What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-08 · 185 added, 175 removed, 755 unchanged (32% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except share data)

2 unchanged sentences

Short-term marketable securities

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

Accounts receivable, net of allowances of $ 1,309 at September 30, 2024 and $ 941 at December 31, 2023

Inventory and other deferred costs

22 unchanged sentences

authorized 37,000,000 shares;

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

issued 24,073,835 shares at September 30, 2024, and 23,911,760 shares at December 31, 2023

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

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

1,590,478 shares at September 30, 2024 and 1,584,512 shares at December 31, 2023

Total stockholders’ equity

4 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands, except per share data)

19 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands)

29 unchanged sentences

Balance at June 30, 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 September 30, 2024

LeMaitre Vascular, Inc.

Consolidated Statements of Stockholders ’ Equity

Comprehensive

17 unchanged sentences

Balance at June 30, 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 September 30, 2023

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the six months ended

For the nine months ended

September 30,

(in thousands)

25 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2024

September 30, 2024

Organization and Basis for Presentation

9 unchanged sentences

North Brunswick, New Jersey;

Chandler, Arizona;

Vaughan, Canada;

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

The results for the nine months ended September 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 August 8, 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 November 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

31 unchanged sentences

We recognize, measure, present and disclose in our financial statements any uncertain tax positions that we have taken, or expect to take on a tax return.

We operate in multiple taxing jurisdictions, both inside and outside the United States (U.S.), and may be subject to audits from various tax authorities.

We operate in multiple taxing jurisdictions, both inside and outside the United States, and may be subject to audits from various tax authorities.

Management’s judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, liabilities for uncertain tax positions, and any valuation allowance recorded against our net deferred tax assets.

4 unchanged sentences

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

As of September 30, 2024, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $ 542,000 .

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:

Six months ended

June 30, 2024

ended September

(in thousands)

4 unchanged sentences

Reductions for lapses of the applicable statutes of limitations

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:

Unrecognized tax benefits as of September 30, 2024

As of September 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:

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

Total inventory and other deferred costs

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

We had inventory on consignment at customer sites of $ 2.0 million as of September 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.

3 unchanged sentences

General and administrative expenses and selling expenses associated with the provision of these services are expensed as incurred.

On April 26, 2022, we committed to a plan to close our St.

Etienne, France factory, which supported our LeMaitre Cardial SAS (Cardial) business, to streamline manufacturing operations and reduce expenses.

The Cardial business consisted of the manufacture of polyester vascular grafts, valvulotomes, surgical glue and selected OEM devices.

We acquired the Cardial business in 2018.

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

Etienne, France factory.

The closure resulted in a restructuring charge of $ 3.1 million for the year ended December 31, 2022.

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

On October 10, 2022, we sold the St.

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 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 six months ended June 30, 2024.

There was no change to goodwill during the nine months ended September 30, 2024.

Other intangible assets consist of the following:

June 30, 2024

September 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 June 30, 2024 is 9.4 years.

The weighted-average amortization period for these intangibles as of September 30, 2024 is 9.5 years.

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

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

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

Location (leases)

4 unchanged sentences

Artegraft biologic business

Fox River Grove, IL (2)

RestoreFlow allografts business

December 2026

Burlington, MA (1)

1 unchanged sentence

December 2030

Fox River Grove, IL (3)

RestoreFlow allografts business

November 2025

Vaughn, Canada

33 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 June 30, 2024.

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

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

8 unchanged sentences

Weighted average discount rate - operating leases

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:

As of September 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 June 30, 2024

Adjustment to net present value as of September 30, 2024

Minimum noncancelable lease liability

1 unchanged sentence

Accrued expenses consist of the following:

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

Other long-term liabilities consist of the following:

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

No discrete operating information is prepared by us except for sales by product line and operations by legal entity for local purposes.

Most of our revenues are generated in the U.S., Canada, Germany, the United Kingdom (UK) and other European countries.

Most of our revenues are generated in the U.S., Germany, Canada, the United Kingdom (UK) and other European countries.

Substantially all our assets are located in the U.S.

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands)

7 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands)

6 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands)

5 unchanged sentences

Total stock-based compensation

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.

We did not grant any options during the nine months ended September 30, 2024.

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

During the nine months ended September 30, 2024 and 2023, we granted restricted stock units of 280 and 944 , respectively.

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

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

We issued 162,075 and 179,954 shares of common stock following the exercise or vesting of underlying stock options, restricted stock units and performance-based restricted stock units during the nine months ended September 30, 2024 and 2023, respectively.

Net Income per Share

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands, except per share data)

23 unchanged sentences

March 28, 2024

August 15, 2024

August 29, 2024

Fiscal Year 2023

5 unchanged sentences

November 30, 2023

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 .

On October 24, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $ 0.16 per share payable on December 5, 2024 , to stockholders of record at the close of business on November 21, 2024 .

Supplemental Cash Flow Information

For the six months ended

For the nine months ended

September 30,

(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 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.

Level 1 assets being measured at fair value on a recurring basis as of September 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 September 30, 2024.

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

During 2020 we recorded a contingent liability associated with our acquisition of the bovine carotid graft business from Artegraft.

The agreement required us to make potential additional payments to Artegraft of up to $ 17.5 million depending on the achievement of certain unit sales milestones during the first three calendar years following the acquisition through December 31, 2023.

We recorded this liability at a fair value of $ 0.4 million in 2020 to reflect management’s estimate of the likelihood of achieving these targets at the time of the Closing, as well as the time value of money until payment.

This amount was remeasured each quarter during the earn-out period, with any adjustments recorded in income from operations.

As of December 31, 2023, there were no unit sales milestones achieved during the earn-out period and therefore we reduced the remaining liability to zero .

During 2019, we recorded contingent liabilities associated with our acquisition of the Anteris biologic patch business.

7 unchanged sentences

The agreement was amended in August 2021 such that the CE Mark Contingency amount may be reduced for certain costs incurred by LeMaitre in achieving the CE marks.

During the quarter ended September 30, 2021, we recorded a reduction to the liability of $ 0.5 million, with the offset recorded in income from operations, to reflect our estimate of costs to be deducted from the contingent payment in connection with this amendment.

Additionally, during the quarter ended December 31, 2022, we recorded a reduction to the liability of approximately $ 0.1 million, with the offset recorded in income from operations.

In September 2023 the agreement was amended in order to (i) place a cap on the total amount of costs incurred by LeMaitre in achieving the CE marks under MDR regulations that could be used as a deduction toward the $ 2.0 million holdback, and (ii) require a prorata payment to Anteris of the CE Mark Contingency, less costs described above, by January 2025 if the CE marks are not obtained by that date.

During the quarter ended September 30, 2023, we recorded a reduction to the liability of $ 0.1 million, with the offset recorded in income from operations.

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:

Six months ended June 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

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

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

Nine months ended

September 30,

(in thousands)

Beginning balance

Other comprehensive (loss) income before reclassifications

Other comprehensive income (loss) before reclassifications

Ending Balance

32 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, Flexcel, 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, Syntel, TufTex, VascuCel, VascuTape, and XenoSure are registered trademarks of LeMaitre Vascular or one of its subsidiaries, and Chevalier, Flexcel and PeriVu 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.

Solely for convenience, trademarks and trade names referred to in this report may appear without the ® or TM symbols.

We are a global provider of medical devices and human tissue cryopreservation services largely used in the treatment of peripheral vascular disease, end-stage renal disease, and to a lesser extent cardiovascular disease.

We develop, manufacture, and market vascular devices to address the needs of vascular surgeons and, to a lesser degree, other specialties such as cardiac surgeons, general surgeons and neurosurgeons.

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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.

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.

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

Our principal product lines include the following:

3 unchanged sentences

In Q3 2024, biologics represented 52% of our worldwide sales.

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

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

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

9 unchanged sentences

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

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.

As of September 30, 2024, our sales force was comprised of 146 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 a North American sales office in Vaughan, Canada.

Our European headquarters is located in Sulzbach, Germany, and we also have European sales offices in Milan, Italy;

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

In the valvulotome market, for example, our differentiated devices have historically allowed us to increase our selling prices while maintaining unit share.

In the valvulotome market, for example, our differentiated devices have historically allowed us to increase our selling prices without incurring significant unit share loss.

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.

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While much of our regulatory effort is focused on maintaining regulatory approvals in various geographies, we will continue to obtain new product approvals in new geographies in order to extend our geographic reach and increase sales.

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.

Recent approvals include the approval to sell the XenoSure patch for carotid indication in Japan in May 2023, the Pruitt Irrigation Occlusion Catheter in China in October 2023, and the Artegraft bovine graft in Thailand and Malaysia in August 2024 and in South Africa in October 2024.

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

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These products totaled approximately $0.7 million in 2022 revenues.

During 2023, we made the decision to discontinue the sales of AlboGraft and LifeSpan synthetic graft product lines in the U.S.

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 attempt to transition sales to other SKUs or products with similar features.

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

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

Sales through LeMaitre Vascular for the nine months ended September 30, 2024 were $4.0 million.

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

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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.

We expect to implement this new system in selected countries in Europe in 2025, starting with the United Kingdom.

As of September 30, 2024, we have capitalized costs on our balance sheet of approximately $4.0 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 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.

For the nine months ended September 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 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.

For the nine months ended September 30, 2024, we estimate that the effects of changes in foreign exchange rates decreased our reported sales by $0.3 million, as compared to rates in effect for the nine months ended September 30, 2023.

Net Sales and Expense Components

25 unchanged sentences

Results of Operations

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

Comparison of the three- and nine-month periods ended September 30, 2024 to the three- and nine-month periods ended September 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

2 unchanged sentences

Europe, Middle East and Africa

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.

Net sales increased by $7.4 million, or 16%, to $54.8 million for the three months ended September 30, 2024, compared to $47.4 million for the three months ended September 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.

Allograft preservation services increased $1.7 million, bovine graft sales increased $1.2 million, bovine vascular patch sales increased $1.2 million, and carotid shunt sales increased $0.8 million.

We estimate that the weaker U.S.

dollar increased net sales by less than $0.1 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

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

Net sales increased by $19.5 million, or 14%, to $164.1 million for the nine months ended September 30, 2024, compared to $144.6 million for the nine months ended September 30, 2023.

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

Allograft preservation services increased $4.2 million, bovine vascular patch sales increased $3.1 million, carotid shunt sales increased $3.0 million, and bovine graft sales increased $2.3 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.

dollar decreased net sales by $0.3 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

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

Net sales by geography.

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.

Net sales in the Americas increased $3.9 million, or 12%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The increase was driven primarily by increased sales of allograft preservation services of $1.4 million, bovine grafts of $1.2 million, bovine vascular patches of $0.5 million, and valvulotomes of $0.4 million.

Net sales in the Americas increased $10.5 million, or 11%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increase was driven primarily by increased sales of allograft preservation services of $3.5 million, bovine grafts of $2.2 million, bovine vascular patches and porcine patches of $1.5 million each, and valvulotomes of $1.0 million.

EMEA net sales increased $2.7 million, or 22%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The increase was driven primarily by increased sales of carotid shunts of $0.6 million, bovine vascular patches of $0.5 million, and allograft preservation services, valvulotomes and embolectomy catheters of $0.3 million each.

EMEA net sales increased $6.5 million, or 17%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increase was driven primarily by increased sales of carotid shunts of $2.2 million, bovine vascular patches of $1.2 million, allograft preservation services of $0.7 million, and embolectomy catheters, valvulotomes and polyester grafts of $0.6 million each.

Asia Pacific net sales increased $0.8 million, or 24%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

The increase was driven primarily by increased sales of ePTFE vascular grafts and bovine vascular patches of $0.2 million each, and embolectomy catheters, over-the-wire embolectomy catheters and valvulotomes of $0.1 million each.

Asia Pacific net sales increased $2.6 million, or 29%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increase was driven primarily by increased sales of over-the-wire embolectomy catheters and ePTFE vascular grafts of $0.6 million each, and bovine vascular patches and embolectomy catheters of $0.3 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

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*Not applicable

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.

Gross profit increased $6.4 million, or 21%, to $37.2 million for the three months ended September 30, 2024, and gross margin increased 280 basis points to 67.8% in the period.

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

The increase in gross margin was driven primarily by greater manufacturing efficiencies and sales price increases, which was partially offset by unfavorable product mix.

Gross profit increased $18.5 million, or 20%, to $112.3 million for the nine months ended September 30, 2024, and gross margin increased 360 basis points to 68.4% in the period.

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

The increase in gross margin was driven primarily by greater manufacturing efficiencies and sales price increases, which was partially offset by unfavorable product mix, including sales of comparatively lower margin 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

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Restructuring

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

% of Net Sales

8 unchanged sentences

Sales and marketing .

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

For the three months ended September 30, 2024, sales and marketing expenses increased 18% to $11.4 million.

The increase was driven primarily by higher sales representative headcount, which resulted in increased compensation and related expenses of $1.2 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 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.

Additionally, travel and training expenses increased $0.5 million.

Sales rep headcount was 146 as of September 30, 2024, a 7% increase from September 30, 2023.

As a percentage of sales, sales and marketing expenses increased to 21% for the three months ended September 30, 2024, up from 20% in the prior period.

For the nine months ended September 30, 2024, sales and marketing expenses increased 11% to $34.1 million.

The increase was driven primarily by higher sales representative headcount, which resulted in increased compensation and related expenses of $2.5 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.

Additionally, travel, training and sales meeting expenses increased $1.0 million and outside services increased $0.1 million.

The increase was partially offset by lower general supplies of $0.3 million.

As a percentage of sales, sales and marketing expenses remained consistent at 21% for the nine months ended September 30, 2024 versus the prior year period.

General and administrative.

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.

For the three months ended September 30, 2024, general and administrative expenses increased 15% to $8.9 million.

The increase was driven primarily by higher headcount and related recruiting fees, accrued bonus, and stock compensation expenses, which resulted in increased compensation and related expenses of $0.9 million.

Additionally, facilities expenses increased $0.3 million.

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

For the nine months ended September 30, 2024, general and administrative expenses increased 14% to $26.8 million.

The increase was driven primarily by higher compensation and related expenses of $1.4 million, outside services and professional fees of $1.1 million, and facilities expenses of $0.5 million.

Additionally, bad debt expenses increased $0.3 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

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

Research and development.

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.

For the three months ended September 30, 2024, research and development expenses decreased 13% to $3.7 million.

The decrease was driven by comparatively higher costs in the prior year period related to outside services, professional fees and testing costs related to MDD and MDR approvals of $0.4 million.

Additionally, process engineering expenses decreased $0.4 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.

As a percentage of sales, research and development expenses decreased to 7% for the three months ended September 30, 2024, down from 9% in the prior year period.

For the nine months ended September 30, 2024, research and development expenses decreased 5% to $12.0 million.

Process engineering expenses decreased $0.5 million as CardioCel device manufacturing was initiated at our Burlington facility, and related expenses were allocated to cost of sales.

As a percentage of sales, research and development expenses decreased to 7% for the nine months ended September 30, 2024, down from 9% in the prior year period.

Restructuring.

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

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

For the nine months ended September 30, 2023, we recorded additional restructuring expenses of $0.5 million.

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

Income tax expense.

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.

We recorded a tax provision of $3.4 million on pre-tax income of $14.6 million for the three months ended September 30, 2024, compared to a $2.3 million tax provision on pre-tax income of $9.8 million for the three months ended September 30, 2023.

We recorded a tax provision of $10.0 million on pre-tax income of $42.9 million for the nine months ended September 30, 2024, compared to a tax provision of $6.5 million on pre-tax income of $28.2 million for the nine months ended September 30, 2023.

Our effective income tax rate was 23.4% and 23.3% for the three- and nine-month periods ended September 30, 2024.

Our tax expense for the current period is based on an estimated annual effective tax rate of 24.1%, 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 21.5% and 22.8% for the three- and six-month periods ended June 30, 2023.

Our effective income tax rate was 23.6% and 23.1% for the three- and nine-month periods ended September 30, 2023.

Our 2023 provision was based on the estimated annual effective tax rate of 24.9%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items.

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.

Our income tax expense for the three- and nine-month periods ended September 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 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.

As of September 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.

3 unchanged sentences

Liquidity and Capital Resources

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.

As of September 30, 2024, our cash and cash equivalents were $21.0 million as compared to $24.3 million as of December 31, 2023.

We had $102.9 million in short-term marketable securities as of September 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 June 30, 2024, our short-term marketable securities reflected an unrealized loss of $1.2 million as a result of increasing market interest rates.

As of September 30, 2024, our short-term marketable securities reflected an unrealized loss of $0.4 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.

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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 $26.3 million for the six months ended June 30, 2024, compared to $17.3 million for the six months ended June 30, 2023.

We recognized operating income of $39.4 million for the nine months ended September 30, 2024, compared to $26.5 million for the nine months ended September 30, 2023.

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

28 unchanged sentences

March 28, 2024

August 15, 2024

August 29, 2024

Fiscal Year 2023

5 unchanged sentences

November 30, 2023

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,

On October 24, 2024, our Board of Directors approved a quarterly cash dividend on our common stock of $0.16 per share payable on December 5, 2024, to stockholders of record at the close of business on November 21, 2024.

Nine months ended September 30,

(in thousands)

5 unchanged sentences

Net cash provided by operating activities.

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 $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.

Net cash provided by operating activities was $28.9 million for the nine months ended September 30, 2024, consisting of $32.9 million in net income, adjustments for non-cash or non-operating items of $14.9 million (including primarily depreciation and amortization of $7.2 million, stock-based compensation of $4.8 million, provisions for inventory write-offs and credit losses of $2.6 million, and foreign currency effect on net income of $0.2 million), and a net use of working capital of $18.8 million.

The net cash used for working capital was driven by an increase in accounts receivable of $7.4 million, an increase in inventory and other deferred costs of $8.9 million, and payments of accounts payable and other liabilities of $2.5 million.

These cash uses were offset by a decrease in prepaid expenses and other assets of $0.1 million.

Net cash provided by operating activities was $26.0 million for the nine months ended September 30, 2023, consisting of $21.6 million in net income, adjustments for non-cash or non-operating items of $12.9 million (including primarily depreciation and amortization of $7.1 million, stock-based compensation of $3.9 million, provisions for inventory write-offs and credit losses of $1.5 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 $2.1 million, an increase in inventory and other deferred costs of $7.6 million, and an increase in prepaid expenses and other assets of $1.2 million.

These cash uses were offset by an increase in accounts payable and other liabilities of $2.3 million.

Net cash used in investing activities.

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 investing activities was $26.2 million for the nine months ended September 30, 2024, consisting of expenditures on property and equipment of $4.9 million and purchases of marketable securities of $21.3 million.

Net cash used in investing activities was $22.5 million for the nine months ended September 30, 2023, consisting of expenditures on property and equipment of $6.0 million, purchases of marketable securities of $15.6 million, and acquisition related payments of $0.9 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.

Net cash used in financing activities was $5.9 million for the nine months ended September 30, 2024, consisting of proceeds from stock option exercises of $4.8 million, net of shares repurchased used to pay employee payroll taxes.

This proceed of cash was offset by dividend payments of $10.8 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.

Net cash used in financing activities was $4.4 million for the nine months ended September 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 $9.3 million.

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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 six months ended June 30, 2024.

There have been no material changes in our critical accounting policies during the nine months ended September 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