What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-02 · 187 added, 146 removed, 473 unchanged (41% of the section changed)

3 unchanged sentences

Dollars in thousands, except per share amounts

Three Months Ended

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Net sales $ 525,160 $ 428,502 $ 1,041,426 $ 834,653

11 unchanged sentences

Net loss from continuing operations ( 18,444 ) ( 14,610 ) ( 90,285 ) ( 37,456 )

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

(Loss) income from discontinued operations, net of taxes ( 68 ) 4,797 ( 68 ) 4,485

Net loss ( 18,512 ) ( 9,813 ) ( 90,353 ) ( 32,971 )

1 unchanged sentence

Net loss attributable to Enovis Corporation $ ( 18,638 ) $ ( 9,995 ) $ ( 90,636 ) $ ( 33,345 )

Net loss per share - basic and diluted

Net income (loss) per share - basic and diluted

Continuing operations $ ( 0.34 ) $ ( 0.27 ) $ ( 1.65 ) $ ( 0.70 )

5 unchanged sentences

Dollars in thousands

Three Months Ended

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

Net loss $ ( 18,512 ) $ ( 9,813 ) $ ( 90,353 ) $ ( 32,971 )

1 unchanged sentence

Foreign currency translation ( 4,208 ) 11,311 ( 69,698 ) 21,895

( 65,490 ) 10,584

Unrealized gain (loss) on hedging activities, net of tax expense (benefit) of $( 1,966 ), $( 1,740 ), $ 5,735 and $( 1,740 )

( 6,584 ) ( 5,449 ) 18,207 ( 5,449 )

Amounts reclassified from Accumulated other comprehensive loss:

Amortization of pension net actuarial gain (loss), net of tax expense (benefit) of $( 7 ), $( 41 ), $( 14 ), and ( 41 )

( 33 ) ( 882 ) ( 68 ) ( 882 )

Reclassification of hedging gain (loss), net of tax expense (benefit) of $( 158 ), $ — , $( 100 ), and $ —

( 544 ) — ( 358 ) —

Other comprehensive income (loss) ( 11,369 ) 4,980 ( 51,917 ) 15,564

6 unchanged sentences

Dollars in thousands, except share amounts

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

CURRENT ASSETS:

24 unchanged sentences

133,333,333 shares authorized;

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

54,866,360 and 54,597,142 shares issued and outstanding as of June 28, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,911,254 2,900,747

15 unchanged sentences

— — — — ( 40,497 ) ( 51 ) ( 40,548 )

Payments of tax withholding for stock-based awards — — ( 4,772 ) — — — ( 4,772 )

Common stock-based award activity 243,439 — 7,302 — — — 7,302

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

Net income (loss) — — — ( 18,638 ) — 126 ( 18,512 )

Other comprehensive loss, net of tax of $( 2,131 )

— — — — ( 11,352 ) ( 17 ) ( 11,369 )

Common stock-based award activity 25,779 — 7,977 — — — 7,977

Balance at June 29, 2024 54,866,360 $ 55 $ 2,911,254 $ 451,835 $ ( 76,730 ) $ 2,524 $ 3,288,938

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

6 unchanged sentences

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

Net income (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

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Dollars in thousands

Three Months Ended

March 29, 2024 March 31, 2023

Six Months Ended

June 28, 2024 June 30, 2023

Cash flows from operating activities:

1 unchanged sentence

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

Depreciation, amortization and other impairment charges

73,404 51,991

Depreciation and amortization 139,167 105,033

Impairment of assets 5,555 —

Stock-based compensation expense 14,102 16,981

Non-cash interest expense 2,558 1,481

Fair value loss on contingent acquisition shares 13,443 —

Fair value gain on contingent acquisition shares ( 20,068 ) —

Loss on currency hedges 11,123 —

10 unchanged sentences

Payments for acquisitions, net of cash received, and investments ( 758,190 ) ( 98,740 )

Payment for settlement of derivatives ( 4,645 ) —

Net cash used in investing activities ( 839,168 ) ( 165,988 )

5 unchanged sentences

Payment of debt issuance costs ( 703 ) —

Payments of tax withholding for stock-based awards ( 4,772 ) —

Proceeds from issuance of common stock, net 1,177 1,385

5 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 43,424 $ 32,491

Supplemental disclosures:

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

Supplemental disclosures - Non-cash investing activities:

Fair value of contingently issuable shares in business acquisition $ 107,877 $ —

See Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

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

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

6 unchanged sentences

Recently Issued Accounting Pronouncements

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

The Company has not adopted any new accounting standards during the six months ended June 28, 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.

3 unchanged sentences

(“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 Contingent Acquisition Shares are expected to be issued in two equal tranches within six and twelve months of the acquisition date upon non-occurrence 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 was $ 758.6 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.

Subsequent to the end of the second quarter of 2024, the first tranche of the Contingent Acquisition Shares of 971,343 shares were issued to the seller on July 16, 2024.

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.

6 unchanged sentences

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 Company incurred $ 9.7 million of advisory, legal, audit, valuation and other professional service fees in connection with the Lima Acquisition in the first quarter of 2024, which are included in Selling, general and administrative expense in the Condensed Consolidated Statement of Operations.

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.

1 unchanged sentence

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

Three Months Ended

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands)

Net Sales $ 525,160 $ 502,547 $ 1,041,426 $ 986,690

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

Net loss from continuing operations attributable to Enovis ( 45,184 ) ( 55,205 ) ( 87,425 ) ( 100,185 )

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.

15 unchanged sentences

Acquisition consideration paid, net of acquired cash $ 758,631

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

Intangible Asset

Weighted Average Amortization Period

The following summarizes the preliminary values of the Intangible assets acquired, excluding Goodwill, as of June 28, 2024:

Intangible Asset Weighted Average Amortization Period

(In thousands) (Years)

3 unchanged sentences

Total Intangible Assets $ 348,000

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.

During the three and six months ended June 28, 2024, the Company’s Condensed Consolidated Statements of Operations included $ 83.5 million and $ 169.3 million, of net sales and $ 15.6 million and $ 12.0 million of net loss, respectively, associated with the acquired Lima legal entities.

ENOVIS CORPORATION

1 unchanged sentence

2023 Acquisitions

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

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

1 unchanged sentence

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 estimates and are subject to adjustment during the measurement period.

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

The Company allocated $ 43.7 million to goodwill and $ 52.0 million to intangible assets acquired.

The purchase accounting related to the Novastep acquisition has been completed.

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.

On July 20, 2023, the Company completed an asset acquisition transaction with D.N.E., LLC (“DNE”) in its Reconstructive segment.

On July 20, 2023, the Company completed an asset acquisition transaction with D.N.E., LLC (“DNE”) in its Recon 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.

1 unchanged sentence

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.

The Condensed 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.

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

In December 2023, the first milestone was achieved and the Company paid $ 4.2 million to the seller.

The remaining contingent amount is held in escrow by Enovis as restricted cash and presented in Other current assets in the Condensed 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.

The potential additional contingent payments are not recorded until the milestones are achieved.

The Condensed Consolidated Financial Statements include the assets acquired and results of operations from the acquisition date.

Restricted Cash

1 unchanged sentence

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 balance in restricted cash as of June 28, 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

June 28, 2024 December 31, 2023

(In thousands)

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

As of June 28, 2024, the balance of investments held by the Company without readily determinable fair values was $ 20.4 million.

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

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

2 unchanged sentences

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

The Company disaggregates its revenue into the following segments:

Three Months Ended

March 29, 2024 March 31, 2023

The Company disaggregates its revenue into the following geographic/product type groups within its segments:

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands)

5 unchanged sentences

Reconstructive:

Reconstructive 123,735 103,492

International Reconstructive 133,518 51,919

Recon 122,062 106,146 245,797 209,638

International Recon 125,344 48,881 258,862 100,800

Total Reconstructive 247,406 155,027 504,659 310,438

12 unchanged sentences

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

Three Months Ended March 29, 2024

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

Six Months Ended June 28, 2024

of Period Charged to Expense, net Write-Offs, Deductions, net Other Activity, net (1)

Translation Balance at

1 unchanged sentence

Allowance for Credit Losses $ 9,731 $ 3,374 $ ( 1,471 ) $ 3,417 $ ( 198 ) $ 14,853

(1) Represents fair value adjustments related to acquisitions

Net Income (Loss) Per Share from Continuing Operations

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

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands, except share and per share data)

18 unchanged sentences

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

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

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

5 unchanged sentences

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

Subsequent to the end of the second quarter of 2024, the first tranche of the Contingent Acquisition Shares of

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Three Months Ended

March 29, 2024 March 31, 2023

971,343 shares were issued to the seller on July 16, 2024.

The first tranche shares will be incorporated into the weighted-average shares of common stock outstanding — basic in the third quarter of 2024.

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands)

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

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

Loss from continuing operations before income taxes $ ( 27,352 ) $ ( 19,323 ) $ ( 106,597 ) $ ( 49,282 )

Income tax benefit $ ( 8,908 ) $ ( 4,713 ) $ ( 16,312 ) $ ( 11,826 )

Effective tax rate:

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.

32.6 % 24.4 % 15.3 % 24.0 %

The effective tax rate for the three months ended June 28, 2024 was higher than the 2024 federal statutory rate of 21%, primarily due to tax credits for research and development, non-U.S.

income taxed at lower rates and non-taxable fair value gain on contingent acquisition shares.

This was partially offset by an increase in valuation allowance on interest limitation carryforwards, non-deductible expenses and U.S.

taxation on international operations.

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.

The effective tax rate for the six months ended June 28, 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.

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

income taxed at lower rates and non-taxable fair value gain on contingent acquisition shares.

The effective tax rate for the three and six months ended June 30, 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.

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

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

taxation on international operations.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Share Repurchase Program

1 unchanged sentence

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

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

As of June 28, 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 three months ended March 29, 2024 and March 31, 2023.

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

5 unchanged sentences

Foreign currency translation adjustment ( 330 ) ( 69,300 ) — ( 69,630 )

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

Gain on hedges — — 18,207 18,207

Other comprehensive income (loss) before reclassifications ( 330 ) ( 69,300 ) 18,207 ( 51,423 )

1 unchanged sentence

Net Other comprehensive income (loss) ( 398 ) ( 69,300 ) 17,849 ( 51,849 )

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at June 28, 2024 $ 4,610 $ ( 71,316 ) $ ( 10,024 ) $ ( 76,730 )

Accumulated Other Comprehensive Loss Components

Net Unrecognized Pension Benefit Cost

Foreign Currency Translation Adjustment Total

Foreign Currency Translation Adjustment Unrealized Loss on Hedging Activities Total

(In thousands)

2 unchanged sentences

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

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

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

Amounts reclassified from Accumulated other comprehensive loss — — —

Amounts reclassified from Accumulated other comprehensive income (loss) ( 882 ) — — ( 882 )

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

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

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventories, Net

Inventories, net consisted of the following:

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

(In thousands)

6 unchanged sentences

Long-term debt consisted of the following:

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

(In thousands)

5 unchanged sentences

Long-term debt $ 1,329,427 $ 466,164

Enovis Term Loan and Revolving Credit Facility

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.

Term Loan and Revolving Credit Facility

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 “2022 Term Loan”) which was fully extinguished during the first quarter of 2023.

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

2 unchanged sentences

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)

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 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.

As of June 28, 2024, the Company was in compliance with the covenants under the Enovis Credit Agreement.

As of June 28, 2024, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 7.19 % excluding accretion of deferred financing fees, and there was $ 385 million available on the Revolver.

