Enovis CORP 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting (Ernst & Young LLP, Philadelphia, PA, Auditor Firm ID: 42) 59 Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements ( Ernst & Young LLP , Philadelphia, PA, Auditor Firm ID: 42 ) 60 Consolidated Statements of Operations 62 Consolidated Statements of Comprehensive Income (Loss) 63 Consolidated Balance Sheets 64 Consolidated Statements of Equity 65 Consolidated Statements of Cash Flows 66 Notes to Consolidated Financial Statements 67 Note 1. Organization and Nature of Operations 67 Note 2. Summary of Significant Accounting Policies 67 Note 3. Recently Issued Accounting Pronouncements 73 Note 4. Discontinued Operations 73 Note 5. Acquisitions and Investments 76 Note 6. Revenue 79 Note 7. Net Income Per Share from Continuing Operations 80 Note 8. Income Taxes 81 Note 9. Goodwill and Intangible Assets 84 Note 10. Property, Plant and Equipment, Net 85 Note 11. Inventories, Net 85 Note 12. Leases 86 Note 13. Debt 86 Note 14. Equity 89 Note 15. Accrued Liabilities 94 Note 16. Defined Benefit Plans 95 Note 17. Financial Instruments and Fair Value Measurements 100 Note 18. Commitments and Contingencies 102 Note 19. Segment Information 103 Note 20. Subsequent Events 105 58 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Enovis Corporation Opinion on Internal Control over Financial Reporting We have audited Enovis Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Enovis Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index 15(A)(2) and our report dated February 22, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Philadelphia, Pennsylvania February 22, 2024 59 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Enovis Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Enovis Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(A)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. 60 Goodwill Description of the Matter At December 31, 2023, the Company’s goodwill allocated to the Prevention & Recovery reporting unit and Reconstructive reporting unit was $1.1 billion and $1.0 billion, respectively. As discussed in Note 9 to the consolidated financial statements, goodwill is not amortized, but rather is subject to an annual impairment test, or more frequent tests if events and circumstances indicate an impairment exists. Auditing the Company's goodwill impairment test was complex and highly judgmental due to the significant estimation required by management to determine the fair value of the Prevention & Recovery and Reconstructive reporting units. In particular, the fair value estimate was sensitive to significant assumptions, such as changes in the discount rates, market multiples, projected revenues and projected operating income metrics that are forward-looking and affected by future economic and market conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its annual goodwill impairment testing process, including controls over management’s determination of the significant assumptions described above. We also tested management’s controls over the completeness and accuracy of the data used in the model. To test the estimated fair value of the Prevention & Recovery and Reconstructive reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions used in the Company’s analyses, as well as testing the completeness and accuracy of the underlying data. For example, we compared the significant assumptions to current third-party industry data, and to the historical results of the two reporting units. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the two reporting units that would result from changes in key assumptions. We also involved internal valuation specialists to assist in our evaluation of the methodologies and significant assumptions used by the Company. In addition, we tested management’s reconciliation of the fair value of both reporting units to the market capitalization of the Company. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2002. Philadelphia, Pennsylvania February 22, 2024 61 ENOVIS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Dollars in thousands, except per share amounts Year Ended December 31, 2023 2022 2021 Net sales $ 1,707,197 $ 1,563,101 $ 1,426,188 Cost of sales 716,418 693,718 648,513 Gross profit 990,779 869,383 777,675 Selling, general and administrative expense 830,305 772,913 665,775 Research and development expense 75,331 60,827 49,094 Amortization of acquired intangibles 133,517 126,301 116,920 Insurance settlement gain — ( 36,705 ) — Restructuring and other charges 17,335 17,225 8,685 Operating loss ( 65,709 ) ( 71,178 ) ( 62,799 ) Interest expense, net 19,749 24,052 29,112 Debt extinguishment charges 7,333 20,396 29,870 Gain on investment in ESAB Corporation — ( 102,669 ) — Gain on cost basis investment — ( 8,800 ) — Other income, net ( 25,663 ) ( 2,088 ) — Loss from continuing operations before income taxes ( 67,128 ) ( 2,069 ) ( 121,781 ) Income tax expense (benefit) ( 13,289 ) 36,120 ( 19,528 ) Net loss from continuing operations ( 53,839 ) ( 38,189 ) ( 102,253 ) Income from discontinued operations, net of taxes 21,108 26,430 178,531 Net income (loss) ( 32,731 ) ( 11,759 ) 76,278 Less: net income attributable to noncontrolling interest from continuing operations - net of taxes 530 567 1,052 Less: net income attributable to noncontrolling interest from discontinued operations - net of taxes — 966 3,569 Net income (loss) attributable to Enovis Corporation $ ( 33,261 ) $ ( 13,292 ) $ 71,657 Net income (loss) per share - basic and diluted Continuing operations $ ( 1.00 ) $ ( 0.72 ) $ ( 2.02 ) Discontinued operations $ 0.39 $ 0.47 $ 3.42 Consolidated operations $ ( 0.61 ) $ ( 0.25 ) $ 1.40 See Notes to Consolidated Financial Statements. 62 ENOVIS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Dollars in thousands Year Ended December 31, 2023 2022 2021 Net income (loss) $ ( 32,731 ) $ ( 11,759 ) $ 76,278 Other comprehensive income (loss): Foreign currency translation, net of tax expense of $ — , $ 338 and $ 3,449 66,513 ( 61,378 ) ( 114,389 ) Unrealized gain (loss) on hedging activities, net of tax expense (benefit) of $( 8,795 ), $ 2,711 and $ 6,980 ( 27,943 ) 9,028 23,247 Changes in unrecognized pension and other post-retirement benefit (cost), net of tax expense (benefit) of $( 1,343 ), $ 2,333 and $ 3,368 ( 8,052 ) 12,207 20,870 Amounts reclassified from Accumulated other comprehensive loss: Amortization of pension and other post-retirement net actuarial gain (loss), net of tax expense (benefit) of $( 356 ), $ 199 and $ 1,148 ( 1,976 ) 629 5,025 Reclassification of hedging gain (loss), net of tax expense (benefit) of $ 22 , $ — , and $ — 70 — — Other comprehensive income (loss) 28,612 ( 39,514 ) ( 65,247 ) Comprehensive income (loss) ( 4,119 ) ( 51,273 ) 11,031 Less: comprehensive income (loss) attributable to noncontrolling interest 593 ( 583 ) 3,281 Comprehensive income (loss) attributable to Enovis Corporation $ ( 4,712 ) $ ( 50,690 ) $ 7,750 See Notes to Consolidated Financial Statements. 63 ENOVIS CORPORATION CONSOLIDATED BALANCE SHEETS Dollars in thousands, except share amounts December 31, 2023 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 36,191 $ 24,295 Trade receivables, less allowance for credit losses of $ 9,731 and $ 7,965 291,483 267,380 Inventories, net 468,832 426,643 Prepaid expenses 28,901 28,550 Other current assets 71,112 48,155 Total current assets 896,519 795,023 Property, plant and equipment, net 270,798 236,741 Goodwill 2,060,893 1,983,588 Intangible assets, net 1,127,363 1,110,727 Lease asset - right of use 63,506 66,881 Other assets 90,255 80,288 Total assets $ 4,509,334 $ 4,273,248 LIABILITIES AND EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ — $ 219,279 Accounts payable 132,475 135,628 Accrued liabilities 237,132 210,292 Total current liabilities 369,607 565,199 Long-term debt, less current portion 466,164 40,000 Non-current lease liability 48,684 51,259 Other liabilities 204,178 166,989 Total liabilities 1,088,633 823,447 Equity: Common stock, $ 0.001 par value; 133,333,333 shares authorized; 54,597,142 and 54,228,619 issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 55 54 Additional paid-in capital 2,900,747 2,925,729 Retained earnings 542,471 575,732 Accumulated other comprehensive loss ( 24,881 ) ( 53,430 ) Total Enovis Corporation equity 3,418,392 3,448,085 Noncontrolling interest 2,309 1,716 Total equity 3,420,701 3,449,801 Total liabilities and equity $ 4,509,334 $ 4,273,248 See Notes to Consolidated Financial Statements. 64 ENOVIS CORPORATION CONSOLIDATED STATEMENTS OF EQUITY Dollars in thousands, except share amounts and as noted Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Shares Amount Balance at January 1, 2021 39,498,896 $ 40 $ 3,478,086 $ 517,367 $ ( 452,106 ) $ 44,487 $ 3,587,874 Net income — — — 71,657 — 4,621 76,278 Distributions to noncontrolling owners — — — — — ( 3,713 ) ( 3,713 ) Other comprehensive income, net of tax expense of $ 14,945 — — — — ( 63,907 ) ( 1,340 ) ( 65,247 ) Common stock offering, net of issuance costs 5,366,667 5 711,334 — — — 711,339 Conversion of tangible equity units into common stock 4,441,488 4 ( 4 ) — — — — Common stock issued for acquisition, net of issuance costs 2,181,507 2 285,678 — — — 285,680 Common stock-based award activity 594,520 1 69,221 — — — 69,222 Balance at December 31, 2021 52,083,078 52 4,544,315 589,024 ( 516,013 ) 44,055 4,661,433 Net income (loss) — — — ( 13,292 ) — 1,533 ( 11,759 ) Distributions to noncontrolling owners — — — — — ( 1,591 ) ( 1,591 ) Other comprehensive income, net of tax expense of $ 5,581 — — — — ( 37,398 ) ( 2,116 ) ( 39,514 ) Distribution of ESAB Corporation — — ( 1,662,795 ) — 499,981 ( 40,510 ) ( 1,203,324 ) Conversion of tangible equity units into common stock 1,691,845 2 ( 2 ) — — — — Acquisition — — — — — 345 345 Common stock-based award activity 453,696 — 44,211 — — — 44,211 Balance at December 31, 2022 54,228,619 54 2,925,729 575,732 ( 53,430 ) 1,716 3,449,801 Net income (loss) — — — ( 33,261 ) — 530 ( 32,731 ) Other comprehensive loss, net of tax benefit of $ 10,472 — — — — 28,549 63 28,612 ESAB Separation adjustment — — 1,140 — — — 1,140 Payment of capped call transactions — — ( 61,962 ) — — — ( 61,962 ) Common stock-based award activity 368,523 1 35,840 — — — 35,841 Balance at December 31, 2023 54,597,142 $ 55 $ 2,900,747 $ 542,471 $ ( 24,881 ) $ 2,309 $ 3,420,701 See Notes to Consolidated Financial Statements. 65 ENOVIS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in thousands Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ ( 32,731 ) $ ( 11,759 ) $ 76,278 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation, amortization and other impairment charges 217,109 219,710 262,919 Stock-based compensation expense 34,065 38,955 35,350 Non-cash interest expense 2,742 3,921 4,752 Gain on investment in ESAB Corporation — ( 102,669 ) — Gain on cost basis investments — ( 8,800 ) — Unrealized gain on currency hedges ( 24,311 ) — — Debt extinguishment charges 7,333 20,396 29,870 Deferred income tax expense (benefit) ( 27,412 ) 6,320 ( 22,188 ) (Gain) loss on sale of property, plant and equipment ( 14,539 ) 352 ( 2,573 ) Pension settlement gain — — ( 11,208 ) Changes in operating assets and liabilities: Trade receivables, net ( 16,316 ) ( 45,189 ) ( 110,985 ) Inventories, net ( 24,737 ) ( 118,791 ) ( 129,967 ) Accounts payable ( 6,638 ) ( 11,843 ) 178,467 Other operating assets and liabilities 20,423 ( 46,464 ) 45,384 Net cash provided by (used in) operating activities 134,988 ( 55,861 ) 356,099 Cash flows from investing activities: Purchases of property, plant and equipment and intangibles ( 122,223 ) ( 105,450 ) ( 104,237 ) Proceeds from sale of property, plant and equipment 32,571 2,746 7,033 Payments for acquisitions, net of cash received, and investments ( 152,815 ) ( 73,684 ) ( 223,272 ) Net cash used in investing activities ( 242,467 ) ( 176,388 ) ( 320,476 ) Cash flows from financing activities: 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 455,000 65,000 991,494 Repayments of borrowings on revolving credit facilities and other ( 478,337 ) ( 634,883 ) ( 417,526 ) Repayments of borrowings on senior notes — ( 686,278 ) ( 700,000 ) Proceeds from borrowings on senior unsecured convertible notes 460,000 — — Distribution from ESAB Corporation, net — 1,143,369 — Payment of debt issuance costs ( 25,676 ) ( 2,938 ) — Proceeds from issuance of common stock, net 1,776 5,814 745,179 Payment of debt extinguishment costs — ( 12,704 ) ( 24,375 ) Payment of capped call transactions ( 61,962 ) — — Deferred consideration payments and other ( 3,536 ) ( 7,507 ) ( 9,866 ) Net cash provided by (used in) financing activities 127,797 ( 465,127 ) 584,906 Effect of foreign exchange rates on Cash and cash equivalents 219 2,301 ( 2,228 ) Increase (decrease) in Cash and cash equivalents and restricted cash 20,537 ( 695,075 ) 618,301 Cash, cash equivalents and restricted cash, beginning of period 24,295 719,370 101,069 Cash, cash equivalents and restricted cash, end of period $ 44,832 $ 24,295 $ 719,370 Supplemental disclosures: Interest payments $ 16,328 $ 37,089 $ 85,487 Income tax payments, net $ 12,515 $ 31,360 $ 47,188 Common stock issued for acquisition, net of issuance costs $ — $ — $ 285,680 ESAB Corporation shares exchanged for debt, net of fees $ — $ 230,532 $ — See Notes to Consolidated Financial Statements. 66 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Nature of Operations 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. 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. On April 4, 2022, the Company completed the separation of its fabrication technology business (the “Separation”) through a tax free, pro-rata distribution of 90 % of the outstanding common stock of ESAB Corporation (“ESAB”) to Colfax stockholders. To affect the Separation, Colfax distributed to its stockholders one share of ESAB common stock for every three shares of Colfax common stock held at the close of business on March 22, 2022, with the Company initially retaining 10% of the shares of ESAB common stock immediately following the Separation. 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 $ 450.0 million of borrowings on a term loan under the Enovis Credit Agreement, as discussed below, 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, and $ 302.8 million of outstanding debt and accrued interest on its 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 also completed the redemption of its Euro Senior Notes representing all of its outstanding € 350.0 million principal 3.25 % Euro Senior Notes due 2025 at a redemption price of 100.813 % of the principal amount. Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock, and all share and per share figures were restated in the 2022 Form 10-K. The Company completed the divestiture of its 10 % retained shares in ESAB in a tax-efficient exchange for $ 230.5 million of its $ 450.0 million term loan outstanding under the Credit Agreement on November 18, 2022. The accompanying Consolidated Financial Statements present our historical financial position, results of operations, changes in equity and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain reclassifications have been made to prior year financial information to conform to the current period presentation. Unless otherwise indicated, all amounts in the notes to the consolidated financial statements refer to continuing operations. The accompanying Consolidated Financial Statements include the following in discontinued operations: (1) operating results through the first quarter of 2022 of ESAB, the Company’s former fabrication technology business; (2) charges through the first quarter of 2022 for previously retained asbestos contingencies from divested businesses for which the Company did not retain an interest in the ongoing operation 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) divestiture-related expenses and gain on disposal from the sale of a retained facility from a prior divestiture. See Note 4, “Discontinued Operations”, for further information. Sales in our Prevention & Recovery and Reconstructive segments typically peak in the fourth quarter. These historical seasonality trends were disrupted by the commercial impacts caused by the COVID-19 pandemic. General economic conditions may, however, impact future seasonal variations. 67 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2. Summary of Significant Accounting Policies Principles of Consolidation The Company’s Consolidated Financial Statements are prepared in accordance with GAAP and include all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities or joint ventures for which the Company has a controlling financial interest or is the primary beneficiary. When protective rights, substantive rights or other factors exist, further analysis is performed in order to determine whether or not there is a controlling financial interest. The Consolidated Financial Statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the noncontrolling parties’ ownership share is presented as a noncontrolling interest. All significant intercompany accounts and transactions have been eliminated. Investments Investments where the Company has a significant influence but not a controlling interest, are accounted for using the equity method of accounting. Investments accounted for under the equity method are initially recorded at the amount of the Company’s initial investment and adjusted each period for the Company’s share of the investee’s income or loss and dividends paid. The Company accounts for equity investments that do not have a readily determinable fair value as cost method investments under the measurement alternative under GAAP to the extent such investments are not subject to consolidation or the equity method of accounting as described above. Under the measurement alternative, these financial instruments are carried at cost, less any impairment, adjusted for changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. All equity investments are reviewed periodically for indications of other-than-temporary impairment, including, but not limited to, significant and sustained decreases in quoted market prices or a series of historic and projected operating losses by investees. If the decline in fair value is considered to be other-than-temporary, an impairment loss is recorded and the investment is written down to a new carrying value. There have been no impairments or upward adjustments in the current year or since acquisition of these investments. As of December 31, 2023, the Company held investments of $ 20.4 million in privately held companies without readily determinable fair values, the majority of which are within the Prevention & Recovery operating segment. One investment is accounted for under the equity method of accounting. The other investments represent minority ownership interests and are accounted for under the cost method. The Company accounts for investments as a noncurrent asset within Other assets in the Consolidated Financial Statements as the Company does not have the intent and ability to sell such assets within the next twelve months. Revenue Recognition The Company provides a variety of products to its customers with revenue being measured as the amount of consideration we expect to receive in exchange for transferring such products. Revenue is recognized at a point in time when we transfer control of our off-the-shelf products to the customer, which generally occurs when title passes upon shipment. The Company’s contracts have a single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contract and, therefore, not distinct. Revenue recognition and billing typically occur simultaneously for contracts recognized at a point in time. Therefore, we do not have material revenues in excess of customer billings or billings to customers in excess of recognized revenues. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for transferring the goods or services. The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates and other discounts. The Company includes estimated amounts of variable consideration in the transaction price to the extent that it is probable there will not be a significant reversal of revenue. Estimates are based on historical or anticipated performance and represent the Company’s best judgment at the time. Any estimates are evaluated on a quarterly basis until the uncertainty is resolved. Additionally, the Company maintains provisions for estimated contractual allowances for reimbursement amounts from certain third-party payors based on negotiated contracts, historical experience for non-contracted payors, and the impact of new contract terms or modifications of existing arrangements with these customers. These allowances are recorded as a reduction to sales in the same period that the sales are recognized. 68 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The period of benefit for the Company’s incremental costs of obtaining a contract generally have less than a one-year duration; therefore, the Company applies the practical expedient available and expenses costs to obtain a contract when incurred. Taxes Collected from Customers and Remitted to Governmental Authorities The Company collects various taxes and fees as an agent in connection with the sale of products and remits these amounts to the respective taxing authorities. These taxes and fees have been presented on a net basis in the Consolidated Statements of Operations and are recorded as a component of Accrued liabilities in the Consolidated Balance Sheets until remitted to the respective taxing authority. Research and Development Expense Research and development costs are expensed as incurred. Costs include salaries, wages, consulting and depreciation and maintenance of facilities and equipment utilized in research, development and engineering activities relating to developing new products, as well as enhancing existing products with the latest technology and designs, creating new applications for existing products, lowering manufacturing costs and redesigning existing products to increase efficiency, improve durability, enhance performance and usability. The Company also receives new product and invention ideas from orthopedic surgeons and other healthcare professionals and seeks to obtain rights to ideas it considers promising from a clinical and commercial perspective through entering into either assignment or licensing agreements. The Company maintains contractual relationships with orthopedic surgeons who assists in developing products and may also provide consulting services in connection with our products. Interest Expense, Net Interest expense, net includes interest income of $ 0.2 million, $ 0.2 million and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively, primarily associated with interest-bearing deposits of certain foreign subsidiaries. In April 2023, the Company entered into synthetic debt 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. The Company receives fixed-rate amounts from the counterparties in exchange for the Company making foreign-currency fixed-rate interest payments over the life of the agreements. During the year ended December 31, 2023, the Company received interest income on its cross-currency swap agreements of $ 7.3 million, which is included within Interest expense, net in the Consolidated Statements of Operations. See Note 17, “Financial Instruments” for further information on the cross-currency swap agreement. Cash and Cash Equivalents Cash and cash equivalents include all financial instruments purchased with an initial maturity of three months or less. Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are excluded from Cash and cash equivalents in the Consolidated Balance Sheets. The balance in restricted cash is related to the acquisition of Precision AI and will be released to the seller within one year of the acquisition date upon completion of three milestones. See Note 5, “Acquisitions and Investments" for further information. The balance of restricted cash is presented as a component of Other current assets on the Consolidated Balance Sheets. The following table summarizes the Company’s Cash and Cash equivalents and Restricted cash: December 31, 2023 2022 (In thousands) Cash and cash equivalents $ 36,191 $ 24,295 Restricted cash 8,641 — Total cash and cash equivalents and restricted cash $ 44,832 $ 24,295 69 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Trade Receivables Trade receivables are presented net of an allowance for credit losses in accordance with Topic 326, “Financial Instruments - Credit Losses”. The 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. Estimated credit losses are reviewed periodically by management. Inventories Inventories, net include the cost of material, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined under various methods including average cost and first-in, first-out. The Company periodically reviews its quantities of inventories on hand and compares these amounts to the expected usage of each particular product. The Company records a charge to Cost of sales for any amounts required to reduce the carrying value of inventories to its net realizable value. Property, Plant and Equipment Property, plant and equipment, net is stated at historical cost, which includes the fair values of such assets acquired through acquisitions, and depreciated by the straight-line method over the estimated useful lives of the related assets. Repair and maintenance expenditures are expensed as incurred unless the repair extends the useful life of the asset. The Company capitalizes surgical implant instruments that are provided free-of-charge to surgeons for use while implanting its surgical products and the related depreciation expense is recorded as a component of Selling, general and administrative expense. Impairment of Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the costs in excess of the fair value of net assets acquired through acquisitions by the Company. The Company evaluates the recoverability of Goodwill annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount. The annual impairment test date elected by the Company is the first day of its fourth quarter. Goodwill is considered to be impaired when the carrying value of a reporting unit or asset exceeds its fair value. The Company currently has two reporting units: Prevention & Recovery and Reconstructive. In the evaluation of Goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting entity is less than its carrying value. If the Company determines that it is more likely than not for a reporting unit’s fair value to be greater than its carrying value, a calculation of the fair value is not performed. If the Company determines that it is more likely than not for a reporting unit’s fair value to be less than its carrying value, a calculation of the reporting entity’s fair value is performed and compared to the carrying value of that entity. In certain instances, the Company may elect to forgo the qualitative assessment and proceed directly to the quantitative impairment test. If the carrying value of a reporting unit exceeds its fair value, Goodwill of that reporting unit is impaired and an impairment loss is recorded equal to the excess of the reporting unit’s carrying value over its fair value. When a quantitative impairment test is needed, the Company measures fair value of reporting units based on a present value of future discounted cash flows and a market valuation approach. The discounted cash flow models indicate the fair value of the reporting units based on the present value of the cash flows that the reporting units are expected to generate in the future. Significant estimates in the discounted cash flow models include the weighted average cost of capital, revenue growth rates, long-term rate of growth, profitability of the business, tax rates, and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison against certain market information. Significant estimates in the market approach model include identifying appropriate peer companies, market multiples and assessing earnings before interest, income taxes, depreciation and amortization. For the year ended December 31, 2023, the Company performed a quantitative assessment of Goodwill for the Reconstructive and Prevention & Recovery reporting units, both of which indicated no impairment existed. The carrying amount of Goodwill of the Prevention & Recovery and Reconstructive reporting units for the year ended December 31, 2023 was $ 1.1 billion and $ 1.0 billion, respectively. The Company determined the fair value of the reporting units by equally weighting a discounted cash flow approach and market valuation approach, and the reporting unit’s fair value exceeded its carrying amount by approximately 4 % and 8 %, respectively. Determining the fair value of a reporting unit requires the application of judgment and involves the use of significant estimates and assumptions which can be affected by changes in 70 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) business climate, economic conditions, the competitive environment and other factors. The Company bases these fair value estimates on assumptions the Company’s management believes to be reasonable but which are unpredictable and inherently uncertain. Future changes in the judgment, assumptions and estimates could result in significantly different estimates of fair value in the future. An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect the Company’s financial statements in any given year. For sensitivity analysis, the Company estimated the fair value of the Prevention & Recovery and Reconstructive reporting units if the Company reduced the long-term revenue growth rate by 25 basis points, and the resulting excess fair value over carrying value decreased by 130 and 150 basis points, respectively. A quantitative impairment test of Goodwill for the Prevention & Recovery and Reconstructive reporting units was performed for the year ended December 31, 2022 , which indicated no impairment existed. Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets Intangible assets primarily represent acquired trade names, customer relationships, acquired technology and software license agreements. Intangible assets are being amortized on a straight-line basis over their estimated useful lives, which approximates the period of benefit. The useful life of intangible asset as of December 31, 2023 range from three to twenty years with the largest asset groups of Acquired Technology, Acquired Customer Lists, and Acquired Trade Names having weighted-average useful life assignments of 12 , 9 , and 20 , respectively. The Company assesses its long-lived assets and finite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected cash flows are less than the carrying amounts, an impairment loss equal to the difference between the carrying amount of the asset and its fair value would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. Assets held for sale are reported at the lower of the carrying amounts or fair value less cost to sell. Management determines fair value using the discounted cash flow method or other accepted valuation techniques. The Company did not record any asset impairment charges during the years ended December 31, 2023 and 2022. Derivatives The Company is subject to foreign currency risk associated with the translation of the net assets of foreign subsidiaries to United States (“U.S.”) dollars on a periodic basis. Derivative instruments are generally recognized on a gross basis in the Consolidated Balance Sheets in either Other current assets, Other assets, Accrued liabilities or Other liabilities depending upon their respective fair values and maturity dates. For all instruments designated as hedges, including net investment hedges and cash flow hedges, the Company formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and the strategy for using the hedging instrument. The Company assesses whether the relationship between the hedging instrument and the hedged item is highly effective at offsetting changes in the fair value both at inception of the hedging relationship and on an ongoing basis. For cash flow hedges and net investment hedges, unrealized gains and losses are recognized as a component of Accumulated other comprehensive loss in the Consolidated Balance Sheets to the extent that it is effective at offsetting the change in the fair value of the hedged item and realized gains and losses are recognized in the Consolidated Statements of Operations consistent with the underlying hedged instrument. The Company does not enter into derivative contracts for speculative purposes. See Note 17, “Financial Instruments and Fair Value Measurements” for additional information regarding the Company’s derivative instruments. 71 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Income Taxes Income taxes for the Company are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Consolidated Financial Statements and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets and liabilities are reported in Other assets and Other liabilities in the Company’s Consolidated Balance Sheets, respectively. The effect on deferred income tax assets and liabilities of a change in tax rates is generally recognized in Income tax expense (benefit) in the period that includes the enactment date. Global Intangible Low-Taxed Income (“GILTI”) is accounted for as a current tax expense in the year the tax is incurred. Valuation allowances are recorded if it is more likely than not that some portion of the deferred income tax assets will not be realized. In evaluating the need for a valuation allowance, the Company considers various factors, including the expected level of future taxable income and available tax planning strategies. Any changes in judgment about the valuation allowance are recorded through Income tax expense (benefit) and are based on changes in facts and circumstances regarding realizability of deferred tax assets. The Company must presume that an income tax position taken in a tax return will be examined by the relevant tax authority and determine whether it is more likely than not that the tax position will be sustained upon examination based upon the technical merits of the position. An income tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The Company establishes a liability for unrecognized income tax benefits for income tax positions for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority to the extent such tax positions reduce the Company’s income tax liability. The Company recognizes interest and penalties related to unrecognized income tax benefits in Income tax benefit in the Consolidated Statements of Operations. Foreign Currency Exchange Gains and Losses The Company’s financial statements are presented in U.S. dollars. The functional currencies of the Company’s operating subsidiaries are generally the local currencies of the countries in which each subsidiary is located. Assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the balance sheet date. The amounts recorded in each year in foreign currency translation are net of income taxes to the extent the underlying equity balances in the entities are not deemed to be permanently reinvested. Revenues and expenses are translated at average rates of exchange in effect during the year. Transactions in foreign currencies are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated for inclusion in the Consolidated Balance Sheets are recognized in Selling, general and administrative expense or Interest expense, net in the Consolidated Statements of Operations for that period. During the year ended December 31, 2023, the Company recognized net foreign currency transaction loss of $ 2.7 million in Selling, general and administrative expense in the Consolidated Statements of Operations. During the year ended December 31, 2022, the Company recognized net foreign currency transaction gain of $ 0.7 million in Interest expense, net and net foreign currency transaction loss of $ 0.6 million in Selling, general and administrative expense in the Consolidated Statements of Operations. During the year ended December 31, 2021, the Company recognized net foreign currency transaction loss of $ 0.5 million in Interest expense, net and net foreign currency transaction loss of $ 2.0 million in Selling, general and administrative expense in the Consolidated Statements of Operations. Debt Issuance Costs and Debt Discount Costs directly related to the placement of debt are capitalized and amortized to Interest expense primarily using the effective interest method over the term of the related obligation. Further, the carrying value of debt is reduced by an original issue discount, which is accreted to Interest expense, net using the effective interest method over the term of the related obligation. 72 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Use of Estimates The Company makes certain estimates and assumptions in preparing its Consolidated Financial Statements in accordance with U.S. GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses for the period presented. Actual results may differ from those estimates. 3. Recently Issued Accounting Pronouncements The Company evaluates the adoption impacts of recently issued accounting pronouncements as well as material updates to previous pronouncements on the Company’s Consolidated Financial Statements. Typically, recently issued standards do not require adoption until a future effective date. During the year ended December 31, 2023, there were no new material accounting standards adopted that impacted the Company. Standards to be Implemented In November 2023, the FASB issued Accounting Standards Update (“ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments require enhanced disclosures about significant segment expenses if they are regularly provided to the Chief Operating Decision Maker and included in each reported measure of segment profit or loss. In addition, the amendments expand interim disclosure requirements and clarify circumstances in which an entity can disclose multiple segment measures of profit or loss. Update No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this ASU on its consolidated financial statement disclosures. In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments require public business entities to disclose additional information in specified categories within the income tax rate reconciliation and greater detail about individual reconciling items to the extent the impact of those items exceeds a specified threshold. Additionally, the amendments require disclosure of incomes taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. The amendments further require disclosure of income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign; and disclosure of income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Update No. 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this ASU on its consolidated financial statement disclosures. Other recently issued accounting pronouncements are not expected to have a material impact on the Company's consolidated financial statements. 73 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 4. Discontinued Operations Separation of Fabrication Technology Business On April 4, 2022, the Company completed the Separation of its fabrication technology business into an independent, publicly traded company: ESAB, a global organization that develops, manufactures and supplies consumable welding and cutting products and equipment, as well as gas control equipment. The spin-off was affected through a pro rata distribution of 90 % of the 60,034,311 outstanding common shares of ESAB to Enovis stockholders of record at the close of business on March 22, 2022 (the “Record Date”). Enovis stockholders retained their Enovis shares and received one share of ESAB for every three shares of Enovis stock they owned on the Record Date. ESAB began “regular way” trading on the New York Stock Exchange on April 5, 2022 under the symbol “ESAB”. In connection with the Separation, the Company received a one-time tax-free cash distribution from ESAB of $ 1.2 billion. In connection with the Separation, Enovis and ESAB entered into various agreements to effect the Separation and provide a framework for ESAB’s relationship with Enovis after the Separation. These agreements include a separation and distribution agreement, a stockholders’ and registration rights agreement, an employee matters agreement, a tax matters agreement, a transition services agreement, an ESAB Business Excellence System (“EBS”) license agreement, and an intellectual property matters agreement (the “Agreements”). These Agreements govern the Separation between Enovis and ESAB of the assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) of Enovis and its subsidiaries attributable to periods prior to, at and after the Separation and will govern certain relationships between Enovis and ESAB after the Separation. The impact of services provided to ESAB and agreed upon charges as part of the Separation are not material to our consolidated financial statements. The matters of the agreements with ESAB have substantially concluded. Asbestos Contingencies Prior to the Separation, the Company retained certain asbestos-related contingencies and insurance coverages from its previously divested businesses for which it did not retain an interest in the ongoing operations except for the contingencies. The net costs and cash flows associated with these contingencies and coverages were reported by the Company as discontinued operations. In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its divested businesses were transferred fully to ESAB. The Company has classified asbestos-related charges through the date of Separation in its Consolidated Statements of Operations as part of Income from discontinued operations, net of taxes. Items Related to our former Air and Gas Handling Business The Company sold its air & gas handling business in 2019. Accordingly, the accompanying Consolidated Financial Statements for all periods presented reflect pre-tax divestiture-related expenses (benefit) of $( 0.7 ) million , $ 1.7 million and $ 9.1 million for the years ended December 31, 2023, 2022 and 2021, respectively, as discontinued operations. The divestiture-related expenses (benefit) are primarily maintenance costs and cost to sell a retained interest in a facility no longer used in operations including certain professional, legal, and consulting fees as well as a settlement executed in the first quarter of 2021. In the third quarter of 2023, the Company sold the retained interest in the facility and recorded a gain of $ 15.5 million. Summary of Items Treated as Discontinued Operations As a result of the Separation and prior divestitures, the operating results of (1) ESAB, the Company’s former fabrication technology business, (2) charges related to the previously retained asbestos contingencies and (3) items related to our divested air & gas handling business have been presented as discontinued operations in the Consolidated Statements of Operations for all periods presented. 74 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table presents the financial results of the former fabrication technology business including all divestiture-related expenses incurred by the company and allocated interest expense; asbestos charges; items related related to Air & Gas; and the combined income tax effect of those items for the years ended December 31, 2023, 2022 and 2021. Year Ended December 31, 2023 2022 2021 (in thousands) Net sales $ — $ 647,911 $ 2,428,115 Cost of sales — 423,580 1,592,132 Selling, general and administrative expense — 125,529 477,040 Gain on disposal of facility ( 15,517 ) — — Restructuring and other charges — 5,304 18,954 Asbestos charges — 3,194 15,578 Divestiture-related expenses and other (1) 4,387 46,684 29,668 Operating income 11,130 43,620 294,743 Interest expense (2) — 8,035 43,481 Pension settlement gain — — ( 11,208 ) Income from discontinued operations before income taxes 11,130 35,585 262,470 Income tax (benefit) expense (3) ( 9,978 ) 9,155 83,939 Income from discontinued operations, net of taxes $ 21,108 $ 26,430 $ 178,531 (1) Divestiture-related expenses and other includes a charge of $ 5.1 million for the release of a tax indemnification receivable from ESAB for the year ended December 31, 2023 and divestiture-related expenses for the Separation of $ 45.0 million and $ 20.6 million for the years ended December 31, 2022 and 2021, 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) The year ended December 31, 2023 includes benefit of release of uncertain tax positions. Total income attributable to noncontrolling interest related to ESAB, net of taxes for the years ended December 31, 2022 and 2021 wa s $ 1.0 million, and $ 3.6 million, respectively. These amounts are presented as net income attributable to noncontrolling interest from discontinued operations - net of taxes on the Consolidated Statements of Operations. The following table presents further detail into the financial results of the former fabrication technology business: Year Ended December 31, 2022 2021 (in thousands) Depreciation $ 7,671 $ 32,452 Amortization 9,012 41,954 Capital expenditures 5,903 35,584 Cash (used in) provided by operating activities related to discontinued operations for the years ended December 31, 2023, 2022 and 2021 wa s approximately $( 2 ) million, $( 27 ) million, and $ 224 million, respectively. Cash provided by (used in) investing activities related to discontinued operations for the years ended December 31, 2023, 2022 and 2021 was approximatel y $ 33 million, $( 3 ) million , and $( 35 ) million, respectively. 