What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-07 · 257 added, 306 removed, 362 unchanged (61% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended Nine Months Ended

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

Three Months Ended

March 29, 2024 March 31, 2023

Net sales $ 516,266 $ 406,151

4 unchanged sentences

Amortization of acquired intangibles 40,931 32,040

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

Restructuring and other charges 12,911 2,635

Operating income (loss) ( 20,492 ) ( 17,919 ) ( 59,954 ) ( 42,993 )

Operating loss ( 35,014 ) ( 24,968 )

Interest expense, net 19,996 5,652

Debt extinguishment charges — — — 20,104

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

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

Other (income) expense, net 24,235 ( 661 )

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

Loss from continuing operations before income taxes ( 79,245 ) ( 29,959 )

Income tax benefit ( 7,404 ) ( 7,113 )

Net income (loss) from continuing operations ( 19,451 ) ( 65,949 ) ( 56,907 ) 16,647

Income (loss) from discontinued operations, net of taxes 16,611 ( 527 ) 21,096 10,163

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

Net loss from continuing operations ( 71,841 ) ( 22,846 )

Loss from discontinued operations, net of taxes — ( 312 )

Net loss ( 71,841 ) ( 23,158 )

net income attributable to noncontrolling interest from continuing operations - net of taxes 157 192

net income attributable to noncontrolling interest from discontinued operations - net of taxes — — — 966

Net income (loss) attributable to Enovis Corporation $ ( 2,880 ) $ ( 66,612 ) $ ( 36,225 ) $ 25,311

Net income (loss) per share - basic

Continuing operations $ ( 0.36 ) $ ( 1.22 ) $ ( 1.05 ) $ 0.30

Discontinued operations $ 0.30 $ ( 0.01 ) $ 0.39 $ 0.17

Consolidated operations $ ( 0.05 ) $ ( 1.23 ) $ ( 0.67 ) $ 0.47

Net income (loss) per share - diluted

Net loss attributable to Enovis Corporation $ ( 71,998 ) $ ( 23,350 )

Net loss per share - basic and diluted

Continuing operations $ ( 1.32 ) $ ( 0.42 )

5 unchanged sentences

Dollars in thousands

Three Months Ended Nine Months Ended

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

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

Three Months Ended

March 29, 2024 March 31, 2023

Net loss $ ( 71,841 ) $ ( 23,158 )

Other comprehensive income (loss):

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

Foreign currency translation

( 65,490 ) 10,584

Unrealized gain (loss) on hedging activities, net of tax expense (benefit) of $ 7,701 and $ 0

3,159 — ( 2,290 ) 9,028

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension and other post-retirement net actuarial gain (loss), net of tax expense (benefit) of $( 75 ), $ — , $( 116 ) and $ 199

( 339 ) — ( 1,221 ) 629

Amortization of pension net actuarial gain (loss), net of tax expense (benefit) of $( 7 ) and $ 0

Reclassification of hedging gain (loss), net of tax expense (benefit) of $ 58 and $ 0

7 unchanged sentences

Dollars in thousands, except share amounts

September 29, 2023 December 31, 2022

March 29, 2024 December 31, 2023

CURRENT ASSETS:

24 unchanged sentences

133,333,333 shares authorized;

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

54,840,581 and 54,597,142 shares issued and outstanding as of March 29, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,903,277 2,900,747

12 unchanged sentences

Balance at December 31, 2023 54,597,142 $ 55 $ 2,900,747 $ 542,471 $ ( 24,881 ) $ 2,309 $ 3,420,701

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

Other comprehensive income, net of tax of $ —

Net income (loss) — — — ( 71,998 ) — 157 ( 71,841 )

Other comprehensive loss, net of tax of $ 7,752

— — — — ( 40,497 ) ( 51 ) ( 40,548 )

1 unchanged sentence

Balance at March 29, 2024 54,840,581 $ 55 $ 2,903,277 $ 470,473 $ ( 65,378 ) $ 2,415 $ 3,310,842

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

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

— — — — 4,972 8 4,980

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

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

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

Other comprehensive income, net of tax of $ 934

— — — — ( 15,017 ) ( 52 ) ( 15,069 )

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

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

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

1 unchanged sentence

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

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

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

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

— — — — ( 43,466 ) ( 338 ) ( 43,804 )

