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What changed in CONMED Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CONMED Corp's 2023 and 2024 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 2024 report.

+198 added−187 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-28)

Top changes in CONMED Corp's 2024 10-K

198 paragraphs added · 187 removed · 151 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also recognize that representation of diversity in the workforce is not enough to have the impact desired, so we encourage inclusion and belonging in addition to representation. Development CONMED recognizes that development is most effective when customized to an employee’s unique experiences and interests.
Biggest changeWe value individual strengths and we believe that hiring and retaining employees of all different backgrounds and experiences permits us to better serve our customers, shareholders and other stakeholders. We also recognize that representation of diversity in the workforce is not enough to have the impact desired, so we encourage inclusion and belonging in addition to representation.
We compete with Smith & Nephew, plc; Arthrex, Inc.; Stryker Corporation; Johnson & Johnson: DePuy Mitek, Inc.; Zimmer Biomet, Inc.; Paragon 28 and Treace Medical Concepts. We also provide our customers with a comprehensive line of battery-powered, autoclavable, large and small bone power tool systems for use in orthopedic, arthroscopic, oral/maxillofacial, podiatric, spinal and cardiothoracic surgeries.
We compete with Smith & Nephew, plc; Arthrex, Inc.; Stryker Corporation; Johnson & Johnson: DePuy Mitek, Inc.; Zimmer Biomet, Inc.; Paragon 28, Inc. and Treace Medical Concepts, Inc. We also provide our customers with a comprehensive line of battery-powered, autoclavable, large and small bone power tool systems for use in orthopedic, arthroscopic, oral/maxillofacial, podiatric, spinal and cardiothoracic surgeries.
Our endomechanical products offer a full line of instruments, including the Anchor 1 line of tissue retrieval bags, trocars, suction irrigation devices, graspers, scissors and dissectors, used in minimally invasive surgery. Our competition includes Medtronic plc; Johnson & Johnson: Ethicon Endo-Surgery, Inc.; Stryker Endoscopy, Olympus, ERBE Elektromedizin GmbH; and Applied Medical Resources Corporation.
Our endomechanical products offer a full line of instruments, including the Anchor 1 line of tissue retrieval bags, trocars, suction irrigation devices, graspers, scissors and dissectors, used in minimally invasive surgery. Our competition includes Medtronic plc; Johnson & Johnson: Ethicon Endo-Surgery, Inc.; Stryker Endoscopy; Olympus Corporation; ERBE Elektromedizin GmbH; and Applied Medical Resources Corporation.
Patient monitoring includes ECG electrodes, EEG electrodes and cardiac defibrillation pads. Our competition includes Boston 1 Anchor is a trademark of the Anchor Products Company, Addison, Illinois. 4 Scientific Corporation - Endoscopy; Cook Medical, Inc.; Merit Medical Endotek; Olympus, Inc.; STERIS Corporation - U.S. Endoscopy, Cantel Medical- Medivators, Inc., Cardinal and 3M Company.
Patient monitoring includes ECG electrodes, EEG electrodes and cardiac defibrillation pads. Our competition includes Boston 1 Anchor is a trademark of the Anchor Products Company, Addison, Illinois. 4 Scientific Corporation - Endoscopy; Cook Medical, Inc.; Merit Medical Endotek; Olympus Corporation; STERIS Corporation - U.S. Endoscopy; Cantel Medical- Medivators, Inc.; Cardinal Health Inc. and 3M Company.
Principal international markets for our products include Europe, Latin America, Canada and the Asia/Pacific Rim. • Active Participation in the Medical Community. We believe that excellent working relationships with physicians and others in the medical industry enable us to gain an understanding of trends and emerging opportunities.
Principal international markets for our products include Europe, Latin America, Canada and the Asia/Pacific Rim. • Active Participation in the Medical Community. We believe that working relationships with physicians and others in the medical industry enable us to gain an understanding of trends and emerging opportunities.
Business Forward Looking Statements This Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“Form 10-K”) contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to CONMED Corporation (“CONMED”, the “Company”, “we” or “us” — references to “CONMED”, the “Company”, “we” or “us” shall be deemed to include our direct and indirect subsidiaries unless the context otherwise requires) which are based on the beliefs of our management, as well as assumptions made by and information currently available to our management.
Business Forward Looking Statements This Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“Form 10-K”) contains certain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to CONMED Corporation (“CONMED”, the “Company”, “we” or “us” — references to “CONMED”, the “Company”, “we” or “us” shall be deemed to include our direct and indirect subsidiaries unless the context otherwise requires) which are based on the beliefs of our management, as well as assumptions made by and information currently available to our management.
A significant portion of our U.S. sales are to customers affiliated with GPOs, IDNs and other large national or regional accounts, as well as to the Veterans Administration and other hospitals operated by the Federal government. For hospital inventory management purposes, some of our customers prefer to purchase our products through independent third-party medical product distributors.
A significant portion of our U.S. sales are to customers affiliated with GPOs, IDNs and other large national or regional accounts, as well as to the Veterans Administration and other hospitals operated by the Federal government. For hospital inventory management purposes, some of our customers prefer to purchase our products through independent third-party medical device distributors.
We distribute our products through sales subsidiaries and branches with offices located in Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Italy, Japan, Korea, the Netherlands, Poland, Spain, Sweden and the United Kingdom. In these countries, our sales are denominated in the local currency and amounted to approximately 32% of our consolidated net sales in 2023.
We distribute our products through sales subsidiaries and branches with offices located in Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Italy, Japan, Korea, the Netherlands, Poland, Spain, Sweden and the United Kingdom. In these countries, our sales are denominated in the local currency and amounted to approximately 32% of our consolidated net sales in 2024.
Marketing A significant portion of our products are distributed domestically directly to more than 6,000 hospitals, surgery centers and other healthcare institutions as well as through medical specialty distributors. We are not dependent on any single customer and no single customer accounted for more than 10% of our net sales in 2023, 2022 and 2021.
Marketing A significant portion of our products are distributed domestically directly to more than 6,000 hospitals, surgery centers and other healthcare institutions as well as through medical specialty distributors. We are not dependent on any single customer and no single customer accounted for more than 10% of our net sales in 2024, 2023 and 2022.
In May 2023, 98% of our global workforce participated in the survey, and all team members were invited to participate in subsequent team action planning sessions. During these sessions, survey results are reviewed and discussed. Additionally, the team agrees upon action items they can take to improve their engagement and make CONMED an even better place to work.
In May 2024, 98% of our global workforce participated in the survey, and all team members were invited to participate in subsequent team action planning sessions. During these sessions, survey results are reviewed and discussed. Additionally, the team agrees upon action items they can take to improve their engagement and make CONMED an even better place to work.
We conduct an annual review of our pay equity globally by role, location, and gender, and also by ethnic diversity in the U.S. If pay equity issues are identified that cannot be explained by historical performance, time in role, tenure, or other job-related factors, we address the inequity in a timely fashion.
We conduct an annual review of our pay equity globally by role, location, and gender, and also by ethnic diversity in the U.S. If pay equity issues are identified that cannot be explained by historical performance, time in role, tenure, or other job-related factors, we work to address the inequity in a timely fashion.
We have rights to intellectual property, including United States patents and foreign equivalent patents which cover a wide range of our products with expiration dates from 2024 to 2043. We own a majority of these patents and have exclusive and non-exclusive licensing rights to the remainder.
We have rights to intellectual property, including United States patents and foreign equivalent patents which cover a wide range of our products with expiration dates from 2025 to 2043. We own a majority of these patents and have exclusive and non-exclusive licensing rights to the remainder.
Following these sessions, managers meet with their teams periodically to discuss progress on agreed upon action items. Due to the commitment of our global team members, in 2023, CONMED’s global engagement average overall score increased year-over-year.
Following these sessions, managers meet with their teams periodically to discuss progress on agreed upon action items. Due to the commitment of our global team members, CONMED’s global engagement average overall score increased year-over-year.
These products are marketed under the Hall ® surgical brand name, a pioneer in power surgical tools in the United States. In powered instruments, our competition includes Stryker Corporation; Medtronic plc; Johnson & Johnson: DePuy Synthes, Inc.; and Zimmer Biomet, Inc. In 2023, approximately 76% of orthopedic surgery revenue came from single-use products that are expected to be recurring.
These products are marketed under the Hall ® surgical brand name, a pioneer in power surgical tools in the United States. In powered instruments, our competition includes Stryker Corporation; Medtronic plc; Johnson & Johnson: DePuy Synthes, Inc.; and Zimmer Biomet, Inc. In 2024, approximately 77% of orthopedic surgery revenue came from single-use products that are expected to be recurring.
Our advanced endoscopic technologies offering includes a comprehensive line of therapeutic and diagnostic products used in gastroenterology procedures which utilize flexible endoscopes, as well as patient monitoring products. In addition to these offerings, we offer a unique energy platform specifically designed for gastroenterology and pulmonology procedures. Devices include products for dilatation, hemostasis, biliary, structure management, infection prevention and patient monitoring.
Our advanced endoscopic technologies offering includes a comprehensive line of therapeutic and diagnostic products used in gastroenterology procedures which utilize flexible endoscopes, as well as patient monitoring products. In addition to these offerings, we offer a unique energy platform specifically designed for gastroenterology and pulmonology procedures. Devices include products for dilation, hemostasis, biliary, stricture management, infection prevention and patient monitoring.
In 2023, approximately 89% of general surgery revenue came from single-use products that are expected to be recurring. International Expanding our international presence is an important component of our long-term growth plan. Our products are sold in over 100 countries. International sales efforts are coordinated through local country dealers (including sub-distributors or sales agents) or through direct in-country sales.
In 2024, approximately 91% of general surgery revenue came from single-use products that are expected to be recurring. International Expanding our international presence is an important component of our long-term growth plan. Our products are sold in over 100 countries. International sales efforts are coordinated through local country dealers (including sub-distributors or sales agents) or through direct in-country sales.
In addition, we are an active sponsor of medical education both in the United States and internationally, offering training on new and innovative surgical techniques as well as other medical education programs on the use of our products. 3 Products The following table sets forth the percentage of net sales for each of our product lines during each of the three years ended December 31: Year Ended December 31, 2023 2022 2021 Orthopedic surgery 43 % 44 % 43 % General surgery 57 56 57 Consolidated net sales 100 % 100 % 100 % Net sales (in thousands) $ 1,244,744 $ 1,045,472 $ 1,010,635 Orthopedic Surgery We design, manufacture and globally distribute products which enable orthopedic surgeons to surgically address sports medicine injuries in the knee, hip, shoulder and lower extremities.
In addition, we are an active sponsor of medical education both in the United States and internationally, offering training on new and innovative surgical techniques as well as other medical education programs on the use of our products. 3 Products The following table sets forth the percentage of net sales for each of our product lines during each of the three years ended December 31: Year Ended December 31, 2024 2023 2022 Orthopedic surgery 42 % 43 % 44 % General surgery 58 57 56 Consolidated net sales 100 % 100 % 100 % Net sales (in thousands) $ 1,307,015 $ 1,244,744 $ 1,045,472 Orthopedic Surgery We design, manufacture and globally distribute products which enable orthopedic surgeons to surgically address sports medicine injuries in the knee, hip, shoulder and lower extremities.
