What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-06 compared with 2025-05-08 · 247 added, 165 removed, 670 unchanged (38% of the section changed)

6 unchanged sentences

Short-term marketable securities

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

Accounts receivable, net of allowances of $ 1,496 at June 30, 2025 and $ 1,369 at December 31, 2024

Inventory and other deferred costs

23 unchanged sentences

authorized 37,000,000 shares;

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

issued 24,246,823 shares at June 30, 2025, and 24,153,165 shares at December 31, 2024

Additional paid-in capital

2 unchanged sentences

Treasury stock, at cost;

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

1,609,942 shares at June 30, 2025 and 1,603,825 shares at December 31, 2024

Total stockholders’ equity

4 unchanged sentences

Three months ended

Six months ended

(in thousands, except per share data)

Cost of sales

17 unchanged sentences

Three months ended

Six months ended

(in thousands)

Other comprehensive income (loss):

6 unchanged sentences

Consolidated Statements of Stockholders ’ Equity

(dollars in thousands)

Comprehensive

11 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, 2025

Comprehensive

11 unchanged sentences

Balance at March 31, 2024

Other comprehensive income (loss)

Issuance of common stock for stock options exercised

Vested restricted stock units

Vested performance-based restricted stock units

Repurchase of common stock for net settlement of equity awards

Stock-based compensation expense

Common stock dividend paid

Balance at June 30, 2024

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the three months ended

For the six months ended

(in thousands)

22 unchanged sentences

Deferred payments for acquisitions

Purchase of treasury stock for net settlement of equity awards

Payment of withholding taxes in connection with net settlement of equity awards

Common stock cash dividend paid

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Non-cash operating activities

Right-of-use assets obtained in exchange for operating lease obligations

Supplemental cash flow information

Cash paid for amounts included in the measurement of operating lease liabilities

Cash paid for income taxes

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2025

June 30, 2025

Nature of the Business and Basis of Presentation

16 unchanged sentences

Zurich, Switzerland;

Kensington, Australia;

Docklands, Australia;

Tokyo, Japan;

12 unchanged sentences

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.

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 June 30, 2025, and results of operations for the three- and six-months ended June 30, 2025 and 2024, and cash flows for the six months ended June 30, 2025 and 2024, have been made.

The Company’s results of operations for the three- and six-months ended June 30, 2025, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.

Use of Estimates

16 unchanged sentences

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.

Employee Retention Credit

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

One provision within the CARES Act provided an Employee Retention Credit (“ERC”), which allows for employers to claim a refundable tax credit against the employer share of Social Security tax equal to 50% of the qualified wages paid to employees from March 13, 2020 through December 31, 2020.

The ERC was subsequently expanded in 2021 for employers to claim a refundable tax credit for 70% of the qualified wages paid to employees from January 1, 2021 through September 30, 2021.

The Company accounted for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

During the quarter ended June 30, 2025, the Company filed a claim for the ERC for qualified wages paid in 2021 and has yet to receive any refunds or receive any correspondence from the IRS regarding the ERC filing.

The Company believes that there is not reasonable assurance that any receipt of credits will be obtained and therefore has not recognized any amounts related to the ERC in the accompanying consolidated financial statements.

In the event the Company obtains a refund in future periods, such refunds would be subject to IRS audit under the applicable statute of limitations.

Additionally, the Company has accounted for the contingent fee arrangement with its service provider in connection with the filing of the ERC under ASC 450-20, Contingencies, and believes it is not probable that it will receive the credits and therefore has not recognized any amounts related to the fee arrangement.

Recently Adopted Accounting Pronouncements

12 unchanged sentences

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.

The Company is currently in the process of evaluating the impact of this pronouncement on its consolidated financial statements.

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

1 unchanged sentence

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.

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

Inventory and Other Deferred Costs

Inventory and other deferred costs consisted of the following:

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

Total inventory and other deferred costs

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.

The Company had inventory on consignment at customer sites of $ 2.3 million and $ 1.8 million as of June 30, 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.

4 unchanged sentences

Goodwill and Other Intangible Assets

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

There was no change to goodwill during the six months ended June 30, 2025.

Other intangible assets consisted of the following:

March 31, 2025

June 30, 2025

December 31, 2024

6 unchanged sentences

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 weighted-average amortization period for these intangibles as of June 30, 2025, is 8.6 years.

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Amortization expense

5 unchanged sentences

Accrued expenses consisted of the following:

March 31, 2025

June 30, 2025

December 31, 2024

2 unchanged sentences

Accrued purchases

Income and other taxes

Accrued expenses

Accrued interest

Income and other taxes

Professional fees

Other long-term liabilities consisted of the following:

March 31, 2025

June 30, 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.

As part of the process of preparing its 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.

7 unchanged sentences

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 monitors the realizability of its deferred tax assets and will adjust the valuation allowance accordingly.

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

2 unchanged sentences

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 .

As of June 30, 2025, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $ 0.4 million.

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

1 unchanged sentence

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

ended March 31,

Six months ended

June 30, 2025

(in thousands)

4 unchanged sentences

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:

Unrecognized tax benefits as of June 30, 2025

As of June 30, 2025, a summary of the tax years that remain subject to examination in the Company’s taxing jurisdictions is as follows:

United States

3 unchanged sentences

Convertible senior notes consisted of the following:

March 31, 2025

June 30, 2025

December 31, 2024

11 unchanged sentences

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.

In connection with the payment by the Company on May 29, 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 8.3602 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $ 119.61 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 September 4, 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.

6 unchanged sentences

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).

Additional interest of up to 0.5% per annum is payable if the Company fails to timely file required documents or reports with the 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.

1 unchanged sentence

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.

On or after February 5, 2028, until the 40 th 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.

During the six months ended June 30, 2025, the Company recognized $ 2.2 million in interest expense related to the 2.50 % cash coupon of the Convertible Notes and $ 0.4 million of amortization expense of the debt issuance costs.

The Company did not recognize interest expense during the six months ended June 30, 2024.

As of June 30, 2025, the estimated fair value of the Convertible Notes was $ 172.7 million compared to $ 178.6 million as of December 31, 2024.

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.

3 unchanged sentences

Three months ended

Six months ended

(in thousands)

Stock option awards

4 unchanged sentences

Three months ended

Six months ended

(in thousands)

Cost of sales

3 unchanged sentences

Total stock-based compensation

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.

During the six months ended June 30, 2025, the Company granted 741 options.

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

During the six months ended June 30, 2025 and 2024, the Company granted 1,521 and 222 restricted stock units, respectively.

During the six months ended June 30, 2025, the Company granted 129 performance-based restricted stock units.

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

The Company issued 93,658 and 147,540 shares of common stock following the exercise or vesting of underlying stock options, restricted stock units, and performance-based restricted stock units during the six months ended June 30, 2025 and 2024, respectively.

Net Income per Share

3 unchanged sentences

Three months ended

Six months ended

(in thousands, except per share data)

Weighted average basic common shares outstanding

Effect if dilutive securities:

Effect of dilutive securities:

Options to purchase common stock

Restricted stock units

Resticted stock units

Performance-based restricted stock units

3 unchanged sentences

Three months ended

Six months ended

(in thousands)

Convertible senior notes

23 unchanged sentences

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 .

On July 30, 2025, the Company’s Board of Directors approved a quarterly cash dividend on its common stock of $ 0.20 per share payable on September 4, 2025 , to stockholders of record at the close of business on August 21, 2025 .

Commitments and Contingencies

2 unchanged sentences

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

As of March 31, 2025, the Company had the following building and facility leases capitalized on the balance sheet:

As of June 30, 2025, the Company had the following building and facility leases capitalized on the balance sheet:

Location (leases)

30 unchanged sentences

Madrid, Spain

Spain sales office

Spain sales office and distribution

Japan sales office and distribution

1 unchanged sentence

China sales office and distribution

Docklands, Australia

Australia sales office and distribution

Bangkok, Thailand

Thailand sales office and distribution

Kensington, Australia

Australia sales office and distribution

Korea sales office and distribution

10 unchanged sentences

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

2 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Operating lease cost

1 unchanged sentence

Total lease cost

Other information

Cash paid for amounts included in the measurement of operating lease liabilities

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

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

Weighted average discount rate - operating leases

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:

As of June 30, 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 March 31, 2025

Adjustment to net present value as of June 30, 2025

Minimum noncancelable lease liability

In June 2025, the Company executed a new building lease agreement in Billerica, Massachusetts for U.S.

distribution.

The 34,400 square foot building lease will commence on January 1, 2026, with a primary term through December 31, 2032.

The Company has the option to renew the primary term of the lease for one additional 24-month period.

Segment and Geographic Information

7 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Cost of sales

12 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

United States

1 unchanged sentence

Other countries

Supplemental Cash Flow Information

For the three months ended

(in thousands)

Cash paid for income taxes, net

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.

Subsequent Event

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law, which is considered the enactment date under U.S.

Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, and updates to GILTI and FDII rules.