75 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 5. Acquisitions and Investments Lima Acquisition in 2024 On January 3, 2024, the Company acquired 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 approximately € 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. During the year ended December 31, 2023, the Company incurred $ 9.0 million of strategic transactions costs, including advisory, legal, audit, valuation and other professional service fees in connection with the Lima acquisition, which are included in Selling, general and administrative expense in the Consolidated Statements of Operations. The Lima acquisition will be accounted for using the acquisition method of accounting and accordingly, the Consolidated Financial Statements will include the financial position and results of operations from the date of acquisition. 2023 Acquisitions 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 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 $ 43.7 million to goodwill and $ 52.0 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. On July 20, 2023, the Company completed an asset acquisition transaction with D.N.E., LLC in its Reconstructive segment. DNE is 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 acquisition of these assets, primarily the developed technology will allow Enovis to expand its robust product portfolio for the Foot & Ankle business unit. 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 is accounted for on a cost approach. The Consolidated Financial Statements include the financial position and results of operations from the acquisition date. On October 5, 2023, the Company acquired a 100 % interest in Precision AI, a developer of surgical planning software. The transaction was accounted for as an asset acquisition. The acquisition compliments the Company’s current product offerings in its Reconstruction segment with advanced planning software for shoulder surgery and opportunity to expand to additional anatomies. On the acquisition date, the Company paid $ 17.6 million, net of cash received and agreed to make contingent payments of approximately $ 12.0 million upon the successful completion of three milestones within one year of the acquisition date. The milestones are based on FDA approvals and user validation testing of the software. In December 2023, the first milestone was achieved and the Company paid $ 4.2 million to the sellers. The remaining contingent amount is held in escrow by Enovis as restricted cash and presented in Other current asset in the Consolidated Balance Sheet. The Company has control over these funds and is required to authorize the transfer upon completion of the milestones. As the asset acquisition is accounted for under a cost approach, the potential additional contingent payments are not recorded until the milestones are achieved. The Consolidated Financial Statements include the assets acquired and results of operations from the acquisition date. 76 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2022 Acquisitions In 2022, the Company completed four asset acquisitions, two business acquisitions, and one investment, which is carried at cost as it does not have a readily determinable fair value. Two of these transactions were completed by the Company’s Reconstructive segment, and the other five transactions were completed by the Prevention & Recovery segment. The asset acquisitions broaden the Company’s product offering and distribution network. Aggregate purchase consideration for the four asset acquisitions was $ 22.3 million, of which $ 12.6 million was paid in cash and $ 9.6 million consists of deferred and contingent consideration. The investment was acquired for $ 10.0 million in cash consideration. Pro forma revenues of the aforementioned acquisitions in the year ended December 31, 2022, if the aforementioned acquisitions were part of the Company since January 1, 2022, were approximately 1 % of Enovis consolidated revenues from continuing operations. 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. 360 Med Care is a medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers. The acquisition is accounted for under the acquisition method of accounting, and accordingly, the Consolidated Financial Statements include the financial position and results of operations from the acquisition date. The Company paid $ 14.3 million for the acquisition, net of cash received, and recorded estimated contingent consideration at fair value of $ 12.8 million related to expected results over future revenue targets. As of December 31, 2023, the contingent liability is $ 13.0 million. The Company allocated $ 16.3 million to Goodwill and $ 18.2 million to intangible assets acquired. The 360 Med Care acquisition broadens our customer base in Australia and adds to our overall product offerings. On July 5, 2022, the Reconstructive segment of the Company acquired a controlling interest of Insight Medical Systems (“Insight”). Insight’s flagship solution, ARVIS, is an FDA-cleared augmented reality solution precisely engineered for the specific needs of hip and knee replacement surgery. The ARVIS navigation unit consists of a hands-free heads-up display worn by the surgeon which provides surgical guidance at the point of care in a streamlined, space-conserving, and cost-effective manner compared to traditional robotic offerings. The acquisition is accounted for under the acquisition method of accounting as a step-acquisition, and accordingly, the Consolidated Financial Statements include the financial position and results of operations from the acquisition date. Enovis made initial investments in Insight in 2021 and 2020, which were 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. As of December 31, 2022, Enovis holds a 99.5 % interest in Insight and recognized $ 0.3 million noncontrolling equity interest in its financial statements attributed to Insight. The Company allocated $ 36.3 million to Goodwill and $ 38.4 million to intangible assets acquired. Goodwill is primarily driven by expected synergies between ARVIS’ augmented reality surgical guidance system and our existing customer base and existing products. The Company does not expect any of the Goodwill to be deductible for tax purposes. As a result of obtaining control of Insight, the Company remeasured its initial investments to its fair value resulting in a $ 8.8 million gain. 2021 Acquisitions The Company completed five acquisitions in its Reconstructive segment in 2021, for net cash consideration of $ 201.6 million and equity consideration of $ 285.7 million. The acquisitions are accounted for under the acquisition method of accounting, and accordingly, the Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date. The Consolidated Balance Sheet as of December 31, 2022 reflects our estimates of fair value and are subject to adjustment for certain of the acquisitions as discussed below. Pro forma revenues of the aforementioned acquisitions in the year ended December 31, 2021, if the aforementioned acquisitions were part of the Company since January 1, 2021, were approximately 12 % of Enovis consolidated revenues from continuing operations. The Company also made three investments during the year ended December 31, 2021 for a total of $ 16.8 million. These investments are carried at cost as they do not have a readily determinable fair value. On January 19, 2021, the Reconstructive segment acquired Trilliant Surgical (“Trilliant”), a national provider of foot and ankle orthopedic implants. The product technologies of Trilliant support the Reconstructive segment’s focused expansion into 77 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) the adjacent foot and ankle market. Trilliant has a broad product portfolio that covers the full universe of foot reconstructive and fixation procedures, and includes the novel Arsenal Foot Plating System, designed for greater flexibility and speed of implant placement. On April 23, 2021, the Reconstructive segment acquired MedShape, Inc. (“MedShape”), a provider of innovative surgical solutions for foot and ankle surgeons using its patented superelastic nickel titanium (NiTiNOL) and shape memory polymer technologies. The acquisition further expands the Company’s foot and ankle platform. These two acquisitions were completed for total consideration, net of cash received, of $ 204.1 million, subject to certain adjustments. Net working capital and intangible assets acquired represent 7.3 % and 36.5 % of the total consideration exchanged for these two acquisitions, respectively, with the residual amount primarily attributable to Goodwill. The Goodwill acquired in the Trilliant acquisition of $ 30 million is deductible for income tax purposes. Expected synergies between Trilliant, MedShape, and DJO through this portfolio of foot and ankle products and cross-selling to existing and acquired customers are primary drivers of the acquired Goodwill. Pro forma revenue of the Trilliant and MedShape acquisitions were approximately 3 % of Enovis’ consolidated revenues from continuing operations. The purchase accounting related to the Trilliant and MedShape acquisitions has been completed. On July 28, 2021, the Reconstructive segment acquired Mathys AG Bettlach (“Mathys”) for total acquisition equity consideration of $ 285.7 million of Enovis common stock, which included cash acquired of $ 14.7 million. Mathys, a Switzerland-based company, develops and distributes innovative products for artificial joint replacement, synthetic bone graft solutions and sports medicine. The acquisition expands the Reconstructive segment’s reconstructive product portfolio with Mathys’ complimentary surgical solutions and broadens its international customer base. The aggregate fair value of assets acquired and liabilities assumed as of the date of the Mathys acquisition are presented below. No ne of the Goodwill recognized is expected to be deductible for income tax purposes. Goodwill recognized for the Mathys acquisition is primarily attributable to synergies from cross-selling DJO products with the acquired customers and cost savings through supply chain management. The following table summarizes the final allocation of consideration related to the Mathys acquisition as of the acquisition date: July 28, 2021 (In thousands) Trade Receivables $ 19,578 Inventory 76,824 Property, Plant and Equipment 58,465 Goodwill 92,438 Intangible Assets 106,000 Accounts payable ( 4,808 ) Other assets and liabilities, net ( 77,494 ) Consideration, net of cash acquired $ 271,003 The following table summarizes Intangible assets acquired in the Mathys acquisition, excluding Goodwill, as of the acquisition date: Intangible Amortization Asset Period (In thousands) (Years) Acquired technology $ 54,000 12 Customer relationships 34,000 16 Trademarks 18,000 20 Intangible assets $ 106,000 78 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 6. Revenue The Company provides orthopedic solutions, including products and services spanning the full continuum of patient care, from injury prevention to rehabilitation. While the Company’s sales are primarily derived from three sales channels including dealers and distributors, insurance, and direct to consumers and hospitals, substantially all its revenue is recognized at a point in time. The Company disaggregates its revenue into the following geographic or product groupings: Year Ended December 31, 2023 2022 2021 (In thousands) Prevention & Recovery: U.S. Bracing & Support $ 456,129 $ 437,287 $ 432,963 U.S. Other P&R 269,826 255,305 243,051 International P&R 350,821 335,036 350,015 Total Prevention & Recovery 1,076,776 1,027,628 1,026,029 Reconstructive: U.S. Reconstructive 426,405 370,173 323,187 International Reconstructive 204,016 165,300 76,972 Total Reconstructive 630,421 535,473 400,159 Total $ 1,707,197 $ 1,563,101 $ 1,426,188 Given the nature of the businesses, the Company does not generally have unsatisfied performance obligations with an original contract duration of greater than one year. The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates, implicit price concessions, and other discounts. 