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

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

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

Net loss — — — 76,855 — 130 76,985

Other comprehensive loss, net of tax of $ —

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

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

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

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

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

Other comprehensive loss, net of tax of $ —

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

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

Acquisition of Insight (see Note 4)

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

Other comprehensive income, net of tax of $ —

— — — — 10,560 24 10,584

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

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

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

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Dollars in thousands

Nine Months Ended

September 29, 2023 September 30, 2022

Three Months Ended

March 29, 2024 March 31, 2023

Cash flows from operating activities:

Net income (loss) $ ( 35,811 ) $ 26,810

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

Net loss $ ( 71,841 ) $ ( 23,158 )

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

Depreciation, amortization and other impairment charges

73,404 51,991

Stock-based compensation expense 6,431 7,606

Non-cash interest expense 1,245 838

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

Gain on cost basis investment — ( 8,800 )

Debt extinguishment charges — 20,104

Fair value loss on contingent acquisition shares 13,443 —

Loss on currency hedges 11,123 —

Deferred income tax expense (benefit) ( 9,966 ) 831

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

Loss on sale of property, plant and equipment 265 429

Changes in operating assets and liabilities:

6 unchanged sentences

Purchases of property, plant and equipment and intangibles ( 36,928 ) ( 30,443 )

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

Payments for acquisitions, net of cash received, and investments ( 760,914 ) ( 3,942 )

5 unchanged sentences

Repayments of borrowings on revolving credit facilities and other ( 1,956 ) ( 5,672 )

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

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

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

Payment of debt issuance costs ( 703 ) —

Proceeds from issuance of common stock, net 871 438

Payment of debt extinguishment costs — ( 12,704 )

Deferred consideration payments and other ( 8,672 ) ( 800 )

Net cash provided by (used in) financing activities 125,008 ( 506,755 )

Net cash provided by financing activities 864,540 24,498

Effect of foreign exchange rates on Cash and cash equivalents ( 828 ) 35

Increase (decrease) in Cash and cash equivalents 7,834 ( 664,413 )

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

Cash and cash equivalents, end of period $ 32,129 $ 54,957

Increase (decrease) in Cash, cash equivalents and restricted cash 29,714 ( 2,395 )

Cash, cash equivalents and restricted cash, beginning of period 44,832 24,295

Cash, cash equivalents and restricted cash, end of period $ 74,546 $ 21,900

Supplemental disclosures:

Fair value of contingent acquisition shares $ 107,877 $ —

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

Enovis Corporation (the “Company” or “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 (“P&R”) and Reconstructive (“Recon”).

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

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

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

Certain prior period amounts have been reclassified to conform to the current period presentation.

The Condensed Consolidated Balance Sheet as of December 31, 2023 is derived from the Company’s audited financial statements.

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

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

The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the SEC on February 22, 2024.

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

2 unchanged sentences

Recently Issued Accounting Pronouncements

The Company has not adopted any new accounting standards during the nine months ended September 29, 2023.

The Company has not adopted any new accounting standards during the three months ended March 29, 2024.

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

Discontinued Operations

The Company’s discontinued operations include the following:

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

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, at an enterprise value of € 800 million (the “Lima Acquisition”), consisting of (i) approximately € 700 million in cash consideration, which includes the repayment at closing of certain indebtedness of Lima and (ii) 1,942,686 shares of common stock of Enovis, par value $ 0.001 per share (the “Contingent Acquisition Shares”), which is based upon a € 100 million value divided by the thirty-day volume weighted average price of Enovis common stock as of the close of business on September 21, 2023.

The Contingent Acquisition Shares are expected to be issued within one year of the acquisition in two equal tranches within six and twelve months of the acquisition date upon non-occurence of certain future events, in each case subject to certain adjustments and conditions as provided for in the purchase agreement.

The cash paid for acquisition at closing was $ 760.7 million, net of acquired cash.

The fair value of the Contingent Acquisition Shares at closing was $ 107.9 million based on the Enovis share price at the close of business on January 3, 2024.

The Contingent Acquisition Shares liability, recorded in Accrued liabilities, will be adjusted to fair value each reporting period with the adjustment reflected in Other income (expense), net in the Condensed Consolidated Statement of Operations.

Lima operates in the reconstructive space of patient care, providing tailored hardware and digital innovation to advance a global standard of care and positive patient outcomes.

Lima has approximately 1,000 employees across more than 15 locations around the world.

