What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 126 added, 109 removed, 359 unchanged (40% of the section changed)

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The following discussion of the financial condition and results of operations of Enovis Corporation (“Enovis,” “the Company,” “we,” “our,” and “us”) should be read in conjunction with the Condensed Consolidated Financial Statements and related footnotes included in Part I.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended July 4, 2025 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in Part II.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended October 3, 2025 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in Part II.

“Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2025.

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Statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements regarding:

the Company’s recently completed acquisition (the “Lima Acquisition”) of LimaCorporate S.p.A.

the Company’s January 2024 acquisition of LimaCorporate S.p.A.

(the “Lima Acquisition”);

projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, synergies or other financial items;

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These forward-looking statements are subject to a number of risks and uncertainties and actual results could differ materially due to numerous factors, including but not limited to the following:

• the effects of the Lima Acquisition on the Company’s and Lima’s combined operations, including any effects on relationships with customers, suppliers and other third parties;

• the effects of the Lima Acquisition on the Company’s and the Recon segment’s combined operations, including any effects on relationships with customers, suppliers and other third parties;

• an inability to identify, finance, acquire and successfully integrate suitable acquisition candidates;

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• changes in the general economy;

• the impact of the current shutdown of the U.S.

government or any future shutdowns;

• disruptions in the global economy caused by escalating geopolitical tensions, including in connection with Russia’s invasion of Ukraine;

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Items Affecting Comparability of Reported Results

The comparability of our operating results for the six months ended July 4, 2025 compared to the prior periods in 2024 was affected by additional calendar days in the first quarter of 2025.

Second quarter 2025 operating results were impacted negatively by the timing of holidays.

Additionally, the comparability of our operating results for the six months ended July 4, 2025 and six months ended June 28, 2024 is affected by the following additional significant items:

Strategic Acquisitions

The comparability of our operating results for the nine months ended October 3, 2025 compared to the prior periods in 2024 was affected by additional calendar days due to the prior year nine-month period ending on September 27, 2024.

Additionally, the comparability of our operating results for the nine months ended October 3, 2025 and nine months ended September 27, 2024 is affected by the following additional significant items:

Strategic Acquisitions and Divestiture

We complement our organic growth plans with strategic acquisitions.

Acquisitions can significantly affect our reported results.

In the six months ended July 4, 2025, the Company completed seven transactions for $35.4 million total purchase consideration, including deferred consideration and estimated contingent consideration which included the acquisition of three distributors, two businesses, and two purchases of intellectual property.

On October 7, 2025, we completed the sale of our Dr Comfort Footcare Solutions U.S.

operations of our P&R segment to Promus Equity Partners in an asset deal, with an effective date of October 4th, 2025.

The sale includes inventory, machinery and equipment, and intangible assets for consideration of up to $60 million in cash, consisting of an upfront payment of $45 million and up to $15 million payable in the future upon the achievement of certain milestones.

In the nine months ended October 3, 2025, the Company completed seven transactions for $37.7 million total purchase consideration, including deferred consideration and estimated contingent consideration which included the acquisition of three distributors, two businesses, and two purchases of intellectual property.

Three transactions are in the P&R segment and four are in the Recon segment.

See Note 3, “Acquisitions and Investments” in our Notes to Condensed Consolidated Financial Statements included in this Form 10-Q for additional information regarding these transactions.

See Note 3, “Acquisitions, Investments and Divestitures” in our Notes to Condensed Consolidated Financial Statements included in this Form 10-Q for additional information regarding these transactions.

On January 3, 2024, the Company acquired Lima, a privately held global orthopedic company focused on restoring motion through digital innovation and customized hardware for total fair value consideration of $865.6 million, net of acquired cash.

The fair value total consideration includes 1,942,686 contingently issuable shares of Enovis common stock, 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”), which issuance was dependent on the non-occurrence of certain future events and was settled within one year of the acquisition closing.

The Contingent Acquisition

Shares were issuable in two equal tranches.

The Contingent Acquisition Shares were issuable in two equal tranches.

The first tranche of 971,343 Contingent Acquisition Shares was issued to the sellers on July 16, 2024 and the second tranche was issued on January 15, 2025.

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Foreign Currency Fluctuations

During the three and six months ended July 4, 2025, approximately 43% and 43%, respectively, of our sales were derived from operations outside the United States, the majority of which are in Europe, with the remaining portion primarily in the Asia-Pacific region.

During the three and nine months ended October 3, 2025, approximately 40% and 42%, respectively, of our sales were derived from operations outside the United States, the majority of which are in Europe, with the remaining portion primarily in the Asia-Pacific region.

Accordingly, we can be affected by market demand, economic and political factors in countries in Europe and the Asia-Pacific region, and significant movements in foreign exchange rates.

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Changes in foreign exchange rates can impact our results of operations and are quantified when significant.

For the three months ended July 4, 2025 compared to the three months ended June 28, 2024, fluctuations in foreign currencies increased Net sales by 2.0%, increased Gross profit by approximately 2.0%, and increased operating expense by approximately 1.5%.

For the six months ended July 4, 2025 compared to the six months ended June 28, 2024, fluctuations in foreign currencies increased Net sales by 0.4%, increased Gross profit by approximately 0.7%, and increased operating expenses by approximately 0.2%.

For the three months ended October 3, 2025 compared to the three months ended September 27, 2024, fluctuations in foreign currencies increased Net sales by 1.9%, increased Gross profit by approximately 1.8%, and increased operating expense by approximately 1.6%.

For the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024, fluctuations in foreign currencies increased Net sales by 0.9%, increased Gross profit by approximately 1.1%, and increased operating expenses by approximately 0.7%.

Sales in our P&R and Recon segments typically peak in the fourth quarter.

General economic conditions and other factors may, however, impact future seasonal variations.

Additionally, our fourth quarter of 2025 will have fewer calendar days due to the third quarter closing on October 3, 2025 in the current year compared to September 27, 2024 in the prior year.

Non-GAAP Measures

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strategic purchase of economic interest on future royalty payments;

insurance settlement loss (gain);

goodwill impairment charges;

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Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.

The following table sets forth a reconciliation of net loss, the most directly comparable financial statement measure, to Adjusted EBITDA, for the three and six months ended July 4, 2025 and June 28, 2024, respectively.

The following table sets forth a reconciliation of net loss, the most directly comparable financial statement measure, to Adjusted EBITDA, for the three and nine months ended October 3, 2025 and September 27, 2024, respectively.

Three Months Ended

July 4, 2025 June 28, 2024

October 3, 2025 September 27, 2024

P&R Recon Total P&R Recon Total

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Amortization of acquired intangibles 23.4 20.3 43.7 23.3 19.5 42.8

Purchase of royalty interest — 10.0 10.0 — — —

Goodwill impairment charge 229.9 318.6 548.4 — — —

Inventory step-up — — — — 8.4 8.4

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(1) Non-operating components of Net income (loss) are not allocated to the segments.

(2) Restructuring charges include $0.2 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended July 4, 2025, and there were no similar charges for the three months ended June 28, 2024.

(2) Restructuring charges include $1.5 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended October 3, 2025, and there were $2.7 million similar charges for the three months ended September 27, 2024.

(3) Certain amounts are allocated to the segments as a percentage of revenue as the costs are not discrete to either segment.

(4) MDR and other costs includes (i) $2.8 million for the three months ended July 4, 2025 and $4.4 million for the three months ended June 28, 2024, respectively, in non-recurring costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union for devices which were introduced to the market prior to the regulation and (ii) $0.4 million for the three months ended July 4, 2025 and $0.1 million for the three months ended June 28, 2024, respectively, of expenses to resolve certain infrequent, non-recurring regulatory or other legal matters.

(4) MDR and other costs includes (i) $2.1 million for the three months ended October 3, 2025 and $3.5 million for the three months ended September 27, 2024, respectively, in non-recurring costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union for devices which were introduced to the market prior to the regulation and (ii) $0.4 million for the three months ended October 3, 2025 and $1.8 million for the three months ended September 27, 2024, respectively, of expenses to resolve certain infrequent, non-recurring regulatory or other legal matters.

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

(5) Strategic transaction costs includes:

(i) $7.8 million for the three months ended July 4, 2025 and $19.5 million for the three months ended June 28, 2024 related to non-recurring integration costs associated with the Lima Acquisition, which includes payroll and retention costs for roles to be eliminated or that are dedicated to integration activities, professional and consulting fees specifically incurred to consummate the acquisition and advise and facilitate on post-acquisition integration matters including legal entity consolidation, costs associated with rebranding and marketing acquired business under Enovis name, such as marketing materials, trade show redesign costs and product labeling, and integration related costs associated with sales agent and distributor network rationalization, including contract termination and retention expenses, supply chain and portfolio integration, and quality management system consolidation, (ii) $5.4 million for the three months ended July 4, 2025 and $2.0 million three months ended June 28, 2024 of non-recurring (non-Lima) acquisition integration costs and other costs associated with non-recurring projects, including global ERP rationalization and establishment of a new shared service center, and (iii) $0.3 million for the three months ended July 4, 2025 and $1.2 million for the three months ended June 28, 2024, respectively, related to the Separation of our former fabrication technology business.

(i) $9.2 million for the three months ended October 3, 2025 and $17.5 million for the three months ended September 27, 2024 related to non-recurring integration costs associated with the Lima Acquisition, which includes payroll and retention costs for roles to be eliminated or that are dedicated to integration activities, professional and consulting fees specifically incurred to consummate the acquisition and advise and facilitate on post-acquisition integration matters including legal entity consolidation, costs associated with rebranding and marketing acquired business under Enovis name, such as marketing materials, trade show redesign costs and product labeling, and integration related costs associated with sales agent and distributor network rationalization, including contract termination and retention expenses, supply chain and portfolio integration, and quality management system consolidation, (ii) $6.1 million for the three months ended October 3, 2025 and $2.6 million three months ended September 27, 2024 of non-recurring (non-Lima) acquisition integration costs and other costs associated with non-recurring projects, including global ERP rationalization and establishment of a new shared service center, and (iii) $0.4 million for the three months ended October 3, 2025 and $1.3 million for the three months ended September 27, 2024, respectively, related to the Separation of our former fabrication technology business.

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

Six Months Ended

July 4, 2025 June 28, 2024

Nine Months Ended

October 3, 2025 September 27, 2024

P&R Recon Total P&R Recon Total

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Amortization of acquired intangibles 69.5 59.0 128.5 69.5 55.2 124.7

Goodwill impairment charge 229.9 318.6 548.5 — — —

Purchase of royalty interest — 45.8 45.8 — — —

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(1) Non-operating components of Net loss are not allocated to the segments.

(2) Restructuring charges include $0.3 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended July 4, 2025, and there were no similar charges for the six months ended June 28, 2024.

(2) Restructuring charges include $1.7 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the nine months ended October 3, 2025, and there were $2.7 million similar charges for the nine months ended September 27, 2024.

(3) Certain amounts are allocated to the segments as a percentage of revenue as the costs are not discrete to either segment.

(4) MDR and other costs includes (i) $5.4 million for the six months ended July 4, 2025 and $8.8 million for the six months ended June 28, 2024, respectively, in non-recurring costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union for devices which were introduced to the market prior to the regulation and (ii) $1.1 million for the six months ended July 4, 2025 and $0.6 million for the six months ended June 28, 2024, respectively, of expenses to resolve certain infrequent, non-recurring regulatory or other legal matters.

(4) MDR and other costs includes (i) $7.6 million for the nine months ended October 3, 2025 and $12.3 million for the nine months ended September 27, 2024, respectively, in non-recurring costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union for devices which were introduced to the market prior to the regulation and (ii) $1.4 million for the nine months ended October 3, 2025 and $2.4 million for the nine months ended September 27, 2024, respectively, of expenses to resolve certain infrequent, non-recurring regulatory or other legal matters.

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

(5) Strategic transaction costs includes:

(i) $16.5 million for the six months ended July 4, 2025 and $37.7 million for the six months ended June 28, 2024, respectively, related to non-recurring integration costs associated with the Lima Acquisition, which includes payroll and retention costs for roles to be eliminated or that are dedicated to integration activities, professional and consulting fees specifically incurred to consummate the acquisition and advise and facilitate on post-acquisition integration matters including legal entity consolidation, costs associated with rebranding and marketing acquired business under Enovis name, such as marketing materials, trade show redesign costs and product labeling, and integration related costs associated with sales agent and distributor network rationalization, including contract termination and retention expenses, supply chain and portfolio integration, and quality management system consolidation, (ii) $8.2 million for the six months ended July 4, 2025 and $3.0 million for the six months ended June 28, 2024, respectively, of non-recurring (non-Lima) acquisition integration costs and other costs associated with non-recurring projects, including global ERP rationalization and establishment of a new shared service center, and (iii) $0.8 million for the six months ended July 4, 2025 and $2.8 million for the six months ended June 28, 2024, respectively, related to the Separation of our former fabrication technology business.

(i) $28.1 million for the nine months ended October 3, 2025 and $55.1 million for the nine months ended September 27, 2024, respectively, related to non-recurring integration costs associated with the Lima Acquisition, which includes payroll and retention costs for roles to be eliminated or that are dedicated to integration activities, professional and consulting fees specifically incurred to consummate the acquisition and advise and facilitate on post-acquisition integration matters including legal entity consolidation, costs associated with rebranding and marketing acquired business under Enovis name, such as marketing materials, trade show redesign costs and product labeling, and integration related costs associated with sales agent and distributor network rationalization, including contract termination and retention expenses, supply chain and portfolio integration, and quality management system consolidation, (ii) $11.8 million for the nine months ended October 3, 2025 and $5.7 million for the nine months ended September 27, 2024, respectively, of non-recurring (non-Lima) acquisition integration costs and other costs associated with non-recurring projects, including global ERP rationalization and establishment of a new shared service center, and (iii) $1.3 million for the nine months ended October 3, 2025 and $4.2 million for the nine months ended September 27, 2024, respectively, related to the Separation of our former fabrication technology business.

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

Total Company

The following table summarizes our Net sales for the three and six months ended July 4, 2025 and June 28, 2024, respectively.

As noted in the Items Affecting Comparability of Reported Results section above, the six months ended July 4, 2025 include the impact of additional days as compared to the six months ended June 28, 2024.

Three Months Ended Six Months Ended

The following table summarizes our Net sales for the three and nine months ended October 3, 2025 and September 27, 2024, respectively.

As noted in the Items Affecting Comparability of Reported Results section above, the nine months ended October 3, 2025 include the impact of additional calendar days due to the prior year nine-month period ending on September 27, 2024.

Three Months Ended Nine Months Ended

Net Sales Change % Net Sales Change %

(In millions)

For the three and six months ended June 28, 2024 $ 525.2 $ 1,041.4

For the three and nine months ended September 27, 2024 $ 505.2 $ 1,546.6

Components of Change:

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43.7 8.7 % 125.7 8.1 %

For the three and six months ended July 4, 2025 $ 564.5 $ 1,123.4

For the three and nine months ended October 3, 2025 $ 548.9 $ 1,672.3

(1) Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of change due to factors such as price, product mix and volume.

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(4) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

The increase in Net sales during the three months ended July 4, 2025 compared to the prior year period was primarily attributable to an increase in sales from existing businesses across both of our segments and favorable foreign currency translation, partially offset by a decrease due to the timing of holidays.

The increase in Net sales during the six months ended July 4, 2025 compared to the prior year period was primarily attributable to an increase in sales from existing businesses across both of our segments, an increase in calendar days in the first quarter, net of the aforementioned effect of holidays in the second quarter, and favorable foreign currency translation, partially offset by a $4.3 million decrease in sales from the 2024 divestiture of our hosiery business in P&R.

Existing business sales in Recon increased $20.0 million and $52.8 million during the three and six months ended July 4, 2025, respectively, due to higher sales volumes compared to the prior year period, driven by broad market strength.

Existing business sales in Recon for the three and six months ended July 4, 2025 was also impacted by the aforementioned impact of calendar days and holidays.

Existing business sales in P&R increased $7.2 million and $27.2 million during the three and six months ended July 4, 2025, respectively, due to higher sales volumes compared to the prior year period.

Existing business sales in P&R for the three and six months ended July 4, 2025 was also impacted by the aforementioned impact of calendar days and holidays.

The increase in Net sales during the three months ended October 3, 2025 compared to the prior year period was primarily attributable to an increase in sales from existing businesses across both of our segments and favorable foreign currency translation.

