What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-04 · 171 added, 133 removed, 499 unchanged (38% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net sales $ 383,814 $ 359,923 $ 1,154,388 $ 1,027,130

3 unchanged sentences

Research and development expense 15,599 12,458 46,102 33,860

Insurance settlement gain ( 33,034 ) — ( 33,034 ) —

Restructuring and other related charges 2,245 1,992 4,664 2,963

Operating income (loss) 5,553 ( 10,351 ) ( 25,074 ) ( 28,482 )

Amortization of acquired intangibles 31,993 31,025 94,603 88,067

Insurance settlement (gain) loss 975 — ( 32,059 ) —

Restructuring and other charges 2,989 2,230 7,653 5,193

Operating loss ( 17,919 ) ( 16,107 ) ( 42,993 ) ( 44,589 )

Interest expense, net 6,334 4,122 17,944 22,751

Debt extinguishment charges — — 20,104 29,870

Unrealized gain on investment in ESAB Corporation ( 135,537 ) — ( 135,537 ) —

Unrealized (gain) loss on investment in ESAB Corporation 63,125 — ( 72,412 ) —

Realized gain on cost basis investment ( 8,800 ) — ( 8,800 ) —

Other income ( 300 ) — ( 300 ) —

Income (loss) from continuing operations before income taxes ( 78,278 ) ( 20,229 ) 471 ( 97,210 )

Income tax expense (benefit) ( 4,211 ) ( 3,783 ) ( 3,847 ) ( 3,000 )

Income tax benefit ( 12,329 ) ( 6,651 ) ( 16,176 ) ( 9,651 )

Net income (loss) from continuing operations ( 65,949 ) ( 13,578 ) 16,647 ( 87,559 )

Income (loss) from discontinued operations, net of taxes ( 527 ) 40,435 10,163 164,358

Net income 76,985 29,702 93,286 49,942

Net income (loss) ( 66,476 ) 26,857 26,810 76,799

net income attributable to noncontrolling interest from continuing operations - net of taxes 136 191 533 836

net income attributable to noncontrolling interest from discontinued operations - net of taxes — 818 966 2,399

Net income attributable to Enovis Corporation $ 76,855 $ 28,642 $ 91,923 $ 47,716

Net income (loss) attributable to Enovis Corporation $ ( 66,612 ) $ 25,848 $ 25,311 $ 73,564

Net income (loss) per share - basic

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Dollars in thousands

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net income $ 76,985 $ 29,702 $ 93,286 $ 49,942

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

Net income (loss) $ ( 66,476 ) $ 26,857 $ 26,810 $ 76,799

Other comprehensive income (loss):

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Dollars in thousands, except share amounts

July 1, 2022 December 31, 2021

September 30, 2022 December 31, 2021

CURRENT ASSETS:

29 unchanged sentences

133,333,333 shares authorized;

54,111,118 and 52,083,078 shares issued and outstanding as of July 1, 2022 and December 31, 2021, respectively

54,148,315 and 52,083,078 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,908,913 4,544,315

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Net income — — — 76,855 — 130 76,985

Other comprehensive income, net of tax of $ —

Other comprehensive loss, net of tax of $ —

— — — — ( 29,443 ) ( 1,433 ) ( 30,876 )

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Balance at July 1, 2022 54,111,118 54 2,897,207 680,947 ( 88,941 ) 2,196 3,491,463

Net loss — — — ( 66,612 ) — 136 ( 66,476 )

Other comprehensive loss, net of tax of $ —

— — — — ( 27,670 ) ( 1,166 ) ( 28,836 )

Adjustments to distribution of ESAB Corporation — — 2,451 — — — 2,451

Acquisition — — — — — 345 345

Common stock-based award activity 37,197 — 9,255 — — — 9,255

Balance at September 30, 2022 54,148,315 $ 54 $ 2,908,913 $ 614,335 $ ( 116,611 ) $ 1,511 $ 3,408,202

See Notes to Condensed Consolidated Financial Statements.

ENOVIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Dollars in thousands, except share amounts

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total

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Balance at July 2, 2021 47,447,215 47 4,225,343 565,083 ( 482,619 ) 44,106 4,351,960

Net income — — — 25,848 — 1,009 26,857

Distributions to noncontrolling owners — — — — — ( 1,496 ) ( 1,496 )

Other comprehensive income (loss), net of tax of $ 4,478

— — — — ( 50,023 ) 364 ( 49,659 )

Conversion of tangible equity units into common stock 1,845,700 2 ( 2 ) — — — —

Common stock issued for acquisition, net of issuance costs 2,181,507 3 285,678 — — — 285,681

Common stock-based award activity 119,525 — 17,181 — — — 17,181

Balance at October 1, 2021 51,593,947 $ 52 $ 4,528,200 $ 590,931 $ ( 532,642 ) $ 43,983 $ 4,630,524

See Notes to Condensed Consolidated Financial Statements.

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Dollars in thousands

Six Months Ended

July 1, 2022 July 2, 2021

Nine Months Ended

September 30, 2022 October 1, 2021

Cash flows from operating activities:

5 unchanged sentences

Unrealized gain on investment in ESAB Corporation ( 72,412 ) —

Realized gain on cost basis investment ( 8,800 ) —

Debt extinguishment charges 20,104 29,870

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Effect of foreign exchange rates on Cash and cash equivalents and Restricted Cash 1,557 ( 1,659 )

Decrease in Cash and cash equivalents and Restricted cash ( 623,765 ) ( 38,760 )

(Decrease) increase in Cash and cash equivalents and Restricted cash ( 664,413 ) 76,413

Cash and cash equivalents and Restricted Cash, beginning of period 719,370 101,069

Cash and cash equivalents, end of period $ 54,957 $ 177,482

Supplemental disclosures:

Common stock issued for acquisition, net of issuance costs $ — $ 285,681

See Notes to Condensed Consolidated Financial Statements.

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To affect the Separation, Colfax distributed to its stockholders one share of ESAB common stock for every three shares of Colfax common stock held at the close of business on March 22, 2022, with the Company retaining 10 % of the shares of ESAB common stock immediately following the Separation.

At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and was valued at $ 263.1 million.

At September 30, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and was valued at $ 200.3 million.

The Company intends to divest its retained stake in ESAB, in a tax-efficient exchange for its outstanding debt no later than 12 months after the Distribution Date.

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Actual results may differ from those estimates.

The COVID-19 outbreak, which was characterized as a pandemic by the World Health Organization on March 11, 2020, has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities in the Condensed Consolidated Financial Statements as the extent and period of recovery from the COVID-19 outbreak and related economic disruption are difficult to

COVID-19, which was characterized as a pandemic by the World Health Organization on March 11, 2020, has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities in the Condensed Consolidated Financial Statements as periodic surges in cases, the extent and period of recovery, and related economic disruption are difficult to

ENOVIS CORPORATION

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Recently Issued Accounting Pronouncements

The Company has not adopted any new accounting standards during the six months ended July 1, 2022.

The Company has not adopted any new accounting standards during the nine months ended September 30, 2022.

There are no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial position, results of operations or cash flows.

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Total liabilities associated with discontinued operations (1)

(1) Total assets and liabilities include asbestos-related contingencies and insurance coverages previously reported by Colfax as discontinued operations.

(1) Total assets and liabilities include asbestos-related contingencies and insurance coverages previously reported as discontinued operations.

See Asbestos Contingencies section below for more information.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The financial results of the discontinued operation for the three and six months ended July 1, 2022 and July 2, 2021 include the fabrication technology business through the date of Separation and separation-related costs incurred and are presented as income from discontinued operations, net of income taxes, on the Company’s Consolidated Statements of Operations.

The following table presents the financial results of the fabrication technology business:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

The financial results of the discontinued operations for the three and nine months ended September 30, 2022 and October 1, 2021 include the fabrication technology business through the date of Separation and separation-related costs incurred and are presented as income from discontinued operations, net of income taxes, on the Company’s Consolidated Statements of Operations.

The following table presents the financial results of the Company’s discontinued operations:

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

(in thousands)

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Selling, general and administrative expense 527 124,313 175,191 382,037

35,463 130,425 174,664 257,724

Restructuring and other related charges — 3,488 5,304 6,563

Operating loss ( 35,463 ) 84,478 44,363 153,899

Restructuring and other charges — 4,227 5,304 10,790

Operating income (loss) ( 527 ) 78,455 43,836 232,354

Interest expense — 9,417 8,035 34,254

Pension settlement gain — — — ( 11,208 )

Income from discontinued operations before income taxes ( 35,463 ) 83,569 36,328 140,270

Income tax (benefit) expense 8,203 11,740 25,638 16,347

Income from discontinued operations, net of taxes $ ( 43,666 ) $ 71,829 $ 10,690 $ 123,923

(1) Selling, general and administrative expenses for the three months ended July 1, 2022 include certain transaction costs incurred to effect the Separation.