The acquisition extends the Company’s current footprint to emerging and growing markets, expands its product lines, and strengthens its global innovation platform.

The value included as Goodwill for this acquisition is reflective of these expected benefits in conjunction with anticipated synergies as the Company uses its integration experience effectively to

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Three Months Ended Nine Months Ended

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

drive further operating improvement, margin expansion, and long-term growth.

Enovis uses its experience and EGX business management system, a comprehensive set of tools and repeatable, teachable processes, to integrate acquisitions and create superior value for its customers, shareholders and associates.

During the three months ended March 29, 2024, the Company incurred $ 9.7 million of 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 Condensed Consolidated Statement of Operations.

As of March 29, 2024, $ 1.7 million related to these expenses were included in Accrued liabilities in the Condensed Consolidated Balance Sheet.

The Lima Acquisition was accounted for as a business combination using the acquisition method of accounting and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the date of acquisition.

The following unaudited proforma financial information presents Enovis’s consolidated financial information assuming the acquisition had taken place on January 1, 2023.

These amounts are presented in accordance with GAAP, consistent with the Company’s accounting policies.

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

Net Sales $ 516,266 $ 484,143

Cost of sales — — — 423,580

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

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

Restructuring and other charges — — — 5,304

Asbestos charges — — — 3,194

Divestiture-related expenses and other (1)

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

Operating (loss) income 17,169 ( 527 ) 11,158 43,836

Interest expense (2)

(Loss) income from discontinued operations before income taxes 17,169 ( 527 ) 11,158 35,801

Income tax (benefit) expense (3)

558 — ( 9,938 ) 25,638

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

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

(2) Interest expense was allocated to discontinued operations in 2022 based on allocating $ 1.2 billion of corporate level debt to discontinued operations consistent with the dividend received from ESAB and the debt repaid at the time of the Separation.

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

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

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

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

Acquisitions and Investments

Lima Acquisition Purchase Agreement

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

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

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

Net income (loss) from continuing operations attributable to Enovis ( 42,241 ) ( 44,980 )

The following table summarizes the Company’s provisional estimate of the aggregate fair value of the assets acquired and liabilities assumed at the date of acquisition.

These amounts, including inventories, deferred taxes, intangible assets, useful lives of the intangible assets, and property, plant and equipment, are determined based upon certain valuations and studies that have yet to be finalized.

Accordingly, the assets acquired and liabilities assumed, as detailed below, are subject to adjustment once the detailed analyses are completed, which could be material.

Substantially all of the Goodwill recognized is not expected to be deductible for income tax purposes.

January 3, 2024

(In thousands)

Trade receivables $ 83,778

Inventories 114,103

Property, plant and equipment 78,575

Goodwill 385,324

Intangible assets 341,000

Accounts payable ( 36,697 )

Accrued liabilities ( 51,148 )

Other assets and liabilities, net ( 46,394 )

Total fair value of consideration, net of acquired cash 868,541

fair value of Contingent Acquisition Shares ( 107,877 )

Acquisition consideration paid, net of acquired cash $ 760,664

The following summarizes the preliminary values of the Intangible assets acquired, excluding Goodwill, as of March 29, 2024:

Intangible Asset

Weighted Average Amortization Period

(In thousands) (Years)

Trademarks $ 182,000 20

Customer Relationships 115,000 15

Acquired technology 44,000 15

Total Intangible Assets $ 341,000

During the three months ended March 29, 2024, the Company’s Condensed Consolidated Statements of Operations included $ 85.8 million of net sales and $ 3.6 million of net income associated with the the acquired Lima legal entities.

ENOVIS CORPORATION

1 unchanged sentence

2023 Acquisitions

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

On June 28, 2023, the Company completed the acquisition of Novastep SAS (“Novastep”) in its Reconstructive segment.

Novastep is a leading player in Minimally Invasive Surgery (MIS) foot and ankle solutions with a best-in-class MIS bunion system serving a rapidly growing portion of the global bunion segment.

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

The acquisition is accounted for as a business combination using 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 acquisition accounting reflects our estimates and are subject to adjustment during the measurement period.

The purchase accounting is substantially complete, except for a review of contingencies.

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

On July 20, 2023, the Company completed an asset acquisition transaction with D.N.E., LLC (“DNE”) 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 of these assets, primarily the developed technology, is an important step in creating a more robust product portfolio for the foot & ankle business unit.

2022 Acquisitions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

During the third quarter of 2022, the Company acquired an additional 53.7 % interest in Insight for $ 34.2 million net of cash received, and recorded contingent consideration of $ 5.0 million, which is the maximum amount payable under the agreement based on Insight’s achievement of certain milestones related to ARVIS.

The Company holds a 99.5 % interest in Insight and recognized an initial $ 0.3 million noncontrolling equity interest in its financial statements attributed to Insight.

The 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 Pty Ltd (“Precision AI”), a developer of surgical planning software.

The transaction was accounted for as an asset acquisition.

The acquisition complements the Company’s current product offerings in its Reconstructive 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 assets 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.

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 Condensed Consolidated Balance Sheets.

Restricted cash is recorded as a component of Other current assets on the Condensed Consolidated Balance Sheets.

The balance in restricted cash as of March 29, 2024 and December 31, 2023 is related to the acquisition of Precision AI which closed in the fourth quarter of 2023 and will be released to the seller within one year of the acquisition date upon completion of certain milestones.

The following table summarizes the Company’s cash, cash equivalents and restricted cash:

March 29, 2024 December 31, 2023

(In thousands)

Cash and cash equivalents

$ 66,267 $ 36,191

Restricted cash

Total cash and cash equivalents and restricted cash

$ 74,546 $ 44,832

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The purchase price accounting for this acquisition was finalized.

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

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

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

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

As of March 29, 2024, the balance of investments held by the Company without readily determinable fair values w as $ 20.4 million.

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

4 unchanged sentences

The Company disaggregates its revenue into the following segments:

Three Months Ended Nine Months Ended

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

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

3 unchanged sentences

International P&R 88,089 84,018

83,686 78,549 258,487 249,937

Total Prevention & Recovery 259,013 250,740

2 unchanged sentences

International Reconstructive 133,518 51,919

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

Total Reconstructive 257,253 155,411

Total $ 516,266 $ 406,151

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

(2) Includes favorable currency impact of $ 2.2 million and $ 1.8 million for the three and nine months ended September 29, 2023, respectively.

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

Given the nature of its 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.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowance for Credit Losses

4 unchanged sentences

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Nine Months Ended September 29, 2023

Three Months Ended March 29, 2024

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

3 unchanged sentences

Net Income (Loss) Per Share from Continuing Operations

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

Three Months Ended Nine Months Ended

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

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

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands, except share and per share data)

17 unchanged sentences

(1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Three Months Ended Nine Months Ended

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

(In thousands, except share data)

Three Months Ended

March 29, 2024 March 31, 2023

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

835,218 1,076,712

Three Months Ended Nine Months Ended

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

In conjunction with the Lima Acquisition, the Company agreed to a contingent issuance of 1,942,686 Contingent Acquisition Shares.

The Contingent Acquisition Shares are currently expected to be issued within one year from the completion of the Lima Acquisition upon the non-occurrence of certain future events, in each case subject to certain adjustments and conditions as provided for in the purchase agreement.

The Contingent Acquisition Shares are only to be included in the weighted-average calculation of basic shares when there are no circumstances the shares would not be issued.

The Contingent Acquisition Shares are only to be included in the weighted-average calculation of diluted shares when the conditions are satisfied.

As such, the shares have been excluded from the calculation of basic and diluted weighted-average shares, respectively.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

Income (loss) from continuing operations before income taxes $ ( 79,245 ) $ ( 29,959 )

1 unchanged sentence

Effective tax rate:

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

The effective tax rates for the three and nine months ended September 29, 2023, were slightly higher than the 2023 federal statutory rate of 21% mainly due to non-U.S.

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

attributes, tax credits for research and development, and release of uncertain tax positions.

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

The effective tax rate for the three months ended March 29, 2024 was lower than the 2024 federal statutory rate of 21% primarily due to an increase in valuation allowance on interest limitation carryforwards, non-deductible expenses and U.S.

taxation on international operations.

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

This was partially offset by tax credits for research and development and non-U.S.

income taxed at lower rates.

The effective tax rate for the three months ended March 31, 2023 was higher than the 2023 U.S.

federal statutory rate of 21% primarily due to non-U.S.

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

attributes, and tax credits for research and development.

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

taxation on international operations.

Share Repurchase Program

1 unchanged sentence

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

As of September 29, 2023, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

As of March 29, 2024, the remaining stock repurchase authorization provided by the Board of Directors was $ 100 million.

