What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 210 added, 142 removed, 344 unchanged (51% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Net sales $ 428,502 $ 395,117 $ 834,653 $ 770,574

4 unchanged sentences

Amortization of acquired intangibles 32,249 31,824 64,289 62,610

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

Restructuring and other charges 3,805 2,245 6,440 4,664

Operating loss ( 24,968 ) ( 30,627 )

Operating income (loss) ( 14,494 ) 5,553 ( 39,462 ) ( 25,074 )

Interest expense, net 4,076 4,546 9,728 11,610

Other income ( 661 ) —

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 )

Debt extinguishment charges — 20,104 — 20,104

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

Other expense, net 753 — 92 —

Income (loss) from continuing operations before income taxes ( 19,323 ) 116,440 ( 49,282 ) 78,749

Income tax benefit ( 4,713 ) ( 4,211 ) ( 11,826 ) ( 3,847 )

Net income (loss) from continuing operations ( 14,610 ) 120,651 ( 37,456 ) 82,596

Income (loss) from discontinued operations, net of taxes 4,797 ( 43,666 ) 4,485 10,690

3 unchanged sentences

Net income (loss) attributable to Enovis Corporation $ ( 9,995 ) $ 76,855 $ ( 33,345 ) $ 91,923

Net income (loss) per share - basic and diluted

Net income (loss) per share - basic

Continuing operations $ ( 0.27 ) $ 2.23 $ ( 0.70 ) $ 1.52

1 unchanged sentence

Consolidated operations $ ( 0.18 ) $ 1.42 $ ( 0.61 ) $ 1.70

Net income (loss) per share - diluted

Continuing operations $ ( 0.27 ) $ 2.21 $ ( 0.70 ) $ 1.51

Discontinued operations $ 0.09 $ ( 0.80 ) $ 0.08 $ 0.18

Consolidated operations $ ( 0.18 ) $ 1.41 $ ( 0.61 ) $ 1.69

See Notes to Condensed Consolidated Financial Statements.

ENOVIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Dollars in thousands

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Net income (loss) $ ( 9,813 ) $ 76,985 $ ( 32,971 ) $ 93,286

Other comprehensive income (loss):

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

11,311 ( 30,876 ) 21,895 ( 84,337 )

Unrealized gain (loss) on hedging activities, net of tax expense (benefit) of $( 1,740 ), $ — , $( 1,740 ) and $ 2,711

( 5,449 ) — ( 5,449 ) 9,028

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain (loss), net of tax expense (benefit) of $( 41 ), $ — , $( 41 ) and $ 199

( 882 ) — ( 882 ) 629

Other comprehensive income (loss) 4,980 ( 30,876 ) 15,564 ( 74,680 )

Comprehensive income (loss) ( 4,833 ) 46,109 ( 17,407 ) 18,606

comprehensive income (loss) attributable to noncontrolling interest 190 ( 1,303 ) 406 ( 408 )

Comprehensive income (loss) attributable to Enovis Corporation $ ( 5,023 ) $ 47,412 $ ( 17,813 ) $ 19,014

See Notes to Condensed Consolidated Financial Statements.

ENOVIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in thousands, except share amounts

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

CURRENT ASSETS:

24 unchanged sentences

133,333,333 shares authorized;

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

54,534,111 and 54,228,619 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,944,094 2,925,729

7 unchanged sentences

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

8 unchanged sentences

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

Net loss — — — ( 9,995 ) — 182 ( 9,813 )

Other comprehensive income, net of tax of $( 1,781 )

— — — — 4,972 8 4,980

Common stock-based award activity 40,957 1 10,321 — — — 10,322

Balance at June 30, 2023 54,534,111 $ 55 $ 2,944,094 $ 542,387 $ ( 37,898 ) $ 2,122 $ 3,450,760

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

8 unchanged sentences

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 income, 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

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Dollars in thousands

Three Months Ended

March 31, 2023 April 1, 2022

Six Months Ended

June 30, 2023 July 1, 2022

Cash flows from operating activities:

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

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

Net income (loss) $ ( 32,971 ) $ 93,286

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

Depreciation, amortization and other impairment charges 105,033 117,300

1 unchanged sentence

Non-cash interest expense 1,481 1,658

Deferred income tax expense 831 2,232

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

Debt extinguishment charges — 20,104

Deferred income tax expense (benefit) ( 107 ) 2,174

Loss on sale of property, plant and equipment 533 352

14 unchanged sentences

Repayments of borrowings on revolving credit facilities and other ( 11,538 ) ( 607,618 )

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

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

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

Proceeds from issuance of common stock, net 1,385 1,727

Payment of debt extinguishment costs — ( 12,704 )

Deferred consideration payments and other ( 1,668 ) ( 9,795 )

1 unchanged sentence

Effect of foreign exchange rates on Cash and cash equivalents ( 87 ) 2,020

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

Increase (decrease) in Cash and cash equivalents 8,196 ( 623,765 )

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

4 unchanged sentences

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 (the “Separation”).