Total income attributable to noncontrolling interest related to ESAB, net of taxes was $ 1.0 million for the six months ended July 1, 2022, and $ 0.7 million and $ 1.6 million for the three and six months ended July 2, 2021, respectively.

Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $ 29.6 million.

Cash provided by operating activities related to discontinued operations for the six months ended July 2, 2021 was $ 122.6 million.

Cash used in investing activities related to discontinued operations for the six months ended July 1, 2022 and July 2, 2021 was $ 3.2 million and $ 14.4 million, respectively.

Income (loss) from discontinued operations before income taxes ( 527 ) 69,038 35,801 209,308

Income tax expense — 28,603 25,638 44,950

Income (loss) from discontinued operations, net of taxes $ ( 527 ) $ 40,435 $ 10,163 $ 164,358

Total income attributable to noncontrolling interest related to ESAB, net of taxes was $ 1.0 million for the nine months ended September 30, 2022, and $ 0.8 million and $ 2.4 million for the three and nine months ended October 1, 2021, respectively.

Cash used in operating activities related to discontinued operations for the nine months ended September 30, 2022 was $ 31.9 million.

Cash provided by operating activities related to discontinued operations for the nine months ended October 1, 2021 was $ 198.8 million.

Cash used in investing activities related to discontinued operations for the nine months ended September 30, 2022 and October 1, 2021 was $ 3.2 million and $ 22.7 million, respectively.

Asbestos Contingencies

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Subsequent to the Separation, the asbestos-related selling, general and administrative activity and asbestos assets and liabilities are no longer reflected in the Enovis financial statements.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisitions and Investments

2022 Acquisitions

During the six months ended July 1, 2022, the Company completed three asset acquisitions, one business acquisition and two investments, which are carried at cost as they do not have a readily determinable fair value.

Two of these transactions were completed by the Company’s Reconstructive segment, and the other four transactions were completed by the Prevention & Recovery segment.

During the nine months ended September 30, 2022, the Company completed four asset acquisitions, two business combinations, and one investment, which is carried at cost as it does not have a readily determinable fair value.

Two of these transactions were completed by the Company’s Reconstructive segment, and the other five transactions were completed by the Prevention & Recovery segment.

The asset acquisitions broaden the Company’s product offering and distribution network.

Aggregate purchase consideration for the three asset acquisitions was $ 18.2 million, of which $ 8.6 million was paid in cash and $ 9.6 million of deferred and contingent consideration.

The investments were acquired for $ 12.0 million in cash consideration.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Aggregate purchase consideration for the four asset acquisitions was $ 22.3 million, of which $ 12.6 million was paid in cash and $ 9.6 million consists of deferred and contingent consideration.

The investment was acquired for $ 10.0 million in cash consideration.

On May 6, 2022, the Company completed a business acquisition in its Reconstructive segment of KICo Knee Innovation Company Pty Limited and subsidiaries, an Australian private company doing business as 360 Med Care, by acquiring 100 % of its equity interests.

The entity is an Australian medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers.

360 Med Care is a medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers.

The acquisition is accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the acquisition date.

The Company paid $ 14.3 million for the acquisition, net of cash received, and recorded estimated contingent consideration at fair value of $ 12.8 million related to certain future revenue targets.

The Company allocated $ 13 million to goodwill and $ 18.2 million to intangible assets acquired.

Purchase accounting procedures are ongoing and revisions to contingent consideration, intangible assets acquired, and adjustments for working capital true-ups may be recorded in future periods during the purchase price allocation period.

The Company paid $ 14.3 million for the acquisition, net of cash received, and recorded estimated contingent consideration at fair value of $ 12.8 million related to expected results over future revenue targets.

The Company has preliminarily allocated $ 13 million to goodwill and $ 18.2 million to intangible assets acquired.

The 360 Med Care acquisition broadens our customer base in Australia and adds to our overall product offerings.

As of July 1, 2022, the balance of investments held by the company without readily determinable fair values was $ 31.9 million.

On July 5, 2022, the Reconstructive segment of the Company acquired a controlling interest of Insight Medical Systems (“Insight”).

Insight’s flagship solution, ARVIS, is an FDA-cleared augmented reality solution precisely engineered for the specific needs of hip and knee replacement surgery.

The ARVIS navigation unit consists of a hands-free heads-up display worn by the surgeon which provides surgical guidance at the point of care in a streamlined, space-conserving, and cost-effective manner compared to traditional robotic offerings.