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

1 unchanged sentence

Accumulated Other Comprehensive Income (Loss)

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

The following tables present the changes in the balances of each component of Accumulated other comprehensive income (loss) including reclassifications out of Accumulated other comprehensive loss for the three months ended March 29, 2024 and March 31, 2023.

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

Accumulated Other Comprehensive Income (Loss) Components

Accumulated Other Comprehensive Loss Components

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

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Foreign currency translation adjustment ( 396 ) ( 65,043 ) — ( 65,439 )

Loss on net investment hedges — — ( 2,290 ) ( 2,290 )

Gain on net investment hedges — — 24,791 24,791

Other comprehensive income (loss) before reclassifications ( 396 ) ( 65,043 ) 24,791 ( 40,648 )

1 unchanged sentence

Net Other comprehensive income (loss) ( 431 ) ( 65,043 ) 24,977 ( 40,497 )

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

Balance at March 29, 2024 $ 4,577 $ ( 67,059 ) $ ( 2,896 ) $ ( 65,378 )

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Loss Components

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

Net Unrecognized Pension Benefit Cost

Foreign Currency Translation Adjustment Total

(In thousands)

2 unchanged sentences

Foreign currency translation adjustment 180 10,380 10,560

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

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

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

1 unchanged sentence

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

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Inventories, Net

Inventories, net consisted of the following:

September 29, 2023 December 31, 2022

March 29, 2024 December 31, 2023

(In thousands)

6 unchanged sentences

Long-term debt consisted of the following:

September 29, 2023 December 31, 2022

March 29, 2024 December 31, 2023

(In thousands)

Term loan $ 391,449 $ —

Senior unsecured convertible notes 446,878 446,164

Revolving credit facilities and other 500,237 20,000

2 unchanged sentences

Long-term debt $ 1,318,463 $ 466,164

Debt Redemptions

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

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

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

Enovis Term Loan and Revolving Credit Facility

The Enovis Credit Agreement became effective on April 4, 2022 and consists of a $ 900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date.

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

On April 4, 2022, the Company entered into a credit agreement (the “Enovis Credit Agreement”), consisting of a $ 900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date and an initial term loan in the aggregate principal amount of $ 450 million (the “Enovis Term Loan”) which was fully extinguished during the first quarter of 2023.

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

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

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

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

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

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

The agreement was amended on October 23, 2023, in conjunction with the financing of the Lima Acquisition as further discussed below.

The Enovis Credit Agreement, as amended, 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 senior secured leverage ratio of not more than 3.75 :1.00 stepping down to 3.50 :1.00 for the fiscal quarter ending

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

down to 3.50 :1.00 for the fiscal quarter ending June 30, 2024 and thereafter, and (ii) a minimum interest coverage ratio of 3.00 :1:00.

June 30, 2024 and thereafter, and (ii) a minimum interest coverage ratio of 3.00 :1:00.

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

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

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

Euro Senior Notes

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

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

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 principal was made on January 15, 2022.

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

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

Commitment Letter and Financing for Lima Acquisition

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

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

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

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

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

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

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

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

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

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

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

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of March 29, 2024, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of March 29, 2024, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.06 %, excluding accretion of original issue discount and deferred financing fees, and there was $ 400 million available on the Revolver.

Financing for Lima Acquisitio n

On October 23, 2023 the Company entered into an amendment to the Enovis Credit Agreement (the “Amendment”), which provided 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, which is $ 5 million each quarter, and matures on April 4, 2027 (the “2024 Term Loan”).

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 2024 Term Loan) 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 adjusted to a new senior secured leverage ratio (as disclosed above);

(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.

The effective interest rate on the 2028 Notes is 4.5 %.

For the three months ended March 29, 2024, the total interest expense was $ 5.1 million, including $ 4.4 million based upon the coupon rate and $ 0.7 million from accretion of the discount.

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:

6 unchanged sentences

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

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

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

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

Other Indebtedness

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

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

Deferred Financing Fees

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

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

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

On October 24, 2023, 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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 a dilutive effect and/or no offset of any cash payments, in each case, attributable to the amount by which the market price of the common stock exceeds the cap price.

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 $ 32.8 million were outstanding as of March 29, 2024 .

Deferred Financing Fees

The Compa ny has $ 3.2 million in deferred financing fees included in Other assets as of March 29, 2024.

