What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-10 · 214 added, 132 removed, 716 unchanged (33% of the section changed)

6 unchanged sentences

Short-term marketable securities

Accounts receivable, net of allowances of $ 1,285 at March 31, 2024 and $ 941 at December 31, 2023

Accounts receivable, net of allowances of $ 1,286 at June 30, 2024 and $ 941 at December 31, 2023

Inventory and other deferred costs

22 unchanged sentences

authorized 37,000,000 shares;

issued 24,036,300 shares at March 31, 2024, and 23,911,760 shares at December 31, 2023

issued 24,059,300 shares at June 30, 2024, and 23,911,760 shares at December 31, 2023

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

1,590,362 shares at March 31, 2024 and 1,584,512 shares at December 31, 2023

1,590,457 shares at June 30, 2024 and 1,584,512 shares at December 31, 2023

Total stockholders’ equity

4 unchanged sentences

Three months ended

Six months ended

(in thousands, except per share data)

Cost of sales

7 unchanged sentences

Interest income

Foreign currency loss

Foreign currency gain (loss)

Income before income taxes

7 unchanged sentences

Three months ended

Six months ended

(in thousands)

Other comprehensive income (loss):

Foreign currency translation adjustment, net

Unrealized (loss) gain on short-term marketable securities

Unrealized gain (loss) on short-term marketable securities

Total other comprehensive income (loss)

11 unchanged sentences

Vested restricted stock units

Vested performance-based restricted stock units

Repurchase of common stock for net settlement of equity awards

2 unchanged sentences

Balance at March 31, 2024

Other comprehensive income (loss)

Issuance of common stock for stock options exercised

Vested restricted stock units

Vested performance-based restricted stock units

Repurchase of common stock for net settlement of equity awards

Stock-based compensation expense

Common stock dividend paid

Balance at June 30, 2024

Comprehensive

6 unchanged sentences

Vested restricted stock units

Vested performance-based restricted stock units

Repurchase of common stock for net settlement of equity awards

Stock-based compensation expense

Common stock cash dividend paid

Common stock dividend paid

Balance at March 31, 2023

Other comprehensive income (loss)

Issuance of common stock for stock options exercised

Vested restricted stock units

Repurchase of common stock for net settlement of equity awards

Stock-based compensation expense

Common stock dividend paid

Balance at June 30, 2023

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the three months ended

For the six months ended

(in thousands)

23 unchanged sentences

Common stock cash dividend paid

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

5 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Organization and Basis for Presentation

Description of Business

Unless the context requires otherwise, references to LeMaitre, LeMaitre Vascular, we, our, and us refer to LeMaitre Vascular, Inc.

Unless the context requires otherwise, references to LeMaitre, LeMaitre Vascular, the Company, we, our, and us refer to LeMaitre Vascular, Inc.

and our subsidiaries.

2 unchanged sentences

We operate in a single segment in which our principal product lines include the following:

anastomotic clips, biologic vascular and dialysis grafts, biologic vascular and cardiac patches, carotid shunts, embolectomy catheters, occlusion catheters, radiopaque marking tape, synthetic vascular grafts, and valvulotomes.

Our offices and production facilities are located in Burlington, Massachusetts;

21 unchanged sentences

Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are updated as appropriate.

The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the entire year.

The results for the six months ended June 30, 2024 are not necessarily indicative of results to be expected for the entire year.

The information contained in these interim financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2023, including the notes thereto, included in our Form 10-K filed with the Securities and Exchange Commission (SEC) on February 29, 2024.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes.

The Company is not aware of any specific event or circumstance that would require an update to its accounting estimates or adjustments to the carrying value of its assets and liabilities as of May 10, 2024, the issuance date of this Quarterly Report on Form 10-Q.

The Company is not aware of any specific event or circumstance that would require an update to its accounting estimates or adjustments to the carrying value of its assets and liabilities as of August 8, 2024, the issuance date of this Quarterly Report on Form 10-Q.

Actual results could differ from those estimates.

25 unchanged sentences

Below is a disaggregation of our revenue by major geographic area, which is among the primary categorizations used by management in evaluating financial performance, for the periods indicated (in thousands):

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Europe, Middle East and Africa

34 unchanged sentences

Our 2024 income tax expense varies from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign subsidiaries, and discrete stock option exercises.

Our 2023 income tax expense varied from the statutory rate mainly due to permanent items, different statutory rates from our foreign subsidiaries, and discrete stock option exercises.

Our 2023 income tax expense varied from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign subsidiaries, and discrete stock option exercises.

We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to examination by a taxing authority.

As of March 31, 2024, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $ 525,000 .

As of June 30, 2024, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $ 510,000 .

We remain subject to examination until the statute of limitations expires for each remaining respective tax jurisdiction.

1 unchanged sentence

A reconciliation of beginning and ending amount of our unrecognized tax benefits is as follows:

Three months ended

March 31, 2024

Six months ended

June 30, 2024

(in thousands)

4 unchanged sentences

Reductions for lapses of the applicable statutes of limitations

Unrecognized tax benefits as of March 31, 2024

As of March 31, 2024, a summary of the tax years that remain subject to examination in our taxing jurisdictions is as follows:

Unrecognized tax benefits as of June 30, 2024

As of June 30, 2024, a summary of the tax years that remain subject to examination in our taxing jurisdictions is as follows:

United States

3 unchanged sentences

Inventories and other deferred costs consist of the following:

March 31, 2024

June 30, 2024

December 31, 2023

5 unchanged sentences

Total inventory and other deferred costs

We had inventory on consignment at customer sites of $ 2.2 million and $ 2.0 million at March 31, 2024 and December 31, 2023, respectively.

We had inventory on consignment at customer sites of $ 2.0 million as of June 30, 2024 and December 31, 2023, respectively.

In connection with our RestoreFlow allograft business, other deferred costs include costs incurred for the preservation of human tissues available for shipment, tissues currently in active processing, and tissues held in quarantine pending release to implantable status.

13 unchanged sentences

Etienne, France building, building improvements, and land for $ 0.9 million less closing costs of $ 0.1 million, resulting in a gain of approximately $ 0.1 million recorded for the year ended December 31, 2022.

For the three months ended March 31, 2023, we recorded additional restructuring charges of $ 0.3 million in conjunction with the St.

For the three and six months ended June 30, 2023, we recorded additional restructuring charges of $ 0.2 million and $ 0.5 million, respectively, in conjunction with the St.

Etienne, France factory closure.

The additional charges consisted primarily of employment termination, settlement, legal and other third-party costs.

There were no additional restructuring charges recorded for the three and six months ended June 30, 2024.

Goodwill and Other Intangible Assets

There was no change to goodwill during the three months ended March 31, 2024.

There was no change to goodwill during the six months ended June 30, 2024.

Other intangible assets consist of the following:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

These assets are being amortized over useful lives ranging from 2 to 16 years.

The weighted-average amortization period for these intangibles as of March 31, 2024, is 9.3 years.

The weighted-average amortization period for these intangibles as of June 30, 2024 is 9.4 years.

Amortization expense is included in general and administrative expense and is as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Amortization expense

5 unchanged sentences

The Company has operating leases for buildings, primarily for office space, manufacturing and distribution, as well as automobiles and printing equipment.

As of March 31, 2024, the Company had the following building and facility leases capitalized on the balance sheet:

As of June 30, 2024, the Company had the following building and facility leases capitalized on the balance sheet:

Location (leases)

29 unchanged sentences

Thailand sales office and distribution

Kensington, Australia

Australia sales office and distribution

Korea sales office and distribution

12 unchanged sentences

We have no subleases, and there are no residual value guarantees associated with, or restrictive covenants imposed by, any of our leases.

There were no assets held under capital leases as of March 31, 2024.

There were no assets held under capital leases as of June 30, 2024.

We elected the package of practical expedients that allow us to omit leases with initial terms of 12 months or less from our balance sheet, which are expensed on a straight-line basis over the life of the lease.

2 unchanged sentences

Additional information with respect to our leases is as follows:

Three Months Ended

Three months ended June 30,

Six months ended June 30,

(in thousands)

Operating lease cost

4 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted average remaining lease term in years - operating leases

Weighted average remaining lease term - operating leases (in years)

Weighted average discount rate - operating leases

As of March 31, 2024, the minimum noncancelable operating lease rental commitments with initial or remaining terms of more than one year are as follows:

As of June 30, 2024, the minimum noncancelable operating lease rental commitments with initial or remaining terms of more than one year are as follows:

Remainder of 2024

Year ending December 31,

Adjustment to net present value as of March 31, 2024

Adjustment to net present value as of June 30, 2024

Minimum noncancelable lease liability

1 unchanged sentence

Accrued expenses consist of the following:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Other long-term liabilities consist of the following:

March 31, 2024

June 30, 2024

December 31, 2023

(in thousands)

Aquisition-related liabilities

Acquisition-related liabilities

Segment and Enterprise-Wide Disclosures

7 unchanged sentences

Three months ended

Six months ended

(in thousands)

United States

2 unchanged sentences

Share-based Compensation

Our Third Amended and Restated 2006 Stock Option and Incentive Plan allows for granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, performance-based restricted stock units, unrestricted stock awards, and deferred stock awards to our officers, employees, directors and consultants.

Our Fourth Amended and Restated 2006 Stock Option and Incentive Plan allows for granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, performance-based restricted stock units, unrestricted stock awards, and deferred stock awards to our officers, employees, directors and consultants.

The components of share-based compensation expense included in the consolidated statements of operations are as follows:

Three months ended

Six months ended

(in thousands)

Stock option awards

4 unchanged sentences

Three months ended

Six months ended

(in thousands)

Cost of sales

3 unchanged sentences

Total stock-based compensation

We did not grant any options during the three months ended March 31, 2024 or 2023.

During the three months ended March 31, 2024, and 2023, we awarded restricted stock units of 222 and 200 , respectively.

We did not award any performance-based restricted stock units during the three months ended March 31, 2024 or 2023.

We issued approximately 125,000 and 59,000 shares of common stock following the exercise or vesting of underlying stock options, restricted stock units or performance-based restricted stock units during the three months ended March 31, 2024 and 2023, respectively.

We did not grant any options during the six months ended June 30, 2024.

During the six months ended June 30, 2023, we granted options for the purchase of 1,660 shares of our common stock.

During the six months ended June 30, 2024 and 2023, we granted restricted stock units of 222 and 765 , respectively.

We did not grant any performance-based restricted stock units during the six months ended June 30, 2024.

During the six months ended June 30, 2023, we granted performance-based restricted stock units of 310 .

We issued 147,540 and 179,775 shares of common stock following the exercise or vesting of underlying stock options, restricted stock units and performance-based restricted stock units during the six months ended June 30, 2024 and 2023, respectively.

Net Income per Share

1 unchanged sentence

Three months ended

Six months ended

(in thousands, except per share data)

Net income available for common stockholders

28 unchanged sentences

November 30, 2023

On April 30, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $ 0.16 per share payable on May 30, 2024 , to stockholders of record at the close of business on May 16, 2024 .

On July 25, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $ 0.16 per share payable on August 29, 2024 , to stockholders of record at the close of business on August 15, 2024 .

Supplemental Cash Flow Information

For the three months ended

For the six months ended

(in thousands)

8 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Level 1 assets being measured at fair value on a recurring basis as of March 31, 2024, included our short-term investment and short-duration bond mutual fund accounts.

We had no Level 2 assets being measured at fair value on a recurring basis as of March 31, 2024.

Level 1 assets being measured at fair value on a recurring basis as of June 30, 2024, included our short-term investment and short-duration bond mutual fund accounts.

We had no Level 2 assets being measured at fair value on a recurring basis as of June 30, 2024.

Several of our acquisition-related assets and liabilities have been measured using Level 3 techniques.

18 unchanged sentences

The following table provides a roll-forward of the fair value of these liabilities, as determined by Level 3 unobservable inputs including management’s forecast of future revenues for the acquired businesses, as well as management’s estimates of the likelihood of achieving the other specified criteria:

Three months ended

Six months ended June 30,

(in thousands)

2 unchanged sentences

Ending balance

Accumulated Other Comprehensive Income (Loss)

Changes to our accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023 consisted primarily of foreign currency translation and unrealized losses on short-term marketable securities:

Three months ended

Accumulated Other Comprehensive Loss

Changes to our accumulated other comprehensive loss for the six months ended June 30, 2024 and 2023 consisted primarily of foreign currency translation and unrealized losses on short-term marketable securities:

Six months ended

(in thousands)

35 unchanged sentences

and its subsidiaries.

LeMaitre, AlboGraft, AnastoClip, AnastoClip GC, Artegraft, Cardial, CardioCel, DuraSure, Eze-Sit, Glow ‘ N Tell, LeverEdge, LifeSpan, OmniFlow, PhasTipp, ProCol, Pruitt, Pruitt F3, RestoreFlow, TufTex, VascuCel, VascuTape, and XenoSure are registered trademarks of LeMaitre Vascular or one of its subsidiaries, and Chevalier, DuraSure, Flexcel, Omniflow, PeriVu and Syntel are trademarks of LeMaitre Vascular.

LeMaitre, AlboGraft, AnastoClip, AnastoClip GC, Artegraft, Cardial, CardioCel, DuraSure, Eze-Sit, Glow ‘ N Tell, LeverEdge, LifeSpan, OmniFlow, PhasTipp, ProCol, Pruitt, Pruitt F3, RestoreFlow, TufTex, VascuCel, VascuTape, and XenoSure are registered trademarks of LeMaitre Vascular or one of its subsidiaries, and Chevalier, Flexcel, PeriVu and Syntel are trademarks of LeMaitre Vascular.

This Quarterly Report on Form 10-Q also includes the registered and unregistered trademarks of other persons, which are the property of their respective owners.

11 unchanged sentences

In contrast to interventional cardiologists and interventional radiologists, vascular surgeons can perform both open surgical and minimally invasive endovascular procedures, and therefore can provide a wider range of treatment options to their patients.

More recently, however, we have begun to explore adjacent market customers, or non-vascular surgeon customers, who can be served by our vascular device technologies, such as cardiac surgeons and neurosurgeons.

Recently we have also begun to explore adjacent market customers, or non-vascular surgeon customers, who can be served by our vascular device technologies, such as cardiac surgeons and interventional cardiologists.

Our principal product lines include the following:

Through our RestoreFlow allografts business, we also provide services related to the processing and cryopreservation of human vascular and cardiac tissue.

anastomotic clips, biologic vascular and dialysis grafts, biologic vascular and cardiac patches, carotid shunts, embolectomy and occlusion catheters, radiopaque marking tape, synthetic vascular and dialysis grafts, and valvulotomes.

Through our RestoreFlow allografts business, we also process and cryopreserve human vascular and cardiac tissue.

Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts.

In Q2 2024, biologics represented 52% of our worldwide sales.

We view our biologic device offerings favorably, as we believe they represent differentiated and, in some cases, growing product segments.

We believe our biologic devices represent differentiated and, in some cases, growing product segments.

To assist us in evaluating our business strategies, we monitor long-term technology trends in the peripheral vascular device market.

7 unchanged sentences

updating existing products and introducing new products through research and development;

consolidating product manufacturing at our Burlington, Massachusetts facilities.

consolidating product manufacturing into our Burlington, Massachusetts facilities.

We sell our products and services primarily through a direct sales force.

As of March 31, 2024, our sales force was comprised of 137 sales representatives in North America, Europe, the UK, and Asia Pacific, including four export managers.

As of June 30, 2024, our sales force was comprised of 144 sales representatives in North America, Europe, the UK, and Asia Pacific, including four export managers.

Our worldwide headquarters is located in Burlington, Massachusetts, and we also have North American sales offices in Chandler, Arizona and Vaughan, Canada.

10 unchanged sentences

During the current quarter, approximately 95% of our net sales were generated in territories in which we employ direct sales representatives.

We also sell our products in other countries through distributors.

We sell our products in other countries through distributors.

Historically we have experienced success in lower-rivalry niche segments.

1 unchanged sentence

In contrast, we have experienced less success in competitive markets such as the polyester vascular graft market, where we face competition from larger companies with greater resources and lower per unit costs.

We have also experienced success in international markets, such as Europe, where we have a significant sales force, and sometimes offer comparatively lower average selling prices than in North America.

We have also experienced success in international markets, such as Europe, where we have a significant sales force, and sometimes offer lower average selling prices than in North America.

If we continue to seek growth opportunities outside of North America, we may experience downward pressure on our gross margin.

2 unchanged sentences

Recent approvals include the approval to sell the XenoSure patch for carotid indication in Japan in May 2023, and the approval to sell the Pruitt Irrigation Occlusion Catheter in China in October 2023.

Separately, in July 2024, we received MDR CE marks allowing for the continued sale of 10 devices into the European market.

Previously we had obtained 4 MDR CE marks.

In total, we expect to receive 22 MDR CE marks by the end of 2025.

The European Commission has designated the end of 2027 as the final MDR CE mark deadline.

Our strategy for growing our business includes the acquisition of complementary product lines and companies, which can be difficult to identify, negotiate and purchase.

There can be no assurance that we will be able to do so in the future.

In June 2020, we entered into an agreement with Artegraft to purchase the assets of their bovine graft business for $72.5 million plus additional payments of up to $17.5 million, contingent upon 2021 – 2023 unit sales.

Occasionally we discontinue or divest products that are no longer complementary to our business or not commercially viable.

5 unchanged sentences

These products totaled approximately $0.3 million and less than $0.1 million, respectively, in 2023 revenues.

From time to time we may undertake SKU reductions and transition sales to other SKUs or products with similar features.

From time to time we may undertake SKU reductions and attempt to transition sales to other SKUs or products with similar features.

For example, in 2022, we initiated the transition of sales of our Syntel spring tip catheter to our Syntel regular tip catheter.

Any of these actions may result in inventory write-offs and temporary or permanent negative impacts to our sales, gross margin and customer relationships.

Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins, we periodically enter into transactions with our distributors to transition their sales of our medical devices into our direct sales organization:

Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins, we periodically enter into transactions with country-specific distributors to transition their sales of our medical devices into our direct sales organization:

In May 2022, we entered into a distribution transition agreement with our Korean distributor to sell products directly in Korea and dissolve the existing distribution arrangement.

1 unchanged sentence

The distribution termination fees totaled approximately $0.5 million.

In March 2023, we entered into a distribution transition agreement with our Thailand distributor to sell products directly in Thailand and dissolve the existing distribution arrangement.

In March 2023, we entered into a distribution transition agreement with our Thai distributor to sell products directly in Thailand and dissolve the existing distribution arrangement.

We have been selling direct-to-hospital in Thailand since August 2023.

1 unchanged sentence

We also benefit, to a lesser extent, from internal product development efforts to bring differentiated technologies and next-generation products and services to market:

In 2020, we launched RestoreFlow cardiac allografts for use in cardiac repair and restoration.

In March 2022, we received U.S.

FDA clearance to market PhasTIPP, a portable powered phlebotomy device used to remove varicose veins in the leg.

The device was launched in the US in April 2024.

The device was launched in the U.S.

in April 2024.

In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate manufacturing into our Burlington facilities.

7 unchanged sentences

We are transitioning Cardial graft sales to our Burlington-manufactured AlboGraft product for additional cost savings and improved margins.

We also transferred chevalier valvulotome production to Burlington.

In October 2019, we acquired the CardioCel and VascuCel biologic patch businesses from Anteris.

1 unchanged sentence

The transfer to Burlington was substantially completed in 2023.

In June 2023, the MDR CE mark application to market these Burlington produced devices was submitted, and we anticipate this application process to take 18-30 months.

We will begin distributing these patches in the US in Q2 2024.

Finally, from time to time we enter into distribution agreements of complementary product lines with the option to acquire the product line in the future.

In June 2023, the MDR CE mark application for these Burlington-produced devices was submitted, and we anticipate this application process to take 18-30 months.

We began distributing these Burlington-produced patches in the U.S.

and select APAC markets in Q2 2024, and in Canada in July 2024.

Finally, from time to time we enter into distribution agreements of complementary product lines with an option to acquire the product line in the future.

In April 2023, we entered into an agreement with Elutia Inc.

3 unchanged sentences

Sales through LeMaitre Vascular for the nine months ended December 31, 2023, were $4.1 million.

Sales through LeMaitre Vascular for the three months ended March 31, 2024, were $1.3 million.

Sales through LeMaitre Vascular for the six months ended June 30, 2024 were $2.7 million.

Our execution of these initiatives may affect the comparability of our financial results and may cause fluctuations from period to period.

1 unchanged sentence

We expect that the new ERP system will be beneficial in a number of areas, including inventory management, pricing programs, financial operations and real-time reporting.

We have been preparing for this transition since 2022 and have hired an experienced consulting team to assist in this transition, and we transitioned from our legacy ERP system to our newly implemented Microsoft Dynamics D365 system in the first quarter of 2024.

We expect to implement this new system in Europe in 2025.

As of March 31, 2024, we have capitalized approximately $4.0 million of costs associated with this ERP system.

We have been preparing for this transition since 2022 and have hired an experienced consulting team to assist in this transition, and in the U.S., we transitioned from our legacy ERP system to our newly implemented Microsoft Dynamics D365 system in Q1 2024.

We expect to implement this new system in selected countries in Europe in 2025.

As of June 30, 2024, we have capitalized costs on our balance sheet of approximately $3.9 million associated with this ERP system.

Fluctuations in the exchange rates between the U.S.

dollar and foreign currencies, primarily the Euro, affect our financial results.

For the three months ended March 31, 2024, approximately 42% of our sales took place outside of the U.S., largely in currencies other than the U.S.

For the six months ended June 30, 2024, approximately 42% of our sales took place outside of the U.S., largely in currencies other than the U.S.

We expect foreign currencies will represent a significant percentage of future sales.

5 unchanged sentences

dollars than we did before the exchange rate changed.

For the three months ended March 31, 2024, we estimate that the effects of changes in foreign exchange rates increased our reported sales by less than $0.1 million, as compared to rates in effect for the three months ended March 31, 2023.

For the six months ended June 30, 2024, we estimate that the effects of changes in foreign exchange rates decreased our reported sales by $0.4 million, as compared to rates in effect for the six months ended June 30, 2023.

Net Sales and Expense Components

25 unchanged sentences

Results of Operations

Comparison of the three-month period ended March 31, 2024 to the three-month period ended March 31, 2023:

Comparison of the three- and six-month periods ended June 30, 2024 to the three- and six-month periods ended June 30, 2023:

The following tables set forth, for the periods indicated, our net sales by geography, and the change between the specified periods expressed as a percentage increase or decrease:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Net sales by geography:

Europe, Middle East and Africa

Net sales increased by $6.4 million, or 14%, to $53.5 million for the three months ended March 31, 2024, compared to $47.1 million for the three months ended March 31, 2023.

The increase was driven primarily by higher average selling prices, elevated hospital procedure volumes, additional sales representatives, and $1.3 million in distribution sales related to the porcine patch product line.

Allograft preservation services increased $1.3 million, carotid shunt sales increased $1.1 million and bovine vascular patch sales increased $1.0 million.

We estimate that the weaker U.S.

dollar increased net sales by less than $0.1 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Direct-to-hospital net sales were 95% and 97% of our total net sales for the three months ended March 31, 2024 and 2023, respectively.

Net sales increased by $5.7 million, or 11%, to $55.8 million for the three months ended June 30, 2024, compared to $50.1 million for the three months ended June 30, 2023.

The increase was driven primarily by higher average selling prices, strong hospital procedure volumes, and additional sales representatives.

Allograft preservation services increased $1.3 million, carotid shunt sales increased $1.0 million, bovine vascular patch sales increased $0.9 million, and valvulotome sales increased $0.8 million.

We estimate that the stronger U.S.

dollar decreased net sales by $0.4 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Direct-to-hospital net sales were 95% of our total net sales for both the three months ended June 30, 2024 and 2023.

Net sales increased by $12.1 million, or 12%, to $109.3 million for the six months ended June 30, 2024, compared to $97.2 million for the six months ended June 30, 2023.

The increase was driven primarily by higher average selling prices, strong hospital procedure volumes, additional sales representatives, and sales related to our new porcine patch product line.

Allograft preservation services increased $2.6 million, carotid shunt sales increased $2.2 million, bovine vascular patch sales increased $1.9 million, and porcine patch sales increased $1.5 million.

We estimate that the stronger U.S.

dollar decreased net sales by $0.4 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Direct-to-hospital net sales were 95% and 96% of our total net sales for the six months ended June 30, 2024 and 2023, respectively.

Net sales by geography.

Net sales in the Americas increased $3.1 million, or 10%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

The increase was driven primarily by increased sales of porcine patches of $1.3 million, allograft preservation services of $1.2 million, and bovine vascular patches of $0.4 million.

EMEA net sales increased $2.1 million, or 17%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase was driven primarily by increased sales of carotid shunts of $0.9 million, bovine vascular patches of $0.5 million, embolectomy catheters of $0.1 million, and ePTFE vascular grafts of $0.1 million.

Asia Pacific net sales increased $1.2 million, or 44%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase was driven primarily by increased sales of over-the-wire embolectomy catheters of $0.3 million, ePTFE vascular grafts of $0.2 million, occlusion catheters of $0.2 million, and embolectomy catheters, carotid shunts and bovine vascular patches of $0.1 million, respectively.

Net sales in the Americas increased $3.4 million, or 10%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

The increase was driven primarily by increased sales of allograft preservation services of $1.0 million, bovine grafts and bovine vascular patches of $0.7 million each, and valvulotomes of $0.5 million.

Net sales in the Americas increased $6.5 million, or 10%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increase was driven primarily by increased sales of allograft preservation services of $2.2 million, porcine patches of $1.5 million, and bovine vascular patches and bovine grafts of $1.0 million each.

EMEA net sales increased $1.7 million, or 13%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

The increase was driven primarily by increased sales of carotid shunts of $0.7 million, and polyester grafts and allograft preservation services of $0.3 million each.

EMEA net sales increased $3.8 million, or 15%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increase was driven primarily by increased sales of carotid shunts of $1.6 million, bovine vascular patches of $0.7 million, allograft preservation services of $0.4 million, and polyester grafts of $0.3 million.

Asia Pacific net sales increased $0.6 million, or 20%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

The increase was driven primarily by increased sales of over-the-wire embolectomy catheters of $0.3 million and ePTFE vascular grafts of $0.1 million.

Asia Pacific net sales increased $1.8 million, or 31%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The increase was driven primarily by increased sales of over-the-wire embolectomy catheters of $0.5 million, ePTFE vascular grafts of $0.4 million, and occlusion catheters and embolectomy catheters of $0.2 million each.

Gross Profit.

The following table sets forth the change in our gross profit and gross margin for the periods indicated:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

*Not applicable

Gross profit increased $5.8 million, or 19%, to $36.7 million for the three months ended March 31, 2024, and gross margin increased 300 basis points to 68.6% in the period.

The increase in gross profit was driven primarily by increased sales, particularly from allograft preservation services, porcine patches and carotid shunts.

The increase in gross margin was driven primarily by greater manufacturing efficiencies as our direct labor manufacturing team became more efficient, which was partially offset by increased excess and obsolescence charges and unfavorable product mix, including higher sales of comparatively lower margin allograft preservation services and porcine patches.

Gross profit increased $6.4 million, or 20%, to $38.5 million for the three months ended June 30, 2024, and gross margin increased 490 basis points to 68.9% in the period.

The increase in gross profit was driven primarily by increased sales, particularly from allograft preservation services, carotid shunts, bovine vascular patches and valvulotomes.

The increase in gross margin was driven primarily by greater manufacturing efficiencies, sales price increases, and favorable product mix, which was partially offset by increased shipping and warehousing costs and unfavorable foreign exchange rates due to the stronger U.S.

Gross profit increased $12.2 million, or 19%, to $75.1 million for the six months ended June 30, 2024, and gross margin increased 390 basis points to 68.7% in the period.

The increase in gross profit was driven primarily by increased sales, particularly from allograft preservation services, carotid shunts, bovine vascular patches and porcine patches.

The increase in gross margin was driven primarily by greater manufacturing efficiencies and sales price increases, which was partially offset by increased shipping and warehousing costs, unfavorable product mix, including sales of comparatively lower margin porcine patches and sales of our existing allograft preservation services, and increased excess and obsolescence charges.

Operating Expenses.

The following tables set forth changes in our operating expenses for the periods indicated and the change between the specified periods expressed as a percentage increase or decrease:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Sales and marketing

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Restructuring

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

% of Net Sales

Sales and marketing

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Sales and marketing .

For the three months ended March 31, 2024, sales and marketing expenses increased 7% to $11.7 million.

For the three months ended June 30, 2024, sales and marketing expenses increased 8% to $11.0 million.

The increase was driven primarily by higher sales representative headcount, which resulted in increased compensation and related expenses of $0.7 million.

Additionally, travel, training and sales meetings increased by $0.7 million.

Additionally, travel and training expenses increased $0.2 million and facility expenses increased $0.1 million.

The increase was partially offset by lower outside services and general supplies of $0.2 million.

Sales rep headcount was 137 as of March 31, 2024, a 7% increase from March 31, 2023.

As a percentage of sales, sales and marketing expense decreased to 22% for the three months ended March 31, 2024, down from 23% in the prior period.

Sales rep headcount was 144 as of June 30, 2024, an 8% increase from June 30, 2023.

As a percentage of sales, sales and marketing expenses remained consistent at 20% for the three months ended June 30, 2024 versus the prior year period.

For the six months ended June 30, 2024, sales and marketing expenses increased 7% to $22.7 million.

The increase was driven primarily by higher sales representative headcount, which resulted in increased compensation and related expenses of $1.0 million.

Additionally, travel, training and sales meetings expenses increased $0.9 million and facility expenses increased $0.1 million.

The increase was partially offset by lower outside services and general supplies of $0.4 million.

As a percentage of sales, sales and marketing expenses decreased to 21% for the six months ended June 30, 2024, down from 22% in the prior year period.

General and administrative.

For the three months ended March 31, 2024, general and administrative expenses increased 14% to $9.0 million.

The increase was driven primarily by higher outside services and professional fees of $0.8 million.

Additionally, compensation and related expenses increased $0.2 million due to an increase in personnel.

As a percentage of sales, general and administrative expense remained consistent at 17% for the three months ended March 31, 2024.

For the three months ended June 30, 2024, general and administrative expenses increased 14% to $8.8 million.

The increase was driven primarily by higher outside services and professional fees, compensation and related expenses, and facilities expenses of $0.3 million each.

Additionally, bad debt expenses increased $0.1 million due to increased uncertainty of accounts receivable collectability related to a small number of our customers.

As a percentage of sales, general and administrative expenses increased to 16% for the three months ended June 30, 2024, up from 15% in the prior year period.

For the six months ended June 30, 2024, general and administrative expenses increased 14% to $17.8 million.

The increase was driven primarily by higher outside services and professional fees of $1.1 million, compensation and related expenses of $0.5 million, facilities expenses of $0.2 million, and travel and training of $0.1 million.

Additionally, bad debt expenses increased $0.2 million due to the increased uncertainty of accounts receivable collectability related to a small number of our customers.

As a percentage of sales, general and administrative expenses remained consistent at 16% for the six months ended June 30, 2024 versus the prior year period

Research and development.

For the three months ended March 31, 2024, research and development expenses increased 6% to $4.1 million.

The increase was driven by higher compensation and related expenses of $0.2 million.

As a percentage of sales, research and development expense remained consistent at 8% for the three months ended March 31, 2024.

For the three months ended June 30, 2024, research and development expenses decreased 5% to $4.3 million.

The decrease was driven by lower outside services, professional fees and testing of $0.3 million related to elevated MDD and MDR services performed in the prior period.

Additionally, process engineering expenses decreased $0.1 million as CardioCel device manufacturing was initiated at our Burlington facility, and related expenses were allocated to cost of sales.

The decrease was partially offset by higher compensation and related expenses of $0.2 million.

As a percentage of sales, research and development expenses decreased to 8% for the three months ended June 30, 2024, down from 9% in the prior year period.

For the six months ended June 30, 2024, research and development expenses were unchanged at $8.4 million.

Compensation and related expenses increased $0.4 million, offset primarily by lower outside services, professional fees and testing of $0.3 million and facilities expenses of $0.2 million.

As a percentage of sales, research and development expenses decreased to 8% for the six months ended June 30, 2024, down from 9% in the prior year period.

Restructuring.

For the three months ended March 31, 2024, there were no restructuring expenses.

For the three and six months ended June 30, 2024, there were no restructuring expenses.

On June 30, 2022, we ceased operations at our St.

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These charges consisted primarily of employment termination costs, impairment of fixed assets and inventory, and third-party costs.

For the three months ended March 31, 2023, we recorded additional restructuring charges in conjunction with the St.

Etienne, France factory closure of $0.3 million.

The additional charges consisted primarily of employment termination, settlement, legal and other third-party costs.

For the three and six months ended June 30, 2023, we recorded additional restructuring expenses of $0.2 million and $0.5 million, respectively.

The additional expenses consisted primarily of employment termination, settlement, legal and other third-party costs.

Income tax expense.

We recorded a tax provision of $2.9 million on pre-tax income of $12.8 million for the three months ended March 31, 2024, compared to a $2.0 million tax provision on pre-tax income of $8.0 million for the three months ended March 31, 2023.

Our effective income tax rate was 22.7% for the three-month period ended March 31, 2024.

We recorded a tax provision of $3.7 million on pre-tax income of $15.5 million for the three months ended June 30, 2024, compared to a $2.2 million tax provision on pre-tax income of $10.3 million for the three months ended June 30, 2023.

We recorded a tax provision of $6.6 million on pre-tax income of $28.3 million for the six months ended June 30, 2024, compared to a tax provision of $4.2 million on pre-tax income of $18.3 million for the six months ended June 30, 2023.

Our effective income tax rate was 23.7% and 23.3% for the three- and six-month periods ended June 30, 2024.

Our tax expense for the current period is based on an estimated annual effective tax rate of 24.3%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items.

Our income tax expense for the current period varies from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

Our effective income tax rate was 24.5% for the three-month period ended March 31, 2023.

Our effective income tax rate was 21.5% and 22.8% for the three- and six-month periods ended June 30, 2023.

Our 2023 provision was based on the estimated annual effective tax rate of 25.6%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items.

Our income tax expense for the three-month period ended March 31, 2023, varied from the statutory rate mainly due to permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

Our income tax expense for the three- and six-month periods ended June 30, 2023 varied from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises.

We monitor the mix of profitability by tax jurisdiction and adjust our annual expected rate on a quarterly basis as needed.

1 unchanged sentence

We assess the likelihood that our deferred tax assets will be realized through future taxable income and record a valuation allowance to reduce gross deferred tax assets to an amount that we believe is more likely than not to be realized.

As of March 31, 2024, we have provided a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized.

As of June 30, 2024, we have provided a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized.

The Inflation Reduction Act (IRA) was enacted into law on August 16, 2022.

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Liquidity and Capital Resources

As of March 31, 2024, our cash and cash equivalents were $26.6 million as compared to $24.3 million as of December 31, 2023.

We had $81.7 million in short-term marketable securities as of March 31, 2024, and $80.8 million as of December 31, 2023.

As of June 30, 2024, our cash and cash equivalents were $22.3 million as compared to $24.3 million as of December 31, 2023.

We had $90.8 million in short-term marketable securities as of June 30, 2024, and $80.8 million as of December 31, 2023.

Our cash and cash equivalents are liquid investments with maturities of 90 days or less at the date of purchase and consist primarily of operating bank accounts.

1 unchanged sentence

dollar denominated fixed and floating-rate debt, and a short-duration bond fund.

As of March 31, 2024, our short-term marketable securities reflected an unrealized loss of $1.3 million as a result of increasing market interest rates.

As of June 30, 2024, our short-term marketable securities reflected an unrealized loss of $1.2 million as a result of increasing market interest rates.

On February 21, 2024, our Board of Directors authorized the repurchase of up to $50.0 million of the Company’s common stock through transactions on the open market, in privately negotiated purchases or otherwise until February 21, 2025.

4 unchanged sentences

Since our inception, we have funded our operations through public offerings and private placements of equity securities, short-term and long-term borrowings, and funds generated from our operations.

We recognized operating income of $11.9 million for the three months ended March 31, 2024, compared to $7.9 million for the three months ended March 31, 2023.

We recognized operating income of $26.3 million for the six months ended June 30, 2024, compared to $17.3 million for the six months ended June 30, 2023.

For the year ended December 31, 2023, we had operating income of $36.7 million.

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We may require additional capital beyond our currently forecasted amounts.

Any such required additional capital may not be available on reasonable terms, if at all.

Any required additional capital may not be available on reasonable terms, if at all.

In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock.

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November 30, 2023

On April 30, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $0.16 per share payable on May 30, 2024, to stockholders of record at the close of business on May 16, 2024.

Three months ended March 31,

On July 25, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $0.16 per share payable on August 29, 2024, to stockholders of record at the close of business on August 15, 2024.

Six months ended June 30,

(in thousands)

5 unchanged sentences

Net cash provided by operating activities.

Net cash provided by operating activities was $5.1 million for the three months ended March 31, 2024, consisting of $9.9 million in net income, adjustments for non-cash or non-operating items of $5.0 million (including primarily depreciation and amortization of $2.4 million, stock-based compensation of $1.6 million and provisions for inventory write-offs and credit losses of $1.1 million), and a net use of working capital of $9.9 million.

Net cash provided by operating activities was $14.7 million for the six months ended June 30, 2024, consisting of $21.7 million in net income, adjustments for non-cash or non-operating items of $10.4 million (including primarily depreciation and amortization of $4.8 million, stock-based compensation of $3.2 million, provisions for inventory write-offs and credit losses of $1.7 million, and foreign currency effect on net income of $0.7 million), and a net use of working capital of $17.4 million.

The net cash used for working capital was driven by an increase in accounts receivable of $6.5 million, an increase in inventory and other deferred costs of $7.3 million, and payments of accounts payable and other liabilities of $4.3 million.

These cash uses were offset by a decrease in prepaid expenses and other assets of $0.7 million.

Net cash provided by operating activities was $2.3 million for the three months ended March 31, 2023, consisting of $6.0 million in net income, adjustments for non-cash or non-operating items of $4.4 million (including primarily depreciation and amortization of $2.4 million, stock-based compensation of $1.3 million, provisions for inventory write-offs and credit losses of $0.3 million, loss on divestiture of $0.3 million), and also a net use of working capital of $8.1 million.

Net cash provided by operating activities was $14.2 million for the six months ended June 30, 2023, consisting of $14.1 million in net income, adjustments for non-cash or non-operating items of $8.6 million (including primarily depreciation and amortization of $4.7 million, stock-based compensation of $2.6 million, provisions for inventory write-offs and credit losses of $0.8 million, and loss on divestiture of $0.5 million), and a net use of working capital of $8.6 million.

The net cash used for working capital was driven by an increase in accounts receivable of $4.2 million, an increase in inventory and other deferred costs of $4.3 million, and payments of accounts payable and other liabilities of $1.0 million.

1 unchanged sentence

Net cash used in investing activities.

Net cash used in investing activities was $2.4 million for the three months ended March 31, 2024, consisting of expenditures on property and equipment of $1.4 million and purchases of marketable securities of $1.0 million.

Net cash used in investing activities was $3.0 million for the three months ended March 31, 2023, consisting of expenditures on property and equipment of $2.1 million, purchases of marketable securities of $0.6 million, and acquisition related payments of $0.3 million.

Net cash provided by (used in) financing activities.

Net cash provided by financing activities was less than $0.1 million for the three months ended March 31, 2024, consisting primarily of proceeds from stock option exercises of $3.6 million, net of shares repurchased used to pay employee payroll taxes.

This proceed of cash was offset by a dividend payment of $3.6 million.

Net cash used in financing activities was $1.8 million for the three months ended March 31, 2023, consisting primarily of a dividend payment of $3.1 million.

This use of cash was partly offset by proceeds from stock option exercises of $1.3 million, net of shares repurchased used to pay employee payroll taxes.

Net cash used in investing activities was $13.4 million for the six months ended June 30, 2024, consisting of expenditures on property and equipment of $3.2 million and purchases of marketable securities of $10.1 million.

Net cash used in investing activities was $12.6 million for the six months ended June 30, 2023, consisting of expenditures on property and equipment of $4.9 million, purchases of marketable securities of $7.2 million, and acquisition related payments of $0.4 million.

Net cash used in financing activities.

Net cash used in financing activities was $2.8 million for the six months ended June 30, 2024, consisting of proceeds from stock option exercises of $4.4 million, net of shares repurchased used to pay employee payroll taxes.

This proceed of cash was offset by dividend payments of $7.2 million.

Net cash used in financing activities was $1.3 million for the six months ended June 30, 2023, consisting of proceeds from stock option exercises of $4.9 million, net of shares repurchased used to pay employee payroll taxes.

This proceed of cash was offset by dividend payments of $6.2 million.

Critical Accounting Policies and Estimates

2 unchanged sentences

Our most significant accounting policies are described in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

There have been no material changes in our critical accounting policies during the three months ended March 31, 2024.

There have been no material changes in our critical accounting policies during the six months ended June 30, 2024.

The preparation of our consolidated financial statements in conformity with U.S.

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements