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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-07-30 · 125 added, 113 removed, 124 unchanged (66% of the section changed)

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Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties that may adversely impact our operations and financial results.

These risks and uncertainties are discussed in Part I, Item 1A “Risk Factors” in the 2024 Annual Report on Form 10-K and in Part II, Item 1A “Risk Factors” in this report.

These risks and uncertainties are discussed in Part I, Item 1A “Risk Factors” in the 2024 Annual Report on Form 10-K and in Part II, Item 1A “Risk Factors” in this report and in our Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2025 and June 30, 2025.

We are a leading manufacturer and marketer of proprietary medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy.

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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.

For the three-month period ended June 30, 2025, we reported sales of $382.5 million, an increase of $44.5 million or 13.2% compared to sales for the three-month period ended June 30, 2024 of $338.0 million.

For the six-month period ended June 30, 2025, we reported sales of $737.8 million, an increase of $76.3 million or 11.5%% compared to sales for the six-month period ended June 30, 2024 of $661.5 million.

Foreign currency fluctuations (net of hedging) increased/(decreased) our net sales by $2.3 million and $(1.1) million for the three and six-month periods ended June 30, 2025, respectively, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Gross profit as a percentage of sales increased to 48.2% for the three-month period ended June 30, 2025 compared to 47.7% for the three-month period ended June 30, 2024.

Gross profit as a percentage of sales increased to 48.3% for the six-month period ended June 30, 2025 compared to 47.3% for the six-month period ended June 30, 2024.

Net income for the three-month period ended June 30, 2025 was $32.6 million, or $0.54 per share, compared to net income of $35.7 million, or $0.61 per share, for the three-month period ended June 30, 2024.

Net income for the six-month period ended June 30, 2025 was $62.7 million, or $1.03 per share, compared to net income of $64.0 million, or $1.09 per share, for six-month period ended June 30, 2024.

For the three-month period ended September 30, 2025, we reported sales of $384.2 million, an increase of $44.3 million or 13.0% compared to sales for the three-month period ended September 30, 2024 of $339.8 million.

For the nine-month period ended September 30, 2025, we reported sales of $1,122.0 million, an increase of $120.6 million or 12.0% compared to sales for the nine-month period ended September 30, 2024 of $1,001.4 million.

Foreign currency fluctuations (net of hedging) increased our net sales by $1.9 million and $0.8 million for the three and nine-month periods ended September 30, 2025, respectively, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Gross profit as a percentage of sales increased to 48.5% for the three-month period ended September 30, 2025 compared to 46.4% for the three-month period ended September 30, 2024.

Gross profit as a percentage of sales increased to 48.4% for the nine-month period ended September 30, 2025 compared to 47.0% for the nine-month period ended September 30, 2024.

Net income for the three-month period ended September 30, 2025 was $27.8 million, or $0.46 per share, compared to net income of $28.4 million, or $0.48 per share, for the three-month period ended September 30, 2024.

Net income for the nine-month period ended September 30, 2025 was $90.5 million, or $1.49 per share, compared to net income of $92.4 million, or $1.57 per share, for the nine-month period ended September 30, 2024.

Recent Developments and Trends

In addition to the trends identified in the 2024 Annual Report on Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview,” our business in 2025 has been impacted, and we believe will continue to be impacted, by the following recent developments and trends:

● Our revenue results during the three-month period ended June 30, 2025 were driven primarily by demand in the U.S.

and favorable international sales trends, particularly in our Rest of World (“ROW”) and Europe, the Middle East and Africa (“EMEA) regions .

● As of June 30, 2025, we had cash, cash equivalents, and restricted cash of $343.9 million and net available borrowing capacity under our Fourth A&R Credit Agreement of approximately $697 million.

● Our revenue results during the three-month period ended September 30, 2025 were driven primarily by demand in the U.S.

and favorable sales trends in each of our international regions.

● As of September 30, 2025, we had cash, cash equivalents, and restricted cash of $394.6 million and net available borrowing capacity under our Fourth A&R Credit Agreement of approximately $697 million.

● The United States recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements.

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While the long-term effects remain uncertain, we continue to closely monitor the evolving trade policy environment which presents a mix of impacts, including, among other impacts, the potential for increased production costs and higher pricing to our customers, any of which could negatively affect our business, results of operations and financial condition.

See Part II, Item 1A.

Risk Factors in this report.

RESULTS OF OPERATIONS

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Selling, general and administrative expenses

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Income before income taxes

Sales for the three-month period ended June 30, 2025 increased by 13.2%, or $44.5 million, compared to the corresponding period in 2024.

Sales for six-month period ended June 30, 2025 increased by 11.5%, or $76.3 million, compared to the corresponding period in 2024.

Listed below are the sales by product category within each of our reportable segments for the three and six-month periods ended June 30, 2025 and 2024 (in thousands, other than percentage changes):

Sales for the three-month period ended September 30, 2025 increased by 13.0%, or $44.3 million, compared to the corresponding period in 2024.

Sales for nine-month period ended September 30, 2025 increased by 12.0%, or $120.6 million, compared to the corresponding period in 2024.

Listed below are the sales by product category within each of our reportable segments for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands, other than percentage changes):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cardiovascular

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*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.

Revenue figures for 2024 have been recast to reflect this realignment of our portfolio of spine products, representing approximately $5.7 million and $16.7 million in revenue for the three and nine-month periods ended September 30, 2024, within the OEM product category to provide comparability between the reported periods.

Cardiovascular Sales.

Our cardiovascular sales for the three-month period ended June 30, 2025 were $364.0 million, up 11.0% when compared to the corresponding period of 2024 of $327.8 million.

Sales for the three-month period ended June 30, 2025 were favorably affected by increased sales of:

Our cardiovascular sales for the three-month period ended September 30, 2025 were $366.4 million, up 13.5% when compared to the corresponding period of 2024 of $322.9 million.

Sales for the three-month period ended September 30, 2025 were favorably affected by increased sales of:

(a) Peripheral intervention products, which increased by $11.7 million, or 8.8%, from the corresponding period of 2024.

This increase was driven primarily by increased sales of our radar localization, drainage, embolotherapy and delivery systems products.

This increase was driven primarily by increased sales of our embolotherapy, access, delivery systems and angiography products.

(b) Cardiac intervention products, which increased by $26.4 million, or 29.3%, from the corresponding period of 2024.

This increase was driven primarily by $10.2 million in sales associated with products acquired from Cook in November 2024 and increased sales of our intervention and angiography products.

This increase was driven primarily by $10.7 million in sales associated with products acquired from Cook in November 2024, $5.3 million in sales associated with products acquired in connection with the Biolife Merger in May 2025 and increased sales of our intervention, cardiac rhythm management/electrophysiology (“CRM/EP”), access and angiography products.

This increase was driven primarily by increased sales of our cardiac rhythm management/electrophysiology (“CRM/EP”), kits and intervention products, offset partially by decreased sales of our access and coatings products.

This increase was driven primarily by increased sales of our CRM/EP and angiography products, offset partially by decreased sales of our access products.

(d) Custom procedural solutions products, which increased by $3.7 million, or 7.3%, from the corresponding period of 2024.

This increase was driven primarily by increased sales of our critical care products.

Our cardiovascular sales for the six-month period ended June 30, 2025 were $702.7 million, up 9.6% when compared to the corresponding period of 2024 of $641.2 million.

Sales for the six-month period ended June 30, 2025 were favorably affected by increased sales of:

This increase was driven primarily by increased sales of our kits.

Our cardiovascular sales for the nine-month period ended September 30, 2025 were $1,069.2 million, up 10.9% when compared to the corresponding period of 2024 of $964.0 million.

Sales for the nine-month period ended September 30, 2025 were favorably affected by increased sales of:

(a) Peripheral intervention products, which increased by $27.4 million, or 6.9%, from the corresponding period of 2024.

This increase was driven primarily by increased sales of our access, embolotherapy, radar localization, drainage and delivery systems products.

This increase was driven primarily by increased sales of our embolotherapy, access, delivery systems, radar localization and drainage products.

(b) Cardiac intervention products, which increased by $58.0 million, or 21.2%, from the corresponding period of 2024.

This increase was driven primarily by $19.4 million in sales associated with products acquired from Cook in November 2024 and increased sales of our CRM/EP, intervention and fluid management products.

This increase was driven primarily by $30.1 million in sales associated with products acquired from Cook in November 2024, $6.6 million in sales associated with products acquired in connection with the Biolife Merger

in May 2025 and increased sales of our intervention, CRM/EP, angiography, access and fluid management products.

This increase was driven primarily by increased sales of our kits, intervention and angiography products, offset partially by decreased sales of our fluid management and coatings products.

This increase was driven primarily by increased sales of our intervention, CRM/EP and angiography products as well as our kits, offset partially by decreased sales of our coated tube and wire products.

(d) Custom procedural solutions products, which increased by $6.6 million, or 4.4%, from the corresponding period of 2024.

This increase was driven primarily by increased sales of our critical care and trays products.

This increase was driven primarily by increased sales of our critical care products as well as our kits and trays.

Endoscopy Sales .

Our endoscopy sales for the three-month period ended June 30, 2025 were $18.4 million, up 81.0% when compared to sales in the corresponding period of 2024 of $10.2 million.

Sales for the three-month period ended June 30, 2025 compared to the corresponding period in 2024 were favorably affected by $8.1 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024.

Our endoscopy sales for the six-month period ended June 30, 2025 were $35.1 million, up 72.6% when compared to sales in the corresponding period of 2024 of $20.3 million.

Sales for the six-month period ended June 30, 2025 compared to the corresponding period in 2024 were favorably affected by $14.7 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024.

Our endoscopy sales for the three-month period ended September 30, 2025 were $17.7 million, up 4.4% when compared to sales in the corresponding period of 2024 of $17.0 million.

Sales for the three-month period ended September 30, 2025 compared to the corresponding period in 2024 were favorably affected by increased sales of our EsophyX® Z+ device and ReSolve Thoracostomy Trays.

Our endoscopy sales for the nine-month period ended September 30, 2025 were $52.8 million, up 41.5% when compared to sales in the corresponding period of 2024 of $37.3 million.

Sales for the nine-month period ended September 30, 2025 compared to the corresponding period in 2024 were favorably affected by increased sales of our EsophyX® Z+ device acquired from EGS in July 2024.

Geographic Sales

Listed below are sales by geography for the three and six-month periods ended June 30, 2025 and 2024 (in thousands, other than percentage changes):

Listed below are sales by geography for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands, other than percentage changes):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

United States

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United States Sales.

sales for the three-month period ended June 30, 2025 were $227.1 million, or 59.4% of net sales, up 16.7% when compared to the corresponding period of 2024.

The increase in our domestic sales for the three-month period ended June 30, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S.

Direct, OEM and Endoscopy businesses.

sales for the six-month period ended June 30, 2025 were $440.6 million, or 59.7%% of net sales, up 15.7% when compared to the corresponding period of 2024.

The increase in our domestic sales for the six-month period ended June 30, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S.

sales for the three-month period ended September 30, 2025 were $230.6 million, or 60.0% of net sales, up 11.7% when compared to the corresponding period of 2024.

The increase in our domestic sales for the three-month period ended September 30, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S.

Direct and OEM businesses.

sales for the nine-month period ended September 30, 2025 were $671.2 million, or 59.8%% of net sales, up 14.3% when compared to the corresponding period of 2024.

The increase in our domestic sales for the nine-month period ended September 30, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S.

Direct, OEM and Endoscopy businesses.

International Sales .

International sales for the three-month period ended June 30, 2025 were $155.4 million, or 40.6% of net sales, up 8.4% when compared to the corresponding period of 2024 of $143.3 million.

The increase in our international sales for the three-month period ended June 30, 2025, compared to the corresponding period of 2024 included increased sales in our ROW operations of $2.0 million or 14.0% and our EMEA operations of $10.3 million or 16.5%, partially offset by decreased sales in our Asia Pacific (“APAC”) operations of $(0.2) million or (0.4)%.

International sales for the six-month period ended June 30, 2025 were $297.2 million, or 40.3% of net sales, up 5.8% when compared to the corresponding period of 2024 of $280.8 million.

The increase in our international sales for the six-month period ended June 30, 2025, compared to the corresponding period of 2024 included increased sales in our ROW operations of $4.4 million or 15.8% and our EMEA operations of $12.6 million or 10.2%, partially offset by decreased sales in our APAC operations of $(0.5) million or (0.4)%.

Our gross profit as a percentage of sales increased to 48.2% for the three-month period ended June 30, 2025, compared to 47.7% for the three-month period ended June 30, 2024.

The increase in gross profit percentage was primarily due to an increase in sales combined with favorable changes in product mix, partially offset by higher intangible amortization expense as a percentage of sales associated with acquisitions.

Our gross profit as a percentage of sales increased to 48.3% for the six-month period ended June 30, 2025, compared to 47.3% for the six-month period ended June 30, 2024.

International sales for the three-month period ended September 30, 2025 were $153.6 million, or 40.0% of net sales, up 15.2% when compared to the corresponding period of 2024 of $133.4 million.

The increase in our international sales for the three-month period ended September 30, 2025, compared to the corresponding period of 2024 included increased sales in our Rest of World (“ROW”) operations of $2.7 million or 18.5%, our Europe, the Middle East and Africa (“EMEA”) operations of $13.1 million or 22.3% and our Asia Pacific (“APAC”) operations of $4.5 million or 7.4%.

International sales for the nine-month period ended September 30, 2025 were $450.7 million, or 40.2% of net sales, up 8.8% when compared to the corresponding period of 2024 of $414.1 million.

