What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-03 · 258 added, 144 removed, 410 unchanged (50% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Net sales $ 417,524 $ 383,814 $ 1,252,177 $ 1,154,388

4 unchanged sentences

Amortization of acquired intangibles 33,967 31,993 98,256 94,603

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

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

Restructuring and other charges 5,342 2,989 11,782 7,653

2 unchanged sentences

Debt extinguishment charges — — — 20,104

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

Other expense, net 753 — 92 —

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

Gain on cost basis investment — ( 8,800 ) — ( 8,800 )

Other (income) expense, net ( 757 ) ( 300 ) ( 665 ) ( 300 )

Income (loss) from continuing operations before income taxes ( 25,503 ) ( 78,278 ) ( 74,785 ) 471

18 unchanged sentences

Dollars in thousands

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Net income (loss) $ ( 2,840 ) $ ( 66,476 ) $ ( 35,811 ) $ 26,810

7 unchanged sentences

( 339 ) — ( 1,221 ) 629

Reclassification of hedging gain (loss), net of tax expense (benefit) of $ — , $ — , $ — and $ —

Other comprehensive income (loss) ( 15,069 ) ( 28,836 ) 495 ( 103,516 )

6 unchanged sentences

Dollars in thousands, except share amounts

June 30, 2023 December 31, 2022

September 29, 2023 December 31, 2022

CURRENT ASSETS:

24 unchanged sentences

133,333,333 shares authorized;

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

54,564,997 and 54,228,619 shares issued and outstanding as of September 29, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,952,975 2,925,729

22 unchanged sentences

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

Net loss — — — ( 2,880 ) — 40 ( 2,840 )

Other comprehensive income, net of tax of $ 934

— — — — ( 15,017 ) ( 52 ) ( 15,069 )

Common stock-based award activity 30,886 — 8,881 — — — 8,881

Balance at September 29, 2023 54,564,997 $ 55 $ 2,952,975 $ 539,507 $ ( 52,915 ) $ 2,110 $ 3,441,732

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 $ —

Net loss — — — 76,855 — 130 76,985

Other comprehensive loss, net of tax of $ —

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

2 unchanged sentences

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

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

Other comprehensive loss, net of tax of $ —

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

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

Acquisition of Insight (see Note 4)

— — — — — 345 345

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

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

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Dollars in thousands

Six Months Ended

June 30, 2023 July 1, 2022

Nine Months Ended

September 29, 2023 September 30, 2022

Cash flows from operating activities:

5 unchanged sentences

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

Gain on cost basis investment — ( 8,800 )

Debt extinguishment charges — 20,104

Deferred income tax expense (benefit) ( 20,612 ) ( 3,458 )

Loss on sale of property, plant and equipment 533 352

(Gain) loss on sale of property, plant and equipment ( 14,832 ) 352

Changes in operating assets and liabilities:

7 unchanged sentences

Proceeds from sale of property, plant and equipment 42,571 2,746

Acquisitions, net of cash received, and investments ( 98,740 ) ( 35,123 )

Payments for acquisitions, net of cash received, and investments ( 131,387 ) ( 73,390 )

Net cash used in investing activities ( 183,095 ) ( 139,312 )

Cash flows from financing activities:

Payments under term credit facility ( 219,468 ) ( 785,000 )

Proceeds from borrowings on term credit facility — 450,000

Repayments of borrowings under term credit facility ( 219,468 ) ( 785,000 )

Proceeds from borrowings on revolving credit facilities and other 400,000 —

3 unchanged sentences

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

Payment of debt issuance costs ( 8,000 ) ( 2,938 )

Proceeds from issuance of common stock, net 1,489 2,530

12 unchanged sentences

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 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.

7 unchanged sentences

Actual results may differ from those estimates.

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.

The Company has not adopted any new accounting standards during the nine months ended September 29, 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.

1 unchanged sentence

The Company’s discontinued operations include the following:

(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.

(1) operating results of ESAB Corporation (“ESAB”) for the first quarter of 2022 prior to Separation, (2) charges for the first quarter of 2022 related to previously retained asbestos contingencies from certain divested businesses for which the Company did not retain an interest in the ongoing operations and that were fully transferred to ESAB in conjunction with the Separation, (3) certain expenses related to the Separation in 2022, (4) a charge related to the release of a tax indemnification receivable from ESAB and release of uncertain tax positions in the second quarter of 2023, and (5) gain on disposal from the sale of a facility retained from a prior divestiture.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(in thousands)

2 unchanged sentences

Selling, general and administrative expense — — — 125,529

Gain on disposal of facility ( 15,517 ) — ( 15,517 ) —

Restructuring and other charges — — — 5,304

Asbestos charges — — — 3,194

Divestiture-related expenses (1)

Divestiture-related expenses and other (1)

( 1,652 ) 527 4,359 46,468

5 unchanged sentences

(Loss) income from discontinued operations, net of taxes $ 16,611 $ ( 527 ) $ 21,096 $ 10,163

(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.

(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.

(1) Divestiture-related expenses and other includes costs (benefits) relating to a facility retained from a prior divestiture, a charge for the release of a tax indemnification receivable from ESAB during the second quarter of 2023, and charges of $ 45.0 million associated with the Separation for the nine months ended September 30, 2022.

(2) Interest expense was allocated to discontinued operations in 2022 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.

(3) Includes benefit of release of uncertain tax positions in the second quarter of 2023.

Cash used in operating activities related to discontinued operations was $ 1.2 million and $ 26.8 million for the nine months ended September 29, 2023 and September 30, 2022, respectively.

Cash provided by investing activities related to discontinued operations for the nine months ended September 29, 2023 was $ 42.6 million.

Cash used in investing activities related to discontinued operations for the nine months ended September 30, 2022 was $ 3.2 million.

Acquisitions and Investments

Lima Acquisition Purchase Agreement

On September 22, 2023, the Company entered into a definitive stock purchase agreement to acquire LimaCorporate S.p.A.

(“Lima”), a privately held global orthopedic company focused on restoring motion through digital innovation and customized hardware, at an enterprise value of € 800 million (the “Lima Acquisition”), consisting of (i) approximately € 700 million in cash consideration, which includes repayment of certain indebtedness, to be paid at closing, and (ii) 1,942,686 shares of common stock of Enovis valued at € 100 million based on the thirty-day volume weighted average price of the Company’s common stock as of the close of business day on September 21, 2023, and which are expected to be issued within eighteen months following the closing of the Lima Acquisition, in each case subject to certain adjustments and conditions as provided for in the purchase agreement.

The closing of the Lima Acquisition is subject to the receipt of applicable regulatory approvals and other customary closing conditions and is expected to be completed in the first quarter of 2024.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisitions and Investments

2023 Acquisitions

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.

On June 28, 2023, the Company completed the Novastep business combination in its Reconstructive segment.

Novastep is 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.

5 unchanged sentences

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

On July 20, 2023, the Company completed an asset acquisition in its Reconstructive segment for an external fixation product line from D.N.E., LLC, a developer of a broad line of external fixation products, including circular frames, pin-to-bar frames, and mini-fixators for use in foot and ankle surgeries.

The Company paid $ 28.2 million for the asset acquisition and assigned $ 25.8 million to intangible assets, $ 1.9 million to finished goods inventory and $ 0.5 million to property, plant and equipment.

The acquisition of these assets, primarily the developed technology, is an important step in creating a more robust product portfolio for the foot & ankle business unit.

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.

During the nine months ended September 30, 2022, the Company completed four asset acquisitions, two business combinations, and one investment which is recorded using the equity method of accounting.

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 of deferred and contingent consideration.

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

On May 6, 2022, the Company completed a business combination 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.

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

1 unchanged sentence

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

The purchase price accounting for this acquisition was finalized.

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

The purchase price accounting for this acquisition was finalized during the quarter ended June 30, 2023.

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

6 unchanged sentences

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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

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

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

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.

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.

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.

As of September 29, 2023, the balance of investments held by the Company without readily determinable fair values w as $ 20.6 million .

The majority of these 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 these investments.

One investment is accounted for under the equity method of accounting and is recorded at the initial investment amount, adjusted each period for the Company’s share of the income or loss.

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

1 unchanged sentence

The Company disaggregates its revenue into the following segments:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands)

8 unchanged sentences

International Reconstructive (2)

47,517 38,273 148,317 121,107

Total Reconstructive 147,237 127,312 457,675 389,268

Total $ 417,524 $ 383,814 $ 1,252,177 $ 1,154,388

(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.