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.

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.

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.

Upon completion of the Separation, the Company retained its specialty medical technology business, changed its name to Enovis Corporation, and began trading under the stock symbol “ENOV” on the New York Stock Exchange on April 5, 2022.

Enovis is an innovation-driven medical technology growth company dedicated to developing clinically differentiated solutions that generate measurably better patient outcomes and transform workflows.

The Company conducts its business through two operating segments, “Prevention & Recovery” and “Reconstructive”.

The Prevention & Recovery segment provides orthopedic and recovery science solutions, including devices, software, and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

The Reconstructive segment provides surgical implant solutions, offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger and surgical productivity tools.

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.

6 unchanged sentences

Actual results may differ from those estimates.

Recently Issued Accounting Pronouncements

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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Recently Issued Accounting Pronouncements

The Company has not adopted any new accounting standards during the six months ended June 30, 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

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.

(1) operating results of ESAB Corporation (“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) certain expenses related to the Separation and prior divestitures.

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

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(in thousands)

5 unchanged sentences

Divestiture-related expenses (1)

5,600 35,463 6,011 45,941

Operating (loss) income ( 5,600 ) ( 35,463 ) ( 6,011 ) 44,363

2 unchanged sentences

Income tax (benefit) expense (3)

( 10,397 ) 8,203 ( 10,496 ) 25,638

(Loss) income from discontinued operations, net of taxes $ 4,797 $ ( 43,666 ) $ 4,485 $ 10,690

(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.

(1) Divestiture-related expenses include a charge for the release of a tax indemnification with ESAB for the three and six months ended June 30, 2023, and charges of $ 35.3 million and $ 45.0 million associated with the Separation for the three and six months ended July 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.

(3) Includes benefit of release of uncertain tax positions for the three and six months ended June 30, 2023.

Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $ 26.2 million.

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

ENOVIS CORPORATION

2 unchanged sentences

2023 Acquisitions

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.

On June 28, 2023, the Company completed the Novastep acquisition in its Reconstructive segment, a leading player in Minimally Invasive Surgery (MIS) foot and ankle solutions with a best-in-class MIS bunion system serving a rapidly growing portion of the global bunion segment.

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 $ 96.9 million for the acquisition, net of cash received.

The Company has allocated $ 39.8 million to goodwill and $ 52 million to intangible assets acquired.

The acquisition accounting reflects our preliminary estimates and are subject to adjustment.

The acquired goodwill value is primarily driven by the expected synergies from cross-selling Novastep products to existing Enovis foot & ankle customers.

The acquisition broadens our reconstructive product offerings for the foot and ankle market and expands our customer base in Europe.

Purchase accounting procedures are ongoing and revisions may be recorded in future periods during the measurement period.

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.

The transaction closed on July 20, 2023 for a purchase price of $ 28 million, subject to working capital adjustments.

2022 Acquisitions

4 unchanged sentences

The Company has allocated $ 16.3 million to goodwill and $ 18.2 million to intangible assets acquired.

The purchase price accounting for this acquisition was finalized.

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

4 unchanged sentences

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.

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 amount 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.

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

The purchase price accounting for this acquisition was finalized.

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.

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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the six months ended July 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.

2 unchanged sentences

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

As of June 30, 2023, the balance of investments held by the Company without readily determinable fair values w as $ 20.7 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.

3 unchanged sentences

The Company disaggregates its revenue into the following segments:

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(In thousands)

10 unchanged sentences

Total $ 428,502 $ 395,117 $ 834,653 $ 770,574

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

(1) Includes favorable currency impact of $ 0.1 million and unfavorable currency impacts of $ 4.1 million for the three and six months ended June 30, 2023, respectively.

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.

3 unchanged sentences

The Company’s estimate of current expected credit losses on trade receivables considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

In calculating and applying its current expected credit losses, the Company disaggregates trade receivables into business segments due to risk characteristics unique to each segment given the individual lines of business and market.

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, 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.

In calculating and applying its current expected

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

credit losses, the Company disaggregates trade receivables into business segments due to risk characteristics unique to each segment given the individual lines of business and market.

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, considering historical write-offs over a defined lookback period in deriving a historical loss rate.

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

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:

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

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

4 unchanged sentences

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

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(In thousands, except share and per share data)

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

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

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

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

$ ( 14,792 ) $ 120,521 $ ( 37,830 ) $ 82,199

1 unchanged sentence

54,510,688 54,080,549 54,418,554 53,969,738

Net loss per share from continuing operations – basic

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

$ ( 0.27 ) $ 2.23 $ ( 0.70 ) $ 1.52

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

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

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

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

$ ( 14,792 ) $ 120,521 $ ( 37,830 ) $ 82,199

4 unchanged sentences

54,510,688 54,521,849 54,418,554 54,458,872

Net loss per share from continuing operations – diluted

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

$ ( 0.27 ) $ 2.21 $ ( 0.70 ) $ 1.51

(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.

taxation on international operations and other non-deductible expenses.

(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 $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2023 and $ 0.1 million and $ 0.4 million for the three and six months ended July 1, 2022.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for both the three and six months ended June 30, 2023 excludes 1.2 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 both the three and six months ended July 1, 2022 excludes 0.4 million shares underlying 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 June 30, 2023, Loss from continuing operations before income taxes was $ 19.3 million and $ 49.3 million, while Income tax benefit was $ 4.7 million and $ 11.8 million, respectively.

The effective tax rate was 24.4 % and 24.0 % for the three and six months ended June 30, 2023, both of 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, tax credits for research and development, and release of uncertain tax positions.

This was offset by other non-deductible expenses and U.S.

taxation on international operations.

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, 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 U.S.

federal statutory rate of 21% mainly due to non-deductible unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction.

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 March 31, 2023, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

As of June 30, 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 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 Total

Net Unrecognized Pension Benefit Cost Foreign Currency Translation Adjustment Unrealized Loss on Hedging Activities Total

(In thousands)

2 unchanged sentences

Foreign currency translation adjustment 383 21,480 — 21,863

Loss on net investment hedges — — ( 5,449 ) ( 5,449 )

Other comprehensive income (loss) before reclassifications 383 21,480 ( 5,449 ) 16,414

1 unchanged sentence

Net Other comprehensive income (loss) ( 499 ) 21,480 ( 5,449 ) 15,532

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

Balance at June 30, 2023 $ 11,708 $ ( 44,157 ) $ ( 5,449 ) $ ( 37,898 )

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Loss Components

9 unchanged sentences

Net Other comprehensive income (loss) 1,099 ( 83,036 ) 9,028 ( 72,909 )

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Inventories, Net

Inventories, net consisted of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

Long-term debt consisted of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

In conjunction with the Separation, which occurred on April 4, 2022, the Company repaid all obligations under its previous credit agreement and entered into a new credit agreement (the “Enovis Credit Agreement”) with certain of its existing bank lenders.

Additionally, on April 7, 2022, after the completion of the Separation, the Company completed the redemptions of its 3.25 % Euro Senior Notes due 2025 and its 6.375 % Senior Notes due 2026.

As a result of these changes, the Company recorded Debt extinguishment charges of $ 20.1 million in the second quarter of 2022, comprised of $ 12.7 million in redemption premiums and $ 7.4 million in noncash write-offs of original issue discount and deferred financing fees.

Additionally, on April 7, 2022, after the completion of the Separation, the Company completed the redemptions of its 3.25 % Euro Senior Notes due 2025 (the “Euro Senior Notes”) and its 6.375 % Senior Notes due 2026 (the “2026 Notes”).

As a result of these changes, the Company recorded Debt extinguishment charges of $ 20.1 million in the second quarter of 2022,

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

comprised of $ 12.7 million in redemption premiums and $ 7.4 million in noncash write-offs of original issue discount and deferred financing fees.

Enovis Term Loan and Revolving Credit Facility

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 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.

The Enovis Credit Agreement also had a term loan with an initial aggregate principal amount of $ 450 million which has been fully extinguished (the “Enovis Term Loan”).

The Revolver contains a $ 50 million swing line loan sub-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 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 Enovis Term Loan outstanding under the Enovis 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 4.00 :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.

In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 3.75 :1.00 for the fiscal quarter ending June 30, 2023, stepping down 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.

As of June 30, 2023, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of June 30, 2023, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.32 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 500 million available on the Revolver.

The Compan y has $ 4.0 million in deferred f inancing fees recorded in conjunction with the Enovis Credit Agreement as of June 30, 2023, which are being accreted to Interest expense, net primarily using a straight-line method over the life of the facility.

Euro Senior Notes

3 unchanged sentences

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 of principal on the TEU amortizing notes in the three months ended April 1, 2022.

The Company paid $ 6.5 million of principal on the TEU amortizing notes in 2022.

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

1 unchanged sentence

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 overdraft facilities with a borrowing capacity of $ 30.0 million.

