, the Company believes that its accounts receivable credit risk exposure is limited.

As of December 31, 2023 and 2022, Mitek represented 46 % and 47 %, respectively, of the Company’s accounts receivable balance.

As of December 31, 2024 and 2023, J&J MedTech represented 56 % and 63 %, respectively, of the Company’s accounts receivable balance.

No other single customer accounted for more than 10% of accounts receivable in either period.

Notes Receivable

In October 2024, the Company sold the Arthrosurface Asset Group to Phoenix Brio, Inc.

(the “Buyer”) (refer to Note 3) in exchange for consideration which included a 10-year $7.0 million non-interest-bearing note receivable (the “Term Note Receivable”), as well as variable consideration to be paid by the Buyer in twenty quarterly installments of 3% of the Buyer’s net sales (the “Royalty Note Receivable” and collectively the “Notes Receivable”).

The Company recognized the Term Note Receivable and the Royalty Note Receivable at their estimated fair values of $3.8 million and $2.1 million, respectively.

The fair value of the Notes Receivable was determined based on a discounted cash flow analysis of the contractually scheduled repayments for the Term Note Receivable and the forecasted variable payments for the Royalty Note Receivable, using a discount rate of 12.75%.

The Notes Receivable are subsequently measured at amortized cost, as adjusted for estimated credit losses.

Inventories are primarily stated at the lower of standard cost and net realizable value, with cost determined using the first-in, first-out method.

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However, components are aggregated as a single reporting unit if they have similar economic characteristics.

The Company has two reporting units:

the legacy Anika reporting unit, which specializes in therapies based on its hyaluronic acid, or HA, technology platform, and a reporting unit established in 2020 upon the acquisitions of Parcus Medical and Arthrosurface.

The Company has currently one reporting unit that it is has defined as its the legacy Anika reporting unit, which specializes in therapies based on its hyaluronic acid (“HA”) technology platform.

It previously had a second reporting unit established in 2020 upon the acquisitions of Parcus Medical and Arthrosurface.

Factors that the Company considers important, on an overall company basis, that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of the acquired assets or the strategy for its overall business, significant negative industry or economic trends, a significant decline in the Company’s stock price for a sustained period, or a reduction of its market capitalization relative to net book value.

4 unchanged sentences

If the reporting unit’s carrying value exceeds its fair value, the Company records an impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value, not to exceed the recorded amount of goodwill.

The Company performed a quantitative annual assessment for impairment of the remaining goodwill with respect to legacy Anika reporting unit as of November 30, 2023, including consideration of (i) general macroeconomic factors, (ii) industry and market conditions, and (iii) the extent of the excess of the fair value over the carrying value indicated in prior impairment testing.

The Company performed a qualitative annual assessment for impairment of the remaining goodwill with respect to legacy Anika reporting unit as of November 30, 2024, including consideration of (i) general macroeconomic factors, (ii) industry and market conditions, and (iii) the extent of the excess of the fair value over the carrying value indicated in prior impairment testing.

Accordingly, the Company determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2024.

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These intangible assets are carried at cost, net of accumulated amortization.

Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately five to sixteen years.

Amortization is recorded on a straight-line basis over the intangible assets' useful lives, which range from approximately three to sixteen years.

The Company reviews long-lived assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate.

1 unchanged sentence

If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis.

During the year ended December 31, 2023, the Company determined that certain of its intangible assets related to its Arthrosurface and Parcus reporting unit were impaired.

Please see Note 6 – Acquired Intangible Assets, net for further details.

In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors.

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The Company’s financial assets (which include cash equivalents and investments) have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services.

The Company’s financial liabilities have been classified as Level 3.

Non-Recurring Fair Value Measurement

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See Note 14, Equity Incentive Plan , for a description of the types of stock-based awards granted, the compensation expense related to such awards, and detail of equity-based awards outstanding.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets, or DTAs, and deferred tax liabilities, or DTLs, for the expected future tax consequences of events that have been included in the financial statements.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”), for the expected future tax consequences of events that have been included in the financial statements.