The acquisition is accounted for under the acquisition method of accounting as a step-acquisition, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the acquisition date.

Enovis made initial investments in Insight in 2020 and 2021, which were carried at cost.

During the quarter, the Company acquired an additional 53.7 % interest in Insight for $ 34.2 million net of cash received, and recorded contingent consideration of $ 5.0 million, which is the maximum payable under the agreement based on Insight’s achievement of certain milestones related to ARVIS.

As of September 30, 2022, Enovis holds 99.5 % interest in Insight and recognizes $ 0.3 million noncontrolling equity interest in its financial statements attributed to Insight.

The Company has preliminarily allocated $ 36.3 million to goodwill and $ 38.4 million to intangible assets acquired.

Goodwill is primarily driven by expected synergies between ARVIS’ augmented reality surgical guidance system and our existing customer base and existing products.

The Company does not expect any of the goodwill to be deductible for tax purposes.

As a result of obtaining control of Insight, the Company remeasured its initial investments to its fair value resulting in a $ 8.8 million gain.

As of September 30, 2022, the balance of investments held by the company without readily determinable fair values was $ 16.5 million.

The investments are carried at cost minus impairments, if any, plus adjustments for fair value indicators from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

There have been no impairments or upward adjustments in the current year or since acquisition of the investments.

The Company holds equity securities in ESAB Corporation for total value of $ 263.1 million which are recorded at fair value.

During the three and six months ended July 1, 2022, the Company recorded an unrealized gain of $ 135.5 million over cost basis.

There have been no impairments or upward adjustments in the current year or since acquisition of the investments except for the gain on our previously held equity investment in Insight discussed above.

As a result of acquiring control of Insight, Enovis now consolidates the assets, liabilities, and results of operations of Insight and therefore current year and previous investments in Insight of $ 16.6 million are no longer recorded as cost basis investments.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company holds equity securities in ESAB Corporation with a total value of $ 200.3 million, which are recorded at fair value.

During the three and nine months ended September 30, 2022, the Company recorded an unrealized loss of $ 63.1 million and an unrealized gain of $ 72.4 million over cost basis, respectively.

The Company does not hold other equity securities measured at fair value.

2021 Acquisitions

During the six months ended July 2, 2021, the Company completed three acquisitions in its Reconstructive segment for aggregate net cash consideration of $ 208.1 million.

The acquisitions are accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date.

During the nine months ended October 1, 2021, the Company completed three business combinations and one asset acquisition in its Reconstructive segment for aggregate net cash consideration of $ 196.4 million and one asset acquisition in its Prevention and Recovery segment for cash consideration of $ 4 million.

The Reconstructive segment acquired Trilliant Surgical (“Trilliant”), a provider of foot and ankle orthopedic implants, in the first quarter of 2021 for net cash consideration of $ 79.6 million.

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foot and ankle product lines.

The purchase accounting for all acquisitions made in the six months ended July 2, 2021 has been completed.

The Company also made two investments in medical technology businesses during the six months ended July 2, 2021 for a total of $ 14.8 million.

Both investments were carried at cost as of July 1, 2022, as they do not have a readily determinable fair value.

The purchase accounting for all acquisitions made in the nine months ended October 1, 2021 has been completed.

The Company also made two investments in medical technology businesses during the nine months ended October 1, 2021 for a total of $ 14.8 million, one of which was a previous investment in Insight for $ 13.3 million.

The Insight investment is now consolidated as part of the acquisition discussed above and the other investment is carried at cost as of September 30, 2022, as it does not have a readily determinable fair value.

During the second half of 2021, the Reconstructive segment acquired Mathys AG Bettlach for total acquisition equity consideration of $ 285.7 million, which included cash acquired of $ 14.7 million.

Purchase allocation procedures for this acquisition are ongoing as of July 1, 2022.

Purchase accounting procedures for this acquisition have been completed and the finalized allocation is presented below.

For further information on prior year acquisitions and investments, refer to Note 5.

“Acquisitions” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

There have been no material changes to purchase accounting estimates for the prior year acquisitions since the issuance of the Company’s 2021 Form 10-K .

July 28, 2021

(In thousands)

Trade receivables

Property, plant and equipment

Intangible assets

Accounts payable

Other assets and liabilities, net

Consideration, net of cash acquired

The Company provides orthopedic solutions, including products and services spanning the full continuum of patient care, from injury prevention to rehabilitation.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

(In thousands)

2 unchanged sentences

Total $ 383,814 $ 359,923 $ 1,154,388 $ 1,027,130

Given the nature of the Company’s business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of July 1, 2022 is immaterial.