Such factors include, among others, the following: • general economic and business conditions, including, without limitation, a potential economic downturn, supply chain challenges and constraints, including the availability and cost of materials, the effects of inflation, and increased interest rates; • compliance with and changes in regulatory requirements; • the failure of any enterprise-wide software programs or information technology systems, or potential disruption associated with updating or implementing new software programs or information technology systems; • the risk of an information security breach, including a cybersecurity breach; • pandemics and health crises, and the responses there to by governments and hospitals, which poses risks to our business, financial condition and results of operations; • the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors; • the introduction and acceptance of new products; • the ability to advance our product lines, including challenges and uncertainties inherent in product research and development, and the uncertain impact, outcome and cost of ongoing and future clinical trials and market studies; • competition; • laws and government regulations; • changes in customer preferences; • changes in technology; • cyclical customer purchasing patterns due to budgetary, staffing and other constraints; • environmental compliance risks, including lack of availability of sterilization with Ethylene Oxide (“EtO”) or other compliance costs associated with the use of EtO; • the quality of our management and business abilities and the judgment of our personnel, as well as our ability to attract, motivate, and retain employees at all levels of the Company; • the availability, terms and deployment of capital; • current and future levels of indebtedness and capital spending; • changes in foreign exchange and interest rates; • the ability to evaluate, finance and integrate acquired businesses, products and companies; • changes in business strategy; • the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues; • the ability to defend and enforce intellectual property, including the risks related to theft or compromise of intellectual property in connection with our international operations; • the risk of patent, product and other litigation as well as the cost associated with such litigation; • trade protection measures, tariffs and other border taxes, and import or export licensing requirements; • weather related events which may disrupt our operations; and • various other factors referenced in this Form 10-K. 2 See “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Item 1-Business” and “Item 1A-Risk Factors” for a further discussion of these factors.
Such factors include, among others, the following: • general economic and business conditions, including, without limitation, a potential economic downturn, supply chain challenges and constraints, including the availability and cost of materials, the effects of inflation, and increased interest rates; • compliance with and changes in regulatory requirements; • the failure of any enterprise-wide software programs or information technology systems, or potential disruption associated with updating or implementing new software programs or information technology systems; • the risk of an information security breach, including a cybersecurity breach; • pandemics and health crises, and the responses thereto by governments and hospitals; • the possibility that United States or foreign regulatory and/or administrative agencies may initiate enforcement actions against us or our distributors; • the introduction and acceptance of new products; • the ability to advance our product lines, including challenges and uncertainties inherent in product research and development, and the uncertain impact, outcome and cost of ongoing and future clinical trials and market studies; • competition; • laws and government regulations; • changes in customer preferences; • changes in technology; • cyclical customer purchasing patterns due to budgetary, staffing and other constraints; • environmental compliance risks, including lack of availability of sterilization with Ethylene Oxide (“EtO”) or other compliance costs associated with the use of EtO; • the quality of our management and business abilities and the judgment of our personnel, as well as our ability to attract, motivate, and retain employees at all levels of the Company; • the availability, terms and deployment of capital; • current and future levels of indebtedness and capital spending; • changes in foreign exchange and interest rates; • the ability to evaluate, finance and integrate acquired businesses, products and companies; • changes in business strategy; • the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues; • the ability to defend and enforce intellectual property, including the risks related to theft or compromise of intellectual property in connection with our international operations; • the risk of patent, product and other litigation as well as the cost associated with such litigation; • trade protection measures, tariffs and other border taxes, and import or export licensing requirements; • weather related events which may disrupt our operations; and • various other factors referenced in this Form 10-K.
Annual royalty expense approximated $5.3 million, $3.2 million and $2.0 million in 2023, 2022 and 2021, respectively. Amounts expended for Company research and development were approximately $52.6 million, $47.2 million and $43.6 million during 2023, 2022 and 2021, respectively. Intellectual Property Patents and other proprietary rights, in general, are important to our business.
Annual royalty expense approximated $6.8 million, $5.3 million and $3.2 million in 2024, 2023 and 2022, respectively. Amounts expended for Company research and development were approximately $54.4 million, $52.6 million and $47.2 million during 2024, 2023 and 2022, respectively. Intellectual Property Patents and other proprietary rights, in general, are important to our business.
As of December 31, 2023, we had approximately 4,000 full-time employees, including approximately 2,500 in operations and the remaining in sales, marketing, research and development and administration. We know that our people are our most important assets and crucial to our ability to deliver on our mission.
As of December 31, 2024, we had approximately 3,900 full-time employees, including approximately 2,400 in operations and the remaining in sales, marketing, research and development and administration. We know that our people are our most important assets and crucial to our ability to deliver on our mission.
In these procedures, we offer products such as BioBrace®, TruShot® with Y-Knot® All-In-One Soft Tissue Fixation System, Y-Knot® All-Suture Anchors, and Argo™ Knotless Suture Anchors which provide unique clinical solutions to orthopedic surgeons for the augmentation and repair of soft tissue injuries. In addition to implants, we offer supporting products that enable surgeons to perform minimally invasive sports medicine surgeries.
In these procedures, we offer products such as BioBrace ® , TruShot ® with Y-Knot ® All-In-One Soft Tissue Fixation System, Y-Knot ® All-Suture Anchors, and Argo™ Knotless Suture Anchors which provide unique clinical solutions to orthopedic surgeons for the augmentation and repair of soft tissue injuries.
In this spirit, CONMED employees and managers utilize various tools such as the annual performance review process and individual development plans to facilitate a specific individual’s career growth. On an annual basis, we offer a performance review workshop for employees.
Development CONMED recognizes that development is most effective when customized to an employee’s unique experiences and interests. In this spirit, CONMED employees and managers utilize various tools such as the annual performance review process and individual development plans to facilitate a specific individual’s career growth. On an annual basis, we offer a performance review workshop for employees.
The Company’s products are used by surgeons and other healthcare professionals in a variety of specialties including orthopedics, general surgery, gynecology, thoracic surgery and gastroenterology. The Company’s 4,000 employees distribute its products worldwide from three primary manufacturing locations. Our headquarters are located in Largo, Florida.
CONMED is a medical technology company that provides devices and equipment for surgical procedures. The Company’s products are used by surgeons and other healthcare professionals in a variety of specialties including orthopedics, general surgery, gynecology, thoracic surgery and gastroenterology. The Company’s 3,900 employees distribute its products worldwide from three primary manufacturing locations. Our headquarters are located in Largo, Florida.
These products include powered resection instruments as well as fluid management and visualization systems and the related single-use products which are marketed under a number of brands, including CONMED Linvatec ® , Concept ® and Shutt ® .
In addition to implants, we offer supporting products that enable surgeons to perform minimally invasive sports medicine surgeries. These products include powered resection instruments as well as fluid management and visualization systems and the related single-use products which are marketed under a number of brands, including CONMED Linvatec ® , Concept ® and Shutt ® .
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the occurrence of unanticipated events.
We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the occurrence of unanticipated events. General CONMED Corporation was incorporated under the laws of the State of New York in 1970 and became a Delaware corporation in May 2020.
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General CONMED Corporation was incorporated under the laws of the State of New York in 1970 and became a Delaware corporation in May 2020. CONMED is a medical technology company that provides devices and equipment for surgical procedures.
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See “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Item 1-Business” and “Item 1A-Risk Factors” for a further discussion of these factors. You are cautioned not to place undue reliance 2 on these forward-looking statements, which speak only as of the date hereof.
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We value individual strengths and are committed to hiring and retaining employees of all different backgrounds and experiences. Tracking representation of diversity in our workforce helps us to understand where our opportunities exist. These metrics are reviewed on a regular basis at the senior executive level and annually with the Board.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFactors which may result in delays of new product introductions or cancellation of our plans to manufacture and market new products include: • research and development delays; • capital and other financial constraints; • delays or failures in securing regulatory approvals; • the potential inability to secure clinical data demonstrating the efficacy of our products, or the inability to develop such clinical data on a timely basis, may delay, limit or preclude the adoption and market acceptance of new products we may develop; and • changes in the competitive landscape, including the emergence of alternative products or solutions which reduce or eliminate the markets for pending products. 11 Ordering patterns of our customers may change resulting in reductions in sales .
Biggest changeAdditional factors that may result in delays of new product introductions or cancellation of our plans to manufacture and market new or existing products or which may impact adoption and market acceptance of our products include: • research and development delays or failures; • capital and other financial constraints; • delays or failures in securing regulatory approvals; and • the potential inability to secure clinical data demonstrating the efficacy of our products or to develop such data on a timely basis.
Although no recall has had a material adverse effect on our business or financial condition, we cannot be certain that regulatory issues will not have a material adverse effect on our business, financial condition or results of operations in the future or that product recalls will not harm our reputation and our customer relationships.
Although no recall has had a material adverse effect on our business, financial condition or results of operations, we cannot be certain that regulatory issues will not have a material adverse effect on our business, financial condition or results of operations in the future or that product recalls will not harm our reputation and our customer relationships.
The highly competitive market for our products may create adverse pricing pressures. The market for our products is highly competitive and our customers have alternative suppliers. Many of our competitors offer a range of products in areas other than those in which we compete, which may make such competitors more attractive to 10 surgeons, hospitals, group purchasing organizations and others.
The highly competitive market for our products may create adverse pricing pressures. 10 The market for our products is highly competitive and our customers have alternative suppliers. Many of our competitors offer a range of products in areas other than those in which we compete, which may make such competitors more attractive to surgeons, hospitals, group purchasing organizations and others.
These covenants, unless waived, may prevent us from pursuing and/or securing acquisitions, significantly limit our operating and financial flexibility and limit our ability to respond to changes in our business or competitive activities. Our ability to comply with such provisions may be affected by events beyond our control.
These covenants, unless waived, may prevent us from pursuing and/or securing acquisitions, significantly limit our operating and financial flexibility and/or limit our ability to respond to changes in our business or competitive activities. Our ability to comply with such provisions may be affected by events beyond our control.
These provisions include: • the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without shareholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the requirement that a special meeting of shareholders may be called only by the board of directors, the chair of the board of directors, the president, or stockholders holding at least 25% of our outstanding stock (subject to certain procedural and informational requirements), which may delay the ability of our shareholders to force consideration of a proposal or to take action; • the procedural safeguards in place in connection with stockholder action by written consent, including a requirement that stockholders of at least 25% of our outstanding common stock request that the board of directors set a record date to determine the stockholders entitled to act by written consent; • providing indemnification and exculpation rights to our directors and officers; • advance notice procedures that shareholders must comply with in order to nominate candidates to our board of 18 directors or to propose matters to be acted upon at a shareholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; and • exclusive forum provisions, including provisions providing for the Court of Chancery of the State of Delaware as the exclusive forum for bringing certain actions.
These provisions include: • the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without shareholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the requirement that a special meeting of shareholders may be called only by the Board of Directors, the chair of the Board of Directors, the president, or stockholders holding at least 25% of our outstanding stock (subject to certain procedural and informational requirements), which may delay the ability of our shareholders to force consideration of a proposal or to take action; • the procedural safeguards in place in connection with stockholder action by written consent, including a requirement that stockholders of at least 25% of our outstanding common stock request that the Board of Directors set a record date to determine the stockholders entitled to act by written consent; • providing indemnification and exculpation rights to our directors and officers; • advance notice procedures that shareholders must comply with in order to nominate candidates to our Board of Directors or to propose matters to be acted upon at a shareholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; and • exclusive forum provisions, including provisions providing for the Court of Chancery of the State of Delaware as the exclusive forum for bringing certain actions.
The senior credit agreement contains, and future credit facilities are expected to contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to respond to changes in our business or competitive activities, or to otherwise engage in acts that may be in our long-term best interest, including restrictions on our ability to: • incur indebtedness; • allow for liens to be placed on our assets; • make investments; • engage in transactions with affiliates; • make certain restricted payments or enter into certain restrictive agreements; • enter into certain swap agreements; • change our line of business; • pay dividends or make other distributions on, or redeem or repurchase, capital stock; • consolidate, merge or sell all or substantially all of our assets; • prepay and/or modify the terms of certain indebtedness; and • pursue acquisitions.