Under this method, we determine DTAs and DTLs based on the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

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In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

We record uncertain tax positions in accordance with ASC 740, Income Taxes , on the basis of a two -step process in which ( 1 ) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and ( 2 ) for those tax positions that meet the more-likely-than- not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We record uncertain tax positions in accordance with Code 740, Income Taxes , on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Interest and penalties associated with income tax filings are recorded in income tax expense.

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Accumulated other comprehensive income (loss) is reported as a component of stockholders' equity.

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 December 31, 2023.

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

Contingencies

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Recent Issued Accounting Pronouncements

No new accounting pronouncements issued or effective during the period had, or are expected to have, a material impact on the consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures, (“ASU 2023-09”), which is effective for annual periods beginning after December 15, 2024.

ASU 2023-09 intends to enhance the transparency as well as usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid.

The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 in an interim and annual basis.

The Company adopted ASU 2023-07 during the year ended December 31, 2024.

See Note 18 Segment Information in the accompanying notes to the consolidated financial statements for further detail.

Discontinued Operations

In October 2024, the Company announced a strategic shift to concentrate on OA pain management and regenerative solutions.

This strategic decision involved the sale of Arthrosurface Incorporated and the planned divestiture of Parcus Medical, LLC, both of which were acquired in early 2020.

Arthrosurface

On October 31, 2024 (the “Closing Date”), the Company completed the sale of all of the outstanding equity interests of Arthrosurface Incorporated, a Delaware corporation and former wholly-owned subsidiary of the Company (“Arthrosurface”), which held the Company’s Arthrosurface business, to Phoenix Brio, Incorporated, a Delaware corporation (“Buyer”), pursuant to the terms and conditions of a Share Purchase Agreement, dated as of the Closing Date (the “Purchase Agreement”), by and among the Company, Arthrosurface and Buyer (the “Arthrosurface Transaction”).

As consideration for the Arthrosurface Transaction, at the closing, the Buyer delivered to the Company a ten-year non-interest-bearing promissory note in the principal amount of $ 7.0 million.

Under the terms of the Purchase Agreement, the Company is also eligible to receive:

(i) for each calendar quarter, an amount equal to a percentage of the net sales (the “Revenue Payments”) for the sale of certain commercial and pipeline products during the period commencing on the Closing Date and ending on the earlier of the fifth (5th) anniversary of the Closing Date or the date on which the Buy-Out Payment (as defined below) is paid to the Company;

and (ii) a percentage of the gross proceeds with respect to the sale of certain commercial and pipeline products in a bona-fide arm’s length transaction with a third party that is not an affiliate of Buyer or the Company occurring within the first twenty four (24) months following the Closing Date.

The Buyer can also elect to make a payment in an amount equal to the greater of (A) $ 14.0 million or (B) ten (10) times the Revenue Payments ((A) and (B) together, the “Buy-Out Payment”) paid to the Company during the last full calendar year prior to the consummation of a change of control transaction or Buyer’s written notice to the Company that it is electing to make the Buy-Out Payment.

Pursuant to the Purchase Agreement, the aggregate consideration is subject to customary post-closing adjustments.

The Company valued the consideration with the sale of the Arthrosurface asset group to be $ 5.9 million and recorded as Notes Receivable on its balance sheet at December 31, 2024.

As a result of the Arthrosurface Transaction, the Company tested the assets associated with the Arthrosurface asset group to determine if the carrying value of the assets at September 30, 2024 were fully recoverable.

Given that the proceeds from the sale of the Arthrosurface assets group was less than the carrying value of its net assets, the Company recorded asset impairment charges totaling $ 27.4 million during the three-month period ended September 30, 2024 related to a write-down of its accounts receivable, inventories, property and equipment and intangible assets related to the Arthrosurface asset group.

Parcus Medical

On March 7, 2025, the Company completed the sale of all of the outstanding equity interests of Parcus Medical, LLC, (“Parcus Medical”) to Medacta Americas Manufacturing, Inc.

(“Medacta”), pursuant to the terms and conditions of a Membership Interest Purchase Agreement (the “Parcus Transaction”).

