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What changed in MERIT MEDICAL SYSTEMS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MERIT MEDICAL SYSTEMS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+427 added−445 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-24)

Top changes in MERIT MEDICAL SYSTEMS INC's 2023 10-K

427 paragraphs added · 445 removed · 319 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

101 edited+32 added−54 removed90 unchanged
Biggest changeOur sustainability values in action include: ​ • achievement of ISO 14001 certification at all of our largest manufacturing facilities (seven in scope) with the goal of continual improvement of our environmental management system (ISO 14001 is the international standard that specifies requirements for an effective environmental management system); • achievement of ISO 45001 certification at all of our largest manufacturing facilities (seven in scope) with the goal of continual improvement to our occupational health and safety management system (ISO 45001 is the international standard that specifies requirements for an effective safety management system); • achievement of ISO 50001 certification at five of our largest manufacturing facilities (seven in scope), and our goal is to achieve ISO 50001 certification at all our in scope manufacturing facilities by the end of 2024 (ISO 50001 is the international standard that specifies requirements for an effective energy management system); 17 Table of Contents • establishment and support of employee gardens that promote pollination and provide farm-to-table nutrition for our employees at our headquarters in South Jordan, Utah; • transition to re-usable pallets and methods to move products in reusable bulk containers, reducing intra-company shipping materials; • reduction in water consumption at our water-stressed location in South Jordan, Utah by investing in campus-wide xeriscaping and water recirculation systems within our most water intensive operations; • reduction in packaging materials by implementing product family packaging reviews to consolidate shipments by better understanding our customers’ purchasing practices—these reviews often allow us to increase quantities per box, eliminate the usage of intermediate packaging, reducing film thickness and use original product packaging where possible; • transition from paper work orders to electronic work orders through our internally designed eWorq program—at full completion, this project will save millions of pieces of paper and thousands of plastic sleeves annually—currently we are working to implement this program at our largest manufacturing facilities in South Jordan, Utah and Tijuana, Mexico, with plans to continue the roll-out to other sites thereafter; • recycling programs where our employees recycle materials, including food waste, paper, plastic, cardboard, food waste and beverage containers, scrap metal, and pallets, and re-use of our plastic scrap waste leftover from the manufacturing process of our molded parts; • placement of free car charging stations for employees who have transitioned to electric vehicles; • installation of efficient heating and cooling systems that operate on variable efficiency drives, increasing our energy efficiency at our headquarters in South Jordan, Utah and our transition to Light Emitting Diode (“LED”) lighting in our manufacturing facilities; • operation of an environmental tracking system at our world-wide facilities to facilitate monthly reporting and accountability for energy, water, waste, recycling, and scope 1 and 2 greenhouse gas emissions metrics—this system supports our 2030 operational sustainability goals; and • engaged in a comprehensive materiality assessment to better align ESG expectations from our internal and external stakeholders. ​ To learn more about our sustainability programs and accomplishments, you may visit www.merit.com/about/corporate-sustainability/; however, the information on this website is not, and will not be deemed, a part of this report or incorporated into any other filings we make with the SEC. ​ Human Capital Management ​ As of December 31, 2022, we had 6,846 employees located in approximately 40 different countries in a variety of different roles.
Biggest change(ISO 14001 is the international standard that specifies requirements for an effective environmental management system); • achievement of ISO 50001 certification at five manufacturing facilities (six in scope) with the goal of achieving of ISO 50001 certification at our sixth in scope manufacturing facility by the end of 2025 (ISO 50001 is the international standard that specifies requirements for an effective energy management system); • establishment and support of employee gardens that promote pollination and provide farm-to-table nutrition for our employees at our headquarters in South Jordan, Utah; • transition to re-usable pallets and methods to move products in reusable bulk containers, reducing intra-company shipping materials; • reduction in water consumption at our water-stressed location in South Jordan, Utah by investing in campus-wide xeriscaping and water recirculation systems within our most water intensive operations; • reduction in packaging materials by implementing product family packaging reviews to consolidate shipments by better understanding our customers’ purchasing practices—these reviews often allow us to increase quantities per box, eliminate the usage of intermediate packaging, reducing film thickness and use original product packaging where possible; 16 Table of Contents • transition from paper work orders to electronic work orders through our internally designed eWorq program.
Suggestions for new products and product improvements may also come from engineers, marketing and sales personnel, physicians and technicians who perform clinical procedures.
Suggestions for new products and product improvements may also come from engineers, marketing and sales personnel, and physicians and technicians who perform clinical procedures.
More privacy and data security laws and regulations are being adopted and enforced, with increasingly significant fines and financial penalties for violations in the jurisdictions in which we conduct our operations. Compliance with these evolving and complex data privacy and cybersecurity laws and regulations has resulted in, and will likely continue to result in new compliance challenges and increased costs.
More privacy and data security laws and regulations are being adopted and enforced, with increasingly significant fines and financial penalties for violations in the jurisdictions in which we conduct our operations. Compliance with these evolving and complex data privacy and cybersecurity laws and regulations has resulted and will likely continue to result in new compliance challenges and increased costs.
FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, rescission of contracts and such other relief as the FTC may deem necessary. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. Import Requirements.
FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, rescission of contracts and such other relief as the FTC may deem necessary. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. Import and Export Requirements.
Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”).
Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, and other federal statutes and regulations, including those established by the Office of Foreign Assets Control.
In recent years, our commitment to innovation led to the introduction of several new products, improvements to our existing products and expansion of our product lines, as well as enhancements and new equipment in our research and development facilities. We continue to develop new products and make improvements to our existing products utilizing many different sources.
In recent years, our commitment to innovation has led to the introduction of several new products, improvements to our existing products and expansion of our product lines, as well as enhancements and new equipment in our research and development facilities. We continue to develop new products and make improvements to our existing products utilizing many different sources.
As a medical device manufacturer, we are subject to other post-market requirements in multiple jurisdictions, including (i) product listing, (ii) establishment registration, (iii) Unique Device Identification (“UDI”), and (iv) reports of corrections and removals.
Additional Post-Market Requirements. As a medical device manufacturer, we are subject to other post-market requirements in multiple jurisdictions, including (i) product listing, (ii) establishment registration, (iii) Unique Device Identification (“UDI”), and (iv) reports of corrections and removals.
We have identified our sustainability opportunities, and have developed areas of focus where we are positioned to make a positive impact. These include programs designed to reduce waste, improve efficiencies, reduce greenhouse gas emissions, and protect the environment.
We have identified sustainability opportunities, and have developed areas of focus where we are positioned to make a positive impact. These include programs designed to reduce waste, improve efficiencies, reduce greenhouse gas emissions, and protect the environment.
Delays in receiving of or failure to receive such approvals, the loss of previously received approvals, or the failure to comply with existing or future regulatory requirements could have a material adverse effect on our business, financial condition or results of operations. ​ 11 Table of Contents In May 2020, we received the CE mark for the Merit Wrapsody Cell-Impermeable Endoprosthesis, and we are pursuing regulatory approval in the U.S. and elsewhere.
Delays in, or failure to receive, such approvals, the loss of previously received approvals, or the failure to comply with existing or future regulatory requirements could have a material adverse effect on our business, financial condition, results of operations or prospects. 11 Table of Contents In May 2020, we received the CE mark for the Merit Wrapsody Cell-Impermeable Endoprosthesis, and we are pursuing regulatory approval in the U.S. and elsewhere.
Business Strategy Our business strategy focuses on five target areas as follows: ● enhancing global growth and profitability through research and development, sales model optimization, cost discipline and operational focus; ● optimizing our operational capability through lean processes, cost effective environments and asset utilization; ● targeting high-growth, high-return opportunities by understanding, innovating and delivering in our core divisions; ● maintaining a highly disciplined, customer-focused enterprise guided by strong core values to globally address unmet or underserved healthcare needs; and ● creating sustainability of our business for our employees, shareholders and community.
Business Strategy Our business strategy focuses on five target areas as follows: ● enhancing global growth and profitability through research and development, sales model optimization, cost discipline and operational focus; ● optimizing our operational capability through lean processes, cost effective environments and asset utilization; ● targeting high-growth, high-return opportunities by understanding, innovating and delivering in our core divisions; ● maintaining a highly disciplined, customer-focused enterprise guided by strong core values to globally address unmet or underserved healthcare needs; and ● creating a sustainable business for our employees, shareholders and community.
We are conducting a large, multinational pivotal human clinical trial of the Wrapsody Endoprosthesis, which is required for us to obtain approval from the FDA and some international regulatory agencies. Human clinical trials of a medical device are often required for regulatory clearance or approval for devices and are expensive, time-consuming and uncertain. ​ Quality System Requirements.
We are conducting a large, multinational pivotal human clinical trial of the Wrapsody Endoprosthesis, which is required for us to obtain approval from the FDA and some foreign regulatory agencies. Human clinical trials of a medical device are often required for regulatory clearance or approval for devices and are expensive, time-consuming and uncertain. Quality System Requirements.
Employee Engagement. The engagement of our workforce is critical to delivering on our competitive strategy, and we place high importance on informed and engaged employees.
The engagement of our workforce is critical to delivering on our competitive strategy, and we place high importance on informed and engaged employees.
In addition, we have a Chief Wellness Officer dedicated to designing programs and initiatives that support the physical, emotional, and mental health of our employees. We have a monthly wellness committee meeting and create a “Get Healthy” wellness program available to all sites across the globe.
In addition, we have a Chief Wellness Coordinator dedicated to designing programs and initiatives that support the physical, emotional, and mental health of our employees. We have a monthly wellness committee meeting and create a “Get Healthy” wellness program available to all sites across the globe.
As a result of our focus on competitive health and wellness benefits, we have achieved our eighth consecutive year of zero health care plan cost increases for our U.S. employees who participate in our group healthcare plans.
As a result of our focus on competitive health and wellness benefits, we have achieved our ninth consecutive year of zero health care plan cost increases for our U.S. employees who participate in our group healthcare plans.
Our compliance program includes (i) policies addressing not only the FCPA, but also the provisions of a variety of anti-corruption laws in multiple foreign jurisdictions, (ii) provisions relating to books and records that apply to us as a public company, and (iii) effective training for our personnel and relevant third parties. Transparency Laws. The U.S.
Our compliance program includes (i) policies addressing not only the FCPA, but also the provisions of a variety of anti-corruption laws in multiple foreign jurisdictions, (ii) provisions relating to books and records that apply to us as a public company, and (iii) effective training for our personnel and relevant third parties. 13 Table of Contents Transparency Laws. The U.S.
The success of our products is enhanced by the extensive experience of our management team in the healthcare industry, our experienced direct sales force and distributors, our ability to provide custom procedural solutions such as kits, trays 2 Table of Contents and procedural packs at the request of our customers, and our dedication to offering facility-unique solutions in the markets we serve worldwide.
The success of our products is enhanced by the extensive experience of our management team in the healthcare industry, our experienced direct sales force and distributors, our ability to provide custom procedural solutions such as kits, trays and procedural packs at the request of our customers, and our dedication to offering facility-unique solutions in the markets we serve worldwide.
Because our mission is to create innovative medical devices that improve lives, we aim to hire and develop employees who want to build something special through hard work, team effort, and commitment. That is why we provide all our employees with competitive benefit packages and strive to provide the most cost-effective medical benefits and wellness programs.
Because our mission is to create innovative medical devices that improve lives, we aim to hire and develop employees who want to build something special through hard work, team effort, and commitment. That is why we provide all our employees with competitive total rewards packages and strive to provide the most cost-effective medical benefits and wellness programs.
Since 2021 we have substantially strengthened our employee communications capabilities through the addition of dedicated internal resources and programs aimed at doing even more to communicate with and engage our workforce. In partnership with the Gallup organization, in 2022 we launched our first ever global employee engagement survey.
Since 2021, we have substantially strengthened our employee communications capabilities through the addition of dedicated internal resources and programs aimed at doing even more to communicate with and engage our workforce. In partnership with the Gallup organization, in 2022 we launched our first ever global employee engagement survey. We repeated this employee engagement survey in 2023.
The Utah Consumer Privacy Act, which is scheduled to take effect on December 31, 2023, gives consumers the right to know what type of data businesses collect about them, how their data is being used and whether or not businesses intend to sell their data to third parties.
The Utah Consumer Privacy Act, which is scheduled to take effect on December 31, 2023, gives consumers the right to know what type of data businesses collect about them, how their data is being used and whether or not businesses intend to sell their 15 Table of Contents data to third parties.
These CSR laws and regulations may impose additional processes and supplier management systems and have led certain key customers to impose additional requirements on medical device companies, including audits, as a prerequisite to selling products to such customers, which could result in increased costs for our products, the termination or suspension of certain suppliers, and reductions in our margins and profitability. 14 Table of Contents Privacy and Security.
These CSR laws and regulations may impose additional processes and supplier management systems and have led certain key customers to impose additional requirements on medical device companies, including audits, as a prerequisite to selling products to such customers, which could result in increased costs for our products, the termination or suspension of certain suppliers, and reductions in our margins and profitability. 14 Table of Contents Environmental Regulation.
Additionally, we are building out digital and direct-to-customer programs to increase awareness of our products, and we work closely with major healthcare facilities and physicians involving our primary target markets in the areas of training, therapy awareness programs, clinical studies and ongoing product research and development.
Additionally, we are developing digital and direct-to-customer programs to increase awareness of our products, and we work closely with major healthcare facilities and physicians involving our primary target markets in the areas of training, therapy awareness programs, clinical studies and ongoing product research and development.
Sales of our products in the U.S. accounted for 57% of our net sales for each of the years ended December 31, 2022, 2021 and 2020, respectively. In the U.S., we have dedicated, direct sales organizations primarily focused on selling to end-user physicians, hospitals and alternate site facilities (e.g., office-based labs), major buying groups and integrated healthcare networks.
Sales of our products in the U.S. accounted for 58%, 57% and 57% of our net sales for the years ended December 31, 2023, 2022 and 2021, respectively. In the U.S., we have dedicated, direct sales organizations primarily focused on selling to end-user physicians, hospitals and alternate site facilities (e.g., office-based labs), major buying groups and integrated healthcare networks.
“Properties.” We ship our products through distribution centers located in Virginia, Utah, Canada, Brazil, The Netherlands, United Kingdom (“UK”), South Africa, South Korea, India, New Zealand, Japan, China and Australia. ​ Competition The medical products industry is highly competitive. Many of our competitors are much larger than us and have access to greater resources.
“Properties.” We ship our products through distribution centers located in Virginia, Utah, Canada, Brazil, The Netherlands, United Kingdom (“UK”), South Africa, South Korea, India, New Zealand, Japan, China, Hong Kong, Thailand and Australia. Competition The medical products industry is highly competitive. Many of our competitors are much larger than we are and have access to greater resources.
The FDA and foreign regulators enforce these requirements through periodic inspections of medical device manufacturers. These requirements are complex, technical and require substantial resources to remain compliant.
The FDA, Notified Bodies, and foreign regulators enforce these requirements through periodic inspections of medical device manufacturers. These requirements are complex, technical and require substantial resources to remain compliant.
Our benefits include competitive pay, annual incentive awards and bonus opportunities, healthcare and retirement benefits, an Employee Stock Purchase Plan, paid time off and sick leave, paid parental leave, flexible work schedules, remote working opportunities, and a wellness program. ​ Talent Development.
Our total rewards package include competitive pay, annual incentive awards and bonus opportunities, healthcare and retirement benefits, an Employee Stock Purchase Plan, paid time off and sick leave, paid parental leave, flexible work schedules, remote working opportunities, and a wellness program. Talent Development.
Recent Developments ​ None. ​ Available Information We file annual, quarterly and current reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s internet website is www.sec.gov. ​ Our internet address is www.merit.com.
Available Information We file annual, quarterly and current reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s internet website is www.sec.gov. Our internet address is www.merit.com.
Within these markets our products are used in the following clinical areas: diagnostic and interventional cardiology; interventional radiology; neurointerventional radiology; vascular, general and 6 Table of Contents thoracic surgery; electrophysiology; cardiac rhythm management; interventional pulmonology; interventional nephrology; orthopedic spine surgery; interventional oncology; pain management; breast cancer surgery; outpatient access centers; intensive care; computed tomography; ultrasound; and interventional gastroenterology.
Within these markets our products are used in the following clinical areas: diagnostic and interventional cardiology; interventional radiology; neurointerventional radiology; vascular, general and thoracic surgery; electrophysiology; cardiac rhythm management; interventional pulmonology; interventional nephrology; orthopedic spine surgery; interventional oncology; pain management; breast cancer surgery; outpatient access centers; intensive care; computed tomography; ultrasound; and interventional gastroenterology.
Some of our primary competitive strengths are our relative stability in the marketplace; comprehensive, broad line of ancillary products; manufacturing integration to secure our supply chain; and strong cadence of new products and product line extensions that enhance our portfolio.
As a company, some of our primary competitive strengths are our relative stability in the marketplace; comprehensive, broad line of ancillary products; manufacturing integration to secure our supply chain; and strong cadence of new products and product line extensions that enhance our portfolio.
In addition to the Merit name and logo, we have used, registered or applied for registration of other specific trademarks and service marks to help distinguish our products, technologies and services from those of our competitors in the U.S. and foreign countries. See Item 1. “Business - Products” above.
The Merit® name and logo are trademarks in the U.S. and other countries. In addition to the Merit name and logo, we have used, registered or applied for registration of other specific trademarks and service marks to help distinguish our products, technologies and services from those of our competitors in the U.S. and foreign countries. See Item 1.
In 2022, our Chief Executive Officer and our Executive Vice President of Global Research & Development worked closely 8 Table of Contents with our sales and marketing teams to incorporate feedback from physicians and clinicians in the field, which contributed to innovative new products and improvements to our existing products.
In 2023, our Chief Executive Officer and our Executive Vice President of Global Research & Development worked closely with our sales and marketing teams to incorporate feedback from physicians and clinicians in the field, which contributed to innovative new products and improvements to our existing products.
Manufacturing of our embolic products includes the synthesis and processing of raw materials and third-party manufactured compounds. ​ We have packaging and manufacturing facilities located in Texas, Virginia, Utah, Mexico, Brazil, Ireland, France, The Netherlands, and Singapore. See Item 2.
We currently produce and package all of our embolotherapy products. Manufacturing of our embolotherapy products includes the synthesis and processing of raw materials and third-party manufactured compounds. We have packaging and manufacturing facilities located in Texas, Virginia, Utah, Mexico, Brazil, Ireland, France, The Netherlands, and Singapore. See Item 2.
Internationally, we employ sales representatives and contract with independent dealer organizations and custom procedure tray manufacturers to distribute our products worldwide, including territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico and Canada. In 2022, our international sales grew 7.4% over our 2021 international sales and accounted for 43% of our net sales.
Internationally, we employ sales representatives and contract with independent dealer organizations and custom procedure tray manufacturers to distribute our products worldwide, including territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico and Canada. In 2023, our international sales grew 6.0% over our 2022 international sales and accounted for 42% of our net sales.
The principal product offerings in our intervention (peripheral) portfolio include our: ​ ● ClariVein® Specialty Infusion Catheter which is designed for controlled 360-degree dispersion of physician specified agents to the peripheral vasculature; ● Dynamis AV™ PTA Dilatation Catheter, a line of balloon catheters that facilitates the opening of blockages located in the arteriovenous system of dialysis patients; ● Q50X™, Q50® and Q50® Plus Stent Graft Balloon Catheters, a line of catheters that treat abdominal and thoracic endovascular aortic repair procedures and reinterventions; ● Fountain® Infusion System and Mistique® Infusion Catheters, a line of catheters that treat arterial and hemodialysis graft occlusions and deep vein thrombosis; and ● EN Snare® and One Snare® Endovascular Snare Systems, a complete line of snares designed to manipulate, capture and retrieve foreign material in the body. ​ Merit Spine Our spine products are used in the treatment of vertebral compression fractures and metastatic spinal tumors and in musculoskeletal biopsy procedures.
The principal product offerings in our intervention (peripheral) portfolio include our: ● ClariVein® Specialty Infusion Catheter which is designed for controlled 360-degree dispersion of physician specified agents to the peripheral vasculature; ● Dynamis AV™ PTA Dilatation Catheter, a line of balloon catheters that facilitates the opening of blockages located in the arteriovenous system of dialysis patients; ● Q50X™ and Q50® Stent Graft Balloon Catheters, a line of catheters that treat abdominal and thoracic endovascular aortic repair procedures and reinterventions; ● Fountain® Infusion System and Mistique® Infusion Catheters, a line of catheters that treat arterial and hemodialysis graft occlusions and deep vein thrombosis; and ● EN Snare® and One Snare® Endovascular Snare Systems, a complete line of snares designed to manipulate, capture and retrieve foreign material in the body.
Our primary product offerings in our oncology portfolio include our: ​ ● SCOUT® Radar Localization System, a nonradioactive, wire-free tumor localization system that facilitates successful surgical removal of marked lesions and lymph nodes, improving workflow and the patient experience; ● CorVocet® Biopsy System, one of our innovative soft tissue core needle biopsy and accessory products, designed to cut a full core of tissue and provide large specimens for pathological examination; ● Achieve®, Temno® and Tru-Cut® Soft Tissue Biopsy Devices; and ● SAVI® Brachytherapy, a precise, targeted approach to accelerated partial breast irradiation with lower toxicities and reduced treatment duration. ​ Cardiac Intervention ​ We manufacture and sell a variety of products designed to treat various heart conditions.
Our primary product offerings in our oncology portfolio include our: ● SCOUT® Radar Localization System, a nonradioactive, wire-free tumor localization system that facilitates successful surgical removal of marked lesions and lymph nodes, improving workflow and the patient experience; 4 Table of Contents ● CorVocet® Biopsy System, one of our innovative soft tissue core needle biopsy and accessory products, designed to cut a full core of tissue and provide large specimens for pathological examination; ● Achieve®, Temno® and Tru-Cut® Soft Tissue Biopsy Devices; ● BioSentry® biopsy tract sealant system; and ● SAVI® Brachytherapy, a precise, targeted approach to accelerated partial breast irradiation with lower toxicities and reduced treatment duration.
Our failure or the failure of our suppliers to maintain compliance with these requirements could result in the shutdown of our manufacturing operations or the recall of our products, or could restrict our ability to obtain new product approvals or certificates from the FDA that are necessary for export of our products to foreign countries.
Our failure or the failure of our suppliers to maintain compliance with these requirements could result in the shutdown of our manufacturing operations or the recall of our products, or could restrict our ability to obtain new product approvals or certificates from regulatory authorities, such as the FDA, that are necessary for import and export of our products.
We believe that long-term value is created for our customers, employees, shareholders, and communities when we focus outward and are determined to deliver an exceptional customer experience. Merit Medical Systems, Inc. was founded in 1987 by Fred P. Lampropoulos, Kent W. Stanger, Darla Gill and William Padilla. Initially we focused our operations on injection and insert molding of plastics.
We believe that long-term value is created for our customers, employees, shareholders, and communities when we focus outward and are determined to deliver an exceptional customer experience. 1 Table of Contents Merit Medical Systems, Inc. was founded in 1987 by Fred P. Lampropoulos, Kent W. Stanger, Darla Gill and William Padilla.
The principal product offerings in our angiography portfolio include our: ​ ● Extensive line of Merit Laureate® Hydrophilic Guide Wires, a smooth-surface guide wire designed to minimize friction and promote rapid catheter exchanges; ● Our newest offering of Merit SplashWire® hydrophilic Steerable Guide Wires, combining optimum lubricity, exceptional torque response and enhanced visibility; ● Performa® and Impress® Diagnostic Catheters, a catheter offering designed for traversing difficult to access peripheral blood vessels; and ● Performa Vessel Sizing Catheters for vessel measurement.
The principal product offerings in our angiography portfolio include our: ● Newest offering of Merit SplashWire® hydrophilic Steerable Guide Wires, combining optimum lubricity, exceptional torque response and enhanced visibility; ● Performa® and Impress® Diagnostic Catheters, a catheter offering designed for traversing difficult to access peripheral blood vessels; and ● Performa Vessel Sizing Catheters for vessel measurement.
Our largest non-U.S. market is China, which represented 13% of our net sales in 2022 and reported net sales of $149.3 million, $138.2 million, and $113.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. We maintain a distribution center and administrative office in Beijing.
Our largest non-U.S. market is China, which represented 12% of our net sales in 2023 and reported net sales of $147.3 million, $149.3 million, and $138.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. We maintain a distribution center and administrative office in Beijing and sales offices in a few major cities in China.
Our cardiovascular segment includes the following product categories: peripheral intervention, cardiac intervention, custom procedural solutions, and OEM. ​ Peripheral Intervention Our peripheral intervention products support the minimally invasive diagnosis and treatment of diseases in peripheral vessels and organs throughout the body, excluding the heart.
Our cardiovascular segment includes the following product categories: peripheral intervention, cardiac intervention, custom procedural solutions, and original equipment manufacturer (“OEM”). 2 Table of Contents Peripheral Intervention Our peripheral intervention products support the minimally invasive diagnosis and treatment of diseases in peripheral vessels and organs throughout the body, excluding the heart.
Merit also conducts and/or participates in medical education conferences around the globe. ​ Wellness. Wellness is at the foundation of creating a positive employee experience. At our company headquarters in Utah, we have an onsite medical clinic available for our employees and their families where we provide preventative and general medical care.
Wellness is at the foundation of creating a positive employee experience. At our company headquarters in Utah, we have an onsite medical clinic available for our employees and their families where we provide preventative and general medical care.
Our first product was a specialized control syringe used to inject contrast solution into a patient’s arteries for a diagnostic cardiac procedure called an 1 Table of Contents angiogram. Since that time, our products and product lines have expanded substantially, both through internal research and development projects and through strategic acquisitions.
Initially, we focused our operations on injection and insert molding of plastics. Our first product was a specialized control syringe used to inject contrast solution into a patient’s arteries for a diagnostic cardiac procedure called an angiogram. Since that time, our products and product lines have expanded substantially, both through internal research and development projects and through strategic acquisitions.
Our primary product offerings in our gastroenterology portfolio include our: ​ ● Alimaxx-ES™ and EndoMAXX® Fully Covered Esophageal Stents, for maintaining esophageal luminal patency in certain esophageal strictures; ● BIG60® Inflation Device, a 60-mL syringe and gauge designed to inflate and deflate non-vascular balloon dilators while monitoring and displaying inflation pressures up to 12 atmospheres; and ● Elation® Fixed Wire, Wire Guided and new 5-stage Balloon Dilators, intended for use in the alimentary tract. ​ Our pulmonary products consist of laser-cut tracheobronchial stents, advanced over-the-wire and direct visualization delivery systems and dilation balloons to endoscopically dilate strictures.
Our primary product offerings in our gastroenterology portfolio include our: ● Alimaxx-ES™ and EndoMAXX® Fully Covered Esophageal Stents, for maintaining esophageal luminal patency in certain esophageal strictures; ● BIG60® Inflation Device, a 60-mL syringe and gauge designed to inflate and deflate non-vascular balloon dilators while monitoring and displaying inflation pressures up to 12 atmospheres; and ● Elation® Fixed Wire, Wire Guided and new 5-stage Balloon Dilators, intended for use in the alimentary tract.
We believe we are a market leader in the U.S. for control syringes, radar localization, waste-disposal systems, embolic beads, tubing and manifolds.
In addition, we believe we are one of the market leaders in the U.S. for analog inflation devices. We believe we are a market leader in the U.S. for control syringes, radar localization, waste-disposal systems, embolic beads, tubing and manifolds.
We invest in our people and cultivate a company culture committed to supporting a diverse and inclusive workforce. ​ Diversity and Inclusion. Our goal is to create a diverse and inclusive global culture that reflects the diversity of the customers we serve and encourages an environment where employees feel welcomed, respected, and valued.
Our goal is to create a diverse and inclusive global culture that reflects the diversity of the customers we serve and encourages an environment where employees feel welcomed, respected, and valued.
As part of our compliance program, we train our U.S. and international employees, and we also train and monitor foreign third parties with whom we contract (e.g., distributors), to comply with the FCPA and other anti-corruption laws.
As part of our compliance program, we train our U.S. and international employees, and we also train and monitor foreign third parties with whom we contract (e.g., distributors), to comply with the FCPA and other anti-corruption laws. Failing to comply with the FCPA or any other anti-corruption law could result in fines, penalties or other adverse consequences.
Our primary product offerings in the vertebral augmentation and radiofrequency ablation portfolios include our: ​ ● STAR™ Tumor Ablation System, designed to provide palliative treatment of painful metastatic spinal tumors in cancer patients by targeted radiofrequency ablation; ● Arcadia® Steerable and straight balloons, designed to achieve controlled, precise, targeted cavity creation in vertebral augmentation procedures; and ● StabiliT® MX Vertebral Augmentation System, which uses our inflation devices to deliver bone cement. ​ 4 Table of Contents The bone biopsy systems portfolio contains a full offering of manual bone biopsy products, including our Madison™, Huntington™, Kensington™, Preston™ and Westbrook™ biopsy products.
Our primary product offerings in the vertebral augmentation and radiofrequency ablation portfolios include our: ● STAR™ Tumor Ablation System, designed to provide palliative treatment of painful metastatic spinal tumors in cancer patients by targeted radiofrequency ablation; ● Arcadia® Steerable and straight balloons, designed to achieve controlled, precise, targeted cavity creation in vertebral augmentation procedures; and ● StabiliT® MX Vertebral Augmentation System, which uses our inflation devices to deliver bone cement.
Sustainability Under the oversight of our Board of Directors and management team, we continue to make sustainability a key focus of our business. We have a cross-functional Corporate Sustainability Council that is driving long-term Environment, Social and Governance (“ESG”) goals across our enterprise.
This reflects, among other factors, lower demand during summer months in countries in the northern hemisphere. Sustainability Under the oversight of our Board of Directors and management team, we continue to make sustainability a key focus of our business. We have a cross-functional Corporate Sustainability Council that is driving long-term Environment, Social and Governance (“ESG”) goals across our enterprise.
The duration of our trademark registrations varies from country to country; in the U.S. we can generally maintain our trademark rights and renew any trademark registrations for as long as the trademarks are in use.
“Business - Products” above. The duration of our trademark registrations varies from country to country; in the U.S. we can generally maintain our trademark rights and renew any trademark registrations for as long as the trademarks are in use. As of December 31, 2023, we owned approximately 700 U.S. and foreign trademark registrations and trademark applications.
At any given time, we may be involved as either a plaintiff or a defendant, as well as a counter-claimant or counter-defendant, in patent, trademark, and other intellectual property infringement actions.
There is substantial litigation regarding patents and other intellectual property rights in the medical device industry. At any given time, we may be involved as either a plaintiff or a defendant, as well as a counter-claimant or counter-defendant, in patent, trademark, and other intellectual property infringement actions.
The Federal Food, Drug and Cosmetic Act (“FDCA”) and its counterpart non-U.S. laws require us to comply with quality system regulations (“QSR”) pertaining to all aspects of our product design and manufacturing processes, including requirements for packaging, labeling, record keeping, personnel training, supplier controls, design controls, complaint handling, corrective and preventive actions and internal quality system auditing.
The Federal Food, Drug and Cosmetic Act (“FDCA”) and its counterpart non-U.S. laws require us to comply with quality system regulations (“QSR”) pertaining to all aspects of our product design, purchasing and supplier controls, manufacturing, distribution, servicing, complaint handling, corrective and preventive action and internal quality system audits.
The duration of our patents is determined by the laws of the country of issuance and, for the U.S., is typically 20 years from the date of filing of the patent application.
The duration of our patents is determined by the laws of the country of issuance and, for the U.S., is typically 20 years from the date of filing of the patent application. As of December 31, 2023, we owned approximately 1,700 U.S. and international patents and patent applications.
Our primary product offerings in our pulmonary portfolio include our: ​ ● AERO®, AEROmini® and AERO DV® Fully Covered Tracheobronchial Stents, for the treatment of tracheobronchial strictures produced by malignant neoplasms; and ● Elation® Pulmonary™ Balloon Dilator, for the dilation of strictures of the trachea and bronchi. ​ We also offer a variety of kits and accessories for endoscopy and bronchoscopy procedures. ​ Marketing and Sales Target Market/Industry.
Our primary product offerings in our pulmonary portfolio include our: ● AERO®, AEROmini® and AERO DV® Fully Covered Tracheobronchial Stents, for the treatment of tracheobronchial strictures produced by malignant neoplasms; and ● Elation® Pulmonary™ Balloon Dilator, for the dilation of strictures of the trachea and bronchi.
Employees also actively support causes by raising awareness and funds for non-profit organizations. Areas that our employees have supported in recent years include Breast Cancer Awareness Month, Heart Health Month, children’s charities and supporting those in need. In 2022, we continued our support of humanitarian missions through Merit product donations in Haiti, Kenya, Honduras, Nicaragua, and Tanzania.
Areas that our employees have supported in recent years include Breast Cancer Awareness Month, Heart Health Month, children’s charities and supporting those in need. In 2022, we continued our support of humanitarian missions through Merit product donations in Haiti, Kenya, Honduras, Nicaragua, and Tanzania. Merit also conducts and/or participates in medical education conferences around the globe. Wellness.
The principal product offerings in our access (peripheral) portfolio include our: ​ ● HeRO® (Hemodialysis Reliable Outflow) Graft, a fully subcutaneous vascular access system, which is intended for use in maintaining long-term vascular access for chronic hemodialysis patients; ● CentrosFLO® Long-Term Hemodialysis Catheter and ProGuide® Chronic Dialysis Catheter; ● Broad offering of peritoneal dialysis catheters, accessories and implantation kits for home dialysis therapy; and ● Merit Wrapsody ™ Endoprosthesis, a cell-impermeable endoprosthesis which is designed to maintain long-term vessel patency in patients with obstructions in the dialysis outflow circuit (this device is not currently available for use in the United States). ​ The products in our angiography portfolio are used to identify blockages and other disease states in the blood vessel.
We recently expanded the renal therapies portion of our access (peripheral) portfolio, which now includes the following key products: ● HeRO® (Hemodialysis Reliable Outflow) Graft, a fully subcutaneous vascular access system, which is intended for use in maintaining long-term vascular access for chronic hemodialysis patients; ● CentrosFLO® Long-Term Hemodialysis Catheter and ProGuide® Chronic Dialysis Catheter; ● Broad offering of peritoneal dialysis catheters, accessories and implantation kits for home dialysis therapy; ● Merit Wrapsody ™ Endoprosthesis, a cell-impermeable endoprosthesis which is designed to maintain long-term vessel patency in patients with obstructions in the dialysis outflow circuit (this device is not currently available for use in the United States); and ● Surfacer® Inside-Out® Access Catheter System that restores and preserves access in chronically occluded veins.
To further promote a culture of inclusion, during 2021 we started the Women’s Leadership Initiative (“WLI”), our first ever affinity group led by women and open to all Merit employees. 18 Table of Contents The WLI contributes to our long-term strategies by promoting a culture of diversity, equity and inclusion through (i) sponsoring professional development activities focused on overcoming barriers and restraints to the advancement of women’s careers, (ii) facilitating external interactions with organizations and thought leaders, and (iii) providing resources focused on improving diversity, equity, and inclusion.
The WLI contributes to our long-term strategies by promoting a culture of diversity, equity and inclusion through (i) sponsoring professional development activities focused on overcoming barriers and restraints to the advancement of women’s careers, (ii) facilitating external interactions with organizations and thought leaders, and (iii) providing resources focused on improving diversity, equity, and inclusion. 17 Table of Contents Employee Engagement.
We offer coated tubes and wires to customers on a spool or as further manufactured components including guide wire components, coated mandrels/stylets and coated needles. We also manufacture and sell sensor components for microelectromechanical systems.
OEM We provide coating services for medical tubes and wires under OEM brands in addition to many of the products identified above. We offer coated tubes and wires to customers on a spool or as further manufactured components including guide wire components, coated mandrels/stylets and coated needles. We also manufacture and sell sensor components for microelectromechanical systems.
All five of these state laws let consumers access and delete their personal data that the business has collected on them and opt out of data collection. 16 Table of Contents Because privacy and data security laws and regulations continue to expand, differ from jurisdiction to jurisdiction, and are subject to evolving (and at times inconsistent) governmental interpretation, compliance with these laws and regulations may require significant additional cost expenditures or changes in products or business that increase competition or reduce revenue.
Because privacy and data security laws and regulations continue to expand, differ from jurisdiction to jurisdiction, and are subject to evolving (and at times inconsistent) governmental interpretation, compliance with these laws and regulations may require significant additional cost expenditures or changes in products or business that increase competition or reduce revenue.
MDR includes increasingly stringent requirements in multiple areas, such as pre-market clinical evidence, review of high-risk devices, labeling and post-market surveillance. Under MDR, pre-market clinical data will now be required to obtain CE Mark approval for high-risk, new and modified medical devices. ​ U.S. and global counter-part regulatory approval processes for medical devices are expensive, uncertain and lengthy.
Under the MDR, pre-market clinical data will now be required to obtain CE mark approval for high-risk, new and modified medical devices. U.S. and foreign counter-part regulatory approval processes for medical devices are expensive, uncertain and lengthy.
In general, these state laws (California, Colorado, Connecticut, Utah and Virginia) give residents the right to obtain their personal information from companies, request to have their personal information deleted, and opt out of having that information sold to third parties.
Additionally, several U.S. states have enacted comprehensive data privacy laws. In general, these laws give residents the right to obtain their personal information from companies, request to have their personal information deleted, and opt out of having that information sold to third parties.
Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us, including: ​ • Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC. • Press releases on our quarterly earnings and other pertinent information, including product launches, corporate initiatives, and participation in upcoming investor conferences. 20 Table of Contents • Corporate governance information including our corporate governance guidelines, committee charters, and codes of business conduct and ethics. ​ Additionally, we provide electronic and paper copies of such filings free of charge upon request. ​ The information on www.merit.com is not, and will not be deemed, a part of this report or incorporated into any other filings we make with the SEC. ​ Financial Information About Foreign and Domestic Sales For financial information relating to our foreign and domestic sales see Note 2 and Note 13 to our consolidated financial statements set forth in Item 8 of this report. ​ ​ 21 Table of Contents
Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us, including: • Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC. • Press releases on our quarterly earnings and other pertinent information, including product launches, corporate initiatives, and participation in upcoming investor conferences. • Corporate governance information including our corporate governance guidelines, committee charters, and codes of business conduct and ethics.
These agencies enforce laws and regulations that control the design, development, testing, clinical trials, manufacturing, labeling, storage, advertising, marketing, distribution, and post-market surveillance of our medical products. ​ The time required to obtain approval by the FDA and other foreign governmental agencies can be lengthy and the requirements may differ.
Our products and operations are global and are subject to regulations by the FDA and various other federal and state agencies, as well as by foreign governmental agencies. These agencies enforce laws and regulations that control the design, development, testing, clinical trials, manufacturing, labeling, storage, advertising, marketing, distribution, and post-market surveillance of our medical products.
Additionally, the laws of the U.S. require imported articles to have their labels accurately marked with the appropriate country of origin, the violation of which may result in confiscation, fines and penalties. Export Requirements. Products for export are subject to foreign countries’ import requirements and the exporting requirements of the exporting countries’ regulating bodies, as applicable.
Our operations are global and are subject to complex federal and foreign laws relating to the import and export of medical devices. Among other requirements, the laws of the U.S. require imported articles to have their labels accurately marked with the appropriate country of origin, the violation of which may result in confiscation, fines and penalties.
We believe our products are attractive to customers due to their innovative design, the quality of materials and workmanship, clinical performance, and our strong focus on customer needs, and our prompt attention to customer requests.
The principal competitive factors in the markets in which our products are sold are quality, price, product features, customer service, breadth of line, and customer relationships. We believe our products are attractive to customers due to their innovative designs, the quality of materials and workmanship, clinical performance, our strong focus on customer needs, and our prompt attention to customer requests.
Our primary competitors in our spine market are Medtronic, Stryker Corporation, and Johnson & Johnson. Our 9 Table of Contents primary competitors in our oncology market are BD, Hologic, Inc., Argon Medical Devices, Inc. and Cook Medical. Our primary competitors in our endoscopy market are Getinge AB, Boston Scientific, Cook Medical, and Olympus Corporation.
Our primary competitors in our spine market are Medtronic, Stryker Corporation, and Johnson & Johnson. Our primary competitors in our oncology market are BD, Hologic, Inc., Endomagnetics Ltd., Argon Medical Devices, Inc. and Cook Medical.
Failing to comply with the FCPA or any other anti-corruption law could result in fines, penalties or other adverse consequences. 13 Table of Contents As we expand our international operations, we continue to increase the scope of our compliance programs to match the risks relating to the potential for violations of the FCPA and other anti-corruption laws.
As we expand our international operations, we continue to increase the scope of our compliance programs to match the risks relating to the potential for violations of the FCPA and other anti-corruption laws.
The principal product offerings in our embolotherapy portfolio include our: ​ ● Embosphere® Microspheres, a highly studied, round embolic for consistent and predictable results; and ● HepaSphere® Microspheres, soft embolics with a consistent cross-sectional diameter for predictable, flow-directed targeting. ​ The products in our intervention (peripheral) portfolio are chiefly used to remove blood clots, retrieve foreign bodies in blood vessels and assist with placing balloons and stents to treat arterial disease.
The principal product offerings in our embolotherapy portfolio include our: ● Embosphere® Microspheres, a highly-studied, round embolic for consistent and predictable results; and ● HepaSphere® Microspheres, soft embolics with a consistent cross-sectional diameter for predictable, flow-directed targeting.
In 2021, we hired our first ever Director of Global Talent Management who continues to be focused on building and strengthening global programs around strategic talent management, employee performance, development and engagement. To improve employee performance, we have begun building out a global performance management program which will be officially launched in 2023 alongside our new human resources information system.
In 2021, we hired our first ever Director of Global Talent Management who continues to be focused on building and strengthening global programs around strategic talent management, employee performance, development, succession planning and engagement.
We have also received various International Standards Organization (“ISO”) certifications for many of our facilities; for further details, please refer to Item 1. “Business - Sustainability” below. Merit Sensor Systems, Inc.
We have also received various International Standards Organization (“ISO”) certifications for many of our facilities; for further details, please refer to Item 1. “Business - Sustainability” below. Merit Sensor Systems, Inc. (“Merit Sensors”) develops and markets silicon pressure sensors to a range of enterprises and presently supplies the sensors we use in our digital inflation devices and blood pressure sensors.
Additionally, the export of our products is subject to restrictions due to trade and economic sanctions imposed by the U.S., the EU and other governments and organizations. The U.S.
Products for export are subject to foreign countries’ import requirements and the exporting requirements of the exporting countries’ regulating bodies, as applicable. 12 Table of Contents Additionally, the export of our products is subject to restrictions due to trade and economic sanctions imposed by the U.S., the E.U. and other governments and organizations. The U.S.
With the U.S. and other countries exploring export sanctions in response to military exercises and escalating tensions in certain parts of the world, any such export restrictions may affect the company’s business in certain regions of the world. Additional Post-Market Requirements.
With the U.S. and other countries imposing export sanctions on certain countries and actors in response to escalating tensions in certain parts of the world, any such export restrictions may affect the company’s business in certain regions of the world, including the requirement to obtain specific export licenses to enable the continuation of Merit’s business in those regions.
We recently completed our second reporting period under the CIA and continue to implement compliance program enhancements. ​ Our failure to comply with our obligations under the CIA could result in monetary penalties and our exclusion from participation in federal health care programs. ​ The foregoing description of the CIA is qualified in its entirety by the full terms of the CIA, which is attached as Exhibit 10.44 hereto and incorporated herein by reference. ​ Regulatory Approvals .
We recently completed our third reporting period under the CIA and continue to implement compliance program enhancements. Our failure to comply with our obligations under the CIA could result in monetary penalties and our exclusion from participation in federal health care programs.
Programs include providing health information from medical and nutrition experts, newsletters with wellness and dietary tips, and activities promoting health and wellbeing such as walking groups and fitness challenges.
Programs include providing health information from medical and nutrition experts, newsletters with wellness and dietary tips, and activities promoting health and wellbeing such as walking groups and fitness challenges. Some programs include suicide prevention awareness, on-site diabetes screenings, mental health awareness, lifestyle modification to prevent diseases, tobacco cessation and breast cancer awareness.
The principal product offerings in our drainage portfolio include our: ​ ● Aspira® Pleural Effusion Drainage and Aspira® Peritoneal Drainage Systems, a compassionate treatment option for end-stage cancer, allowing patients to spend more time at home by reducing the need for frequent hospital visits to treat their drainage needs; 3 Table of Contents ● Family of ReSolve® Drainage Catheters, including our ReSolve ConvertX® Stent System and ReSolve Mini™ Locking Drainage Catheter, and our related tubing sets and drainage bag; ● One-Step® and Valved One-Step® Drainage Catheters, sold individually and in kits, for quickly removing unwanted fluid accumulation; and ● Revolution™ Catheter Securement Device and StayFIX® Fixation Device, used to stop migration, movement and accidental removal of percutaneous catheters. ​ The principal product offerings in our delivery systems portfolio include our: ​ ● SwiftNINJA® Steerable Microcatheter, an advanced microcatheter with a 180-degree articulating tip, sold through our exclusive worldwide distribution agreement (excluding Japan) with SB-Kawasumi Laboratories, Inc.; ● Merit Maestro® and Merit Pursue™ Microcatheters, small microcatheters designed for pushability and trackability through small and tortuous vessels; and ● True Form™ Reshapable Guide Wire, designed to be reshaped multiple times, reducing the need for multiple guide wires. ​ Our embolotherapy products treat disease by blocking or slowing the flow of blood into the arteries or delivering chemotherapy drugs in the treatment of primary and metastatic liver cancer.
The principal product offerings in our drainage portfolio include our: ● Aspira® Pleural Effusion Drainage and Aspira® Peritoneal Drainage Systems, a compassionate treatment option for end-stage cancer, allowing patients to spend more time at home by reducing the need for frequent hospital visits to treat their drainage needs; ● Family of ReSolve® Drainage Catheters, including our ReSolve ConvertX® Stent System and ReSolve Mini™ Locking Drainage Catheter, and our related tubing sets and drainage bag; ● One-Step® and Valved One-Step® Drainage Catheters, sold individually and in kits, for quickly removing unwanted fluid accumulation; and ● Revolution™ Catheter Securement Device and StayFIX® Fixation Device, used to stop migration, movement and accidental removal of percutaneous catheters.
Employee development programs are also being executed at different regional and local levels with a focus on management and leadership development. ​ Community. Our employees are actively involved in their communities and supporting causes. At our headquarters, we provide an onsite garden where employees take part in growing and distributing produce to employees and to the local community.
Our employees are actively involved in their communities and supporting causes. At our headquarters, we provide an onsite garden where employees take part in growing and distributing produce to employees and to the local community. Employees also actively support causes by raising awareness and funds for non-profit organizations.
Products in our cardiac intervention product category are organized into the following product portfolios: access (cardiac), angiography, electrophysiology and CRM, fluid management, hemodynamic monitoring, hemostasis, and intervention (cardiac). ​ Merit Vascular – Cardiac ​ The principal product offerings in our access portfolio (cardiac) include our family of Prelude Introducer Sheaths, for both radial and femoral access, featuring our Prelude IDeal™ Hydrophilic Sheath Introducer, an ultra-thin wall introducer sheath that provides more room for the insertion of catheters and other devices in the radial artery. ​ The principal product offerings in our angiography portfolio include our InQwire® Guide Wires and Performa Diagnostic and Ultimate™ catheters for femoral and radial procedures. ​ Electrophysiology is the study of diagnosing and treating abnormal electrical activities of the heart.
Merit Vascular – Cardiac The principal product offerings in our access portfolio (cardiac) include our family of Prelude Introducer Sheaths, for both radial and femoral access, featuring our Prelude IDeal™ Hydrophilic Sheath Introducer, an ultra-thin wall introducer sheath that provides more room for the insertion of catheters and other devices in the radial artery.
For information relating to our operating segments and product categories, see Note 13 to our consolidated financial statements set forth in Item 8 of this report and Management’s Discussion and Analysis set forth in Item 7 of this report. ​ The following sections describe our principal product offerings by reporting segment and product category. ​ Cardiovascular We offer a broad line of medical devices used to gain and maintain vascular access.
We conduct our business through two operating segments: cardiovascular and endoscopy. For information relating to our operating segments and product categories, see Note 13 to our consolidated financial statements set forth in Item 8 of this report and Management’s Discussion and Analysis set forth in Item 7 of this report.
Our spine product line includes the following product portfolios: vertebral augmentation, radiofrequency ablation, and bone biopsy systems.
Merit Spine Our spine products are used in the treatment of vertebral compression fractures and metastatic spinal tumors and in musculoskeletal biopsy procedures. Our spine product line includes the following product portfolios: vertebral augmentation, radiofrequency ablation, and bone biopsy systems.
Due to Merit’s global presence, we are impacted by the privacy and data security requirements at the international, federal, state and regional level, as well as on an industry specific basis.
Due to Merit’s global presence, we are impacted by the privacy and data security requirements of U.S. and foreign governments, those of various regional, provincial, state and local governments, as well those targeted towards our specific industry.
In particular, in May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which replaced Council Directive 93/92/EEC (“MDD”) as of May 26, 2021.
The time required to obtain approval by the FDA and foreign governmental agencies can be lengthy and the requirements may differ. In particular, in May 2017, the European Union (E.U.) adopted Regulation (EU) 2017/745 (“MDR”), which replaced Council Directive 93/92/EEC (“MDD”) as of May 26, 2021.
Merit Oncology Our oncology products are dedicated to the accurate diagnosis and localization of breast and soft tissue tumors and the innovative treatment of early-stage breast cancer. We also offer an extensive line of soft tissue biopsy products and accessories.
The bone biopsy systems portfolio comprises a full offering of manual bone biopsy products, including our Madison™, Huntington™, Kensington™, Preston™ and Westbrook™ biopsy products. Merit Oncology Our oncology products are dedicated to the accurate diagnosis and localization of breast and soft tissue tumors and the innovative treatment of early-stage breast cancer.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe above factors, including a number of other economic and geopolitical factors both in the U.S. and abroad, could ultimately have material adverse effects on our business, financial condition, results of operations or cash flows, including the following: ● effects of significant changes in economic, monetary and fiscal policies in the U.S. and abroad including currency fluctuations, inflationary pressures and significant income tax changes; ● global increases in inflation ; ● a global or regional economic slowdown in any of our market segments; ● changes in government policies and regulations affecting the Company or its significant customers; ● industrial policies in various countries that favor domestic industries over multinationals or that restrict foreign companies altogether; ● new or stricter trade policies and tariffs enacted by countries, such as China, in response to changes in U.S. trade policies and tariffs; ● postponement of spending, in response to tighter credit, financial market volatility and other factors; ● rapid material escalation of the cost of regulatory compliance and litigation; ● difficulties protecting intellectual property; ● longer payment cycles; ● credit risks and other challenges in collecting accounts receivable; and ● the impact of each of the foregoing on outsourcing and procurement arrangements.
Biggest changeThe above factors, as well as other economic and geopolitical factors in the U.S. and abroad, could have a material adverse effect on our business, operations and financial condition, including: ● changes in economic, monetary and fiscal policies in the U.S. and abroad including currency fluctuations, inflationary pressures and significant income tax changes; ● a global or regional economic slowdown in any of our market segments; ● a regional epidemic or a global pandemic, such as COVID-19, and government and social responses; ● changes in government policies and regulations affecting the Company or its significant customers; ● policies in various countries that favor domestic industries or restrict foreign companies; ● trade policies and tariffs enacted by countries in response to changes in U.S. trade policies and tariffs; ● postponement of spending, in response to tighter credit, financial market volatility and other factors; ● rapid escalation of the cost of regulatory compliance and litigation; and ● credit risks, longer payment cycles and other challenges in collecting accounts receivable.
Third parties may copy all or portions of our products or otherwise use our intellectual property without authorization, and we may not be able to prevent the unauthorized disclosure or use of our intellectual property by consultants, vendors, former employees and current employees.
Third parties may copy all or portions of our products or otherwise use our intellectual property without authorization, and we may not be able to prevent the unauthorized disclosure or use of our intellectual property by consultants, vendors and former and current employees.
These CSR labor laws and regulations may impose additional processes and supplier management systems and have led certain key customers to impose additional requirements on medical device companies, including audits, as a prerequisite to selling products to such customers, which could result in increased costs for our products, the termination or suspension of certain suppliers, and reductions in our margins and profitability.
These labor laws and regulations may impose additional processes and supplier management systems and have led certain key customers to impose additional requirements on medical device companies, including audits, as a prerequisite to selling products to such customers, which could result in increased costs for our products, the termination or suspension of certain suppliers or customers, and reductions in our margins and profitability.
We may be unable to compete in our markets, particularly if there is a significant change in relevant practices or technology. The markets in which our products compete are highly competitive. We face competition from many companies which are larger, better established, have greater financial, technical and other resources and possess a greater market presence than we do.
We may be unable to compete in our markets, particularly if there is a significant change in practices or technology. The markets in which our products compete are highly competitive. We face competition from many companies which are larger, better established, have greater financial, technical and other resources and possess a greater market presence than we do.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would impact our gross margin. Conversely, if we underestimate customer demand for our products, our manufacturing facilities may not be able to deliver products to meet our order requirements, which could damage our reputation and customer relationships.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would impact our gross margin. Conversely, if we underestimate customer demand, our manufacturing facilities may not be able to deliver products to meet our order requirements, which could damage our reputation and customer relationships.
Competing companies with substantially greater resources than us are actively engaged in research and development of new methods, treatments, drugs, and procedures to treat or prevent cardiovascular disease that could limit the market for our products and eventually make some of our products obsolete.
Companies with substantially greater resources than us are actively engaged in research and development of new methods, treatments, drugs, and procedures to treat or prevent cardiovascular disease that could limit the market for our products and eventually make some of our products obsolete.
Certain environmental laws and regulations may impose “strict liability” for the conduct of, or conditions caused by, others, or for acts that were in non-compliance with all applicable laws at the time the acts were performed, rendering us liable without regard to our negligence or fault.
Certain environmental laws and regulations may impose “strict liability” for the conduct of, or conditions caused by, others, or for acts that were in non-compliance with applicable laws at the time the acts were performed, rendering us liable without regard to our negligence or fault.
In addition, although our contract terms require our distributors to comply with all applicable laws regarding the sale of our products, including anti-competition, anti-corruption, anti-money laundering and sanctions laws, we may not be able to ensure proper compliance.
In addition, although our contract terms require our distributors to comply with applicable laws regarding the sale of our products, including anti-competition, anti-corruption, anti-money laundering and sanctions laws, we may not be able to ensure proper compliance.
Further, no assurances can be given that any patent application we have filed or will file will result in a patent being issued, or that any existing or future patents will afford adequate or meaningful protection against competitors or against similar technologies.
Further, no assurances can be given that any patent application we have filed or may file will result in a patent being issued, or that any existing or future patents will afford adequate or meaningful protection against competitors or against similar technologies.
Our operations are subject to various state and federal laws targeting fraud and abuse in the healthcare industry, including the federal Anti-Kickback Statute and other anti-kickback laws, which prohibit any person from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, to induce or reward either the referral of an individual, or the furnishing or arranging for an item or service, for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs.
Our operations are subject to various state and federal laws targeting fraud and abuse in the healthcare industry, including the U.S. federal Anti-Kickback Statute and other anti-kickback laws, which prohibit any person from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, to induce or reward either the referral of an individual, or the furnishing or arranging for an item or service, for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs.
We have no or limited direct sales or marketing capabilities in some of the regions and countries in which our products are sold, including, among others, China, Japan, Russia and India.
We have no or limited direct sales or marketing capabilities in some of the regions and countries in which our products are sold, including, among others, China, Japan, and India.
We rely on third-party vendors to supply and support certain aspects of our information technology systems. These third-party systems could also become vulnerable to cyber-attacks, malicious intrusions, breakdowns, interference or other significant disruptions, and may contain defects in design or manufacture or other problems that could result in system disruption or compromise the information security of our own systems.
We rely on third-party vendors to supply and support certain aspects of our information technology systems. These vendors could become vulnerable to cyber-attacks, malicious intrusions, breakdowns, interference or other significant disruptions, and their systems may contain defects in design or manufacture or other problems that could result in system disruption or compromise the information security of our own systems.
However, physicians may use these products in ways or circumstances other than those strictly within the scope of the regulatory approval or clearance. The use of our products for unauthorized purposes could arise from our sales personnel or distributors violating our policies by providing information or recommendations about such unauthorized uses.
However, physicians may use these products in ways or circumstances other than those strictly within the scope of the regulatory approval or clearance. The use of our products for unauthorized purposes could arise from our sales personnel or third-party distributors violating our policies by providing information or recommendations about such unauthorized uses.
The FDA or such other agencies could require a recall of products or allege that our promotional activities misbrand or adulterate our products or violate other legal requirements, which could result in investigations, prosecutions, fines or other civil or criminal actions. Our products may be subject to product liability claims and warranty claims .
The FDA or such other authorities could require a recall of products or allege that our promotional activities misbrand or adulterate our products or violate other legal requirements, which could result in investigations, prosecutions, fines or other civil or criminal actions. Our products may be subject to product liability claims and warranty claims .
The availability and price of these materials, parts, products and services are affected by a variety of factors beyond our control, including the willingness of suppliers to sell into the medical device industry, changes in supply and demand, general economic conditions, labor costs, fuel-related transportation costs, liability concerns, climate change (including new and existing laws and regulations to address climate change), competition, import duties, tariffs, currency exchange rates and political uncertainty around the world.
The availability and price of these materials, parts, products and services are affected by a variety of factors beyond our control, including the willingness of suppliers to sell into the medical device industry, changes in supply and demand, general economic conditions, labor costs, fuel-related transportation costs, liability concerns, climate change (including existing and prospective laws and regulations), competition, import duties, tariffs, currency exchange rates and political uncertainty around the world.
“Business – Regulation - Regulatory Approvals.” In general, we intend to obtain MDR approvals for our principal products sold in the EU ahead of expiry dates; however for multiple reasons, including but not limited to changing business strategies, limited labor pool and contract resources, administrative delays, increased costs of obtaining MDR certification, availability of necessary data and notified body capacity, there will be some products that will not be fully compliant at the time of expiry.
“Business – Regulation – Regulatory Approvals.” In general, we intend to obtain MDR approvals for our principal products sold in the E.U. ahead of expiry dates; however for multiple reasons, including but not limited to changing business strategies, limited labor pool and contract resources, administrative delays, increased costs of obtaining MDR certification, availability of necessary data and notified body capacity, there will be some products that will not be fully compliant at the time of expiry.
Before we can introduce a new device or a new use of or a claim for a cleared device in the U.S., we must generally obtain clearance from the FDA, unless an exemption from premarket review or an alternative procedure, such as a de novo risk-based classification or a humanitarian device exemption, applies.
Before we can introduce a new device or a new use of or a claim for an existing device in the U.S., we must generally obtain clearance from the FDA, unless an exemption from premarket review or an alternative procedure, such as a de novo risk-based classification or a humanitarian device exemption, applies.
The administrative agent, joint lead arrangers, joint bookrunners and lenders under the Third Amended Credit Agreement have available to them the remedies typically available to lenders and secured parties, including the ability to foreclose on the collateral we have pledged. It could lead to an acceleration of indebtedness and foreclosure on our assets.
The administrative agent, joint lead arrangers, joint bookrunners and lenders under the Fourth Amended Credit Agreement have available to them the remedies typically available to lenders and secured parties, including the ability to foreclose on the collateral we have pledged. It could lead to an acceleration of indebtedness and foreclosure on our assets.
Supply disruptions are making it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to manufacture certain products.
Supply disruptions are making it harder for us to find reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to manufacture certain products.
We have pledged substantially all of our assets as collateral for the Third Amended Credit Agreement. Our breach of any covenant in the Third Amended Credit Agreement, not otherwise cured, waived or amended, could result in a default under that agreement and could trigger acceleration of the underlying obligations.
We have pledged substantially all of our assets as collateral for the Fourth Amended Credit Agreement. Our breach of any covenant in the Fourth Amended Credit Agreement, not otherwise cured, waived or amended, could result in a default under that agreement and could trigger acceleration of the underlying obligations.
Use of our products in unapproved circumstances could expose us to liabilities . The marketing clearances and approvals from the FDA and other regulators of certain of our products are, or are expected to be, limited to specific uses. We are prohibited from marketing or promoting any uncleared or unapproved use of our product.
Use of our products in unapproved circumstances could expose us to liabilities . The marketing clearances and approvals from the FDA and other authorities of certain of our products are, or are expected to be, limited to specific uses. We are prohibited from marketing or promoting any uncleared or unapproved use of our product.
If we do not adequately identify and value targets for, or manage issues related to, acquisitions and strategic transactions, such transactions may not produce the anticipated benefits and have an adverse effect on our business, operations or financial condition.
If we do not adequately identify and value targets for, or manage issues related to, acquisitions and other transactions, such transactions may not produce the anticipated benefits and have an adverse effect on our business, operations or financial condition.
These customers are often able to obtain lower prices and more favorable terms because of the potential sales volume they represent, which has lead to lower revenues and required us to take on additional liability.
These customers are often able to obtain lower prices and more favorable terms because of the potential sales volume they represent, which has led to lower revenues and required us to take on additional liability.
If our employees, distributors or agents violate the provisions of the FCPA or other anti-bribery laws, or even if there are allegations of such violations, we could be subject to investigations or civil and criminal penalties or other sanctions, which could have a material, adverse effect on our reputation, business, results of operations, financial condition or cash flows.
If our employees, distributors or agents violate the provisions of the FCPA or other anti-bribery laws, or even if there are allegations of such violations, we could be subject to investigations or civil and criminal penalties or other sanctions, which could have a material, adverse effect on our reputation, business, operations or financial condition.
Limits on reimbursement imposed by such third-party payers may adversely affect our 29 Table of Contents customers, such as hospitals, physicians and other healthcare providers, to purchase our products, which could adversely affect our business and results of operations. Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.
Limits on reimbursement imposed by such third-party payers may adversely affect our customers, such as hospitals, physicians and other healthcare providers, to purchase our products, which could adversely affect our business and results of operations. Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.
If we are not successful in reversing non-coverage or unfavorable coverage policies, or if third-party payers that currently cover or reimburse certain procedures involving the use of our products reverse, change or limit their coverage of such procedures in the future, or if other third-party payers issue similar policies or adopt similar practices, our business could be adversely impacted.
If we are not successful in reversing non-coverage or unfavorable coverage policies, or if third-party payers that currently cover or reimburse certain procedures involving the use of our products reverse, change or limit their coverage of such procedures in the future, or if other third-party payers issue similar policies or adopt similar practices, our business and results of operation could be adversely impacted.
Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any such lawsuits that we might initiate could be expensive, take significant time and divert management’s attention from our business.
Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any such lawsuits that we might initiate could be expensive, time consuming and divert management’s attention from our business.
In addition, we continue to grow in part through business and product acquisitions and, as a result, may face risks associated with defects and vulnerabilities in the systems operated by the other parties to those transactions, or difficulties or other breakdowns or disruptions in connection with the integration of the acquired businesses and products into our information technology systems.
In addition, we continue to grow in part through business and product acquisitions and may face risks associated with defects and vulnerabilities in the systems operated by the other parties to those transactions, or difficulties or other breakdowns or disruptions in connection with the integration of the acquired businesses and products into our information technology systems.
Royalty or licensing arrangements that we may seek in such circumstances may not be available to us on commercially reasonable terms or at all and we may not be able to redesign applicable products in a way to avoid infringing the intellectual property 33 Table of Contents rights of others.
Royalty or licensing arrangements that we may seek in such circumstances may not be available to us on commercially reasonable terms or at all and we may not be able to redesign applicable products in a way to avoid infringing the intellectual property rights of others.
In the event that audits, assessments, or other determinations by governmental authorities are concluded adversely to us, they could have an adverse effect on our business, financial condition or results of operation. ​ Item 1B. Unresolved Staff Comments. None. ​
In the event that audits, assessments, or other determinations by governmental authorities are concluded adversely to us, they could have an adverse effect on our business, financial condition or results of operation. 34 Table of Contents ​ Item 1B. Unresolved Staff Comments. None. ​
Violations of these fraud and abuse-related laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid, any of which could harm our business or negatively impact our financial results.
Violations of these laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid, any of which could harm our business or negatively impact our financial results.
Those initiatives may also divert the attention of our management team or other personnel, result in unanticipated expense and disrupt our operations. Climate change may increase both the frequency and severity of natural disasters and, 23 Table of Contents consequently, risks to our operations and growth.
Those initiatives may also divert the attention of our management team or other personnel, result in unanticipated expense and disrupt our operations. Climate change may increase both the frequency and severity of natural disasters and, consequently, risks to our operations and growth.
Any default under the Third Amended Credit Agreement could adversely affect our ability to service our debt and to fund our planned capital expenditures and ongoing operations.
Any default under the Fourth Amended Credit Agreement could adversely affect our ability to service our debt and to fund our planned capital expenditures and ongoing operations.
Despite our efforts to restrict such unauthorized disclosure or use through nondisclosure agreements and other contractual restrictions, we may not be able to enforce these contractual provisions or we may incur substantial costs enforcing our legal rights. Third parties may also develop similar or superior technology independently or by designing around our patents.
Despite our efforts to restrict such unauthorized disclosure or use through nondisclosure agreements and other contractual restrictions, we may not be able to enforce these contractual provisions or we may incur substantial costs enforcing our legal rights. 30 Table of Contents Third parties may also develop similar or superior technology independently or by designing around our patents.
Consequently, claims may be asserted by the FDA or other enforcement agencies that we are not in compliance with applicable laws or regulations or have improperly promoted our products for uncleared or unapproved uses.
Consequently, claims may be asserted by the FDA or other authorities that we are not in compliance with applicable laws or regulations or have improperly promoted our products for uncleared or unapproved uses.
The additional time and resources required to obtain MDR certification has been a significant factor in, and will likely continue to influence, our decisions to discontinue sales and distribution of certain products in the EU.
The additional time and resources required to obtain MDR certification has been a significant factor in, and will likely continue to influence, our decisions to discontinue sales and distribution of certain products in the E.U.
Non-compliance with sanctions as well as general ecosystem disruptions could result in reputational harm, operational delays, monetary fines, loss of revenues, increased costs, loss of export privileges, or criminal sanctions.
Non-compliance with sanctions, as well as general ecosystem disruptions, could result in reputational harm, operational delays, monetary fines, lost revenues, increased costs, lost export privileges or criminal sanctions.
As currently amended, the Third Amended Credit Agreement provides for potential borrowings of up to $750 million. Such increased borrowing limits may make it more difficult for us to comply with leverage ratios and other restrictive covenants in the Third Amended Credit Agreement.
As currently amended, the Fourth Amended Credit Agreement provides for potential borrowings of up to $850 million. Such increased borrowing limits may make it more difficult for us to comply with leverage ratios and other restrictive covenants in the Fourth Amended Credit Agreement.
Complying with and obtaining regulatory approval in foreign countries, including our efforts to comply with the requirements of the MDR, have caused and will likely continue to cause us to experience more uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, which could have a material adverse impact our net sales, market share and operating profits from our international operations.
Complying with and obtaining regulatory approval in foreign countries, including our efforts to comply with changing requirements and with the requirements of the MDR, have caused and will likely continue to cause us to experience more uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, which could have a material adverse impact on our net sales, market share and financial results from our international operations.
Moreover, any product liability claim brought against us could result in significant costs, divert our management’s attention from other business matters or operations, increase our product liability insurance rates, or prevent us from securing insurance 31 Table of Contents coverage in the future.
Moreover, any product liability claim brought against us could result in significant costs, divert our management’s attention from other business matters or operations, increase our product liability insurance rates, or prevent us from securing insurance coverage in the future.
We are subject to laws targeting fraud and abuse in the healthcare industry, the violation of which could adversely affect our business or financial results .
We are subject to laws targeting fraud and abuse in the healthcare industry, the violation of which could adversely affect our business, operations or financial condition.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy and customer acceptance of new products, product introductions by our competitors, an increase or decrease in customer demand for our products or for products of our competitors, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions, effects of COVID-19 or decreased consumer confidence in future economic conditions.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our growth strategy and customer acceptance of new products, product introductions by our competitors, an increase or decrease in customer demand for our products or for products of our competitors, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions, or decreased consumer confidence.
We have entered into distribution agreements with third parties to market and sell our products in those countries in which we do not have a direct sales force and in those countries in which we utilize a “modified direct” sales approach.
We have entered into distribution agreements with third parties to market and sell our products in those countries in which we do not have a direct sales force and in those countries in 23 Table of Contents which we utilize a “modified direct” sales approach.
The FDA clearance and approval processes for medical devices are expensive, uncertain and time-consuming. We may make changes to our cleared products without seeking additional clearances or approvals if we determine such clearances or approvals are not necessary and document the basis for that conclusion.
The FDA clearance and approval processes for medical devices are expensive, time-consuming and uncertain. 24 Table of Contents We may make changes to our cleared devices without seeking additional clearances or approvals if we determine such clearances or approvals are not necessary and document the basis for that conclusion.
Among the key factors that may have a direct bearing on our business, operations or financial condition are the factors identified below: Business, Economic, Industry and Operational Risks Termination or interruption of our supply relationships and increases in labor costs and the prices of our component parts, finished products, third-party services and raw materials, particularly petroleum-based products, is negatively impacting our business and could have a further adverse effect on our business, operations or financial condition .
Among the key factors that may have a direct bearing on our business, operations or financial condition are the factors identified below: Business, Economic, Industry and Operational Risks Termination or interruption of our supply relationships and increases in the cost of component parts, finished products, third-party services and raw materials is negatively impacting our business and could have a further adverse effect on our business, operations or financial condition .
If we are unable to fully recover these costs through price increases or offset these increases through cost reductions, or we experience terminations or interruption of our relationships with our suppliers, we could experience lower margins and profitability, and our results of operations, financial condition and cash flows could be materially harmed.
If we are unable to recover these costs through price increases or offset these increases through cost reductions, or we experience terminations or interruption of our relationships with our suppliers, we could experience lower margins and profitability, and our business, operations or financial condition could be materially harmed.
We are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of applicable tax rates in the various countries, states and other jurisdictions in which we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of these jurisdictions.
Our effective tax rate is derived from a combination of applicable tax rates in the various countries, states and other jurisdictions in which we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of these jurisdictions.
Damage or interruption to our facilities or systems relating to manufacturing, distribution, research and development, or information technology because of fire, extreme weather conditions, natural disaster, power loss, communications failure, geopolitical disruption, labor strikes, riots, cyber-attack, health epidemics and pandemics, unauthorized entry or other events could significantly disrupt our operations, the operations of suppliers and critical infrastructure.
Damage or interruption to our facilities or systems because of fire, extreme weather conditions, natural disaster, power loss, communications failure, geopolitical disruption, labor strikes, riots, cyber-attack, health epidemics or pandemics, unauthorized entry or other events could significantly disrupt our operations, the operations of suppliers and critical infrastructure.
Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results. Our operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions.
Changes in economic and geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business, operations and financial condition. Our operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions.
Furthermore, U.S. trade policy could trigger retaliatory actions by other countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials we use in our manufacturing and could result in foreign governments imposing tariffs on products that we export outside the U.S. or otherwise limiting our ability to sell our products abroad.
Furthermore, U.S. trade policy 20 Table of Contents could trigger retaliatory actions by other countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials we use in our manufacturing, foreign governments imposing tariffs on products that we export outside the U.S. or limitations on our ability to sell our products abroad.
Regulatory, Litigation, Tax and Legal Compliance Risks Regulations and trade policies implemented by foreign governments to reduce the costs of healthcare or promote business in their countries have caused, and are likely to continue to cause our sales to decline in such countries.
Regulatory, Litigation, Tax and Legal Compliance Risks Regulations and trade policies implemented by foreign governments to reduce the costs of healthcare or promote business in their countries have negatively impacted, and are likely to continue to negatively impact our sales in such countries.
It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data practices, resulting in fines or orders requiring that we change our data practices, which could in turn (i) cause us to incur substantial costs or (ii) have an adverse effect on our business.
It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data practices, may result in significant liability, fines or orders requiring that we change our data practices, which could, in turn, cause us to incur substantial costs and have a materially adverse effect on our business.
Additionally, there is no assurance that crude oil supplies will be uninterrupted or that petroleum-based manufacturing materials will be available for purchase in the future. The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions and further hinder our ability to find the materials we need to make our products.
Additionally, there is no assurance that crude oil supplies will be uninterrupted or that petroleum-based manufacturing materials will be available for purchase in the future. The escalating tensions in the Middle East and the military conflict in Ukraine may increase the likelihood of supply interruptions and hinder our ability to obtain the materials we need to make our products.
Cyber-attacks are becoming more sophisticated and frequent, and there can be no assurance that our protective measures have prevented or will prevent security breaches, any of which could have a significant impact on our business, reputation and financial condition, particularly attacks that result in our intellectual property and other confidential information being accessed or stolen.
There can be no assurance that our protective measures 31 Table of Contents have prevented or will prevent security breaches, any of which could have a significant impact on our business, reputation and financial condition, particularly attacks that result in our intellectual property and other confidential information being accessed or stolen.
Product liability claims may be brought by individuals or by groups seeking to represent a class. We have previously faced, and currently face, claims by patients claiming injuries from our products. To date, these claims have not resulted in material harm to our operations or financial condition.
Product liability claims may be brought by individuals or by groups seeking to represent a class. We have previously faced, and currently face, claims by patients claiming injuries from our products. To date, these claims have not had a material adverse effect on our business, operations or financial condition.
Failure to comply with applicable rules or regulations or with contractual or other requirements may result in monetary damages and criminal or civil penalties as well as termination of our government contracts or our suspension or debarment from government contract work. Our international operations make us subject to the U.S.
Failure to comply with applicable rules or regulations or with contractual or other requirements may result in monetary damages and criminal or civil penalties as well as termination of our government contracts or our suspension or debarment from government contract work. 26 Table of Contents We are subject to the U.S.
Periods of intense diplomatic or armed conflict, such as the ongoing conflict in 22 Table of Contents Ukraine, may result in (i) new and rapidly evolving sanctions and trade restrictions, which may impair trade with sanctioned individuals and countries, and (ii) negative impacts to regional trade ecosystems among our customers, partners, and us.
Periods of diplomatic or armed conflict, such as the ongoing conflict in Ukraine, tensions in the Middle East and China-Taiwan relations, may result in (i) new and rapidly evolving sanctions and trade restrictions, which may impair trade with sanctioned individuals and countries, and (ii) negative impacts to regional trade ecosystems among our customers, partners, and us.
If our distributors fail to effectively market and sell our products in full compliance with applicable laws, our results of operations and business could be impacted. We are dependent upon key personnel . Our success is dependent on key management personnel, including Fred P. Lampropoulos, our Chairman of the Board, President and Chief Executive Officer. Mr.
If our distributors fail to effectively market and sell our products in compliance with applicable laws, our results of operations and business could be impacted. We are dependent upon key personnel and have announced the anticipated retirement of our Chief Executive Officer . Our success is dependent on key management personnel, including Fred P.
Foreign Corrupt Practices Act and similar anti-bribery laws in non-U.S. jurisdictions, and our failure, or the failure of our distributors and agents, to comply with these laws could subject us to civil and criminal penalties and adversely affect our business. We currently conduct our business in various foreign countries, and we expect to continue to expand our foreign operations.
Foreign Corrupt Practices Act and similar anti-bribery laws in non-U.S. jurisdictions, and our failure, or the failure of our distributors or agents, to comply with these laws could subject us to civil and criminal penalties and adversely affect our business, operations or financial condition.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties. We are routinely a party to litigation, which could affect our financial condition and results of operations .
Additionally, because we use a limited amount of hazardous and other regulated materials in our manufacturing processes, we are subject to certain risks of future liabilities, lawsuits and claims resulting from any substances we manufacture, dispose of or release.
Compliance with future regulations may also require additional capital investments or other expenses. Additionally, because we use a limited amount of hazardous and other regulated materials in our manufacturing processes, we are subject to certain risks of future liabilities, lawsuits and claims resulting from any substances we manufacture, dispose of or release.
During 2022, we experienced significantly elevated commodity and supply chain costs, including the costs of labor, raw materials, energy, fuel, packaging materials and other inputs necessary for the production and distribution of our products, and we expect elevated levels of inflation to continue in 2023.
During 2023, we experienced significantly elevated commodity and supply chain costs, including the costs of labor, raw materials, energy, packaging materials and other inputs necessary for the production and distribution of our products. Those elevated costs may continue in 2024.
If any of these sterilizers goes out of business or fails to comply with quality or regulatory requirements, we may be unable to find a suitable supplier to replace them. This could significantly delay or stop production and cause sales of such products to materially decline.
If any of these entities goes out of business, ceases to provide services to us or fails to comply with quality or regulatory requirements, we may be unable to find a suitable supplier to replace them. This could significantly delay or stop production and adversely affect sales of such products.
Congress, DOJ, OIG, SEC and the Department of Defense, as well as foreign counterparts, have issued subpoenas and other requests for information to medical device manufacturers, primarily related to financial arrangements with healthcare providers, regulatory compliance and product promotional practices.
These authorities and domestic and foreign legislators continue to scrutinize the medical device industry. In recent years, the U.S. Congress, DOJ, OIG, SEC and the Department of Defense, as well as foreign counterparts, have issued subpoenas and other requests for information to medical device manufacturers, primarily related to financial arrangements with healthcare providers, regulatory compliance and product promotional practices.
Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations.
Legal proceedings can be complex and time-consuming, with the final outcome depending on a number of variables, some of which are beyond our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations.
Our internal information technology systems, as well as those systems maintained by third-party providers, may be subjected to computer viruses or other malicious code, unauthorized access attempts, and cyber-attacks, any of which could result in data leaks or otherwise compromise our confidential or proprietary information and disrupt our operations.
Our internal information technology systems, as well as those systems maintained by third-party providers, may be subjected to inadvertent leaks, computer viruses or other malicious code, unauthorized access attempts, and ransom or other cyber-attacks (including through phishing emails, attempts to fraudulently induce employees or others to disclose information, and the exploitation of software and operating vulnerabilities), any of which could result in data leaks or otherwise compromise our confidential or proprietary information and disrupt our operations.
Our customers and suppliers may also be affected by these events, so even if we are not directly impacted, we may still experience lower demand for our products and increases in our manufacturing costs because of the effects these events may have on our customers and suppliers.
Thus, even if we are not directly impacted by these regulations and policies, we may still experience lower demand for our products, increases in our manufacturing costs and supply chain delays or disruptions because of the effects these events may have on our customers and suppliers.
For the year ended December 31, 2022, $394.1 million, or 34.2%, of our net sales were denominated in foreign currencies, with our CNY- and Euro-denominated sales representing our largest currency risks to net sales. If the rate of exchange between foreign currencies declines against the U.S.
For the year ended December 31, 2023, $423.4 million, or 33.7%, of our net sales were denominated in foreign currencies, with our Chinese Yuan- and Euro-denominated sales representing our largest currency risks to net sales. If the rate of exchange between foreign currencies declines against the U.S.
Our products are used in connection with invasive procedures and in other medical contexts that entail an inherent risk of product liability claims.
The design, manufacture and marketing of medical devices involves various risks. Frequently, our products are used in connection with invasive procedures and in other medical contexts that entail an inherent risk of product liability claims.
Dollar, our financial results may be negatively impacted. 35 Table of Contents We are subject to changes in tax laws, fluctuations in tax rates, the adoption of new tax legislation or exposure to additional tax liabilities, which may adversely affect our effective tax rate, business, financial condition, or results of operations.
We are subject to changes in tax laws, fluctuations in tax rates, the adoption of new tax legislation or exposure to additional tax liabilities, which may adversely affect our effective tax rate, business, financial condition, or results of operations. We are subject to taxation in numerous countries, states and other jurisdictions.
Our transportation and service providers are typically able to pass any significant increases in oil prices on to us. Our ability to recover such increased costs may depend upon our ability to raise prices on our products.
In addition to the effect on resin prices, transportation costs have generally increased and may further increase if crude oil prices increase. Our transportation and service providers typically pass any significant increases in oil prices on to us. Our ability to recover such increased costs may depend upon our ability to raise prices on our products.
If we are unable to maintain or establish sales capabilities on our own or through third parties, we may not be able to commercialize any of our products in those countries .
We do not maintain direct sales and marketing capabilities in many countries and are dependent on our distributors for the commercialization of our products in those countries. If we are unable to maintain or establish sales capabilities on our own or through third parties, we may not be able to effectively commercialize our products in those countries .
Because of these laws, any accidental release may have an adverse effect on our business, operations or financial condition. Our operations are also subject to various laws and regulations relating to occupational health and safety. We maintain safety, training and maintenance programs as part of our ongoing efforts to ensure compliance with applicable laws and regulations.
The impact of these regulations could have a material adverse effect on our business. Our operations are also subject to various laws and regulations relating to occupational health and safety. We maintain safety, training and maintenance programs as part of our ongoing efforts to ensure compliance with applicable laws and 29 Table of Contents regulations.
This matter has consumed a significant amount of our resources and management’s attention. 28 Table of Contents We anticipate that government authorities will continue to scrutinize our industry closely, and that additional regulation by government authorities may increase compliance costs, exposure to litigation and other adverse effects on our operations.
We anticipate that government authorities will continue to scrutinize our industry closely, and that additional regulation by government authorities may increase compliance costs, exposure to litigation and other adverse effects on our operations.
We are dependent on our cash on hand and free cash flow to fund our debt obligations, capital expenditures and ongoing operations. Our ability to service our debt and to fund our planned capital expenditures and ongoing operations will depend on our ability to continue to generate cash flow.
We depend on our cash on hand and free cash flow from operations to fund our debt obligations, capital expenditures and ongoing operations.
During 2022, 2021 and 2020, the exchange rate between all applicable foreign currencies and the U.S. Dollar resulted in a decrease in net sales of $23.8 million, an increase in net sales of $10.3 million, and a decrease in net sales of $1.3 million, respectively.
Those fluctuations could have a negative impact on our margins and financial results. During 2023, 2022 and 2021, the exchange rate between all applicable foreign currencies and the U.S. Dollar resulted in a decrease in net sales of $6.4 million, a decrease in net sales of $23.8 million, and an increase in net sales of $10.3 million, respectively.
As a result, if the rate of exchange between foreign currencies declines against the U.S.
As a result, if the rate of exchange between foreign currencies declines against the U.S. Dollar, our financial results may be negatively impacted.
Our business is subject to complex and evolving U.S., state and international laws and regulations regarding privacy and data protection.
Our business is subject to evolving domestic and foreign laws and regulations regarding privacy and data protection.
Lampropoulos is not subject to any agreement prohibiting his departure, and we do not maintain key man life insurance on his life. The loss of Mr. Lampropoulos, or of certain other key management personnel, could have a materially adverse effect on our business and operations.
Lampropoulos, our Chairman of the Board, President and Chief Executive Officer. We do not maintain key man life insurance on Mr. Lampropoulos. The loss of Mr. Lampropoulos, or of certain other key management personnel, could have a materially adverse effect on our business, operations and financial condition.
The global macroeconomic environment continues to be challenging due to the effects of the COVID-19 pandemic and government responses, increases in inflation globally, instability in the global credit markets, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world (including as a result of the on-going Russia and Ukraine war and China-Taiwan relations), the current economic challenges in China, and other disruptions.
The global macroeconomic environment continues to be challenging due to the effects of increases in inflation globally, instability in global credit markets, uncertainty regarding global central bank monetary policy, instability in the geopolitical environment in many parts of the world, current economic challenges in China, and other factors.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLegal Proceedings. See Note 10 “Commitments and Contingencies” to our consolidated financial statements set forth in Item 8 of this report and incorporated herein by reference. ​ Item 4. Mine Safety Disclosures. The disclosure required by this item is not applicable. ​ ​ 37 Table of Contents PART II
Biggest changeWe believe our existing and proposed facilities will generally be adequate for our present and future anticipated levels of operations. ​ ​ Item 3. Legal Proceedings. See Note 10 “Commitments and Contingencies” to our consolidated financial statements set forth in Item 8 of this report and incorporated herein by reference. ​ ​ Item 4. Mine Safety Disclosures.
Our research and development activities are conducted principally at facilities located in Utah, California, Texas, Ireland, France, and Singapore. Our total manufacturing, commercial, distribution, and research space is approximately 1.9 million square feet, of which approximately 1.0 million square feet is owned, and 0.9 million square feet is leased.
Our research and development activities are conducted principally at facilities located in Utah, California, Texas, Ireland and France. Our total manufacturing, commercial, distribution, and research space is approximately 1.9 million square feet, of which approximately 1.0 million square feet is owned, and 0.9 million square feet is leased.
The following is a summary of the approximate square footage of our key facilities as of December 31, 2022: ​ ​ ​ ​ ​ Location Main Purpose Area (sq. ft.) Utah HQ, Manufacturing, Distribution, Research 724,170 Mexico ​ Manufacturing ​ 196,690 Virginia ​ Manufacturing, Distribution ​ 187,659 Ireland ​ Manufacturing, Research ​ 139,680 The Netherlands Manufacturing, Distribution 136,501 Texas ​ Manufacturing, Research ​ 94,000 Singapore ​ Manufacturing, Research ​ 68,000 China ​ Distribution ​ 50,290 ​ Operations associated with our cardiovascular segment utilize all of our facilities, while operations associated with our endoscopy segment are conducted primarily from our facilities located in Utah and Texas. 36 Table of Contents We believe our existing and proposed facilities will generally be adequate for our present and future anticipated levels of operations. ​ ​ Item 3.
The following is a summary of the approximate square footage of our key facilities as of December 31, 2023: ​ ​ ​ ​ ​ Location Main Purpose Area (sq. ft.) Utah HQ, Manufacturing, Distribution, Research 724,170 Mexico ​ Manufacturing ​ 196,690 Virginia ​ Manufacturing, Distribution ​ 187,659 Ireland ​ Manufacturing, Research ​ 139,680 The Netherlands Manufacturing, Distribution 136,501 Texas ​ Manufacturing, Research ​ 94,000 Singapore ​ Manufacturing ​ 68,000 China ​ Distribution ​ 59,708 ​ Operations associated with our cardiovascular segment utilize all of our facilities, while operations associated with our endoscopy segment are conducted primarily from our facilities located in Utah and Texas.
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The disclosure required by this item is not applicable. ​ ​ 36 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures ​ 37 ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 38 ​ ​ ​ ​
Biggest changeItem 4. Mine Safety Disclosures ​ 36 ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 37 ​ ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePast performance is not necessarily an indicator of future results. NOTE: Performance graph data is complete through last fiscal year. Corporate Performance Graph with peer group uses peer group only performance (excludes only Merit). Peer group indices use beginning of period market capitalization weighting. Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2023.
Biggest changeNOTE: Performance graph data is complete through last fiscal year. Corporate Performance Graph with peer group uses peer group only performance (excludes only Merit). Peer group indices use beginning of period market capitalization weighting. Prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2023. Used with permission. All rights reserved. Index Data: Copyright NASDAQ OMX, Inc.
We did not repurchase any shares during the years ended December 31, 2022, 2021 and 2020. Performance The following graph compares the performance of our common stock with the performance of the NASDAQ US Benchmark TR Index and NASDAQ Stocks (SIC 3840-3849 U.S.
We did not repurchase any shares during the years ended December 31, 2023, 2022 and 2021. Performance The following graph compares the performance of our common stock with the performance of the NASDAQ US Benchmark TR Index and NASDAQ Stocks (SIC 3840-3849 U.S.
Market Price for the Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “MMSI.” As of February 22, 2023, the number of shares of our common stock outstanding was 57,318,032 held by approximately 96 shareholders of record, not including shareholders whose shares are held in securities position listings.
Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol “MMSI.” As of February 26, 2024, the number of shares of our common stock outstanding was 57,930,050 held by approximately 91 shareholders of record, not including shareholders whose shares are held in securities position listings.
Companies - Surgical, Medical and Dental Instruments and Supplies) f or a five-year period by measuring the changes in common stock prices from December 31, 2017 to December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/2017 12/2018 12/2019 12/2020 12/2021 12/2022 Merit Medical Systems, Inc. ​ $ 100.00 ​ $ 129.19 ​ $ 72.27 ​ $ 128.50 ​ $ 144.21 ​ $ 163.45 NASDAQ US Benchmark (TR) ​ ​ 100.00 ​ ​ 94.56 ​ ​ 124.03 ​ ​ 150.41 ​ ​ 189.36 ​ ​ 152.00 NASDAQ Stocks (SIC 3840-3849 U.S.
Companies - Surgical, Medical and Dental Instruments and Supplies) f or a five-year period by measuring the changes in common stock prices from December 31, 2018 to December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 Merit Medical Systems, Inc. ​ $ 100.00 ​ $ 55.94 ​ $ 99.46 ​ $ 111.63 ​ $ 126.52 ​ $ 136.07 NASDAQ US Benchmark (TR) ​ ​ 100.00 ​ ​ 131.17 ​ ​ 159.07 ​ ​ 200.26 ​ ​ 160.75 ​ ​ 203.23 NASDAQ Stocks (SIC 3840-3849 U.S.
Companies) ​ 100.00 ​ ​ 112.98 ​ ​ 138.90 ​ ​ 202.84 ​ ​ 228.47 ​ ​ 165.59 38 Table of Contents The stock performance graph assumes for comparison that the value of our common stock and of each index was $100 on December 31, 2017 and that all dividends were reinvested.
Companies) ​ ​ 100.00 ​ ​ 130.29 ​ ​ 193.37 ​ ​ 219.67 ​ ​ 155.78 ​ ​ 163.47 The stock performance graph assumes for comparison that the value of our common stock and of each index was $100 on December 31, 2018 and that all dividends were reinvested. Past performance is not necessarily an indicator of future results.
Used with permission. All rights reserved. Index Data: Copyright NASDAQ OMX, Inc. Used with permission. All rights reserved. ​ Item 6. Reserved. ​
Used with permission. All rights reserved. 37 Table of Contents ​ Item 6. Reserved. ​ ​

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Reserved ​ 39 ​ ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 39 ​ ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 49 ​ ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 51 ​ ​ ​ ​
Biggest changeItem 6. Reserved ​ 38 ​ ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 38 ​ ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 48 ​ ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 49 ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur dedication to the Foundations for Growth program has helped offset inflationary cost pressures in certain raw materials, shipping, and freight expenses. 39 Table of Contents Results of Operations The following table sets forth certain operational data as a percentage of sales for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Net sales 100 % 100 % 100 % Gross profit 45.1 45.2 41.6 ​ Selling, general and administrative expenses 29.8 31.2 30.9 ​ Research and development expenses 6.6 6.6 6.0 ​ Legal settlement ​ — ​ 0.9 ​ 1.9 ​ Impairment charges 0.2 0.4 3.8 ​ Contingent consideration expense (benefit) 0.4 0.3 (0.8) ​ Acquired in-process research and development expense 0.6 — 0.0 ​ Income (loss) from operations 7.6 5.7 (0.2) ​ Income (loss) before income taxes 7.2 5.0 (1.4) ​ Net income (loss) 6.5 4.5 (1.0) ​ ​ Sales Listed below are the sales by product category within each operating segment for the years ended December 31, 2022, 2021 and 2020 (in thousands, other than percentage changes): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change 2022 % Change 2021 % Change 2020 Cardiovascular ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Peripheral Intervention 8.6 % $ 439,810 18.6 % $ 405,116 (2.7) % $ 341,568 Cardiac Intervention 7.0 % 343,186 14.6 % 320,641 (8.2) % 279,671 Custom Procedural Solutions (1.9) % 190,194 (4.6) % 193,942 8.5 % 203,196 OEM 17.4 % 145,034 12.5 % 123,528 (6.9) % 109,767 Total 7.2 % 1,118,224 11.7 % 1,043,227 (2.8) % 934,202 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Endoscopy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Endoscopy Devices 3.9 % 32,757 6.2 % 31,524 (12.4) % 29,673 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 7.1 % $ 1,150,981 11.5 % $ 1,074,751 (3.1) % $ 963,875 ​ Cardiovascular Sales.
Biggest changeWe intend to use the proceeds from the Notes offering for general corporate purposes, which may include repayment or reduction of existing debt, sales and marketing activities, medical affairs and educational efforts, research and development, clinical studies, working capital, capital expenditures and investments in and acquisitions of other companies, products or technologies in the future. ​ 38 Table of Contents Results of Operations The following table sets forth certain operational data as a percentage of sales for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net sales 100 % 100 % 100 % Gross profit 46.4 45.1 45.2 ​ Selling, general and administrative expenses 29.7 29.8 31.2 ​ Research and development expenses 6.6 6.6 6.6 ​ Legal settlement ​ — ​ — ​ 0.9 ​ Impairment charges — 0.2 0.4 ​ Contingent consideration expense 0.1 0.4 0.3 ​ Acquired in-process research and development expense 0.1 0.6 — ​ Income from operations 9.9 7.6 5.7 ​ Other expense — net (0.9) (0.4) ​ (0.7) ​ Income before income taxes 8.9 7.2 5.0 ​ Net income 7.5 6.5 4.5 ​ ​ Sales Listed below are the sales by product category within each operating segment for the years ended December 31, 2023, 2022 and 2021 (in thousands, other than percentage changes): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change 2023 % Change 2022 % Change 2021 Cardiovascular ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Peripheral Intervention 14.2 % $ 502,220 8.6 % $ 439,810 18.6 % $ 405,116 Cardiac Intervention 4.4 % 358,451 7.0 % 343,186 14.6 % 320,641 Custom Procedural Solutions 2.7 % 195,333 (1.9) % 190,194 (4.6) % 193,942 OEM 13.5 % 164,556 17.4 % 145,034 12.5 % 123,528 Total 9.2 % 1,220,560 7.2 % 1,118,224 11.7 % 1,043,227 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Endoscopy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Endoscopy Devices 12.4 % 36,806 3.9 % 32,757 6.2 % 31,524 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 9.2 % $ 1,257,366 7.1 % $ 1,150,981 11.5 % $ 1,074,751 ​ Cardiovascular Sales.
International Sales . International sales for the year ended December 31, 2022 were $500.4 million, or 43.5% of net sales, up 7.4% when compared to 2021.
International sales for the year ended December 31, 2022 were $500.4 million, or 43.5% of net sales, up 7.4% when compared to 2021.
For the year ended December 31, 2022, we recorded impairment charges of $2.2 million. These impairments included $1.7 million of intangible assets for our divestiture of STD Pharmaceutical Products Limited (“STD Pharmaceutical”) business acquired in our August 2019 acquisition of Fibrovein Holdings and $0.5 million impairment of our equity investment in XableCath, Inc. as this business ceased operations.
For the year ended December 31, 2022, we recorded impairment charges of $2.2 million. These impairments included $1.7 million of intangible assets for our divestiture of the STD Pharmaceutical Products Limited (“STD Pharmaceutical”) business acquired in our August 2019 acquisition of Fibrovein Holdings and $0.5 million impairment of our equity investment in XableCath, Inc. as this business ceased operations.
Endoscopy Operating Income. Our endoscopy operating income for the year ended December 31, 2022 was $6.6 million, compared to operating income of $7.5 million for the year ended December 31, 2021.
Our endoscopy operating income for the year ended December 31, 2022 was $6.6 million, compared to operating income of $7.5 million for the year ended December 31, 2021.
(“Fluidx”) of $1.4 million. Cash outflows invested in acquisitions for the year ended December 31, 2021 were $7.2 million and were primarily related to $4.1 for the settlement of deferred payments and the working capital adjustment associated with our acquisition of KA Medical, LLC (“KA Medical”) completed in November 2020 and $2.7 million for an equity investment in FluidX .
Cash outflows invested in acquisitions for the year ended December 31, 2021 were $7.2 million and were primarily related to $4.1 million for the settlement of deferred payments and the working capital adjustment associated with our acquisition of KA Medical, LLC (“KA Medical”) completed in November 2020 and $2.7 million for an equity investment in Fluidx .
The expense (benefit) in each fiscal year relates to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time. Acquired In-process Research and Development .
The expense in each fiscal year relates to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time. Acquired In-process Research and Development .
We re-measure the estimated liability each quarter and record changes in the estimated fair value through operating expense in our consolidated statements of income (loss).
We re-measure the estimated liability each quarter and record changes in the estimated fair value through operating expense in our consolidated statements of income.
Based on this historical trend, we believe that our inventory balances as of December 31, 2022 have been accurately adjusted for any unmarketable and/or slow moving products that may expire prior to being sold. Valuation of Goodwill and Intangible Assets.
Based on this historical trend, we believe that our inventory balances as of December 31, 2023 have been accurately adjusted for any unmarketable and/or slow moving products that may expire prior to being sold. Valuation of Goodwill and Intangible Assets.
Our revenue results for the year ended December 31, 2022 were driven primarily by stronger-than-anticipated demand in the U.S. and more favorable than anticipated international sales trends, particularly in the EMEA and “Rest of World” (“ROW”) regions.
Our revenue results for the year ended December 31, 2023 were driven primarily by stronger-than-anticipated demand in the U.S. and more favorable than anticipated international sales trends, particularly in the EMEA and “Rest of World” (“ROW”) regions.
This improvement in net income was partially offset by an increase in the non-cash adjustment for deferred income taxes within the statement of cash flows of $(14.9) million and $(4.6) million for the years ended December 31, 2022 and 2021, respectively. 45 Table of Contents ​ ● Cash (used for) accounts receivable was $(15.1) million and $(8.6) million for the years ended December 31, 2022 and 2021, respectively, due primarily to increases in sales volume, ​ ● Cash provided by (used for) other receivables was $4.2 million and $(10.4) million for the years ended December 31, 2022 and 2021, respectively, due primarily to the collection of approximately $8.2 million of insurance proceeds in connection with the consolidated securities class action lawsuit we settled in April 2022, ​ ● Cash (used for) inventories was $(47.9) million and $(25.2) million for the years ended December 31, 2022 and 2021, respectively, due primarily to efforts to normalize inventory levels as well as build bridge inventory for production line transfers and increases in safety stock due to vendor supply delays, and ​ ● Cash provided by (used for) accrued expenses was $(16.4) million and $36.5 million for the years ended December 31, 2022 and 2021, respectively, primarily related to payment of a legal settlement accrual of $18.25 million in 2022 associated with the agreement in principle to settle the Class Action Litigation and increased labor-related cost accruals associated with higher commissions and bonus expense in the prior-year period, among other items. ​ Net cash provided by operating activities decreased $18.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.
This improvement in net income was partially offset by an increase in the non-cash adjustment for deferred income taxes within the statement of cash flows of $(14.9) million and $(4.6) million for the years ended December 31, 2022 and 2021, respectively. ● Cash (used for) accounts receivable was $(15.1) million and $(8.6) million for the years ended December 31, 2022 and 2021, respectively, due primarily to increases in sales volume, ● Cash provided by (used for) other receivables was $4.2 million and $(10.4) million for the years ended December 31, 2022 and 2021, respectively, due primarily to the collection of approximately $8.2 million of insurance proceeds in connection with the consolidated securities class action lawsuit we settled in April 2022, 44 Table of Contents ● Cash used for inventories was $(47.9) million and $(25.2) million for the years ended December 31, 2022 and 2021, respectively, due primarily to efforts to normalize inventory levels as well as build bridge inventory for production line transfers and increases in safety stock due to vendor supply delays, and ● Cash provided by (used for) accrued expenses was $(16.4) million and $36.5 million for the years ended December 31, 2022 and 2021, respectively, primarily related to payment of a legal settlement accrual of $18.25 million in 2022 associated with the agreement in principle to settle the Class Action Litigation and increased labor-related cost accruals associated with higher commissions and bonus expense in the prior-year period, among other items.
During our annual test of goodwill balances in 2022, which was completed during the third quarter of 2022, we determined that the fair value of each reporting unit with goodwill exceeded the carrying amount by a significant amount.
During our annual test of goodwill balances in 2023, which was completed during the third quarter of 2023, we determined that the fair value of each reporting unit with goodwill exceeded the carrying amount by a significant amount.
During the year ended December 31, 2022, we incurred in-process research and development charges of $6.7 million p rimarily associated with our acquisition of Restore Endosystems, LLC (“Restore Endosystems”). We did not incur in-process research and development charges during the year ended December 31, 2021.
We incurred $6.7 million for in-process research and development charges associated with our acquisition of Restore Endosystems, LLC (“Restore Endosystems”) during the year ended December 31, 2022 . We did not incur in-process research and development charges during the year ended December 31, 2021.
Other Income (Expense) Our other expense for the years ended December 31, 2022, 2021 and 2020 was $4.9 million, $7.0 million, and $11.7 million, respectively.
Other Income (Expense) Our other expense for the years ended December 31, 2023, 2022 and 2021 was $11.9 million, $4.9 million, and $7.0 million, respectively.
As of December 31, 2022 and 2021, approximately $2.1 million and $1.9 million respectively, of our cash and cash equivalents represents restricted cash for the payment of certain import and other taxes for our subsidiary in China.
As of December 31, 2023 and 2022, approximately $2.1 million and $2.1 million respectively, of our cash and cash equivalents represents restricted cash for the payment of certain import and other taxes for our subsidiary in China.
The decrease in the effective income tax rate for 2022 compared to 2021 was primarily the result of 44 Table of Contents a benefit from the change in foreign withholding taxes on unremitted foreign earnings due to the restructuring of our foreign entities, more foreign tax credits being utilized, as well as additional benefit from the foreign-derived intangible income (FDII) deduction.
The decrease in the effective income tax rate for 2022 compared to 2021 was primarily the result of a benefit from the change in foreign withholding taxes on unremitted foreign earnings due to the restructuring of our foreign entities, more foreign tax credits being utilized, as well as additional benefit from the FDII deduction.
Based on this review, we provide adjustments for any slow-moving finished good products or raw materials that we believe will expire prior to being sold or used to produce a finished good and any 47 Table of Contents products that are unmarketable.
Based on this review, we provide adjustments for any slow-moving finished good products or raw materials that we believe will expire prior to being sold or used to produce a finished good and any products that are unmarketable.
Our endoscopy sales for the year ended December 31, 2022 were $32.8 million, up 3.9%, when compared to sales for the year ended December 31, 2021 of $31.5 million.
Our endoscopy sales for the year ended December 31, 2022 were $32.8 million, up 3.9%, when compared to sales for the corresponding period in 2021 of $31.5 million.
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 December 31, 2022 and 2021, we had cash and cash equivalents, including restricted cash, of $26.1 million and $28.5 million, respectively, held by our subsidiary in China.
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 December 31, 2023 and 2022, we had cash and cash equivalents, including restricted cash, of $17.6 million and $26.1 million, respectively, held by our subsidiary in China.
In connection with a business combination, any contingent consideration is recorded at fair value on the acquisition date based upon the consideration expected to be 48 Table of Contents transferred in the future.
In connection with a business combination, any contingent consideration is recorded at fair value on the acquisition date based upon the consideration expected to be transferred in the future.
Contingent Consideration Expense (Benefit) . For the years ended December 31, 2022, 2021 and 2020, we recorded $4.6 million, $3.2 million and $(8.0) million, respectively, of net contingent consideration expense (benefit) from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions.
Contingent Consideration Expense . For the years ended December 31, 2023, 2022 and 2021, we recorded $1.7 million, $4.6 million and $3.2 million, respectively, of net contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions.
During the years ended December 31, 2022, 2021 and 2020, we recorded obsolescence expense of approximately $9.8 million, $10.9 million, and $14.1 million, respectively, and wrote off approximately $10.2 million, $11.6 million, and $8.9 million, respectively.
During the years ended December 31, 2023, 2022 and 2021, we recorded obsolescence expense of approximately $11.5 million, $9.8 million, and $10.9 million, respectively, and wrote off approximately $11.9 million, $10.2 million, and $11.6 million, respectively.
Our cardiovascular operating income for the year ended December 31, 2022 was $80.9 million, compared to cardiovascular operating income of $53.4 million for the year ended December 31, 2021.
Our cardiovascular operating income for the year ended December 31, 2023 was $114.4 million, compared to cardiovascular operating income of $80.9 million for the year ended December 31, 2022.
Operating Expenses Selling, General and Administrative Expenses . Our selling, general and administrative (“SG&A”) expenses increased $6.8 million, or 2.0%, for the year ended December 31, 2022 compared to 2021 and increased $38.0 million, or 12.8%, for the year ended December 31, 2021 compared to 2020.
Operating Expenses Selling, General and Administrative Expenses . Our selling, general and administrative (“SG&A”) expenses increased $31.2 million, or 9.1%, for the year ended December 31, 2023 compared to 2022 and increased $6.8 million, or 2.0%, for the year ended December 31, 2022 compared to 2021.
SG&A expenses as a percentage of sales were 29.8%, 31.2% and 30.9% for the years ended December 31, 2022, 2021 and 2020, respectively.
SG&A expenses as a percentage of sales were 29.7%, 29.8% and 31.2% for the years ended December 31, 2023, 2022 and 2021, respectively.
Cash Flows At December 31, 2022 and 2021, we had cash, cash equivalents and restricted cash of $60.6 million and $67.8 million respectively, of which $49.6 million and $55.7 million, respectively, were held by foreign subsidiaries. We do not consider our foreign earnings to be permanently reinvested.
Cash Flows At December 31, 2023 and 2022, we had cash, cash equivalents and restricted cash of $589.1 million and $60.6 million respectively, of which $48.7 million and $49.6 million, respectively, were held by foreign subsidiaries. We do not consider our foreign earnings to be permanently reinvested.
Our research and development (“R&D”) expenses as a percentage of sales were 6.6%, 6.6% and 6.0% for the years ended December 31 2022, 2021, and 2020, respectively. R&D expenses increased by $4.3 million or 6.0% to $75.5 million for the year ended December 31, 2022, compared to $71.2 million in 2021.
Research and Development Expenses . Our research and development (“R&D”) expenses as a percentage of sales were 6.6%, 6.6% and 6.6% for the years ended December 31 2023, 2022, and 2021, respectively. R&D expenses increased by $7.2 million or 9.6% to $82.7 million for the year ended December 31, 2023, compared to $75.5 million in 2022.
Cash flows provided by operating activities. We generated cash from operating activities of $114.3 million, $147.2 million and $165.3 million during the years ended December 31, 2022, 2021 and 2020, respectively. Net cash provided by operating activities decreased $32.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cash flows provided by operating activities. We generated cash from operating activities of $145.2 million, $114.3 million and $147.2 million during the years ended December 31, 2023, 2022 and 2021, respectively. Net cash provided by operating activities increased $30.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Foreign currency exchange rate fluctuations, calculated by using the applicable average foreign exchange rates for the prior year decreased sales (2.2)% for the year ended December 31, 2022 compared to 2021 and increased sales 1.1% for the year ended December 31, 2021 compared to 2020.
Dollar. Foreign currency exchange rate fluctuations, calculated by using the applicable average foreign exchange rates for the prior year decreased sales (0.5)% for the year ended December 31, 2023 compared to 2022 and decreased sales (2.2)% for the year ended December 31, 2022 compared to 2021.
Gross Profit Our gross profit as a percentage of sales was 45.1%, 45.2%, and 41.6% for the years ended December 31, 2022, 2021 and 2020, respectively.
Gross Profit Our gross profit as a percentage of sales was 46.4%, 45.1%, and 45.2% for the years ended December 31, 2023, 2022 and 2021, respectively.
We currently believe that our existing cash balances, anticipated future cash flows from operations and borrowings under the Third Amended Credit Agreement will be adequate to fund our current and currently planned future operations for the next twelve months and the foreseeable future.
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.
This increase was driven primarily by sales of our intervention, cardiac rhythm management/electrophysiology (“CRM/EP”), and angiography products, partially offset by a decrease in sales of our fluid management products. (c) OEM products, which increased by $21.5 million, or 17.4% from the corresponding period of 2021.
(b) Cardiac intervention products, which increased by $22.5 million, or 7.0%, from the corresponding period of 2021. This increase was driven primarily by sales of our intervention, CRM/EP, and angiography products, partially offset by a decrease in sales of our fluid management products. (c) OEM products, which increased by $21.5 million, or 17.4% from the corresponding period of 2021.
We used cash in investing activities of $57.4 million, $37.2 million, and $58.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. We invested in capital expenditures for property and equipment of $45.0 million, $27.9 million, and $46.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash flows used in investing activities. We used cash in investing activities of $175.3 million, $57.4 million, and $37.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. We invested in capital expenditures for property and equipment of $34.3 million, $45.0 million, and $27.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Capital expenditures in each period were primarily related to investment in property and equipment to support development and production of our products. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products.
Capital expenditures in each period were primarily related to investment in property and equipment to support development and production of our products. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately $50 to $60 million in 2024 for property and equipment.
Sales for the year ended December 31, 2021 were favorably affected by increased sales of: (a) Peripheral intervention products, which increased by $63.5 million, or 18.6%, from the corresponding period of 2020. This increase was driven primarily by sales of our radar localization, embolotherapy, drainage, biopsy, angiography, access and intervention products .
Sales for the year ended December 31, 2022 were favorably affected by increased sales of: (a) Peripheral intervention products, which increased by $34.7 million, or 8.6%, from the corresponding period of 2021. This increase was driven primarily by sales of our access , embolotherapy, and radar localization products .
During the years ended December 31, 2022, 2021 and 2020 we recorded total impairment charges associated with intangible assets in our cardiovascular segment of $1.7 million, $1.6 million, and $28.7 million, respectively. These expenses are reflected within impairment charges in our consolidated statements of income (loss).
During the years ended December 31, 2022 and 2021, we recorded total impairment charges associated with intangible assets in our cardiovascular segment of $1.7 million and $1.6 million, respectively. We did not have any impairments for the year ended December 31, 2023. These expenses are reflected within impairment charges in our consolidated statements of income.
Significant changes in operating assets and liabilities affecting cash flows during these years included: ● Net income was $74.5 million and $48.5 million for the years ended December 31, 2022 and 2021, respectively.
Net cash provided by operating activities decreased $32.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. Significant changes in operating assets and liabilities affecting cash flows during these years included: ● Net income was $74.5 million and $48.5 million for the years ended December 31, 2022 and 2021, respectively.
Significant increases or decreases in our estimates could result in changes to the estimated fair value of our contingent consideration liability, as well as the result of changes in the timing and amount of revenue estimates and changes in the discount rate or periods.
Significant increases or decreases in our estimates could result in changes to the estimated fair value of our contingent consideration liability, as well as the result of changes in the timing and amount of revenue estimates and changes in the discount rate or periods. Our revenue milestones for the acquisition of Brightwater Medical, Inc. includes payment thresholds.
Effective Tax Rate Our provision for income taxes for the years ended December 31, 2022, 2021 and 2020 was a tax expense (benefit) of $8.1 million, $5.5 million and $(3.4) million, respectively, which resulted in an effective income tax rate of 9.8%, 10.1%, and 25.6%, respectively.
Effective Tax Rate Our provision for income taxes for the years ended December 31, 2023, 2022 and 2021 was a tax expense of $17.7 million, $8.1 million and $5.5 million, respectively, which resulted in an effective income tax rate of 15.8%, 9.8%, and 10.1%, respectively.
See Note 8 and Note 9 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding the Third Amended Credit Agreement, our long-term debt and our interest rate swaps.
See Note 8 and Note 9 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding the Fourth Amended Credit Agreement, Convertible Notes, and our interest rate swap.
Our cardiovascular sales for the year ended December 31, 2022 were $1.118 billion, up 7.2%, when compared to the year ended December 31, 2021 of $1.043 billion. Sales for the year ended December 31, 2022 were favorably affected by increased sales of: (a) Peripheral intervention products, which increased by $34.7 million, or 8.6%, from the corresponding period of 2021.
Our cardiovascular sales for the year ended December 31, 2023 were $1.221 billion, up 9.2%, when compared to the year ended December 31, 2022 of $1.118 billion. Sales for the year ended December 31, 2023 were favorably affected by increased sales of: (a) Peripheral intervention products, which increased by $62.4 million, or 14.2%, from the corresponding period of 2022.
Gross profit as a percentage of sales was 45.1% for the year ended December 31, 2022 as compared to 45.2% for the year ended December 31, 2021. Net income for the year ended December 31, 2022 was $74.5 million, or $1.29 per share, as compared to $48.5 million, or $0.84 per share, for the year ended December 31, 2021.
Gross profit as a percentage of sales was 46.4% for the year ended December 31, 2023 as compared to 45.1% for the year ended December 31, 2022. Net income for the year ended December 31, 2023 was $94.4 million, or $1.62 per share, as compared to $74.5 million, or $1.29 per share, for the year ended December 31, 2022.
The foregoing increase in sales for the year ended December 31, 2022 was partially offset by decreased sales of: 40 Table of Contents (d) Custom procedural solutions products, which decreased by $(3.7) million, or (1.9)% from the corresponding period of 2021.
The foregoing increase in sales for the year ended December 31, 2022 was partially offset by decreased sales of: (d) Custom procedural solutions products, which decreased by $(3.7) million, or (1.9)% from the corresponding period of 2021. This decrease was driven primarily by decreased sales of our critical care products , offset partially by increased sales of trays .
The increase in our domestic sales in 2022 was driven primarily by our U.S. direct, sensors and OEM businesses. U.S. sales for the year ended December 31, 2021 were $608.9 million, or 56.7% of net sales, up 10.7% when compared to 2020. The increase in our domestic sales in 2021 was driven primarily by our U.S. direct and OEM businesses.
The increase in our domestic sales in 2023 was driven primarily by our U.S. direct, OEM and oncology businesses. U.S. sales for the year ended December 31, 2022 were $650.6 million, or 56.5% of net sales, up 6.8% when compared to 2021.
As of December 31, 2022, we had outstanding borrowings of $198.2 million and issued letter of credit guarantees of $3.2 million under the Third Amended Credit Agreement, with additional available borrowings of approximately $523 million, based on the leverage ratio required pursuant to the Third Amended Credit Agreement.
As of December 31, 2023, we had outstanding borrowings of $846.6 million and issued letter of credit guarantees of $2.7 million, with additional available borrowings of approximately $626 million under the Fourth Amended Credit Agreement, based on the leverage ratio required pursuant to the Fourth Amended Credit Agreement.
The increase in our international sales during 2022 was primarily a result of higher sales 41 Table of Contents in APAC, which increased $13.3 million or 5.9%, higher sales in EMEA, which increased $11.4 million or 5.5%, and higher rest of world sales which increased $9.9 million or 30.8%, compared to the corresponding period of 2021.
The increase in our international sales during 2022 was primarily a result of higher sales in APAC, which increased $13.3 million or 5.9%, higher sales in EMEA, which increased $11.4 million or 5.5%, and higher rest of world sales which increased $9.9 million or 30.8%, compared to the corresponding period of 2021. 40 Table of Contents Our international sales are subject to foreign currency exchange rate fluctuations between the natural currency of a foreign country and the U.S.
Listed below are sales by geography for the years ended December 31, 2022, 2021, and 2020 (in thousands, other than percentage changes): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change 2022 % Change 2021 % Change 2020 United States ​ 6.8 % ​ 650,559 ​ 10.7 % ​ 608,878 ​ (4.5) % ​ 550,061 International ​ 7.4 % ​ 500,422 ​ 12.6 % ​ 465,873 ​ (1.3) % ​ 413,814 Total 7.1 % $ 1,150,981 11.5 % $ 1,074,751 (3.1) % $ 963,875 ​ United States Sales: U.S. sales for the year ended December 31, 2022 were $650.6 million, or 56.5% of net sales, up 6.8% when compared to 2021.
Geographic Sales Listed below are sales by geography for the years ended December 31, 2023, 2022, and 2021 (in thousands, other than percentage changes): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change 2023 % Change 2022 % Change 2021 United States ​ 11.7 % ​ 726,989 ​ 6.8 % ​ 650,559 ​ 10.7 % ​ 608,878 International ​ 6.0 % ​ 530,377 ​ 7.4 % ​ 500,422 ​ 12.6 % ​ 465,873 Total 9.2 % $ 1,257,366 7.1 % $ 1,150,981 11.5 % $ 1,074,751 ​ United States Sales: U.S. sales for the year ended December 31, 2023 were $727.0 million, or 57.8% of net sales, up 11.7% when compared to 2022.
Cash used in financing activities for the years ended December 31, 2022, 2021 and 2020 was $60.3 million, $98.4 million, and $95.7 million, respectively.
Cash flows provided by (used in) financing activities. Cash provided by (used in) financing activities for the years ended December 31, 2023, 2022 and 2021 was $559.3 million, $(60.3) million, and $(98.4) million, respectively.
Net Income (Loss) Our net income (loss) for the years ended December 31, 2022, 2021 and 2020 was $74.5 million, $48.5 million, and $(9.8) million, respectively.
Net Income Our net income for the years ended December 31, 2023, 2022 and 2021 was $94.4 million, $74.5 million, and $48.5 million, respectively.
The increase in our international sales during 2021 was primarily a result of higher sales in APAC, which increased 12.8% or $25.9 million, higher sales in EMEA, which increased 11.8% or $21.7 million, and higher rest of world sales which increased 16.2% or $4.5 million, compared to the corresponding period of 2020.
The increase in our international sales during 2023 was primarily a result of higher sales in EMEA, which increased $18.0 million or 8.3%, higher rest of world sales which increased $7.0 million or 16.6%, and higher sales in APAC, which increased $4.9 million or 2.1%, compared to the corresponding period of 2022.
We anticipate that we will spend approximately $55 to $60 million in 2023 for property and equipment. 46 Table of Contents ​ Cash outflows invested in acquisitions for the year ended December 31, 2022 were $8.3 million and were primarily related to our $3.0 million upfront payment in our purchase of Restore Endosystems, our $2.5 million payment in our purchase of BioTrace Medical, Inc., and our additional equity investment in FluidX Medical Technology, Inc.
Cash outflows invested in acquisitions for the year ended December 31, 2022 were $8.3 million and were primarily related to our $3.0 million upfront payment in our purchase of Restore Endosystems, our $2.5 million payment in our purchase of BioTrace Medical, Inc., and our additional equity investment in FluidX Medical Technology, Inc. (“Fluidx”) of $1.4 million.
This increase was driven primarily by sales of our access, embolotherapy, and radar localization products. (b) Cardiac intervention products, which increased by $22.5 million, or 7.0%, from the corresponding period of 2021.
This increase was driven primarily by sales of our access, drainage, radar localization, and biopsy products. (b) Cardiac intervention products, which increased by $15.3 million, or 4.4%, from the corresponding period of 2022.
Overview We design, develop, manufacture and market medical products for interventional and diagnostic procedures. For financial reporting purposes, we report our operations in two operating segments: cardiovascular and endoscopy.
Overview We design, develop, manufacture, market and sell medical products for interventional and diagnostic procedures. For financial reporting purposes, we report our operations in two operating segments: cardiovascular and endoscopy. Our cardiovascular segment consists of four product categories: peripheral intervention, cardiac intervention, custom procedural solutions, and OEM.
Certain of our business combinations involve the potential for the payment of future contingent consideration, generally based on a percentage of future product sales or upon attaining specified future revenue or other relevant milestones.
Contingent consideration is an obligation by the buyer to transfer additional assets or equity interests to the former owner upon reaching certain performance targets. Certain of our business combinations involve the potential for the payment of future contingent consideration, generally based on a percentage of future product sales or upon attaining specified future revenue or other relevant milestones.
Significant changes in operating assets and liabilities affecting cash flows during these years included: ​ ● Net income (loss) was $48.5 million and $(9.8) million for the years ended December 31, 2021 and 2020, respectively.
Significant changes in operating assets and liabilities affecting cash flows during these years included: ● Net income was $94.4 million and $74.5 million for the years ended December 31, 2023 and 2022, respectively. ● Cash used for inventories was $(32.1) million and $(47.9) million for the years ended December 31, 2023 and 2022, respectively.
Our endoscopy operating income for the year ended December 31, 2021 was $7.5 million, compared to operating income of $5.5 million for the year ended December 31, 2020. This increase in endoscopy operating income relative to 2020 was primarily due to higher sales and increased gross margin percentage, partially offset by increased labor-related costs.
Endoscopy Operating Income. Our endoscopy operating income for the year ended December 31, 2023 was $9.5 million, compared to operating income of $6.6 million for the year ended December 31, 2022. This increase in endoscopy operating income relative to 2022 was primarily due to higher sales and gross profit, partially offset by higher SG&A expenses.
Our cardiovascular segment consists of cardiology and radiology devices, which assist in diagnosing and treating coronary arterial disease, peripheral vascular disease and other non-vascular diseases and includes embolotherapeutic, cardiac rhythm management, electrophysiology, critical care, breast cancer localization and guidance, biopsy, interventional oncology and spine devices.
Within these product categories, we sell a variety of products, including cardiology and radiology devices (which assist in diagnosing and treating coronary arterial disease, peripheral vascular disease and other nonvascular diseases), as well as embolotherapeutic, cardiac rhythm management, electrophysiology, critical care, breast cancer localization and guidance, biopsy, and interventional oncology and spine devices.
Critical Accounting Policies and Estimates Our significant accounting policies are summarized in Note 1 to our consolidated financial statements set forth in Item 8 of this report. While these significant accounting policies affect the reporting of our financial condition and results of operations, the SEC has requested that all registrants address their most critical accounting policies.
While these significant accounting policies affect the reporting of our financial condition and results of operations, the SEC has requested that all registrants address their most critical accounting policies.
These and other similar contract features of our contingent consideration liabilities create sensitivity regarding the occurrence, timing, and amount of future payments. ​ For the years ended December 31, 2022, 2021 and 2020, we recognized contingent consideration expense (benefit) of $4.6 million, $3.2 million and $(8.0) million, respectively, from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions.
For the years ended December 31, 2023, 2022 and 2021, we recognized contingent consideration expense of $1.7 million, $4.6 million and $3.2 million, respectively, from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions.
The increase in net income for 2022, when compared to 2021, was primarily related to higher sales, decreased legal settlement costs primarily due to the $10.0 million settlement in 2021 in connection with an agreement in principle to settle a securities class action lawsuit, and decreased impairment charges ($2.2 million in 2022 compared to $4.3 million in 2021); partially offset by higher SG&A expenses due to higher labor-related and travel costs , as well as increased contingent consideration expense of $4.6 million in 2022 compared to $3.2 million in 2021.
The increase in net income for 2022, when compared to 2021, was primarily related to higher sales, decreased legal settlement costs primarily due to the $10.0 million settlement in 2021 in connection with an agreement in principle to settle a securities class action lawsuit, and decreased impairment charges ($2.2 million in 2022 compared to $4.3 million in 2021); partially offset by higher SG&A expenses due to higher labor-related and travel costs , as well as increased contingent consideration expense of $4.6 million in 2022 compared to $3.2 million in 2021 . 43 Table of Contents Liquidity and Capital Resources Capital Commitments and Contractual Obligations Our most significant contractual obligations as of December 31, 2023 included total long-term debt obligations of $846.6 million, of which $0.0 million is recorded in current liabilities, interest payments on this debt, contingent consideration liabilities of $3.4 million, of which $0.4 million is recorded in current liabilities, and operating lease liabilities of $68.3 million, of which $12.1 million is recorded in current liabilities.
(c) OEM products, which increased by $13.8 million, or 12.5% from the corresponding period of 2020. This increase was driven primarily by sales of our CRM/EP, angiography products and kits.
This increase was driven primarily by increased sales of our kits and critical care products , offset partially by decreased sales of trays. (d) OEM products, which increased by $19.5 million, or 13.5% from the corresponding period of 2022.
Changes in the fair value of our contingent consideration liabilities were primarily attributable to changes in anticipated sales growth in the acquired products and the anticipated timing of milestone payments. See Note 15 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding our contingent liabilities. ​
Changes in the fair value of our contingent consideration liabilities were primarily attributable to changes in anticipated sales growth in the acquired products and the anticipated timing of milestone payments.
In the event we pursue and complete significant transactions or acquisitions in the future, additional funds will likely be required to meet our strategic needs, which may require us to raise additional funds in the debt or equity markets.
In the event we pursue and complete significant transactions or acquisitions in the future, additional funds may be required to meet our strategic needs, which may require us to raise additional funds in the debt or equity markets. 45 Table of Contents Critical Accounting Policies and Estimates Our significant accounting policies are summarized in Note 1 to our consolidated financial statements set forth in Item 8 of this report.
The decrease in the effective income tax rate for 2021 compared to 2020 was primarily the result of a change in the jurisdictional mix of earnings, additional benefit from stock-based compensation awards, as well as more foreign tax credits being utilized.
The increase in the effective income tax rate for 2023 compared to 2022 was primarily the result of decreased benefit from items such as stock-based compensation, the foreign-derived intangible income (FDII) deduction, as well as the foreign tax credits being utilized.
This analysis requires similar significant judgments as those discussed above regarding goodwill. In-process technology intangible assets, which are not subject to amortization until projects reach commercialization, are assessed for impairment at least annually and more frequently if events occur that would indicate a potential reduction in the fair value of the assets below their carrying value.
In-process technology intangible assets, which are not subject to amortization until projects reach commercialization, are assessed for impairment at least annually and more frequently if events occur that would indicate a potential reduction in the fair value of the assets below their carrying value. 46 Table of Contents During the years ended December 31, 2022 and 2021, we identified indicators of impairment associated with certain acquired intangible assets within the asset groups based on our qualitative assessment.
This decrease was driven primarily by decreased sales of our critical care products , offset partially by increased sales of trays. Our cardiovascular sales for the year ended December 31, 2021 were $1.043 billion, up 11.7%, when compared to the year ended December 31, 2020 of $934.2 million.
This increase was driven primarily by sales of our CRM/EP, angiography, intervention and coating products as well as our kits, partially offset by a decrease in sales of our fluid management products. 39 Table of Contents Our cardiovascular sales for the year ended December 31, 2022 were $1.118 billion, up 7.2%, when compared to the year ended December 31, 2021 of $1.043 billion.
We incurred $0.3 million for in-process research and development associated with various asset acquisitions during the year ended December 31, 2020. 43 Table of Contents Operating Income (Loss) Our operating profit by operating segment for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income (Loss) ​ 2022 2021 2020 Cardiovascular ​ $ 80,946 ​ $ 53,415 ​ $ (7,042) Endoscopy ​ 6,617 ​ 7,501 ​ 5,480 Total operating income (loss) ​ $ 87,563 ​ $ 60,916 ​ $ (1,562) ​ Cardiovascular Operating Income (Loss).
Operating Income Our operating profit by operating segment for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ 2023 2022 2021 Cardiovascular ​ $ 114,440 ​ $ 80,946 ​ $ 53,415 Endoscopy ​ 9,504 ​ 6,617 ​ 7,501 Total operating income ​ $ 123,944 ​ $ 87,563 ​ $ 60,916 ​ Cardiovascular Operating Income.
Our endoscopy sales for the year ended December 31, 2021 were $31.5 million, up 6.2%, when compared to sales for the corresponding period in 2020 of $29.7 million. Sales for the year ended December 31, 2021 were favorably affected by increased sales of our Elation Balloon Dilator and our EndoMAXX fully covered esophageal stent .
Sales for the year ended December 31, 2023 were favorably affected by increased sales of our EndoMAXX fully covered esophageal stent, Elation Balloon Dilator, and AERO Mini tracheobronchial stent, partially offset by a decrease in sales of our probes.
The primary factors driving impairment of certain intangible assets were planned closure and restructuring activities and uncertainty about future product development and commercialization associated with certain acquired technologies, due in part to the economic impacts of the COVID-19 pandemic.
The primary factors driving impairment of certain intangible assets were planned closure and restructuring activities and uncertainty about future product development and commercialization associated with certain acquired technologies. See Note 5 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding impairments of intangible assets. Contingent Consideration.
The increase in gross profit as a percentage of sales for 2021, as compared to 2020, was primarily due to decreased amortization expense associated with acquisitions ($42.5 million in 2021 compared to $50.7 million in 2020), changes in product mix, improvements in manufacturing variances, and decreased obsolescence expense as a percentage of sales, partially offset by higher shipping and freight costs, among other factors.
The increase in gross profit as a percentage of sales for 2023, as compared to 2022, was primarily due to increased sales combined with changes in standard costs and product mix, lower freight expenses due to focus on increasing ocean freight and lowering air shipments, partially offset by higher royalty costs associated with sales and higher intangible amortization expense as a percentage of sales associated with acquisitions.
International sales for the year ended December 31, 2021 were $465.9 million, or 43.3% of net sales, up 12.6% when compared to 2020.
Endoscopy Sales. Our endoscopy sales for the year ended December 31, 2023 were $36.8 million, up 12.4%, when compared to sales for the year ended December 31, 2022 of $32.8 million.
The increase in R&D expenses for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily related to labor-related costs, which increased due to higher bonus expense in the current-year period, in contrast to temporary salary cuts and furloughs in the prior year.
The increase in R&D expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily related to labor-related costs consistent with an increase in headcount and an increase in regulatory expense and costs for clinical trials.
Our interest rate as of December 31, 2021 was a fixed rate of 2.71% on $75 million as a result of an interest rate swap and a variable floating rate of 1.10% on $168.1 million. The foregoing fixed rates are exclusive of potential future changes in the applicable margin.
Our interest rate as of December 31, 2023 was a fixed rate of 3.0% on our Convertible Notes, a fixed rate of 3.39% on $75 million as a result of an interest rate swap, and a variable floating rate of 7.21% on $24.1 million.
See Note 5 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding impairments of intangible assets. Contingent Consideration. Contingent consideration is an obligation by the buyer to transfer additional assets or equity interests to the former owner upon reaching certain performance targets.
See Note 15 to our consolidated financial statements set forth in Item 8 of this report for additional details regarding our contingent liabilities. ​ ​ ​ ​ 47 Table of Contents
We also incurred increased outside service and consulting costs due to higher costs from clinical trials and the implementation of the MDR in the European Union. 42 Table of Contents R&D expenses increased by $13.7 million or 23.8% to $71.2 million for the year ended December 31, 2021, compared to $57.5 million for the year ended December 31, 2020.
We also incurred increased outside service and consulting costs due to higher costs from clinical trials and the implementation of the MDR in the E.U. 41 Table of Contents Legal Settlement .
This expense includes $18.25 million of settlement related costs, net of $8.2 million of insurance proceeds . For the year ended December 31, 2020, w e recorded $18.7 million of expense in connection with a settlement agreement with the United States Department of Justice (“ DOJ”) to resolve the DOJ’s investigation of certain marketing and promotional practices. Impairment Charges .
This expense includes $18.25 million of settlement related costs, net of $8.2 million of insurance proceeds . Impairment Charges . For the year ended December 21, 2023, we recorded impairment charges of $270 thousand due to the acquisition and subsequent write-off of our equity investment in Bluegrass Vascular Technologies, Inc. (“Bluegrass”).
For the year ended December 31, 2022, we reported sales of $1.151 billion, up $76.2 million or 7.1%, compared to 2021 sales of $1.075 billion.
Our endoscopy segment consists of gastroenterology and pulmonology devices which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures caused by malignant tumors. For the year ended December 31, 2023, we reported sales of $1.257 billion, up $106.4 million or 9.2%, compared to 2022 sales of $1.151 billion.
(b) Cardiac intervention products, which increased by $41.0 million, or 14.6%, from the corresponding period of 2020. This increase was driven primarily by sales of our intervention, fluid management (including our Medallion Syringes, which saw increased demand due to COVID-19 vaccination efforts) and angiography products.
This increase was driven primarily by sales of our access, hemostasis, angiography, and cardiac rhythm management/electrophysiology (“CRM/EP”) products, partially offset by a decrease in sales of our intervention products. (c) Custom procedural solutions products, which increased by $5.1 million, or 2.7% from the corresponding period of 2022.
This increase in cardiovascular operating income was primarily related to higher sales and increased gross margin percentage, decreased legal settlement costs ($10 million in 2021, compared to $18.7 million in 2020) and decreased impairment charges within our cardiovascular operating segment ($4.3 million in 2021 compared to $36.5 million in 2020), partially offset by increased labor-related costs, approximately $6 million of contract termination costs to renegotiate certain terms of our share purchase agreement with IntelliMedical, increased corporate transformation costs, including consulting charges, in connection with our Foundations for Growth program and increased contingent consideration ($3.2 million of expense in 2021, compared to a benefit of $(8.0) million in 2020).
This increase in cardiovascular operating income was primarily related to higher sales and gross profit, decreased impairment charges ($270 thousand in 2023 compared to $2.2 million in 2022), decreased acquired in-process research and development charges, and decreased contingent consideration expense ($1.7 million in 2023 compared to $4.6 million in 2022), partially offset by higher SG&A and R&D expenses. 42 Table of Contents Our cardiovascular operating income for the year ended December 31, 2022 was $80.9 million, compared to cardiovascular operating income of $53.4 million for the year ended December 31, 2021.
The decrease in other expense for 2021 compared to 2020 was principally the result of decreased interest expense due to lower average debt balances and a lower average interest rate during 2021 partially offset by a gain of $0.5 million on the sale of the assets associated with our Hypotube™ product line in 2020 .
The increase in other expense for 2023 compared to 2022 was principally the result of an increase in interest expense associated with increased borrowings under our Credit Agreement, issuance of convertible debt and rising interest rates, partially offset by an increase in interest income associated with an increase in cash and cash equivalents.
Removed
Our endoscopy segment consists of gastroenterology and pulmonology devices which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures caused by malignant tumors. Within those two operating segments, we offer products focused in five core product categories: peripheral intervention, cardiac intervention, custom procedural solutions, OEM and endoscopy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−2 removed3 unchanged
Biggest changeSee Note 9 to our consolidated financial statements set forth in Item 8 of this report for additional discussion of our foreign currency forward contracts. 49 Table of Contents Interest Rate Risk As discussed in Note 8 to our consolidated financial statements set forth in Item 8 of this report, as of December 31, 2022, we had outstanding borrowings of $198.2 million under the Third Amended Credit Agreement.
Biggest changeInterest Rate Risk As discussed in Note 8 to our consolidated financial statements set forth in Item 8 of this report, as of December 31, 2023, we had outstanding borrowings of $99.1 million under the Fourth Amended Credit Agreement. Accordingly, our earnings and after-tax cash flow are affected by changes in interest rates.
A sensitivity analysis of changes in the fair value of all currency exchange rate derivative contracts at December 31, 2022 and 2021 indicates that, if the U.S.
A sensitivity analysis of changes in the fair value of all currency exchange rate derivative contracts at December 31, 2023 and 2022 indicates that, if the U.S.
Excluding the amount that is subject to a fixed rate under the interest rate swap and assuming the current level of borrowings remained the same, it is estimated that our interest expense and income before income taxes would change by approximately $1.2 million annually for each one percentage point change in the average interest rate under these borrowings.
Excluding the amount that is subject to a fixed rate under the interest rate swap and assuming the current level of borrowings remained the same, it is estimated that our interest expense and income before income taxes would change by approximately $0.2 million annually for each one percentage point change in the average interest rate under these borrowings. 48 Table of Contents ​
As of December 31, 2022 and 2021, we had entered into foreign currency forward contracts, which were not designated as hedging instruments, related to those balance sheet accounts with aggregate notional amounts of $92.4 million and $86.0 million, respectively.
As of December 31, 2023 and 2022, we had entered into foreign currency forward contracts, which were not designated as hedging instruments, related to those balance sheet accounts with aggregate notional amounts of $108.4 million and $92.4 million, respectively.
Dollar strengthened or weakened by 10% against all currencies, it would have the following impact on the fair value of these contracts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 10% Strengthening ​ $ 4,660 ​ $ 3,470 10% Weakening ​ $ (4,660) ​ $ (3,470) ​ Gains or losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying hedged transaction or net exposure.
Dollar strengthened or weakened by 10% against all currencies, it would have the following impact on the fair value of these contracts (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 10% Strengthening ​ $ 7,264 ​ $ 4,660 10% Weakening ​ $ (7,264) ​ $ (4,660) ​ Gains or losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying hedged transaction or net exposure.
We forecast our net exposure related to sales and expenses denominated in foreign currencies. As of December 31, 2022 and 2021, we had entered into foreign currency forward contracts, which qualified as cash flow hedges, with aggregate notional amounts of $87.8 million and $123.0 million, respectively.
We forecast our net exposure related to sales and expenses denominated in foreign currencies. As of December 31, 2023 and 2022, we had entered into foreign currency forward contracts, which qualified as cash flow hedges, with aggregate notional amounts of $141.1 million and $87.8 million, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Currency Exchange Rate Risk Our consolidated financial statements are denominated in, and our principal currency is, the U.S. Dollar. For the year ended December 31, 2022, a portion of our net sales ($394.1 million, representing 34.2% of our aggregate net sales), was attributable to sales that were denominated in foreign currencies.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Currency Exchange Rate Risk Our consolidated financial statements are denominated in, and our principal currency is, the U.S. Dollar. For the year ended December 31, 2023, a portion of our net sales ($423.4 million, representing 33.7% of our aggregate net sales), was attributable to sales that were denominated in foreign currencies.
This interest rate swap is intended to reduce our exposure to interest rate fluctuations and was not entered into for speculative purposes.
Under the interest rate swap agreement we fixed the one-month SOFR rate on that portion of our borrowings under the Fourth Amended Credit Agreement at 1.64% for the period from June 1, 2023 to July 31, 2024. This interest rate swap is intended to reduce our exposure to interest rate fluctuations and was not entered into for speculative purposes.
Accordingly, our earnings and after-tax cash flow are affected by changes in interest rates. On December 23, 2019, we entered into a pay-fixed, receive-variable interest rate swap with Wells Fargo Bank, with a notional amount of $75 million, to fix the one-month LIBOR rate at 1.71% for the period from July 6, 2021 to July 31, 2024.
On December 23, 2019, we entered into a pay-fixed, receive-variable interest rate swap with Wells Fargo Bank, with a notional amount of $75 million. In June 2023, certain terms under the agreement were amended to reflect the transition from LIBOR to SOFR, an alternative reference rate.
Removed
These offsetting gains and losses are not reflected above.
Added
These offsetting gains and losses are not reflected above. See Note 9 to our consolidated financial statements set forth in Item 8 of this report for additional discussion of our foreign currency forward contracts.
Removed
Certain of the interest rates applicable to our Third Amended Credit Agreement and to hedging instruments we have purchased to offset interest rate risk under our Third Amended Credit Agreement, are LIBOR-based. We anticipate replacement rates will be identified, as provided for in our Third Amended Credit Agreement, as LIBOR-based rates become unavailable. 50 Table of Contents ​

Other MMSI 10-K year-over-year comparisons