As of March 29, 2024, the Company has $16.7 million of original issue discount fees and other issuance costs included as a reduction of Long-term debt related to the 2024 Term Loan and the 2028 Notes.

Accrued Liabilities

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

September 29, 2023 December 31, 2022

March 29, 2024 December 31, 2023

(In thousands)

Contingent consideration - current portion $ 127,903 $ 5,972

Accrued compensation and related benefits 75,320 70,979

Accrued third-party commissions 25,378 24,958

Lease liability - current portion 23,176 21,568

Accrued third-party commissions 21,036 28,539

Accrued taxes 14,997 14,384

Accrued rebates 11,600 13,715

Accrued professional fees 11,174 13,037

Contingent consideration - current portion 7,790 8,812

Accrued rebates 9,057 14,464

Accrued interest 8,640 3,765

Accrued royalties 6,585 6,944

Accrued freight 4,541 3,909

Accrued restructuring liability 5,586 2,276

Customer advances and billings in excess of costs incurred 3,654 2,953

Warranty liability 2,951 2,959

Accrued restructuring liability 2,159 1,090

Accrued interest 388 2,921

Other 58,663 45,383

$ 373,283 $ 237,132

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Restructuring Liability

1 unchanged sentence

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

Nine Months Ended September 29, 2023

Three Months Ended March 29, 2024

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

10 unchanged sentences

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

(3) For the nine months ended September 29, 2023, $ 6.2 million and $ 5.9 million of th e Company’s total provisions were related to the Prevention & Recovery and Reconstructive segments, respectively.

Restructuring and other charges includes $ 0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the nine months ended September 29, 2023.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(3 ) For the three months ended March 29, 2024, $ 7.8 million and $ 5.1 million of the Company’s total provisions were related to the Prevention & Recovery and Reconstructive segments, respectively.

Financial Instruments and Fair Value Measurements

8 unchanged sentences

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

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

The estimated fair value of the Company’s total debt, including the 2024 Term Loan and the Revolver, was $ 1,489.9 million and $ 573.2 million as of March 29, 2024 and December 31, 2023, respectively, based on current interest rates for similar types of borrowings, a Level Two valuation in the fair value hierarchy.

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

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

As of March 29, 2024, the Company held $ 23.1 million in Level Three liabilities arising from contingent consideration related to acquisitions that may settle in cash.

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.

These inputs can include the estimated

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

During the nine months ended September 29, 2023 the Company recorded a reduction in contingent consideration of $ 0.8 million due to a final agreement on the payout from an acquisition in 2020 and payments of $ 0.9 million, offset by increases for interest accretion and effect of foreign currency.

During the three months ended March 29, 2024, the Company recorded a reduction in contingent consideration due to a payment of $ 3.0 million and effect of foreign currency.

The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is zero to $ 10.1 million.

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

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

There is one contingent consideration arrangement remaining that has no limit and is based on a percentage of sales in excess of a benchmark over a five -year period.

Additionally, in conjunction with the Lima Acquisition, the Company agreed to a contingent issuance of 1,942,686 shares Contingent Acquisition Shares, as determined based upon a € 100 million value divided by the thirty-day volume weighted average price of Enovis common stock as of the close of business on September 21, 2023.

The Contingent Acquisition Shares are expected to be issued within one year from the completion of the Lima Acquisition in two equal tranches within six and twelve months of the acquisition date upon the non-occurrence of certain future events, in each case subject to certain adjustments and conditions as provided for in the purchase agreement.

The initial fair value of the Contingent Acquisition Shares at closing was $ 107.9 million based on the Enovis share price at the close of business on January 3, 2024.

The fair value of the Contingent Acquisition Shares liability is Level One in the fair value hierarchy as it is determined using the quoted market prices.

There were no transfers in or out of Level One, Two or Three during the three months ended March 29, 2024.

Total Contingent Consideration Rollforward

Beginning Balance Charges Interest Payments Foreign Exchange Ending Balance

Beginning Balance Additions Charges Interest Payments Foreign Exchange Ending Balance

(In thousands)

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

Contingent Consideration - Level One $ — $ 107,877 $ 13,443 $ — $ — $ — $ 121,320

Contingent Consideration - Level Three 26,026 650 — — ( 3,000 ) ( 571 ) 23,105

Total Contingent Consideration $ 26,026 $ 108,527 $ 13,443 $ — $ ( 3,000 ) $ ( 571 ) $ 144,425

Deferred Compensation Plans

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

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

As of March 29, 2024 and December 31, 2023 the fair value of these plans were $ 16.3 million and $ 14.4 million, respectively.

