What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-08 · 447 added, 552 removed, 388 unchanged (72% 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 $ 1,309 at September 30, 2024 and $ 941 at December 31, 2023

Accounts receivable, net of allowances of $ 1,429 at March 31, 2025 and $ 1,369 at December 31, 2024

Inventory and other deferred costs

12 unchanged sentences

Total current liabilities

Convertible senior notes, net

Lease liabilities - long-term

8 unchanged sentences

authorized 37,000,000 shares;

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

issued 24,204,191 shares at March 31, 2025, and 24,153,165 shares at December 31, 2024

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

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

1,609,890 shares at March 31, 2025 and 1,603,825 shares at December 31, 2024

Total stockholders’ equity

4 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands, except per share data)

Cost of sales

2 unchanged sentences

Research and development

Restructuring

Total operating expenses

2 unchanged sentences

Interest income

Foreign currency gain (loss)

Interest expense

Other income (loss), net

Income before income taxes

7 unchanged sentences

Three months ended

Nine months ended

September 30,

(in thousands)

Other comprehensive income (loss):

19 unchanged sentences

Balance at March 31, 2025

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

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

6 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

Repurchase of common stock for net settlement of equity awards

Stock-based compensation expense

Common stock dividend paid

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 nine months ended

September 30,

For the three months ended

(in thousands)

3 unchanged sentences

Stock-based compensation

Non-cash interest expense and end of term accretion expense

Provision for inventory write-downs

Provision for credit losses

Fair value adjustment to contingent consideration obligations

Loss on divestitures

Foreign currency effect on net income

Fair value adjustments to contingent consideration obligations

Foreign currency transaction effect on income

Changes in operating assets and liabilities:

5 unchanged sentences

Investing activities

Purchases of property and equipment

Purchases of short-term marketable securities

Payments related to acquisitions

Purchases of property and equipment

Payments related to acquisitions, net of cash acquired

Net cash used in investing activities

1 unchanged sentence

Proceeds from stock option exercises

Deferred payments for acquisitions

Purchase of treasury stock for net settlement of equity awards

Common stock cash dividend paid

Net cash used in financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Notes to Consolidated Financial Statements

September 30, 2024

Organization and Basis for Presentation

Description of Business

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

and our subsidiaries.

We develop, manufacture, and market medical devices and implants used primarily in the field of vascular surgery.

We also derive revenues from the processing and cryopreservation of human tissues for implantation in patients.

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

March 31, 2025

Nature of the Business and Basis of Presentation

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

and its subsidiaries.

The Company develops, manufactures, and markets medical devices and implants used primarily in the field of vascular surgery.

The Company also derives revenues from the processing and cryopreservation of human tissues for implantation in patients.

The Company operates in a single segment in which its 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 and dialysis grafts, and valvulotomes.

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

The Company’s offices and production facilities are located in Burlington, Massachusetts;

Fox River Grove, Illinois;

7 unchanged sentences

Maisons-Alfort, France;

Zurich, Switzerland;

Kensington, Australia;

3 unchanged sentences

and Bangkok, Thailand.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation of the results of these interim periods have been included.

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

Actual results may differ from these estimates.

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 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 November 8, 2024, the issuance date of this Quarterly Report on Form 10-Q.

Actual results could differ from those estimates.

Consolidation

Our consolidated financial statements include the accounts of LeMaitre Vascular and the accounts of our wholly-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

Our revenue is derived primarily from the sale of disposable or implantable devices used during vascular surgery.

We sell primarily direct to hospitals and to a lesser extent to international distributors, as described below, and, during the periods presented in our consolidated financial statements, entered into consigned inventory arrangements with either hospitals or distributors on a limited basis.

We also derive revenues from the processing and cryopreservation of human tissues for implantation in patients.

These revenues are recognized when services have been provided and the tissue has been shipped to the customer, provided all other revenue recognition criteria discussed in the succeeding paragraph have been met.

We record revenue under the provisions of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) .

The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The standard explains that to achieve the core principle, an entity should take the following actions:

Identify the contract with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations

Recognize revenue when or as the entity satisfies a performance obligation

Revenue is recognized when the Company satisfies a performance obligation by transferring the promised good or service to a customer (which is when the customer obtains control of that good or service).

In instances in which shipping and handling activities are performed after a customer takes control of the goods (such as when title passes upon shipment from our dock), we have made the policy election allowed under Topic 606 to account for these activities as fulfillment costs and not as performance obligations.

We generally reference customer purchase orders to determine the existence of a contract.

Orders that are not accompanied by a purchase order are confirmed with the customer either in writing or verbally.

The purchase orders or similar correspondence, once accepted, identify the performance obligations as well as the transaction price, and otherwise outline the rights and obligations of each party.

We allocate the transaction price of each contract among the performance obligations in accordance with the pricing of each item specified on the purchase order, which is in turn based on standalone selling prices per our published price lists.

In cases where we discount products or provide certain items free of charge, we allocate the discount proportionately to all performance obligations, unless it can be demonstrated that the discount should be allocated entirely to one or more, but not all, of the performance obligations.

We record revenue, net of allowances for returns and discounts, fees paid to group purchasing organizations, and any sales and value added taxes required to be invoiced, which we have elected to exclude from the measurement of the transaction price as allowed by the standard, at the time of shipment (taking into consideration contractual shipping terms), or in the case of consigned inventory, when it is consumed.

Shipment is the point at which control of the product and title passes to our customers, and at which LeMaitre has a present right to receive payment for the goods.

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 September 30,

Nine months ended September 30,

(in thousands)

Europe, Middle East and Africa

We do not carry any contract assets or contract liabilities, as there are generally no unbilled amounts due from customers under contracts for which we have partially satisfied performance obligations, or amounts received from customers for which we have not satisfied performance obligations.

We satisfy our performance obligations under revenue contracts within a short time period from receipt of the orders, and payments from customers are typically received within 30 to 60 days of fulfillment of the orders, except in certain geographies such as Italy, Spain and France where the payment cycle is customarily longer.

Accordingly, there is no significant financing component to our revenue contracts.

Additionally, we have elected as a policy that incremental costs (such as commissions) incurred to obtain contracts are expensed as incurred, due to the short-term nature of the contracts.

Customers returning products may be entitled to full or partial credit based on the condition and timing of the return.

To be accepted, a returned product must be unopened (if sterile), unadulterated, and undamaged, must have at least 18 months remaining prior to its expiration date, or twelve months for our hospital customers in Europe, and generally be returned within 30 days of shipment.

These return policies apply to sales to both hospitals and distributors.

The amount of products returned to us, either for exchange or credit, has not been material.

Nevertheless, we provide for an allowance for future sales returns based on historical returns experience, which requires judgment.

Our cost of replacing defective products has not been material and is accounted for at the time of replacement.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and are generally adopted by the Company as of the specified effective date.

In December 2023 the FASB issued ASU 2023-09, Income Taxes Topic 740 - Improvements to Income Tax Disclosures.

This amendment is expected to enhance the transparency and decision usefulness of income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and certain information about income taxes paid.

This revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2024.

We are currently evaluating the impacts of the new standard.

In November 2023 the FASB issued ASU 2023-07, Segment Reporting Topic 280- Improvements to Reportable Segment Disclosures.

This amendment requires disclosure of incremental segment information on an annual and interim basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

We are currently evaluating the impacts of the new standard.

There are no other accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on the Company’s consolidated financial statements.

Income Tax Expense

As part of the process of preparing our consolidated financial statements we are required to determine our income taxes in each of the jurisdictions in which we operate.

This process involves estimating our actual current tax expense together with assessing temporary differences resulting from recognition of items for income tax and accounting purposes.

These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet.

We must then assess the likelihood that our deferred tax assets will be recovered from taxable income during the carryback period or in the future;

and to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance.

To the extent we establish a valuation allowance or increase this allowance in a period, we must reflect this increase as an expense within the tax provision in the statement of operations.

We do not provide for income taxes on undistributed earnings of certain foreign subsidiaries, as our intention is to permanently reinvest these earnings.

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, 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.

We will monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly.

Our policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.

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 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 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.

The statute of limitations will be open with respect to these tax positions until 2031.

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

ended September

(in thousands)

Unrecognized tax benefits as of December 31, 2023

Additions/adjustments for tax positions of current year

Additions/adjustments for tax positions of prior years

Reductions for settlements with taxing authorities

Reductions for lapses of the applicable statutes of limitations

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

2020 and forward

2015 and forward

Inventories and Other Deferred Costs

Inventories and other deferred costs consist of the following:

September 30, 2024

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited interim financial statements and related notes have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of March 31, 2025, and results of operations for the three months ended March 31, 2025 and 2024 and cash flows for the three months ended March 31, 2025 and 2024, have been made.

The Company’s results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and assumptions reflected in these unaudited consolidated financial statements include, but are not limited to, credit losses, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes.

The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors that it believes to be reasonable under the circumstances.

On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts, and experience.

Changes in estimates are recorded in the period in which they become known.

As of the date of issuance of these unaudited consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates or judgments or to revise the carrying value of any assets or liabilities.

Actual results may differ from those estimates or assumptions.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

• Level 1-Quoted prices in active markets for identical assets or liabilities.

• Level 2-Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

• Level 3-Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s cash and cash equivalents, short-term marketable securities, accounts receivable, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

The Company's 2.50 % convertible senior notes due 2030 (the "Convertible Notes") are carried at the face value less unamortized debt discount and issuance costs (a level 2 measurement) on the accompanying consolidated balance sheets, and the fair value of the Convertible Notes is presented at each reporting period for disclosure purposes only.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.

Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures.

The Company adopted ASU 2023-07 effective December 31, 2024, on a retrospective basis.

The adoption of 2023-07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU 2024-03), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement.

The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments.

The new guidance clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument.

The guidance is effective for fiscal years beginning after December 15, 2025, with early adoption permitted, and it can be adopted either on a prospective or retrospective basis.

The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

Inventory and Other Deferred Costs

Inventory and other deferred costs consisted of the following:

March 31, 2025

December 31, 2024

5 unchanged sentences

Total inventory and other deferred costs

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.

The Company had inventory on consignment at customer sites of $ 2.1 million and $ 1.8 million at March 31, 2025, and December 31, 2024, respectively.

In connection with the Company’s 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.

By federal law, human tissues cannot be bought or sold.

Therefore, the tissues we preserve are not held as inventory, and the costs we incur to procure and process vascular tissues are instead accumulated and deferred.

Therefore, the tissues the Company preserves are not held as inventory, and the costs the Company incurs to procure and process vascular tissues are instead accumulated and deferred.

These costs include fixed and variable overhead costs associated with the cryopreservation process, including primarily direct labor costs, tissue recovery fees, inbound freight charges, indirect materials, and facilities costs.

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

The Company expenses general and administrative expenses and selling expenses associated with the provision of these services as incurred.

Goodwill and Other Intangible Assets

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

Other intangible assets consist of the following:

September 30, 2024

There was no change to goodwill during the three months ended March 31, 2025.

Other intangible assets consisted of the following:

March 31, 2025

December 31, 2024

5 unchanged sentences

Total identifiable intangible assets

These assets are being amortized over useful lives ranging from 2 to 16 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 September 30,

Nine months ended September 30,

(in thousands)

The Company is amortizing these assets over useful lives ranging from 2 to 16 years.

The weighted-average amortization period for these intangibles as of March 31, 2025, is 8.6 years.

The Company includes amortization expense in general and administrative expense as follows:

Three months ended March 31,

(in thousands)

4 unchanged sentences

Amortization expense

Accrued Expenses and Other Long-term Liabilities

Accrued expenses consisted of the following:

March 31, 2025

December 31, 2024

(in thousands)

Compensation and related taxes

Accrued purchases

Income and other taxes

Accrued expenses

Accrued interest

Professional fees

Other long-term liabilities consisted of the following:

March 31, 2025

December 31, 2024

(in thousands)

As part of the process of preparing the consolidated financial statements, the Company is required to determine its income taxes in each of the jurisdictions in which it operates.

This process involves the Company estimating its actual current tax expense together with assessing temporary differences resulting from recognition of items for income tax and accounting purposes.

These differences result in deferred tax assets and liabilities, which are included within the Company’s consolidated balance sheet.

The Company must then assess the likelihood that its deferred tax assets will be recovered from taxable income during the carryback period or in the future;

and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance.

To the extent the Company establishes a valuation allowance or increases its allowance in a period, the Company must reflect this increase as an expense within the tax provision in the statement of operations.

The Company does not provide for income taxes on undistributed earnings of certain foreign subsidiaries, as its intention is to permanently reinvest these earnings.

The Company recognizes, measures, presents and discloses in its consolidated financial statements any uncertain tax positions that it has taken, or expects to take on a tax return.

The Company operates 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 the Company’s provision for income taxes, deferred tax assets and liabilities, liabilities for uncertain tax positions, and any valuation allowance recorded against the Company’s net deferred tax assets.

The Company will monitor the realizability of its deferred tax assets and adjust the valuation allowance accordingly.

The Company’s policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.

The Company’s 2025 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 its foreign subsidiaries, and discrete stock option exercises.

The Company’s 2024 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 its foreign subsidiaries, and discrete stock option exercises.

The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority.

As of March 31, 2025, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $ 417,000 .

The Company remains subject to examination until the statute of limitations expires for each remaining respective tax jurisdiction.

The statute of limitations will be open with respect to these tax positions until 2031.

A reconciliation of beginning and ending amount of the Company’s unrecognized tax benefits is as follows:

ended March 31,

(in thousands)

Unrecognized tax benefits as of December 31, 2024

Additions/adjustments for tax positions of current year

Additions/adjustments for tax positions of prior years

Reductions for settlements with taxing authorities

Reductions for lapses of the applicable statutes of limitations

Unrecognized tax benefits as of March 31, 2025

As of March 31, 2025, a summary of the tax years that remain subject to examination in the Company’s taxing jurisdictions is as follows:

United States

2021 and forward

2016 and forward

Convertible Senior Notes

Convertible senior notes consisted of the following:

March 31, 2025

December 31, 2024

(in thousands)

Principal amount of convertible senior notes

Current portion of convertible senior notes

Convertible senior notes, net of current portion

Debt discount, net of accretion

Convertible senior notes, net of discount and current portion

On December 19, 2024, the Company issued $ 172.5 million aggregate principal amount of convertible senior notes due 2030, in a Rule 144A private placement to qualified institutional buyers pursuant to an indenture dated December 19, 2024, by and between the Company and U.S.

Bank Trust Company, National Association (the “Indenture”).

The Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed, or converted.

The proceeds from the issuance of the Convertible Notes were approximately $ 167.7 million, net of initial purchaser discounts and other debt issuance costs totaling $ 4.8 million.

The Convertible Notes bear interest at a rate of 2.50 % per year and interest is payable semiannually in arrears on August 1 and February 1 of each year.

The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents an initial conversion price of approximately $ 119.73 per share of common stock and a premium of approximately 30% over the closing price of the Company’s common stock on December 16, 2024.

In connection with the payment by the Company on March 27, 2025 of a quarterly cash dividend of $ 0.20 per share (an increase from the quarterly dividend amount of $ 0.16 per share as of the time of issuance of the Convertible Notes), the conversion rate of the Convertible Notes was increased to 8.3562 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $ 119.67 per share of common stock.

A similar adjustment to the conversion rate will be made upon payment of the quarterly cash dividend of $ 0.20 on May 29, 2025 and upon payment of subsequent quarterly dividends in excess of $ 0.16 per share.

The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.

Noteholders may convert all or a portion of their Convertible Notes at their option only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the Indenture;

(4) if the Company calls (or is deemed to have called) any Convertible Notes for redemption;

and (5) at any time from, and including, August 1, 2029, until the close of business on the second scheduled trading day immediately before the maturity date.

The Company has the right to elect to settle conversions either in cash, shares of its common stock, or in a combination of cash and shares of its common stock.

Additional interest of up to 0.5% per annum is payable if the Company fails to timely file required documents or reports with the Securities and Exchange Commission (“SEC”) or the Convertible Notes become not freely tradable (as defined in the Indenture).

The Company determined that the higher interest payments required in certain circumstances were embedded derivatives that should be bifurcated and accounted for at fair value.

The Company assessed the value of the embedded derivatives at each balance sheet date and determined they had de minimis value.

Prior to February 5, 2028, the Convertible Notes will not be redeemable.

On or after February 5, 2028, until the fortieth trading day immediately before the maturity date, the Company may redeem for cash all or any portion of the Convertible Notes (subject to the partial redemption limitation set forth in the Indenture), at its option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

In addition, calling any Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

During the three months ended March 31, 2025, the Company recognized $ 1.1 million in interest expense related to the 2.50 % cash coupon of the Convertible Notes and $ 0.2 million of amortization expense of the debt issuance costs.

The Company did not recognize interest expense during the three months ended March 31, 2024.

During the three months ended March 31, 2025, the effective interest rate on the outstanding Convertible Notes was approximately 3.1%.

As of March 31, 2025, the estimated fair value of the Convertible Notes was $ 172.7 million.

The fair value was determined based on the quoted price of the last trade of the Convertible Notes prior to the end of the reporting period in an inactive market, which is considered as Level 2 in the fair value hierarchy.

Stock-Based Compensation

The Company’s 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 its officers, employees, directors, and consultants.

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

Three months ended

(in thousands)

Stock option awards

Restricted stock units

Performance-based restricted stock units

Total stock-based compensation

Stock-based compensation is included in the Company’s consolidated statements of operations as follows:

Three months ended

(in thousands)

Cost of sales

Sales and marketing

General and administrative

Research and development

Total stock-based compensation

During the three months ended March 31, 2025, the Company granted 741 options.

The Company did not grant any options during the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, the Company granted 1,521 and 222 restricted stock units, respectively.

During the three months ended March 31, 2025, the Company granted 129 performance-based restricted stock units.

The Company did not grant any performance-based restricted stock units during the three months ended March 31, 2024.

The Company issued 51,026 and 124,540 shares of common stock following the exercise or vesting of underlying stock options, restricted stock units, and performance-based restricted stock units during the three months ended March 31, 2025 and 2024, respectively.

Net Income per Share

The Company computes basic net income per common share by dividing the net income by the weighted average number of shares of common stock outstanding for the period.

Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards, using the treasury stock method, and outstanding convertible notes, using the if-converted method.

A reconciliation of the numerators and the denominators of the basic and dilutive net income per common share computations are as follows:

Three months ended

(in thousands, except per share data)

Weighted average basic common shares outstanding

Effect if dilutive securities:

Options to purchase common stock

Restricted stock units

Performance-based restricted stock units

Weighted average dilutive common shares outstanding

Net income per share:

The Company excluded the following common shares, presented based on weighted average shares outstanding, from the computation of diluted net income per share because including them would have had an anti-dilutive effect:

Three months ended

(in thousands)

Convertible senior notes

Options to purchase common stock

Restricted stock units

Performance-based restricted stock units

Stockholders ’ Equity

Share Repurchase Program

On February 18, 2025, the Company’s Board of Directors authorized the repurchase of up to $ 75.0 million of the Company’s common stock through transactions on the open market, in privately negotiated purchases or otherwise until February 17, 2026.

The repurchase program may be suspended or discontinued at any time.

To date the Company has not made any repurchases under this program.

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

Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Board of Directors on a quarterly basis.

The dividend activity for the periods presented is as follows:

Per Share Amount

Dividend Payment

(in thousands)

Fiscal Year 2025

March 13, 2025

March 27, 2025

Fiscal Year 2024

March 14, 2024

March 28, 2024

August 15, 2024

August 29, 2024

November 21, 2024

December 5, 2024

On April 29, 2025, the Company’s Board of Directors approved a quarterly cash dividend on its common stock of $ 0.20 per share payable on May 29, 2025 , to stockholders of record at the close of business on May 15, 2025 .

Commitments and Contingencies

Operating Leases

The Company determines if an arrangement is a lease at inception of the contract.

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

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

As of March 31, 2025, 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 unchanged sentence

December 2030

Fox River Grove, IL

RestoreFlow allografts business

December 2026

Fox River Grove, IL

RestoreFlow allografts business

November 2025

Vaughn, Canada

1 unchanged sentence

February 2026

Chandler, Arizona

US sales office

Europe, Middle East and Africa

2 unchanged sentences

Italy sales office and distribution

September 2027

Hereford, England

3 unchanged sentences

February 2030

Zurich, Switzerland

Switzerland sales office and distribution

February 2030

Madrid, Spain

1 unchanged sentence

Japan sales office and distribution

Shanghai, China

China sales office and distribution

Bangkok, Thailand

4 unchanged sentences

Asia Pacific headquarters and distribution

Shanghai, China

China sales office and distribution

Ballarat, Australia

5 unchanged sentences

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

None of our noncancelable lease payments include non-lease components such as maintenance contracts;

we generally reimburse the landlord for direct operating costs associated with the leased space.

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 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.

None of the Company’s noncancelable lease payments include non-lease components such as maintenance contracts.

The Company generally reimburses the landlord for direct operating costs associated with the leased space.

The Company has no subleases, and there are no residual value guarantees associated with, or restrictive covenants imposed by, any of its leases.

The Company held no assets under capital leases as of March 31, 2025.

The Company elected the package of practical expedients that allow it to omit leases with initial terms of 12 months or less from its balance sheet, which the Company expenses on a straight-line basis over the life of the lease.

The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis.

Additional information with respect to our leases is as follows:

Three months ended September 30,

Nine months ended September 30,

(in thousands)

Additional information with respect to the Company’s leases is as follows:

Three months ended March 31,

(in thousands)

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Weighted average discount rate - operating leases

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:

As of March 31, 2025, the minimum noncancelable operating lease rental commitments with initial or remaining terms of more than one year are as follows:

Remainder of 2025

Year ending December 31,

Adjustment to net present value as of September 30, 2024

Adjustment to net present value as of March 31, 2025

Minimum noncancelable lease liability

Accrued Expenses and Other Long-term Liabilities

Accrued expenses consist of the following:

September 30, 2024

December 31, 2023

(in thousands)

Compensation and related taxes

Accrued purchases

Accrued expenses

Income and other taxes

Professional fees

Other long-term liabilities consist of the following:

September 30, 2024

December 31, 2023

(in thousands)

Acquisition-related liabilities

Segment and Enterprise-Wide Disclosures

The FASB establishes standards for reporting information regarding operating segments in financial statements.

Operating segments are identified as components of an enterprise that engage in business activities for which separate, discrete financial information is available and is regularly reviewed by the chief operating decision-maker in making decisions on how to allocate resources and assess performance.

We view our operations and manage our business as one operating segment.

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., Germany, Canada, the United Kingdom (UK) and other European countries.

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

Net sales to unaffiliated customers by country were as follows:

Three months ended

Nine months ended

September 30,

Segment and Geographic Information

The Company regularly reviews its segment financial information and the approach used by the chief operating decision maker (“CODM”), the Chief Executive Officer, to evaluate performance and allocate resources.

The Company considers the business to be a single operating segment engaged in the development, manufacturing, and marketing of medical devices and implants, as well as the processing and cryopreservation of human tissues for implantation in patients, all used primarily in the field of vascular surgery.

The CODM assesses performance for its single operating segment and decides how to allocate resources based on net income that also is reported on the consolidated statements of operations.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the single operating segment or into other parts of the entity, such as for acquisitions, dividend payments, and/or short-term marketable security investments.

Net income is also used to monitor budget versus actual results, which is used in assessing performance of the segment and in establishing management’s compensation.

In addition to total segment net income, the CODM’s quarterly reporting package includes several highlighted expense categories that the CODM considers key strategic drivers of the Company’s long-term profitability.

The following is the Company’s operating segment reconciliation of net income, including significant segment expenses:

Three months ended March 31,

(in thousands)

Cost of sales

Selling expense

Marketing expense

Administrative expense

Finance expense

Management information systems expense

Research and development expense

Process engineering expense

Regulatory and clinical expense

Other (income) expense, net*

* Refer to the consolidated statement of operations for the components of other income and expense and related amounts.

Most of the Company’s revenues are generated in the United States, Germany, the United Kingdom, other European countries, and Canada.

Substantially all of the Company’s assets are located in the United States and Germany.

Net sales to unaffiliated customers based on customer location by country were as follows:

Three months ended March 31,

(in thousands)

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Other countries

Share-based Compensation

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

Nine months ended

September 30,

(in thousands)

Stock option awards

Restricted stock units

Performance-based restricted stock units

Total share-based compensation

Stock-based compensation is included in our consolidated statements of operations as follows:

Three months ended

Nine months ended

September 30,

(in thousands)

Cost of sales

Sales and marketing

General and administrative

Research and development

Total stock-based compensation

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

The computation of basic and diluted net income per share is as follows:

Three months ended

Nine months ended

September 30,

(in thousands, except per share data)

Net income available for common stockholders

Weighted average shares outstanding

Basic earnings per share

Net income available for common stockholders

Weighted-average shares outstanding

Common stock equivalents, if dilutive

Shares used in computing diluted earnings per common share

Diluted earnings per share

Shares excluded in computing diluted earnings per share as those shares would be anti-dilutive

Stockholders ’ Equity

Share Repurchase Program

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.

The repurchase program may be suspended or discontinued at any time.

To date we have not made any repurchases under this program.

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

Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis.

The dividend activity for the periods presented is as follows:

Per Share Amount

Dividend Payment

(in thousands)

Fiscal Year 2024

March 14, 2024

March 28, 2024

August 15, 2024

August 29, 2024

Fiscal Year 2023

March 9, 2023

March 23, 2023

August 17, 2023

August 31, 2023

November 16, 2023

November 30, 2023

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 nine months ended

September 30,

For the three months ended

(in thousands)

Cash paid for income taxes, net

Fair Value Measurements

The fair value accounting guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets;

quoted prices for identical or similar assets and liabilities in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

The agreement includes the potential for us to pay up to $ 7.8 million of additional consideration beyond payments made to date, with $ 0.3 million contingent upon the delivery of audited financial statements of the acquired business to us;

$ 2.0 million (CE Mark Contingency) contingent on LeMaitre’s success in obtaining CE marks under MDR regulations on the acquired products;

$ 0.5 million contingent upon Anteris’ success in extending the shelf life of the acquired products as specified in the agreement;

and another $ 5.0 million contingent on the achievement of specified levels of revenues in the first 12 and 24 months following the acquisition date.

This additional contingent consideration was initially valued in total at $ 2.3 million and is being re-measured each quarter until the payment requirement ends, with any adjustments reported in income from operations.

The contingent payment related to the delivery of audited financial statements of the business was paid in November 2019 upon satisfaction of the deliverable.

The contingent payments related to Anteris’ extending the shelf life of the acquired products and achieving the revenue targets during the first 12- and 24-month periods following the acquisition were not met, and the portion of the liabilities related to these items was adjusted through income from operations.

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.

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.

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:

Nine months ended September 30,

(in thousands)

Beginning balance

Change in fair value included in earnings

Ending balance

Accumulated Other Comprehensive Loss

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 income (loss) before reclassifications

Ending Balance

Subsequent Events

On April 2, 2025, the U.S.

federal government announced a new series of tariffs on a broad range of imported goods, including components, raw materials, and finished products originating from several key international trade partners.

These tariffs are scheduled to take effect beginning June 15, 2025.

The Company is actively assessing the potential effects of these announced tariffs on both short-term and long-term business operations.

At this time, the extent of the financial and operational impact of the new tariffs on the Company’s future results cannot be reasonably estimated.

The Company will continue to monitor developments related to the implementation and potential legal or policy challenges to the tariffs, and will take appropriate measures to manage any potential risks or disruptions to its business, if any.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements (within the meaning of the U.S.

Private Securities Litigation Reform Act of 1995) that involve substantial risks and uncertainties, particularly risks related to the regulatory environment, our common stock, fluctuations in our quarterly and annual results, our ability to successfully integrate acquisitions into our business, and risks related to our business and industry generally, such as risks inherent in the process of developing and commercializing products and services that are safe and effective for use in the peripheral vascular disease market.

All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future net sales, gross margin expectations, projected costs, projected expenses, prospects and plans and objectives of management are forward-looking statements.

The words “ anticipates, ” “ believes, ” “ estimates, ” “ expects, ” “ intends, ” “ may, ” “ plans, ” “ projects, ” “ will, ” “ would, ” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We have based these forward-looking statements on our current expectations and projections about future events.

Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties.

Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove incorrect, our actual results, performance, or financial condition may vary materially and adversely from those anticipated, estimated, or expected.

No forward-looking statement can be guaranteed and actual results may vary materially from those projected in the forward-looking statements.

We intend to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding our forward-looking statements, and are including this sentence for the express purpose of enabling us to use the protections of the safe harbor with respect to all forward-looking statements.

These risks and uncertainties include, but are not limited to :

the risk of companies that develop products or services that may impact the use of our products such as drugs to treat diabetes or weight loss;

the risks from competition from other companies;

the status of our global regulatory approvals and compliance with regulatory requirements to market and sell our products both in the U.S.

and outside of the U.S.;

risks related to product demand and market acceptance of the Company ’ s products and pricing;

risks from implementing a new enterprise resource planning system;

the risk of significant fluctuations in our quarterly and annual results due to numerous factors;

the risk that we may not be able to maintain our recent levels of profitability;

our reliance on sole source suppliers;

disruptions or breaches of information technology systems;

the risk that the Company may not realize the anticipated benefits of its strategic activities;

the risk that assumptions about the market for the Company ’ s products and the productivity of the Company ’ s direct sales force and distributors may not be correct;

the acceleration or deceleration of product growth rates;

the risk that a recall of our products could result in significant costs or negative publicity;

the risk that the Company is not successful in transitioning to a direct-selling model in new territories.

Forward-looking statements reflect management ’ s analysis as of the date of this quarterly report.

Further information on potential risk factors that could affect our business and financial results is detailed in Part II, Item 1A, “ Risk Factors ” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission, including under the section headed “ Risk Factors ” in our most recent Annual Report on Form 10-K.

Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included in this report and our other SEC filings, including our audited consolidated financial statements and the related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 29, 2024.

We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Unless the context indicates otherwise, references to “ LeMaitre Vascular, ” “ we, ” “ LeMaitre, ” “ our, ” and “ us ” in this Quarterly Report on Form 10-Q refer to LeMaitre Vascular, Inc.

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, 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.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 28, 2025, or the 2024 Form 10-K.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “ Item 1A.

Risk Factors ” section of this Quarterly Report on Form 10-Q and the “ Item 1A.

Risk Factors ” section of our 2024 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

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 cardiovascular disease.

1 unchanged sentence

Our diversified portfolio of devices consists of brand name products that are used in arteries and veins and are well known to vascular surgeons.

Our principal product offerings are sold globally, primarily in the U.S., Europe, Canada and Asia Pacific.

We estimate that the annual worldwide market for peripheral vascular devices exceeds $5 billion, within which we estimate that the market for our products is approximately $800 million.

Our principal product offerings are sold globally, primarily in the United States, Europe, Canada and Asia Pacific.

We estimate that the annual worldwide market for peripheral vascular devices exceeds $5 billion, within which we estimate that the market for our products is approximately $1 billion.

We have grown our business using a three-pronged strategy:

4 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.

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.

Recently we have also begun to explore adjacent market customers, such as cardiac surgeons and interventional cardiologists.

Our principal product lines include the following:

9 unchanged sentences

growing our direct sales force in North America, Europe, the UK, and Asia Pacific, including replacing distributors with our direct sales personnel;

increasing the average selling prices for our devices;

increasing the average selling prices of our devices;

introducing our products into new territories upon receipt of regulatory approvals or registrations;

3 unchanged sentences

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

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.

3 unchanged sentences

Dublin, Ireland;

and Maisons-Alfort, France.

Maisons-Alfort, France;

and Zurich, Switzerland.

Our Asia Pacific headquarters is located in Singapore, and we also have Asia Pacific sales offices in Tokyo, Japan;

3 unchanged sentences

and Bangkok, Thailand.

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

During the quarter ended March 31, 2025, approximately 94% of our net sales were generated in territories in which we employ direct sales representatives.

We sell our products in other countries through distributors.

As of May 1, 2025, our sales force comprised 164 sales representatives and export managers in North America, Europe, the UK, and Asia Pacific.

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 without incurring significant unit share loss.

In the valvulotome market, for example, our differentiated devices have historically allowed us to increase average 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.

1 unchanged sentence

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

We obtain regulatory approvals for our devices and services in new segments and geographies in order to further access the broader peripheral device market and selected other markets.

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, 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.

Previously we had obtained 4 MDR CE marks.

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

We obtain regulatory approvals for our devices and services in new product categories and geographies in order to further access the broader peripheral device market and selected other markets.

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, the XenoSure patch for cardiac indication in China in December 2024, and the Artegraft bovine graft in Thailand and Malaysia in August 2024 and in South Africa in October 2024.

Separately, in 2024, we received MDR CE marks allowing for the continued sale of eleven devices into the European Union, or EU.

Previously in 2023 we obtained four MDR CE marks.

In January 2025, we received MDR CE marks to market Burlington-manufactured CardioCel and VascuCel devices in the EU.

In April 2025, we received MDR CE marks to market Artegraft devices in the EU.

In total, we currently have 17 MDR CE marks as of May 1, 2025, and expect to hold 23 MDR CE marks by the end of 2025.

The European Commission has designated the end of 2028 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.

Our strategy for growing our business includes acquisitions 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.

1 unchanged sentence

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

During 2021, we made decisions to wind down or discontinue TRIVEX powered phlebectomy systems, remote endarterectomy devices and surgical glue.

These products totaled approximately $2.2 million in 2021 revenues.

During 2021, we made decisions to wind down the TRIVEX powered phlebectomy systems, remote endarterectomy devices, and surgical glue.

These product lines totaled approximately $2.2 million in 2021 revenues.

During 2022, we made the decision to wind down the ProCol graft, AlboSure polyester patch, LeverEdge and Latis graft cleaning catheter product lines.

These products totaled approximately $0.7 million in 2022 revenues.

During 2024, we made the decision to wind down the PeriVu Angioscope product line.

This product totaled approximately $0.9 million in 2024 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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The distribution termination fees totaled approximately $0.7 million.

In March 2025, we entered into a distribution transition agreement with our Portugal distributor to sell products directly in Portugal and dissolve the existing distribution arrangement.

We plan to be selling direct-to-hospitals in Portugal in Q2 2025.

The distribution termination fees are expected to total approximately $0.2 million.

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 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 U.S.

in April 2024.

In March 2022, we received FDA clearance to market PhasTIPP, a portable powered phlebotomy device used to remove varicose veins in the leg.

The device was launched in the United States 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.

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In October 2018, we acquired the Cardial business from Becton Dickinson.

Cardial manufactured polyester vascular grafts, valvulotomes and surgical glue at its St.

Cardial manufactured polyester vascular grafts, valve cutters and surgical glue at its St.

Etienne, France facility.

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

In July 2020, we initiated a project to transfer production to our Burlington facilities.

The transfer to Burlington was substantially completed in 2023.

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.

to become the exclusive U.S.

In June 2023, the MDR CE mark application for these Burlington-produced devices was submitted and we obtained approval in January 2025.

We began distributing these Burlington-produced patches in the United States, Canada, and select Asia Pacific, or APAC, markets in 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 April 2023, we entered into an agreement with Elutia to become the exclusive U.S.

distributor of their cardiovascular porcine patches.

Under the agreement, we can distribute the products for three years with an option to acquire Elutia Inc’s worldwide cardiovascular porcine patch business during the second and third year of the agreement.

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

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

Under the agreement, we can distribute the products for three years with an option to acquire Elutia’s worldwide cardiovascular porcine patch business during the second and third year of the agreement.

Our sales of the Elutia patches for the three months ended March 31, 2025 was $1.5 million.

Subsequently, on April 30, 2025, we ended our cardiovascular porcine patch distribution agreement with Elutia.

Our Elutia patch sales for the year ended December 31, 2024 were $5.0 million.

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

In February 2024, we began implementing a new enterprise resource planning system (ERP) to replace our financial reporting and planning system.

In February 2024, we began implementing a new ERP system to replace our financial reporting and planning system.

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 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, 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.

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

In February 2025, we implemented this new system in the UK.

As of March 31, 2025, we have capitalized costs on our balance sheet of $5.0 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 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.

For the three months ended March 31, 2025, approximately 42% of our sales took place outside of the United States, largely in currencies other than the U.S.

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

Selling, marketing, and administrative costs related to these sales are also denominated in foreign currencies, thereby partially mitigating our bottom-line exposure to exchange rate fluctuations.

However, if there is an increase in the rate at which a foreign currency is exchanged for U.S.

However, if there is a decrease in the rate at which a foreign currency is exchanged for U.S.

dollars, it will require more of the foreign currency to equal a specified amount of U.S.

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In such cases we will record less revenue in U.S.

dollars than we did before the exchange rate changed.

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.

dollars than we would have if the exchange rate had not changed.

For the three months ended March 31, 2025, we estimate that the effects of changes in foreign exchange rates decreased our reported sales by approximately $0.8 million, as compared to rates in effect for the three months ended March 31, 2024.

Net Sales and Expense Components

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Sales and marketing.

Our sales and marketing expense consists primarily of salaries, commissions, stock-based compensation, travel and entertainment, sales meetings, attendance at vascular and cardiac congresses, training programs, advertising and product promotions, direct mail and other marketing costs.

Sales and marketing expense consists primarily of salaries, commissions, stock-based compensation, travel and entertainment, sales meetings, attendance at vascular and cardiac congresses, training programs, advertising and product promotions, direct mail, and other marketing costs.

General and administrative.

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Income tax expense.

We are subject to federal and state income taxes for earnings generated in the U.S., which include operating losses or profits in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned foreign subsidiaries.

Our consolidated tax expense is affected by the mix of our taxable income (loss) in the U.S.

and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S.

We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses or profits in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned foreign subsidiaries.

Our consolidated tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S.

tax reporting purposes.

Results of Operations

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 September 30,

Nine months ended September 30,

(in thousands)

Comparison of the three-month period ended March 31, 2025, to the three-month period ended March 31, 2024:

The following table sets 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,

(in thousands)

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Europe, Middle East and Africa

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 $1.7 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.

Net sales increased by $6.4 million, or 12%, to $59.9 million for the three months ended March 31, 2025, compared to $53.5 million for the three months ended March 31, 2024.

The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and additional sales representatives.

Graft sales increased $3.1 million, patch sales increased $1.4 million, shunt sales increased $0.8 million, and valvulotome sales increased $0.7 million.

We estimate that the stronger U.S.

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.

dollar decreased net sales by $0.8 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Direct-to-hospital net sales were 94% and 95% of our total net sales for the three months ended March 31, 2025 and 2024.

Net sales by geography.

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.

Net sales in the Americas increased $3.7 million, or 11%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The increase was driven primarily by increased sales of grafts of $1.7 million, patches of $1.0 million, and valvulotomes of $0.7 million.

EMEA net sales increased $2.6 million, or 18%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The increase was driven primarily by increased sales of grafts of $1.5 million, shunts of $0.4 million, and catheters of $0.4 million.

Asia Pacific net sales increased $0.1 million, or 3%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The increase was driven primarily by increased sales of valvulotomes of $0.1 million.

Gross Profit.

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

Three months ended September 30,

Nine months ended September 30,

(in thousands)

Three months ended March 31,

(in thousands)

*Not applicable

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.

Gross profit increased $4.8 million, or 13%, to $41.4 million for the three months ended March 31, 2025, as compared to $36.7 million for the three months ended March 31, 2024, and gross margin increased by 60 basis points to 69.2% in the period, as compared to 68.6% for the three months ended March 31, 2024.

The increase in gross profit was driven primarily by increased sales, particularly from grafts, patches, and shunts.

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

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 September 30,

Nine months ended September 30,

(in thousands)

Three months ended March 31,

(in thousands)

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Research and development

Restructuring

Three months ended September 30,

Nine months ended September 30,

% of Net Sales

Three months ended March 31,

% of Net Sales

3 unchanged sentences

Research and development

Restructuring

* Not a meaningful percentage relationship.

Sales and marketing .

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 $0.5 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 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.

For the three months ended March 31, 2025, sales and marketing expenses increased 22% to $14.2 million.

The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $1.4 million.

Additionally, general supplies and equipment expenses increased $0.4 million, professional services and outside services increased $0.4 million, and travel and training expenses increased $0.3 million in the three months ended 2025.

As a percentage of net sales, sales and marketing expenses increased to 24% for the three months ended March 31, 2025, up from 22% in the prior year period.

General and administrative.

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 nine months ended September 30, 2024 versus the prior year period

For the three months ended March 31, 2025, general and administrative expenses increased 16% as compared to the three months ended March 31, 2024, to $10.5 million.

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

As a percentage of sales, general and administrative expenses increased to 18% for the three months ended March 31, 2025, up from 17% for the three months ended March 31, 2024.

Research and development.

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 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 nine months ended September 30, 2024, there were no restructuring expenses.

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

Etienne, France factory.

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

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

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.

For the three months ended March 31, 2025, research and development expenses remained flat at $4.1 million relative to the three months ended March 31, 2024.

As a percentage of sales, research and development expenses decreased to 7% for the three months ended March 31, 2025, down from 8% for the three months ended March 31, 2024.

Income tax expense.

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.

We recorded a tax provision of $3.2 million on pre-tax income of $14.2 million for the three months ended March 31, 2025, compared to a $2.9 million tax provision on pre-tax income of $12.8 million for the three months ended March 31, 2024.

Our effective income tax rate was 22.7% for the three-month period ended March 31, 2025.

Our tax expense for the current period is based on an estimated annual effective tax rate of 23.8%, 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 23.6% and 23.1% for the three- and nine-month periods ended September 30, 2023.

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

Our 2024 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 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.

Our income tax expense for the three-month period ended March 31, 2024, 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.

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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 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.

As of March 31, 2025, 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, or IRA, was enacted into law on August 16, 2022.

Included in the IRA was a provision to implement a 15% corporate alternative minimum tax on “adjusted financial statement income” for applicable corporations and a 1% excise tax on repurchases of stock.

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We do not currently believe the IRA will have a material impact on our reported results, cash flows, or financial position.

In April 2025, the Company filed amended Forms 941-X to claim the expanded Employee Retention Credit, or ERTC, totaling $6.3 million of credits for filing periods beginning January 1, 2021, through September 30, 2021.

Liquidity and Capital Resources

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.

As of March 31, 2025, our cash and cash equivalents were $25.3 million, as compared to $25.6 million as of December 31, 2024.

We had $277.2 million in short-term marketable securities as of March 31, 2025, and $274.1 million as of December 31, 2024.

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.

Our short-term marketable securities consist of a managed income mutual fund investing mainly in short-term investment grade, U.S.

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

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.

Our short-term marketable securities consist of a U.S.

government money market fund investing mainly in high-quality, short-term securities that are issued or guaranteed by the U.S.

government or by U.S.

government agencies and instrumentalities, and a short-duration bond fund.

As of March 31, 2025, our short-term marketable securities reflected an unrealized loss of $0.8 million as a result of increasing market interest rates.

On February 18, 2025, our Board of Directors authorized the repurchase of up to $75.0 million of our common stock through transactions on the open market, in privately negotiated purchases, or otherwise until February 17, 2026.

The repurchase program may be suspended or discontinued at any time.

To date we have not made any repurchases under this program.

To date we have not made any repurchases under this or any prior program.

Convertible Senior Notes

On December 19, 2024, we issued $172.5 million aggregate principal amount of convertible senior notes due 2030, or the Convertible Notes, in a Rule 144A private placement to qualified institutional buyers pursuant to an indenture dated December 19, 2024, by and between us and U.S.

Bank Trust Company, National Association, or the Indenture.

The Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted.

The proceeds from the issuance of the Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million.

The Convertible Notes bear interest at a rate of 2.50% per year, and interest is payable semiannually in arrears on August 1 and February 1 of each year.

The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024.

In connection with the payment by the Company on March 27, 2025 of a quarterly cash dividend of $0.20 per share (an increase from the quarterly dividend amount of $0.16 per share as of the time of issuance of the Convertible Notes), the conversion rate of the Convertible Notes was increased to 8.3562 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.67 per share of common stock.

A similar adjustment to the conversion rate will be made upon payment of the quarterly cash dividend of $0.20 on May 29, 2025 and upon payment of subsequent quarterly dividends in excess of $0.16 per share.

The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture.

Noteholders may convert all or a portion of their Convertible Notes at their option only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of the our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the our common stock, as described in the Indenture;

(4) if we call (or are deemed to have called) any Convertible Notes for redemption;

and (5) at any time from, and including, August 1, 2029, until the close of business on the second scheduled trading day immediately before the maturity date.

We have the right to elect to settle conversions either in cash, shares of common stock, or in a combination of cash and shares of our common stock.

Prior to February 5, 2028, the Convertible Notes will not be redeemable.

On or after February 5, 2028, until the fortieth scheduled trading day immediately before the maturity date, we may redeem for cash all or any portion of the Convertible Notes (subject to the partial redemption limitation set forth in the Indenture), at its option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.

Operating and Capital Expenditure Requirements

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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 $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.

We recognized operating income of $12.6 million for the three months ended March 31, 2025, compared to $11.9 million for the three months ended March 31, 2024.

We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors.

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costs associated with our initiatives to sell direct-to-hospital in new countries;

costs of obtaining and maintaining U.S.

FDA and other regulatory clearances;

costs of obtaining and maintaining FDA and other regulatory clearances;

costs associated with obtaining European MDR CE mark approvals;

1 unchanged sentence

potential future share repurchases.

Our cash balances may decrease as we continue to use cash to fund our operations, make acquisitions, pay dividends, repurchase shares of our common stock and make deferred payments related to prior acquisitions.

We believe that our cash, cash equivalents, investments and the interest we earn on these balances will be sufficient to meet our anticipated cash requirements for at least the next twelve months and to meet our known long-term cash requirements.

If these sources of cash are insufficient to satisfy our liquidity requirements beyond the next twelve months, we may seek to sell additional equity or debt securities or take out a loan.

The sale of additional equity and debt securities may result in dilution to our stockholders, as was the case with our July 2021 equity offering.

If we raise additional funds through the issuance of debt securities, such securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations and possibly our ability to pay dividends.

We may require additional capital beyond our currently forecasted amounts.

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

We believe that our cash, cash equivalents, investments, and the interest we earn on these balances will enable us to fund our operating expenses, capital expenditures requirements, and Convertible Note payments for at least twelve months following the filing of this Form 10-Q and, together with our anticipated future cash, cash equivalents, and investments, to meet our known long-term cash requirements.

We may need to raise additional funding, which might not be available on desirable terms or at all.

See “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Three months ended March 31,

(in thousands)

Cash and cash equivalents

Cash flows provided by (used in):

Operating activities

Investing activities

Financing activities

Net cash provided by operating activities.

Net cash provided by operating activities was $9.0 million for the three months ended March 31, 2025, consisting of $11.0 million in net income, adjustments for non-cash or non-operating items of $6.5 million (including primarily depreciation and amortization of $2.6 million, stock-based compensation of $2.0 million, interest and debt offering expense of $1.3 million, and provision for inventory write-offs and credit losses of $0.6 million), and a net use of working capital of $8.5 million.

The net cash used for working capital was driven by an increase in accounts receivable of $4.6 million, an increase in inventory and other deferred costs of $1.3 million, and payments of accounts payable and other liabilities of $5.3 million.

These cash uses were offset by a decrease in prepaid expenses and other assets of $2.7 million.

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.

The net cash used for working capital was driven by an increase in accounts receivable of $5.8 million, an increase in inventory and other deferred costs of $3.5 million, and payments of accounts payable and other liabilities of $2.8 million.

These cash uses were offset by a decrease in prepaid expenses and other assets of $2.2 million.

Net cash used in investing activities.

Net cash used in investing activities was $4.3 million for the three months ended March 31, 2025, consisting of purchases of marketable securities of $2.9 million, expenditures on property and equipment of $1.4 million, and payments related to acquisitions of less than $0.1 million.

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) provided by financing activities.

Net cash used in financing activities was $5.2 million for the three months ended March 31, 2025, consisting primarily of a dividend payment of $4.5 million and deferred payments for acquisitions of $1.4 million.

This use of cash was offset by stock option exercises of $0.7 million, net of shares repurchased used to pay employee payroll taxes.

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.

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

7 unchanged sentences

March 27, 2025

August 15, 2024

August 29, 2024

Fiscal Year 2024

4 unchanged sentences

November 21, 2024

November 30, 2023

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)

Cash and cash equivalents

Cash flows provided by (used in):

Operating activities

Investing activities

Financing activities

Net cash provided by operating activities.

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 $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 $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 $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.

Critical Accounting Policies and Estimates

We have adopted various accounting policies to prepare our consolidated financial statements in accordance with U.S.

generally accepted accounting principles, or U.S.

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 nine months ended September 30, 2024.

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

GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

Our estimates and assumptions, including those related to revenue recognition, inventory valuation, valuation of intangible assets and goodwill, contingent consideration and income taxes are reviewed on an ongoing basis and updated as appropriate.

Actual results may differ from those estimates.

December 5, 2024

On April 29, 2025, our Board of Directors approved a quarterly cash dividend on our common stock of $0.20 per share payable on May 29, 2025, to stockholders of record at the close of business on May 15, 2025.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.

We evaluate our estimates on an ongoing basis.

Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in our 2024 Form 10-K.

Recent Accounting Pronouncements

A summary of recent accounting pronouncements that may impact our financial statements upon adoption in future periods can be found in Note 1 to our financial statements included under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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