What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-02 · 182 added, 366 removed, 304 unchanged (64% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended Nine Months Ended

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

Three Months Ended

March 31, 2023 April 1, 2022

Net sales $ 406,151 $ 375,457

4 unchanged sentences

Amortization of acquired intangibles 32,040 30,786

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

Restructuring and other charges 2,635 2,419

1 unchanged sentence

Interest expense, net 5,652 7,064

Debt extinguishment charges — — 20,104 29,870

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

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

Other income ( 661 ) —

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

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 )

Loss from continuing operations before income taxes ( 29,959 ) ( 37,691 )

Income tax expense (benefit) ( 7,113 ) 364

Net loss from continuing operations ( 22,846 ) ( 38,055 )

Income (loss) from discontinued operations, net of taxes ( 312 ) 54,356

3 unchanged sentences

Net income (loss) attributable to Enovis Corporation $ ( 23,350 ) $ 15,068

Net income (loss) per share - basic

Continuing operations $ ( 1.22 ) $ ( 0.26 ) $ 0.30 $ ( 1.76 )

Discontinued operations $ ( 0.01 ) $ 0.75 $ 0.17 $ 3.22

Consolidated operations $ ( 1.23 ) $ 0.49 $ 0.47 $ 1.46

Net income (loss) per share - diluted

Net income (loss) per share - basic and diluted

Continuing operations $ ( 0.42 ) $ ( 0.71 )

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ENOVIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Dollars in thousands

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):

Foreign currency translation, net of tax expense of $ — , $ 1,948 , $ 338 , and $ 5,124

( 28,836 ) ( 57,176 ) ( 113,173 ) ( 101,573 )

Unrealized gain on hedging activities, net of tax expense of $ — , $ 2,203 , $ 2,711 , $ 5,709

— 6,424 9,028 16,655

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $ — , $ 327 , $ 199 , $ 958

— 1,093 629 3,193

Other comprehensive income (loss) ( 28,836 ) ( 49,659 ) ( 103,516 ) ( 81,725 )

Comprehensive income ( 95,312 ) ( 22,802 ) ( 76,706 ) ( 4,926 )

comprehensive income (loss) attributable to noncontrolling interest ( 1,030 ) 1,373 ( 1,438 ) 2,046

Comprehensive loss attributable to Enovis Corporation $ ( 94,282 ) $ ( 24,175 ) $ ( 75,268 ) $ ( 6,972 )

See Notes to Condensed Consolidated Financial Statements.

ENOVIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in thousands, except share amounts

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

CURRENT ASSETS:

5 unchanged sentences

Other current assets 61,018 48,155

Investment in ESAB Corporation 200,274 —

Total current assets associated with discontinued operations — 956,614

Total current assets 833,110 795,023

4 unchanged sentences

Other assets 87,874 80,288

Total non-current assets associated with discontinued operations — 2,738,049

Total assets $ 4,299,586 $ 4,273,248

4 unchanged sentences

Accrued liabilities 197,754 210,292

Total current liabilities associated with discontinued operations — 635,284

Total current liabilities 349,497 565,199

2 unchanged sentences

Other liabilities 170,525 166,989

Total non-current liabilities associated with discontinued operations — 573,562

Total liabilities 854,315 823,447

1 unchanged sentence

133,333,333 shares authorized;

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

54,493,154 and 54,228,619 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,933,773 2,925,729

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ENOVIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Dollars in thousands

Three Months Ended

March 31, 2023 April 1, 2022

Net income (loss) $ ( 23,158 ) $ 16,301

Other comprehensive income (loss):

Foreign currency translation, net of tax expense of $ 0 and $ 338

10,584 ( 53,461 )

Unrealized gain on hedging activities, net of tax expense of $ 0 and $ 2,711

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $ 0 and $ 199

Other comprehensive income (loss) 10,584 ( 43,804 )

Comprehensive loss ( 12,574 ) ( 27,503 )

comprehensive income attributable to noncontrolling interest 216 895

Comprehensive loss attributable to Enovis Corporation $ ( 12,790 ) $ ( 28,398 )

See Notes to Condensed Consolidated Financial Statements.

ENOVIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

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Balance at December 31, 2022 54,228,619 $ 54 $ 2,925,729 $ 575,732 $ ( 53,430 ) $ 1,716 $ 3,449,801

Net income — — — 15,068 — 1,233 16,301

Distributions to noncontrolling owners — — — — — ( 941 ) ( 941 )

Other comprehensive loss, net of tax of $ 3,248

— — — — ( 43,466 ) ( 338 ) ( 43,804 )

Conversion of tangible equity units into common stock 1,691,845 2 ( 2 ) — — — —

Common stock-based award activity 255,957 — 11,056 — — — 11,056

Balance at April 1, 2022 54,030,880 54 4,555,369 604,092 ( 559,479 ) 44,009 4,644,045

Net income — — — 76,855 — 130 76,985

Other comprehensive loss, net of tax of $ —

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

Distribution of ESAB Corporation — — ( 1,666,732 ) — 499,981 ( 40,510 ) ( 1,207,261 )

Common stock-based award activity 80,238 — 8,570 — — — 8,570

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

Net loss — — — ( 23,350 ) — 192 ( 23,158 )

Other comprehensive loss, net of tax of $ —

Other comprehensive income, net of tax of $ —

— — — — 10,560 24 10,584

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

Acquisition — — — — — 345 345

Common stock-based award activity 264,535 — 8,044 — — — 8,044

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

Balance at March 31, 2023 54,493,154 $ 54 $ 2,933,773 $ 552,382 $ ( 42,870 ) $ 1,932 $ 3,445,271

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

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Conversion of tangible equity units into common stock 1,691,845 2 ( 2 ) — — — —

Common stock offering, net of issuance costs 5,366,666 5 711,316 — — — 711,321

Common stock-based award activity 255,957 — 11,056 — — — 11,056

Balance at April 1, 2022 54,030,880 $ 54 $ 4,555,369 $ 604,092 $ ( 559,479 ) $ 44,009 $ 4,644,045

Net income — — — 28,642 — 1,060 29,702

Other comprehensive income (loss), net of tax of $ 473

— — — — 9,108 ( 1,429 ) 7,679

Conversion of tangible equity units into common stock 2,058,000 2 ( 2 ) — — — —

Common stock-based award activity 190,105 — 23,510 — — — 23,510

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.

2 unchanged sentences

Dollars in thousands

Nine Months Ended

September 30, 2022 October 1, 2021

Three Months Ended

March 31, 2023 April 1, 2022

Cash flows from operating activities:

Net income $ 26,810 $ 76,799

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

Net (loss) income $ ( 23,158 ) $ 16,301

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

Depreciation, amortization and other impairment charges 51,991 66,026

1 unchanged sentence

Non-cash interest expense 838 978

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

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

Debt extinguishment charges 20,104 29,870

Deferred income tax expense (benefit) ( 3,458 ) ( 5,904 )

(Gain)/Loss on sale of property, plant and equipment 352 ( 1,483 )

Deferred income tax expense 831 2,232

Loss on sale of property, plant and equipment 429 352

Changes in operating assets and liabilities:

3 unchanged sentences

Other operating assets and liabilities ( 25,164 ) ( 43,362 )

Net cash (used in) provided by operating activities ( 19,903 ) 259,883

Net cash provided by (used in) operating activities 7,457 ( 14,423 )

Cash flows from investing activities:

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Cash flows from financing activities:

Proceeds from borrowings on term credit facility 450,000 515,696

Payments under term credit facility ( 219,468 ) —

Proceeds from borrowings on revolving credit facilities and other 250,000 —

Repayments of borrowings on revolving credit facilities and other ( 5,672 ) ( 7,428 )

Repayments of borrowings on Senior notes ( 300,000 ) ( 700,000 )

Repayments of borrowings on Euro senior notes ( 386,278 ) —

Distribution from ESAB Corporation, net 1,143,369 —

Payment of debt issuance costs ( 2,938 ) —

Proceeds from issuance of common stock, net 438 1,199

Payment of debt extinguishment costs ( 12,704 ) ( 24,375 )

Deferred consideration payments and other ( 800 ) ( 4,590 )

Net cash (used in) provided by financing activities ( 506,755 ) 111,837

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

(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

Net cash provided by (used in) financing activities 24,498 ( 10,819 )

Effect of foreign exchange rates on Cash and cash equivalents 35 2,542

Decrease in Cash and cash equivalents ( 2,395 ) ( 57,866 )

Cash and cash equivalents, beginning of period 24,295 719,370

Cash and cash equivalents, end of period $ 21,900 $ 661,504

Supplemental disclosures:

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

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Enovis Corporation (the “Company” or “Enovis”) was previously Colfax Corporation (“Colfax”) until its separation into two differentiated, independent, and publicly traded companies on April 4, 2022, as discussed below.

Colfax was a leading diversified technology company that provided fabrication technology and medical device products and services to customers around the world, principally under the ESAB and DJO brands.