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)

Other Indebtedness

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

Total letters of credit and surety bonds of $ 6.9 million were outstanding as of June 30, 2023.

Accrued Liabilities

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands)

4 unchanged sentences

Warranty liability- current portion 2,826 2,804

Accrued restructuring liability - current portion 944 1,090

Accrued restructuring liability 1,057 1,090

Accrued third-party commissions 25,643 24,958

9 unchanged sentences

The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company.

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:

Three Months Ended March 31, 2023

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

Six Months Ended June 30, 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 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.

(3) For the six months ended June 30, 2023, $ 3.3 million and $ 3.4 million of th e 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 six months ended June 30, 2023.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 $ 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 value of the Company’s debt, which was $ 400.0 million as of June 30, 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.

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.

As of June 30, 2023, the Company held $ 21.6 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 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.

During the six months ended June 30, 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 and payments of $ 0.9 million, offset by increases for interest accretion and effect of foreign currency.

The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is zero to $ 10.0 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.

There were no transfers in or out of Level One, Two or Three during the six months ended June 30, 2023.

Deferred Compensation Plans

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

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

As of June 30, 2023 and December 31, 2022 the fair value of these plans were $ 13.5 million and $ 10.3 million, respectively.

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

Foreign Currency Contracts

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.

As of June 30, 2023 and December 31, 2022, the Company had foreign currency contracts related to purchases and sales with notional values of $ 0.0 million and $ 0.8 million, respectively.

During the six months ended June 30, 2023, the Company recognized an unrealized gain of $ 0.0 million and realized loss of $ 1.4 million on its Condensed Consolidated Statements of Operations related to its derivative instruments.

The realized loss is recorded in Other expense, net on Condensed Consolidated Statements of Operations.

Net investment hedges

On April 18, 2023, the Company entered into cross-currency swap agreements to hedge its net investment in its Swiss Franc-denominated subsidiaries against adverse movements in exchange rates between the U.S.

Dollar and the Swiss Franc.

These swap agreements are designated and qualify as net investment hedges.

These contracts have a Swiss Franc notional amount of approximately ₣ 403 million and a U.S.

Dollar aggregate notional amount of $ 450 million at June 30, 2023.

Cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement.

For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in Accumulated other comprehensive income (loss) in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the cumulative translation adjustment.

Amounts are reclassified out of Accumulated other comprehensive loss into earnings when the hedged net investment is either sold or substantially liquidated.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the three and six months ended June 30, 2023, the Company received interest income on its Cross-currency swap derivatives of $ 2.1 million, which is included within Interest expense, net in the Condensed Consolidated Statements of Operations.

The following table presents the amount of loss recognized in Other comprehensive loss for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(In thousands)

Loss on cross-currency swaps $ ( 7,189 ) $ — $ ( 7,189 ) $ —

$ ( 7,189 ) $ — $ ( 7,189 ) $ —

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

Other current assets Other liabilities Other current assets Other liabilities

(In thousands)

Derivatives designated as hedging instruments:

Cross-currency swaps $ 9,977 $ 17,166 $ — $ —

$ 9,977 $ 17,166 $ — $ —

Commitments and Contingencies

The Company is involved in various pending legal proceedings arising out of the ordinary course of the Company’s business.

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.

The Company is involved in various pending legal, regulatory, and other proceedings arising out of the ordinary course of the Company’s business.

None of these 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 either it will prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities.

1 unchanged sentence

Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated.

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.

There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these 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.

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.

7 unchanged sentences

The Company’s segment results were as follows:

Three Months Ended

March 31, 2023 April 1, 2022

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(In thousands)

7 unchanged sentences

(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

Three Months Ended Six Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

(In thousands)

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

Income (loss) from continuing operations before income taxes (GAAP) $ ( 19,323 ) $ 116,440 $ ( 49,282 ) $ 78,749

Restructuring and other charges (1)

3,806 2,555 6,742 5,508

MDR and other costs (2)

8,997 4,421 16,793 7,048

Strategic transaction costs 5,435 12,707 17,065 24,403

4 unchanged sentences

Interest expense, net 4,076 4,546 9,728 11,610

Other income ( 661 ) —

Other expense, net 753 — 92 —

Debt extinguishment charges — 20,104 — 20,104

Insurance settlement gain (3)

— ( 33,034 ) — ( 33,034 )

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

Adjusted EBITDA (non-GAAP) $ 65,682 $ 56,190 $ 122,093 $ 103,917

(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.

(1) Restructuring and other charges in cludes $ — million and $ 0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively.

Restructuring and other charges in cludes $ 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.

(2) Primarily related to costs specific to compliance with medical device reporting reg ulations 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.

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