Given the nature of the Company’s business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of September 30, 2022 is immaterial.

The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates, implicit price concessions, and other discounts.

The Company includes estimated amounts of variable consideration in the transaction price to the extent that it is probable there will not be a significant reversal of revenue.

In some circumstances, customers are billed in advance of revenue recognition, resulting in contract liabilities.

As of December 31, 2021 and 2020, total contract liabilities were $ 9.2 million and $ 15.0 million, respectively.

During the three and six months ended July 1, 2022, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 2.6 million and $ 6.2 million, respectively.

During the three and six months ended July 2, 2021, revenue recognized that was included in the contract liability balance at the beginning of the year was $ 2.3 million and $ 3.1 million, respectively.

As of July 1, 2022 and July 2, 2021, total contract liabilities were $ 3.1 million and $ 13.6 million, respectively, and were included in Accrued liabilities on the Company’s Condensed Consolidated Balance Sheets.

The contract liabilities as of December 31, 2021 included $ 4.9 million of certain one-time advance payments.

Allowance for Credit Losses

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A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Condensed Consolidated Balance Sheets is as follows:

Six Months Ended July 1, 2022

Nine Months Ended September 30, 2022

of Period Charged to Expense, net Write-Offs, Deductions and Other, net Foreign

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Net income per share from continuing operations was computed as follows:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

(In thousands, except share and per share data)

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54,136,889 53,031,128 54,025,144 50,274,020

Net effect of potentially dilutive securities - stock options, restricted stock units and tangible equity units 441,300 — 489,134 —

Net effect of potentially dilutive securities - stock options and restricted stock units — — 434,859 —

Weighted-average shares of Common stock outstanding – diluted

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$ ( 1.22 ) $ ( 0.26 ) $ 0.30 $ ( 1.76 )

(1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $ 0.1 million and $ 0.4 million for the three and six months ended July 1, 2022, respectively, and $ 0.4 million and $ 0.6 million for the three and six months ended July 2, 2021, respectively.

(1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $ 0.1 million and $ 0.5 million for the three and nine months ended September 30, 2022, respectively, and $ 0.2 million and $ 0.8 million for the three and nine months ended October 1, 2021, respectively.

As a result of the reverse stock split following the Separation, prior-period share and per share figures contained in the Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

For the three and six months ended July 1, 2022 and the three and six months ended July 2, 2021, the weighted-average shares of Common stock outstanding - basic includes the impact of 6.1 million shares, as adjusted for the reverse stock split, for the actual or potential issuance of shares from tangible equity unit purchase contracts.

For the three and nine months ended September 30, 2022 and the three and nine months ended October 1, 2021, the weighted-average shares of Common stock outstanding - basic includes the impact of 6.1 million shares, as adjusted for the reverse stock split, for the actual or potential issuance of shares from tangible equity unit purchase contracts.

In January 2022, the final remaining amount of tangible equity unit purchase contracts were converted into approximately 1.7 million shares of the Company’s common stock, as adjusted for the reverse stock split.

All issuances of Company common stock related to the tangible equity units were converted at the minimum settlement rate as a result of the increase in the Company’s share price.

All the issued shares are included in the Common stock issued and outstanding as of July 1, 2022.

All the issued shares are included in the Common stock issued and outstanding as of September 30, 2022.

See Note 8, “Equity” for details.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and six months ended July 1, 2022 excludes 0.4 million of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and six months ended July 2, 2021 excludes 0.5 million and 0.4 million, respectively, of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and nine months ended September 30, 2022 excludes 0.5 million and 0.4 million, respectively, of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and nine months ended October 1, 2021 excludes 0.3 million and 0.4 million, respectively, of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the three and six months ended July 1, 2022, Income from continuing operations before income taxes was $ 116.4 million and $ 78.7 million, respectively, while income tax benefit was $ 4.2 million and $ 3.8 million, respectively.

The effective tax rate was ( 3.6 )% and ( 4.9 )% for the three and six months ended July 1, 2022, both of which differed from the 2022 federal statutory rate of 21% mainly due to non-taxable unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction.

During the three and six months ended July 2, 2021, Loss from continuing operations before income taxes was $ 45.9 million and $ 77.0 million, respectively, while the income tax benefit was $ 3.8 million and $ 3.0 million, respectively.