On April 4, 2022 (the “Distribution Date”), the Company completed the separation of its fabrication technology business (the “Separation”) through a tax-free, pro-rata distribution of 90 % of the outstanding common stock of ESAB Corporation (“ESAB”) to Colfax stockholders.

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 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.

Following the completion of the Separation, the Company revised its reporting structure and conducts its business through two operating segments, “Prevention & Recovery” and “Reconstructive”.

The segment results were retroactively restated to the current method the Company uses to conduct its business for all periods presented.

The Separation was completed through a tax-free, pro-rata distribution of 90 % of the outstanding common stock of ESAB Corporation (“ESAB”) to Colfax stockholders.

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 initially retaining 10 % of the shares of ESAB common stock immediately following the Separation.

Upon completion of the Separation, Colfax, which retained the Company’s specialty medical technology business, changed its name to Enovis Corporation.

On April 5, 2022, the Company began trading under the stock symbol “ENOV” on the New York Stock Exchange.

Since the Separation occurred in the second quarter of 2022, Enovis has classified its fabrication technology business as a discontinued operation in its historical financial statements for all periods presented.

Following the completion of the Separation, the Company revised its reporting structure to now conduct its business through two operating segments, “Prevention and Recovery”, which consists of the Company’s bracing, recovery sciences, and footcare product lines, and “Reconstructive”, which includes the Company’s surgical implant product lines.

In connection with the Separation, ESAB issued $ 1.2 billion of new debt securities, the proceeds from which were used to fund a $ 1.2 billion cash distribution to Enovis.

The distribution proceeds were used by Enovis in conjunction with $ 450 million of borrowings on a term loan (the “Enovis Term Loan”) under the new Enovis credit facility (the “Enovis Credit Agreement”), and $ 52.3 million of cash on hand to repay $ 1.4 billion of outstanding debt and accrued interest under the Company’s previous credit agreement, which was legally extinguished upon completion of the Separation, $ 302.8 million of outstanding debt and accrued interest on its 2026 Notes at a redemption price of 103.188 % of the principal amount, and other fees and expenses due at closing.

Additionally, on April 7, 2022, the Company completed a full redemption of its € 350 million principal 3.250 % Euro Senior Notes due 2025 using cash on hand at a redemption price of 100.813 % of the principal amount.

Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock.

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

In connection with the Separation, ESAB issued $ 1.2 billion of new debt securities, the proceeds from which were used to fund a $ 1.2 billion cash distribution to Enovis upon separation.

The distribution proceeds were used by Enovis in conjunction with $ 450 million of borrowings on a term loan under the new Enovis credit facility (the “Enovis Credit Agreement”) and $ 52.3 million of cash on hand to repay $ 1.4 billion of outstanding debt and accrued interest on the Company’s prior credit facility, repay $ 302.8 million of outstanding debt and accrued interest on its 6.375 % senior notes due February 15, 2026 (the “2026 Notes”), pay a redemption premium at 103.188 % of the principal amount of the 2026 Notes, and pay other fees and expenses due at closing.

Additionally, on April 7, 2022, the Company completed the redemption of its 3.250 % senior unsecured notes due April 2025 (the “Euro Senior Notes”) representing all of its outstanding € 350 million principal Euro Senior Notes, at a redemption price of 100.813 % of the principal amount.

On November 18, 2022, the Company completed the divestiture of its 10 % retained shares in ESAB in a tax-efficient exchange for $ 230.5 million of its $ 450 million term loan outstanding under the Enovis Credit Agreement.

The Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated.

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Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements.

The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), filed with the SEC on February 22, 2022.

The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), filed with the SEC on March 1, 2023.

The Company makes certain estimates and assumptions in preparing its Condensed Consolidated Financial Statements in accordance with GAAP.

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Actual results may differ from those estimates.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Furthermore, historical seasonality trends have been disrupted by the commercial impacts caused by the COVID-19 pandemic.

Recently Issued Accounting Pronouncements

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

The Company has not adopted any new accounting standards during the three months ended March 31, 2023.

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.

Discontinued Operations

Separation of Fabrication Technology Business

On April 4, 2022, the Company completed the Separation of its fabrication technology business into an independent, publicly traded company:

ESAB, a global organization that develops, manufactures and supplies consumable welding and cutting products and equipment, as well as gas control equipment, into diversified end markets such as medical and alternative energy.

The spin-off was effected through a pro-rata distribution of 90 % of the 60,034,311 outstanding common shares of ESAB to Enovis stockholders of record at the close of business on March 22, 2022 (the “Record Date”).