Financing for Lima Acquisitio n

2 unchanged sentences

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”).

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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;

5 unchanged sentences

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:

For the six months ended June 28, 2024, the interest expense on the 2028 Notes was $ 10.1 million, including $ 8.7 million based upon the coupon rate and $ 1.4 million from accretion of the discount.

Holders may convert their 2028 Notes in multiples of $1,000 principal amount prior to the close of business April 15, 2028 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;

(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 in the 2028 Note indenture, 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;

4 unchanged sentences

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.

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 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.

The capped call payment was classified as equity since it meets the derivative scope exception included in Accounting Standards Codification Topic 815 Derivatives 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 .

Total letters of credit and surety bonds of $ 34.1 million were outstanding as of June 28, 2024 .

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

The Compa ny has $ 2.9 million in deferred financing fees included in Other assets as of June 28, 2024.

As of June 28, 2024, the Company has $ 15.7 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:

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

(In thousands)

1 unchanged sentence

Accrued compensation and related benefits 71,797 70,979

Lease liability - current portion 23,176 21,568

Accrued third-party commissions 30,686 28,539

Lease liability - current portion 22,295 21,568

Accrued taxes 16,909 14,384

Accrued professional fees 11,174 13,037

Accrued rebates 13,769 14,464

Accrued interest 8,640 3,765

Accrued professional fees 7,453 13,037

Accrued royalties 6,704 6,944

Accrued freight 5,258 3,909

Accrued restructuring liability 5,586 2,276

Accrued interest 4,336 3,765

Derivative liability – current portion 3,892 278

Customer advances and billings in excess of costs incurred 3,479 2,953

Warranty liability 2,960 2,959

Accrued restructuring liability 2,665 2,276

Other 55,588 45,105

$ 343,145 $ 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:

Three Months Ended March 29, 2024

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

Six Months Ended June 28, 2024

Balance at Beginning of Period Provisions Payments Foreign Currency Translation Balance at End of Period

(In thousands)

9 unchanged sentences

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

(3 ) For the three months ended March 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.

(3) For the six months ended June 28, 2024, $ 9.5 million and $ 8.0 million of the Company’s total provisions were related to the P&R and Recon segments, respectively.The non-cash charges was an impairment of assets associated with divesting a minor product line in P&R.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Instruments and Fair Value Measurements

9 unchanged sentences

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 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.

Based on current interest rates for similar types of borrowings, the estimated fair value of the Company’s total debt, including the Senior unsecured convertible notes, the 2024 Term Loan, and the Revolver, was $ 1,385.2 million and $ 573.2 million as of June 28, 2024 and December 31, 2023, respectively.

The estimated fair value, a Level Two valuation in the fair value hierarchy, may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

As of June 28, 2024, the Company held $ 20.5 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

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.

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.

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.

During the six months ended June 28, 2024, the Company recorded a net $ 5.5 million reduction in contingent consideration primarily due to $ 6.3 million in settlements of revenue-based contingent consideration arrangements.

The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is zero to $ 7.5 million.

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.

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 through 2027.

Additionally, in conjunction with the Lima Acquisition, the Company agreed to a contingent issuance of 1,942,686 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 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 Contingent Acquisition Shares liability, recorded in Accrued liabilities, is adjusted to fair value each reporting period with the adjustments reflected in Other income (expense), net in the Condensed Consolidated Statement of Operations.

The adjustments were gains of $ 33.5 million and $ 20.1 million for the three and six months ended June 28, 2024, respectively.

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.

Subsequent to the end of the second quarter of 2024, the first tranche of the Contingent Acquisition Shares of 971,343 shares were issued to the seller on July 16, 2024.

There were no transfers in or out of Level One, Two or Three during the six months ended June 28, 2024.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total Contingent Consideration Rollforward

Beginning Balance Additions Charges Interest Payments Foreign Exchange Ending Balance

Beginning Balance Additions Charges / (Gain) Interest Payments Foreign Exchange Ending Balance

(In thousands)

4 unchanged sentences

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

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

As of June 28, 2024 and December 31, 2023 the fair value of these plans were $ 16.5 million and $ 14.4 million, respectively.

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

8 unchanged sentences

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

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.

At June 28, 2024, the Company’s forward currency contracts have a Mexican Peso notional amount of approximately $ 420.0 million and a U.S.

Dollar aggregate notional amount of $ 24.0 million.

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)

During the three and six months ended June 28, 2024, the Company recognized a realized gain of $ 0.3 million and $ 0.5 million, respectively on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges.

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

Net Investment Hedges

1 unchanged sentence

Dollar and the Swiss Franc.

These swap agreements were designated and qualified as net investment hedges.

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

Dollar aggregate notional amount of $ 450 million.

In April 2024, the ₣ 403 million cross-currency swap agreements designated as net investment hedges were de-designated and settled for $ 4.6 million which is reflected as a cash outflow within investing activities in the Consolidated Statements of Cash Flows.

The $ 0.7 million gain on settlement 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.

On April 8, 2024 and April 12, 2024 the Company entered into additional 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 ₣ 590 million and a U.S.

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

Dollar aggregate notional amount of $ 650 million at June 28, 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 income (loss) and in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the foreign currency translation adjustment.

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

During the three and six months ended June 28, 2024, the Company received interest income on its cross-currency swap derivatives of $ 5.7 million and $ 8.3 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 and six months ended June 28, 2024 and 2023:

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands)

Gain (loss) on cross-currency swaps

$ ( 5,965 ) $ ( 7,189 ) $ 25,426 $ ( 7,189 )

Gain (loss) on forward currency contracts ( 3,287 ) — ( 1,942 ) —

$ ( 9,252 ) $ ( 7,189 ) $ 23,484 $ ( 7,189 )

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.

In 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 over the first three days of 2024.

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 March 29, 2024 and December 31, 2023:

From inception of the forward contracts on October 4, 2023 through the closing of the Lima Acquisition on January 3, 2024, the foreign currency forward contracts settled in an overall realized gain position of $ 13.4 million.

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

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

Derivative Assets

2 unchanged sentences

Cross-currency swaps Other current assets 10,937 10,061

10,937 10,493

Non-Designated Hedging Instruments

4 unchanged sentences

Forward currency contracts Accrued liabilities $ 1,528 $ 278

Cross-currency swaps Accrued liabilities 2,364 —

Cross-currency swaps Other long-term liabilities 15,195 46,953

1 unchanged sentence

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

ENOVIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Commitments and Contingencies

10 unchanged sentences

• 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.

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

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

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 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

March 29, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 28, 2024 June 30, 2023 June 28, 2024 June 30, 2023

(In thousands)

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

Restructuring and other charges (1)

Loss from continuing operations before income taxes (GAAP) $ ( 27,352 ) $ ( 19,323 ) $ ( 106,597 ) $ ( 49,282 )

Restructuring and other costs (1)

4,587 3,806 17,498 6,742

MDR and other costs (2)

4,542 8,997 9,460 16,793

Strategic transaction costs (3)

22,693 5,435 43,530 17,065

Stock-based compensation 7,641 8,868 14,041 15,776

4 unchanged sentences

Other (income) expense, net (4)

( 33,836 ) 753 ( 9,601 ) 92

Adjusted EBITDA (non-GAAP) $ 90,214 $ 65,682 $ 173,448 $ 122,093

(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.

(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 six months ended June 30, 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) Primarily relates to integration costs associated with the Lima Acquisition in 2024 and other strategic initiatives in 2023, including costs related to the Separation.

(4) Primarily includes the fair value gain on Contingent Acquisition shares, partially offset by the first quarter of 2024 loss on the non-designated forward currency hedge for managing exchange rate risk related to the Euro-denominated purchase price of the Lima Acquisition.

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