The effective tax rate was 8.2 % and 3.9 % for the three and six months ended July 2, 2021, respectively, both of which differed from the 2021 U.S.

During the three and nine months ended September 30, 2022, Income (loss) from continuing operations before income taxes was $( 78.3 ) million and $ 0.5 million, respectively, while Income tax benefit was $ 12.3 million and $ 16.2 million, respectively.

The effective tax rate was 15.8 % and ( 3,434.4 )% for the three and nine months ended September 30, 2022, both of which differed from the 2022 federal statutory rate of 21% mainly due to non-taxable unrealized gains on the investment in ESAB and non-taxable realized gain on cost basis investment offset by non-deductible costs related to the tax-free separation transaction.

During the three and nine months ended October 1, 2021, Loss from continuing operations before income taxes was $ 20.2 million and $ 97.2 million, respectively, while Income tax benefit was $ 6.7 million and $ 9.7 million, respectively.

The effective tax rate was 32.9 % and 9.9 % for the three and nine months ended October 1, 2021, respectively, both of which differed from the 2021 U.S.

federal statutory rate of 21% mainly due to U.S.

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No repurchases of the Company’s Common stock have been made under this plan since the third quarter of 2018.

As of July 1, 2022, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

As of September 30, 2022, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

The timing, amount and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors.

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Accumulated Other Comprehensive Loss

The following tables present the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the six months ended July 1, 2022 and July 2, 2021.

All amounts are net of tax and noncontrolling interest, if any.

11 unchanged sentences

Distribution of ESAB Corporation 84,460 469,220 ( 53,699 ) 499,981

Balance at July 1, 2022 $ — $ ( 88,941 ) $ — $ ( 88,941 )

Balance at September 30, 2022 $ — $ ( 116,611 ) $ — $ ( 116,611 )

ENOVIS CORPORATION

11 unchanged sentences

Net Other comprehensive income (loss) 4,282 ( 98,891 ) 14,073 ( 80,536 )

Balance at July 2, 2021 $ ( 110,100 ) $ ( 402,328 ) $ 29,809 $ ( 482,619 )

Balance at October 1, 2021 $ ( 108,501 ) $ ( 459,868 ) $ 35,727 $ ( 532,642 )

Tangible equity unit offering

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All the TEU prepaid stock purchase contracts converted at the minimum settlement rate.

Approximately 1.3 million and 1.6 million TEU prepaid stock purchase contracts were settled into approximately 1.7 million and 2.2 million shares of Company common stock as adjusted for the reverse split, during the six months ended July 1, 2022 and July 2, 2021, respectively.

Approximately 1.3 million and 3.0 million TEU prepaid stock purchase contracts were settled into approximately 1.7 million and 4.0 million shares of Company common stock as adjusted for the reverse split, during the nine months ended September 30, 2022 and October 1, 2021, respectively.

Since the 4.6 million TEU prepaid stock purchase contracts were mandatorily converted into shares of Company common stock at the minimum settlement rate or greater, 6.1 million shares, as adjusted for the reverse split, are included in basic net income per share calculations for all periods presented.

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Inventories, net consisted of the following:

July 1, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In thousands)

5 unchanged sentences

$ 416,872 $ 356,233

COLFAX CORPORATION

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-term debt consisted of the following:

July 1, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In thousands)

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The Enovis Credit Agreement contains various events of default (including failure to comply with the covenants under the Enovis Credit Agreement and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Enovis Term Loan and the Enovis Revolver.

As of July 1, 2022, the Company was in compliance with the covenants under the Enovis Credit Agreement.

For further descriptions of the Company’s financial covenants as of April 1, 2022, refer to Note 13, “Debt” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

As of July 1, 2022, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 2.58 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 900 million available on the Revolver.

As of September 30, 2022, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of September 30, 2022, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 3.98 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 900 million available on the Revolver.

Euro Senior Notes

The Company had senior unsecured notes with an aggregate principal amount of € 350 million due in May 2025, with an interest rate of 3.25 %.

The Euro Senior Notes were redeemed on April 7, 2022 including a 100.813 % redemption premium after the completion of the Separation.

COLFAX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Euro Senior Notes were redeemed on April 7, 2022 at a 100.813 % redemption premium after the completion of the Separation.

TEU Amortizing Notes

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company previously had 6.50 % TEU amortizing notes at an initial principal amount of $ 15.6099 per note with equal quarterly cash installments of $ 1.4375 per note representing a payment of interest and partial payment of principal.