As consideration for the Parcus Transaction, at closing, Medacta delivered to the Company a payment of $4.5 million in cash.

Pursuant to the terms of the agreement, the aggregate consideration is subject to customary post-closing adjustments.

As a result of the Parcus Transaction, the Company tested the assets associated with the Parcus Medical asset group to determine if the carrying value of the assets at December 31, 2024 were fully recoverable.

Given that the proceeds from the sale of the Parcus Medical assets group was less than the carrying value of its net assets, the Company recorded asset impairment charges totaling $20.1 million during the three-month period ended December 31, 2024 related to a write-down of its inventories, property and equipment and intangible assets related to the Parcus Medical asset group.

The results of operations for Arthrosurface and Parcus are reported in income from discontinued operations within the consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, and the related assets and liabilities are presented within assets and liabilities held-for-sale on the consolidated balance sheets as of December 31, 2024 and 2023.

Years Ended December 31,

Costs and expenses

Loss from discontinued operations before income taxes

Benefit from income taxes

Net loss from discontinued operations

The assets and liabilities reported as held-for-sale consist of the following (in thousands):

As of December 31,

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Property and equipment, net

Right-of-use assets

Other long-term assets

Intangible assets, net

Total assets held-for-sale

Accounts payable

Accrued expenses and other current liabilities

Lease liabilities

Total liabilities held-for-sale

Selected financial information related to significant operating and investing cash flow items from discontinued operations are as follows (in thousands):

Years Ended December 31,

Amortization of acquisition related intangible assets

Non-cash operating lease cost

Loss on impairment of long-lived assets

Stock-based compensation expense

Provision for inventory

Purchases of property and equipment

Fair Value Measurements

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The Company’s investments, including cash equivalents, are all classified within Levels 1 of the fair value hierarchy and are valued based on quoted prices in active markets.

For cash, current 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.

For cash, current receivables, notes receivable, 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.

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.

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Money Market Funds

$ 55,485 $ 55,485 $ - $ - $ 55,485

Active Markets

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Money Market Funds

$ 67,801 $ 67,801 $ - $ - $ 67,801

There were no transfers between fair value levels in 2024 or 2023.

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Raw materials

$ 15,507 $ 20,535

Work-in-process

17,002 10,648

Finished goods

32,084 25,306

$ 64,593 $ 56,489

$ 46,386 $ 39,765

Other long-term assets

18,207 16,724

$ 64,593 $ 56,489

Inventories are stated net of inventory reserves of approximately $ 3.9 million and $ 3.6 million, as of December 31, 2024 and 2023, respectively.

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Equipment and software

$ 52,278 $ 52,112

Furniture and fixtures

Leasehold improvements

34,975 34,916

Construction in progress

93,867 94,462

Less accumulated depreciation

( 47,669 ) ( 46,183 )

$ 46,198 $ 48,279

Depreciation expense was $ 5.0 million, $ 4.9 million, and $ 4.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

2 unchanged sentences

Year Ended December 31, 2024

Currency Translation

Current Period

Impairment Charge

Accumulated Currency

Translation Adjustment

Net Book Value

2 unchanged sentences

Developed technology

$ 89,580 $ ( 1,608 ) $ ( 56,518 ) $ ( 29,481 ) $ 1,973 15

2,656 ( 1,006 ) - - 1,650 Indefinite

Customer relationships

9,000 - ( 5,113 ) ( 3,527 ) 360 10

Distributor relationships

4,700 ( 415 ) - ( 4,285 ) - 5

1,000 ( 189 ) - ( 728 ) 83 16

5,200 - ( 559 ) ( 4,081 ) 560 5

$ 112,136 $ ( 3,218 ) $ ( 62,190 ) $ ( 42,102 ) $ 4,626 13

Year Ended December 31, 2023

Currency Translation

Current Period

Impairment Charge

Net Book Value

1 unchanged sentence

Developed technology

$ 89,580 $ ( 1,608 ) $ - $ ( 23,686 ) $ 64,286 15

2,656 ( 1,006 ) - - 1,650 Indefinite

Customer relationships

9,000 - - ( 2,627 ) 6,373 10

Distributor relationships

4,700 ( 415 ) - ( 4,285 ) - 5

1,000 ( 189 ) - ( 680 ) 131 16

5,200 - - ( 3,041 ) 2,159 5

$ 112,136 $ ( 3,218 ) $ - $ ( 34,319 ) $ 74,599 13

Total amortization expense with respect to the definite lived acquired intangible assets was $ 7.8 million for each of the years ended December 31, 2023, 2022 and 2021, respectively.