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

2 unchanged sentences

Dollar value of forecasted transactions.

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

contract agreements between the U.S.

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 unaudited Consolidated Statements of Comprehensive Income (Loss) until the underlying third party transaction occurs.

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

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

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

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

At March 29, 2024, the Company’s forward currency contracts have a Mexican Peso notional amount of approximately $ 630.0 million and a U.S.

Dollar aggregate notional amount of $ 35.9 million.

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

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

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

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

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

During the three months ended March 29, 2024, the Company recognized a realized gain of $ 0.1 million on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges.

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Investment Hedges

3 unchanged sentences

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

Dollar aggregate notional amount of $ 450 million at September 29, 2023.

Dollar aggregate notional amount of $ 450 million at March 29, 2024.

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 Condensed Consolidated Balance Sheet as part of Accumulated other comprehensive (loss) and in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the foreign currency translation adjustment.

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

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

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

Three Months Ended Nine Months Ended

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

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

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

During the three months ended March 29, 2024, the Company received interest income on its cross-currency swap derivatives of $ 2.6 million which is included within Interest expense, net in the Condensed Consolidated Statements of Operations.

The following table presents the effect of the Company’s designated hedging instruments on Accumulated other comprehensive income (loss) for the three months ended March 29, 2024 and 2023:

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

Gain (loss) on cross-currency swaps

$ 5,991 $ — $ ( 1,199 ) $ —

Gain (loss) on forward currency contracts 1,345 —

$ 4,337 $ — $ ( 2,853 ) $ —

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 the Lima Acquisition which closed in January 2024.

During the first quarter of 2024, the Company recorded a loss of $ 11.1 million on its Consolidated Statements of Operations related to the exchange rate movements since December 31, 2023.

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

From inception of the forward contracts on October 4, 2023 through the closing of the Lima Acquisition, the foreign currency forward contracts settled in an overall realized gain position of $ 13.4 million.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 29, 2023 and December 31, 2022:

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

September 29, 2023 December 31, 2022

March 29, 2024 December 31, 2023

Derivative Assets

Designated Hedging Instruments

Forward currency contracts Other current assets $ 1,102 $ 432

Cross-currency swaps Other current assets 7,647 10,061

Non-Designated Hedging Instruments

Forward currency contracts Other current assets — 24,311

Total Derivative Assets $ 8,749 $ 34,804

Derivative Liabilities

Forward currency contracts Other current liabilities 1,150 —

Forward currency contracts Other long-term liabilities 684 —

Designated Hedging Instruments

Forward currency contracts Accrued liabilities $ — $ 278

Cross-currency swaps Other long-term liabilities 13,149 46,953

8 unchanged sentences

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

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

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

The Company’s management, including the chief operating decision maker, evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of Other (income) expense, net, non-operating (gain) loss on investments, debt extinguishment charges, interest expense, net, restructuring and certain other charges, Medical Device Regulation (MDR) and other costs, strategic transaction costs, stock-based compensation, depreciation and other amortization, acquisition-related intangible asset amortization, insurance settlement loss (gain), and inventory step-up charges from the results of the Company’s operating segments.

▪ P&R - 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.

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and other amortization, acquisition-related intangible asset amortization, insurance settlement loss (gain), and inventory step-up charges from the results of the Company’s operating segments.

The Company’s segment results were as follows:

Three Months Ended Nine Months Ended

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

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

7 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

March 29, 2024 March 31, 2023

(In thousands)

1 unchanged sentence

Restructuring and other charges (1)

5,341 2,989 12,083 8,497

MDR and other costs (2)

6,228 3,600 23,021 10,648

Strategic transaction costs 20,837 11,629

5 unchanged sentences

Other (income) expense, net 24,235 ( 661 )

Debt extinguishment charges — — — 20,104

Insurance settlement loss (gain) (3)

— 975 — ( 32,059 )

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

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

Adjusted EBITDA (non-GAAP) $ 83,234 $ 56,411

(1) Restructuring and other charges includes $ — million and $ 0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 29, 2023, respectively.

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

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

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

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Subsequent Events

Precision AI Acquisition

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

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

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

Financing for Lima Acquisition

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

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

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

What changed 10-Q

Item 1. Financial Statements