Enovis stockholders received one share of ESAB for every three shares of Enovis stock they owned on the Record Date.

The carrying value of the assets and liabilities of the Company’s former fabrication technology business’ discontinued operations, other contributed legal entities, discontinued operations containing asbestos, and certain pension assets and liabilities, as of December 31, 2021 were as follows:

December 31, 2021

ASSETS (in thousands)

Cash and cash equivalents $ 39,118

Trade receivables, net 383,742

Inventories, net 420,062

Prepaid expenses 52,140

Other current assets 61,552

Total current assets associated with discontinued operations 956,614

Property, plant and equipment, net 286,278

Goodwill 1,533,037

Other intangibles, net 521,434

Lease asset - right of use 107,944

Other assets 289,356

Total assets associated with discontinued operations (1)

Current portion of long-term debt $ 613

Accounts payable 348,965

Accrued liabilities 285,706

Total current liabilities associated with discontinued operations 635,284

Long-term debt, less current portion 54

Non-current lease liability 88,777

Deferred tax liabilities 116,198

Other liabilities 368,533

Total liabilities associated with discontinued operations (1)

(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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

Discontinued Operations

The Company’s discontinued operations include the following:

(1) operating results of ESAB prior to Separation, (2) charges related to previously retained asbestos contingencies from certain divested businesses for which we did not retain an interest in the ongoing operations that were fully transferred to ESAB in conjunction with the Separation, and (3) expenses related to the Separation and the 2019 divestiture of our former air & gas handling business.

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

Three Months Ended

March 31, 2023 April 1, 2022

(in thousands)

3 unchanged sentences

Restructuring and other charges — 5,304

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

Asbestos charges — 3,194

Divestiture-related expenses (1)

Operating (loss) income ( 411 ) 79,826

Interest expense (2)

Pension settlement gain — — — ( 11,208 )

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

The Company retained certain asbestos-related contingencies and insurance coverages from its previously divested businesses for which it did not retain an interest in the ongoing operations except for the contingencies.

The net costs and cash flows associated with these contingencies and coverages were reported by the Company as discontinued operations.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its divested businesses were transferred fully to ESAB.

The Company has classified asbestos-related selling, general and administrative activity through the the date of Separation in its Condensed Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes.

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.

(Loss) income from discontinued operations before income taxes ( 411 ) 71,791

Income tax (benefit) expense ( 99 ) 17,435

(Loss) income from discontinued operations, net of taxes $ ( 312 ) $ 54,356

(1) Divestiture-related expenses include $ 9.8 million for the Separation for the three months ended April 1, 2022 and $ 0.4 million and $ 0.7 million for Air & Gas for the three months ended March 31, 2023 and April 1, 2022, respectively.

(2) Interest expense was allocated to discontinued operations based on allocating $ 1.2 billion of corporate level debt to discontinued operations consistent with the dividend received from ESAB and the debt repaid at the time of the Separation.

Cash provided by operating activities related to discontinued operations for the three months ended April 1, 2022 was $ 9.2 million.

Cash used in investing activities related to discontinued operations for the three months ended April 1, 2022 was $ 3.2 million.

ENOVIS CORPORATION

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2023 Acquisitions

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 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 March 31, 2023, the Company entered into a definitive agreement with Amplitude Surgical SA to acquire Novastep®, a leading player in Minimally Invasive Surgery (MIS) foot and ankle solutions.

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2023.

In April 2023, the Company entered into a definitive agreement to acquire the SEAL external fixation product line from D.N.E., LLC.

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2023.

2022 Acquisitions

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.

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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.

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 measurement period.

The Company has allocated $ 16.3 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.

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

During the third quarter of 2022, 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.

The Company holds a 99.5 % interest in Insight and recognized an initial $ 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.

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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 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.

Purchase accounting procedures are ongoing and revisions to contingent consideration, intangible assets acquired, and working capital adjustments may be recorded in future periods during the measurement period.

As a result of obtaining control of Insight, the Company remeasured its initial investments to fair value, resulting in a $ 8.8 million gain in the fourth quarter of 202 2.

During the three months ended April 1, 2022, the Company also completed two asset acquisitions and one investment in its Prevention & Recovery segment.

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

Aggregate purchase consideration for the two asset acquisitions and one investment was $ 18.2 million, of which $ 13.6 million was paid in cash and $ 4.6 million of deferred and contingent consideration.

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

“Acquisitions and Investments” in the in the Company’s 2022 Form 10-K.

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 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 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 of each business combination.

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.

The Reconstructive segment’s acquisitions in the second quarter of 2021 included MedShape, Inc.

(“MedShape”), a provider of innovative surgical solutions for foot and ankle surgeons, which was acquired for net cash consideration of $ 124.6 million.

The Trilliant and MedShape acquisitions further expand the Company’s U.S.

foot and ankle product lines.

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 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.

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

As of March 31, 2023, the balance of investments held by the Company without readily determinable fair values w as $ 21 million .

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

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

Substantially all its revenue is recognized at a point in time.

While the Company’s sales are primarily derived from three sales channels including dealers and distributors, insurance, and direct to consumers and hospitals, substantially all of the Company’s revenue is recognized at a point in time.

The Company disaggregates its revenue into the following segments:

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended Nine Months Ended

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

Three Months Ended

March 31, 2023 April 1, 2022

(In thousands)

Prevention and Recovery $ 256,502 $ 256,229 $ 765,121 $ 757,822

Prevention & Recovery:

Bracing & Support $ 104,375 $ 103,035

Other P&R 62,347 57,714

International P&R (1)

84,018 84,086

Total Prevention & Recovery 250,740 244,835

Reconstructive:

Reconstructive 103,492 88,479

International Reconstructive 51,919 42,143

Total Reconstructive 155,411 130,622

Total $ 406,151 $ 375,457

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.

(1) The quarter ended March 31, 2023 includes the unfavorable impact of $ 4.2 million of currency.

Given the nature of the businesses, the Company does not generally have unsatisfied performance obligations with an original contract duration of greater than one year.

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

4 unchanged sentences

The business segments are further disaggregated based on either geography or product type.

The Company uses a loss rate methodology in calculating its current expected credit losses, leveraging historical write-offs over a defined lookback period in deriving a historical loss rate.

The Company uses a loss rate methodology in calculating its current expected credit losses, considering historical write-offs over a defined lookback period in deriving a historical loss rate.

The expected credit loss model further considers current conditions and reasonable and supportable forecasts using an adjustment for current and projected macroeconomic factors.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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:

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

2 unchanged sentences

Allowance for credit losses $ 7,965 $ 528 $ ( 463 ) $ 33 $ 8,063

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Share from Continuing Operations

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

Three Months Ended Nine Months Ended

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

Net Loss Per Share from Continuing Operations

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

Three Months Ended

March 31, 2023 April 1, 2022

(In thousands, except share and per share data)

Computation of Net income (loss) per share from continuing operations - basic:

Net income (loss) from continuing operations attributable to Enovis Corporation (1)

Computation of Net loss per share from continuing operations - basic:

Net loss from continuing operations attributable to Enovis Corporation (1)

$ ( 23,038 ) $ ( 38,322 )

1 unchanged sentence

54,325,396 53,872,007

Net income (loss) per share from continuing operations – basic

Net loss per share from continuing operations – basic

$ ( 0.42 ) $ ( 0.71 )

Computation of Net income (loss) per share from continuing operations - diluted:

Net income (loss) from continuing operations attributable to Enovis Corporation (1)

Computation of Net loss per share from continuing operations - diluted:

Net loss from continuing operations attributable to Enovis Corporation (1)

$ ( 23,038 ) $ ( 38,322 )

4 unchanged sentences

54,325,396 53,872,007

Net income (loss) per share from continuing operations – diluted

Net loss per share from continuing operations – diluted

$ ( 0.42 ) $ ( 0.71 )

(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 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 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 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 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.

(1) Net loss from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net loss from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $ 0.2 million for the three months ended March 31, 2023 and $ 0.3 million for the three months ended April 1, 2022.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three months ended March 31, 2023 excludes 1.1 million shares underlying 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 months ended April 1, 2022 excludes 0.5 million shares underlying outstanding stock-based compensation awards, as their inclusion would be anti-dilutive.

During the three months ended March 31, 2023, Loss from continuing operations before income taxes was $ 30.0 million, while Income tax benefit was $ 7.1 million.

The effective tax rate was 23.7 % for the three months ended March 31, 2023, which differed from the 2023 federal statutory rate of 21% mainly due to non-U.S.

income taxed at lower rates, release of valuation allowance on non-U.S.

attributes, and tax credits for research and development offset by other non-deductible expenses and U.S.

taxation on international operations.

During the three months ended April 1, 2022, Loss from continuing operations before income taxes was $ 37.7 million while Income tax expense was $ 0.4 million.

The effective tax rate was ( 1.0 )% for the three months ended April 1, 2022, which differed from the 2022 U.S.

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Outstanding shares

As discussed in Note 1, the Company effected a reverse stock split immediately following the Separation on April 4, 2022 and all share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

As of December 31, 2021, the outstanding shares for the Company after the reverse stock split were 52,083,078 .

Share Repurchase Program

1 unchanged sentence

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

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

As of March 31, 2023, 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.

1 unchanged sentence

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 nine months ended September 30, 2022 and October 1, 2021.

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 three months ended March 31, 2023 and April 1, 2022.

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

Accumulated Other Comprehensive Loss Components

Net Unrecognized Pension and Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain on Hedging Activities Total

Net Unrecognized Pension and Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Total

(In thousands)

2 unchanged sentences

Foreign currency translation adjustment 180 10,380 10,560

Loss on long-term intra-entity foreign currency transactions — ( 21,779 ) — ( 21,779 )

Gain on net investment hedges — — 9,028 9,028

Other comprehensive income (loss) before reclassifications 180 10,380 10,560

1 unchanged sentence

Net Other comprehensive income (loss) 180 10,380 10,560

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at March 31, 2023 $ 12,387 $ ( 55,257 ) $ ( 42,870 )

Accumulated Other Comprehensive Loss Components

4 unchanged sentences

Foreign currency translation adjustment 470 ( 38,333 ) — ( 37,863 )

Gain on long-term intra-entity foreign currency transactions — 25,933 — 25,933

Loss on long-term intra-entity foreign currency transactions — ( 15,260 ) — ( 15,260 )

Gain on net investment hedges — — 9,028 9,028

2 unchanged sentences

Net Other comprehensive income (loss) 1,099 ( 53,593 ) 9,028 ( 43,466 )

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

Tangible equity unit offering

On January 11, 2019, the Company issued 4.6 million in Tangible Equity Units (“TEUs”) at the stated amount of $ 100 per unit.

Net cash of $ 447.7 million was received upon closing.

The gross proceeds and deferred finance costs from the issuance of the TEUs were allocated 84.4 % to equity (the “TEU prepaid stock purchase contracts”) and 15.6 % to debt (the “TEU amortizing notes”) based on the relative fair value of the respective components of each TEU.

See Note 10, “Debt” for additional information on the TEU amortizing notes.

The TEU prepaid stock purchase contracts were mandatorily converted into shares of Company common stock on January 15, 2022, unless previously settled at the holder’s option.

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

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.

See Note 6, “Net Income Per Share from Continuing Operations” for additional information.

Balance at April 1, 2022 $ ( 84,460 ) $ ( 528,718 ) $ 53,699 $ ( 559,479 )

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventories, Net

Inventories, net consisted of the following:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands)

5 unchanged sentences

$ 438,957 $ 426,643

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-term debt consisted of the following:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands)

Term loan $ — $ 219,279

Euro senior notes — 395,552

2026 notes — 297,906

TEU amortizing notes — 6,501

Revolving credit facilities and other 285,000 40,000

7 unchanged sentences

Enovis Term Loan and Revolving Credit Facility

The new Enovis Credit Agreement became effective on April 4, 2022 and consists of a $ 900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date and a term loan with an initial aggregate principal amount of $ 450 million and an April 4, 2023 maturity date (the “Enovis Term Loan”).

The Enovis Credit Agreement became effective on April 4, 2022 and consists of a $ 900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date and a term loan with an initial aggregate principal amount of $ 450 million and an April 4, 2023 maturity date (the “Enovis Term Loan”).

The Revolver contains a $ 50 million swing line loan sub-facility.

subsidiaries of the Company guarantee the obligations under the Credit Facility.

subsidiaries of the Company guarantee the obligations under the Enovis Credit Agreement.

On November 18, 2022, the Company completed an exchange with a lender under the Enovis Credit Agreement of 6,003,431 shares of common stock of ESAB, representing all of the retained shares in ESAB following the Separation, for $ 230.5 million of the $ 450.0 million in term loan outstanding under the Credit Agreement, net of cost to sell.

On March 1, 2023, the Company extinguished the remaining outstanding balance on the Enovis Term Loan with borrowings on the Revolver.

The Enovis Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments, or pay dividends.

In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.50 :1.00, with a step-down to, on the date on which the Company and its subsidiaries have transferred any retained shares of ESAB common stock to one or more unaffiliated third parties, 4.00 :1.00, commencing with the fiscal quarter ending June 30, 2023, 3.75 :1.00 and commencing with the fiscal quarter ending June 30, 2024, 3.50 :1.00, and (ii) a minimum interest coverage ratio of 3.00 :1:00.

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 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.

In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.00 :1.00, stepping down to 3.75 :1.00 for the fiscal quarter ending June 30, 2023 and to 3.50 :1.00 for the fiscal quarter ending June 30, 2024, and (ii) a minimum interest coverage ratio of 3.00 :1:00.

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,

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

require the immediate payment of all amounts outstanding under the Enovis Credit Agreement.

As of March 31, 2023, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of March 31, 2023, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.02 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 615 million available on the Revolver.

The Compan y has $ 4.3 million in deferred f inancing fees recorded in conjunction with the Enovis Credit Agreement as of March 31, 2023, which are being accreted to Interest expense, net primarily using the effective interest method over the life of the facility.

Euro Senior Notes

1 unchanged sentence

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)

Tangible Equity Unit (“TEU”) Amortizing Notes

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

The Company paid $ 6.5 million of principal on the TEU amortizing notes in the three months ended April 1, 2022.

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

3 unchanged sentences

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

Deferred Financing Fees

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.

Additionally, the Company deferred $ 2.9 million of financing costs in the second quarter of 2022 in connection with the new Enovis Credit Facility.

Total letters of credit and surety bonds of $ 7.1 million were outstanding as of March 31, 2023.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Liabilities

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(In thousands)

3 unchanged sentences

Contingent consideration - current portion 7,841 8,812

Warranty liability 2,608 2,503

Accrued restructuring liability 1,711 2,170

Warranty liability- current portion 2,826 2,804

Accrued restructuring liability - current portion 944 1,090

Accrued third-party commissions 23,945 24,958

7 unchanged sentences

$ 197,754 $ 210,292

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Restructuring Liability

1 unchanged sentence

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:

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

10 unchanged sentences

(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 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.

(3) For the three months ended March 31, 2023, $ 1.3 million and $ 1.6 million of the Company’s total provisions were related to the Prevention & Recovery and Reconstructive segments, respectively.

Restructuring and other charges includes $ 0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended March 31, 2023.

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 $ 0.4 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 value of the Company’s debt, which was $ 285.0 million as of March 31, 2023, 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 September 30, 2022, the Company held $ 29.4 million in Level Three liabilities arising from contingent consideration related to acquisitions.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 31, 2023, the Company held $ 22.2 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 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 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.

During the three months ended March 31, 2023 the Company recorded a reduction in contingent consideration of $ 0.8 million due to a final agreement on the payout from an acquisition in 2020.

The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is zero to $ 10.9 million.

There are two contingent consideration arrangements that have no limits and are based on a percentage of sales in excess of a benchmark over a three -year period and five -year period, respectively.

There were no transfers in or out of Level One, Two or Three during the three months ended March 31, 2023.

Deferred Compensation Plans

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

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

As of March 31, 2023 and December 31, 2022 the fair value of these plans were $ 12.8 million and $ 10.3 million, respectively.

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

Foreign Currency Contracts

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.

As of March 31, 2023 and December 31, 2022, the Company had foreign currency contracts related to purchases and sales with notional values of $ 3.0 million and $ 0.8 million, respectively.

During the three months ended March 31, 2023, the Company recognized an unrealized gain of $ 0.1 million on its Condensed Consolidated Statements of Operations related to its derivative instruments.

Commitments and Contingencies

1 unchanged sentence

None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company.

With respect to these proceedings, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities.

With respect to these proceedings, management of the Company believes that either it will prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities.

Legal costs related to proceedings or claims are recorded as incurred.

1 unchanged sentence

There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from the divested industrial businesses were transferred fully to ESAB.

The historical asbestos-related activity and balances are presented in discontinued operations on the Condensed Consolidated Statements of Operations and in assets/liabilities associated with discontinued operations on the Condensed Consolidated Balance Sheets, respectively.

For further description of the Company’s litigation and contingencies, reference is made to Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

Segment Information

The Company conducts its continuing operations through the Prevention and Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments.

▪ Prevention and Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

• Reconstructive - an innovation-driven leader offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger.

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 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.

The Company conducts its continuing operations through the Prevention & Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments.

▪ Prevention & Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software, and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

• Reconstructive - an innovation market-leader positioned in the fast-growing surgical implant business, offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger and surgical productivity tools.

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 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 management, including the chief operating decision maker, evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and certain other charges, MDR and other costs, strategic transaction costs, stock-based compensation, depreciation and other amortization, acquisition-related intangible asset amortization, and inventory step-up charges from the results of the Company’s operating segments.

The Company’s segment results were as follows:

Three Months Ended Nine Months Ended

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

Three Months Ended

March 31, 2023 April 1, 2022

(In thousands)

Prevention and Recovery $ 256,502 $ 256,229 $ 765,121 $ 757,822

Prevention & Recovery $ 250,740 $ 244,835

Reconstructive 155,411 130,622

1 unchanged sentence

Segment Adjusted EBITDA (1) :

Prevention and Recovery $ 39,532 $ 40,432 $ 101,050 $ 94,982

Prevention & Recovery $ 25,695 $ 26,370

Reconstructive 30,716 21,357

$ 56,411 $ 47,727

(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

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

Three Months Ended

March 31, 2023 April 1, 2022

(In thousands)

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

Loss from continuing operations before income taxes (GAAP) $ ( 29,959 ) $ ( 37,691 )

Restructuring and other charges (1)

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

MDR and other costs (2)

3,600 1,902 10,648 5,574

Strategic transaction costs 11,629 11,696

2 unchanged sentences

Amortization of acquired intangibles 32,040 30,786

Insurance settlement (gain) loss (3)

975 — ( 32,059 ) —

Inventory step-up 119 5,084

Interest expense, net 5,652 7,064

Other income ( 661 ) —

Adjusted EBITDA (non-GAAP) $ 56,411 $ 47,727

(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.

(1) Restructuring and other charges includes $ 0.3 million and $ 0.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and April 1, 2022, respectively.

(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) loss is related to the 2019 acquisition of DJO.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Related Party Transactions

Related Party Agreements

On April 4, 2022, in connection with the Separation, the Company entered into several agreements with ESAB that govern the Separation and provide a framework for the future relationship between the parties, including a separation and distribution agreement, a transition services agreement (the “Separation Agreement”), tax matters agreement, employee matters agreements, a stockholder’s and registration rights agreement, and an intellectual property matters agreement.

The Separation and Distribution Agreement

The Company entered into the Separation Agreement with ESAB immediately prior to the distribution of ESAB’s common stock to Enovis stockholders.

The Separation Agreement sets forth the Company’s agreements with ESAB regarding the principal actions to be taken in connection with the Separation.

The Separation agreement contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of ESAB and Enovis as part of the Separation;

(ii) the cash distribution made to Enovis in partial consideration of the transfer of ESAB Assets in connection with the Separation;

and, (iii) cross-indemnities principally designed to place financial responsibility for obligations and liabilities with either Enovis or ESAB, depending on the responsible party.

Transition Services Agreement

The transition services agreement ("TSA") sets forth the terms and conditions pursuant to which the Company and its subsidiaries and ESAB’s and its subsidiaries will provide various services to each other.

The services to be provided include human resources, payroll, certain information technology services, treasury services and financial reporting services.

The charges for the transition services generally are expected to allow the providing company to fully recover all actual internal and external costs and expenses in connection with providing the service (including a reasonable allocation of overhead) provided in the manner and at a level substantially consistent with that provided by the respective providing company

immediately preceding the Separation.

Tax Matters Agreement

The tax matters agreement governs the Company’s and ESAB’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes.

Employee Matters Agreement

The employee matters agreement sets forth, among other things, the allocation of assets, liabilities and responsibilities relating to employee compensation and benefit plans, and programs and other related matters in connection with the Separation, including the treatment of outstanding equity and other incentive awards and certain retirement and welfare benefit obligations.

Stockholders and Registration Rights Agreement

The stockholders and registration rights agreement sets forth the terms and conditions pursuant to which ESAB has granted Company and its affiliates certain registration rights with respect to the shares of ESAB common stock owned by the Company.

Upon the request of the Company or certain subsequent transferees as further defined in the agreement, ESAB will use its reasonable best efforts to effect the registration under applicable federal and state securities laws of any shares of ESAB common stock retained by the Company.

Under the agreement, the Company has agreed to vote any shares of ESAB common stock retained by it immediately after the Separation in proportion to the votes cast by ESAB’s other stockholders.

Intellectual Property Matters Agreement

The intellectual property matters agreement sets forth the terms and conditions pursuant to which, among other things, the Company and ESAB have granted each other a non-exclusive, royalty-free, fully paid-up, irrevocable, sublicenseable (subject to certain limitations) and worldwide license to use certain intellectual property rights retained by the other party.

The term of the intellectual property matters agreement is perpetual .

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