Total amortization expense with respect to the definite lived acquired intangible assets was $ 0.7 million, $ 0.6 million and $ 0.6 million for each of the years ended December 31, 2024, 2023 and 2022, respectively.

The Company performed an assessment of its definite lived acquired intangible assets during the quarter ended December 31, 2024.

3 unchanged sentences

In developing its assumptions, the Company also considered observed trends of its industry participants.

The Company recorded a $ 62.2 million charge to intangible assets related to its Arthrosurface and Parcus asset groups during the year ended December 31, 2023 mainly due to slower than expected revenue growth from product sales that have impacted cash flows with these asset groups.

The Company performed its annual assessment of the IPR&D intangible asset as of November 30, 2024.

8 unchanged sentences

Balance, beginning January 1

$ 7,339 $ 7,781

Effect of foreign currency adjustments

Balance, ending December 31

$ 7,571 $ 7,339

The goodwill balance at December 31, 2024 and 2023 was related to the legacy Anika reporting unit.

The Company estimated the fair value of the reporting units using a discounted cash flow method, which is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period.

The Company estimated the fair value of its reporting units using a discounted cash flow method, which is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period.

The Company determined that a discounted cash flow model provided the best approximation of fair value of the reporting units for the purpose of performing the impairment test.

2 unchanged sentences

In developing its assumptions, the Company also considered observed trends of its industry participants.

For the legacy Anika reporting unit, the Company performed a quantitative assessment as of November 30, 2023.

For the legacy Anika reporting unit, the Company performed a qualitative assessment as of November 30, 2024.

The results of the impairment test indicated that the estimated fair value of the legacy Anika reporting unit was greater than its carrying value, therefore the Company determined that was more likely than not that the fair value of the legacy Anika reporting unit was not impaired as of November 30, 2024.

There was no remaining goodwill with respect to the reporting unit for Parcus Medical and Arthrosurface as of December 31, 2023.

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

As of December 31, 2023, the Company had real estate leases in Bedford, Massachusetts, Franklin, Massachusetts, Sarasota, Florida, Warsaw, Indiana and Padova, Italy.

As of December 31, 2024, the Company had real estate leases in Bedford, Massachusetts, Sarasota, Florida, Warsaw, Indiana and Padova, Italy and Sarasota, Florida.

In June 2022, the Company finalized a renewal option to extend the current term for its operating headquarters and manufacturing facility in Bedford through 2027.

2 unchanged sentences

The current term of the Padova lease extends to 2032, with a right to terminate at the Company’s option in 2026 without penalty.

the Company also has operating leases for corporate offices, manufacturing and warehouse facilities.

The operating leases consist of one real estate lease in Franklin, Massachusetts (Franklin lease) and two real estate leases in Sarasota, Florida (Sarasota lease).

In October 2022, the Company entered into an option to extend the current term of the Franklin lease through 2024.

In June 2022, the Company finalized an option to extend the current term of the two Sarasota leases through 2027.

The Company had two real estate leases in Sarasota, Florida that it uses for office space and manufacturing and warehouse facilities.

In June 2022, the Company extended its current term on these leases through 2027.

These leases were sold with the Parcus transaction in March 2025.

The significant assumptions in recognizing the right-of-use asset and lease liability are as follows:

6 unchanged sentences

The lease term begins at the lease commencement date and is determined on that date based on the non-cancelable term of the lease together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, or periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.