In accordance with ASC 740, the effects of the new tax law will be recognized in the period of enactment.

The Company is currently evaluating the impact of the OBBBA, and we currently do not believe there will be a material impact to the Company’s financial statements.

Additionally, in April 2025, the Company filed amended Forms 941-X to claim the expanded ERC totaling $ 6.3 million of credits for filing periods beginning January 1, 2021, through September 30, 2021.

The OBBBA removed the claims filed by any taxpayer after January 31, 2024, for the period July 1, 2021, through September 30, 2021.

The Company’s amended Forms 941-X for the period July 1, 2021, through September 30, 2021, were filed in April 2025 with a credit of $ 2.2 million.

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

7 unchanged sentences

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 United States, Europe, Canada and Asia Pacific.

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

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.

16 unchanged sentences

Our business opportunities include the following:

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

growing our direct sales force in North America, Europe, and APAC, including replacing distributors with our direct sales personnel;

increasing the average selling prices of our devices;

11 unchanged sentences

and Zurich, Switzerland.

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

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

Shanghai, China;

Kensington, Australia;

Docklands, Australia;

Seoul, Korea;

and Bangkok, Thailand.

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

During the quarter ended June 30, 2025, approximately 95% 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.

As of June 30, 2025, our sales force comprised 163 sales representatives and export managers in North America, Europe, and APAC.

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

3 unchanged sentences

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 product categories 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.

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.

We obtain regulatory approvals for our devices and services in new product categories and geographies to further access the broader peripheral device market and select other markets, thus extending our geographic reach.

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

We received approvals to sell the Artegraft bovine graft in Thailand and Malaysia in August 2024 and South Africa in October 2024, and the XenoSure patch for cardiac indications in China in December 2024.

We received approvals to sell the Artegraft bovine graft in the European Union (EU) in April 2025 and Australia in June 2025, the Pruitt Aortic Occlusion Catheter in the EU in May 2025, and the Pruitt Occlusion Catheter in China in June 2025.

Separately, our regulatory efforts to maintain approvals in the EU and the United Kingdom (UK) have shown steady progress and success as the EU transitions from the Medical Device Directive (MDD) to the Medical Device Regulation (MDR) and the UK transitions to the United Kingdom Conformity Assessed (UKCA) marks.

In 2024, we received MDR CE and UKCA marks allowing for the continued sale of 11 devices into the EU and UK.

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

As of June 30, 2025, we have 19 MDR CE marks and UKCA approvals, and expect to hold 22 approvals by the end of 2025.

Those 22 CE and UKCA marks will represent substantially all of our product offerings in the EU and UK.

The European Commission has designated the end of 2028 as the final MDR CE mark transition deadline.

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

8 unchanged sentences

This product totaled approximately $0.9 million in 2024 revenues.

During 2025, we made the decision to end our cardiovascular porcine patch distribution agreement with Elutia.

Previously, in April 2023, we had entered into an agreement with Elutia to become the exclusive U.S.

distributor of their cardiovascular porcine patches.

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

This product totaled approximately $1.8 million in 2025 revenues.

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

8 unchanged sentences

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.

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

We have been selling direct-to-hospitals in Portugal since May 2025.

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

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

We plan to be selling direct-to-hospitals in Czechia in Q3 2025.

The distribution termination fees are expected to total approximately $0.1 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:

3 unchanged sentences

We expect these plant consolidations and manufacturing transfers will result in improved control over production quality as well as reduced costs.

Our most recent manufacturing transfers included:

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

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

Etienne, France facility.

In June 2022, we closed the St.

Etienne factory to streamline manufacturing operations and to reduce expenses.

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

Our most recent manufacturing transfer was:

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

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 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’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.

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

We began distributing these Burlington-produced patches in the United States, Canada, and select APAC markets in 2024.

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 ERP system to replace our financial reporting and planning system.

In February 2024, we began implementing a new enterprise resource planning, or 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 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.

We have been preparing for this transition since 2022 and hired an experienced consulting team to assist in this transition.

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.

As of June 30, 2025, we have capitalized costs on our balance sheet of $4.9 million associated with this ERP system.

Fluctuations in the exchange rates between the U.S.

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

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

For the six months ended June 30, 2025, approximately 43% 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 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.

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

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

dollars than before the rate increase.

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

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

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.

For the six months ended June 30, 2025, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $0.3 million, as compared to rates in effect for the six months ended June 30, 2024.

Net Sales and Expense Components

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Results of Operations

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

Comparison of the three- and six-month periods ended June 30, 2025, to the three- and six-month periods ended June 30, 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,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Net sales by geography:

Europe, Middle East and Africa

Net sales increased by $6.4 million, or 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.