The senior credit agreement contains, and future credit facilities are expected to contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to respond to changes in our business or competitive activities, or to otherwise engage in acts that may be in our long-term best interest, including restrictions on our ability to: • incur indebtedness; • allow for liens to be placed on our assets; • make investments; • engage in transactions with affiliates; • make certain restricted payments or enter into certain restrictive agreements; • enter into certain swap agreements; • change our line of business; • pay dividends or make other distributions on, or redeem or repurchase, capital stock; • consolidate, merge or sell all or substantially all of our assets; • prepay and/or modify the terms of certain indebtedness; and 12 • pursue acquisitions.
The interactions with domestic health care providers are subject to various federal and state laws and regulations, including the federal Anti-Kickback Statute, which prohibits entities from knowingly and willfully soliciting, offering, receiving or paying remuneration (including kickbacks, bribes or rebates) in exchange for or to induce the referral of an individual for the purchase, order, lease or recommendation of any good, item or service for which payment may be made under federal healthcare programs; and the federal civil False Claims Act, which prohibits individuals or entities from knowingly presenting or causing to be presented false or fraudulent claims for payment or knowingly using false statements to obtain payment from the federal government.
The interactions with domestic health care providers are subject to various federal and state laws and regulations, including the federal Anti-Kickback Statute, which prohibits entities from knowingly and willfully soliciting, offering, receiving or paying remuneration (including kickbacks or bribes) in exchange for or to induce the referral of an individual for the purchase, order, lease or recommendation of any good, item or service for which payment may be made under federal healthcare programs; and the federal civil False Claims Act, which prohibits individuals or entities from knowingly presenting or causing to be presented false or fraudulent claims for payment or knowingly using false statements to obtain payment from the federal government.
Our international presence exposes us to certain other inherent risks, including: • imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other payments by international subsidiaries; • imposition or increase of withholding and other taxes on remittances and other payments by international subsidiaries; • trade barriers and tariffs; 17 • compliance with economic sanctions, trade embargoes, export controls, and the customs laws and regulations of the many countries in which we operate; • political risks, including political instability; • reliance on third parties to distribute our products; • hyperinflation in certain countries outside the United States; and • imposition or increase of investment and other restrictions by foreign governments.
Our international presence exposes us to certain other inherent risks, including: • imposition of limitations on conversions of foreign currencies into dollars or remittance of dividends and other payments by international subsidiaries; • imposition or increase of withholding and other taxes on remittances and other payments by international subsidiaries; • trade barriers and tariffs; • compliance with economic sanctions, trade embargoes, export controls, and the customs laws and regulations of the many countries in which we operate; • political risks, including political instability; • reliance on third parties to distribute our products; • hyperinflation in certain countries outside the United States; and • imposition or increase of investment and other restrictions by foreign governments.
The FCPA can pose unique challenges for manufacturers that operate in foreign cultures where conduct prohibited by the FCPA may not be viewed as illegal in local jurisdictions and because, in some cases, a United States 9 manufacturer may face risks under the FCPA based on the conduct of third parties (i.e., distributors) over whom the manufacturer may not have complete control.
The FCPA can pose unique challenges for manufacturers that operate in foreign cultures where conduct prohibited by the FCPA may not be viewed as illegal in local jurisdictions and because, in some cases, a United States manufacturer may face risks under the FCPA based on the conduct of third parties (i.e., distributors) over whom the manufacturer may not have complete control.
In addition, while we are generally entitled to customary indemnification from sellers of businesses or coverage from representation and warranty insurance for any difficulties that may have arisen prior to our acquisition of each business, acquisitions may involve exposure to unknown liabilities and the amount and time for claiming under these indemnification provisions is often limited.
In addition, while we are generally entitled to customary indemnification from sellers of businesses or coverage from representation and warranty insurance for any difficulties that may have arisen prior to our acquisition of each business, 14 acquisitions may involve exposure to unknown liabilities and the amount and time for claiming under these indemnification provisions is often limited.
See “Products” in Item 1 - Business for a further discussion of these competitive forces. Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock. We have paid a quarterly dividend to our shareholders since 2012.
See “Products” in Item 1 - Business for a further discussion of these competitive forces. Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock. 18 We have paid a quarterly dividend to our shareholders since 2012.
If one or more holders elect to convert their Convertible Notes, we would be required to make cash payments to satisfy all or a portion 13 of our conversion obligation based on the conversion rate, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Notes, we would be required to make cash payments to satisfy all or a portion of our conversion obligation based on the conversion rate, which could adversely affect our liquidity.
The sales of such products may be negatively impacted if hospitals and other healthcare providers are unable to secure the financing necessary to purchase these products or otherwise defer purchases. 8 Public health crises have had, and may continue to have, an adverse effect on certain aspects of our business, results of operations, financial condition, and cash flows.
The sales of such products may be negatively impacted if hospitals and other healthcare providers are unable to secure the financing necessary to purchase these products or otherwise defer purchases. 8 Public health crises have had, and may continue to have, an adverse effect on certain aspects of our business, financial condition, or results of operations.
The nature and extent of future impacts are highly uncertain and unpredictable. We face a wide variety of risks related to public health crises, epidemics, pandemics or similar events, which could have an adverse effect on certain aspects of our business, results of operations, financial condition, and cash flows .
The nature and extent of future impacts are highly uncertain and unpredictable. We face a wide variety of risks related to public health crises, epidemics, pandemics or similar events, which could have an adverse effect on certain aspects of our business, financial condition, or results of operations .
We use a variety of raw materials in our businesses, and significant shortages, inflation or price increases could increase our operating costs and adversely impact the competitive positions of our products. Our reliance on certain suppliers and commodity markets to secure raw materials used in our products exposes us to volatility in the prices and availability of raw materials.
We use a variety of raw materials in our businesses, and our reliance on certain suppliers and commodity markets to secure raw materials used in our products exposes us to volatility in the prices and availability of raw materials. Significant shortages or inflation could increase our operating costs and adversely impact the competitive positions of our products.
We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China, Japan and Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency and those sales denominated in local currency amounted to approximately 32% of our total net sales in 2023.
We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Canada, China, Japan, and Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency and those sales denominated in local currency amounted to approximately 32% of our total net sales in 2024.
Compliance with the CCPA, the CPRA, and other state statutes, common law, or regulations designed to protect consumer, employee, or job applicant personal information could potentially require substantive technology infrastructure and process changes across many of the Company’s businesses. Other jurisdictions are also implementing or proposing a variety of data privacy laws and regulations.
Compliance with the CCPA, the CPRA, and other state statutes, common law, 15 or regulations designed to protect consumer, employee, or job applicant personal information could potentially require substantive technology infrastructure and process changes across many of our businesses. Other jurisdictions are also implementing or proposing a variety of data privacy laws and regulations.
Approximately 29% of our products when measured in terms of revenues, are sterilized by third-party sterilizers using ethylene oxide, a chemical which, when present or used in high levels or concentrations, has raised some environmental concerns in some areas within the United States, with the result that some EtO sterilization facilities have closed, or are threatened with closure, either temporarily or permanently, in connection with government enforcement actions or enhanced regulations prompted by environmental concerns.
Approximately 31% of our products when measured in terms of revenues for 2024, are sterilized by third-party sterilizers using ethylene oxide, a chemical which, when present or used in high levels or concentrations, has raised some environmental concerns in some areas within the United States, with the result that some EtO sterilization facilities have closed, or are threatened with closure, either temporarily or permanently, in connection with government enforcement actions or enhanced regulations prompted by environmental concerns.
There can be no assurance, however, that any pending inquiries will not become investigations or enforcement actions, or the costs associated with responding to such inquiries, investigations, enforcement actions or investigations relating to reports of misconduct will not have a material adverse effect on our financial condition, results of operations or cash flows.
There can be no assurance, however, that any pending inquiries will not become investigations or enforcement actions, or the costs associated with responding to such inquiries, investigations, enforcement actions or investigations relating to reports of misconduct will not have a material adverse effect on our business, financial condition or results of operations.
To the extent that these disruptions recur and/or persist over time, this could negatively impact our competitive position and our relationships with our customers and thus could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
To the extent that these disruptions recur and/or persist over time, this could negatively impact our competitive position and our relationships with our customers and thus could have a material adverse effect on our business, financial condition or results of operations.
While we have a hedging strategy involving foreign currency forward contracts for 2023, our revenues and earnings are only partially protected from foreign currency translation if the United States dollar strengthens as compared with currencies such as the Euro. Further, as of the date of this Form 10-K, we have not entered into any foreign currency forward contracts beyond 2025.
While we have a hedging strategy involving foreign currency forward contracts for 2024, our revenues and earnings are only partially protected from foreign currency translation if the United States dollar strengthens as compared with currencies such as the Euro. Further, as of the date of this Form 10-K, we have not entered into any foreign currency forward contracts beyond 2026.
Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above. We may incur substantial additional indebtedness, including secured indebtedness. As of December 31, 2023, we have $581.4 million of availability under the senior credit agreement.
Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above. We may incur substantial additional indebtedness, including secured indebtedness. As of December 31, 2024, we have $583.4 million of availability under the senior credit agreement.
The remaining 12% of sales to customers outside the United States was on an export basis and transacted in United States dollars.
The remaining 11% of sales to customers outside the United States was on an export basis and transacted in United States dollars.
The failure of any of these software systems or information technology systems to operate properly, or disruptions associated with updating or implementing new software or information technology systems, may have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.
The failure of any of these software systems or information technology systems to operate properly, or disruptions associated with updating or implementing new software or information technology systems, may have a material adverse effect on our business, financial condition or results of operations.
Our significant international operations subject us to foreign currency fluctuations and other risks associated with operating in countries outside the United States . A significant portion of our revenues, approximately 44% of 2023 consolidated net sales, were to customers outside the United States.
Our significant international operations subject us to foreign currency fluctuations and other risks associated with operating in countries outside the United States . A significant portion of our revenues, approximately 43% of 2024 consolidated net sales, were to customers outside the United States.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 8. 12 The degree to which we are leveraged could have important consequences to investors, including but not limited to the following: • a portion of our cash flow from operations must be dedicated to debt service and will not be available for operations, capital expenditures, acquisitions, dividends and other purposes; • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be limited or impaired or may be at higher interest rates; • we may be at a competitive disadvantage when compared to competitors that are less leveraged; • we may be hindered in our ability to adjust rapidly to market conditions; • our degree of leverage could make us more vulnerable in the event of a downturn in general economic conditions or other adverse circumstances applicable to us; and • our interest expense could increase if interest rates in general increase because a portion of our borrowings, including our borrowings under our credit agreement, are and will continue to be at variable rates of interest.
The degree to which we are leveraged could have important consequences to investors, including but not limited to the following: • a portion of our cash flow from operations must be dedicated to debt service and will not be available for operations, capital expenditures, acquisitions, dividends and other purposes; • our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be limited or impaired or may be at higher interest rates; • we may be at a competitive disadvantage when compared to competitors that are less leveraged; • we may be hindered in our ability to adjust rapidly to market conditions; • our degree of leverage could make us more vulnerable in the event of a downturn in general economic conditions or other adverse circumstances applicable to us; and • our interest expense could increase if interest rates in general increase because a portion of our borrowings, including our borrowings under our credit agreement, are and will continue to be at variable rates of interest.
We may not be able to generate sufficient cash to service our indebtedness and other obligations, and, our leverage and debt service requirements may require us to adopt alternative business strategies . As of December 31, 2023, we had $986.6 million of debt outstanding, representing 54% of total capitalization.