(1) Includes favorable currency impact of $ 3.3 million and unfavorable currency impacts of $ 0.7 million for the three and nine months ended September 29, 2023, respectively.

(2) Includes favorable currency impact of $ 2.2 million and $ 1.8 million for the three and nine months ended September 29, 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.

1 unchanged sentence

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

Allowance for Credit Losses

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

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.

Allowance for Credit Losses

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.

2 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 29, 2023

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

2 unchanged sentences

Allowance for credit losses $ 7,965 $ 3,269 $ ( 2,499 ) $ ( 24 ) $ 8,711

Net Loss Per Share from Continuing Operations

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

Three Months Ended Six Months Ended

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

Net Income (Loss) Per Share from Continuing Operations

Net income (loss) per share from continuing operations was computed using treasury stock method as follows:

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands, except share and per share data)

16 unchanged sentences

$ ( 0.36 ) $ ( 1.22 ) $ ( 1.05 ) $ 0.30

(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.

The following weighted average computations of potentially dilutive shares of Common stock from stock-based compensation awards were excluded from the calculation of Weighted-average shares of Common stock outstanding – diluted as inclusion would be anti-dilutive in Net income (loss) per share:

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands, except share data)

Weighted average computation of potentially dilutive shares of Common stock excluded from diluted computation, as inclusion would be anti-dilutive

1,073,464 462,624 1,127,227 432,789

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

Income (loss) from continuing operations before income taxes ( 25,503 ) ( 78,278 ) ( 74,785 ) 471

Income tax expense (benefit) ( 6,052 ) ( 12,329 ) ( 17,878 ) ( 16,176 )

Effective tax rate:

23.7 % 15.8 % 23.9 % ( 3,434.4 ) %

The effective tax rates for the three and nine months ended September 29, 2023, were slightly higher than 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.

This was partially 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.

The effective tax rates for the three and nine months ended September 30, 2022, were lower than the 2022 U.S.

federal statutory rate of 21% mainly due to non-taxable unrealized (gain) loss on the investment in ESAB Corporation and gain on cost basis investment, partially offset by non-deductible costs related to the tax-free Separation.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 June 30, 2023, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

As of September 29, 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.

There is no term associated with the remaining repurchase authorization.

Accumulated Other Comprehensive Loss

The following tables present the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the six months ended June 30, 2023 and July 1, 2022.

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

Accumulated Other Comprehensive Loss Components

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

Accumulated Other Comprehensive Income (Loss)

The following tables present the changes in the balances of each component of Accumulated other comprehensive income (loss) including reclassifications out of Accumulated other comprehensive loss for the nine months ended September 29, 2023 and September 30, 2022.

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

Accumulated Other Comprehensive Income (Loss) Components

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

(In thousands)

6 unchanged sentences

Net Other comprehensive income (loss) ( 1,113 ) 3,750 ( 2,122 ) 515

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at September 29, 2023 $ 11,094 $ ( 61,887 ) $ ( 2,122 ) $ ( 52,915 )

Accumulated Other Comprehensive Loss Components

10 unchanged sentences

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

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventories, Net

Inventories, net consisted of the following:

June 30, 2023 December 31, 2022

September 29, 2023 December 31, 2022

(In thousands)

6 unchanged sentences

Long-term debt consisted of the following:

June 30, 2023 December 31, 2022

September 29, 2023 December 31, 2022

(In thousands)

5 unchanged sentences

Debt Redemptions

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.

In conjunction with the Separation 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 (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.

As a result of these changes, the Company recorded Debt extinguishment charges of $ 20.1 million during 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.

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.

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 Enovis Credit Agreement also had a term loan with an initial aggregate principal amount of $ 450 million (the “Enovis Term Loan”) which was fully extinguished during the first quarter of 2023.

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 Enovis Term Loan outstanding under the Enovis 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 Enovis Term Loan that was outstanding at that time 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 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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

down to 3.50 :1.00 for the fiscal quarter ending June 30, 2024 and thereafter, 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 Credit Agreement.

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.

As of September 29, 2023, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of September 29, 2023, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.54 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 505 million available on the Revolver.

Euro Senior Notes

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

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

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

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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 2022.

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

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

The final installment payment of $ 6.5 million principal was made on January 15, 2022.

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

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

Commitment Letter and Financing for Lima Acquisition

On September 22, 2023, the Company entered into a commitment letter (the “Commitment Letter”) to obtain an $ 800 million senior bridge facility for financing the Lima Acquisition (the “Bridge Facility”).

The funding of the Bridge Facility, if needed, is subject to the satisfaction of certain customary conditions.

The Bridge Facility will be reduced by an equivalent amount of the net cash proceeds of the incurrence of a new term loan facility , the issuance by the Company of debt, equity or equity-linked securities in a public offering or private placement, or the disposition of assets prior to the consummation of the Lima Acquisition and upon other specified events, subject to certain exceptions set forth in the Commitment Letter .

The Commitment Letter requires the Company to use commercially reasonable efforts to arrange and syndicate a $ 400 million senior term loan facility, the proceeds of which will be used to refinance and/or reduce the commitments under all or a portion of the Bridge Facility.

The financing requirements under the Commitment Letter were completed in October 2023, as follows.

On October 23, 2023 the Company entered into an amendment to the Enovis Credit Agreement (the “Amendment”).

The Amendment provides for a new term loan commitment in the aggregate amount of $ 400 million, which reduced, on a dollar-for-dollar basis, the commitments under the Commitment Letter.

The term loan facility extended to the Company under the Amendment will be available on the date the Lima Acquisition is consummated.

The term loan requires quarterly principal repayments at 1.25 % of the initial aggregate principal amount and ultimately matures on April 4, 2027.

Pursuant to the Amendment, effective as of the date of consummation of the Lima Acquisition, (i) all facilities under the Credit Agreement (including the Term Loan Facility) will become secured by certain personal property of the Company and certain of its subsidiaries, subject to limitations and exclusions;

(ii) the financial covenant under the Credit Agreement will be adjusted from total leverage ratio to senior secured leverage ratio and will require the senior secured leverage ratio to be no more than 3.75 :1.00 with a step down to 3.50 :1.00 commencing with the fiscal quarter ending June 30, 2024;

(iii) certain changes to the negative covenants will become effective (including restrictions on repayments of junior financing and amendments to junior financing documents);

and (iv) certain additional changes will be implemented (including the removal of the guaranty fallaway provision).

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On October 24, 2023, the Company issued $ 460 million aggregate principal amount of senior unsecured convertible notes in a private placement pursuant to Rule 144A (the “2028 Notes”).

The 2028 Notes have an interest rate of 3.875 %, payable semiannually in arrears on April 15 and October 15 of each year, beginning April 15, 2024 and will mature on October 15, 2028 unless earlier repurchased, redeemed, or converted.

Holders may convert their 2028 Notes under the following conditions at any time prior to the close of business on the business day immediately preceding April 15, 2028 in multiples of $1,000 principal amount, only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on December 31, 2023 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of 2028 Notes, as determined following a request by a holder of 2028 Notes in accordance with the procedures described below, for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii) if the Company calls any or all of the 2028 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date;

or (iv) upon the occurrence of specified corporate events as described in the indenture governing the 2028 Notes.

In addition, holders may convert their 2028 Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after April 15, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances.

The conversion rate is 17.1474 shares of common stock per $1,000 principal amount of 2028 Notes (equivalent to an initial conversion price of approximately $ 58.32 per share of common stock), subject to adjustment upon the occurrence of certain specified events as set forth in the indenture governing the 2028 Notes.

Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2028 Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at its election, in respect of the remainder,

The Company also entered into privately negotiated capped call transactions with certain of the initial purchasers of the 2028 Notes and paid $ 62 million to the counterparties.

The capped call transactions are intended generally to mitigate potential dilution to the Company’s common stock upon conversion of any Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

If, however, the market price per share of common stock exceeds $ 89.72 , the initial cap price of the capped call transactions, there would be dilution effect and/or no offset of any cash payments, in each case, attributable to the amount by which the market price of the common stock exceeds the cap price.

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.

Total letters of credit and surety bonds of $ 11.2 million were outstanding as of September 29, 2023.

Deferred Financing Fees

The Company has $ 11.7 million in deferred financing fees of which $ 3.7 million was recorded in conjunction with the Enovis Credit Agreement as of September 29, 2023 and are accreted to Interest expense, net primarily using a straight-line method over the life of the facility.