The increase in our international sales for the nine-month period ended September 30, 2025, compared to the corresponding period of 2024 included increased sales in our ROW operations of $7.0 million or 16.7%, our EMEA operations of $25.6 million or 14.1% and our APAC operations of $3.9 million or 2.1%.

Our gross profit as a percentage of sales increased to 48.5% for the three-month period ended September 30, 2025, compared to 46.4% for the three-month period ended September 30, 2024.

Our gross profit as a percentage of sales increased to 48.4% for the nine-month period ended September 30, 2025, compared to 47.0% for the nine-month period ended September 30, 2024.

The increase in gross profit percentage for the three and nine-month periods ended September 30, 2024 was primarily due to an increase in sales combined with favorable changes in product mix, partially offset by higher intangible amortization expense as a percentage of sales associated with acquisitions.

Operating Expenses

Selling, General and Administrative Expense.

Selling, general and administrative ("SG&A") expenses increased $18.5 million, or 19.6%, for the three-month period ended June 30, 2025 compared to the corresponding period of 2024.

As a percentage of sales, SG&A expenses were 29.6% for the three-month period ended June 30, 2025, compared to 28.0% for the corresponding period of 2024.

SG&A expenses increased $31.6 million, or 16.7%, for the six-month period ended June 30, 2025 compared to the corresponding period of 2024.

As a percentage of sales, SG&A expenses were 29.9%% for the six-month period ended June 30, 2025, compared to 28.6%% for the corresponding period of 2024.

For the three and six-month periods ended June 30, 2025, SG&A expenses increased compared to the corresponding periods of 2024, primarily due to an increase in labor-related costs associated with headcount additions, including those in connection with the EGS, Cook and Biolife Acquisitions, and increased travel and entertainment and advertising and promotional expenses.

Selling, general and administrative (“SG&A”) expenses increased $20.2 million, or 20.2%, for the three-month period ended September 30, 2025 compared to the corresponding period of 2024.

As a percentage of sales, SG&A expenses were 31.2% for the three-month period ended September 30, 2025, compared to 29.3% for the corresponding period of 2024.

SG&A expenses increased $51.7 million, or 17.9%, for the nine-month period ended September 30, 2025 compared to the corresponding period of 2024.

As a percentage of sales, SG&A expenses were 30.3%% for the nine-month period ended September 30, 2025, compared to 28.8%% for the corresponding period of 2024.

For the three and nine-month periods ended September 30, 2025, SG&A expenses increased compared to the corresponding period of 2024, primarily due to an increase in labor-related costs including (i) variable compensation associated with performance-based bonus programs, commissions associated with sales growth, as well as an increase in expense associated with both performance and non-performance based equity awards;

and (ii) headcount additions to support investment in the business and growth from acquisitions, including those in connection with the Cook Transaction and the Biolife Merger.

Research and Development Expenses.

Research and development (”R&D”) expenses for the three-month period ended June 30, 2025 were $24.4 million, up 20.3%, when compared to R&D expenses in the corresponding period of 2024 of $20.3 million.

R&D expenses for the six-month period ended June 30, 2025 were $46.8 million, up 12.2%, when compared to R&D expenses in the corresponding period of 2024 of $41.7 million.

For the three and six-month periods ended June 30, 2025, R&D expenses increased compared to the corresponding periods of 2024 primarily due to increased R&D activity and regulatory costs associated with clinical trials.

Research and development (“R&D”) expenses for the three-month period ended September 30, 2025 were $24.0 million, up 16.8%, when compared to R&D expenses in the corresponding period of 2024 of $20.5 million.

R&D expenses for the nine-month period ended September 30, 2025 were $70.8 million, up 13.7%, when compared to R&D expenses in the corresponding period of 2024 of $62.3 million.

For the three and nine-month periods ended September 30, 2025, R&D expenses increased compared to the corresponding periods of 2024 primarily due to increased regulatory costs and clinical trials.

Contingent Consideration Expense .

For the three and six-month periods ended June 30, 2025, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $0.1 million and $1.2 million, compared to contingent consideration expense of $0.3 million and $0.2 million for the three and six-month periods ended June 30, 2024.

For the three and nine-month periods ended September 30, 2025, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $0.0 million and $1.2 million, compared to contingent consideration expense of $0.1 million and $0.3 million for the three and nine-month periods ended September 30, 2024.

Expense in each period related to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.

Operating Income

The following table sets forth our operating income by financial reporting segment for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):

The following table sets forth our operating income by financial reporting segment for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating Income

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Cardiovascular Operating Income.

Our cardiovascular operating income for the three-month period ended June 30, 2025 was $41.2 million, compared to cardiovascular operating income in the corresponding period of 2024 of $42.9 million.

The decrease in cardiovascular operating income during the three-month period ended June 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased SG&A and R&D expense, partially offset by increased sales ($364.0 million compared to $327.8 million) and gross margin.

Our cardiovascular operating income for the six-month period ended June 30, 2025 was $79.8 million, compared to cardiovascular operating income in the corresponding period of 2024 of $75.8 million.

The increase in cardiovascular operating income during the six-month period ended June 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased sales ($702.7 million compared to $641.2 million) and gross margin , partially offset by increased SG&A, R&D and contingent consideration expenses .

Endoscopy Operating Income .

Our endoscopy operating income for the three-month period ended June 30, 2025 was $5.6 million, compared to endoscopy operating income of $3.0 million for the corresponding period of 2024.

Our endoscopy operating income for the six-month period ended June 30, 2025 was $8.1 million, compared to endoscopy operating income of $6.0 million for the corresponding period of 2024.

The increase in endoscopy operating income for the three and six-month periods ended June 30, 2025 compared to the corresponding periods of 2024 was primarily a result of increased sales and gross margin, partially offset by increased SG&A expenses associated with higher labor related costs due to headcount additions in connection with the integration activities for the EGS Acquisition.

Our cardiovascular operating income for the three-month period ended September 30, 2025 was $37.8 million, compared to cardiovascular operating income in the corresponding period of 2024 of $37.6 million.

The increase in cardiovascular operating income during the three-month period ended September 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased sales ($366.4 million compared to $322.9 million) and gross margin, partially offset by increases in SG&A and R&D expenses.

Our cardiovascular operating income for the nine-month period ended September 30, 2025 was $117.6 million, compared to cardiovascular operating income in the corresponding period of 2024 of $113.4 million.

The increase in cardiovascular operating income during the nine-month period ended September 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased sales ($1,069.2 million compared to $964.0 million) and gross margin , partially offset by increased SG&A, R&D and contingent consideration expenses .

Endoscopy Operating Income (Loss) .

Our endoscopy operating income for the three-month period ended September 30, 2025 was $4.8 million, compared to endoscopy operating loss of $(0.3) million for the corresponding period of 2024.

The increase in endoscopy operating income for the three-month period ended September 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased sales and gross margin and decreased SG&A expenses associated with reduced restructuring and integration costs from the acquisition of EGS in July 2024.

Our endoscopy operating income for the nine-month period ended September 30, 2025 was $13.0 million, compared to endoscopy operating income of $5.8 million for the corresponding period of 2024.

The increase in endoscopy operating income for the nine-month period ended September 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased sales and gross margin, partially offset by increased SG&A expenses associated with higher labor related costs due to headcount additions in connection with the EGS Acquisition.

Other Expense – Net

Our other expense for the three months ended June 30, 2025 and 2024 was $3.5 million and $0.1 million, respectively.

Our other expense for the six-month periods ended June 30, 2025 and 2024 was $6.6 million and $1.7 million, respectively.

The increase in other expense for the three and six-month periods ended June 30, 2025 compared to the corresponding periods of 2024 were primarily related to decreased interest income associated with reduced cash and cash equivalent balances, partially offset by a decrease in interest expense as a result of having no outstanding amounts due under the term loan of our Amended Fourth A&R Credit Agreement for the three and six-month periods ended June 30, 2025.

Our other expense for the three months ended September 30, 2025 and 2024 was $4.1 million and $0.6 million, respectively.

Our other expense for the nine-month periods ended September 30, 2025 and 2024 was $10.6 million and $2.3 million, respectively.

The increase in other expense for the three and nine-month periods ended September 30, 2025 compared to the corresponding periods of 2024 were primarily related to decreased interest income associated with reduced cash and cash equivalent balances, partially offset by a decrease in interest expense as a result of having no outstanding amounts due under our Amended Fourth A&R Credit Agreement for the three and nine-month periods ended September 30, 2025.

Effective Tax Rate

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 net income for the three-month periods ended June 30, 2025 and 2024 was $32.6 million and $35.7 million, respectively.

The decrease in our net income for the three-month period ended June 30, 2025 was the result of several principal factors, including increased SG&A and R&D expenses, other expenses, and income tax expense, partially offset by increased sales and gross margin.

Our net income for the six-month periods ended June 30, 2025 and 2024 was $62.7 million and $64.0 million, respectively.

The decrease in our net income for the six-month period ended June 30, 2025 was the result of several principal factors, including increased SG&A and R&D expenses, contingent consideration expense, other expenses, and income tax expense, partially offset by increased sales and gross margin.

Our provision for income taxes for the three-month periods ended September 30, 2025 and 2024 was a tax expense of $10.8 million and $8.2 million, respectively, which resulted in an effective tax rate of 28.0% and 22.4%, respectively.

Our provision for income taxes for the nine-month periods ended September 30, 2025 and 2024 was a tax expense of $29.4 million and $24.4 million, respectively, which resulted in an effective tax rate of 24.5% and 20.9%, respectively.

The increase in the effective income tax rate for the three and nine-month periods ended September 30, 2025, when compared to the prior-year period, was primarily due to decreased benefit from discrete items such as share-based compensation and contingent liabilities and increased permanent tax differences in various jurisdictions and items related to the budget reconciliation package enacted during the period and retroactive to the beginning of the year.

The increase in the income tax expense for the three and nine-month periods ended September 30, 2025, when compared to the prior-year periods, was primarily due to increased pre-tax book income and the rate differences noted above.

Our net income for the three-month periods ended September 30, 2025 and 2024 was $27.8 million and $28.4 million, respectively.

The decrease in our net income for the three-month period ended September 30, 2025 was the result of several principal factors, including increased SG&A and R&D expenses, other expenses, and income tax expense, partially offset by increased sales and gross margin.

Our net income for the nine-month periods ended September 30, 2025 and 2024 was $90.5 million and $92.4 million, respectively.

The decrease in our net income for the nine-month period ended September 30, 2025 was the result of several principal factors, including increased SG&A and R&D expenses, contingent consideration expense, other expenses, and income tax expense, partially offset by increased sales and gross margin.

LIQUIDITY AND CAPITAL RESOURCES

Capital Commitments, Contractual Obligations and Cash Flows

As of June 30, 2025 and December 31, 2024, our current assets exceeded current liabilities by $697.5 million and $707.4 million, respectively, and we had cash, cash equivalents and restricted cash of $343.9 million and $378.8 million, respectively, of which $69.7 million and $50.6 million, respectively, were held by foreign subsidiaries.

As of September 30, 2025 and December 31, 2024, our current assets exceeded current liabilities by $755.1 million and $707.4 million, respectively, and we had cash, cash equivalents and restricted cash of $394.6 million and $378.8 million, respectively, of which $72.5 million and $50.6 million, respectively, were held by foreign subsidiaries.

We currently believe f uture repatriation of cash and other property held by our foreign subsidiaries will generally not be subject to U.S.

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In addition, cash held by our subsidiary in China is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside of China.

As of June 30, 2025, and December 31, 2024, we had cash, cash equivalents and restricted cash of $29.2 million and $18.1 million, respectively, within our subsidiary in China.

As of September 30, 2025, and December 31, 2024, we had cash, cash equivalents and restricted cash of $25.8 million and $18.1 million, respectively, within our subsidiary in China.

Cash flows provided by operating activities .

We generated cash from operating activities of $123.9 million and $104.7 million during the six-month periods ended June 30, 2025 and 2024, respectively.

We generated cash from operating activities of $198.9 million and $152.1 million during the nine-month periods ended September 30, 2025 and 2024, respectively.

Significant factors affecting operating cash flows during these periods included:

● Net income was $62.7 million and $64.0 million for the six-month periods ended June 30, 2025 and 2024, respectively.

● Depreciation and amortization was approximately $60.3 million and $47.7 million for the six-month periods ended June 30, 2025 and 2024, respectively.

The increase in depreciation and amortization for the six-month period ended June 30, 2025 was primarily associated with the amortization of developed technology and other intangible assets acquired from EGS, Cook and Biolife.

● Cash provided by (used for) inventories was approximately $(11.7) million and $3.1 million for the six-month periods ended June 30, 2025 and 2024, respectively.

The increase in inventories during 2025 was principally associated with our strategy to proactively invest in our inventory balances to encourage high customer service levels, as well as to build bridge inventory for production line transfers and increases in safety stock due to vendor supply delays.

● Cash (used for) provided by trade payables was $3.7 million and $(7.1) million for the six-month periods ended June 30, 2025 and 2024, respectively, due primarily to the timing of payments.

● Stock-based compensation expense was $20.0 million and $12.2 million for the six-month periods ended June 30, 2025 and 2024, respectively.

● Net income was $90.5 million and $92.4 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

● Depreciation and amortization was approximately $91.6 million and $74.1 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

The increase in depreciation and amortization for the nine-month period ended September 30, 2025 was primarily associated with the amortization of developed technology and other intangible assets acquired from EGS and Cook, and in connection with the Biolife Merger.

● Stock-based compensation expense was $33.6 million and $19.0 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

The increase in stock-based compensation expense during 2025 is primarily associated with the increase in the Company’s stock price and grants of restricted stock units.

● Cash used for inventories was approximately $15.1 million and $2.8 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

● Cash provided by (used for) trade payables was $3.4 million and $(6.5) million for the nine-month periods ended September 30, 2025 and 2024, respectively, due primarily to the timing of payments.

Cash flows used in investing activities.

We used cash in investing activities of $173.0 million and $38.5 million for the six-month periods ended June 30, 2025 and 2024, respectively.

We used cash for capital expenditures of property and equipment of $34.8 million and $22.3 million in the six-month periods ended June 30, 2025 and 2024, respectively.

We used cash in investing activities of $197.1 million and $154.2 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

We used cash for capital expenditures of property and equipment of $57.3 million and $31.7 million in the nine-month periods ended September 30, 2025 and 2024, respectively.

Capital expenditures in each period were primarily related to investments in property and equipment to support development and production of our products, and in 2025 includes costs for the construction of a new distribution facility in South Jordan, Utah.

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We anticipate that we will spend approximately $90 to $100 million in 2025 for property and equipment.

Cash outflows for the acquisition of equity investments and issuance of notes receivable were $14.6 million and $9.7 million for the six-month periods ended June 30, 2025 and 2024, respectively.

Cash outflows invested in acquisitions were $122.6 million for the six-month period ended June 30, 2025 and were primarily related to the acquisition of Biolife in May 2025.

Cash outflows invested in acquisitions were $4.9 million for the six-month period ended June 30, 2024 and were related to the initial payment for the acquisition of assets from SSI and a deferred payment for the acquisition of assets from Restore Endosystems.

Cash outflows for the acquisition of equity investments and issuance of notes receivable were $14.9 million and $10.2 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

Cash outflows invested in acquisitions were $122.8 million for the nine-month period ended September 30, 2025 and were primarily related to the Biolife Merger in May 2025.

Cash outflows invested in acquisitions were $110.2 million for the nine-month period ended September 30, 2024 and were primarily related to the EGS Acquisition in July 2024 and the initial payment for the acquisition of assets from SSI and a deferred payment for the acquisition of assets from Restore Endosystems.

Cash flows provided by (used in) financing activities.

Cash provided by (used in) financing activities for the six-month periods ended June 30, 2025 and 2024 was $11.3 million and $(14.9) million, respectively.

For the six-month period ended June 30, 2024, we had cash used in financing activities primarily attributable to repayment of net borrowings under our Amended Fourth A&R Credit Agreement in an aggregate amount of $24.1 million.

We had cash proceeds from the issuance of Common Stock of $20.0 million and $10.9 million for the six-month periods ended June 30, 2025 and 2024, respectively, related to the exercise of non-qualified stock options.

As of June 30, 2025, we had outstanding borrowings of $747.5 million and had issued letter of credit guarantees of $2.9 million, with additional available borrowings of approximately $697 million under the Amended Fourth A&R Credit Agreement, based on the maximum net leverage ratio and the aggregate revolving credit commitment pursuant to the Amended Fourth A&R Credit Agreement.

Our interest rate as of June 30, 2025 and December 31, 2024 was a fixed rate of 3.0% on our Convertible Notes.

Cash provided by (used in) financing activities for the nine-month periods ended September 30, 2025 and 2024 was $10.9 million and $(62.4) million, respectively.

For the nine-month period ended September 30, 2024, we had cash used in financing activities primarily attributable to repayment of net borrowings under our Amended Fourth A&R Credit Agreement in an aggregate amount of $76.1 million.

We had cash proceeds from the issuance of Common Stock of $13.6 million and $13.8 million, net of taxes paid in exchange for common stock, for the nine-month periods ended September 30, 2025 and 2024, respectively, related to the exercise of non-qualified stock options.

As of September 30, 2025, we had outstanding borrowings of $747.5 million and had issued letter of credit guarantees of $3.0 million, with additional available borrowings of approximately $697 million under the Amended Fourth A&R Credit Agreement, based on the maximum net leverage ratio and the aggregate revolving credit commitment pursuant to the Amended Fourth A&R Credit Agreement.

Our interest rate as of September 30, 2025 and December 31, 2024 was a fixed rate of 3.0% on our Convertible Notes.

We currently believe that our existing cash balances, anticipated future cash flows from operations and borrowings under our long-term debt agreements will be adequate to fund our current and currently planned future operations for the next twelve months and the foreseeable future.

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Our financial results are affected by the selection and application of accounting policies and methods.

In the six-month period ended June 30, 2025 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

In the nine-month period ended September 30, 2025 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

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Forward-looking statements include, among others:

• statements proceeded or followed by, or that include the words, “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “projects,” “forecasts,” “potential,” “target,” “continue,” “upcoming,” “optimistic” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology;

• statements preceded or followed by, or that include the words, “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “projects,” “forecasts,” “potential,” “target,” “continue,” “upcoming,” “optimistic” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology;

• statements that address our future operating performance or events or developments that we expect or anticipate will occur, including, without limitation, any statements regarding our projected earnings, revenues or other financial measures, our plans and objectives for future operations, our proposed new products or services, the integration, development or commercialization of the business or any assets acquired from other parties, future economic conditions or performance, the implementation of, and results which may be achieved through, Merit’s Continued Growth Initiatives Program or other business optimization initiatives, and any statements of assumptions underlying any of the foregoing;

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Investors are cautioned not to unduly rely on any such forward-looking statements.

The following are some of the important risks and uncertainties that could cause our actual results to differ from our expectations in any forward-looking statements:

inherent risks and uncertainties associated with consequences of Merit’s executive succession planning activities and leadership transition;

The following are some of the important risks and uncertainties that could cause Merit’s actual results to differ from management’s expectations in any forward-looking statements:

risks and uncertainties associated with consequences of Merit’s executive succession planning activities and leadership transition;

risks and uncertainties regarding trade policies or related actions implemented by the U.S.

or other countries, including existing, proposed or prospective tariffs, duties or other measures;

inherent risks and uncertainties associated with Merit’s acquisition of Biolife Delaware, L.L.C.

Merit’s integration of the Biolife business and operations and its ability to achieve revenues and other financial measures consistent with its forecasts projected for the Biolife acquisition;

inherent risks and uncertainties associated with Merit’s integration of products acquired from Cook Medical Holdings LLC and Merit’s ability to achieve anticipated financial results, product development and other anticipated benefits of such acquisition;

risks and uncertainties associated with Merit’s proposed acquisition of the C2 CryoBalloon device and related assets from Pentax of America, Inc., the possibility that Merit may not complete the proposed acquisition and, if the acquisition is completed, Merit’s integration of the acquired products and Merit’s ability to achieve projected financial results, product development and other projected benefits of the proposed acquisition;

risks and uncertainties associated with Merit’s integration of the Biolife business and operations and its ability to achieve financial results, product development and other anticipated benefits of such acquisition;

risks and uncertainties associated with Merit’s integration of products acquired in the Cook Transaction and Merit’s ability to achieve anticipated financial results, product development and other anticipated benefits of such acquisition;

effects of the Convertible Notes on Merit’s net income and earnings per share performance;

disruptions in Merit’s supply chain, manufacturing or sterilization processes;

and global political, economic, competitive, reimbursement and regulatory conditions;

and global political, economic, competitive, reimbursement and regulatory conditions, including the ongoing “shutdown” of the United States government;

modification or limitation of, or policies and procedures associated with, governmental or private insurance reimbursement policies;

reduced availability of, and price increases associated with, components and other raw materials;

increases in transportation expenses;

relating to Merit’s potential inability to successfully manage growth through acquisitions generally, including the inability to effectively integrate acquired operations or products or commercialize technology developed internally or acquired through completed, proposed or future transactions;

risks relating to Merit’s potential inability to successfully manage growth through acquisitions generally, including the inability to effectively integrate acquired operations or products or commercialize technology developed internally or acquired through completed, proposed or future transactions;

fluctuations in interest or foreign currency exchange rates and inflation;

cybersecurity events;

government scrutiny and regulation of the medical device industry;

difficulties relating to development, testing and regulatory approval, clearance and maintenance of Merit’s products;

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the ability to fully enroll and the outcomes of ongoing and future clinical trials and market studies relating to Merit’s products;

modification or limitation of, or policies and procedures associated with, governmental or private insurance reimbursement policies;

litigation and other judicial proceedings affecting Merit;

consequences associated with a Corporate Integrity Agreement executed between Merit and the U.S.

consequences associated with a Corporate Integrity Agreement

executed between Merit and the U.S.

Department of Justice;

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potential for significant adverse changes in governing regulations;

changes in tax laws and regulations in the United States or other jurisdictions or exposure to additional tax liabilities which may adversely affect our effective tax rate;

changes in tax laws and regulations in the United States or other jurisdictions or exposure to additional tax liabilities which may adversely affect Merit’s effective tax rate;

termination of relationships with Merit’s suppliers, or failure of such suppliers to perform;

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“Risk Factors” in our 2024 Annual Report on Form 10-K filed with the SEC, which we (i) updated in Part II, Item 1A.

“Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, (ii) update in Part II, Item 1A.

“Risk Factors” in this report, and (iii) may further update in subsequent Quarterly Reports on Form 10-Q that we will file hereafter.

“Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, (ii) updated in Part II, Item 1A.

“Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, and (iii) updated in Part II, Item 1A.

“Risk Factors” in this report.

All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

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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 2. Management’s Discussion and Analysis