The components of lease expense and other information are as follows:

The components of lease expense and other information for continued and discontinued operations are as follows:

Years Ended December 31

Finance lease amortization of right-of-use assets

$ - $ 121 $ 143

Interest on finance lease liabilities

Finance lease expense

Operating lease expense

3,320 2,839 2,468

Short-term lease expense

1 unchanged sentence

Total lease expense

$ 3,745 $ 3,401 $ 2,951

Years Ended December 31

5 unchanged sentences

Operating cash flows from operating leases

$ 3,239 $ 2,471

Future commitments due under these lease agreements as of December 31, 2024 are as follows:

11 unchanged sentences

Operating lease liability- current

Discontinuation of software development project

Income taxes payable

Share based compensation

Clinical trial costs

Income taxes payable

Revolving Credit Agreement

19 unchanged sentences

Revenue and Geographic Information

The Company categorizes its product portfolio into three product families:

During the year ended December 31, 2024, the Company changed its classification of revenue.

The Company previously disclosed revenue in 3 categories:

OA Pain Management, Joint Preservation and Restoration and Non-Orthopedic.

As a result of a change in strategic focus made in 2024, revenue classification was delineated to provide a clear view to the Company’s value drivers.

Revenue will be split between the Commercial Channel and the Original Equipment Manufacturer (“OEM”) Channel.

In the Commercial Channel, the Company has full responsibility for sales, marketing, and pricing of products through its commercial leaders, direct sales representatives, and independent distributors.

Revenue from our Regenerative Solutions and international OA Pain Management businesses is included in the Commercial Channel.

In the OEM Channel, the Company is responsible for development and manufacturing of products sold to the Company’s OEM partners governed by long-term agreements, but the Company does not control sales, marketing, or pricing with end users.

Revenue from the Company’s U.S.

OA Pain Management business and the Non-Orthopedic business is now included in the OEM Channel.

All other revenue is reported in the Commercial Channel.

Product revenue by product family is as follows:

3 unchanged sentences

Percentage of

OA Pain Management

$ 101,927 61 % $ 91,984 59 % $ 85,084 58 %

Joint Preservation and Restoration

54,879 33 % 50,402 32 % 48,588 33 %

Non-Orthopedic

9,856 6 % 13,850 9 % 14,122 9 %

$ 166,662 100 % $ 156,236 100 % $ 147,794 100 %

Effective January 1, 2023, the Company reported revenue from product sales to veterinary customers within the Non-Orthopedic product family whereas such revenue had historically been reported within the OA Pain Management revenue product family for the prior period years ended December 31, 2022 and 2021.

Revenue from product sales to veterinary customers amounted to $ 4.2 million, $ 5.9 million and $ 4.4 million for 2023, 2022 and 2021, respectively, with the 2022 and 2021 revenue reclassified to Non-Orthopedic to conform to current presentation.

Product revenue from the Company’s sole significant customer, Mitek, as a percentage of the Company’s total product revenue was 45 %, 43 %, and 45 % for the years ended December 31, 2023, 2022, and 2021, respectively.

Commercial Channel

Product revenue from the Company’s sole significant customer, J&J MedTech, as a percentage of the Company’s total product revenue was 57 %, 62 %, and 60 % for the years ended December 31, 2024, 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 are as follows:

5 unchanged sentences

United States

$ 123,129 74 % $ 119,151 76 % $ 113,833 77 %

21,724 13 % 20,639 13 % 19,580 13 %

21,809 13 % 16,446 11 % 14,381 10 %

$ 166,662 100 % $ 156,236 100 % $ 147,794 100 %

Net long-lived assets, consisting primarily of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid.

2 unchanged sentences

United States

$ 45,077 $ 47,068

United Kingdom

$ 46,198 $ 48,279

Equity Incentive Plan

19 unchanged sentences

Cost of revenue

$ 646 $ 820 $ 716

Research and development

2,189 1,646 1,233

Selling, general and administrative

12,408 11,849 9,136

Total stock-based compensation expense

$ 15,243 $ 14,315 $ 11,085

For the years ended December 31, 2023, 2022 and 2021, windfall tax benefits (expense) of ($ 0.1 ) million, ($ 0.5 ) million and $ 0.1 million, respectively, are associated with the stock-based compensation expense above.