We may not be able to generate sufficient cash to service our indebtedness and other obligations, and, our leverage and debt service requirements may require us to adopt alternative business strategies . As of December 31, 2024, we had $914.6 million of debt outstanding, representing 48% of total capitalization.
We seek to attract talented and diverse new employees and retain and motivate our existing employees. If we are unable to continue to attract or retain qualified employees, including our executives, our performance, including our competitive position, could be materially and adversely affected. Item 1B. Unresolved Staff Comments None.
If we are unable to continue to attract or retain qualified employees, including our executives, our performance, including our competitive position, could be materially and adversely affected. Item 1B. Unresolved Staff Comments None.
If we are not able to comply with the QSR or industry-defined standards, we may not be able to fill customer orders and we may decide to cease production or sale of non-compliant products. Failure to produce products could affect our revenues, profit margins and could lead to loss of customers.
If we are not able to comply with the QSR or industry-defined standards, we may not be able to fill customer orders and we may decide to cease production or sale of non-compliant products. Failure to produce products could affect our business, financial condition or results of operations and could lead to loss of customers.
In addition to the QSR, many of our products are also subject to industry-defined standards. We may not be able to comply with these regulations and standards due to deficiencies in component parts or our manufacturing processes.
Our manufacturing processes and facilities are subject to FDA’s Quality System Regulations ("QSR"), and many of our products are subject to industry-defined standards. We may not be able to comply with these regulations and standards due to deficiencies in component parts or our manufacturing processes.
Our hospital and surgery center customers purchase our products in quantities sufficient to meet their anticipated demand. Likewise, our healthcare distributor customers purchase our products for ultimate resale to healthcare providers in quantities sufficient to meet the anticipated requirements of the distributors’ customers.
Ordering patterns of our customers may change resulting in reductions in sales . Our hospital and surgery center customers purchase our products in quantities sufficient to meet their anticipated demand. Likewise, our healthcare distributor customers purchase our products for ultimate resale to healthcare providers in quantities sufficient to meet the anticipated requirements of the distributors’ customers.
The increases in costs or availability of raw materials may be exacerbated as a result of the conflicts in Ukraine and the Middle East and ongoing global supply chain challenges. In addition, increased inflation in wages and materials may also increase our costs.
The increases in costs or availability of raw materials may be exacerbated as a result of the conflicts in Ukraine and the Middle East and ongoing global supply chain challenges.
We may not have sufficient cash flow available to enable us to meet our obligations. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as foregoing acquisitions, reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.
If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as foregoing acquisitions, reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.
If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income (loss) and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. The interest rates rose in fiscal year 2023 and may rise further going forward.
If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income (loss) and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.
See “Item 3 - Legal Proceedings” for a further discussion of the risk of product liability actions and our insurance coverage. Damage to our physical properties as a result of windstorm, earthquake, fire or other natural or man-made disaster may cause a financial loss and a loss of customers.
See “Item 3 - Legal Proceedings” for a further discussion of the risk of product liability actions and our insurance coverage. Damage to our physical properties as a result of hurricanes, tornadoes, earthquakes, fires, droughts, extreme temperatures, flooding or other natural or man-made disaster may cause a financial loss and a loss of customers.
Environmental laws and regulations and climate change initiatives could materially and adversely affect our business, financial condition, and results of operations. Our business and facilities and those of our suppliers are subject to a number of federal, state, local and international laws and regulations governing the protection of human health and the environment.
Violations of environmental, social and governance laws and regulations and climate change initiatives could materially and adversely affect our business, financial condition, and results of operations. Our business and facilities and those of our suppliers are subject to a number of federal, state, local and international laws and regulations governing environmental, social and governance (“ESG”) matters.
Further, while insurance reimburses us for our lost gross earnings during a business interruption, if we are unable to supply our customers with our products for an extended period of time, there can be no assurance that we will regain the customers’ business once the product supply is returned to normal.
Any increase in the frequency or severity of natural disaster events could result in increased insurance premiums. 17 Further, while insurance reimburses us for our lost gross earnings during a business interruption, if we are unable to supply our customers with our products for an extended period of time, there can be no assurance that we will regain the customers’ business once the product supply is returned to normal.
The FDA could identify deficiencies in future inspections of MTF or MTF's suppliers or promulgate future regulatory rulings that could disrupt our business, reducing profitability. We distribute some products for third-party companies, and cannot ensure that our rights to distribute such third-party products will continue indefinitely.
The FDA could identify deficiencies in future inspections of MTF or MTF's suppliers or promulgate future regulatory rulings that could have an adverse effect on our business, financial condition or results of operations. We distribute some products for third-party companies, and cannot ensure that our rights to distribute such third-party products will continue indefinitely.
No inquiry or claim that the Company currently faces or has faced to date, and no report of misconduct that the Company has received to date, has had a material adverse effect on our financial condition, results of operations or cash flows.
No inquiry or claim that we currently face or have faced to date, and no report of misconduct that we have received to date, has had a material adverse effect on our business, financial condition or results of operations.
We have numerous U.S. patents and corresponding international patents on products expiring at various dates from 2024 through 2043 and have additional patent applications pending. See Item 1 Business “Research and Development” and “Intellectual Property” for a further description of 16 our patents.
Much of the technology used in the markets in which we compete is covered by patents. We have numerous U.S. patents and corresponding international patents on products expiring at various dates from 2025 through 2043 and have additional patent applications pending. See Item 1 Business “Research and Development” and “Intellectual Property” for a further description of our patents.
The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA clearance, and requirements for such approvals may differ from FDA requirements.
Moreover, we are generally required to obtain regulatory clearance or approval prior to marketing a new product. The time required to obtain approvals from foreign countries may be longer or shorter than that required for FDA clearance, and requirements for such approvals may differ from FDA requirements.
The results of our business are directly tied to the economic conditions in the healthcare industry and the broader economy as a whole. We will continue to monitor and manage the impact of the overall economic environment on the Company.
The results of our business are directly tied to the economic conditions in the healthcare industry and the broader economy as a whole.
We believe that our supply management practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Where possible we have addressed increasing supply chain costs in pricing, yet continued cost pressures and raw material availability have had and may continue to have an adverse effect on our results of operations.
Where possible, we have addressed increasing supply chain costs in pricing, yet continued cost pressures and raw material availability have had and may continue to have an adverse effect on our business, financial condition or results of operations.
If, however, there are further restrictions on capacity or further government actions adverse to EtO sterilization, it is possible that we could be impacted materially in the future.
We have been able to secure EtO sterilization services to date, and do not currently expect sterilization availability to have a material impact on our business. If, however, there are further restrictions on capacity or further government actions adverse to EtO sterilization, it is possible that we could be impacted materially in the future.
Any data security breaches, cyber-attacks, malicious intrusions or significant disruptions could result in actions by regulatory bodies and/or civil litigation, any of which could materially and adversely affect our business, results of operations, financial condition, cash flows, reputation or competitive position. 15 The costs of protecting IT systems and data may increase, and there can be no assurance that these added security efforts will prevent all breaches of our IT systems or thefts of our data.
Any data security breaches, cyber-attacks, malicious intrusions or significant disruptions could result in actions by regulatory bodies and/or civil litigation, any of which could materially and adversely affect our business, financial condition, results of operations, reputation or competitive position.
As a result, our financial performance is now, and will continue to be, subject to various risks associated with the acquisition of businesses, including the financial effects associated with any increased borrowing required to fund such acquisitions or with the integration of such businesses. 14 The terms of any future preferred equity or debt financing may give holders of any preferred securities or debt securities rights that are senior to rights of our common shareholders or impose more stringent operating restrictions on our company.
As a result, our financial performance is now, and will continue to be, subject to various risks associated with the acquisition of businesses, including the financial effects associated with any increased borrowing required to fund such acquisitions or with the integration of such businesses.
We cannot be certain that any of these strategies could be implemented on terms acceptable to us, if at all.
We cannot be certain that any of these strategies could be implemented on terms acceptable to us, if at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 8.
Any deterioration in global economic conditions could also have material adverse effects on the Company’s businesses or financial condition, even if the Company’s direct exposure to the affected region is limited. Global political trends could increase the probability of a deterioration in global economic conditions.
Any of these effects, or others that we are not able to predict, could adversely affect our business, financial condition or results of operations. Any deterioration in global economic conditions could also have material adverse effects on our business, financial condition or results of operations, even if our direct exposure to the affected region is limited.
We may not be able to keep pace with technology or to develop viable new products, including our ability to advance the Biorez and In2Bones product lines we acquired during 2022. In addition, many of our competitors are substantially larger with greater financial resources which may allow them to more rapidly develop or acquire new products.
In addition, many of our competitors are substantially larger with greater financial resources which may allow them to more rapidly develop or acquire new products.
If new debt or other liabilities are added to our current debt levels, the related risks that we now face could intensify. Our senior credit agreement restricts our ability to incur additional indebtedness, including secured indebtedness, but if the facilities mature or are repaid, we may not be subject to such restrictions under the terms of any subsequent indebtedness.
Our senior credit agreement restricts our ability to incur additional indebtedness, including secured indebtedness, but if the facilities mature or are repaid, we may not be subject to such restrictions under the terms of any subsequent indebtedness. 13 The conditional conversion features of our 2.250% Notes if triggered, may adversely affect our financial condition.
If we lose the distribution rights to such products, we may not be able to find replacement products that are acceptable to our customers, or to us.
If we lose the distribution rights to such products, we may not be able to find replacement products that are acceptable to our customers, or to us. 16 If we lose our patents or they are held to be invalid, or if our products or services infringe on third party patents, we could become subject to liability and our competitive position could be harmed.
Market volatility and uncertainty related to inflation and its effects, which could potentially contribute to poor economic conditions, may contribute to or enhance some of the risks described herein. Any of these effects, or others that the Company is not able to predict, could adversely affect its financial condition or results of operations.
We will continue to monitor and manage the impact of the overall economic environment on the Company. Market volatility and uncertainty related to inflation and its effects, which could potentially contribute to poor economic conditions, may contribute to or enhance some of the risks described herein.
Any such expenses or liability could have a material adverse effect on our financial condition, results of operations or cash flows. Our ability to attract and retain qualified employees is critical to our success . Our employees are our most important resource, and in many areas of the medical industry, competition for qualified personnel is intense.
Our ability to attract and retain qualified employees is critical to our success . Our employees are our most important resource, and in many areas of the medical industry, competition for qualified personnel is intense. We seek to attract talented and diverse new employees and retain and motivate our existing employees.
In this regard, approximately 17% of our 2023 revenues are derived from the sale of capital products.
Global political trends could increase the probability of a deterioration in global economic conditions. In this regard, approximately 15% of our 2024 revenues are derived from the sale of capital products.
Such efforts include national healthcare reform, trends towards managed care, cuts in Medicare reimbursement for procedures, consolidation of healthcare distribution companies and collective purchasing arrangements by GPOs and IDNs. Demand and prices for our products may be adversely affected by such trends.
In the U.S., such efforts include national healthcare reform, trends towards managed care, cuts in Medicare reimbursement for procedures, consolidation of healthcare distribution companies and collective purchasing arrangements by GPOs and IDNs. In addition to U.S. initiatives to reduce healthcare costs and expenses, we experience similar pricing pressure in other countries in which we do business.
Any failure to comply with these laws and regulations could subject us or our officers and employees to criminal and civil financial penalties.
We also must comply with a variety of other laws that impose extensive tracking and reporting related to all transfers of value provided to certain healthcare professionals and others. Any failure to comply with these laws and regulations could subject us or our officers and employees to criminal and civil financial penalties.