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 estimates current expected credit losses on trade receivables using historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management disaggregate trade receivables into business segments due to risk characteristics unique to each segment given the individual lines of business and market. Pooling was further disaggregated based on either geography or product type. The Company leveraged 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. Management identified appropriate macroeconomic indicators based on a tangible correlation to historical losses considering the location and risks associated with the Company. A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Consolidated Balance Sheets is as follows: Year Ended December 31, 2023 Balance at Beginning of Period Charged to Expense, net Write-Offs, Deductions and Other, net Foreign Currency Translation Balance at End of Period (In thousands) Allowance for credit losses $ 7,965 $ 4,836 $ ( 3,221 ) $ 151 $ 9,731 79 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 7. Net Income (Loss) Per Share from Continuing Operations Net income (loss) per share from continuing operations was computed as follows: Year Ended December 31, 2023 2022 2021 (In thousands, except share and per share data) Computation of Net income (loss) per share from continuing operations - basic: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ ( 54,369 ) $ ( 38,756 ) $ ( 103,305 ) Weighted-average shares of Common stock outstanding – basic 54,494,823 54,065,420 51,141,210 Net income (loss) per share from continuing operations – basic $ ( 1.00 ) $ ( 0.72 ) $ ( 2.02 ) Computation of Net income (loss) per share from continuing operations - diluted: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ ( 54,369 ) $ ( 38,756 ) $ ( 103,305 ) Weighted-average shares of Common stock outstanding – basic 54,494,823 54,065,420 51,141,210 Net effect of potentially dilutive securities - stock options and restricted stock units — — — Weighted-average shares of Common stock outstanding – diluted 54,494,823 54,065,420 51,141,210 Net income (loss) per share from continuing operations – diluted $ ( 1.00 ) $ ( 0.72 ) $ ( 2.02 ) (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 net income attributable to noncontrolling interest from continuing operations, net of taxes. For the years ended December 31, 2021, the weighted-average shares of common stock outstanding - basic included the impact of 6.1 million shares, as adjusted for the reverse stock split, for the actual or potential issuance of shares from tangible equity unit purchase contracts. In January 2022, the remaining tangible equity unit purchase contracts were converted into approximately 1.7 million shares of the Company’s common stock, as adjusted for the reverse stock split. All the issued shares are included in the common stock issued and outstanding as of December 31, 2022 and December 31, 2023. See Note 14, “Equity”, for details. For the year ended December 31, 2021, conversions of the Company’s tangible equity units resulted in the issuance of approximately 4.4 million shares, as adjusted for the reverse stock split, of common stock. All issuances of common stock related to the tangible equity units were converted at the minimum settlement rate of 4.0000 shares of common stock for each purchase contract as a result of the Company’s share price. The weighted-average computation of the dilutive effect of potentially issuable shares of common stock under the treasury stock method for the years ended December 31, 2023, 2022 and 2021 excludes 1.2 million, 1.1 million, and 0.3 million outstanding stock-based compensation awards, respectively, as their inclusion would be anti-dilutive. 80 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 8. Income Taxes Loss from continuing operations before income taxes and Income tax expense (benefit) consisted of the following: Year Ended December 31, 2023 2022 2021 (In thousands) Income (loss) from continuing operations before income taxes: Domestic operations $ ( 114,700 ) $ 8,826 $ ( 129,903 ) Foreign operations 47,572 ( 10,895 ) 8,122 $ ( 67,128 ) $ ( 2,069 ) $ ( 121,781 ) Income tax expense (benefit): Current: Federal $ 949 $ 3,780 $ — State 4,177 4,957 829 Foreign 8,997 3,405 9,862 14,123 12,142 10,691 Deferred: Domestic operations ( 22,866 ) 73,370 ( 29,801 ) Foreign operations ( 4,546 ) ( 49,392 ) ( 418 ) ( 27,412 ) 23,978 ( 30,219 ) $ ( 13,289 ) $ 36,120 $ ( 19,528 ) See Note 4, “Discontinued Operations” for the loss from discontinued operations and related income taxes. The Company’s Income tax expense (benefit) from continuing operations differs from the amount that would be computed by applying the U.S. federal statutory rate as follows: Year Ended December 31, 2023 2022 2021 (In thousands) Taxes calculated at the U.S. federal statutory rate $ ( 14,097 ) $ ( 435 ) $ ( 25,574 ) State taxes ( 1,835 ) 10,878 ( 4,473 ) Effect of tax rates on international operations ( 3,053 ) ( 5,106 ) 681 Changes in valuation allowance 4,646 ( 12,126 ) ( 4,496 ) Changes in tax reserves ( 2,182 ) 1,724 ( 2,332 ) Research and development tax credits ( 4,499 ) ( 2,599 ) ( 2,392 ) Net items not deductible (taxable) ( 1,478 ) 1,859 772 U.S. tax on international operations 2,789 4,565 14,865 Transaction related costs 840 27,699 — Non-deductible employee compensation 5,232 9,013 2,562 Other 348 648 859 Income tax expense (benefit) $ ( 13,289 ) $ 36,120 $ ( 19,528 ) 81 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Deferred income taxes, net reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The significant components of deferred tax assets and liabilities included in continuing operations are as follows: December 31, 2023 2022 (In thousands) Deferred tax assets: Expenses currently not deductible $ 30,787 $ 30,428 Net operating loss and interest expense limitation carryforward 119,247 162,713 Tax credit carryforward 37,358 37,883 Depreciation and amortization 57,901 28,659 Inventory reserves and capitalization 18,585 6,731 Capitalized R&D expenditures 41,343 29,579 Non-current lease liability 17,798 17,815 Other 6,069 2,171 Valuation allowance ( 101,650 ) ( 93,542 ) Deferred tax assets, net 227,438 222,437 Deferred tax liabilities: Depreciation and amortization ( 226,802 ) ( 237,374 ) Lease asset - right of use ( 16,463 ) ( 17,380 ) Total deferred tax liabilities ( 243,265 ) ( 254,754 ) Total deferred tax liabilities, net $ ( 15,827 ) $ ( 32,317 ) The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more lik ely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. During the year ended December 31, 2023, the valuation allowance increased from $ 93.5 million to $ 101.7 million with a net increase of $ 4.6 million recognized in Income tax benefit and a $ 3.5 million increase related to changes in foreign currency rates. Consideration was given to tax planning strategies and, when applicable, future taxable income as to how much of the relevant deferred tax asset could be realized on a more likely than not basis. The Company has U.S. net operating loss carryforwards of $ 14.2 million expiring in years 2024 through 2043, $ 11.7 million of net operating losses that may be carried forward indefinitely and U.S. interest limitation carryforward of $ 44.1 million that may be carried forward indefinitely. The Company’s ability to use these various carryforwards to offset any taxable income generated in future taxable periods may be limited under Section 382 and other federal tax provisions. As of December 31, 2023, the Company had $ 17.9 million foreign net operating loss carryforwards primarily in Germany, Switzerland, France, and the United Kingdom that may be subject to local tax limitations including changes in ownership. The foreign net operating losses can be carried forward indefinitely, except $ 3.1 million of net operating losses in Switzerland expiring in 2030. The company has $ 31.5 million of foreign interest limitation carryforward primarily in Germany, that may be carried forward indefinitely. The Company has U.S. foreign tax and R&D tax credits that may be used to offset U.S. tax in previous or future tax periods subject to Section 382 and other federal provisions. The Company’s $ 21.9 million foreign tax credit can be carried back one year and carried forward to tax years 2024 through 2031. The Company’s $ 10.5 million R&D credit can be carried back one year and carried forward to tax years 2024 through 2043. The Company has non-refundable R&D tax offsets of $ 3.4 million carrying forward indefinitely that that may be used to reduce Australian income tax in future periods. For the year ended December 31, 2023, undistributed earnings of the Company’s foreign subsidiaries are estimated to be $ 78.1 million, all of which is permanently reinvested; accordingly, the Company has assessed no deferred tax liability as of December 31, 2023 on such earnings. 82 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company records a liability for unrecognized income tax benefits for the amount of benefit included in its previously filed income tax returns and in its financial results expected to be included in income tax returns to be filed for periods through the date of its Consolidated Financial Statements for income tax positions for which it is not more likely than not to be sustained upon examination by the respective taxing authority. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: (In thousands) Balance, January 1, 2021 $ 58,014 Acquisitions and divestitures 4,450 Addition for tax positions taken in prior periods 228 Addition for tax positions taken in the current period 3,653 Reductions related to settlements with taxing authorities ( 425 ) Reductions resulting from a lapse of applicable statute of limitations ( 3,239 ) Other, including the impact of foreign currency translation ( 734 ) Balance, December 31, 2021 61,947 Acquisitions and divestitures ( 23,250 ) Addition for tax positions taken in the current period 462 Reductions resulting from a lapse of applicable statute of limitations ( 244 ) Other, including the impact of foreign currency translation ( 616 ) Balance, December 31, 2022 38,299 Acquisitions and divestitures 2,052 Addition for tax positions taken in prior periods 3,659 Addition for tax positions taken in the current period 2,251 Reductions related to settlements with taxing authorities ( 125 ) Reductions resulting from a lapse of applicable statute of limitations ( 14,240 ) Other, including the impact of foreign currency translation 230 Balance, December 31, 2023 $ 32,126 The Company is routinely examined by tax authorities around the world. Tax examinations remain in process in multiple countries, including but not limited to Germany, China, the United States and various U.S. states. The Company files numerous group and separate tax returns in U.S. federal and state jurisdictions, as well as international jurisdictions. In the U.S., tax years dating back to 2009 remain subject to examination, due to tax attributes available to be carried forward to open or future tax years. With some exceptions, other major tax jurisdictions generally are not subject to tax examinations for years beginning before 2017. The Company records interest and penalties on uncertain tax positions as a component of Income tax expense (benefit), which was $( 2.0 ) million, $ 1.1 million, and $ 0.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, we had accrued $ 3.1 million and $ 4.2 million, respectively, of interest and penalties related to unrecognized tax benefits. Due to the difficulty in predicting with reasonable certainty when tax audits will be fully resolved and closed, the range of reasonably possible significant increases or decreases in the liability for unrecognized tax benefits that may occur within the next 12 months is difficult to ascertain. Currently, the Company estimates that it is reasonably possible that the expiration of various statutes of limitations, resolution of tax audits and court decisions may reduce its tax expense in the next 12 months up to $ 1.2 million. The gross amount of the unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $ 20.0 million as of December 31, 2023. 83 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 9. Goodwill and Intangible Assets The following table summarizes the activity in Goodwill, by segment during the years ended December 31, 2023 and 2022: Prevention & Recovery Reconstructive Total (In thousands) Balance, January 1, 2022 $ 1,088,533 $ 845,725 $ 1,934,258 Goodwill attributable to acquisitions (1) — 61,241 61,241 Impact of foreign currency translation ( 10,897 ) ( 1,014 ) ( 11,911 ) Balance, December 31, 2022 1,077,636 905,952 1,983,588 Goodwill attributable to acquisitions (1) — 43,683 43,683 Impact of foreign currency translation 23,859 9,763 33,622 Balance, December 31, 2023 $ 1,101,495 $ 959,398 $ 2,060,893 (1) Includes purchase accounting adjustments associated with acquisitions discussed in Note 5, “Acquisitions”. The following table summarizes the Company’s Intangible assets, excluding Goodwill: Year Ended December 31, 2023 2022 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Definite-Lived Intangible Assets Acquired customer relationships $ 548,234 $ ( 279,757 ) $ 528,489 $ ( 215,962 ) Acquired technology 632,801 ( 184,216 ) 553,284 ( 134,967 ) Acquired trade names 458,917 ( 100,061 ) 414,801 ( 74,644 ) Software 83,849 ( 42,910 ) 72,371 ( 39,202 ) Other intangible assets 16,335 ( 5,829 ) 9,917 ( 3,360 ) $ 1,740,136 $ ( 612,773 ) $ 1,578,862 $ ( 468,135 ) Amortization expense related to acquired intangible assets, including acquired customer relationships, acquired technology, and acquired trade names, are presented on the face of the Consolidated Statements of Operations. Other intangible assets amortization expense consists primarily of amortization of software intangibles and is recorded as a component of Selling, general, and administrative expense in the Consolidated Statements of Operations. Total amortization expense is $ 140.2 million, $ 133.7 million, and $ 125.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. See Note 2, “Summary of Significant Accounting Policies” for discussion regarding impairment of Intangible assets. 84 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Expected Amortization Expense The Company’s expected annual amortization expense for intangible assets for the next five years is as follows: December 31, 2023 (In thousands) 2024 $ 145,822 2025 144,572 2026 139,483 2027 131,403 2028 96,556 10. Property, Plant and Equipment, Net Year Ended December 31, Depreciable Life 2023 2022 (In years) (In thousands) Land n/a $ 6,454 $ 5,935 Buildings and improvements 5 - 40 41,195 36,548 Machinery and equipment 3 - 15 465,599 375,441 513,248 417,924 Accumulated depreciation ( 242,450 ) ( 181,183 ) $ 270,798 $ 236,741 Depreciation expense for the years ended December 31, 2023, 2022 and 2021, w as $ 76.9 million, $ 69.2 million and $ 62.0 million, respectively. 11. Inventories, Net Inventories, net consisted of the following: Year Ended December 31, 2023 2022 (In thousands) Raw materials $ 88,129 $ 100,038 Work in process 39,310 28,164 Finished goods 406,931 357,143 534,370 485,345 Less: Allowance for excess, slow-moving and obsolete inventory ( 65,538 ) ( 58,702 ) $ 468,832 $ 426,643 85 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 12. Leases The Company leases certain office space, warehouse, distribution, and production facilities, as well as vehicles and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include renewal options, which can extend the lease term into the future. The Company determines the lease term by assuming options that are reasonably certain of being renewed will be exercised. Certain of the Company’s leases include rental payments adjusted for inflation. The right-of-use lease asset and lease liability are recorded on the Consolidated Balance Sheet, with the current lease liability being included in Accrued liabilities. December 31, 2023 (In thousands) Future lease payments by year: 2024 $ 19,528 2025 16,445 2026 11,413 2027 6,402 2028 5,125 Thereafter 12,809 Total 71,722 Less: present value discount ( 5,507 ) Present value of lease liabilities $ 66,215 Weighted-average remaining lease term (in years): Operating leases 5.66 Weighted-average discount rate: Operating leases 3.6 % The Company’s operating leases extend for varying periods and, in some cases, contain renewal options that would extend the existing terms. During the years ended December 31, 2023, 2022 and 2021 , the Company’s net rental expense related to operating leases was $ 22.4 million, $ 23.0 million, and $ 20.2 million respectively. 