For the years ended December 31, 2024, 2023 and 2022, windfall (shortfall) tax expense of ($ 0.1 ) million, ($ 0.1 ) million and ($ 0.5 ) million, respectively, are associated with the stock-based compensation expense above.

Stock Options

10 unchanged sentences

Outstanding as of December 31, 2023

1,530,703 $ 34.93

404,903 $ 28.58

( 2,034 ) $ 18.30 $ 20

Forfeited and canceled

( 120,843 ) $ 36.59

Outstanding as of December 31, 2024

1,812,729 $ 33.42 7.5 $ 127

Vested, December 31, 2024

983,834 $ 36.66 6.7 $ 5

Vested or expected to vest, December 31, 2024

1,812,729 $ 33.42 7.5 $ 127

The aggregate intrinsic value of options exercised was immaterial for the years ended December 31, 2023 and 2022, respectively and was $ 0.3 million for the year ended December 31, 2021.

The aggregate intrinsic value of options exercised was immaterial for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company granted 547,450 stock options during the year ended December 31, 2024, of which 421,925 shares were premium-priced options.

17 unchanged sentences

Outstanding as of December 31, 2023

$ 675,405 $ 28.40

442,762 $ 26.66

( 261,939 ) $ 29.44

Forfeited and cancelled

( 84,870 ) $ 27.11

Outstanding as of December 31, 2024

$ 771,358 $ 27.19

The weighted-average grant-date fair value per share of RSUs granted was $ 26.62 , $ 26.66 and $ 25.14 for the years ended December 31, 2024, 2023 and 2022, respectively.

1 unchanged sentence

As of December 31, 2024, there was $ 5.1 million of unrecognized compensation cost related to time-based RSUs, which is expected to be recognized over a weighted-average period of 1.4 years.

Performance Stock Units

The Company granted performance stock units (“PSUs”) to employees in 2019 and 2020 which contained performance conditions with business and financial targets.

The business target, amounting to 30 % of the total performance condition awards, was measured and achieved in the 2019 fiscal year.

One of the financial targets, amounting to 55 % of the total performance condition awards, was measured and achieved in the 2022 fiscal year, while the remaining financial target, amounting to 15 % of the total performance condition awards, was not achieved.

The PSUs granted to employees in 2020 contained performance conditions with business and financial targets.

One of the business targets, amounting to 20 % of the total performance condition awards, was not achieved in the 2021 fiscal year, while the remaining business target related to a certain timely regulatory approval, amounting to 20 % of the total performance condition awards, was not achieved in the 2022 fiscal year.

The financial targets, amounting to 60 % of the total performance condition awards, were not achieved in the 2022 fiscal year.

The Company has no PSUs outstanding at December 31, 2023.

PSU activity for the year ended December 31, 2023 is as follows:

Number of Shares

Weighted Average Fair Value

Outstanding as of December 31, 2022

117,897 $ 34,98

Forfeited and cancelled

( 117,897 ) $ 34.98

Outstanding as of December 31, 2023

The weighted-average grant-date fair value per share of PSUs granted was $ 32.53 for the year ended December 31, 2022.

The total fair value of PSUs vested was $ 0.6 million for the year ended December 31, 2022.

There were no PSUs granted or vested during the years ended December 31, 2023 and 2021, respectively.

There are no PSUs outstanding as of December 31, 2023.

Employee Benefit Plan

2 unchanged sentences

Employees may elect to contribute a percentage of their compensation to the plan, and the Company will make 140 % matching contributions up to a limit of 5% of an employee's eligible compensation.

Effective January 1, 2025, the Company's matching contributions became 100% up to a limit of 5 % of an employee’s eligible compensation.

In addition, the Company may make annual discretionary contributions.

The Company made matching contributions of $ 2.6 million, $ 2.7 million, and $ 2.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Share Repurchase Plan

In May 2024, the Company’s Board of Directors approved a share repurchase program for an aggregate purchase price of $ 40.0 million to occur as follows:

(i) first $ 15.0 million was to be effected through a Rule 10b5-1 plan initiated prior to June 1, 2024 and to be effective through June 30, 2025, and (ii) the remaining amount to be purchased in the open market (the “ 2024 Share Repurchase Program ”).

In the event of positive “free cash flow” as defined in the 2024 Cooperation Agreement dated May 28, 2024, with Caligan Partners LP, Caligan Partners Master Fund LP and David Johnson, for the period from July 1, 2024 through June 30, 2025, the amount under the share repurchase program shall be increased by 50 % of such positive amount and in no event would we be required to make any purchases in the event that our cash would be less than $ 45.0 million after taking into account the share repurchase and reasonably anticipated capital expenditures and restructuring costs.

On May 28, 2024, the Company entered into a share repurchase agreement under a Rule 10b5-1 with Bank of America.

As of December 31, 2024, the Company had repurchased 505,903 shares at a cost of $ 10.9 million, representing 27 % of the then estimated total number of shares expected to be repurchased under the 2024 Share Repurchase Program.

Income Tax Expense

2 unchanged sentences

(Loss) income before income taxes

$ ( 86,061 ) $ ( 19,080 ) $ ( 2,529 )

734 334 4,956

$ ( 85,327 ) $ ( 18,746 ) $ 2,427

Years ended December 31,

Provision for (benefit from) income taxes:

$ 3,153 $ 1,005 $ 494

309 285 ( 635 )

Total current

3,774 1,386 26

( 5,045 ) ( 3,243 ) ( 553 )

( 1,418 ) ( 1,256 ) ( 426 )

29 ( 774 ) ( 754 )

Total deferred

( 6,434 ) ( 5,273 ) ( 1,733 )

Total benefit from income taxes

$ ( 2,660 ) $ ( 3,887 ) $ ( 1,707 )

Deferred Tax Assets and Liabilities

1 unchanged sentence

Deferred tax assets:

Capital loss carryforward

Capitalized research expenditures

$ 11,266 $ 5,451

Lease liability

Acquisition-related intangible asset

Impairment of assets

Stock-based compensation expense

Inventory reserves

Accrued expenses and other

Compensation accrual

Net operating loss carry forwards

Accrued expenses

Foreign currency exchange

Gross deferred tax assets

35,250 23,144

Valuation allowance

Deferred tax assets

$ 17,188 $ 23,144

Deferred tax liabilities:

Acquisition-related intangible asset

$ ( 288 ) $ ( 12,075 )

( 8,567 ) ( 8,804 )

Right of use asset

( 6,844 ) ( 7,252 )

Deferred tax liabilities

$ ( 15,699 ) $ ( 28,131 )

Net deferred tax liabilities

$ 1,489 $ ( 4,987 )

As of December 31, 2023, the Company had no Federal net operating loss (“NOL”) carryforwards and state net NOL carryforwards of $ 1.0 million that will begin to expire in 2027.

Net deferred tax assets

As of December 31, 2024, the Company had no Federal net operating loss (“NOL”) carryforwards, including with the Arthrosurface asset group and a negligible amount of state net NOL carryforwards that will begin to expire in 2039.

The Company also had NOL carryforwards in Italy of $ 2.7 million that do not expire but are limited to 80% of taxable income.

As of December 31, 2023, the Company had no federal research and development tax credit carryforwards and state research and development tax credit carryforwards of $ 0.7 million that will begin expiring in 2024.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and experimental (“R&D”) expenditures for tax years beginning after December 31, 2021.

This rule became effective for the Company during the year ended December 31, 2022 and resulted in the capitalization of R&D costs of $ 22.9 million and $ 23.4 million as of December 31, 2023 and 2022, respectively.

The Company will amortize these costs for tax purposes over 5 years if the R&D was performed in the U.S.

and over 15 years if the R&D was performed outside the U.S.

As of December 31, 2024, the Company had no federal or state research and development tax credit carryforwards.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and experimental (“R&D”) starting in the year the year ended December 31, 2022.

The Company will amortize these costs for tax purposes over 5 years if the R&D was performed in the United States and over 15 years if the R&D was performed outside the U.S.

This change has resulted in the recognition of additional deferred tax assets and increased cash tax liabilities.