The Company paid $ 6.5 million and $ 12.3 million of principal on the TEU amortizing notes in the six months ended July 1, 2022 and July 2, 2021, respectively.

The Company paid $ 6.5 million and $ 18.6 million of principal on the TEU amortizing notes in the nine months ended September 30, 2022 and October 1, 2021, respectively.

The final installment payment was made on January 15, 2022.

The Company had senior notes with a remaining principal amount of $ 300 million, which were due on February 15, 2026 and had an interest rate of 6.375 %.

The 2026 Notes were redeemed on April 7, 2022 including a 103.188 % redemption premium after the completion of the Separation.

The 2026 Notes were redeemed on April 7, 2022 at a 103.188 % redemption premium after the completion of the Separation.

Other Indebtedness

In addition to the debt agreements discussed above, the Company is party to bilateral credit facilities with a borrowing capacity of $ 30.0 million.

As of July 1, 2022, there were $ 0.9 million in outstanding borrowings under these facilities.

In addition to the debt agreements discussed above, the Company is party to overdraft facilities with a borrowing capacity of $ 30.0 million.

The Company is party to a letter of credit facility with a capacity of $ 15.0 million.

Total letters of credit of $ 2.3 million were outstanding as of July 1, 2022.

Total letters of credit of $ 6.6 million were outstanding as of September 30, 2022.

Deferred Financing Fees

In total, the Company had deferred financing fees of $ 6.2 million included in its Condensed Consolidated Balance Sheet as of July 1, 2022, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

In total, the Company had deferred financing fees of $ 5.6 million included in its Condensed Consolidated Balance Sheet as of September 30, 2022, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements.

In conjunction with the Separation-related debt redemptions and extinguishment of its prior credit facility in the second quarter of 2022, the Company recorded $ 7.4 million of noncash write-offs of original issue discounts and deferred financing fees.

2 unchanged sentences

Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following:

July 1, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In thousands)

14 unchanged sentences

$ 225,021 $ 225,391

COLFAX CORPORATION

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2 unchanged sentences

A summary of the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Condensed Consolidated Balance Sheets is as follows:

Six Months Ended July 1, 2022

Nine Months Ended September 30, 2022

Balance at Beginning of Period Provisions Payments Balance at End of Period

(In thousands)

Restructuring and other related charges:

Restructuring and other charges:

Termination benefits (1)

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(2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities, site cost structures, and product lines.

(3) For the six months ended July 1, 2022 , $ 3.4 million and $ 2.1 million of the Company’s total provisions were related to the Prevention and Recovery and Reconstructive segments, respectively.

Restructuring and other related charges includes $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended July 1, 2022.

(3) For the nine months ended September 30, 2022 , $ 4.7 million and $ 3.8 million of the Company’s total provisions were related to the Prevention and Recovery and Reconstructive segments, respectively.

Restructuring and other charges includes $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.

Financial Instruments and Fair Value Measurements

The carrying values of financial instruments, including trade receivables, other receivables and accounts payable, approximate their fair values due to their short-term maturities.

The estimated fair value of the Company’s debt, which was $ 0.5 billion and $ 2.1 billion as of July 1, 2022 and December 31, 2021, respectively, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy.

The estimated fair value of the Company’s debt, which was $ 0.4 billion and $ 2.1 billion as of September 30, 2022 and December 31, 2021, respectively, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy.

The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

As of July 1, 2022, the Company held $ 25.0 million in Level Three liabilities arising from contingent consideration related to acquisitions.

As of September 30, 2022, the Company held $ 29.4 million in Level Three liabilities arising from contingent consideration related to acquisitions.

The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements.

1 unchanged sentence

A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates.

During the six months ended July 1, 2022, the company recorded contingent consideration of $ 20.0 million in conjunction with current acquisitions.

There were no transfers in or out of Level One, Two or Three during the six months ended July 1, 2022.

During the nine months ended September 30, 2022 the company recorded contingent consideration of $ 24.4 million in conjunction with current acquisitions.

There were no transfers in or out of Level One, Two or Three during the nine months ended September 30, 2022.

Investment in ESAB

On April 4, 2022, the Company completed the Separation and retained 10 % of the shares of ESAB common stock.

The Company did not retain a controlling interest in ESAB and, therefore, the fair value of the retained shares is included in the assets of continuing operations on the Company’s Condensed Consolidated Balance Sheet as of July 1, 2022, and the subsequent fair value changes are included in results from continuing operations on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022.

At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and it is classified as Level 1 in the fair value hierarchy.

The fair value of the ESAB investment as of July 1, 2022 was $ 263.1 million, and the gain on investment for the three and six months ended July 1, 2022 was $ 135.5 million.

COLFAX CORPORATION

The Company did not retain a controlling interest in ESAB and, therefore, the fair value of the retained shares is included in the assets of continuing operations on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2022, and the subsequent fair value changes are included in results from continuing operations on the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022.

At September 30, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and it is classified as Level 1 in the fair value hierarchy.

The fair value of the ESAB investment as of September 30, 2022 was $ 200.3 million, and there was an

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

unrealized loss on investment of $ 63.1 million for the three months ended September 30, 2022 and an unrealized gain on investment of $ 72.4 million for the nine months ended September 30, 2022.

Deferred Compensation Plans

The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers.

As of July 1, 2022 and December 31, 2021 the fair value of these plans were $ 9.7 million and $ 11.2 million, respectively.

As of September 30, 2022 and December 31, 2021 the fair value of these plans were $ 9.4 million and $ 11.2 million, respectively.

These plans are deemed to be Level Two within the fair value hierarchy.

Foreign Currency Contracts

As of July 1, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $ 4.6 million and $ 7.6 million, respectively.

During the three and six months ended July 1, 2022, the Company recognized unrealized losses of $ 0.1 million and $ 0.2 million, respectively, and realized losses of $ 0.2 million and $ 0.3 million, respectively, on its Condensed Consolidated Statements of Operations related to its derivative instruments.

As of September 30, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $ 2.8 million and $ 7.6 million, respectively.

During the nine months ended September 30, 2022, the Company recognized an unrealized loss of $ 0.2 million related to its derivative instruments.

During the three and nine months ended September 30, 2022, the Company recognized realized losses of $ 0.1 million and $ 0.3 million, respectively, on its Condensed Consolidated Statements of Operations related to its derivative instruments.

Commitments and Contingencies

13 unchanged sentences

In conjunction with revising its reporting structure, the Company allocated $ 1.1 billion and $ 0.8 billion of goodwill to the Prevention and Recovery and Reconstructive segments, respectively.

The total segment assets as of the beginning of the quarter were $ 2.8 billion and $ 1.8 billion for the Prevention and Recovery and Reconstructive segments, respectively.

There have not been any material changes to the segment assets since the start of the quarter.

COLFAX CORPORATION

The total segment assets as of the beginning of the second quarter were $ 2.8 billion and $ 1.8 billion for the Prevention and Recovery and Reconstructive segments, respectively.

There have not been any material changes to the segment assets since the start of the second quarter.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and other related charges, MDR and related costs, strategic transaction costs, stock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gains, and inventory step-up from the operating income of the Company’s operating segments.

The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and other charges, MDR and related costs, strategic transaction costs, stock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gains, and inventory step-up from the operating income of the Company’s operating segments.

The amounts presented below have been recast for the change in operating segments for all periods presented.

The Company’s segment results were as follows:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

(In thousands)

6 unchanged sentences

$ 57,209 $ 56,472 $ 161,126 $ 144,371

(1) The following is a reconciliation of Income from continuing operations before income taxes to Adjusted EBITDA:

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(1) The following is a reconciliation of Operating loss to Adjusted EBITDA:

Three Months Ended Nine Months Ended

September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021

(In thousands)

Operating income (loss) (GAAP) $ 5,553 $ ( 10,351 ) $ ( 25,074 ) $ ( 28,482 )

Restructuring and other related charges (1)

Operating loss (GAAP) $ ( 17,919 ) $ ( 16,107 ) $ ( 42,993 ) $ ( 44,589 )

Restructuring and other charges (1)

2,989 2,230 8,497 5,193

5 unchanged sentences

Amortization of acquired intangibles 31,993 31,025 94,603 88,067

Insurance settlement gain (3)

Insurance settlement (gain) loss (3)

975 — ( 32,059 ) —

1 unchanged sentence

Adjusted EBITDA (non-GAAP) $ 57,209 $ 56,472 $ 161,126 $ 144,371

(1) Restructuring and other related charges includes $ 0.3 million and $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively.

(1) Restructuring and other charges includes $ 0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.

(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union Medical Devices Regulation.

These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.

(3) Insurance settlement gain is related to the 2019 acquisition of DJO.

COLFAX CORPORATION

(3) Insurance settlement (gain) loss is related to the 2019 acquisition of DJO.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

25 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements