What changed in this filing

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Item 2. Management’s Discussion and Analysis

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We have presented our financial results in accordance with these product lines, with our primary products in each line listed below.

Definitive Agreement to Purchase Smiths Medical 2020 Limited

In September 2021, we entered into a Share Sale and Purchase Agreement (the "Purchase Agreement") with Smiths Medical 2020 Limited ("Smiths"), the holding company of Smiths Group plc's global medical device business.

We will purchase the entire issued share capital of Smiths Medical 2020 Limited for approximately $1.9 billion in cash, a potential contingent earn-out of $100.0 million and the issuance of 2.5 million fully paid and non-assessable shares of our common stock, par value $0.10 per share.

In connection with entering into the Purchase Agreement, in September 2021, we entered into a debt commitment letter with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC and Barclays Bank PLC (the “Committed Parties”), pursuant to which, among other things, the Committed Parties will provide to us, at or near closing of the transaction, with senior secured credit facilities of up to $2.0 billion consisting of a term loan A facility of $850.0 million, a term loan B facility of $850.0 million and a revolving credit facility of $300.0 million.

In October 2021, the debt commitment related to the term loan A and revolving credit facility was syndicated to a broader group of Committed Parties.

As part of the syndication process, the size of the revolving credit facility was increased from $300.0 million to $500.0 million.

Operations Overview

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Plum 360 was named the 2018, 2019 and 2020 Best in KLAS winner as top-performing IV smart pump and is the first medical device to be awarded UL Cybersecurity Assurance Program Certification.

Also, in 2021, the Plum 360 won the first ever award as the top-performing Smart Pump EMR-Integrated;

◦ LifeCare PCA™ :

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2021 2020 2021 2020

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Increased expenditures for sales and marketing and product acquisition and development may not yield desired results when expected, or at all.

While we have

taken steps to control these risks, there are certain risks that may be outside of our control, and there is no assurance that steps we have taken will succeed.

While we have taken steps to control these risks, there are certain risks that may be outside of our control, and there is no assurance that steps we have taken will succeed.

Seasonality/Quarterly Results

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We present income statement data in Part I, Item 1 - Financial Statements.

The following table shows, for the three and six months ended June 30, 2021 and 2020, the percentages of each income statement caption in relation to total revenue:

The following table shows, for the three and nine months ended September 30, 2021 and 2020, the percentages of each income statement caption in relation to total revenue:

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2021 2020 $ Change % Change 2021 2020 $ Change % Change

Infusion Consumables $ 144.9 $ 116.1 $ 28.8 24.8 % $ 407.5 $ 350.6 $ 56.9 16.2 %

Infusion Consumables revenue increased for the three and six months ended June 30, 2021, as compared to the same periods in the prior year due to lower hospital census in the second quarter of 2020 driven by the onset of the COVID-19 pandemic, growth in our oncology and renal products, and the impact of foreign exchange.

For the three and six months ended June 30, 2021, on a constant currency basis, Infusion Consumables revenue would have been $131.4 million and $254.5 million, respectively, an increase of $20.4 million or 18.4% and $20.0 million or 8.5%, respectively, as compared to the same periods in the prior year.

Infusion Consumables revenue increased for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year due to lower hospital census in 2020 driven by the onset of the COVID-19 pandemic, growth in our global oncology, U.S.

core infusion and renal products and the impact from foreign exchange.

For the three and nine months ended September 30, 2021, on a constant currency basis, Infusion Consumables revenue would have been $143.5 million and $398.0 million, respectively, an increase of $27.4 million or 23.6% and $47.4 million or 13.5%, respectively, as compared to the same periods in the prior year.

Infusion Systems

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Infusion Systems $ 90.7 $ 88.4 $ 2.3 2.6 % $ 259.7 $ 267.9 $ (8.2) (3.1) %

Infusion Systems revenue decreased for the three and six months ended June 30, 2021, as compared to the same periods in the prior year due to large volume pumps sales driven by higher COVID-19-related purchases during the second quarter of 2020 and a decline in our non-large volume pump business.

For the three and six months ended June 30, 2021, on a constant currency basis Infusion Systems revenue would have been $83.2 million and $166.5 million, respectively, a decrease of $7.9 million or 8.7% and $13.0 million or 7.2%, respectively, as compared to the same periods in the prior year.