The balance of $ 8.0 million was recorded in September 2023 related to the Commitment Letter discussed above and is amortized over the life of the Bridge Facility.

Upon the completion of the amendment to the Enovis Credit Agreement and senior unsecured convertible notes offering in October 2023, the Bridge Facility was terminated and the unamortized balance of the Bridge Facility deferred financing fees will be written-off in the fourth quarter of 2023.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Liabilities

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

June 30, 2023 December 31, 2022

September 29, 2023 December 31, 2022

(In thousands)

Accrued compensation and related benefits $ 64,384 $ 51,384

Accrued taxes 16,288 13,676

Accrued freight 4,533 3,955

Contingent consideration - current portion 7,832 8,812

Warranty liability- current portion 2,826 2,804

Accrued restructuring liability 1,057 1,090

Accrued third-party commissions 25,378 24,958

Customer advances and billings in excess of costs incurred 3,423 3,560

Lease liability - current portion 20,910 24,281

Accrued interest 545 2,921

Accrued taxes 15,106 13,676

Accrued rebates 11,600 13,715

Accrued professional fees 9,737 15,670

Contingent consideration - current portion 7,790 8,812

Accrued royalties 5,288 5,777

Accrued freight 3,576 3,955

Customer advances and billings in excess of costs incurred 3,082 3,560

Warranty liability 2,846 2,804

Accrued restructuring liability 2,159 1,090

Accrued interest 388 2,921

Other 57,980 37,689

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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

Nine Months Ended September 29, 2023

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

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

(3) For the six months ended 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.

(3) For the nine months ended September 29, 2023, $ 6.2 million and $ 5.9 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 nine months ended September 29, 2023.

ENOVIS CORPORATION

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Financial Instruments and Fair Value Measurements

The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments.

The guidance establishes a fair value hierarchy based on the inputs used to measure fair value.

This hierarchy prioritizes the inputs into three broad levels as follows:

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level Three :

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement

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 $ 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 carrying value of the Company’s revolving credit facility debt, which bears a variable interest rate indexed to the Secured Overnight Financing Rate (SOFR), approximates fair value as it reprices when market interest rates change.

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 June 30, 2023, the Company held $ 21.6 million in Level Three liabilities arising from contingent consideration related to acquisitions.

As of September 29, 2023, the Company held $ 26.5 million in Level Three liabilities arising from contingent consideration related to acquisitions.

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

1 unchanged sentence

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

During the six months ended 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.

During the nine months ended September 29, 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 six months ended June 30, 2023.

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

There were no transfers in or out of Level One, Two or Three during the nine months ended September 29, 2023.

Total Contingent Consideration Rollforward

Beginning Balance Charges Interest Payments Foreign Exchange Ending Balance

(In thousands)

Contingent Consideration $ 27,809 $( 832 ) $ 1,133 $( 868 ) $( 741 ) $ 26,500

Deferred Compensation Plans

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

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

As of September 29, 2023 and December 31, 2022 the fair value of these plans were $ 12.9 million and $ 10.3 million, respectively.

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

Foreign Currency Contracts

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.

Forward Currency Contracts

The Company’s objective in using forward currency contracts is to add stability to the Company’s earnings and to protect the U.S.

Dollar value of forecasted transactions.

To accomplish this objective, the Company has entered into forward currency

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

contract agreements between the U.S.

Dollar and the Mexican Peso as part of its risk management strategy.

These forward currency contract agreements are designated and qualify as cash flow hedges.

The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in Unrealized gain (loss) on hedging activities, net of tax within the Company’s unaudited Consolidated Statements of Comprehensive Income (Loss) until the underlying third party transaction occurs.

When the underlying third-party transaction occurs, the Company recognizes the gain or loss in earnings within Cost of Sales in its unaudited Condensed Consolidated Statements of Operations.

The contracts are recorded at fair value and deemed to be Level Two in the fair value hierarchy.

At September 29, 2023, the Company’s forward currency contracts have a Mexican Peso notional amount of approximately $ 1,260.0 million and a U.S.

Dollar aggregate notional amount of $ 71.9 million.

During the three and nine months ended September 29, 2023, the Company recognized a realized gain of $ 0.2 million on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges.

There was nothing recognized in 2022 as the Mexican Peso forward currency program was established in the second quarter of 2023.