In particular, on June 6, 2022, we completed an $800 million offering of the 2.250% Notes (as defined below) (including the full exercise by the initial purchasers of their $100 million option to purchase additional 2.250% Notes) through a private offering pursuant to Rule 144A (the “2.250% Notes Offering”).
In particular, on June 6, 2022, we completed an $800 million offering of the 2.250% Convertible Notes due 2027 (the "2.250% Notes" or the “Convertible Notes”) through a private offering pursuant to Rule 144A (the “2.250% Notes Offering”). We may not have sufficient cash flow available to enable us to meet our obligations.
Although we maintain insurance coverage for physical damage to our property and the resultant losses that could occur during a business interruption, we are required to pay deductibles and our insurance coverage is limited to certain caps. For example, our deductible for windstorm damage to our Florida property amounts to 2% of any loss.
Our insurance coverage is limited to certain caps, and our insurance may not be adequate to cover future losses. We maintain insurance coverage for physical damage to our property and casualty losses, product liability, cybersecurity and data privacy losses. We also maintain third-party insurance for resultant losses that could occur during a business interruption.
Failure to comply with regulatory requirements may result in recalls, loss of revenues, fines or other materially adverse implications . Substantially all of our products are classified as class II medical devices subject to regulation by numerous agencies, including the U.S. Food and Drug Administration ("FDA") and comparable international counterparts.
Failure to comply with regulatory requirements may result in recalls, loss of revenues, fines or other materially adverse implications . As a manufacturer of medical devices, we are governed by a global regulatory environment that is increasingly stringent, unpredictable and complex.
Debt or equity financing may not be available to us on acceptable terms.
The terms of any future preferred equity or debt financing may give holders of any preferred securities or debt securities rights that are senior to rights of our common shareholders or impose more stringent operating restrictions on our company. Debt or equity financing may not be available to us on acceptable terms.
Removed
In 2022, the U.S. Environmental Protection Agency (the “EPA”) announced its plans to engage and share up-to-date information on the risks posed by EtO from commercial sterilizers, as well as its efforts to address the risks.
Added
We believe that the health care industry will continue to be impacted by judicial decisions, increasing regulation, political and legal action at both the federal and state/local levels in the United States and internationally, and US executive orders, and it is uncertain how such developments will affect our business.
Removed
In April 2023, the EPA also announced proposals to reduce risks in communities and for workers by reducing EtO emissions from chemical plants, commercial sterilizers and reducing risk to workers in the sterilization industry. We have been able to secure EtO sterilization services to date, and do not currently expect sterilization availability to have a material impact on our business.
Added
Furthermore, due to the nature of our business, which includes the sourcing, marketing and manufacturing of medical devices, we regularly become involved in disputes, litigation and regulatory matters. Litigation is inherently unpredictable, disruptive, and time consuming, and we cannot predict the timing, outcome or impact of any such investigations. For example, we voluntarily informed the U.S.
Removed
A violation of the False Claims Act may result in fines up to $11,000 for each false claim, plus up to three times the amount of damages sustained by the government, and may also provide the basis for the imposition of administrative penalties and exclusion from participation in federal healthcare programs.
Added
Department of Justice ("DOJ") of potential issues with certain royalty payments related to surgeons involved in design teams. We are fully cooperating with the DOJ and their review of this matter.
Removed
Similarly, under the federal Civil Monetary Penalties Statute, the government may seek civil monetary penalties or exclusion for a wide variety of conduct, including presenting, or causing to be presented, claims to a federal healthcare program for an item or service that was not provided as claimed or is false or fraudulent. Penalties range from $10,000 to $50,000 per violation.
Added
Although we are 9 currently unable to predict the outcome of the investigations or the potential impact, if any, on our business, financial condition, and results of operations, the impacts could potentially be significant and material.
Removed
In addition, as a manufacturer of U.S. FDA-approved devices reimbursable by federal healthcare programs, we are subject to the Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians, U.S. teaching hospitals or other U.S. covered recipients.
Added
These laws and regulations are broad in scope and are subject to evolving interpretation and we have in the past been, and in the future could be, required to incur substantial costs to investigate, audit and monitor compliance or to alter our practices.
Removed
Furthermore, we occasionally receive subpoenas or other requests for information from various governmental agencies around the world, and while these investigations typically relate primarily to financial arrangements with healthcare providers, regulatory compliance and product promotional practices, we cannot predict the timing, outcome or impact of any such investigations.
Added
We continue to implement enhancements to our overall compliance program in light of evolving interpretations of laws and regulations. Violations or alleged violations of these laws could result in litigation, and we may be subject to criminal or civil penalties and sanctions, including substantial fines, imprisonment of current or former employees and exclusion from participation in governmental healthcare programs.
Removed
As a manufacturer of medical devices, our manufacturing processes and facilities are subject to on-site inspection and continuing review by the FDA for compliance with the Quality System Regulation ("QSR"). There can be no assurance that the costs of responding to such inspections will not be material.
Added
The products and services we design, develop, manufacture and market are subject to rigorous regulation by the FDA and numerous other supranational, national, federal, regional, state and local governmental authorities. We have ongoing responsibilities under FDA regulations, the EU MDR and other supranational, national, federal, regional, state and local requirements.
Removed
Manufacturing and sales of our products outside the United States are also subject to international regulatory requirements which vary from country to country. Moreover, we are generally required to obtain regulatory clearance or approval prior to marketing a new product.
Added
These requirements relate to quality systems, recordkeeping, labeling, promotional and marketing requirements, adverse event reporting regulations and other matters, which are subject to continual review and are monitored rigorously through periodic inspections by regulators, which may result in observations (such as on FDA Form 483), and in some cases warning letters, that require corrective action or other forms of enforcement.
Removed
Failure to comply with applicable domestic and/or foreign regulatory requirements may result in: • fines, seizure or recall of products, or other enforcement actions; • total or partial suspension of production; • loss of certifications, withdrawal of existing product approvals or clearances; • refusal to approve or clear new applications or notices; • increased quality control costs; or • criminal prosecution.
Added
There can be no assurance that the costs of responding to such inspections will not be material. Additionally, the availability of designated European notified body services to certify compliance with the new EU MDR requirements is limited, which may delay the marketing approval for some of our products under the EU MDR (and, potentially, the UK MDR).
Removed
In some instances, we participate in commodity markets that may be subject to allocations by suppliers. A disruption in deliveries from our suppliers, price increases or decreased availability of raw materials or commodities could have an adverse effect on our ability to meet our commitments to customers or increase our operating efficiencies and/or costs.
Added
Furthermore, regulators strictly regulate the promotional claims that we may make about approved or cleared products. We incur significant costs to comply with regulations, including the EU MDR.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−0 removed12 unchanged
Biggest changeDuring the fiscal year ended December 31, 2023 and through the date of the filing of this Form 10-K, the Company has not identified any specific risks from cybersecurity threats that have materially affected, or are reasonably likely to affect, the Company’s business strategy, results of operations, or financial condition.
Biggest changeDuring the fiscal year ended December 31, 2024 and through the date of the filing of this Form 10-K, we have not identified any specific risks from cybersecurity threats that have materially affected, or are reasonably likely to affect, our 20 business strategy, results of operations, or financial condition.
Our CISO has extensive leadership and experience within the cybersecurity space. We invest in the growth and development of our security team's expertise through hands-on training, technical industry 19 certifications and security domain specific conferences. Security is approached as a unified company strategy, where everyone in the organization plays a key role in the success of our programs.
Our CISO has extensive leadership and experience within the cybersecurity space. We invest in the growth and development of our security team's expertise through hands-on training, technical industry certifications and security domain specific conferences. Security is approached as a unified company strategy, where everyone in the organization plays a key role in the success of our programs.
Added
The risk factors related to cybersecurity threats identified to be reasonably likely to affect, our business strategy, results of operations, or financial condition are included in “Item 1A. Risk Factors - Other Risks Related to Our Business”.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeLocation Square Feet Own or Lease Lease Expiration Utica, NY 500,000 Own — Largo, FL 278,000 Own — Chihuahua, Mexico 207,720 Lease October 2024 Chihuahua, Mexico 40,626 Lease March 2028 Lithia Springs, GA 188,400 Lease January 2025 Atlanta, GA 110,096 Lease March 2026 Brussels, Belgium 58,276 Lease June 2024 Mississauga, Canada 36,054 Lease July 2036 Greenwood Village, CO 27,763 Lease January 2025 Westborough, MA 19,533 Lease November 2025 Frenchs Forest, Australia 16,959 Lease July 2025 Our principal manufacturing facilities are located in Utica, NY, Largo, FL and Chihuahua, Mexico.
Biggest changeLocation Square Feet Own or Lease Lease Expiration Utica, NY 500,000 Own — Largo, FL 278,000 Own — Lithia Springs, GA 330,000 Lease September 2034 Chihuahua, Mexico 207,720 Lease October 2029 Chihuahua, Mexico 40,626 Lease March 2028 Brussels, Belgium 58,276 Lease June 2030 Mississauga, Canada 36,054 Lease July 2036 Greenwood Village, CO 27,763 Lease April 2025 Westborough, MA 19,533 Lease November 2025 Frenchs Forest, Australia 16,959 Lease July 2025 Our principal manufacturing facilities are located in Utica, NY, Largo, FL and Chihuahua, Mexico.
Lithia Springs and Atlanta, GA as well as Brussels, Belgium are our principal distribution centers. We also maintain sales and administrative offices in countries throughout the world.
Lithia Springs, GA and Brussels, Belgium are our principal distribution centers. We also maintain sales and administrative offices in countries throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not a party to any pending legal proceedings other than ordinary routine litigation incidental to our business. Item 4. Mine Safety Disclosures Not applicable. 20 PART II
Biggest changeWe are not a party to any pending legal proceedings other than ordinary routine litigation incidental to our business. Item 4. Mine Safety Disclosures Not applicable. 21 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed0 unchanged
Biggest changeOur Board of Directors has authorized a share repurchase program; see Note 10 for further details. The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2022 and 2023. The fourth quarter dividend for 2023 was paid on January 5, 2024 to shareholders of record as of December 18, 2023.
Biggest changeOur Board of Directors has authorized a share repurchase program; see Note 10 for further details. The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2023 and 2024. The fourth quarter dividend for 2024 was paid on January 3, 2025 to shareholders of record as of December 20, 2024.
Risk Factors - Other Risk Factors Related to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock." Refer to Item 12 for information relating to compensation plans under which equity securities of CONMED Corporation are authorized for issuance. 21 Performance Graph The performance graph below compares the cumulative five-year total shareholder return on the Company’s Common Stock with the cumulative total return of the S&P 500 Index and the Standard & Poor’s Health Care Equipment Index.
Risk Factors - Other Risk Factors Related to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock." Refer to Item 12 for information relating to compensation plans under which equity securities of CONMED Corporation are authorized for issuance. 22 Performance Graph The performance graph below compares the cumulative five-year total shareholder return on the Company’s Common Stock with the cumulative total return of the S&P 500 Index and the Standard & Poor’s Health Care Equipment Index.
The total dividend payable at December 31, 2023 was $6.2 million and is included in other current liabilities in the consolidated balance sheet. Future decisions as to the payment of dividends will be at the discretion of the Board of Directors. See "Item 1A.
The total dividend payable at December 31, 2024 was $6.2 million and is included in other current liabilities in the consolidated balance sheet. Future decisions as to the payment of dividends will be at the discretion of the Board of Directors. See "Item 1A.
In each case, the cumulative total return assumes reinvestment of dividends into the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year. Item 6. [Reserved] 22
In each case, the cumulative total return assumes reinvestment of dividends into the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year. Item 6. [Reserved] 23
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $.01 per share, is traded on the New York Stock Exchange ("NYSE") under the symbol “CNMD”. At February 1, 2024, there were 447 registered holders of our common stock and approximately 70,385 accounts held in “street name”.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $.01 per share, is traded on the New York Stock Exchange ("NYSE") under the symbol “CNMD”. At January 31, 2025, there were 445 registered holders of our common stock and approximately 84,334 accounts held in “street name”.

Item 7. Management's Discussion & Analysis

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

49 edited+8 added−14 removed22 unchanged
Biggest changePartially offsetting this, were proceeds of $72.0 million from the issuance of warrants as further described in Note 8. • During 2022, we paid $69.5 million to settle warrants related to the 2.625% Notes and received $86.2 million to settle the hedges related to the 2.625% Notes as further described in Note 8. • During 2022, we paid $21.8 million in debt issuance costs mainly related to the 2.250% Notes. • During 2023, we had net payments on our term loan of $20.0 million compared to $93.0 million in 2022 as we prepaid $90.0 million with proceeds from the 2.250% Notes. • During 2023, we had net payments on our revolving line of credit of $68.0 million as compared to $70.0 million in net payments during 2022 as we continued to reduce outstanding borrowings. • During 2023, we paid $13.9 million in contingent consideration related to the In2Bones Acquisition.
Biggest changeBelow is a summary of the significant financing activities impacting the change during 2024 compared to 2023: • During 2024, we repaid the remaining $70.0 million outstanding on the 2.625% Notes. • During 2024, we paid $56.9 million in contingent consideration related to the In2Bones and Biorez acquisitions compared to $13.9 million in 2023. • During 2024, we had net payments on our revolving line of credit of $2.0 million, compared to $68.0 million in 2023. • During 2024, we had net cash proceeds of $5.5 million related to stock issued under employee plans compared to $18.1 million in 2023. • During 2024, we did not make any payments on our term loan compared to $20.0 million in payments in 2023.
See Note 16 for further discussion of contingent consideration. Pension Plan We sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen.
See Note 16 for further discussion of contingent consideration. Pension Plan 25 We sponsor a defined benefit pension plan (the “pension plan”) that was frozen in 2009. It covered substantially all our United States based employees at the time it was frozen.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The most significant areas involving management judgments and estimates are described below and are considered by management to be critical to understanding the financial condition and results of operations of CONMED Corporation. Actual results may or may not differ from these estimates. 23 Goodwill and Intangible Assets We have a history of growth through acquisitions.
The most significant areas involving management judgments and estimates are described 24 below and are considered by management to be critical to understanding the financial condition and results of operations of CONMED Corporation. Actual results may or may not differ from these estimates. Goodwill and Intangible Assets We have a history of growth through acquisitions.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our Consolidated Financial Statements and related notes contained elsewhere in this report. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our Consolidated Financial Statements and related notes contained elsewhere in this report. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The seventh amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of December 31, 2023.
The seventh amended and restated senior credit agreement contains covenants and restrictions which, among other things, require the maintenance of certain financial ratios and restrict dividend payments and the incurrence of certain indebtedness and other activities, including acquisitions and dispositions. We were in full compliance with these covenants and restrictions as of December 31, 2024.
We expect to use operating cash flows to satisfy capital spending requirements. The following table summarizes our contractual obligations for the next five years and thereafter (amounts in thousands) as of December 31, 2023. Purchase obligations represent purchase orders for goods and services placed in the ordinary course of business.
We expect to use operating cash flows to satisfy capital spending requirements. The following table summarizes our contractual obligations for the next five years and thereafter (amounts in thousands) as of December 31, 2024. Purchase obligations represent purchase orders for goods and services placed in the ordinary course of business.
The identification and measurement of goodwill impairment involves the estimation of the fair value of our business. Estimates of fair value are based on the best information available as of the date of the assessment. We completed our goodwill impairment testing of our single reporting unit during the fourth quarter of 2023.
The identification and measurement of goodwill impairment involves the estimation of the fair value of our business. Estimates of fair value are based on the best information available as of the date of the assessment. We completed our goodwill impairment testing of our single reporting unit during the fourth quarter of 2024.
In addition, management believes we could access capital markets, as necessary, to fund future business acquisitions. The Company is also being impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. We continue to 28 monitor our spending and expenses in light of these factors.
In addition, management believes we could access capital markets, as necessary, to fund future business acquisitions. We are also being impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges. We continue to monitor our spending and expenses in light of these factors.
International sales approximated 44% in 2023, 45% in 2022 and 45% in 2021. Business Environment The Company has been and continues to be impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges.
International sales approximated 43% in 2024, 44% in 2023 and 45% in 2022. Business Environment The Company has been and continues to be impacted by the macro-economic environment and we are experiencing higher manufacturing and operating costs caused by inflationary pressures and ongoing supply chain challenges.
Other Liquidity Matters Our cash balances and cash flows generated from operations may be used to fund strategic investments, business acquisitions, working capital needs, research and development, common stock repurchases and payments of dividends to our shareholders.
Other Liquidity Matters Our cash balances and cash flows generated from operations may be used to fund strategic investments, business acquisitions, including contingent consideration payments, working capital needs, research and development, common stock repurchases and payments of dividends to our shareholders.
In addition, we have historically used term borrowings, including borrowings under the amended and restated senior credit agreement and borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions.
In addition, we have historically used term borrowings, including borrowings under the amended and restated senior credit agreement and borrowings under separate loan facilities, in the case of real property purchases, to finance our acquisitions, including payments of contingent consideration.
Risk Factors - Other Risks Related to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock." We expect an increased level of capital spending during the year ending December 31, 2024 compared to 2023. Capital spending will be monitored and controlled as the year progresses.
See "Item 1A. Risk Factors - Other Risks Related to our Business - Our Board of Directors may, in the future, limit or discontinue payment of a dividend on common stock." We expect an increased level of capital spending during the year ending December 31, 2025 compared to 2024. Capital spending will be monitored and controlled as the year progresses.
In performing a sensitivity analysis on the pension benefit obligation, a 0.25% increase in our discount rate would decrease the pension benefit obligation by $1.5 million and a 0.25% decrease in the discount rate would increase the pension benefit obligation by $1.6 million. See Note 13 for further discussion of the pension plan.
In performing a sensitivity analysis on the pension benefit obligation, a 0.25% increase in our discount rate would decrease the pension benefit obligation by $1.3 million and a 0.25% decrease in the discount rate would increase the pension benefit obligation by $1.4 million. See Note 13 for further discussion of the pension plan.
We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales. In February 2024, the Company repaid the $70.0 million then outstanding of the 2.625% Notes through borrowings on our revolving credit facility.
We are also required, under certain circumstances, to make mandatory prepayments from net cash proceeds from any issuance of equity and asset sales. In February 2024, we repaid the $70.0 million then outstanding of the 2.625% Notes through borrowings on our revolving credit facility and issued 0.1 million shares of our common stock.
These product lines as a percentage of consolidated net sales are as follows: 2023 2022 2021 Orthopedic surgery 43 % 44 % 43 % General surgery 57 56 57 Consolidated net sales 100 % 100 % 100 % A significant amount of our products are used in surgical procedures with approximately 83% of our revenues derived from the sale of single-use products.
These product lines as a percentage of consolidated net sales are as follows: 2024 2023 2022 Orthopedic surgery 42 % 43 % 44 % General surgery 58 57 56 Consolidated net sales 100 % 100 % 100 % A significant amount of our products are used in surgical procedures with approximately 85% of our revenues derived from the sale of single-use products.
However, we may need to take further steps to reduce our costs, or to refinance our debt. See “Item 1A. Risk Factors - Risks Related to Our Indebtedness." There were $114.6 million in borrowings outstanding on the term loan facility as of December 31, 2023.
However, we may need to take further steps to reduce our costs, or to refinance our debt. See “Item 1A. Risk Factors - Risks Related to Our Indebtedness." There were $114.6 million in borrowings outstanding on the term loan facility as of December 31, 2024. There were no borrowings outstanding under the revolving credit facility as of December 31, 2024.
Consolidated Results of Operations The following table presents, as a percentage of net sales, certain categories included in our consolidated statements of comprehensive income (loss) for the periods indicated: Years Ended December 31, 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 45.7 45.4 43.8 Gross profit 54.3 54.6 56.2 Selling and administrative expense 40.4 43.4 41.0 Research and development expense 4.2 4.5 4.3 Income from operations 9.7 6.7 10.9 Interest expense 3.2 2.8 3.5 Other expense — 10.7 0.1 Income (loss) before income taxes 6.5 (6.8) 7.2 Provision for income taxes 1.3 0.9 1.0 Net income (loss) 5.2 % (7.7) % 6.2 % Net Sales The following table presents net sales by product line for the years ended December 31, 2023, 2022 and 2021: % Change from 2022 to 2023 2023 2022 As Reported Impact of Foreign Currency Constant Currency a Orthopedic surgery $ 533.1 $ 461.5 15.5 % 2.2 % 17.7 % General surgery 711.6 584.0 21.9 % 1.5 % 23.4 % Net sales $ 1,244.7 $ 1,045.5 19.1 % 1.8 % 20.9 % Single-use products $ 1,038.5 $ 874.9 18.7 % 1.8 % 20.5 % Capital products 206.2 170.6 20.9 % 1.9 % 22.8 % Net sales $ 1,244.7 $ 1,045.5 19.1 % 1.8 % 20.9 % 25 % Change from 2021 to 2022 2022 2021 As Reported Impact of Foreign Currency Constant Currency a Orthopedic surgery $ 461.5 $ 438.4 5.3 % 1.2 % 6.5 % General surgery 584.0 572.2 2.1 % 1.0 % 3.1 % Net sales $ 1,045.5 $ 1,010.6 3.4 % 1.2 % 4.6 % Single-use products $ 874.9 $ 820.1 6.7 % 1.1 % 7.8 % Capital products 170.6 190.5 -10.5 % 1.1 % -9.4 % Net sales $ 1,045.5 $ 1,010.6 3.4 % 1.2 % 4.6 % (a) Refer to Non-GAAP Financial Measures below for further details.
Consolidated Results of Operations The following table presents, as a percentage of net sales, certain categories included in our consolidated statements of comprehensive income (loss) for the periods indicated: Years Ended December 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 43.9 45.7 45.4 Gross profit 56.1 54.3 54.6 Selling and administrative expense 36.6 40.4 43.4 Research and development expense 4.2 4.2 4.5 Income from operations 15.3 9.7 6.7 Interest expense 2.9 3.2 2.8 Other expense — — 10.7 Income (loss) before income taxes 12.5 6.5 (6.8) Provision for income taxes 2.3 1.3 0.9 Net income (loss) 10.1 % 5.2 % (7.7) % Net Sales The following table presents net sales by product line for the years ended December 31, 2024, 2023 and 2022: % Change from 2023 to 2024 2024 2023 As Reported Impact of Foreign Currency Constant Currency a Orthopedic surgery $ 544.0 $ 533.1 2.0 % 0.5 % 2.5 % General surgery 763.0 711.6 7.2 % 0.3 % 7.5 % Net sales $ 1,307.0 $ 1,244.7 5.0 % 0.3 % 5.3 % Single-use products $ 1,112.1 $ 1,038.5 7.1 % 0.3 % 7.4 % Capital products 194.9 206.2 -5.5 % 0.4 % -5.1 % Net sales $ 1,307.0 $ 1,244.7 5.0 % 0.3 % 5.3 % 26 % Change from 2022 to 2023 2023 2022 As Reported Impact of Foreign Currency Constant Currency a Orthopedic surgery $ 533.1 $ 461.5 15.5 % 2.2 % 17.7 % General surgery 711.6 584.0 21.9 % 1.5 % 23.4 % Net sales $ 1,244.7 $ 1,045.5 19.1 % 1.8 % 20.9 % Single-use products $ 1,038.5 $ 874.9 18.7 % 1.8 % 20.5 % Capital products 206.2 170.6 20.9 % 1.9 % 22.8 % Net sales $ 1,244.7 $ 1,045.5 19.1 % 1.8 % 20.9 % (a) Refer to Non-GAAP Financial Measures below for further details.
During 2023, we redeployed $11.7 million of cash from certain non-U.S. subsidiaries primarily for U.S. debt reduction. We may repatriate funds from certain foreign subsidiaries in the future. Refer to Note 9 for further details. Operating Cash Flows Our net working capital position was $304.9 million at December 31, 2023.
During 2024, we redeployed $9.0 million of cash from certain non-U.S. subsidiaries primarily for U.S. debt reduction. We may repatriate funds from certain foreign subsidiaries in the future. Refer to Note 9 for further details. Operating Cash Flows Our net working capital position was $361.9 million at December 31, 2024.
We also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering. 27 We had total cash on hand at December 31, 2023 of $24.3 million, of which approximately $19.7 million was held by our foreign subsidiaries outside the United States with unremitted earnings.
We also have the ability to raise funds through the sale of stock or we may issue debt through a private placement or public offering. We had total cash on hand at December 31, 2024 of $24.5 million, of which approximately $20.2 million was held by our foreign subsidiaries outside the United States with unremitted earnings.
In conjunction with the pension plan, we recorded a pension benefit obligation totaling $70.6 million as of December 31, 2023. In accounting for this pension plan, we are required to make 24 a number of assumptions, including the discount rate and mortality.
In conjunction with the pension plan, we recorded a pension benefit obligation totaling $69.2 million as of December 31, 2024. In accounting for this pension plan, we are required to make a number of assumptions, including the discount rate and mortality.
Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income (loss) was $24.3 million, $21.7 million and $16.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. New Accounting Pronouncements See Note 2 for a discussion of new accounting pronouncements.
SARs are only settled in shares of the Company’s stock (See Note 10). Total pre-tax stock-based compensation expense recognized in the consolidated statements of comprehensive income (loss) was $25.6 million, $24.3 million and $21.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. New Accounting Pronouncements See Note 2 for a discussion of new accounting pronouncements.
The fair value of contingent consideration at December 31, 2023 was $41.4 million for the In2Bones acquisition and $128.8 million for the Biorez acquisition. Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows.
The fair value of contingent consideration at December 31, 2024 was $11.2 million for the In2Bones acquisition and $61.0 million for the Biorez acquisition. Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows.
Critical Accounting Policies Preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 describes the significant accounting policies used in preparation of the consolidated financial statements.
We will continue to monitor and adjust our business strategy in response to the conflicts in these regions. Critical Accounting Policies Preparation of our financial statements requires us to make estimates and assumptions which affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 describes the significant accounting policies used in preparation of the consolidated financial statements.
Selling and Administrative Expense Selling and administrative expense was $503.0 million in 2023 compared to $454.0 million in 2022. Selling and administrative expense as a percentage of net sales was 40.4% in 2023 and 43.4% in 2022.
Selling and Administrative Expense Selling and administrative expense was $478.3 million in 2024 compared to $503.0 million in 2023. Selling and administrative expense as a percentage of net sales was 36.6% in 2024 and 40.4% in 2023.
There were $2.0 million in borrowings outstanding under the revolving credit facility as of December 31, 2023. Our available borrowings on the revolving credit facility at December 31, 2023 were $581.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit.
Our available borrowings on the revolving credit facility at December 31, 2024 were $583.4 million with approximately $1.6 million of the facility set aside for outstanding letters of credit.
The Company has no direct operations in these regions with our business limited to selling to third party distributors. Total revenues and accounts receivable associated with sales to third party distributors in these regions are not material to the consolidated financial statements. We will continue to monitor and adjust our business strategy in response to the conflicts in these regions.
The Company has not been materially impacted by the conflicts in Ukraine and the Middle East. The Company has no direct operations in these regions with our business limited to selling to third party distributors. Total revenues and accounts receivable associated with sales to third party distributors in these regions are not material to the consolidated financial statements.
The decrease in selling and administrative expense as a percentage of net sales in 2023 was primarily driven by: • a decrease of $9.3 million in consulting fees, legal fees and other integration related costs associated with the acquisitions of In2Bones and Biorez ($0.8 million in 2023 compared to $10.1 million in 2022); • a decrease of $4.9 million in costs related to fair value adjustments to contingent consideration ($2.4 million of income in 2023 compared to $2.5 million expense in 2022), see Note 16; • $0.8 million in costs related to a legal settlement during 2022; • a decrease of $0.7 million in costs related to the implementation of a new warehouse management system ($6.1 million in 2023 compared to $6.8 million in 2022).
The decrease in selling and administrative expense as a percentage of net sales in 2024 was primarily driven by: • a decrease of $38.6 million in costs related to fair value adjustments to contingent consideration ($41.0 million of income in 2024 compared to $2.4 million of income in 2023), see Note 16; • $6.8 million in costs related to the implementation of a new warehouse management system during 2023.
Cost of Sales Cost of sales was $568.5 million in 2023 compared to $474.2 million in 2022. Gross profit margins were 54.3% in 2023 and 54.6% in 2022.
Cost of Sales Cost of sales was $574.0 million in 2024 compared to $568.5 million in 2023. Gross profit margins were 56.1% in 2024 and 54.3% in 2023.
In addition, below is a summary of significant changes in assets and liabilities: • A decrease in cash flows from accounts receivable as we experienced higher sales in the fourth quarter of 2023 as well as the timing of cash receipts; • An increase in cash flows from inventory as we moderate our inventory levels; • A decrease in cash flows from income taxes due to higher payments; and • An increase in cash flows from accrued compensation and benefits due to higher incentive compensation and commission accruals.
In addition, below is a summary of significant changes in assets and liabilities: • An increase in cash flows from accounts receivable due to timing of sales and cash receipts compared to the same period a year ago; • A decrease in cash flows from inventory as we increased inventory due to supply chain challenges; and 28 • A decrease in cash flows from accrued compensation and benefits as a result of higher incentive compensation payments during 2024 compared to 2023.
RSUs are valued at the market value of the underlying stock on the date of grant. PSUs are valued using a Monte Carlo valuation model at the date of grant. Stock options, SARs, and RSUs are generally non-transferable other than on death and generally become exercisable over a four to five year period from date of grant.
Stock options, SARs, and RSUs are generally non-transferable other than on death and generally become exercisable over a four to five year period from date of grant. PSUs are generally non-transferable other than on death and cliff vest after three years from date of grant. Stock options and SARs expire ten years from date of grant.
Provision for Income Taxes A provision for income taxes was recorded at an effective rate of 20.3% and (13.7)% in 2023 and 2022, respectively. As compared to the federal statutory rate of 21.0%, the 2023 effective tax rate was lower primarily due to federal tax benefits from the research credit and US tax on worldwide earnings at different rates.
As compared to the federal statutory rate of 21.0%, the 2024 effective tax rate was lower primarily due to the change in fair value of contingent consideration that is excluded from income for tax purposes, federal tax benefits from the research credit and US tax on worldwide earnings at different rates.
In addition, capital expenditures were lower in 2023 compared to 2022. Financing Cash Flows Financing activities in 2023 used cash of $110.4 million compared to providing cash of $225.0 million in 2022.
Financing Cash Flows Financing activities in 2024 used cash of $151.0 million compared to $110.4 million in 2023.
A reconciliation of the United States statutory income tax rate to our effective tax rate is included in Note 9. Non-GAAP Financial Measures Net sales on a "constant currency" basis is a non-GAAP measure. The Company analyzes net sales on a constant currency basis to better measure the comparability of results between periods.
These benefits were offset by state tax expense and foreign tax expense from jurisdictions with higher statutory tax rates. A reconciliation of the United States statutory income tax rate to our effective tax rate is included in Note 9. Non-GAAP Financial Measures Net sales on a "constant currency" basis is a non-GAAP measure.
We work with suppliers to mitigate these impacts; however, we expect these challenges to continue in 2024. This will likely impact our results of operations. See "Item 1A. Risk Factors" for more information. The Company has not been materially impacted by the conflicts in Ukraine and the Middle East.
We work with suppliers to mitigate these impacts; however, we expect these challenges to continue in 2025. This will likely continue to impact our results of operations and we therefore have engaged a consulting firm to evaluate and propose improvements in our manufacturing operations. See "Item 1A. Risk Factors" for more information.
Net cash provided by operating activities was $125.3 million in 2023 and $33.4 million in 2022 generated on net income (loss) of $64.5 million in 2023 and $(80.6) million in 2022.
Net cash provided by operating activities was $167.0 million in 2024 and $125.3 million in 2023 generated on net income of $132.4 million in 2024 and $64.5 million in 2023. The change in cash provided by operating activities in 2024 as compared to 2023 was mainly driven by higher net income.
Liquidity and Capital Resources Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the seventh amended and restated senior credit agreement. We have historically met these liquidity requirements with funds generated from operations and borrowings under our revolving credit facility.
We have historically met these liquidity requirements with funds generated from operations, borrowings under our revolving credit facility and issuances of debt in the capital markets.
The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2022 and 2023. Future decisions as to the payment of dividends will be at the discretion of the Board of Directors. See "Item 1A.
We have financed the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our revolving credit facility. 29 The Board of Directors declared a quarterly cash dividend of $0.20 per share in 2023 and 2024. Future decisions as to the payment of dividends will be at the discretion of the Board of Directors.
Interest Expense Interest expense increased to $39.8 million in 2023 compared to $28.9 million in 2022. The weighted average interest rates on our borrowings were 3.12% in 2023 increasing from 2.58% in 2022. The increase in interest expense in 2023 was driven by higher interest rates on our senior credit agreement.
The increase in spending in 2024 compared to 2023 was related to the timing of projects. 27 Interest Expense Interest expense decreased to $37.3 million in 2024 compared to $39.8 million in 2023. The weighted average interest rates on our borrowings were 3.15% in 2024 increasing from 3.12% in 2023.
To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of net sales. Because non-GAAP financial measures are not standardized, it may not be possible to compare this financial measure with other companies' non-GAAP financial measures having the same or similar names.
Because non-GAAP financial measures are not standardized, it may not be possible to compare this financial measure with other companies' non-GAAP financial measures having the same or similar names. This adjusted financial measure should not be considered in isolation or as a substitute for reported net sales growth, the most directly comparable GAAP financial measure.
The Company strongly encourages investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. EBITDA is also a non-GAAP measure and is defined as earnings before income tax, interest expense, depreciation and amortization.
This non-GAAP financial measure is an additional way of viewing net sales that, when viewed with our GAAP results, provides a more complete understanding of our business. The Company strongly encourages investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
The Plans provide for grants of stock options, stock appreciation rights (“SARs”), dividend equivalent rights, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and other equity-based and equity-related awards. The exercise price on all outstanding stock options and SARs is equal to the quoted fair market value of the stock at the date of grant.
Stock-based Compensation We have reserved shares of common stock for issuance to employees and directors under two shareholder-approved share-based compensation plans (the "Plans"). The Plans provide for grants of stock options, stock appreciation rights (“SARs”), dividend equivalent rights, restricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and other equity-based and equity-related awards.
Through December 31, 2023, we have repurchased a total of 6.1 million shares of common stock aggregating $162.6 million under this authorization and have $37.4 million remaining available for share repurchases. The repurchase program calls for shares to be purchased in the open market or in private transactions from time to time.
See Note 8 for further information on our financing agreements and outstanding debt obligations. Our Board of Directors has authorized a $200.0 million share repurchase program. Through December 31, 2024, we have repurchased a total of 6.1 million shares of common stock aggregating $162.6 million under this authorization and have $37.4 million remaining available for share repurchases.
We may suspend or discontinue the share repurchase program at any time. We have not purchased any shares of common stock under the share repurchase program during 2023. We have financed the repurchases and may finance additional repurchases through operating cash flow and from available borrowings under our revolving credit facility.
The repurchase program calls for shares to be purchased in the open market or in private transactions from time to time. We may suspend or discontinue the share repurchase program at any time. We have not purchased any shares of common stock under the share repurchase program during 2024.
These benefits were offset by state tax expense and foreign tax expense from jurisdictions with higher statutory tax rates. The 2022 effective tax rate was lower primarily due to the premium on extinguishment of the 2.625% Notes and the change in fair value of convertible notes hedges upon settlement as these items were not deductible for tax purposes.
These benefits were offset by state tax expense and foreign tax expense from jurisdictions with higher statutory tax rates. The 2023 effective tax rate was lower primarily due to federal tax benefits from the research credit and US tax on worldwide earnings at different rates.
The above table also does not include unrecognized tax benefits of approximately $1.7 million, the timing and certainty of recognition for which is not known (See Note 9). 29 Stock-based Compensation We have reserved shares of common stock for issuance to employees and directors under two shareholder-approved share-based compensation plans (the "Plans").
“Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk” and Note 8). The above table also does not include unrecognized tax benefits of approximately $1.2 million, the timing and certainty of recognition for which is not known (See Note 9).
Payments Due by Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Long-term debt $ 986,588 $ — $ 186,588 $ 800,000 $ — Contingent consideration payments 170,144 77,581 92,563 — — Purchase obligations 166,804 158,078 7,786 940 — Lease obligations 23,652 8,217 8,004 3,210 4,221 Total contractual obligations $ 1,347,188 $ 243,876 $ 294,941 $ 804,150 $ 4,221 In addition to the above contractual obligations, we are required to make periodic interest payments on our long-term debt obligations (see additional discussion under Item 7A.
Payments Due by Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Long-term debt $ 914,588 $ — $ 914,588 $ — $ — Contingent consideration payments 72,217 35,397 36,820 — — Purchase obligations 156,971 153,634 3,327 10 — Lease obligations 53,711 8,808 14,852 10,966 19,085 Total contractual obligations $ 1,197,487 $ 197,839 $ 969,587 $ 10,976 $ 19,085 In addition to the above contractual obligations, we are required to make periodic interest payments on our long-term debt obligations (see additional discussion under Item 7A.
Research and Development Expense Research and development expense was $52.6 million in 2023 and $47.2 million in 2022. As a percentage of net sales, research and development expense was 4.2% in 2023 and 4.5% in 2022. The lower spend as a percentage of net sales in 2023 was mainly driven by higher sales.
Salesforce and commissions, marketing, general & administrative costs and amortization expense in 2024 were in line with 2023 as a percentage of sales. Research and Development Expense Research and development expense was $54.4 million in 2024 and $52.6 million in 2023. As a percentage of net sales, research and development expense was 4.2% in both 2024 and 2023.
In addition, during 2023, we incurred costs for the amortization of inventory step-up to fair value of $8.6 million related to the In2Bones acquisition compared to $4.5 million of such costs during 2022. During both 2023 and 2022, we incurred $2.0 million in consulting fees related to a cost improvement initiative.
The increase in gross profit margin of 1.8 percentage points in 2024 was mainly due to favorable product mix as well as during 2023 we incurred costs for the amortization of inventory step-up to fair value of $8.6 million related to the In2Bones acquisition.
Removed
Net sales increased 19.1% in 2023 due to increases across the majority of our product lines, including In2Bones and Biorez product lines.
Added
Amounts reported in millions within this Form 10-K are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in millions due to rounding. Additionally, certain columns and rows within tables may not sum due to rounding.
Removed
Further contributing to sales growth during 2023 was the significant progress and improvement we made with the performance of our warehouse management system and significant reduction in the shipping delays that existed at year-end 2022. • Orthopedic surgery sales increased 15.5% in 2023 as a result of growth in the In2Bones and Biorez product lines and increases in our orthopedic product offerings. • General surgery sales increased 21.9% in 2023 as a result of growth in the AirSeal, Buffalo Filter and other surgical product offerings.
Added
Net sales increased 5.0% in 2024 due to growth in both the orthopedic surgery and general surgery product lines. • Orthopedic surgery sales increased 2.0% in 2024 as a result of growth in our sports medicine and BioBrace ® product offerings. • General surgery sales increased 7.2% in 2024 as a result of growth in our AirSeal ® and biliary product offerings.
Removed
The decrease in gross profit margin of 0.3 percentage points in 2023 was driven by cost increases and inflation in raw materials and other costs of production offset by higher sales volumes and more favorable product mix.
Added
These costs mainly consisted of incremental freight, labor and professional fees; and • efficiency improvements in our distribution sites. These decreases were partially offset by $5.1 million in costs incurred during 2024 for third party services pertaining to the review of potential issues with certain royalty payments to surgeons involved in design teams.
Removed
These costs mainly consisted of incremental freight, labor and professional fees; and • overall decrease in selling and administrative expense as a percentage of sales as we leverage our existing selling and administrative structure.
Added
The decrease in interest expense in 2024 was driven by lower weighted average borrowings outstanding during 2024. Provision for Income Taxes A provision for income taxes was recorded at an effective rate of 18.8% and 20.3% in 2024 and 2023, respectively.
Removed
These decreases were partially offset by: • $2.1 million in costs related to the termination of distribution agreements during 2023; and 26 • an increase of $0.8 million in costs consisting of severance related to the elimination of certain positions ($1.6 million in 2023 compared to $0.8 million in 2022).
Added
The Company analyzes net sales on a constant currency basis to better measure the comparability of results between periods. To measure percentage sales growth in constant currency, the Company removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of net sales.
Removed
In addition, the issuance of the 2.250% Notes in June 2022 contributed to higher interest expense during 2023.
Added
EBITDA is also a non-GAAP measure and is defined as earnings before income tax, interest expense, depreciation and amortization. Liquidity and Capital Resources Our liquidity needs arise primarily from capital investments, working capital requirements and payments on indebtedness under the seventh amended and restated senior credit agreement and outstanding convertible notes.
Removed
Other Expense Other expense during the year ended December 31, 2022 consisted of $103.1 million related to the conversion premium on the repurchase and extinguishment of 2.625% Notes; $5.5 million related to the settlement of the associated convertible notes hedge transactions and $3.4 million related to the write-off of deferred financing fees associated with the repurchase of $275.0 million of the 2.625% Notes and the pay down of $90.0 million on our term loan as further described in Note 8.
Added
Investing Cash Flows Net cash used in investing activities decreased by $6.9 million in the year ended December 31, 2024 mainly due to capital expenditures being lower at $13.1 million in 2024 compared to $19.0 million in the year ended December 31, 2023.
Removed
This adjusted financial measure should not be considered in isolation or as a substitute for reported net sales growth, the most directly comparable GAAP financial measure. This non-GAAP financial measure is an additional way of viewing net sales that, when viewed with our GAAP results, provides a more complete understanding of our business.
Added
The exercise price on all outstanding stock options and SARs is equal to the quoted fair market value of the stock at the date of grant. RSUs are valued at the market value of the underlying stock on the date of grant. PSUs are valued using a Monte Carlo valuation model at the date of grant.
Removed
The change in cash provided by operating activities in 2023 as compared to 2022 was mainly driven by higher net income as 2022 experienced higher costs due to the integration associated with acquisitions and the warehouse management system implementation.
Removed
During 2022, sales and earnings were generally below incentive targets. Investing Cash Flows Net cash used in investing activities decreased to $20.0 million in 2023 compared to $249.5 million in 2022 primarily due to the $144.7 million payment for the In2Bones Acquisition and $83.0 million for the Biorez Acquisition in 2022.
Removed
Below is a summary of the significant financing activities impacting the change during 2023 compared to 2022: • During 2022, we received proceeds of $800.0 million in 2.250% Notes as further described in Note 8. • During 2022, we paid $275.0 million in aggregate principal on the repurchase and extinguishment of the 2.625% Notes as further described in Note 8. • During 2022, we paid $187.6 million to purchase hedges related to our 2.250% Notes.
Removed
In addition, we expect to finance contingent consideration payments related to our Biorez and In2Bones acquisitions in whole or in part through borrowings on our revolving credit facility. See Note 8 for further information on our financing agreements and outstanding debt obligations. Our Board of Directors has authorized a $200.0 million share repurchase program.
Removed
“Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk” and Note 8).
Removed
PSUs are generally non-transferable other than on death and cliff vest after three years from date of grant. Stock options and SARs expire ten years from date of grant. SARs are only settled in shares of the Company’s stock (See Note 10).

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed4 unchanged
Biggest changeComparatively, if market interest rates for similar borrowings average 1.0% less in 2024 than they did in 2023, our interest expense would decrease, and income before income taxes would increase by $1.2 million. 30
Biggest changeComparatively, if market interest rates for similar borrowings average 1.0% less in 2025 than they did in 2024, our interest expense would decrease, and income before income taxes would increase by $1.1 million.
We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Brazil, Canada, China, Japan and Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency amounting to approximately 32% of our total net sales in 2023.
We have sales subsidiaries in a significant number of countries in Europe as well as Australia, Brazil, Canada, China, Japan and 30 Korea. In those countries in which we have a direct presence, our sales are denominated in the local currency amounting to approximately 32% of our total net sales in 2024.
We have not designated these forward contracts as hedges and have not applied hedge accounting to them. Refer to Note 16 for further discussion. Interest Rate Risk At December 31, 2023, we had approximately $116.6 million of variable rate long-term debt outstanding under our senior credit agreement.
We have not designated these forward contracts as hedges and have not applied hedge accounting to them. Refer to Note 16 for further discussion. Interest Rate Risk At December 31, 2024, we had approximately $114.6 million of variable rate long-term debt outstanding under our senior credit agreement.
Assuming no repayments, if market interest rates for similar borrowings averaged 1.0% more in 2024 than they did in 2023, interest expense would increase, and income before income taxes would decrease by $1.2 million.
Assuming no repayments, if market interest rates for similar borrowings averaged 1.0% more in 2025 than they did in 2024, interest expense would increase, and income before income taxes would decrease by $1.1 million.
We manage our exposure to these and other market risks through regular operating and financing activities and as necessary through the use of derivative financial instruments. Foreign Currency Risk Approximately 44% of our total 2023 consolidated net sales were to customers outside the United States.
We manage our exposure to these and other market risks through regular operating and financing activities and as necessary through the use of derivative financial instruments. Foreign Currency Risk Approximately 43% of our total 2024 consolidated net sales were to customers outside the United States.
The remaining 12% of sales to customers outside the United States was on an export basis and transacted in United States dollars.
The remaining 11% of sales to customers outside the United States was on an export basis and transacted in United States dollars.
During 2023, foreign currency exchange rates, including the effects of the hedging program, caused sales to decrease by approximately $16.1 million. We hedge forecasted intercompany sales denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges.
During 2024, foreign currency exchange rates, including the effects of the hedging program, caused sales to decrease by approximately $4.0 million. We hedge forecasted intercompany sales denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges.

Other CNMD 10-K year-over-year comparisons