Infusion Systems revenue increased for the three months ended September 30, 2021, as compared to the same period in the prior year due to higher dedicated set sales as hospital census recovered from a low level in the third quarter of 2020 driven by the onset of the COVID-19 pandemic, partially offset by lower large volume pump sales during the third quarter of 2021 and a decline in our non-large volume pump business.

Infusion Systems revenue decreased for the nine months ended September 30, 2021, as compared to the same period in the prior year due to large volume pump sales driven by higher COVID-19-related purchases during the second and third quarters of 2020 and a decline in our non-large volume pump business, which has been partially offset by higher dedicated set sales in 2021 as a result of higher hospital census.

For the three months ended September 30, 2021, on a constant currency basis Infusion Systems revenue would have been $91.0 million, an increase of $2.6 million or 2.9% as compared to the same period in the prior year and for the nine months ended September 30, 2021 on a constant currency basis Infusion Systems revenue would have been $257.5 million, a decrease of $10.4 million or 3.9% as compared to the same period in the prior year.

The following table summarizes our total IV Solutions revenue (in millions):

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IV Solutions $ 89.2 $ 101.9 $ (12.7) (12.5) % $ 271.8 $ 295.4 $ (23.6) (8.0) %

IV Solutions sales was essentially flat for the three months ended June 30, 2021, as compared to the same period in the prior year as growth due to lower hospital census in the second quarter of 2020 driven by the onset of the COVID-19 pandemic, offset by lower contract manufacturing sales to Pfizer in the second quarter of 2021.

For the six months ended June 30, 2021, IV Solutions revenue decreased primarily due to lower contract manufacturing sales to Pfizer and customer stocking in the first quarter of the prior year driven by the COVID-19 pandemic.

IV Solutions revenue decreased for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year primarily due to lower contract manufacturing sales to Pfizer.

Critical Care

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Critical Care $ 11.3 $ 12.2 $ (0.9) (7.4) % $ 36.8 $ 36.7 $ 0.1 0.3 %

Critical Care revenue increased for the three and six months ended June 30, 2021, as compared to the same period in the prior year, primarily as a result of the impact of foreign exchange.

Critical Care revenue slightly decreased for the three months ended September 30, 2021, as compared to the same period in the prior year and was essentially flat for the nine months ended September 30, 2021, as compared to the same period in the prior year.

Gross Margins

For the three and six months ended June 30, 2021, gross margins were 38.4% and 36.9%, respectively, as compared to 35.0% and 36.0%, respectively, for the three and six months ended June 30, 2020.

The increase in gross margin for the three months ended June 30, 2021, as compared to the same period in the prior year was primarily due to product mix and increased

plant volumes, offset by increased costs for raw materials, direct labor and freight.

The increase in gross margin for the six months ended June 30, 2021, as compared to the same period in the prior year was primarily due to product mix and increased plant volumes, offset by capitalized manufacturing variances from the shutdown of our Austin plant in the fourth quarter of 2020, additional weather-related costs at our Austin plant during the first quarter of 2021 and increased costs for raw materials, direct labor and freight..

For the three and nine months ended September 30, 2021, gross margins were 38.0% and 37.3%, respectively, as compared to 35.8% and 35.9%, respectively, for the three and nine months ended September 30, 2020.

The increase in gross margin for the three months ended September 30, 2021, as compared to the same period in the prior year was primarily due to product mix and increased plant volumes, offset by increased costs for raw materials, direct labor and freight.

The increase in gross margin for the nine months ended September 30, 2021, as compared to the same period in the prior year was primarily due to product mix and increased plant volumes, offset by capitalized manufacturing variances from the shutdown of our Austin plant in the fourth quarter of 2020, additional weather-related costs at our Austin plant during the first quarter of 2021 and increased costs for raw materials, direct labor and freight.

Selling, General and Administrative (“SG&A”) Expenses

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SG&A $ 74.8 $ 70.9 $ 3.9 5.5 % $ 221.1 $ 210.4 $ 10.7 5.1 %

SG&A expenses increased for the three and six months ended June 30, 2021, as compared to the same periods in the prior year.

For the three months ended June 30, 2021 as compared to the same period in the prior year, compensation expense increased $2.1 million, dealer fees increased $1.6 million and stock compensation increased $1.2 million.

SG&A expenses increased for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year.

For the three months ended September 30, 2021 as compared to the same period in the prior year, the increases were primarily due to compensation expense which increased $3.4 million and commissions which increased $1.4 million.

Offsetting these increases was a decrease of $2.6 million in bad debt expense.

Compensation expense increased primarily due to increased headcount and annual compensation merit increases.

Dealer fees increased due to an increase in revenue from distributors in the current year.

Stock compensation increased in the current period due to a current quarter change in the number of performance shares estimated to vest.

For the six months ended June 30, 2021, as compared to the same period in the prior year, dealer fees increased $3.0 million, compensation increased $2.9 million, and legal expenses increased $1.5 million.

Dealer fees increased due to an increase in revenue from distributors in the current year.

Commissions increased due to an increase in revenue.

Bad debt expense is adjusted quarterly, if deemed necessary, based on an assessment of our accounts receivables and our expectations regarding the collectability of those accounts.

For the nine months ended September 30, 2021, as compared to the same period in the prior year, the increases were primarily due to compensation expense which increased $6.3 million, dealer fees which increased $2.9 million, and legal expenses which increased $2.0 million.

Offsetting these increases was a $2.3 million decrease in bad debt expense.

Compensation expense increased primarily due to increased headcount and annual compensation merit increases.

Dealer fees increased due to an increase in revenue from U.S.

distributors in the current year.

Legal fees increased due to additional services performed in the current year related to various legal matters.

Bad debt expense is adjusted quarterly, if deemed necessary, based on an assessment of our accounts receivables and our expectations regarding the collectability of those accounts.

Research and Development (“R&D”) Expenses

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R&D $ 12.2 $ 10.1 $ 2.1 20.8 % $ 34.3 $ 31.2 $ 3.1 9.9 %

R&D expenses slightly increased for the three and six months ended June 30, 2021, as compared to the same periods in the prior year, due to timing and nature of various R&D projects.

R&D expense during both periods primarily relates to compensation and related benefit expenses on current R&D projects.

R&D expenses increased for the three and nine months ended September 30, 2021, as compared to the same periods in the prior year, due to timing and nature of various R&D projects.

R&D expenses during both periods primarily relates to compensation and related benefit expenses on current R&D projects.

Restructuring and Strategic Transaction and Integration Expenses

Restructuring and strategic transaction and integration expenses were $3.8 million and $6.6 million for the three and six months ended June 30, 2021, respectively, as compared to $6.5 million and $18.8 million for the three and six months ended June 30, 2021 and 2020, respectively.

Restructuring and strategic transaction and integration expenses were $2.4 million and $9.0 million for the three and nine months ended September 30, 2021, respectively, as compared to $4.1 million and $22.9 million for the three and nine months ended September 30, 2020, respectively.

Restructuring charges

Restructuring charges were $0.1 million and $0.1 million for the three and six months ended June 30, 2021, respectively, as compared to $0.9 million and $8.1 million for the three and six months ended June 30, 2020, respectively.

Restructuring charges for the three and six months ended June 30, 2021 were primarily related to severance costs.

Restructuring charges for the three and six months ended June 30, 2020 were primarily related to severance charges and costs related to office and facility closures.

We expect to pay our unpaid restructuring charges as of June 30, 2021 by the end of the year.

During the third quarter we adjusted certain facility restructuring liabilities by $2.0 million to reflect actual amounts owed resulting in net restructuring credits of $(2.0) million and $(1.8) million for the three and nine months ended September 30, 2021, respectively.

Restructuring charges for the three and nine months ended September 30, 2020 were $0.0 million and $8.1 million, respectively.

Restructuring charges for the nine months ended September 30, 2020 were primarily related to severance charges and costs related to office and facility closures.

Strategic transaction and integration expenses

Strategic transaction and integration expenses were $3.7 million and $6.5 million for the three and six months ended June 30, 2021, respectively, as compared to $5.6 million and $10.7 million for the three and six months ended June 30, 2020, respectively.

The strategic transaction and integration expenses during the three and six months ended June 30, 2021 were primarily related to integration costs associated with acquisitions, the Hospira Infusion Systems ("HIS") earn-out dispute with Pfizer and one-time costs incurred to comply with regulatory initiatives.

The strategic transaction and integration expenses during the three and six months ended June 30, 2020 were primarily related to the integration of the HIS business acquired in 2017 from Pfizer, which included the migration of IT systems at our Austin facility.

Strategic transaction and integration expenses were $4.3 million and $10.8 million for the three and nine months ended September 30, 2021, respectively, as compared to $4.1 million and $14.8 million for the three and nine months ended September 30, 2020, respectively.

The strategic transaction and integration expenses during the three months ended September 30, 2021 were primarily related to transaction expenses incurred related to entering into a definitive agreement to acquire Smiths.

The strategic transaction and integration expenses for the nine months ended September 30, 2021 were primarily related to integration costs associated with acquisitions, the Hospira Infusion Systems ("HIS") earn-out dispute with Pfizer, one-

time costs incurred to comply with regulatory initiatives and the transaction costs related to the Smiths transaction.

The strategic transaction and integration expenses during the three and nine months ended September 30, 2020 were primarily related to the integration of the HIS business acquired in 2017 from Pfizer, which included the migration of IT systems at our Austin facility.

Change in Fair Value of Contingent Earn-out

For the three and six months ended June 30, 2021 there was no change in fair value of the Pursuit earn-out liability for each period, as the underlying forecasts and actual results for those periods did not materially change.

For the three and six months ended June 30, 2020, the fair value revaluation of our Pursuit earn-out liability resulted in an increase in value of $2.7 million.

For the three and nine months ended September 30, 2021 there was no change in fair value of the Pursuit earn-out liability for each period.

As of June 30, 2021, the Pursuit earn-out measurement period had ended and in October 2021 the $26.3 million earn-out was finalized and paid to Pursuit's former shareholders.

For the three and nine months ended September 30, 2020, the fair value revaluation of our Pursuit earn-out liability resulted in an increase in value of $4.3 million and $7.0 million, respectively.

Contract Settlement

For the six months ended June 30, 2021, we recorded $0.1 million in contract settlement expense.

For the nine months ended September 30, 2021, we recorded $0.1 million in contract settlement expense.

Interest Expense

Interest expense was $0.2 million and $0.3 million for the three and six months ended June 30, 2021, respectively, as compared to $0.8 million and $1.0 million for the three and six months ended June 30, 2020, respectively.

The three and six months ended June 30, 2021 primarily includes interest expense related to the per annum commitment fee charged on the unused portion of the revolver under our Credit Facility and the amortization of financing costs that were incurred in 2017 in connection with entering into the Credit Facility.

During March 2020, we borrowed $150.0 million under our Credit Facility and, accordingly the interest expense for the three and six months ended June 30, 2020 also includes interest incurred on borrowings under the Credit Facility (see Note 16:

Interest expense was $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, respectively, as compared to $0.6 million and $1.6 million for the three and nine months ended September 30, 2020, respectively.

The three and nine months ended September 30, 2021 primarily includes interest expense related to the per annum commitment fee charged on the unused portion of the revolver under our Credit Facility and the amortization of financing costs that were incurred in 2017 in connection with entering into the Credit Facility.

During March 2020, we borrowed $150.0 million under our Credit Facility and, accordingly the interest expense for the three and nine months ended September 30, 2020 also includes interest incurred on borrowings under the Credit Facility (see Note 16:

Long-Term Obligations in our accompanying condensed consolidated financial statements for additional information).

Other Income (Expense), net

Other income (expense) netted to $0.5 million and $1.2 million for the three and six months ended June 30, 2021, respectively, as compared to $2.1 million and ($3.4) million for the three and six months ended June 30, 2020.

For the three months ended June 30, 2021, the other income, net was related to $0.7 million of interest income and $0.2 million of miscellaneous income, partially offset by $0.2 million in foreign exchange losses and $0.2 million of loss from disposed assets.

For the six months ended June 30, 2021, the other income, net was related to $1.4 million of interest income, $0.4 million of miscellaneous income and $0.3 million in foreign exchange gains, partially offset by $0.8 million of loss from disposed assets.

For the three months ended June 30, 2020, the other income, net was primarily related to $1.5 million in foreign exchange gains.

For the six months ended June 30, 2020, the other expense, net was primarily related to $4.7 million in foreign exchange losses as a result of the strengthening of the U.S.

dollar from the impact of COVID-19 during the first quarter, partially offset by interest income.

For the three and six months ended June 30, 2021, income taxes were accrued at an estimated effective tax rate of 18% and 16%, respectively, as compared to 9% and 13%, for the three and six months ended June 30, 2020, respectively.

The effective tax rate for the three and six months ended June 30, 2021 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

Other (Expense) Income, net

Other (expense) income netted to ($0.3) million and $0.9 million for the three and nine months ended September 30, 2021, respectively, as compared to $1.3 million and ($2.2) million for the three and nine months ended September 30, 2020, respectively.

For the three months ended September 30, 2021, the other expense, net was related to $0.9 million in foreign exchange losses and $0.3 million of loss from disposed assets offset by $0.7 million of interest income and $0.2 million of miscellaneous income.

For the nine months ended September 30, 2021, the other income, net was related to $2.1 million of interest income and $0.5 million of miscellaneous income partially offset by $1.1 million of loss from disposed assets and $0.6 million in foreign exchange losses.

For the three months ended September 30, 2020, the other income, net was related to $2.5 million in miscellaneous income and $0.8 million of interest income, partially offset by $1.4 million in foreign exchange losses and $0.6 million of loss from disposed assets.

For the nine months ended September 30, 2020, the other expense, net was primarily related to $6.0 million in foreign exchange losses and $1.7 million of loss from disposed assets, partially offset by $2.5 million in miscellaneous income and $3.0 million in interest income.

For the three and nine months ended September 30, 2021, income taxes were accrued at an estimated effective tax rate of 18% and 17%, respectively, as compared to 5% and 10%, for the three and nine months ended September 30, 2020, respectively.

The effective tax rate for the three and nine months ended September 30, 2021 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign incomes, state income taxes, global intangible low-taxed income ("GILTI"), foreign-derived intangible income ("FDII") and tax credits.

The effective tax rate during the three and six months ended June 30, 2021 included a tax benefit of $0.4 million and $2.2 million, respectively, related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

The effective tax rate for the three and six months ended June 30, 2020 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

The effective tax rate during the three and nine months ended September 30, 2021 included the following:

• Excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the three and nine months ended September 30, 2021 of $1.1 million and $3.3 million, respectively.

federal return-to-provision adjustments for the year ended December 31, 2020 primarily due to changes in estimates for GILTI, FDII, subpart F and related foreign tax credits along with other prior period adjustments resulted in a tax provision of $1.1 million.

The effective tax rate for the three and nine months ended September 30, 2020 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign incomes, state income taxes, GILTI, FDII and tax credits.

The effective tax rate during the three and six months ended June 30, 2020 included a tax benefit of $3.0 million and $3.5 million,

respectively, related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

The effective tax rate during the three and nine months ended September 30, 2020 included a tax benefit of $0.1 million and $3.6 million, respectively, related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

The effective tax rate for the three and nine months ended September 30, 2020 also included U.S.

federal and state return-to-provision adjustments net of related reserve changes for the year ended December 31, 2019 of $3.8 million tax benefit primarily due to changes in estimates for GILTI, FDII, and related foreign tax credits.

Liquidity and Capital Resources

During the first six months of 2021, our cash, cash equivalents and short and long-term investments increased by $68.6 million from $423.8 million at December 31, 2020 to $492.4 million at June 30, 2021.

During the first nine months of 2021, our cash, cash equivalents and short and long-term investments increased by $120.9 million from $423.8 million at December 31, 2020 to $544.7 million at September 30, 2021.

Cash Flows from Operating Activities

Our net cash provided by operations for the six months ended June 30, 2021 was $106.1 million.

Our net cash provided by operations for the nine months ended September 30, 2021 was $184.9 million.

Net income plus adjustments for non-cash net expenses contributed $195.2 million.

Net cash used in operations as a result of changes in operating assets and liabilities was $10.3 million.

The changes in operating assets and liabilities included a $17.1 million decrease in accrued liabilities, a $7.6 million increase in other assets, $6.0 million in net changes in income taxes, including excess tax benefits and deferred income taxes and a $1.6 million decrease in accounts payable.

The changes in operating assets and liabilities included a $13.6 million increase in other assets, a $10.4 million decrease in accounts payable, a $8.3 million decrease in accrued liabilities and $1.9 million in net changes in income taxes, including excess tax benefits and deferred income taxes.

Offsetting these amounts was a $16.5 million decrease in inventories, a $3.8 million decrease in accounts receivables and a $3.6 million decrease in prepaid expenses and other assets.

The decrease in accrued liabilities was primarily due to the payment of annual bonuses.

The net changes in income taxes was a result of the timing of payments.

The increase in other assets was due to the purchase of spare parts.

The decrease in accounts payable was due to the timing of payments.

The decrease in accrued liabilities was primarily due to the payment of operating lease liabilities and annual bonuses.

The net changes in income taxes was a result of the timing of payments.

The decrease in inventory was primarily due to the timing of production and customer purchases combined with the reduction in capitalized manufacturing variances.

The decrease in accounts receivable is primarily due to collection efforts.

The net decrease in prepaid expenses and other current assets was primarily due to a decrease in prepaid insurance, property taxes and deferred costs, offset by an increase in annual software renewals.

Our net cash provided by operations for the six months ended June 30, 2020 was $68.7 million.

The net decrease in prepaid expenses and other current assets was primarily due to a decrease in prepaid insurance and property taxes, decreased sales tax receivables and a decrease in deferred costs, offset partially by an increase in annual software and service contract renewals.

Our net cash provided by operations for the nine months ended September 30, 2020 was $144.2 million.

Net income plus adjustments for non-cash net expenses contributed $174.3 million.

Net cash used in operations as a result of changes in operating assets and liabilities was $30.1 million.

The changes in operating assets and liabilities included a $23.3 million decrease in accounts payable, a $15.3 million decrease in accrued liabilities, a $9.3 million increase in prepaid expenses and other current assets and a $7.2 million increase in other assets.

Offsetting these amounts was a $8.5 million decrease in inventories, a $5.3 million decrease in accounts receivables, and a $2.7 million in net changes in income taxes, including excess tax benefits and deferred income taxes.

The changes in operating assets and liabilities included a $38.0 million decrease in accounts payable, a $20.4 million decrease in accrued liabilities, a $12.1 million increase in other assets, a $6.5 million increase in prepaid expenses, and $0.7 million in net changes in income taxes, including excess tax benefits and deferred income taxes.

Offsetting these amounts was a $38.9 million decrease in accounts receivables and a $8.9 million decrease in inventories.

The decrease in accounts payable was due to the timing of payments.

The decrease in accrued liabilities was due to the payment of accrued supply chain reorganization costs.

The increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs.

The increase in other assets was due to the purchase of spare parts.

The increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs.

The net changes in income taxes was a result of the timing of payments.

The decrease in inventory was primarily due to improved inventory management.

The decrease in accounts receivable is due to lower sales and collections partially due to decreased demand from hospital customers due to COVID-19.

The decrease in accounts receivable is primarily due to collection efforts.

The net changes in income taxes was a result of the timing of payments.

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The following table summarizes the changes in our investing cash flows (in thousands):

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Intangible asset additions (10,216) (6,325) (3,891) (2)

Investments in non-marketable equity securities (3,250) — (3,250) (3)

Purchases of investment securities (10,034) (9,603) (431) (4)

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(1) Our purchases of property and equipment will vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.

(2) In September 2021, we recorded a $7.1 million intangible asset related to a three-year non-compete agreement, of which $3.1 million was non-cash offset with a contingent earn-out (see Note 8:

Fair Value Measurements).

(3) In September 2021, we paid $3.3 million to acquire approximately a 20% non-marketable equity interest in a non public company.

(4) Our purchases of investment securities will vary from period to period based on current cash needs, planning for known future transactions and due to changes in our investment strategy.

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The following table summarizes the changes in our financing cash flows (in thousands):

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Proceeds from short-term debt $ — $ 150,000 $ (150,000) (1)

Repayment of short-term debt — (150,000) 150,000 (1)

Proceeds from exercise of stock options 6,966 8,586 (1,620) (2)

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Tax withholding payments related to net share settlement of equity awards (8,109) (12,821) 4,712 (3)

Net cash (used in) provided by financing activities $ (2,699) $ 144,122 $ (146,821)

Net cash used in financing activities $ (1,591) $ (4,466) $ 2,875

______________________________

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(2) Proceeds from the exercise of stock options will vary from period to period based on the volume of options exercised and the exercise price of the specific options exercised.

(3) During the six months ended June 30, 2021, our employees surrendered 37,882 shares of our common stock from vested restricted stock awards as consideration for approximately $7.8 million in minimum statutory withholding obligations paid on their behalf.

During the six months ended June 30, 2020, our employees surrendered 65,392 shares of our common stock from vested restricted stock awards as consideration for approximately $12.6 million in minimum statutory withholding obligations paid on their behalf.

(3) During the nine months ended September 30, 2021, our employees surrendered 39,371 shares of our common stock from vested restricted stock awards as consideration for approximately $8.1 million in minimum statutory withholding

obligations paid on their behalf.

During the nine months ended September 30, 2020, our employees surrendered 66,749 shares of our common stock from vested restricted stock awards as consideration for approximately $12.8 million in minimum statutory withholding obligations paid on their behalf.

In August 2019, our Board of Directors approved a share purchase plan to purchase up to $100.0 million of our common stock.

This plan replaced our existing plan and has no expiration date.

As of June 30, 2021, all of the $100 million available for purchase was remaining under the plan.

As of September 30, 2021, all of the $100 million available for purchase was remaining under the plan.

We have a substantial cash and investment security position generated from operations.

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Our primary investment goal is capital preservation.

Definitive Agreement to Purchase Smiths Medical 2020 Limited

As mentioned above, we entered into a definitive agreement to acquire Smiths Medical 2020 Limited.

The purchase price includes the payment of $1.9 billion in cash, a potential contingent earn-out of $100.0 million and the issuance of 2.5 million fully paid and non-assessable shares of our common stock.

During September 2021, we entered into a debt commitment letter pursuant to which we will be provided with senior secured credit facilities of up to $2.0 billion consisting of a term loan A facility of $850.0 million, a term loan B facility of $850.0 million and a revolving credit facility of $300.0 million.

In October 2021, the debt commitment related to the term loan A and revolving credit facility was syndicated to a broader group of Committed Parties.

As part of the syndication process, the size of the revolving credit facility was increased from $300.0 million to $500.0 million.

The proceeds from the new credit facilities will be used to partially finance the Smiths acquisition.

We expect the new credit facilities to be available near or on the closing date of the Smiths acquisition.

Access to Capital

We believe that our existing cash and cash equivalents along with funds expected to be generated from future operations will provide us with sufficient funds to finance our current operations for the next twelve months.

We believe that our existing cash and cash equivalents along with funds expected to be generated from future operations and the funds received under the Credit Facilities in connection with financing the Smiths acquisition will provide us with sufficient funds to finance our current operations for the next twelve months.

In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all.

products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in conditions.

Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in conditions.

Credit Facility

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Any unused portion of the Credit Facility will be subject to a per annum commitment fee which is also calculated using the leverage ratio in effect.

The Credit Facility matures in 2022.

The Credit Facility matures in November 2022.

During March 2020, as a precautionary measure in response to market uncertainty driven by the COVID-19 pandemic, we preemptively increased our liquidity by borrowing $150.0 million under our Credit Facility.

In September 2020, we fully repaid the borrowings under our Credit Facility.

Our current Credit Facility will be refinanced in full with the consummation of the Smiths acquisition.

We expect to enter into a new credit facility at or near the closing of the Smiths acquisition which we anticipate will include a new revolving credit facility of $500.0 million (see Note 20, Acquisitions).

Financial Covenants

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The minimum Consolidated Fixed Charge Coverage Ratio is 2.00 to 1.00.

We were in compliance with all financial covenants as of June 30, 2021.

We were in compliance with all financial covenants as of September 30, 2021.

Off-Balance Sheet Arrangements

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Contractual Obligations

There have been no material changes to our contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 ("Annual Report").

There have been no material changes to our contractual obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 ("Annual Report"), except with respect to our purchase obligations in connection with the Smiths transaction.

Pursuant to the Purchase Agreement, we expect to purchase the entire share capital of Smiths for $1.9 billion in cash, the issuance of 2.5 million fully paid and non-assessable shares of our common stock, par value $0.10 per share and a potential contingent earn-out of $100.0 million in cash, which is to be based upon our common stock achieving a certain volume.

We expect to finance this acquisition with senior secured credit facilities of up to $2.2 billion consisting of a term loan A facility of $850.0 million, a term loan B facility of $850 million and a revolving credit facility of $500.0 million.

Critical Accounting Policies

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increases in systems capabilities;

introduction, development and sales of new products, acquisition and integration of businesses and product lines;

introduction, development and sales of new products, acquisition and integration of businesses and product lines (including the Smiths business);

benefits of our products over competing systems;

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loss of larger distributors and the ability to locate other distributors;

impact of our pending acquisition of the Smiths business;

growth of our Clave products in future years;

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• unanticipated production problems;

• acquisition and integration expenses (including as it relates to the Smiths acquisition);

• the availability of patent protection and the cost of enforcing and of defending patent claims;

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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