The Company also used a non-designated forward currency contract for the purpose of managing its exposure to currency exchange rate risk related to the Euro-denominated purchase price of Novastep, which closed in June 2023.

During the second quarter of 2023, the Company recognized a loss of $ 1.5 million on its Condensed Consolidated Statements of Operations related to the settlement of this non-designated forward currency contract.

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

Net Investment Hedges

3 unchanged sentences

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.

Dollar aggregate notional amount of $ 450 million at September 29, 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.

For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in the Condensed Consolidated Balance Sheet as part of Accumulated other comprehensive (loss) and in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the foreign currency 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

During the three and nine months ended September 29, 2023, the Company received interest income on its cross-currency swap derivatives of $ 2.6 million and $ 4.7 million, respectively, which is included within Interest expense, net in the Condensed Consolidated Statements of Operations.

The following table presents the effect of the Company’s designated hedging instruments on Accumulated other comprehensive income (loss) for the three and nine months ended September 29, 2023 and 2022:

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands)

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

Gain (loss) on cross-currency swaps

$ 5,991 $ — $ ( 1,199 ) $ —

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 $ — $ —

Gain (loss) on forward currency contracts ( 1,654 ) — ( 1,654 ) —

$ 4,337 $ — $ ( 2,853 ) $ —

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In thousands) Location on Unaudited Consolidated Balance Sheets (1)

September 29, 2023 December 31, 2022

Derivative Assets

Forward currency contracts Other current assets 12 —

Cross-currency swaps Other current assets 7,524 —

Total Derivative Assets $ 7,536 $ —

Derivative Liabilities

Forward currency contracts Other current liabilities 1,150 —

Forward currency contracts Other long-term liabilities 684 —

Cross-currency swaps Other long-term liabilities 8,723 —

Total Derivative Liabilities $ 10,557 $ —

(1) The Company classifies derivative assets and liabilities as current when the settlement date of the contract is one year or less.

Commitments and Contingencies

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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.

Segment Information

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• 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.

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 Other (income) expense, net, non-operating (gain) loss on investments, debt extinguishment charges, interest expense, net, restructuring and certain other charges, Medical Device Regulation (MDR) and other costs, strategic transaction costs, stock-based compensation, depreciation and other amortization, acquisition-related intangible asset amortization, insurance settlement loss (gain), and inventory step-up charges from the results of the Company’s operating segments.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 Six Months Ended

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands)

6 unchanged sentences

$ 65,386 $ 57,209 $ 187,480 $ 161,126

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

Three Months Ended Six Months Ended

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

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

Three Months Ended Nine Months Ended

September 29, 2023 September 30, 2022 September 29, 2023 September 30, 2022

(In thousands)

10 unchanged sentences

Interest expense, net 5,768 6,334 15,496 17,944

Other expense, net 753 — 92 —

Other (income) expense, net ( 757 ) ( 300 ) ( 665 ) ( 300 )

Debt extinguishment charges — — — 20,104

Insurance settlement gain (3)

Insurance settlement loss (gain) (3)

— 975 — ( 32,059 )

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

Gain on cost basis investment — ( 8,800 ) — ( 8,800 )

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

Adjusted EBITDA (non-GAAP) $ 65,386 $ 57,209 $ 187,480 $ 161,126

(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.

(1) Restructuring and other charges includes $ — 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 nine months ended September 29, 2023, respectively.

Restructuring and other charges includes $ — 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 nine months ended September 30, 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.

1 unchanged sentence

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

Precision AI Acquisition

On October 5, 2023, the Company completed a business combination in its Reconstructive segment of Precision AI, an Australian company specializing in the development of surgical planning software in multiple areas of the body.

The acquisition will be accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements will include the financial position and results of operations beginning the next fiscal quarter.

The Company paid $ 27.5 million for the acquisition, net of cash received, and estimated $ 12.4 million contingent consideration related to certain regulatory milestones in 2024.

Financing for Lima Acquisition

In October 2023, the Company entered into an amendment to the Enovis Credit Agreement and issued $ 460 million aggregate principal amount of senior unsecured convertible notes in conjunction with financing the Lima Acquisition which is expected to close in the first quarter of 2024.

“Debt” in our Notes to Condensed Consolidated Financial Statements included in this Form 10-Q for additional information.

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