What changed in this filing

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Item 1. Financial Statements

2025-07-30 compared with 2025-04-24 · 230 added, 107 removed, 625 unchanged (35% of the section changed)

51 unchanged sentences

Preferred stock — 5,000 shares authorized;

no shares issued as of March 31, 2025 and December 31, 2024

no shares issued as of June 30, 2025 and December 31, 2024

Common stock, no par value — 100,000 shares authorized;

issued and outstanding as of March 31, 2025 - 59,078 and December 31, 2024 - 58,743

issued and outstanding as of June 30, 2025 - 59,218 and December 31, 2024 - 58,743

Retained earnings

8 unchanged sentences

Three Months Ended

Six Months Ended

Cost of sales

2 unchanged sentences

Research and development

Contingent consideration expense (benefit)

Contingent consideration expense

Total operating expenses

3 unchanged sentences

Interest expense

Other expense — net

Other (expense) income — net

Total other expense — net

9 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income (loss):

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Balance — March 31, 2025

Other comprehensive income

Stock-based compensation expense

Options exercised

Issuance of common stock under Employee Stock Purchase Plan

Shares issued from time-vested restricted stock units

Balance — June 30, 2025

See condensed notes to consolidated financial statements.

MERIT MEDICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands - unaudited)

Accumulated Other

8 unchanged sentences

Balance — March 31, 2024

Other comprehensive loss

Stock-based compensation expense

Options exercised

Issuance of common stock under Employee Stock Purchase Plan

Shares issued from time-vested restricted stock units

Balance — June 30, 2024

See condensed notes to consolidated financial statements.

3 unchanged sentences

(In thousands - unaudited)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on disposition of business

Loss on sale or abandonment of property and equipment

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Intangible assets

Proceeds from the sale of property and equipment

Proceeds from disposition of business

Cash paid for notes receivable and other investments

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(In thousands - unaudited)

Three Months Ended

Six Months Ended

CASH FLOWS FROM FINANCING ACTIVITIES:

5 unchanged sentences

Effect of exchange rates on cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

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The interim consolidated financial statements of Merit Medical Systems, Inc.

("Merit," "we" or "us") for the three-month periods ended March 31, 2025 and 2024 are not audited.

("Merit," "we" or "us") for the three and six-month periods ended June 30, 2025 and 2024 are not audited.

Our consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods and, consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America.

In the opinion of our management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of March 31, 2025 and December 31, 2024, and our results of operations and cash flows for the three-month periods ended March 31, 2025 and 2024.

The results of operations for the three-month periods ended March 31, 2025 and 2024 are not necessarily indicative of the results for a full-year period.

In the opinion of our management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

The results of operations presented in these interim consolidated financial statements are not necessarily indicative of the results for a full-year period.

Amounts presented in this report are rounded, while percentages and earnings per share amounts presented are calculated from the underlying amounts.

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Recently Issued Accounting Standards.

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

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to improve annual basis income tax disclosures related to (1) rate reconciliation, (2) income taxes paid, and (3) other disclosures related to pretax income (or loss) and income tax expense (or benefit) from continuing operations.

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Our endoscopy segment consists of gastroenterology and pulmonology devices which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures.

The following tables present revenue from contracts with customers by reporting segment, product category and geographic region for the three-month periods ended March 31, 2025 and 2024 (in thousands):

The following tables present revenue from contracts with customers by reporting segment, product category and geographic region for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):

Three Months Ended

March 31, 2025

March 31, 2024*

June 30, 2025

June 30, 2024*

United States

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Endoscopy Devices

*Commencing January 1, 2025, we reorganized our sales teams and product categories to include the sale of our spine devices under our OEM product categories.

Revenue figures for 2024 have been recast to reflect the realignment of Merit’s portfolio of spine products, representing approximately $ 5.3 million in revenue, within the OEM product category to provide comparability between the reported periods.

Six Months Ended

June 30, 2025

June 30, 2024*

United States

International

United States

International

Cardiovascular

Peripheral Intervention

Cardiac Intervention

Custom Procedural Solutions

Endoscopy Devices

*Commencing January 1, 2025, we reorganized our sales teams and product categories to include revenues from the sale of our spine devices under our OEM product category.

Revenue figures for 2024 have been recast to reflect this realignment of our portfolio of spine products, representing approximately $ 5.7 million and $ 11.0 million in revenue for the three and six-month periods ended June 30, 2024, within the OEM product category to provide comparability between the reported periods.

Acquisitions and Investments.

On May 16, 2025 , Merit entered into an Agreement and Plan of Merger (the “Biolife Agreement”) by and among, Merit, Biolife, L.L.C., a Florida limited liability company (“FL Biolife”), Biolife Transaction Sub, LLC, a Delaware limited liability company (“Merger Sub”), and Shareholder Representative Services LLC, a Colorado limited liability company.

Promptly following the execution of the Biolife Agreement, FL Biolife converted from a Florida limited liability company to a Delaware limited liability company called Biolife Delaware, L.L.C.

Pursuant to the terms of the Biolife Agreement, on May 20, 2025, Merger Sub merged with and into Biolife, with Biolife continuing as the surviving corporation and a wholly-owned subsidiary of Merit (the “Biolife Merger”).

The purchase consideration consisted of an upfront payment of $ 120 million plus working capital and other adjustments of $ 6.3 million in cash.

Biolife manufactures unique patented hemostatic devices under the brand names StatSeal and WoundSeal.

We accounted for the Biolife Merger as a business combination.

During the six-month period ended June 30, 2025, our net sales of Biolife products were approximately $ 1.4 million.

It is not practical to separately report earnings related to the products acquired in connection with the Biolife Merger, as we cannot split our sales costs related solely to the Biolife products, principally because our sales representatives sell multiple products (including the Biolife products) in our cardiovascular business segment.

Acquisition-related costs associated with the Biolife Merger, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were approximately $ 2.0 million for the six-month period ended June 30, 2025.

The following table summarizes the preliminary purchase price allocated to the net assets acquired in connection with the Biolife Merger (in thousands):

Assets Acquired

Cash and cash equivalents

Trade receivables

Prepaid expenses and other current assets

Property and equipment

Intangible assets

Developed technology

Customer list

Total assets acquired

Liabilities Assumed

Trade payables

Accrued expenses

Income taxes payable

Deferred income tax liabilities

Liabilities related to unrecognized tax benefits

Other long-term obligations

Total liabilities assumed

Total assets acquired, net of liabilities assumed

Cash acquired

Purchase price, net of cash acquired

We are amortizing the Biolife developed technology intangible assets over 12 years , the trademark intangible assets over 12 years , and the customer list intangible asset on an accelerated basis over 12 years .

We have estimated the weighted average life of the intangible assets acquired from Biolife to be 12 years .

The goodwill consists largely of the synergies expected from combining operations and is not expected to be deductible for tax purposes.

The pro forma effects to our consolidated results of operations of the Biolife Acquisition are not material in relation to reported sales .

On November 1, 2024, pursuant to the terms of the Asset Purchase Agreement (the “Cook Purchase Agreement”) dated September 18, 2024 between Merit and Cook Medical Holdings LLC, (“Cook”), we acquired Cook’s lead management business, which is composed of a comprehensive end-to-end portfolio of medical devices and accessories used in lead management procedures for patients who need a pacemaker or an implantable cardioverter-defibrillator lead removed or replaced.

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We accounted for this transaction under the acquisition method of accounting as a business combination.

The sales related to the acquisition have been included in our Cardiovascular segment since the acquisition date and were $ 9.2 million for the three-month period ended March 31, 2025.

It is not practical to separately report earnings related to the acquisition, as we began to immediately integrate the acquisition into the existing operations, sales distribution networks and management structure of our cardiovascular business segment.

Acquisition-related costs associated with the transaction, which were included in selling, general and administrative expenses in the consolidated statements of income were approximately $ 5.4 million during the year ended December 31, 2024.

Acquisition-related costs associated with the transaction, which were included in selling, general and administrative expenses in the consolidated statements of income included in the 2024 Annual Report on Form 10-K were approximately $ 5.4 million during the year ended December 31, 2024.

The purchase price was allocated as follows (in thousands):

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Total net assets acquired

We are amortizing Cook developed technology intangible assets over ten years , the trademark intangible assets over 12 years , and the customer list intangible asset on an accelerated basis over 12 years .

We are amortizing the Cook developed technology intangible assets over ten years , the trademark intangible assets over 12 years , and the customer list intangible asset on an accelerated basis over 12 years .

We have estimated the weighted average life of the intangible assets acquired from Cook to be 10.3 years.

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We accounted for the EGS Acquisition under the acquisition method of accounting as a business combination.

The sales related to the EGS Acquisition have been included in our endoscopy segment since the acquisition date and were $ 6.6 million for the three-month period ended March 31, 2025.

It is not practical to separately report earnings related to the EGS Acquisition, as we began to immediately integrate the acquisition into the existing operations, sales distribution networks and management structure of our endoscopy business segment.

Acquisition-related costs associated with the EGS Acquisition, which were included in selling, general and administrative expenses in the consolidated statements of were approximately $ 3.4 million during the year ended December 31, 2024.

The sales related to the EGS Acquisition have been included in our endoscopy segment since the acquisition date.

Acquisition-related costs associated with the EGS Acquisition, which were included in selling, general and administrative expenses in the consolidated statements of income included in the 2024 Annual Report on Form 10-K were approximately $ 3.4 million during the year ended December 31, 2024.

The purchase price was allocated as follows (in thousands) :

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We have accounted for this transaction as an asset purchase, and recorded the amount paid and deferred payments as a developed technology intangible asset, which we are amortizing over eight years .

Inventories at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

March 31, 2025

Inventories at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

June 30, 2025

December 31, 2024

4 unchanged sentences

Goodwill and Intangible Assets.

The change in the carrying amount of goodwill by segment for the three-month period ended March 31, 2025 is detailed as follows (in thousands):

The change in the carrying amount of goodwill by segment for the six-month period ended June 30, 2025 is detailed as follows (in thousands):

Cardiovascular

1 unchanged sentence

Effect of foreign exchange

Goodwill balance at March 31

Total accumulated goodwill impairment losses aggregated to $ 8.3 million as of March 31, 2025 and December 31, 2024, respectively.

We did no t have any goodwill impairments for the three-month periods ended March 31, 2025 or 2024.

Other intangible assets at March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

March 31, 2025

Additions and adjustments as the result of acquisitions

Goodwill balance at June 30

Total accumulated goodwill impairment losses aggregated to $ 8.3 million as of June 30, 2025 and December 31, 2024, respectively.

We did no t have any goodwill impairments for the three and six-month periods ended June 30, 2025 or 2024.

Other intangible assets at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

June 30, 2025

Gross Carrying

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Customer lists

Aggregate amortization expense for developed technology and other intangible assets for the three-month periods ended March 31, 2025 and 2024 was $ 20.0 million and $ 14.6 million, respectively.

Aggregate amortization expense for developed technology and other intangible assets for the three and six-month periods ended June 30, 2025 was $ 21.5 million and $ 41.5 million, respectively.

Aggregate amortization expense for the three and six-month periods ended June 30, 2024 was $ 14.8 million and $ 29.4 million, respectively.

We evaluate long-lived assets, including amortizing intangible assets, for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

1 unchanged sentence

If a triggering event is identified, we determine the fair value of our amortizing assets based on estimated future cash flows discounted back to their present value using a discount rate that reflects the risk profiles of the underlying activities.

We did no t identify indicators of impairment for our intangible assets based on our consideration of triggering events for the three-month periods ended March 31, 2025 and 2024, respectively.

Estimated amortization expense for developed technology and other intangible assets for the next five years consisted of the following as of March 31, 2025 (in thousands):

We did no t identify indicators of impairment for our intangible assets based on our consideration of triggering events for the six-month periods ended June 30, 2025 and 2024, respectively.

Estimated amortization expense for developed technology and other intangible assets for the next five years consisted of the following as of June 30, 2025 (in thousands):

Year ending December 31,

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Income Taxes.

Our provision for income taxes for the three-month periods ended March 31, 2025 and 2024 was a tax expense of $ 7.8 million and $ 6.1 million, respectively, which resulted in an effective tax rate of 20.6 % and 17.8 %, respectively.

The increase in the effective income tax rate for the three-month period ended March 31, 2025, when compared to the prior-year period, was primarily due to decreased benefit from discrete items such as deferred compensation and increased impact of foreign income inclusions.

The increase in income tax expense for the three-month period ended March 31, 2025, when compared to the prior-year period, was primarily due to increased pre-tax book income.

Our provision for income taxes for the three-month periods ended June 30, 2025 and 2024 was a tax expense of $ 10.8 million and $ 10.1 million, respectively, which resulted in an effective tax rate of 24.9 % and 22.1 %, respectively.

Our provision for income taxes for the six-month periods ended June 30, 2025 and 2024 was a tax expense of $ 18.6 million and $ 16.2 million, respectively, which resulted in an effective tax rate of 22.9 % and 20.2 %, respectively.

The increase in the effective income tax rate and income tax expense for the three and six-month periods ended June 30, 2025, when compared to the prior-year periods, was primarily due to decreased benefit from discrete items such as share-based compensation and contingent liabilities and increased permanent tax differences in foreign jurisdictions.

Our effective tax rate differs from the U.S.

statutory rate primarily due to the impact of global intangible low-taxed income (“GILTI”) and Subpart F inclusions, state income taxes, foreign taxes, other nondeductible permanent items and discrete items (such as share-based compensation).

The Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024.

statutory rate primarily due to the impact of global intangible low-taxed income (“GILTI”) inclusions, state income taxes, foreign taxes, other nondeductible permanent items and discrete items (such as share-based compensation).

The Organization for Economic Cooperation and Development (“OECD”) Pillar Two global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, were intended to apply for tax years beginning in 2024.

On February 2, 2023, the OECD issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax.

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We are closely monitoring developments and evaluating the impact these new rules are anticipated to have on our tax rate, including eligibility to qualify for these safe harbor rules.

Principal balances outstanding under our long-term debt obligations as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

On July 4, 2025, the U.S.

enacted a budget reconciliation package (known as the “One Big Beautiful Bill Act” or “OBBBA”) which includes a broad range of tax provisions affecting businesses.

As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025, in accordance with ASC 740, Income Taxes .

The Company is currently evaluating the impact of the new legislation and its impact on the consolidated financial statements.

We currently do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.

Principal balances outstanding under our long-term debt obligations as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

June 30, 2025

December 31, 2024

Convertible notes

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Long-term portion

Future minimum principal payments on our long-term debt, as of March 31, 2025, were as follows (in thousands):

Future minimum principal payments on our long-term debt, as of June 30, 2025, were as follows (in thousands):

Future Minimum

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Among other things, the amendment also updated the definition of the Applicable Margin used in determining the interest rates and amended the financial covenants, all as described below.

Term loans made under the Amended Fourth A&R Credit Agreement, as amended, bear interest, at our election, at either (i) the Base Rate plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement) or, (ii) Adjusted Term SOFR plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement).

Term loans made under the Amended Fourth A&R Credit Agreement bear interest, at our election, at either (i) the Base Rate plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement) or, (ii) Adjusted Term SOFR plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement).

Revolving credit loans bear interest, at our election, at either (a) the Base Rate plus the Applicable Margin, (b) Adjusted Term SOFR plus the Applicable Margin, (c) Adjusted Eurocurrency Rate plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement), or (d) Adjusted Daily Simple SONIA plus the Applicable Margin (as defined in the Amended Fourth A&R Credit Agreement).

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(3) Minimum ratio of Consolidated EBITDA (as defined in the Amended Fourth A&R Credit Agreement and adjusted for certain expenditures) to Consolidated Interest Expense (as defined in the Amended Fourth A&R Credit Agreement) for any period of four consecutive fiscal quarters.

We were in compliance with these financial covenants set forth in the Amended Fourth A&R Credit Agreement as of March 31, 2025.

As of March 31, 2025, we had no outstanding borrowings and issued letter of credit guarantees of $ 2.9 million under the Amended Fourth A&R Credit Agreement, with additional available borrowings of approximately $ 697 million, based on the maximum net leverage ratio required pursuant to the Amended Fourth A&R Credit Agreement.

We were in compliance with these financial covenants set forth in the Amended Fourth A&R Credit Agreement as of June 30, 2025.

As of June 30, 2025, we had no outstanding borrowings and issued letter of credit guarantees of $ 2.9 million under the Amended Fourth A&R Credit Agreement, with additional available borrowings of approximately $ 697 million, based on the maximum net leverage ratio required pursuant to the Amended Fourth A&R Credit Agreement.

Convertible Notes

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or (5) Prior to the related redemption date if Merit calls any Convertible Notes for redemption.

As of March 31, 2025, none of the conditions permitting the Holders to convert their Convertible Notes early had been met.

As of June 30, 2025, none of the conditions permitting the Holders to convert their Convertible Notes early had been met.

Therefore, the Convertible Notes are classified as long-term debt obligations.

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The cost of the Capped Call Transactions was approximately $ 66.5 million.

The Capped Call Transactions do not meet the criteria for separate

accounting as a derivative as they are indexed to the Common Stock.

The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the Common Stock.

The premiums paid for the Capped Call Transactions have been included as a net reduction to Common Stock within stockholders' equity.

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The objective of the forward contracts is to reduce the variability of cash flows associated with the forecasted purchase or sale of the foreign currencies.

As of March 31, 2025 and December 31, 2024, we had entered into foreign currency forward contracts, which qualified as cash flow hedges, with aggregate notional amounts of $ 179.9 million and $ 117.5 million, respectively.

As of June 30, 2025 and December 31, 2024, we had entered into foreign currency forward contracts, which qualified as cash flow hedges, with aggregate notional amounts of $ 168.9 million and $ 117.5 million, respectively.

Derivatives Not Designated as Cash Flow Hedges

We forecast our net exposure in various receivables and payables to fluctuations in the value of various currencies, and we enter into foreign currency forward contracts to mitigate a portion of that exposure.

As of March 31, 2025 and December 31, 2024, we had entered into foreign currency forward contracts related to those balance sheet accounts with aggregate notional amounts of $ 100.6 million and $ 95.7 million, respectively.

As of June 30, 2025 and December 31, 2024, we had entered into foreign currency forward contracts related to those balance sheet accounts with aggregate notional amounts of $ 114.5 million and $ 95.7 million, respectively.

Balance Sheet Presentation of Derivative Instruments.

As of March 31, 2025 and December 31, 2024, all derivative instruments, both those designated as hedging instruments and those that were not designated as hedging instruments, were recorded at fair value on a gross basis on our consolidated balance sheets.

As of June 30, 2025 and December 31, 2024, all derivative instruments, both those designated as hedging instruments and those that were not designated as hedging instruments, were recorded at fair value on a gross basis on our consolidated balance sheets.

We are not subject to any master netting agreements.

2 unchanged sentences

Balance Sheet Location

March 31, 2025

June 30, 2025

December 31, 2024

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Balance Sheet Location

March 31, 2025

June 30, 2025

December 31, 2024

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Reclassified from AOCI

Three Months Ended March 31,

Three Months Ended June 30,

Derivative instrument

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Cost of sales

As of March 31, 2025, $ 1.1 million, or $ 0.8 million after taxes, was expected to be reclassified from AOCI to earnings in revenue and cost of sales over the succeeding twelve months.

Amount of Gain/(Loss)

Consolidated Statements

Amount of Gain/(Loss)

Recognized in OCI

Reclassified from AOCI

Six Months Ended June 30,

Derivative instrument

Location in statements of income

Interest rate swap

Interest expense

Foreign currency forward contracts

Cost of sales

As of June 30, 2025, $ 0.2 million, or $ 0.2 million after taxes, was expected to be reclassified from AOCI to earnings in revenue and cost of sales over the succeeding twelve months.

Derivative Instruments Not Designated as Hedging Instruments

The following gains/(losses) from these derivative instruments were recognized in our consolidated statements of income for the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Derivative Instrument

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Securities and Exchange Commission (“SEC”) seeking the voluntary production of information relating to the business activities of Merit’s subsidiary in China, including interactions with hospitals and health care officials in China (the “SEC Inquiry”).

We are cooperating with the requests, investigating the matter and are in discussions with the SEC Staff regarding a potential resolution to the matter.

We are cooperating with the requests, investigating the matter and are engaged in steps in furtherance of reaching a resolution to the matter.

Currently, we are unable to predict the scope, timing, significance or outcome of the SEC Inquiry or estimate a reasonably possible loss or range of loss associated with the matter.

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Earnings Per Common Share (EPS).

The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the three-month periods ended March 31, 2025 and 2024 consisted of the following (in thousands, except per share amounts):

The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the three and six-month periods ended June 30, 2025 and 2024 consisted of the following (in thousands, except per share amounts):

Three Months Ended

Six Months Ended

Average common shares outstanding

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The convertible notes only have an impact on diluted earnings per share when the average share price of our Common Stock exceeds the conversion price of $ 86.83 .

The average closing price of the Common Stock for the three-month periods ended March 31, 2025 and 2024, respectively, was used as the basis for determining the dilutive effect on EPS.

The average closing price of the Common Stock for the three and six-month periods ended June 30, 2025 and 2024, respectively, was used as the basis for determining the dilutive effect on EPS.

Stock-Based Compensation Expense.

Stock-based compensation expense before income tax expense for the three-month periods ended March 31, 2025 and 2024 consisted of the following (in thousands):

Stock-based compensation expense before income tax expense for the three and six-month periods ended June 30, 2025 and 2024 consisted of the following (in thousands) :

Three Months Ended

Six Months Ended

Cost of sales

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Cash-settled performance-based awards

Cash-settled restricted stock units

Total selling, general and administrative

3 unchanged sentences

Nonqualified Stock Options

During the three months ended March 31, 2025 and 2024, we did no t grant any stock options.

As of March 31, 2025, the total remaining unrecognized compensation cost related to non-vested stock options was $ 9.0 million, which was expected to be recognized over a weighted average period of 1.5 years.

During the six months ended June 30, 2025 and 2024, we did no t grant any stock options.

As of June 30, 2025, the total remaining unrecognized compensation cost related to non-vested stock options was $ 7.0 million, which was expected to be recognized over a weighted average period of 1.2 years.

Stock-Settled Performance-Based Restricted Stock Units (“Performance Stock Units”)

During the three-month periods ended March 31, 2025 and 2024, we granted Performance Stock Units which represented awards of up to 290,120 and 364,810 shares of Common Stock, respectively.

During the six-month periods ended June 30, 2025 and 2024, we granted Performance Stock Units which represented awards of up to 290,120 and 364,810 shares of Common Stock, respectively.

Settlement of the Performance Stock Units into shares of Common Stock occurs at the end of the relevant performance periods.

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The fair value of each performance stock unit was estimated as of the grant date using the following assumptions for awards granted in the periods indicated below:

Three Months Ended

Six Months Ended

Risk-free interest rate

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At the end of the performance period, cumulative expense is calculated based on the actual performance metrics achieved.

As of March 31, 2025, the total remaining unrecognized compensation cost related to stock-settled Performance Stock Units was $ 38.8 million, which is expected to be recognized over a weighted average period of 1.8 years.

As of June 30, 2025, the total remaining unrecognized compensation cost related to stock-settled Performance Stock Units was $ 33.8 million, which is expected to be recognized over a weighted average period of 1.5 years.

Cash-Settled Performance-Based Awards

During the three-month periods ended March 31, 2025 and 2024, we granted Performance Stock Units to our Chief Executive Officer that provide for settlement in cash upon achievement of specific metrics (“Liability Awards”), with total target cash incentives in the amount of $ 1.7 million and $ 1.6 million, respectively.

During the six-month periods ended June 30, 2025 and 2024, we granted Performance Stock Units to our Chief Executive Officer that provide for settlement in cash upon achievement of specific metrics (“Liability Awards”), with total target cash incentives in the amount of $ 1.7 million and $ 1.6 million, respectively.

The Liability Awards entitle him to a target cash payment based upon our level of rTSR performance and achievement of other performance metrics, as defined in the award agreements.

During the three-month periods ended March 31, 2025 and 2024, we granted additional Performance Stock Units to certain employees that provide for settlement in cash upon our achievement of specified financial metrics.

During the six-month periods ended June 30, 2025 and 2024, we granted additional Performance Stock Units to certain employees that provide for settlement in cash upon our achievement of specified financial metrics.

The cash payable upon vesting at the end of the service period is based upon performance against specified financial performance targets and relative total shareholder return as compared to the rTSR, as defined in the award agreements.

Compensation expense is recognized in an amount equal to the cash payment likely to be awarded based on the performance metrics.

The potential maximum payout of these Liability Awards is 250 % of the target cash incentive, resulting in a total potential maximum payout of $ 4.8 million and $ 4.5 million for Liability Awards granted during the three-month periods ended March 31, 2025 and 2024, respectively.

The potential maximum payout of these Liability Awards is 250 % of the target cash incentive, resulting in a total potential maximum payout of $ 4.7 million and $ 4.4 million for Liability Awards granted during the six-month periods ended June 30, 2025 and 2024, respectively.

The settlement generally occurs at the end of three-year performance periods based upon the same performance metrics and vesting period as our Performance Stock Units.

The fair value of these Liability Awards is measured at each reporting period until the awards are settled.

As of March 31, 2025 and December 31, 2024, the recorded balance associated with these Liability Awards is $ 3.8 million and $ 5.1 million, respectively, which have been classified as liabilities and reported in accrued expenses and other long-term obligations within our consolidated balance sheets.

As of March 31, 2025, the total remaining unrecognized compensation cost related to Liability Awards was $ 7.1 million, which was expected to be recognized over a weighted average period of 1.9 years.

As of June 30, 2025 and December 31, 2024, the recorded balance associated with these Liability Awards was $ 4.7 million and $ 5.1 million, respectively, which have been classified as liabilities and reported in accrued expenses and other long-term obligations within our consolidated balance sheets.

As of June 30, 2025, the total remaining unrecognized compensation cost related to Liability Awards was $ 5.7 million, which was expected to be recognized over a weighted average period of 1.6 years.

Restricted Stock Units

During the three-month periods ended March 31, 2025 and 2024, we granted restricted stock units to certain employees and non-employee directors representing 109,515 and 134,553 shares of Common Stock, respectively.

During the six-month periods ended June 30, 2025 and 2024, we granted restricted stock units to certain employees and non-employee directors representing 135,778 and 158,719 shares of Common Stock, respectively.

The expense recognized for restricted stock units is equal to the closing stock price on the date of grant, which is recognized over the vesting period.

Restricted stock units granted to each employee are subject to such employee’s continued employment

through the vesting date, which is four years from the date of grant.

Restricted stock units granted to each employee are subject to such employee’s continued employment through the vesting date, which is four years from the date of grant.

Restricted stock units granted to each non-employee director are subject to such director’s continued service through the vesting date, which is one year from the grant date.

As of March 31, 2025, the total remaining unrecognized compensation cost related to restricted stock units was $ 31.4 million, which was expected to be recognized over a weighted average period of 3.1 years.

As of June 30, 2025, the total remaining unrecognized compensation cost related to restricted stock units was $ 30.8 million, which was expected to be recognized over a weighted average period of 2.9 years.

Segment Reporting.

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Our endoscopy segment consists of gastroenterology and pulmonology devices which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures.

Our chief operating decision maker is our Chief Executive Officer, who uses segment profit or loss to assess performance and allocate resources to each segment, primarily through periodic budgeting and segment performance reviews.

Our chief operating decision maker (“CODM”) is our Chief Executive Officer, who uses segment profit or loss to assess performance and allocate resources to each segment, primarily through periodic budgeting and segment performance reviews.

See Note 3, Revenues from Contracts with Customers for a detailed breakout of our sales by operating segment and product category, disaggregated between domestic and international sales.

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therefore, total assets by segment are not disclosed.

Financial information relating to our reportable operating segments and reconciliations to the consolidated totals for the three-month periods ended March 31, 2025 and 2024, were as follows (in thousands):

Financial information relating to our reportable operating segments and reconciliations to the consolidated totals for the three and six-month periods ended June 30, 2025 and 2024, were as follows (in thousands):

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Cardiovascular

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Income before income taxes

Six Months Ended

June 30, 2025

June 30, 2024

Cardiovascular

Cost of sales standard (1)

Cost of sales other (2)

Selling, general and administrative expenses

Research and development expenses

Other operating expenses (3)

Income from operations

Total other expense — net

Income before income taxes

(1) Cost of sales standard represents costs of goods sold measured at the internal standard cost for production of inventory.

Inventory standard costs include material, labor and manufacturing overhead.

(2) Cost of sales other for all segments includes amortization expense associated with our developed technology and license agreements intangible assets, freight and handling associated with shipments to customers, provisions based on estimated excess, slow moving and obsolete inventories, manufacturing and price variances, and royalties.

(2) Cost of sales other for all segments includes amortization expense associated with our developed technology and license agreement intangible assets, freight and handling associated with shipments to customers, provisions based on estimated excess, slow moving and obsolete inventories, manufacturing and price variances, and royalties.

(3) Other operating expenses include contingent consideration expense (benefit) related to the changes in fair value of contingent payments associated with acquisitions.

Total depreciation and amortization by operating segment for the three-month periods ended March 31, 2025 and 2024, consisted of the following (in thousands):

Total depreciation and amortization by operating segment for the three and six-month periods ended June 30, 2025 and 2024, consisted of the following (in thousands):

Three Months Ended

Six Months Ended

Cardiovascular

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Assets (Liabilities) Measured at Fair Value on a Recurring Basis

Our financial assets and (liabilities) carried at fair value and measured on a recurring basis as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):

Our financial assets and (liabilities) carried at fair value and measured on a recurring basis as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

Fair Value Measurements Using

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unobservable inputs

March 31, 2025

June 30, 2025

Money market funds (1)

United States treasury debt securities (2)

Foreign currency contract assets, current and long-term (3)

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(1) Our money market fund represents a bank-managed money market fund which permits daily redemptions.

The fund is recorded as cash equivalents in the consolidated balance sheets.

Amounts in the fund are recorded as cash equivalents in the consolidated balance sheets.

(2) The fair value of U.S.

treasury debt securities are determined using quoted prices for identical assets in active markets and is recorded as cash and cash equivalents in the consolidated balance sheets.

(3) The fair value of the foreign currency contract assets (including those designated as hedging instruments and those not designated as hedging instruments) is determined using Level 2 fair value inputs and is recorded as a prepaid expense and other current asset or other long-term asset in the consolidated balance sheets.

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We measure the initial liability and re-measure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

Changes in the fair value of our contingent consideration liabilities during the three-month periods ended March 31, 2025 and 2024 consisted of the following (in thousands):

Changes in the fair value of our contingent consideration liabilities during the three and six-month periods ended June 30, 2025 and 2024 consisted of the following (in thousands):

Three Months Ended

Six Months Ended

Beginning balance

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Ending balance

As of March 31, 2025, $ 1.6 million in contingent consideration liability was included in other long-term obligations and $ 2.8 million in contingent consideration liability was included in accrued expenses in our consolidated balance sheet.

As of June 30, 2025, $ 1.7 million in contingent consideration liability was included in other long-term obligations and $ 0.3 million in contingent consideration liability was included in accrued expenses in our consolidated balance sheet.

As of December 31, 2024, $ 3.1 million in contingent consideration liability was included in other long-term obligations and $ 0.4 million in contingent consideration liability was included in accrued expenses in our consolidated balance sheet.

Payments related to the settlement of the contingent consideration liability recognized at fair value as of the applicable acquisition date of $ 0.1 million and $ 0.1 million for the three-month periods ended March 31, 2025 and 2024, respectively, have been reflected as a cash outflow from financing activities in the accompanying consolidated statements of cash flows.

Payments related to increases in the contingent consideration liability subsequent to the date of acquisition are reflected as operating cash flows.

The recurring Level 3 measurement of our contingent consideration liabilities included the following significant unobservable inputs at March 31, 2025 and December 31, 2024 (amounts in thousands):

Payments related to the settlement of the contingent consideration liability recognized at fair value as of the applicable acquisition date of $2.5 million and $ 0.1 million for the six-month periods ended June 30, 2025 and 2024, respectively, have been reflected as a cash outflow from financing activities in the accompanying consolidated statements of cash flows.

Payments related to increases in the contingent consideration liability subsequent to the date of acquisition of $ 0.1 million and $ 0.1 million for the six-month periods ended June 30, 2025 and 2024, respectively, are reflected as operating cash flows.

The recurring Level 3 measurement of our contingent consideration liabilities included the following significant unobservable inputs at June 30, 2025 and December 31, 2024 (amounts in thousands):

Fair value at

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Projected year of payments

Regulatory approval contingent liability

Scenario-based method

Discount rate

Probability of milestone payment

Projected year of payment

Fair value at

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The carrying amount of cash and cash equivalents, receivables, and trade payables approximate fair value because of the immediate, short-term maturity of these financial instruments.

Our long-term debt under our Amended Fourth A&R Credit Agreement re-prices frequently due to variable rates and entails no significant changes in credit risk and, as a result, we believe the fair value of long-term debt approximates carrying value.

The fair value of our long-term debt under our Convertible Notes was $ 1,016.6 million as of March 31, 2025 and was determined based on quoted prices in markets that are not active, which is considered a Level 2 valuation input.

The fair value of our long-term debt under our Convertible Notes was $ 934.4 million as of June 30, 2025 and was determined based on quoted prices in markets that are not active, which is considered a Level 2 valuation input.

The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash and cash equivalents, which use Level 1 inputs.

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All our nonrecurring valuations use significant unobservable inputs and therefore fall under Level 3 of the fair value hierarchy.

Our equity investments in privately-held companies were $ 25.9 million and $ 22.8 million at March 31, 2025 and December 31, 2024, respectively, which are included within other long-term assets in our consolidated balance sheets.

We analyze our investments in privately-held companies to determine if they should be accounted for using the equity method based on our ability to exercise significant influence over operating and financial policies of the investment.

Our equity investments in privately-held companies were $ 25.9 million and $ 22.8 million at June 30, 2025 and December 31, 2024, respectively, which are included within other long-term assets in our consolidated balance sheets.

amortization of differences between our investment basis and underlying equity in net assets of the investee, excluding the component representing goodwill;

and impairment, if any, as a component of other income (expense) — net for each reporting period.

Investments not accounted for under the equity method of accounting are accounted for at cost minus impairment, if applicable, plus or minus changes in valuation resulting from observable transactions for identical or similar investments .

For the three-month periods ended March 31, 2025 and 2024, we recorded no impairment charges related to our equity investments.

For the six-month periods ended June 30, 2025 and 2024, we recorded no impairment charges related to our equity investments.

Current Expected Credit Losses

Our outstanding long-term notes receivable, including accrued interest and an allowance for current expected credit losses, were $ 13.5 million and $ 9.4 million as of March 31, 2025 and December 31, 2024, respectively.

Long-term notes receivable increased $ 4.0 million for the three-month period ended March 31, 2025 related to a loan issued to Protaryx Medical Inc.

(“Protaryx”).

As of March 31, 2025 and December 31, 2024, we had an allowance for current expected credit losses of $ 1.6 million and $ 1.4 million, respectively, associated with these notes receivable.

Our outstanding long-term notes receivable, including accrued interest and an allowance for current expected credit losses, were $ 21.0 million and $ 9.4 million as of June 30, 2025 and December 31, 2024, respectively.

Long-term notes receivable increased $ 11.6 million for the six-month period ended June 30, 2025 related to loans issued to FluidX Medical Technology, Inc.

and Protaryx Medical Inc.

As of June 30, 2025 and December 31, 2024, we had an allowance for current expected credit losses of $ 2.4 million and $ 1.4 million, respectively, associated with these notes receivable.

We assess the allowance for current expected credit losses on an individual security basis, due to the limited number of securities, using a probability of default model, which is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the expected collectability of securities, and other security specific factors.

The table below presents a roll-forward of the allowance for current expected credit losses on our notes receivable for the three-month periods ended March 31, 2025 and 2024 (in thousands):

The table below presents a roll-forward of the allowance for current expected credit losses on our notes receivable for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):

Three Months Ended

Six Months Ended

Beginning balance

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Accumulated Other Comprehensive Income (Loss).

The changes in each component of accumulated other comprehensive income (loss) for the three-month periods ended March 31, 2025 and 2024 were as follows:

The changes in each component of accumulated other comprehensive income (loss) for the three and six-month periods ended June 30, 2025 and 2024 were as follows:

Cash Flow Hedges

Foreign Currency Translation

Balance as of April 1, 2025

Other comprehensive income (loss)

Reclassifications to:

Cost of sales

Net other comprehensive income (loss)

Balance as of June 30, 2025

Cash Flow Hedges

Foreign Currency Translation

Balance as of April 1, 2024

Other comprehensive loss

Reclassifications to:

Cost of sales

Interest expense

Net other comprehensive loss

Balance as of June 30, 2024

Cash Flow Hedges

Foreign Currency Translation

Balance as of January 1, 2025

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Net other comprehensive income (loss)

Balance as of March 31, 2025

Balance as of June 30, 2025

Cash Flow Hedges

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Net other comprehensive income (loss)

Balance as of March 31, 2024

Balance as of June 30, 2024

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