The increase in Net sales during the nine months ended October 3, 2025 compared to the prior year period was primarily attributable to an increase in sales from existing businesses across both of our segments, additional calendar days due to the prior year nine-month period ending on September 27, 2024, and favorable foreign currency translation, partially offset by a $4.3 million decrease in sales from the 2024 divestiture of our hosiery business in P&R.

Existing business sales in Recon increased $21.2 million and $74.1 million during the three and nine months ended October 3, 2025, respectively, due to higher sales volumes compared to the prior year period, driven by broad market strength.

Existing business sales in Recon for the nine months ended October 3, 2025 was also impacted by the additional calendar days due to the prior year nine-month period ending on September 27, 2024.

Existing business sales in P&R increased $11.8 million and $39.0 million during the three and nine months ended October 3, 2025, respectively, due to higher sales volumes compared to the prior year period.

Existing business sales in P&R for the nine months ended October 3, 2025 was also impacted by additional calendar days due to the prior year nine-month period ending on September 27, 2024.

The weakening of the U.S.

dollar relative to other currencies resulted in $10.5 million and $4.5 million favorable foreign currency translation impacts during the three and six months ended July 4, 2025, respectively.

dollar relative to other currencies resulted in $9.6 million and $14.1 million favorable foreign currency translation impacts during the three and nine months ended October 3, 2025, respectively.

Operating Results

The following table summarizes our results of continuing operations for the current year and prior year periods.

Three Months Ended Six Months Ended

July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024

Three Months Ended Nine Months Ended

October 3, 2025 September 27, 2024 October 3, 2025 September 27, 2024

(Dollars in millions)

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Amortization of acquired intangibles $ 43.7 $ 42.8 $ 128.5 $ 124.7

Goodwill impairment charge $ 548.4 $ — $ 548.5 $ —

Purchase of royalty interest $ — $ — $ 45.8 $ —

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Income tax expense (benefit) $ 4.0 $ (9.1) $ 13.0 $ (25.4)

(1) Restructuring charges include $0.2 million and $0.3 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 4, 2025, respectively, and there were no similar charges for the three and six months ended June 28, 2024 .

Three Months Ended July 4, 2025 Compared to Prior Year

Gross profit increased $45.8 million, or 15.9%, in the three months ended July 4, 2025 compared with the prior year period due to a $32.8 million increase in our Recon segment and a $13.0 million increase in our P&R segment.

(1) Restructuring charges include $1.5 million and $1.7 million expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended October 3, 2025, respectively, and there were $2.7 million similar charges for the three and nine months ended September 27, 2024 .

Three Months Ended October 3, 2025 Compared to Prior Year

Gross profit increased $42.5 million, or 14.8%, in the three months ended October 3, 2025 compared with the prior year period due to a $30.1 million increase in our Recon segment and a $12.4 million increase in our P&R segment.

The Gross profit increase was attributable to growth in sales volume, improved mix of higher margin products sales, and the decrease of $8.4 million in inventory fair value step-up amortization charges.

Gross profit margin increased by 4.3% due to the decrease in inventory fair value step-up amortization charges and supply chain productivity.

Selling, general and administrative expense increased $3.0 million in the three months ended July 4, 2025 compared to the prior year period, primarily due to a $5.5 million increase in commissions on increased sales and increased investment in the business in selling, general and administrative costs of $7.0 million, offset by a $9.2 million decrease in strategic transactions costs driven by the higher transaction costs in 2024 and a reduction in acquisition integration costs.

Gross profit margin increased by 320 basis points due to the decrease in inventory fair value step-up amortization charges and supply chain productivity, partially offset by impact of tariffs.

Selling, general and administrative expense increased $13.7 million in the three months ended October 3, 2025 compared to the prior year period, primarily due to a $9.2 million increase in commissions on increased sales and increased investment in the business in selling, general and administrative costs of $10.3 million, offset by a $5.7 million decrease in strategic transactions costs driven by a reduction in acquisition integration costs.

Research and development costs increased compared to the prior year period from increased spending within recently acquired businesses in our Recon segment, which is investing in surgical productivity solutions and computer-assisted surgery technologies.

Amortization of acquired intangibles increased slightly compared to the prior year period due to the finalization of the Lima Acquisition in the later part of 2024 and the additional bolt-on business, distributor, and intellectual property acquisitions in 2025.

Depreciation and other amortization decreased slightly due to phasing of older assets partially offset by the higher levels of capital expenditures associated with recent acquisitions.

Purchase of royalty interest increased in the second quarter of 2025 as we completed additional strategic purchases of economic interest on future royalty payments in our intellectual property (“royalty interest”) for a fixed price of $12.7 million, which will be paid over nine years.

We accrued a liability and recognized a $10.0 million charge for the net present value of the purchases.

Interest expense, net decreased in the three months ended July 4, 2025 compared to the prior year period due to a $6.3 million increase in interest income on the cross-currency swap derivatives.

This was driven by the increase in the hedging position entered into during the third quarter of 2024.

Other income, net decreased in the three months ended July 4, 2025 compared to the prior year period due to the $33.5 million fair value mark-to-market gain on the Contingent Acquisition Shares in 2024.

The final settlement of the Contingent Acquisition Shares was completed on January 15, 2025 so there was no gain or loss in the second quarter of 2025.

The effective tax rate for Net loss from continuing operations during the three months ended July 4, 2025 was (42.1)%, which differs from the U.S.

federal statutory tax rate of 21%, primarily due to an increase in valuation allowance on U.S.

Amortization of acquired intangibles increased compared to the prior year period due to the additional business, distributor, and intellectual property acquisitions in 2025.

The goodwill impairment charge recorded during the three months ended October 3, 2025 was predominantly driven by an impairment indicator associated with a sustained decrease in the Enovis publicly quoted share price and market capitalization, relative to the carrying value of our reporting units.

In estimating the fair values of the reporting units for the interim quantitative impairment test of Goodwill, we increased the weighted average cost of capital and reduced market multiples to the low end of acceptable ranges in order to align each reporting unit’s fair value model with the Enovis overall market capitalization.

Interest expense, net decreased in the three months ended October 3, 2025 compared to the prior year period due the lower interest rates in the current year compared to the prior year period.

The effective tax rate for Net loss from continuing operations during the three months ended October 3, 2025 was (0.7)%, which differs from the U.S.

federal statutory tax rate of 21%, primarily due to non-deductible goodwill impairment charges, an increase in valuation allowance on U.S.

deferred tax assets, non-deductible expenses, and U.S.

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income taxed at lower rates.

The effective tax rate for the three months ended June 28, 2024 was 32.6% which was higher than the 2024 U.S.

The effective tax rate for the three months ended September 27, 2024 was 21.4% which was higher than the 2024 U.S.

federal statutory rate of 21%, primarily due to tax credits for research and development, non-U.S.

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taxation on international operations.

Net loss and Net loss from continuing operations increased in the three months ended July 4, 2025 compared with the prior year period, primarily due to the aforementioned decreases in Other income, net and the increase in Purchase of royalty interest, partially offset by the increase in Gross Profit and lower interest expense, net.

Adjusted EBITDA and Adjusted EBITDA margin increased due to improved scale of aforementioned gross profit growth over a more stable fixed base of selling, general, and administrative expenses.

Six Months Ended July 4, 2025 Compared to Prior Year

Gross profit increased in the six months ended July 4, 2025 compared with the prior year period due to a $54.6 million increase in our Recon segment and a $25.5 million increase in our P&R segment.

Net loss and Net loss from continuing operations increased in the three months ended October 3, 2025 compared with the prior year period, primarily due to the aforementioned Goodwill impairment charge, the increases in selling, general, and administrative expense and research and development costs, partially offset by the increase in Gross Profit and lower interest expense, net.

Adjusted EBITDA increased due to improved scale of aforementioned gross profit growth over a more stable fixed base of selling, general, and administrative expenses.

Adjusted EBITDA margin decreased due to the timing of the aforementioned increased investment in the business in selling, general and administrative costs and net impact of new tariffs.

Nine Months Ended October 3, 2025 Compared to Prior Year

Gross profit increased $122.6 million in the nine months ended October 3, 2025 compared with the prior year period due to a $84.7 million increase in our Recon segment and a $37.9 million increase in our P&R segment.

The Gross profit increase was attributable growth in sales volume, improved mix of higher margin products sales, and the decrease of $19.3 million in inventory fair value step-up amortization charges.

Gross profit margin increased by 3.1% due to improved product mix, supply chain productivity, and the decrease in inventory fair value step-up amortization charges.

Selling, general and administrative expense increased $16.3 million in the six months ended July 4, 2025 compared to the prior year period, primarily due to a $17.6 million increase in commissions on increased sales and increased investment in selling, general and administrative costs of $18.9 million, offset by a $18.0 million decrease in strategic transaction costs driven by higher transaction costs in 2024 and a reduction in acquisition integration costs.

Gross profit margin increased by 300 basis points due to improved product mix, supply chain productivity, and the decrease in inventory fair value step-up amortization charges.

Selling, general and administrative expense increased $30.1 million in the nine months ended October 3, 2025 compared to the prior year period, primarily due to a $26.8 million increase in commissions on increased sales and increased investment in selling, general and administrative costs of $27.1 million offset by a $23.8 million decrease in strategic transaction costs driven by higher transaction costs in 2024 and a reduction in acquisition integration costs.

Amortization of acquired intangibles and Depreciation and other amortization also increased compared to the prior year period due to the finalization of the Lima Acquisition in the later part of 2024, the additional business, distributor, and intellectual property acquisitions in 2025, and higher levels of capital expenditures associated with recent acquisitions.

Amortization of acquired intangibles increased compared to the prior year period due to the additional business, distributor, and intellectual property acquisitions in 2025.

The goodwill impairment charge recorded during the nine months ended October 3, 2025 was predominantly driven by an impairment indicator associated with a sustained decrease in the Enovis publicly quoted share price and market capitalization, relative to the carrying value of our reporting units.

In estimating the fair values of the reporting units for the interim quantitative impairment test of Goodwill, we increased the weighted average cost of capital and reduced market multiples to the

low end of acceptable ranges in order to align each reporting unit’s fair value model with the Enovis overall market capitalization.

Purchase of royalty interest increased in the first half of 2025 as we completed strategic purchases of economic interest on future royalty payments in our intellectual property (“royalty interest”) for a fixed price of $56.5 million, which will be paid over nine years.

We accrued a liability and recognized a $45.8 million charge for the net present value of the purchases.

Interest expense, net decreased in the six months ended July 4, 2025 compared to the prior year period due to a $16.0 million increase in interest income on the cross-currency swap derivatives.

Interest expense, net decreased in the nine months ended October 3, 2025 compared to the prior year period due to a $16.3 million increase in interest income on the cross-currency swap derivatives.

This was driven by the increase in the hedging position entered into during the third quarter of 2024.

Other expense, net decreased in the six months ended July 4, 2025 compared to the prior year period due to the $21.8 million decrease in the fair value gain on the Contingent Acquisition Shares, partially offset by an $11.1 million decrease in the prior year loss on the 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 3, 2024.

The effective tax rate for Net loss from continuing operations during the six months ended July 4, 2025 was (10.9)%, which differs from the 2025 U.S.

federal statutory tax rate of 21%, primarily due to an increase in valuation allowance on U.S.

Other expense (income), net was an expense in the nine months ended October 3, 2025 compared to the prior year period due to the $21.7 million decrease in the fair value gain on the Contingent Acquisition Shares, which reached final settlement on January 15, 2025, partially offset by an $11.1 million decrease in the prior year loss recognized in the first quarter of 2024 on the non-designated forward currency contracts to manage the risk from the Euro-denominated purchase price of the Lima Acquisition which closed in January 3, 2024.

The effective tax rate for Net loss from continuing operations during the nine months ended October 3, 2025 was (2.0)%, which differs from the 2025 U.S.

federal statutory tax rate of 21%, primarily due to non-deductible goodwill impairment charges and an increase in valuation allowance on U.S.

deferred tax assets, non-deductible expenses, and U.S.

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income taxed at lower rates.

The effective tax rate for Net income from continuing operations during the six months ended June 28, 2024 was 15.3%, which was lower than the 2024 U.S.

The effective tax rate for Net income from continuing operations during the nine months ended September 27, 2024 was 17.0%, which was lower than the 2024 U.S.

federal statutory tax rate of 21%, primarily due to an increase in valuation allowance on interest limitation carryforwards, non-deductible expenses and U.S.

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

Net loss and Net loss from continuing operations increased in the six months ended July 4, 2025 compared with the prior year period, primarily due to the aforementioned decreases in Other income, net and the increase in Purchase of royalty interest, partially offset by the increase in Gross Profit and lower interest expense, net.

Net loss and Net loss from continuing operations increased in the nine months ended October 3, 2025 compared with the prior year period, primarily due to the aforementioned Goodwill impairment charge, the decrease in Other income, net and the increase in Purchase of royalty interest, partially offset by the increase in Gross Profit and lower interest expense, net.

Adjusted EBITDA and Adjusted EBITDA margin increased due to improved scale of aforementioned gross profit growth over a more stable fixed base of selling, general, and administrative expenses.

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The following table summarizes selected financial results for our Prevention & Recovery segment:

Three Months Ended Six Months Ended

July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024

Three Months Ended Nine Months Ended

October 3, 2025 September 27, 2024 October 3, 2025 September 27, 2024

(Dollars in millions)

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Amortization of acquired intangibles $ 23.4 $ 23.3 $ 69.5 $ 69.5

Goodwill impairment charge $ 229.9 $ — $ 229.9 $ —

Restructuring charges $ 0.4 $ 3.0 $ 3.9 $ 12.5

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Adjusted EBITDA margin (non-GAAP) 14.5 % 15.6 % 14.0 % 13.8 %

Three Months Ended July 4, 2025 Compared to Prior Year

Net sales increased $12.8 million, or 4.6%, in the three months ended July 4, 2025 compared with the prior year period, driven by solid existing business volume growth and favorable foreign currency translation of 1.4%, partially offset by a decrease due to the timing of holidays.

Gross profit increased $13.0 million and Gross profit margin increased by 220 basis points, primarily due to an improved mix of higher margin product sales and supply chain productivity.

Selling, general and administrative expenses were flat as a percentage of net sales.

Operating income and Operating income margin increased due to the aforementioned gross profit growth and stable selling, general and administrative expenses and a reduction of restructuring costs and MDR spending.

Adjusted EBITDA and Adjusted EBITDA margin increased due to the aforementioned gross profit increase partially offset by an increase in the selling, general, and administrative expenses.

Six Months Ended July 4, 2025 Compared to Prior Year

Net sales increased $26.4 million, or 4.9%, compared with the prior year period, driven by solid existing business volume growth and additional calendar days, net of the aforementioned effect of holidays in the second quarter, partially offset by a $4.3 million decrease from divesting the compression hosiery business in April 2024.

Three Months Ended October 3, 2025 Compared to Prior Year

Net sales increased $16.7 million, or 6.1%, in the three months ended October 3, 2025 compared with the prior year period, driven by strong existing business volume growth and favorable foreign currency translation of 1.4%.

Gross profit increased $12.4 million and Gross profit margin increased by 120 basis points, primarily due to an improved mix of higher margin product sales, partially offset by the impact of tariffs.

Selling, general and administrative expenses increased slightly as a percentage of net sales.

Operating loss and Operating loss margin increased due to the Goodwill impairment charge of $229.9 million, slightly offset by operating leverage with the aforementioned higher gross profit exceeding the aforementioned increase in Selling, general and administrative expenses.

Adjusted EBITDA and Adjusted EBITDA margin decreased slightly due to the timing of the aforementioned increased investment in the business in selling, general and administrative costs and the net impact of new tariffs, partially offset by the increase in gross profit and improved mix of higher margin product sales.

Nine Months Ended October 3, 2025 Compared to Prior Year

Net sales increased $43.1 million, or 5.3%, compared with the prior year period, driven by solid existing business volume growth and additional calendar days due to the prior year nine-month period ending on September 27, 2024, partially offset by a $4.3 million decrease from divesting the compression hosiery business in April 2024.

Gross profit increased $37.8 million and Gross profit margin increased by 180 basis points primarily due to mix of higher margin products sales and supply chain productivity.

Selling, general and administrative expenses increased slightly as a percentage of net sales.

Operating income, net increased $13.8 million due to the aforementioned higher gross profit, partially offset by charges from divesting a minor product line.

Adjusted EBITDA and Adjusted EBITDA margin increased slightly compared with the prior year period.

Adjusted EBITDA and Adjusted EBITDA margin increased slightly compared with the prior year period due to the aforementioned improved product mix, supply chain productivity, and operating leverage.

Reconstructive

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The following table summarizes the selected financial results for our Reconstructive segment:

Three Months Ended Six Months Ended

July 4, 2025 June 28, 2024 July 4, 2025 June 28, 2024

Three Months Ended Nine Months Ended

October 3, 2025 September 27, 2024 October 3, 2025 September 27, 2024

(Dollars in millions)

5 unchanged sentences

Amortization of acquired intangibles $ 20.3 $ 19.5 $ 59.0 $ 55.2

Goodwill impairment charge $ 318.6 $ — $ 318.6 $ —

Purchase of royalty interest $ — $ — $ 45.8 $ —

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Adjusted EBITDA margin (non-GAAP) 20.3 % 20.5 % 20.9 % 20.6 %

Three Months Ended July 4, 2025 Compared to Prior Year

Net sales increased by $26.6 million, or 10.7%, in the three months ended July 4, 2025, due to strong sales volumes and favorable foreign currency translation of 2.7%, partially offset by a decrease due to the timing of holidays.

Three Months Ended October 3, 2025 Compared to Prior Year

Net sales increased by $27.0 million, or 11.7%, in the three months ended October 3, 2025, due to strong sales volumes and favorable foreign currency translation of 2.5%.

Gross profit increased over the same period, primarily due to higher net sales and a decrease of $8.4 million in inventory fair value step-up amortization charges.

Selling, general and administrative expenses decreased by $3.7 million over the same period, primarily due to a decrease in Lima Acquisition integration costs, partially offset by an increase in commissions driven by higher sales and increases in existing business investments to support growth.

Selling, general and administrative expenses increased by $1.4 million over the same period primarily due to an increase in commissions driven by higher sales and increases in existing business investments to support growth partially offset by a decrease in Lima Acquisition integration costs.

Research and development expense increased compared to the prior year period due to an increase in new product development projects and activities and spending within our recently acquired businesses, which are investing in surgical productivity solutions and computer-assisted surgery technologies.

Purchase of royalty interest increased in the second quarter of 2025 as we completed additional strategic purchases to buyout the economic interest in future royalty payments in connection with the termination of certain legacy product development agreements for a fixed price of $12.6 million, which will be paid over nine seven years.

We accrued a liability and recognized a $10.0 million charge for the net present value of the purchases.

Operating loss decreased, primarily due to the aforementioned gross profit increases and a $9.4 million decrease in strategic transaction costs including the integration and transaction costs for the Lima Acquisition, partially offset by the $10.0 million purchase of royalty interest and the increase in research and development expense.

Operating loss increased, primarily due to the Goodwill impairment charge of $318.6 million, slightly offset by the aforementioned gross profit increases and a $6.5 million decrease in strategic transaction costs including the integration and transaction costs for the Lima Acquisition.

Adjusted EBITDA increased primarily due to the aforementioned sales growth and gross profit increase.

Six Months Ended July 4, 2025 Compared to Prior Year

Net sales increased by $55.5 million, or 11.0%, due to strong sales volumes, additional calendar days, and favorable foreign currency translation of 0.5%, net of the aforementioned effect of holidays in the second quarter.

Gross profit increased $54.6 million in the six months ended July 4, 2025 compared to the prior year period, primarily due to higher net sales, improved operating leverage and a decrease of $10.9 million in inventory fair value step-up amortization charges.

Selling, general and administrative expenses decreased by $0.6 million over the same period, primarily due to a decrease in Lima Acquisition integration costs, partially offset by an increase in commissions driven by higher sales and increases in existing business investments to support growth.

Nine Months Ended October 3, 2025 Compared to Prior Year

Net sales increased by $82.6 million, or 11.2%, due to strong sales volumes, favorable foreign currency translation of 1.1%, and additional calendar days due to the prior year nine-month period ending on September 27, 2024.

Gross profit increased $84.7 million in the nine months ended October 3, 2025 compared to the prior year period, primarily due to higher net sales, improved operating leverage and a decrease of $19.3 million in inventory fair value step-up amortization charges.

Selling, general and administrative expenses increased by $0.7 million over the same period primarily due to an increase in commissions driven by higher sales and increases in existing business investments to support growth, nearly entirely offset by a decrease in Lima Acquisition integration costs.

1 unchanged sentence

We accrued a liability and recognized a $45.8 million charge for the net present value of the purchases.

Operating loss decreased, primarily due to a $20.1 million decrease in strategic transaction costs including the integration and transaction costs for the Lima Acquisition, offset by the $45.8 million purchase of royalty interest.

Operating loss increased, primarily due to the Goodwill impairment charge of $318.6 million and the $45.8 million purchase of royalty interest, slight offset by the $26.7 million decrease in strategic transaction costs including the integration and transaction costs for the Lima Acquisition.

Adjusted EBITDA increased primarily due to increased gross profit from the Lima Acquisition and improved operating cost leverage.

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

As of July 4, 2025, the remaining stock repurchase authorization provided by our Board of Directors was $100 million.

As of October 3, 2025, the remaining stock repurchase authorization provided by our 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.

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All facilities under the Enovis Credit Agreement (including the 2024 Term Loan Facility) are secured by certain personal property of the Company and certain of its subsidiaries, subject to limitations and exclusions.

As of July 4, 2025, there was $325 million available on the Re volver.

As of October 3, 2025, there was $355 million available on the Re volver.

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.

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In addition, we are party to overdraft facilities with a borrowing capacity of $30.0 million.

Total letters of credit and surety bonds of $50.1 million were outstanding as of July 4, 2025.

As of July 4, 2025, we had $44.1 million of Cash and cash equivalents, a decrease of $4.1 million from the balance as of December 31, 2024 of $48.2 million.

Total letters of credit and surety bonds of $47.5 million were outstanding as of October 3, 2025.

As of October 3, 2025, we had $33.6 million of Cash and cash equivalents, a decrease of $14.6 million from the balance as of December 31, 2024 of $48.2 million.

The following table summarizes the change in cash and cash equivalents during the periods indicated:

Six Months Ended

July 4, 2025 June 28, 2024

Nine Months Ended

October 3, 2025 September 27, 2024

(Dollars in millions)

12 unchanged sentences

Cash flows provided by operating activities increased $103.5 million year-over-year.

This improvement was primarily due to the increase in gross profit, lower strategic transaction costs of $18.0 million, lower interest paid of $18.1 million, and lower restructuring costs of $5.3 million, offset by a higher investment in working capital of $14.4 million and increases in Selling, general and administrative and Research and development expense.

Cash flows used in investing activities during the six months ended July 4, 2025 were $110.3 million compared to $839.2 million in the prior year period due to six small acquisition transactions during 2025 compared to the Lima Acquisition purchase price of $757.7 million, net of cash received, in the prior year and overall higher capital investments in the current year driven by recent acquisitions, including surgical implant instruments that support sales growth in Recon.

Cash flows provided by financing activities during the six months ended July 4, 2025 include $62.0 million of net debt borrowings primarily used for the recent acquisition transactions and capital expenditures.

Cash flows provided by financing activities for the six months ended June 28, 2024 include net debt borrowings of $878.5 million primarily used for the Lima Acquisition and to a lesser extent capital expenditures and operations.

This improvement was primarily due to the increase in gross profit, lower strategic transaction costs of $23.8 million, lower interest paid of $22.3 million, lower restructuring costs payments of $9.6 million, and lower investment in working capital of $1.3 million, offset by increases in Selling, general and administrative and Research and development expense.

Cash flows used in investing activities during the nine months ended October 3, 2025 were $166.4 million compared to $897.6 million in the prior year period due to six small acquisition transactions during 2025 compared to the Lima Acquisition purchase price of $757.7 million, net of cash received, in the prior year and overall higher capital investments in the current year driven by recent acquisitions, including surgical implant instruments that support sales growth in Recon.

Cash flows provided by financing activities during the nine months ended October 3, 2025 include $25.1 million of net debt borrowings primarily used for the recent acquisition transactions and capital expenditures.

Cash flows provided by financing activities for the nine months ended September 27, 2024 include net debt borrowings of $878.0 million primarily used for the Lima Acquisition and to a lesser extent capital expenditures and operations.

Critical Accounting Policies and Estimates

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We evaluate the recoverability of Goodwill at the reporting unit level annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

Our last quantitative impairment test performed on the first day of the fourth quarter of 2024 resulted in impairment.

Based on our qualitative assessment as of July 4, 2025, there were no events that would indicate an impairment should be incurred in the second quarter of 2025.

Due to the decrease in the share price of our common stock, the sum of the fair value of our two reporting units as calculated by management in the last quantitative impairment test implies a premium of approximately 45% above our current market capitalization.

As of July 4, 2025, the Goodwill of the Reconstructive and Prevention & Recovery reporting units was $800.2 million and $981.1 million, respectively.

If the decline in our market capitalization is sustained or actual results of the business differ from our estimates and projections, there is an increased risk of potential impairment, which could materially affect our financial statements.

For the quarter ending October 3, 2025, the Company identified an impairment indicator associated with a sustained decrease in the Company’s publicly quoted share price and market capitalization, relative to the carrying value of our reporting units.

Accordingly the Company performed an interim quantitative assessment of Goodwill as of the last day of the third quarter of 2025.

Determining the fair value of a reporting unit requires the application of judgment and involves the use of significant estimates and assumptions which can be affected by changes in business climate, economic conditions, the competitive environment and other factors.

Generally, we measure fair value of reporting units by equally weighting a discounted cash flow approach and market valuation approach.

The discounted cash flow models indicate the fair value of the reporting units based on the present value of the cash flows that the reporting units are expected to generate in the future.

Significant estimates in the discounted cash flow models include the weighted average cost of capital, revenue growth rates, long-term rate of growth, profitability of our business, tax rates, and working capital effects.

The market valuation approach indicates the fair value of the business based on a comparison against certain market information.

Significant estimates in the market approach model include identifying appropriate market multiples and assessing earnings before interest, income taxes, depreciation and amortization.

We base these fair value estimates on assumptions our management believes to be reasonable but which are unpredictable and inherently uncertain.

Based upon the results of the quantitative impairment test, the Company determined the carrying values of each of the Reconstructive and Prevention & Recovery reporting units exceeded their fair values as of October 3, 2025.

In order to align each reporting unit’s fair value model with the Company’s overall market capitalization, the Company increased the weighted average cost of capital and reduced market multiples to the low end of acceptable ranges.

As a result, the Company recognized a non-cash goodwill impairment charge of $540.8 million ($222.3 million for the Prevention & Recovery reporting unit and $318.6 million for the Reconstructive reporting unit).

A further sustained decline in our share price and market capitalization, future cash flows, end-markets and/or geographic markets could result in additional impairment charges that could materially affect our financial statements in any given year.

Actual results could differ from our estimates and projections, which would also affect the assessment of impairment.

As of October 3, 2025, after recognition of the impairment charge, we have Goodwill of $1.2 billion ($558 million for the Prevention and Recovery reporting unit and $661 million for the Reconstructive reporting unit) that is subject to at least annual review for impairment.

See Note 8 “Goodwill” 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 2. Management’s Discussion and Analysis