Net sales increased by $8.4 million, or 15%, to $64.2 million for the three months ended June 30, 2025, compared to $55.8 million for the three months ended June 30, 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 $0.8 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.

Graft sales increased $3.6 million, catheter sales increased $1.6 million, valvulotome sales increased $1.3 million, and shunt sales increased $0.8 million.

We estimate that the weaker U.S.

dollar increased net sales by $1.0 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Direct-to-hospital net sales were 95% of our total net sales for both the three months ended June 30, 2025 and 2024.

Net sales increased by $14.8 million, or 14%, to $124.1 million for the six months ended June 30, 2025, compared to $109.3 million for the six months ended June 30, 2024.

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

Graft sales increased $6.7 million, valvulotome and catheter sales increased $2.0 million each, patch sales increased $1.7 million, and shunt sales increased $1.5 million.

We estimate that the weaker U.S.

dollar increased net sales by $0.3 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

Direct-to-hospital net sales were 94% and 95% of our total net sales for the six months ended June 30, 2025 and 2024, respectively.

Net sales by geography.

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.

Net sales in the Americas increased $4.4 million, or 12%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

The increase was driven primarily by increased sales of grafts of $2.9 million, catheters of $0.7 million, and valvulotomes of $0.6 million.

Net sales in the Americas increased $8.1 million, or 11%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The increase was driven primarily by increased sales of grafts of $4.6 million, valvulotomes of $1.3 million, catheters of $0.7 million, and patches and clips of $0.4 million each.

Europe, Middle East, and Africa, or EMEA, net sales increased $3.5 million, or 23%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

The increase was driven primarily by increased sales of catheters of $1.0 million, patches and shunts of $0.7 million each, and valvulotomes of $0.6 million.

EMEA net sales increased $6.1 million, or 21%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The increase was driven primarily by increased sales of grafts of $1.9 million, catheters of $1.4 million, shunts of $1.2 million, and patches of $1.1 million.

APAC net sales increased $0.4 million, or 12%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

The increase was driven primarily by increased sales of grafts and patches of $0.2 million each.

APAC net sales increased $0.5 million, or 7%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The increase was driven primarily by increased sales of grafts, patches, and valvulotomes of $0.2 million each, offset by decreased sales of catheters 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 March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

*Not applicable

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.

Gross profit increased $6.5 million, or 17%, to $45.0 million for the three months ended June 30, 2025, as compared to $38.5 million for the three months ended June 30, 2024, and gross margin increased by 110 basis points to 70.0% in the period, as compared to 68.9% for the three months ended June 30, 2024.

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

The increase in gross margin was driven primarily by greater manufacturing efficiencies, sales price increases, and favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with Elutia.

The increase was partially offset by increased shipping and warehousing costs.

Gross profit increased $11.3 million, or 15%, to $86.4 million for the six months ended June 30, 2025, as compared to $75.1 million for the six months ended June 30, 2024, and gross margin increased by 90 basis points to 69.6% in the period, as compared to 68.7% for the six months ended June 30, 2024.

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

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

Operating Expenses.

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Sales and marketing

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Research and development

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

% of Net Sales

Sales and marketing

2 unchanged sentences

Sales and marketing .

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

For the three months ended June 30, 2025, sales and marketing expenses increased 36% to $14.9 million.

The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $2.8 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.

Additionally, travel and training expenses increased $0.6 million and professional fees and outside services expenses increased $0.5 million.

Sales force headcount was 163 as of June 30, 2025, a 10% increase from June 30, 2024.

As a percentage of sales, sales and marketing expenses increased to 23% for the three months ended June 30, 2025, up from 20% for the three months ended June 30, 2024.

For the six months ended June 30, 2025, sales and marketing expenses increased 28% to $29.1 million.

The increase was driven primarily by higher sales representative headcount and wage increases, which resulted in increased compensation and related expenses of $4.3 million.

Additionally, professional fees and outside services expenses increased $1.0 million and travel and training expenses increased $0.9 million.

As a percentage of sales, sales and marketing expenses increased to 23% for the six months ended June 30, 2025, up from 21% for the six months ended June 30, 2024.

General and administrative.

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.

For the three months ended June 30, 2025, general and administrative expenses increased 18% to $10.4 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.

Additionally, travel and training expenses increased $0.2 million.

As a percentage of sales, general and administrative expenses remained consistent at 16% for the three months ended June 30, 2025 and 2024, respectively.

For the six months ended June 30, 2025, general and administrative expenses increased 17% to $20.9 million.

The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $2.4 million.

Additionally, facilities expenses increased $0.6 million and travel and training expenses increased $0.2 million.

As a percentage of sales, general and administrative expenses increased to 17% for the six months ended June 30, 2025, up from 16% for the six months ended June 30, 2024.

Research and development.

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.

For the three months ended June 30, 2025, research and development expenses decreased 17% to $3.5 million.

The decrease was driven primarily by lower third-party service fees, which resulted in decreased professional fees and outside services expenses related to MDR related activities of $0.9 million, partially offset by increased facilities expenses of $0.1 million.

As a percentage of sales, research and development expenses decreased to 6% for the three months ended June 30, 2025, down from 8% for the three months ended June 30, 2024.

For the six months ended June 30, 2025, research and development expenses decreased 9% to $7.6 million.

The decrease was driven primarily by lower third-party service fees, which resulted in decreased professional fees and outside services expenses related to MDR related activities of $1.3 million, partially offset by increased compensation and related expenses of $0.3 million and facilities expenses of $0.2 million.

As a percentage of sales, research and development expenses decreased to 6% for the six months ended June 30, 2025, down from 8% for the six months ended June 30, 2024.

Income tax expense.

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.

We recorded a tax provision of $4.3 million on pre-tax income of $18.1 million for the three months ended June 30, 2025, compared to a $3.7 million tax provision on pre-tax income of $15.5 million for the three months ended June 30, 2024.

We recorded a tax provision of $7.5 million on pre-tax income of $32.3 million for the six months ended June 30, 2025, compared to a tax provision of $6.6 million on pre-tax income of $28.3 million for the six months ended June 30, 2024.

Our effective income tax rate was 23.7% and 23.3% for the three- and six-month periods ended June 30, 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 22.7% for the three-month period ended March 31, 2024.

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

Our 2024 provision was based on the estimated annual effective tax rate of 24.3%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items.

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

Our income tax expense for the three- and six-month periods ended June 30, 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 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.

These provisions are effective for tax years beginning after December 31, 2022.

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.

As of June 30, 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.

Liquidity and Capital Resources

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.

As of June 30, 2025, our cash and cash equivalents were $27.2 million, as compared to $25.6 million as of December 31, 2024.

We had $292.3 million in short-term marketable securities as of June 30, 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.

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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.

As of June 30, 2025, our short-term marketable securities reflected an unrealized loss of $0.7 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.

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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.

In connection with the payment by us on May 29, 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 8.3602 shares of common stock per $1,000 principal amount of the Convertible Notes, which represents a conversion price of approximately $119.61 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 September 4, 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;

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of 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;

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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.

On or after February 5, 2028, until the 40 th 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 our 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.

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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 $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 recognized operating income of $28.8 million for the six months ended June 30, 2025, compared to $26.3 million for the six months ended June 30, 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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Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Three months ended March 31,

Six months ended June 30,

(in thousands)

5 unchanged sentences

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.

Net cash provided by operating activities was $29.3 million for the six months ended June 30, 2025, consisting of $24.8 million in net income, adjustments for non-cash or non-operating items of $12.9 million (including primarily depreciation and amortization of $5.2 million, stock-based compensation of $4.0 million, interest and debt offering expense of $2.6 million, and provision for inventory write-offs and credit losses of $1.4 million), and a net use of working capital of $8.3 million.

The net cash used for working capital was driven by an increase in accounts receivable of $5.3 million, an increase in inventory and other deferred costs of $3.5 million, and payments of accounts payable and other liabilities of $1.3 million.

These cash uses were offset by a decrease in prepaid expenses and other assets of $1.7 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.

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

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

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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.

Net cash used in investing activities was $20.7 million for the six months ended June 30, 2025, consisting of purchases of marketable securities of $17.8 million, expenditures on property and equipment of $2.7 million, and payments related to acquisitions of $0.1 million.

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

Net cash used in financing activities.

Net cash used in financing activities was $8.0 million for the six months ended June 30, 2025, consisting primarily of dividend payments of $9.0 million and deferred payments for acquisitions of $1.4 million.

This use of cash was offset by stock option exercises of $2.5 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.

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

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

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

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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.

On July 30, 2025, our Board of Directors approved a quarterly cash dividend on our common stock of $0.20 per share payable on September 4, 2025, to stockholders of record at the close of business on August 21, 2025.

Critical Accounting Policies and Significant Judgments and Estimates

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

What changed 10-Q

Item 1. Financial Statements