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

1 unchanged sentence

Based upon future reversals of existing taxable temporary differences and projected future taxable income, the Company believes it is more likely than not it will realize its foreign deferred tax assets.

During the year ended December 31, 2023, the Company determined that its domestic deferred tax assets originating during the year ended December 31, 2023 would exceed the availability of reversing taxable temporary differences.

Due to significant negative evidence, including the Company’s current and prior year operating losses, the Company concluded its net deferred tax assets in the U.S.

are not more likely than not to be realizable.

As a result, the Company recorded a valuation allowance of $ 18.1 million against its U.S deferred tax assets at December 31, 2023.

The Company recorded a full valuation allowance on all deferred tax assets in the U.S.

as it was determined they are more likely than not to be realizable as of both December 31, 2024 and December 31, 2023.

The Company intends to maintain a full valuation allowance until there is sufficient evidence to support release of all or a portion of the allowance.

As of December 31, 2024, 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 in the Company’s foreign jurisdictions.

8 unchanged sentences

Statutory federal income tax rate

21.0 % 21.0 % 21.0 %

State tax expense, net of federal benefit

3.2 % 1.4 % ( 3.2 %)

Stock compensation

( 0.5 %) ( 4.7 %) 22.3 %

Section 162(m) limitation

( 1.0 %) ( 8.2 %) 8.7 %

Change in fair value of contingent consideration

- % - % ( 36.7 %)

Change in tax rates and state apportionment

- % 1.2 % ( 29.8 %)

Federal, state and foreign tax credits

1.3 % 5.1 % ( 28.4 %)

Valuation allowance

( 21.2 %) - % ( 35.3 %)

Return to provision adjustments

0.2 % 5.0 % - %

Other permanent items

0.1 % ( 0.1 %) 11.0 %

Effective income tax rate

3.1 % 20.7 % ( 70.4 %)

Accounting for Uncertainty in Income Taxes

The Company had no unrecognized tax benefits for the years ended December 31, 2023 and 2022, respectively.

The Company has $ 0.6 million and $0 of unrecognized tax benefits for the years ended December 31, 2024 and 2023, respectively.

The Company does not anticipate experiencing any significant increase or decrease in its unrecognized tax benefits within the twelve months following December 31, 2024.

In the normal course of business, Anika and its subsidiaries may be periodically examined by various taxing authorities.

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

2 unchanged sentences

With a few exceptions, the Company is no longer subject to income tax examinations for years prior to 2020.

In September 2024, the Company was notified by the Italian tax authorities that it had selected the Company’s tax returns for its Italian subsidiary for 2021 for examination and they remain under review.

Earnings per Share ( “ EPS ” )

5 unchanged sentences

Shares used in the calculation of basic EPS

14,656 14,561 14,401

Effect of dilutive securities:

1 unchanged sentence

Diluted shares used in the calculation of EPS

14,656 14,561 14,634

Stock options of 1.1 million shares were outstanding for the year ended December 31, 2021 and were not included in the computation of diluted EPS because the awards’ impact on EPS would have been anti-dilutive.

The Company was in a loss position during the years ended December 31, 2024, 2023 and 2022, therefore all potential common shares would have been anti-dilutive and accordingly were excluded from the computation of diluted EPS.

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance.

The Company operates in one business segment.

The Company’s CODM is its President and Chief Executive Officer, who reviews financial information presented on a consolidated basis.

The CODM’s financial review is focused on the consolidated financial results of the Company which is used as the basis for financial performance assessment and allocation of resources.

The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2024, 2023 and 2022 (in thousands):

For the Years Ended December 31,

Cost of revenue

Operating expenses:

Research & development

Selling, general & administrative

Total operating expenses

(Loss) income from operations

Interest and other income (expense), net

(Loss) income before income taxes

Provision for (benefit from) for income taxes

(Loss) income from continuing operations

Loss from discontinued operations

Total U.S revenues were $ 82.4 million, $ 86.9 million and $ 83.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

See Note 13 Revenue and Geographic Information for additional information about revenue by region.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data