13. Debt Long-term debt consisted of the following: December 31, 2023 2022 (In thousands) Term loan $ — $ 219,279 Senior unsecured convertible notes 446,164 — Revolving credit facilities and other 20,000 40,000 Total debt 466,164 259,279 Less: current portion — ( 219,279 ) Long-term debt $ 466,164 $ 40,000 Debt Redemptions in Connection with the Separation 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 86 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Enovis Term Loan and Revolving Credit Facility The Enovis Credit Agreement became effective 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 $ 450.0 million and an April 4, 2023 maturity date (the “Enovis Term Loan”). The Revolver contains a $ 50 million swing line loan sub-facility. Certain U.S. subsidiaries of the Company guarantee the obligations under the Credit Facility. On November 18, 2022, the Company completed an exchange with a lender under the Enovis Credit Agreement of 6,003,431 shares of common stock of ESAB, representing all of the retained shares in ESAB following the Separation, for $ 230.5 million of the $ 450.0 million in term loan outstanding under the Credit Agreement, net of cost to sell. On March 1, 2023 the Company extinguished the remaining outstanding balance on the Enovis Team Loan with borrowing 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 and thereafter, stepping 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 Term Loan and the Enovis Revolver. As of December 31, 2023, the Company was in compliance with the covenants under the Enovis Credit Agreement. On October 23, 2023 the Company entered into an amendment to the Enovis Credit Agreement (the “Amendment”). The Amendment provided for a new term loan commitment in the aggregate amount of $ 400 million (the “Term Loan Facility”). The Term Loan Facility extended to the Company under the Amendment was funded on January 3, 2024, the date the Lima Acquisition was consummated. The Term Loan Facility 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 Enovis Credit Agreement (including the Term Loan Facility) became secured by certain personal property of the Company and certain of its subsidiaries, subject to limitations and exclusions; (ii) the financial covenant under the Enovis Credit Agreement was be adjusted from total leverage ratio to senior secured leverage ratio and requires 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 became effective (including restrictions on repayments of junior financing and amendments to junior financing documents); and (iv) certain additional changes were implemented (including the removal of the guaranty fallaway provision). As of December 31, 2023, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.58 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 880.0 million available on the Revolver. Euro Senior Notes The Company previously had senior unsecured notes with an aggregate principal amount of € 350.0 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. Tangible Equity Unit (“TEU”) Amortizing Notes The Company previously had 6.50 % TEU amortizing notes at an initial principal amount of $ 15.6099 per note with equal quarterly cash installments of $ 1.4375 per note representing a payment of interest and partial payment of principal. The final installment payment of $ 6.5 million was made on January 15, 2022. 87 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 2026 Notes The Company previously had senior notes with a remaining principal amount of $ 300 million, which were due on February 15, 2026 and had an interest rate of 6.375 %. The 2026 Notes were redeemed on April 7, 2022 at a 103.188 % redemption premium after the completion of the Separation. Financing for Lima Acquisitio n 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. The term loan facility extended to the Company under the Amendment was funded on January 3, 2024, the date the Lima Acquisition was 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) became 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 was adjusted from total leverage ratio to senior secured leverage ratio and requires 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 became effective (including restrictions on repayments of junior financing and amendments to junior financing documents); and (iv) certain additional changes were implemented (including the removal of the guaranty fallaway provision). 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 88 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) which the market price of the common stock exceeds the cap price. The capped call payment was classified as equity since it meets the derivative scope exception included in ASC 815 Derivative and Hedging. Other Indebtedness In addition to the d ebt 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 $ 11.5 million were outstanding as of December 31, 2023. Deferred Financing Fees The Company has $ 6.6 million in deferred financing fees included in Other assets as of December 31, 2023 ( $ 3.5 million related to the Revolver and $ 3.1 million related to the new term loan). In the third quarter of 2023, the Company paid $ 8.0 million for a b ridge facility for the Lima acquisition. Upon the completion of the amendment to the Enovis Credit Agreement and 2028 Notes offering, the bridge facility was terminated and the unamortized balance of the bridge facility deferred financing fees of $ 7.3 million was written-off. As of December 31, 2023, the Company has $ 13.8 million of original issue discount fees and other issuance costs included as a reduction of Long-term debt related to the 2028 Notes. Contractual Maturities The contractual maturities of the Company’s debt are as follows: December 31, 2023 (In thousands) 2024 $ — 2025 — 2026 — 2027 20,000 2028 460,000 Thereafter — Total contractual maturities 480,000 Debt discount ( 13,836 ) Total debt $ 466,164 14. Equity Share Repurchase Program On February 12, 2018, the Company’s Board of Directors authorized the repurchase of shares of the Company’s common stock from time-to-time on the open market or in privately negotiated transactions. No repurchases of the Company’s common stock have been made under this plan since the third quarter of 2018. As of December 31, 2023, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million . The timing, amount and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors. There is no term associated with the remaining repurchase authorization. Accumulated Other Comprehensive Loss The following table presents the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the years ended December 31, 2023, 2022 and 2021. All amounts are net of tax and noncontrolling interest, if any. 89 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accumulated Other Comprehensive Loss Components Net Unrecognized Pension And Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain (Loss) On Hedging Activities Total (In thousands) Balance at January 1, 2021 $ ( 112,783 ) $ ( 360,977 ) $ 21,654 $ ( 452,106 ) Other comprehensive income (loss) before reclassifications: Net actuarial gain 20,866 — — 20,866 Foreign currency translation adjustment 1,339 ( 146,409 ) ( 230 ) ( 145,300 ) Gain on long-term intra-entity foreign currency transactions — 32,261 — 32,261 Gain on net investment hedges — — 23,247 23,247 Other comprehensive income (loss) before reclassifications: 22,205 ( 114,148 ) 23,017 ( 68,926 ) Amounts reclassified from Accumulated other comprehensive loss (1) 5,019 — — 5,019 Net Other comprehensive income (loss) 27,224 ( 114,148 ) 23,017 ( 63,907 ) Balance at December 31, 2021 ( 85,559 ) ( 475,125 ) 44,671 ( 516,013 ) Other comprehensive income (loss) before reclassifications: Net actuarial gain 12,207 — — 12,207 Foreign currency translation adjustment 470 ( 37,953 ) — ( 37,483 ) Loss on long-term intra-entity foreign currency transactions — ( 21,779 ) — ( 21,779 ) Gain on net investment hedges — — 9,028 9,028 Other comprehensive income (loss) before reclassifications: 12,677 ( 59,732 ) 9,028 ( 38,027 ) Amounts reclassified from Accumulated other comprehensive loss (1) 629 — — 629 Net Other comprehensive income (loss) 13,306 ( 59,732 ) 9,028 ( 37,398 ) Distribution of ESAB Corporation 84,460 469,220 ( 53,699 ) 499,981 Balance at December 31, 2022 12,207 ( 65,637 ) — ( 53,430 ) Other comprehensive income (loss) before reclassifications: Net actuarial loss ( 8,052 ) — — ( 8,052 ) Foreign currency translation adjustment 2,829 63,621 — 66,450 Loss on net investment hedges — — ( 27,943 ) ( 27,943 ) Other comprehensive income (loss) before reclassifications: ( 5,223 ) 63,621 ( 27,943 ) 30,455 Amounts reclassified from Accumulated other comprehensive loss (1) ( 1,976 ) — 70 ( 1,906 ) Net Other comprehensive income (loss) ( 7,199 ) 63,621 ( 27,873 ) 28,549 Balance at December 31, 2023 $ 5,008 $ ( 2,016 ) $ ( 27,873 ) $ ( 24,881 ) (1) Included in the computation of net periodic benefit cost. See Note 16, “Defined Benefit Plans” for additional details. 90 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During the years ended December 31, 2023, 2022 and 2021, Noncontrolling interest increased (decreased) by $ 0.1 million, $( 2.1 ) million, and $( 1.3 ) million, respectively, as a result of Other comprehensive income, due to foreign currency translation adjustment. Share-Based Payments On June 7, 2022, the shareholders of the Company approved an amendment (the “Amendment”) to the Company’s 2020 Omnibus Incentive Plan (the “2020 Plan”), which was originally adopted by the shareholders of the Company on May 21, 2020. The Amendment authorizes an additional 745,000 shares of common stock of the Company and did not make any other changes to the 2020 Plan. Upon the approval of the 2020 Plan, no additional ordinary shares were to be granted under the Company’s previously approved plans, including the Company’s 2016 Omnibus Incentive Plan dated May 13, 2016. All awards previously granted and outstanding under the prior plans remain subject to the terms of those prior plans. The 2020 Plan provides the Compensation and Human Capital Management Committee of the Company’s Board of Directors (“Compensation Committee”) discretion in creating employee equity incentives. Awards under the 2020 Plan may be made in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based stock, performance-based stock units, dividend equivalents, and other stock-based awards. The Company measures and recognizes compensation expense related to share-based payments based on the fair value of the instruments issued, net of an estimated forfeiture rate. Stock-based compensation expense is generally recognized as a component of Selling, general and administrative expense in the Consolidated Statements of Operations, as payroll costs of the employees receiving the awards are recorded in the same line item. The Company’s Consolidated Statements of Operations reflect the following amounts related to stock-based compensation: Year Ended December 31, 2023 2022 2021 (In thousands) Stock-based compensation expense (1) $ 34,065 $ 38,955 $ 35,350 Deferred tax benefit 2,813 1,236 2,658 (1) Stock-based compensation expense includes $ 2.1 million and $ 7.7 million of expense included in Income from discontinued operations on the Company’s Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 , respectively. As of December 31, 2023, the Company had $ 25.1 million of unrecognized compensation expense related to stock-based awards that will be recognized over a weighted-average period of 1.1 years. The intrinsic value of awards exercised or issued upon vesting was $ 19.5 million, $ 37.2 million, and $ 48.6 million during the years ended December 31, 2023, 2022 and 2021, respectively. Stock Options Under the 2020 Plan, the Company may grant options to purchase common stock, with a maximum term of 10 years at a purchase price equal to the market value of the Company’s common stock on the date of grant. Stock-based compensation expense for stock option awards is based upon the grant-date fair value using the Black-Scholes option pricing model. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the entire award. The following table shows the weighted-average assumptions used to calculate the fair value of stock option awards using the Black-Scholes option pricing model, as well as the weighted-average fair value of options granted: 91 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2023 2022 2021 Expected period that options will be outstanding (in years) 4.72 4.77 4.50 Interest rate (based on U.S. Treasury yields at the time of grant) 4.05 % 2.10 % 0.61 % Volatility 48.54 % 42.90 % 43.10 % Dividend yield — — — Weighted-average fair value of options granted (1) $ 26.36 $ 27.48 $ 27.64 (1) The weighted-average fair value of options granted in 2021 was adjusted by a factor of 1.7 due to the Separation and reverse stock split. . As a result of the Separation, beginning in April 2022, expected volatility is based on the weighted average historical stock price volatility of a group of peer companies for the expected term of the option. Prior to April 2022, expected volatility was estimated based on the historical volatility of the Company’s stock price. The Company considers historical data to estimate forfeitures within the valuation model. Groups of employees that have similar historical exercise behavior are considered together for valuation purposes. The Company has elected to estimate the expected life of an award based upon the Securities and Exchange Commission-approved “simplified method” noted under the provisions of Staff Accounting Bulletin No. 107 with the continued use of this method extended under the provisions of Staff Accounting Bulletin No. 110. Stock option activity is as follows: Number of Options (1) Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (In years) Aggregate Intrinsic Value (2) (In thousands) Outstanding at January 1, 2021 2,705,070 $ 50.61 Granted 331,375 65.08 Exercised ( 712,810 ) 48.91 Forfeited and expired ( 170,529 ) 97.46 Outstanding at December 31, 2021 2,153,106 49.70 Granted 154,552 70.23 Exercised ( 127,261 ) 45.69 Forfeited and expired ( 407,069 ) 72.53 Adjustment due to ESAB Separation (3) ( 425,651 ) 57.64 Outstanding at December 31, 2022 1,347,677 59.96 Granted 222,707 57.49 Exercised ( 33,514 ) 45.37 Forfeited and expired ( 40,727 ) 67.85 Outstanding at December 31, 2023 1,496,143 59.71 3.23 $ 4,474 Vested or expected to vest at December 31, 2023 1,488,175 59.71 3.21 4,474 Exercisable at December 31, 2023 1,159,675 58.26 2.57 4,474 (1) The outstanding options as of December 31, 2021 was adjusted by a factor of 1.7 due to the Separation and reverse stock split. (2) The aggregate intrinsic value is based upon the difference between the Company’s closing stock price at the date of the Consolidated Balance Sheet and the exercise price of the stock option for in-the-money stock options. The intrinsic value of outstanding stock options fluctuates based upon the trading value of the Company’s common stock. (3) Reflects the cancellation of outstanding options held by ESAB employees as of April 4, 2022, which were replaced with ESAB options issued by ESAB Corp. as part of the Separation. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 0.4 million, $ 1.5 million , and $ 21.4 million, respectively. The fair value of options vested during the years ended December 31, 2023, 2022 and 2021 was $ 5.4 million, $ 7.4 million , and $ 9.0 million, respectively. 92 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Restricted Stock Units Under the 2020 Plan, the Compensation Committee may award performance-based restricted stock units (“PRSUs”), the vesting of which is contingent upon meeting service conditions and various performance goals. During the years ended December 31, 2023, 2022 and 2021 , the Company granted certain employees PRSUs, the vesting of which is fully based on the Company’s total shareholder return (“TSR”) ranking among a peer group over a three -yea r performance period. The awards also have a service requirement that equals the respective performance periods. The final achievement of the PRSUs granted in 2022 and 2021 was determined as of April 4, 2022 based on the current performance as of the time of the Separation, and it was determined that 100 % of the TSR metric was achieved . The achievement factors were determined in accordance with the applicable criteria established by the Compensation Committee. While the achievement factor of the outstanding awards has been determined, they remain subject to the awards’ service period requirements and will therefore continue to vest over the original term of the award. PRSUs with TSR conditions are valued at grant date using a binomial-lattice model (i.e., Monte Carlo simulation model). PRSUs with TSR conditions are recognized on a straight-line basis over the performance periods regardless of the performance condition achievement because the probability is factored into the valuation of the award. The related compensation expense for each of the awards is recognized, on a straight-line basis, over the vesting period. Under the 2020 Plan, the Compensation Committee may also award non-performance-based restricted stock units (“RSUs”) to select executives, employees and outside directors, which typically vest three years after the date of grant. With limited exceptions, the employee must remain in service until the vesting date. The Compensation Committee determines the terms and conditions of each award, incl uding the restriction period and other criteria applicable to the awards. Directors may also elect to defer their annual board fees into RSUs with immediate vesting. Delivery of the shares underlying these director restricted stock units is deferred until termination of the director’s service on the Company’s Board of Directors. The activity in the Company’s PRSUs and RSUs is as follows: PRSUs RSUs Number of Units (1) Weighted- Average Grant-Date Fair Value Number of Units (1) Weighted- Average Grant-Date Fair Value Nonvested at January 1, 2021 430,236 $ 59.70 489,654 $ 55.06 Granted 146,322 77.84 464,279 78.84 Vested ( 113,991 ) 52.75 ( 248,405 ) 51.71 Forfeited and expired ( 96,492 ) 48.30 ( 60,311 ) 63.95 Nonvested at December 31, 2021 366,075 72.13 645,217 69.44 Granted 192,921 47.89 303,752 67.58 Vested ( 230,310 ) 49.69 ( 243,485 ) 64.11 Forfeited and expired ( 35,516 ) 46.07 ( 70,914 ) 69.22 Adjustment due to ESAB Separation (2) ( 32,373 ) 46.07 ( 131,291 ) 71.52 Nonvested at December 31, 2022 260,797 77.34 503,279 71.33 Granted 121,352 71.80 303,350 57.43 Vested ( 164,948 ) 82.96 ( 253,791 ) 71.55 Forfeited and expired — — ( 44,857 ) 63.43 Nonvested at December 31, 2023 217,201 69.97 507,981 63.59 (1) The outstanding awards as of December 31, 2021 has been adjusted by a factor of 1.7 due to the Separation and reverse stock split. (2) Reflects the cancellation of unvested awards held by ESAB employees as of April 4, 2022, which were replaced with ESAB awards issued by ESAB as part of the Separation. The fair value of shares vested during the years ended December 31, 2023, 2022 and 2021 was $ 31.8 million, $ 32.1 million , and $ 18.3 million, respectively. 93 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 15. Accrued Liabilities Accrued liabilities in the Consolidated Balance Sheets consisted of the following: December 31, 2023 2022 (In thousands) Accrued compensation and related benefits $ 70,979 $ 51,384 Accrued third-party commissions 28,539 24,958 Lease liability - current portion 21,568 24,281 Accrued rebates 14,464 13,715 Accrued taxes 14,384 13,676 Accrued professional fees 13,037 15,670 Contingent consideration - current portion 6,944 8,812 Accrued royalties 5,972 5,777 Accrued freight 3,909 3,955 Accrued interest 3,765 2,921 Warranty liability 2,959 2,804 Customer advances and billings in excess of costs incurred 2,953 3,560 Accrued restructuring liability 2,276 1,091 Other 45,383 37,688 $ 237,132 $ 210,292 Accrued Restructuring Liability 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 in the Consolidated Balance Sheets is as follows: Year Ended December 31, 2023 Balance at Beginning of Period Provisions Payments Balance at End of Period (In thousands) Restructuring and other charges: Termination benefits (1) $ 973 $ 8,953 $ ( 7,731 ) $ 2,195 Facility closure costs and other (2) 118 8,388 ( 8,425 ) 81 Total $ 1,091 17,341 $ ( 16,156 ) $ 2,276 Non-cash charges (2) 2,609 Total Provisions (3) $ 19,950 (1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment, lease termination expense, and other costs in connection with the closure and optimization of facilities and product lines. (3) Charges includes $ 2.6 million of expense classified as Cost of sales on the Company’s Consolidated Statements of Operations. $ 13.5 million and $ 6.4 million of the Company’s total provisions are related to the Prevention & Recovery and Reconstructive segments, respectively. 94 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2022 Balance at Beginning of Period Provisions Payments Foreign Currency Translation Balance at End of Period (In thousands) Restructuring and other charges: Termination benefits (1) $ 2,470 $ 3,944 $ ( 5,441 ) $ — $ 973 Facility closure costs and other (2) 358 12,864 ( 13,104 ) — 118 Total $ 2,828 16,808 $ ( 18,545 ) $ — $ 1,091 Non-cash charges (2) 2,152 Total Provisions (3) $ 18,960 (1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment and lease termination expense in connection with the closure and optimization of facilities and product lines. (3) Charges include $ 1.7 million classified as Cost of sales on the Company’s Consolidated Statements of Operations. $ 9.6 million and $ 9.4 million of the Company’s total provisions are related to the Prevention & Recovery and Reconstructive segments, respectively. 16. Defined Benefit Plans The Company sponsors various defined benefit plans and defined contribution plans for certain eligible employees or former employees. Since the Separation, all of the Company’s defined benefit plans are based outside of the U.S and the Company does not sponsor any other post-retirement benefit plans. The Company uses December 31 st as the measurement date for all of its employee benefit plans. As part of the Separation, all plans sponsored by ESAB and certain U.S. defined benefit and other post-retirement plans, formerly sponsored by the Company, were transferred to ESAB as of March 21, 2022. The impact of transferring the plans to ESAB is shown as Divestitures in the tables below. The following tables include all defined benefit plans historically sponsored by the Company prior to the transfer to ESAB. See Note 4, “Discontinued Operations” for further information. The following table summarizes the total changes in the Company’s pension benefits and plan assets and includes a statement of the plans’ funded status. The amounts presented as of January 1, 2022 and the changes in benefit obligation and plan assets in 2022 include three months of activity of the ESAB plans prior to the Separation. 95 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Total Pension Benefits Foreign Pension Benefits Year Ended December 31, Year Ended December 31, 2023 2022 2022 (In thousands) Change in benefit obligation: Projected benefit obligation, beginning of year $ 95,075 $ 455,067 $ 252,739 Service cost 3,709 4,703 4,703 Interest cost 2,122 1,821 897 Actuarial loss (gain) (1) 11,465 ( 21,586 ) ( 21,586 ) Foreign exchange effect 10,946 ( 4,844 ) ( 4,844 ) Transfers in (benefits paid), net (2) 6,407 ( 5,724 ) ( 1,854 ) Divestitures (3) — ( 337,045 ) ( 137,663 ) Settlements ( 8,655 ) — — Other 1,274 2,683 2,683 Projected benefit obligation, end of year $ 122,343 $ 95,075 $ 95,075 Accumulated benefit obligation, end of year $ 116,767 $ 91,527 $ 91,527 Change in plan assets: Fair value of plan assets, beginning of year $ 77,696 $ 366,820 $ 165,561 Actual return on plan assets 4,173 ( 4,193 ) ( 6,557 ) Employer contribution 3,632 3,416 3,378 Foreign exchange effect 8,696 ( 2,599 ) ( 2,599 ) Transfers in (benefits paid), net (2) 6,407 ( 5,724 ) ( 1,854 ) Divestitures (3) — ( 282,534 ) ( 82,743 ) Settlements ( 8,655 ) — — Other 2,723 2,510 2,510 Fair value of plan assets, end of year $ 94,672 $ 77,696 $ 77,696 Funded status, end of year $ ( 27,671 ) $ ( 17,379 ) $ ( 17,379 ) Amounts recognized on the Consolidated Balance Sheet at December 31: Current liabilities $ ( 214 ) $ ( 174 ) $ ( 174 ) Non-current liabilities ( 27,457 ) ( 17,205 ) ( 17,205 ) Total $ ( 27,671 ) $ ( 17,379 ) $ ( 17,379 ) (1) The actuarial loss for 2023 is primarily due to the decrease in discount rate in the Swiss market and the gain for 2022 is primarily due to the increases in discount rates in most markets. (2) Transfers in (benefits paid), net are positive for 2023 due to transfers in for new members. (3) Divestitures are related to the Separation. As of December 31, 2023 and 2022, all Enovis plans had projected benefit obligations in excess of the fair value of plan assets. The projected benefit obligation increased by $ 27.3 million in the year ended December 31, 2023 compared to a decrease of $ 360.0 million in the December 31, 2022. In the year ended December 31, 2023, the increase was mainly driven by two key factors: an actuarial loss of $ 11.5 million and the exchange rate effect of $ 10.9 million (as a result of the U.S. currency weakening relative to other currencies). In the year ended December 31, 2022, the single largest driver was a decrease of $ 337.0 million due to the divestiture of ESAB. In addition, there was an actuarial gain of $ 21.6 million. Expected contributions to the Company’s pension plans for the year ending December 31, 2024 are $ 3.5 million. The following benefit payments are expected to be paid during each respective fiscal year: 96 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) All Plans (In thousands) 2024 $ 4,863 2025 5,192 2026 6,333 2027 5,399 2028 5,309 2029 - 2032 31,653 The Company’s primary investment objective for its pension plan assets is to provide a source of retirement income for the plans’ participants and beneficiaries. The assets are invested with the goal of preserving principal while providing a reasonable real rate of return over the long term. Diversification of assets is achieved through strategic allocations to various asset classes. Actual allocations to each asset class vary due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions, and the timing of benefit payments and contributions. The asset allocation is monitored and rebalanced as required, as frequently as on a quarterly basis in some instances. The following are the actual and target allocation percentages for the Company’s pension plan assets: Actual Asset Allocation December 31, Target 2023 2022 Allocation Equity securities 35 % 35 % 25 % - 43 % Fixed income securities 28 % 27 % 24 % - 43 % Cash and cash equivalents 3 % 2 % 0 % - 10 % Other 35 % 36 % 25 % - 45 % A summary of the Company’s pension plan assets for each fair value hierarchy level for the periods presented follows (see Note 17, “Financial Instruments and Fair Value Measurements”, for further description of the levels within the fair value hierarchy): December 31, 2023 Measured at Net Asset Value(1) Level One Level Two Level Three Total (In thousands) Cash and cash equivalents $ — $ 2,406 $ — $ — $ 2,406 Equity securities — 33,091 — — 33,091 Non-U.S. government and corporate bonds — 26,376 — — 26,376 Other (1) — — 32,799 — 32,799 $ — $ 61,873 $ 32,799 $ — $ 94,672 (1) Represents diversified portfolio funds, reinsurance contracts and money market funds. December 31, 2022 Measured at Net Asset Value(1) Level One Level Two Level Three Total (In thousands) Cash and cash equivalents $ — $ 1,250 $ — $ — $ 1,250 Equity securities — 27,074 — — 27,074 Non-U.S. government and corporate bonds — 21,224 — — 21,224 Other (1) — — 28,148 — 28,148 $ — $ 49,548 $ 28,148 $ — $ 77,696 (1) Represents diversified portfolio funds, reinsurance contracts and money market funds. 97 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table sets forth the components of Net periodic benefit cost (income) and Other comprehensive (gain) loss of the Company’s defined benefit pension plans and other post-retirement employee benefit plans: Pension Benefits Year Ended December 31, 2023 2022 2021 (In thousands) Components of Net Periodic Benefit (Income) Cost: Service cost $ 3,709 $ 4,703 $ 3,719 Interest cost 2,122 1,821 4,642 Amortization ( 1,759 ) 1,187 5,953 Settlement gain ( 578 ) — ( 11,157 ) Other — ( 20 ) 2 Expected return on plan assets ( 3,032 ) ( 4,789 ) ( 12,819 ) Net periodic benefit cost (income) $ 462 $ 2,902 $ ( 9,660 ) Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss: Current year net actuarial (gain) loss $ 9,478 $ ( 14,728 ) $ ( 27,385 ) Current year prior service cost ( 1,448 ) 221 — Less amounts included in net periodic benefit (income) cost: Amortization of net (gain) loss 1,839 ( 1,135 ) ( 5,899 ) Settlement/divestiture/other gain 578 — ( 51 ) Amortization of prior service cost ( 80 ) ( 52 ) ( 65 ) Total recognized in Other comprehensive (gain) loss $ 10,367 $ ( 15,694 ) $ ( 33,400 ) Net periodic benefit cost (income) of $ 0.3 million and $( 9.9 ) million for the years ended December 31, 2022 and 2021, respectively are included in Income from discontinued operations. The following table sets forth the components of Net periodic benefit cost (income) and Other comprehensive (gain) loss of the foreign defined benefit pension plans for the years ended December 31, 2022 and 2021 included in the table above: Foreign Pension Benefits Year Ended December 31, 2022 2021 (In thousands) Components of Net Periodic Benefit (Income) Cost: Service cost $ 4,703 $ 3,719 Interest cost 897 1,741 Amortization 273 1,223 Settlement gain — ( 11,157 ) Other ( 20 ) 2 Expected return on plan assets ( 2,425 ) ( 3,015 ) Net periodic benefit cost (income) $ 3,428 $ ( 7,487 ) Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss: Current year net actuarial (gain) loss $ ( 14,728 ) $ ( 7,577 ) Current year prior service cost 221 — Less amounts included in net periodic benefit (income) cost: Amortization of net (gain) loss ( 221 ) ( 1,169 ) Settlement/divestiture/other gain — ( 51 ) Amortization of prior service cost ( 52 ) ( 65 ) Total recognized in Other comprehensive (gain) loss $ ( 14,780 ) $ ( 8,862 ) 98 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The components of net unrecognized pension benefit cost included in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets that have not been recognized as a component of Net periodic benefit (income) cost are as follows: December 31, 2023 2022 (In thousands) Net actuarial gain $ ( 4,681 ) $ ( 16,620 ) Prior service (income) cost ( 1,084 ) 488 Total $ ( 5,765 ) $ ( 16,132 ) The key economic assumptions used in the measurement of the Company’s pension benefit obligations are as follows: December 31, 2023 2022 Weighted-average discount rate for all plans 1.5 % 2.2 % Weighted-average rate of increase in compensation levels for active plans 1.5 % 1.5 % The key economic assumptions used in the computation of Net periodic benefit (income) cost are as follows: Year Ended December 31, 2023 2022 2021 Weighted-average discount rate: All plans 2.1 % 1.7 % 1.7 % Foreign plans 1.2 % 1.4 % Weighted-average expected return on plan assets: All plans 3.5 % 4.3 % 5.2 % Foreign plans 2.8 % 3.6 % Weighted-average rate of increase in compensation levels for active plans 1.5 % 1.7 % 0.6 % In determining discount rates, the Company utilizes the single discount rate equivalent to discounting the expected future cash flows from each plan using the yields at each duration from a published yield curve as of the measurement date. The expected long-term rate of return on plan assets was based on the Company’s investment policy target allocation of the asset portfolio between various asset classes and the expected real returns of each asset class over various periods of time that are consistent with the long-term nature of the underlying obligations of these plans. The Company maintains defined contribution plans for its employees. The Company’s expense in continuing operations for the years ended December 31, 2023, 2022 and 2021 was $ 8.1 million, $ 6.6 million and $ 5.4 million, respectively. Prior to the Separation, the Company sponsored other post-retirement benefit plans with unfunded liabilities of $ 11.9 million at the time of the Separation with annual costs of approximately $ 0.1 million. See prior filings for expanded disclosures related to these plans transferred to ESAB as part of the Separation. 99 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 17. 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: Level One: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level Two: 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 of $ 573.2 million and $ 259.3 million as of December 31, 2023 and 2022, respectively, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. As of December 31, 2023, the Company held $ 26.0 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. These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements. 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. The gross range of outcomes for contingent consideration arrangements that have a fixed limit is zero to $ 8.5 million. There is one contingent consideration arrangement as of December 31, 2023 that has no limit and is based on a percentage of sales in excess of a benchmark over a five-year period. There were no other transfers in or out of Level One, Two or Three during the year ended December 31, 2023. Total Contingent Consideration Rollforward Beginning Balance Additions Charges Interest Payments Foreign Exchange Ending Balance (In thousands) Contingent Consideration $ 27,809 $ 1,818 $ ( 832 ) $ — $ ( 2,736 ) $ ( 33 ) $ 26,026 Deferred Compensation Plans The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers. As of December 31, 2023 and 2022, the fair values of these plans were $ 14.4 million and $ 10.3 million, respectively. These plans are deemed to be Level Two within fair value hierarchy. Derivatives The Company periodically enters into foreign currency derivative contracts. As the Company has manufacturing sites internationally in Europe, Africa, and Asia and sells its products globally, the Company is exposed to movements in the exchange rates of various currencies. As a result, the Company enters into foreign currency swaps and forward contracts to mitigate this exchange rate risk. As the Company’s borrowings under the Credit Facility include variable interest rates, the Company may periodically enter into interest rate swap or collar agreements to mitigate interest rate risk. Commodity 100 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) derivative contracts can be used to manage costs of raw materials used in the Company’s production processes. There were no changes during the periods presented in the Company’s valuation techniques used to measure asset and liability fair values on a recurring basis. Cash Flow Hedges 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 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 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 Consolidated Statements of Operations. The contracts are recorded at fair value and deemed to be Level Two in the fair value hierarchy. At December 31, 2023, the Company’s forward currency contracts have a Mexican Peso notional amount of approximately $ 840.0 million, equivalent to a U.S. Dollar aggregate notional amount of $ 47.9 million. During the year ended December 31, 2023, the Company recognized a realized gain of $ 0.2 million on its 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. 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 December 31, 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 the Consolidated Balance Sheet as part of Accumulated other comprehensive income (loss) and in the Company’s 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. During the three months and year ended December 31, 2023, the Company received interest income on its cross-currency swap derivatives of $ 2.6 million and $ 7.3 million, respectively, which is included within Interest expense, net in the 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 year ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In thousands) Gain (loss) on cross-currency swaps $ ( 36,893 ) $ — Gain (loss) on forward currency contracts 247 — $ ( 36,646 ) $ — Non-Designated Hedging Instruments The Company also used non-designated forward currency contracts for the purpose of managing its exposure to currency exchange rate risk related to the Euro-denominated purchase price of Novastep and Lima, which closed in June 2023 and January 2024, respectively. During the second quarter of 2023, the Company recognized a realized loss of $ 1.5 million on its Consolidated Statements of Operations related to the settlement of the Novastep non-designated forward currency contract. The loss is recorded in Other income, net on the Consolidated Statements of Operations. During the fourth quarter of 2023, the Company recorded an unrealized gain of $ 24.3 million on its Consolidated Statements of Operations related to the outstanding 101 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Lima non-designated forward currency contracts. The gain is recorded in Other income, net on the Consolidated Statements of Operations. The Lima forward remained outstanding as of December 31, 2023 and was subsequently settled on January 3, 2024 upon the closing of the Lima acquisition for a realized gain of $ 13.2 million, which will reflect a loss of $ 11.1 million in the first quarter of 2024. The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of December 31, 2023 and 2022: December 31, (In thousands) Location on Consolidated Balance Sheets (1) 2023 2022 Derivative Assets Designated Hedging Instruments Forward currency contracts Other current assets $ 432 $ — Cross-currency swaps Other current assets 10,061 — 10,493 — Non-Designated Hedging Instruments Forward currency contracts Other current assets 24,311 — Total Derivative Assets $ 34,804 $ — Derivative Liabilities Designated Hedging Instruments Forward currency contracts Accrued liabilities $ 278 $ — Cross-currency swaps Other long-term liabilities 46,953 — Total Derivative Liabilities $ 47,231 $ — (1) The Company classifies derivative assets and liabilities as current when the settlement date of the contract is one year or less. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. Concentrations of credit risk are considered to exist when there are amounts collectible from multiple counterparties with similar characteristics, which could cause their ability to meet contractual obligations to be similarly impacted by economic or other conditions. The Company performs credit evaluations of its customers prior to delivery or commencement of services and normally does not require collateral. Letters of credit are occasionally required when the Company deems necessary. There are no customers that represent more than 10% of the Company’s Accounts receivable, net as of December 31, 2023 and 2022. 18. Commitments and Contingencies General Litigation 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 it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded when incurred. 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. Off-Balance Sheet Arrangements As of December 31, 2023, the Company had $ 145.9 million of unconditional purchase obligations with suppliers, the majority of which is expected to be paid by December 31, 2023. 102 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 19. Segment Information The Company conducts its continuing operations through the Prevention & Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments. • Prevention & Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease. • Reconstructive - 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. 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 from Net loss from continuing operations the effect of restructuring and certain other charges, MDR and related costs, acquisition-related intangible asset amortization and other non-cash charges, strategic transaction costs, stock-based compensation, insurance settlement gain, and inventory step-up charges from the operating income of the Company’s operating segments. The Company’s segment results were as follows: Year Ended December 31, 2023 2022 2021 (In thousands) Net sales: Prevention & Recovery $ 1,076,776 $ 1,027,628 $ 1,026,029 Reconstructive 630,421 535,473 400,159 Total Net sales $ 1,707,197 $ 1,563,101 $ 1,426,188 Segment Adjusted EBITDA (1) : Prevention & Recovery $ 152,501 $ 141,344 $ 133,500 Reconstructive 116,726 94,726 72,496 Total Adjusted EBITDA (1) $ 269,227 $ 236,070 $ 205,996 Depreciation, amortization and impairment Prevention & Recovery $ 115,752 $ 104,458 $ 97,898 Reconstructive 101,357 98,507 89,091 Total depreciation, amortization and impairment $ 217,109 $ 202,965 $ 186,989 Capital expenditures: Prevention & Recovery $ 26,356 $ 25,140 $ 19,514 Reconstructive 95,867 74,407 49,077 Total capital expenditures $ 122,223 $ 99,547 $ 68,591 103 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (1) The following is a reconciliation of Income from continuing operations before income taxes to Adjusted EBITDA: Year Ended December 31, 2023 2022 2021 (In thousands) Loss from continuing operations before income taxes $ ( 67,128 ) $ ( 2,069 ) $ ( 121,781 ) Restructuring and other charges (1) 19,950 18,960 13,914 MDR and other costs (2) 27,400 16,709 7,949 Strategic transaction costs 38,250 61,024 23,448 Stock-based compensation 32,079 31,493 25,737 Depreciation and other amortization 83,592 76,664 70,069 Amortization of acquired intangibles 133,517 126,301 116,920 Insurance settlement gain (3) — ( 36,705 ) — Inventory step-up 148 12,802 10,758 Interest expense, net 19,749 24,052 29,112 Debt extinguishment charges 7,333 20,396 29,870 Gain on investment in ESAB Corporation — ( 102,669 ) — Gain on cost basis investment — ( 8,800 ) — Other income, net ( 25,663 ) ( 2,088 ) — Adjusted EBITDA (non-GAAP) 269,227 236,070 205,996 (1) Restructuring and other charges includes $ 2.6 million, $ 1.7 million and $ 5.2 million of expense classified as Cost of sales on the Company’s Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, respectively. (2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union MDR. These costs are classified as Selling, general and administrative expense on our Consolidated Statements of Operations. (3) Insurance settlement gain is related to the 2019 acquisition of DJO. December 31, 2023 2022 (In thousands) Total assets (1) : Prevention & Recovery $ 2,414,014 $ 2,470,917 Reconstructive 2,095,320 1,802,331 Total $ 4,509,334 $ 4,273,248 (1) Includes allocation of certain centrally managed assets, including cash and cash equivalents. The detail of the Company’s operations by geography is as follows: Year Ended December 31, 2023 2022 2021 (In thousands) Net sales by origin (1 ) : United States $ 1,152,360 $ 1,062,765 $ 1,030,440 Foreign locations 554,837 500,336 395,748 Total $ 1,707,197 $ 1,563,101 $ 1,426,188 (1) The Company attributes revenues from external customers to individual countries based upon the country in which the sale was originated. 104 ENOVIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2023 2022 (In thousands) Property, plant and equipment, net (1 ) : United States $ 179,146 $ 157,897 Switzerland 45,995 41,113 Germany 20,147 16,450 Mexico 8,006 6,605 France 5,529 3,058 Other foreign locations 11,975 11,618 Total $ 270,798 $ 236,741 (1) As the Company does not allocate all long-lived assets (specifically intangible assets) to each individual country, evaluation of long-lived assets in total is impracticable. 20. Subsequent Events Lima Acquisition On January 3, 2023, the Company completed a business combination in its Reconstructive segment of LimaCorporate S.p.A. (“Lima”), a privately held global orthopedic company focused on restoring motion through digital innovation and customized hardware. See Note 5. “Acquisitions and Investments” and Note 13. “Debt” in the Notes to the Consolidated Financial Statements included in this Form 10-K for additional information regarding the acquisition and the financing of the acquisition. 105 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.