ýx QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
Delaware | 59-2417093 | |||||||
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1655 Roberts Boulevard, NW, Kennesaw, Georgia | 30144 | |||||||
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Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value AORT New York Stock Exchange x Accelerated Filer o Non-accelerated Filer o Smaller Reporting Company o Emerging Growth Company Class Outstanding at Common Stock, $0.01 par value (Loss) Income Three Months Ended March 31, 2022 2021 Revenues: Products $ 57,542 $ 53,345 Preservation services 19,671 17,742 Total revenues 77,213 71,087 Cost of products and preservation services: Products 17,408 14,911 Preservation services 9,086 8,338 Total cost of products and preservation services 26,494 23,249 Gross margin 50,719 47,838 Operating expenses: General, administrative, and marketing 38,955 38,638 Research and development 10,128 7,754 Total operating expenses 49,083 46,392 Operating income 1,636 1,446 Interest expense 3,948 4,040 Interest income (16) (24) Other expense, net 133 1,931 Loss before income taxes (2,429) (4,501) Income tax expense (benefit) 960 (1,363) Net loss $ (3,389) $ (3,138) Loss per share: Basic $ (0.08) (0.08) Diluted $ (0.08) $ (0.08) Weighted-average common shares outstanding: Basic 39,850 38,738 Diluted 39,850 38,738 Net loss $ (3,389) $ (3,138) Other comprehensive loss: Foreign currency translation adjustments (3,775) (10,290) Comprehensive loss $ (7,164) $ (13,428) See accompanying Notes to Condensed Consolidated Financial Statements Artivion, Inc. and Subsidiaries March 31, December 31, 2022 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 51,408 $ 55,010 Trade receivables, net 54,998 53,019 Other receivables 4,577 5,086 Inventories, net 76,208 76,971 Deferred preservation costs, net 43,964 42,863 Prepaid expenses and other 13,378 14,748 Total current assets 244,533 247,697 Goodwill 247,829 250,000 Acquired technology, net 162,458 166,994 Operating lease right-of-use assets, net 44,365 45,714 Property and equipment, net 37,459 37,521 Other intangibles, net 33,697 34,502 Deferred income taxes 3,489 2,357 Other assets 8,026 8,267 Total assets $ 781,856 $ 793,052 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,230 $ 10,395 Accrued compensation 9,571 13,163 Accrued expenses 9,396 7,687 Taxes payable 5,575 3,634 Accrued procurement fees 2,206 3,689 Current maturities of operating leases 3,362 3,149 Current portion of long-term debt 1,622 1,630 Other liabilities 1,875 1,606 Total current liabilities 42,837 44,953 Long-term debt 307,232 307,493 Contingent consideration 47,600 49,400 Non-current maturities of operating leases 43,679 44,869 Non-current finance lease obligation 4,156 4,374 Deferred income taxes 26,373 28,799 Deferred compensation liability 5,766 5,952 Other liabilities 6,721 6,484 Total liabilities $ 484,364 $ 492,324 Commitments and contingencies Shareholders' equity: Preferred stock -- -- Common stock (issued shares of 41,688 in 2022 and 41,397 in 2021) 417 414 Additional paid-in capital 326,799 322,874 Retained (deficit) earnings (1,414) 1,975 Accumulated other comprehensive loss (13,662) (9,887) Treasury stock, at cost, 1,487 shares as of March 31, 2022 (14,648) (14,648) Total shareholders' equity 297,492 300,728 Total liabilities and shareholders' equity $ 781,856 $ 793,052 Artivion, Inc. and Subsidiaries Three Months Ended March 31, 2022 2021 Net cash flows from operating activities: Net loss $ (3,389) $ (3,138) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 5,881 6,006 Non-cash compensation 3,166 2,480 Non-cash lease expense 1,920 1,758 Write-down of inventories and deferred preservation costs 989 1,274 Change in fair value of contingent consideration (1,800) 970 Deferred income taxes (2,966) (4,241) Other 496 787 Changes in operating assets and liabilities: Prepaid expenses and other assets 1,494 (1,291) Inventories and deferred preservation costs (1,359) (5,933) Receivables (1,710) (3,301) Accounts payable, accrued expenses, and other liabilities (3,320) 1,590 Net cash flows used in operating activities (598) (3,039) Net cash flows from investing activities: Capital expenditures (2,239) (1,502) Other (469) 692 Net cash flows used in investing activities (2,708) (810) Net cash flows from financing activities: Proceeds from exercise of stock options and issuance of common stock 2,318 861 Repayment of debt (694) (701) Redemption and repurchase of stock to cover tax withholdings (1,730) (1,813) Other (129) (442) Net cash flows used in financing activities (235) (2,095) Effect of exchange rate changes on cash and cash equivalents (61) 1,088 Decrease in cash and cash equivalents (3,602) (4,856) Cash and cash equivalents beginning of period 55,010 61,958 Cash and cash equivalents end of period $ 51,408 $ 57,102 Artivion, Inc. and Subsidiaries Accumulated Additional Retained Other Total Common Paid-In Earnings Comprehensive Treasury Shareholders' Stock Capital (Deficit) Loss Stock Equity Shares Amount Shares Amount Balance at December 31, 2021 41,397 $ 414 $ 322,874 $ 1,975 $ (9,887) (1,487) $ (14,648) $ 300,728 Net loss -- -- -- (3,389) -- -- -- (3,389) Other comprehensive loss -- -- -- -- (3,775) -- -- (3,775) Equity compensation 205 2 3,338 -- -- -- -- 3,340 Exercise of options 140 2 1,678 -- -- -- -- 1,680 Employee stock purchase plan 37 -- 638 -- -- -- -- 638 Redemption and repurchase of stock to cover tax withholdings (91) (1) (1,729) -- -- -- -- (1,730) Balance at March 31, 2022 41,688 $ 417 $ 326,799 $ (1,414) $ (13,662) (1,487) $ (14,648) $ 297,492 Accumulated Additional Other Total Common Paid-In Retained Comprehensive Treasury Shareholders' Stock Capital Earnings Income (Loss) Stock Equity Shares Amount Shares Amount Balance at December 31, 2020 40,394 $ 404 $ 316,192 $ 20,022 $ 6,743 (1,487) $ (14,648) $ 328,713 Net loss -- -- -- (3,138) -- -- -- (3,138) Other comprehensive loss -- -- -- -- (10,290) -- -- (10,290) Impact of adoption of ASU 2020-06 -- -- (16,426) (3,213) -- -- -- (19,639) Equity compensation 207 2 2,635 -- -- -- -- 2,637 Exercise of options 19 -- 271 -- -- -- -- 271 Employee stock purchase plan 37 1 589 -- -- -- -- 590 Redemption and repurchase of stock to cover tax withholdings (72) (1) (1,812) -- -- -- -- (1,813) Balance at March 31, 2021 40,585 $ 406 $ 301,449 $ 13,671 $ (3,547) (1,487) $ (14,648) $ 297,331 Artivion, Inc. and Subsidiaries March 31, 2022 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 10,018 $ -- $ -- $ 10,018 Total assets $ 10,018 $ -- $ -- $ 10,018 Long-term liabilities: Contingent consideration -- -- (47,600) (47,600) Total liabilities $ -- $ -- $ (47,600) $ (47,600) December 31, 2021 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 10,015 $ -- $ -- $ 10,015 Total assets $ 10,015 $ -- $ -- $ 10,015 Long-term liabilities: Contingent consideration -- -- (49,400) (49,400) Total liabilities $ -- $ -- $ (49,400) $ (49,400) earn-out. The fair value of the contingent consideration component of the Ascyrus acquisition was updated using Level 3 inputs. Changes in fair value of Level 3 assets and liabilities are listed in the tables below (in thousands): Contingent Consideration Balance as of December 31, 2021 $ (49,400) Change in valuation 5,000 Balance as of $ Unrealized Estimated Holding Market March 31, 2022 Cost Basis Gains Value Cash equivalents: Money market funds $ 10,018 $ -- $ 10,018 Total assets $ 10,018 $ -- $ 10,018 Unrealized Estimated Holding Market December 31, 2021 Cost Basis Gains Value Cash equivalents: Money market funds $ 10,015 $ -- $ 10,015 Total assets $ 10,015 $ -- $ 10,015 March 31, December 31, 2022 2021 Raw materials and supplies $ 35,075 $ 35,780 Work-in-process 11,440 9,712 Finished goods 29,693 31,479 Total inventories, net $ 76,208 $ 76,971 March 31, December 31, 2022 2021 Goodwill $ 247,829 $ 250,000 In-process R&D 2,164 2,208 Procurement contracts and agreements 2,013 2,013 Trademarks 196 66 segment, is as follows (in thousands): Definite Lived Intangible Assets Weighted Average Gross Carrying Accumulated Net Carrying Useful Life March 31, 2022 Value Amortization Value (Years) Acquired technology $ 211,589 $ 49,131 $ 162,458 17.7 Other intangibles: Customer lists and relationships 31,108 9,987 21,121 20.5 Distribution and manufacturing rights and know-how 9,652 4,675 4,977 5.0 Patents 4,127 3,153 974 17.0 Other 4,190 1,938 2,252 4.4 Total other intangibles $ 49,077 $ 19,753 $ 29,324 10.6 Weighted Average Gross Carrying Accumulated Net Carrying Useful Life December 31, 2021 Value Amortization Value (Years) Acquired technology $ 213,626 $ 46,632 $ 166,994 17.7 Other intangibles: Customer lists and relationships 31,148 9,618 21,530 20.5 Distribution and manufacturing rights and know-how 9,847 4,308 5,539 5.0 Patents 4,083 3,144 939 17.0 Other 3,969 1,762 2,207 4.4 Total other intangibles $ 49,047 $ 18,832 $ 30,215 10.6 Three Months Ended March 31, 2022 2021 Amortization expense $ 4,084 $ 4,260 Remainder of 2022 2023 2024 2025 2026 2027 Total Amortization expense $ 11,625 15,131 14,754 12,785 12,559 12,496 $ 79,350 income deduction, the research and development tax credit, changes in our uncertain tax position liabilities, and tax shortfalls on stock compensation. Our income tax rate for the three and six months ended Operating leases: March 31, 2022 December 31, 2021 Operating lease right-of-use assets $ 57,532 $ 58,097 Accumulated amortization (13,167) (12,383) Operating lease right-of-use assets, net $ 44,365 $ 45,714 Current maturities of operating leases $ 3,362 $ 3,149 Non-current maturities of operating leases 43,679 44,869 Total operating lease liabilities $ 47,041 $ 48,018 Finance leases: Property and equipment, at cost $ 6,625 $ 6,759 Accumulated amortization (2,196) (2,105) Property and equipment, net $ 4,429 $ 4,654 Current maturities of finance leases $ 520 $ 528 Non-current maturities of finance leases 4,156 4,374 Total finance lease liabilities $ 4,676 $ 4,902 Weighted average remaining lease term (in years): Operating leases 12.4 12.5 Finance leases 8.6 8.8 Weighted average discount rate: Operating leases 5.9% 5.8% Finance leases 2.0% 2.0% Current maturities of finance leases are included as a component of Other current liabilities on our Condensed Consolidated Balance Sheets. A summary of lease expenses for our finance and operating leases included in General, administrative, and marketing expenses on our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income Three Months Ended March 31, 2022 2021 Amortization of property and equipment $ 137 $ 154 Interest expense on finance leases 25 29 Total finance lease expense 162 183 Operating lease expense 1,920 1,758 Sublease income (92) (124) Total lease expense $ 1,990 $ 1,817 A summary of our cash flow information related to leases is as follows (in thousands): Three Months Ended March 31, Cash paid for amounts included in the measurement of lease liabilities: 2022 2021 Operating cash flows for operating leases $ 1,525 $ 1,500 Financing cash flows for finance leases 130 144 Operating cash flows for finance leases 24 28 Finance Operating Sublease Leases Leases Income Remainder of 2022 $ 436 $ 4,392 $ 214 2023 616 5,630 -- 2024 610 6,189 -- 2025 587 5,162 -- 2026 568 4,767 -- Thereafter 2,272 42,021 -- Total minimum lease payments $ 5,089 $ 68,161 $ 214 Less amount representing interest (413) (21,120) Present value of net minimum lease payments 4,676 47,041 Less current maturities (520) (3,362) Lease liabilities, less current maturities $ 4,156 $ 43,679 maturities triggered if our 4.25% Convertible Senior Notes, described below, remain outstanding on April 1, 2025 and December 31, 2024, respectively. With respect to the Term Loan, if the Convertible Senior Notes remain outstanding on April 1, 2025, the Term Loan’s maturity date will be April 1, 2025, or, if the Convertible Senior Notes’ own maturity date has been extended, the earlier of (i) 91 days prior to the Convertible Senior Notes’ new maturity date and (ii) June 1, 2027. In the case of the Revolving Credit Facility, if the Convertible Senior Notes are still outstanding on December 31, 2024, the Revolving Credit Facility’s maturity date will be either December 31, 2024 or, if the Convertible Senior Notes’ own maturity date has been extended, the earlier of (i) 182 days prior to the Convertible Senior Notes’ new maturity date and (ii) June 1, 2025. Under the amendment, the Term Loan Facility bears interest, at our option, at a floating annual rate equal to either the base rate, plus a margin of 2.50%, or LIBOR, plus a margin of 3.50%. Prior to the amendment, the optional floating annual rate was equal to either the base rate plus a margin of 2.25%, or LIBOR, plus a margin of 3.25%. We paid debt issuance costs of $2.1 million, of which $1.8 million will be amortized over the life of the Term Loan Facility and included in current and long-term debt on the Condensed Consolidated Balance Sheets. The remaining $361,000 of debt issuance costs and $474,000 of non-cash debt extinguishment costs were recorded in Interest expense on the Condensed Consolidated Statements of Operations and Comprehensive March 31, December 31, 2022 2021 Term loan balance $ 215,438 $ 216,000 Convertible senior notes 100,000 100,000 2.45% Sparkasse Zollernalb (KFW Loan 1) 493 566 1.40% Sparkasse Zollernalb (KFW Loan 2) 971 1,061 Total loan balance 316,902 317,627 Less unamortized loan origination costs (8,048) (8,504) Net borrowings 308,854 309,123 Less short-term loan balance (1,622) (1,630) Long-term loan balance $ 307,232 $ 307,493 For the three and six months ended Three Months Ended March 31, 2022 2021 (Unaudited) Domestic hospitals $ 36,993 $ 36,229 International hospitals 28,414 26,128 International distributors 11,064 8,642 CardioGenesis cardiac laser therapy 742 88 Total sources of revenue $ 77,213 $ 71,087 Stock Compensation Expense Three Months Ended March 31, 2022 Stock Options ESPP Expected life 5.0 Years 0.5 Years Expected stock price volatility 0.40 0.31 Risk-free interest rate 1.89% 0.22% Three Months Ended March 31, 2022 2021 RSA, RSU, and PSU expense $ 2,768 $ 2,050 Stock option and ESPP expense 572 587 Total stock compensation expense $ 3,340 $ 2,637 Three Months Ended March 31, Basic loss per common share 2022 2021 Net loss $ (3,389) $ (3,138) Net loss allocated to participating securities 18 23 Net loss allocated to common shareholders $ (3,371) $ (3,115) Basic weighted-average common shares outstanding 39,850 38,738 Basic loss per common share $ (0.08) $ (0.08) Three Months Ended March 31, Diluted loss per common share 2022 2021 Net loss $ (3,389) $ (3,138) Net loss allocated to participating securities 18 23 Net loss allocated to common shareholders $ (3,371) $ (3,115) Basic weighted-average common shares outstanding 39,850 38,738 Diluted weighted-average common shares outstanding 39,850 38,738 Diluted loss per common share $ (0.08) $ (0.08) The following table summarizes revenues, cost of products and preservation services, and gross margins for our operating segments (in thousands): Three Months Ended March 31, 2022 2021 Revenues: Medical devices $ 57,542 $ 53,345 Preservation services 19,671 17,742 Total revenues 77,213 71,087 Cost of products and preservation services: Medical devices 17,408 14,911 Preservation services 9,086 8,338 Total cost of products and preservation services 26,494 23,249 Gross margin: Medical devices 40,134 38,434 Preservation services 10,585 9,404 Total gross margin $ 50,719 $ 47,838 Three Months Ended March 31, 2022 2021 Products: Aortic stent grafts $ 25,506 $ 20,205 Surgical sealants 15,681 17,828 On-X 14,371 13,095 Other 1,984 2,217 Total products 57,542 53,345 Preservation services 19,671 17,742 Total revenues $ 77,213 $ 71,087 Forward-Looking Statements 10-Q. levels, timing of the release of tissues to an implantable status, demand for certain tissue types due to the number and type of procedures being performed, and pressures from competing products or services; NEXUS, E-vita Thoracic 3G, and E-nya products. Abdominal stent grafts include our E-xtra Design Engineering, E-nside, E-tegra, E-ventus BX, and E-liac products. Surgical sealants include BioGlue® Surgical Adhesive (“BioGlue”) products. In addition to these four major product families, we sell or distribute PhotoFix® bovine surgical patches, CardioGenesis® cardiac laser therapy, Therion® chorioamniotic allografts (previously marketed as NeoPatch®), and PerClot® hemostatic powder (prior to the sale to a subsidiary of Baxter International, Inc (“Baxter”)). suppliers. The extent to which our operations and financial performance will be impacted by the pandemic for the remainder of 2022 and beyond will depend largely on future developments, including changes in hospital utilization rates and staffing, prevalence and severity of new variants and their impact on case numbers and short-term quarantines, the impact of Percent Revenues as a Percentage of Revenues for the Change Total Revenues for the Three Months Ended From Prior Three Months Ended March 31, Year March 31, 2022 2021 2022 2021 Products: Aortic stent grafts $ 25,506 $ 20,205 26% 33% 28% Surgical sealants 15,681 17,828 -12% 20% 26% On-X 14,371 13,095 10% 19% 18% Other 1,984 2,217 -11% 3% 3% Total products 57,542 53,345 8% 75% 75% Preservation services 19,671 17,742 11% 25% 25% Total $ 77,213 $ 71,087 9% 100% 100% Revenues from aortic stent grafts increased Three Months Ended March 31, 2022 2021 Cost of products $ 17,408 $ 14,911 Cost of products increased Three Months Ended March 31, 2022 2021 Cost of preservation services $ 9,086 $ 8,338 Three Months Ended March 31, 2022 2021 Gross margin $ 50,719 $ 47,838 Gross margin as a percentage of total revenues 66% 67% Three Months Ended March 31, 2022 2021 General, administrative, and marketing expenses $ 38,955 $ 38,638 General, administrative, and marketing expenses 50% 54% as a percentage of total revenues General, administrative, and marketing expenses expenses, partially offset by an increase in personnel related and marketing costs. June 30, 2021, respectively. Three Months Ended March 31, 2022 2021 Research and development expenses $ 10,128 $ 7,754 Research and development expenses 13% 11% as a percentage of total revenues Three Months Ended March 31, 2022 2021 Loss before income taxes $ (2,429) $ (4,501) Income tax expense (benefit) 960 (1,363) Net loss $ (3,389) $ (3,138) Diluted loss per common share $ (0.08) $ (0.08) Diluted weighted-average common shares outstanding 39,850 38,738 We incurred a loss before income taxes for the three and six months ended Demand for our vascular preservation services has also traditionally been seasonal, with lowest demand generally occurring in the fourth quarter. We believe this trend for vascular preservation services was primarily due to fewer vascular surgeries being scheduled during the winter holiday months. was $100.0 million recorded in Long-term debt on the Condensed Consolidated Balance Sheets as of Three Months Ended March 31, 2022 2021 Cash flows used in: Operating activities $ (598) $ (3,039) Investing activities (2,708) (810) Financing activities (235) (2,095) Effect of exchange rate changes on cash and cash equivalents (61) 1,088 Decrease in cash and cash equivalents $ (3,602) $ (4,856) Net Cash Flows from Operating Activities in operating assets and liabilities from the prior year end. For the instruments, $3.8 million of lease expenses, and $1.6 million of deferred income tax changes. Changes to Disclosure Controls and Procedures and its variants remain highly contagious and may have additional impact on our business solution, requiring us to write-off approximately $826,000 in contaminated tissues in the fourth quarter of 2020. The written off and temporarily quarantined tissue impacted our ability to fully meet demand for certain tissues and sizes in the fourth quarter of 2020, the first quarter of 2021, and to a lesser extent the second quarter of 2021. Our inability to meet some demand for tissue in the third quarter resulted in part from a shortage of trained staff capable of tubing used in the handpiece assembly had gone out of business, requiring us to work with our supplier to identify and qualify a new supplier before a disruption in handpiece availability occurs. handpieces are solely manufactured by a supplier in Merrilville, Indiana, and the NEXUS product is solely manufactured by Endospan in Herzlia, Israel. If one of these facilities ceases operations temporarily or permanently, for any reason including a pandemic or climate change related event, our business could be substantially disrupted. Further, on May 25, 2017 the European Union adopted a new Medical Device Regulation (MDR 2017/745) (“MDR”), which was fully implemented on May 26, 2021. The MDR places stricter requirements on manufacturers and European Notified Bodies regarding, among other things, product classifications and pre- and post-market clinical studies for product clearances and approvals which could result in product reclassifications or the imposition of other regulatory requirements that could delay, impede, or prevent our ability to commercialize existing, improved, or new products in the European Economic Area Code of Conduct, the MedTech Europe Code of Ethical Business Practice, and the APACMed Code of Ethical Conduct which govern our relationships with healthcare professionals to bolster our compliance with healthcare compliance laws. While our relationships with healthcare professionals and organizations are structured to comply with such laws and we conduct training sessions on these laws and Codes, it is possible that enforcement authorities may view our relationships as prohibited arrangements that must be restructured or for which we would be subject to other significant civil or criminal penalties or debarment. In any event, any enforcement review of or action against us as a result of such review, regardless of outcome, could be costly and time consuming. Additionally, we cannot predict the impact of any changes in or interpretations of these laws, whether these changes will be retroactive or will have effect on a going-forward basis only. and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement; stakeholders in these areas may damage our reputation, impact employee retention, impact the willingness of our customers to do business with us, or otherwise impact our financial results and stock price. Total Number of Common Shares Dollar Value Total Number of Purchased as of Common Shares Common Shares Average Price Part of Publicly That May Yet Be and Common Stock Paid per Announced Purchased Under the Period Units Purchased Common Share Plans or Programs Plans or Programs 01/01/22 - 01/31/22 -- $ -- -- $ -- 02/01/22 - 02/28/22 61,891 17.80 -- -- 03/01/22 - 03/31/22 29,352 21.39 -- -- Total 91,243 $ 18.95 -- $ -- Exhibit Certification by J. Patrick Mackin pursuant to section 302 of the Sarbanes-Oxley Act of 2002. 101.INS* 101.SCH* 101.CAL* 101.DEF* 101.LAB* 101.PRE* 104 SIGNATURES ARTIVION, INC. (Registrant) J. PATRICK MACKIN August 5, 2022Large Accelerated Filer ¨oAprilJuly 29, 202240,201,56540,316,054TABLE OF CONTENTS
Part I – FINANCIAL INFORMATION
LossThree Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Revenues: Products $ 58,936 $ 56,076 $ 116,478 $ 109,421 Preservation services 21,404 20,072 41,075 37,814 Total revenues 80,340 76,148 157,553 147,235 Cost of products and preservation services: Products 18,230 16,178 35,638 31,089 Preservation services 9,938 9,457 19,024 17,795 Total cost of products and preservation services 28,168 25,635 54,662 48,884 Gross margin 52,172 50,513 102,891 98,351 Operating expenses: General, administrative, and marketing 38,983 40,830 77,938 79,468 Research and development 8,648 8,360 18,776 16,114 Total operating expenses 47,631 49,190 96,714 95,582 Operating income 4,541 1,323 6,177 2,769 Interest expense 4,101 4,855 8,049 8,895 Interest income (30) (18) (46) (42) Other expense (income), net 3,770 (1,331) 3,903 600 Loss before income taxes (3,300) (2,183) (5,729) (6,684) Income tax expense (benefit) 959 (5) 1,919 (1,368) Net loss $ (4,259) $ (2,178) $ (7,648) $ (5,316) Loss per share: Basic $ (0.11) $ (0.06) $ (0.19) $ (0.14) Diluted $ (0.11) $ (0.06) $ (0.19) $ (0.14) Weighted-average common shares outstanding: Basic 40,031 38,943 39,941 38,841 Diluted 40,031 38,943 39,941 38,841 Net loss $ (4,259) $ (2,178) $ (7,648) $ (5,316) Other comprehensive (loss) income: Foreign currency translation adjustments (14,796) 2,973 (18,571) (7,317) Comprehensive (loss) income $ (19,055) $ 795 $ (26,219) $ (12,633)
and December 31, 2021, respectivelyJune 30,
2022December 31,
2021(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 40,382 $ 55,010 Trade receivables, net 57,558 53,019 Other receivables 7,995 5,086 Inventories, net 74,318 76,971 Deferred preservation costs, net 44,785 42,863 Prepaid expenses and other 15,390 14,748 Total current assets 240,428 247,697 Goodwill 240,939 250,000 Acquired technology, net 154,866 166,994 Operating lease right-of-use assets, net 42,659 45,714 Property and equipment, net 36,268 37,521 Other intangibles, net 32,470 34,502 Deferred income taxes 9,916 2,357 Other assets 7,318 8,267 Total assets $ 764,864 $ 793,052 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 10,545 $ 10,395 Accrued compensation 9,732 13,163 Accrued expenses 7,842 7,687 Taxes payable 4,709 3,634 Accrued procurement fees 2,130 3,689 Current maturities of operating leases 3,207 3,149 Current portion of long-term debt 1,590 1,630 Other liabilities 1,891 1,606 Total current liabilities 41,646 44,953 Long-term debt 306,941 307,493 Contingent consideration 44,400 49,400 Non-current maturities of operating leases 42,141 44,869 Non-current finance lease obligation 3,766 4,374 Deferred income taxes 32,609 28,799 Deferred compensation liability 5,154 5,952 Other liabilities 6,698 6,484 Total liabilities $ 483,355 $ 492,324 Commitments and contingencies 0 0 Shareholders' equity: Preferred stock — — Common stock (issued shares of 41,744 in 2022 and 41,397 in 2021) 417 414 Additional paid-in capital 329,871 322,874 Retained (deficit) earnings (5,673) 1,975 Accumulated other comprehensive loss (28,458) (9,887) Treasury stock, at cost, 1,487 shares as of June 30, 2022 and December 31, 2021 (14,648) (14,648) Total shareholders' equity 281,509 300,728 Total liabilities and shareholders' equity $ 764,864 $ 793,052 Six Months Ended
June 30,2022 2021 Net cash flows from operating activities: Net loss $ (7,648) $ (5,316) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 11,497 11,999 Non-cash compensation 6,100 4,595 Non-cash lease expense 3,803 3,575 Write-down of inventories and deferred preservation costs 2,177 2,988 Change in fair value of contingent consideration (5,000) 4,270 Deferred income taxes (1,611) (4,269) Other 940 2,174 Changes in operating assets and liabilities: Prepaid expenses and other assets (205) (2,076) Inventories and deferred preservation costs (3,653) (11,712) Receivables (9,635) (5,454) Accounts payable, accrued expenses, and other liabilities (5,677) (1,166) Net cash flows used in operating activities (8,912) (392) Net cash flows from investing activities: Capital expenditures (4,055) (7,249) Other (939) 205 Net cash flows used in investing activities (4,994) (7,044) Net cash flows from financing activities: Proceeds from exercise of stock options and issuance of common stock 2,318 2,321 Payment of debt issuance costs — (2,219) Redemption and repurchase of stock to cover tax withholdings (1,739) (1,831) Repayment of term loan (1,370) (1,405) Other (241) (603) Net cash flows used in financing activities (1,032) (3,737) Effect of exchange rate changes on cash and cash equivalents 310 242 Decrease in cash and cash equivalents (14,628) (10,931) Cash and cash equivalents beginning of period 55,010 61,958 Cash and cash equivalents end of period $ 40,382 $ 51,027 Common
StockAdditional
Paid-In
CapitalRetained
DeficitAccumulated
Other
Comprehensive
LossTreasury
StockTotal
Shareholders'
EquityShares Amount Shares Amount Balance at March 31, 2022 Balance at March 31, 2022 41,688 $ 417 $ 326,799 $ (1,414) $ (13,662) (1,487) $ (14,648) $ 297,492 Net loss — — — (4,259) — — — (4,259) Other comprehensive loss — — — — (14,796) — — (14,796) Equity compensation 57 — 3,081 — — — — 3,081 Redemption and repurchase of stock to cover tax withholdings (1) — (9) — — — — (9) Balance at June 30, 2022 Balance at June 30, 2022 41,744 $ 417 $ 329,871 $ (5,673) $ (28,458) (1,487) $ (14,648) $ 281,509 Common
StockAdditional
Paid-In
CapitalRetained Earnings
(Deficit)Accumulated
Other
Comprehensive
LossTreasury
StockTotal
Shareholders'
EquityShares Amount Shares Amount Balance at December 31, 2021 Balance at December 31, 2021 41,397 $ 414 $ 322,874 $ 1,975 $ (9,887) (1,487) $ (14,648) $ 300,728 Net loss — — — (7,648) — — — (7,648) Other comprehensive loss — — — — (18,571) — — (18,571) Equity compensation 262 2 6,419 — — — — 6,421 Exercise of options 140 2 1,678 — — — — 1,680 Employee stock purchase plan 37 — 638 — — — — 638 Redemption and repurchase of stock to cover tax withholdings (92) (1) (1,738) — — — — (1,739) Balance at June 30, 2022 Balance at June 30, 2022 41,744 $ 417 $ 329,871 $ (5,673) $ (28,458) (1,487) $ (14,648) $ 281,509 Common
StockAdditional
Paid-In
CapitalRetained
EarningsAccumulated
Other
Comprehensive
LossTreasury
StockTotal
Shareholders'
EquityShares Amount Shares Amount Balance at March 31, 2021 40,585 $ 406 $ 301,449 $ 13,671 $ (3,547) (1,487) $ (14,648) $ 297,331 Net loss — — — (2,178) — — — (2,178) Other comprehensive income — — — — 2,973 — — 2,973 Equity compensation 37 — 2,267 — — — — 2,267 Exercise of options 121 1 1,459 — — — — 1,460 Redemption and repurchase of stock to cover tax withholdings (1) — (18) — — — — (18) Balance at June 30, 2021 40,742 $ 407 $ 305,157 $ 11,493 $ (574) (1,487) $ (14,648) $ 301,835 Common
StockAdditional
Paid-In
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Treasury
StockTotal
Shareholders'
EquityShares Amount Shares Amount Balance at December 31, 2020 40,394 $ 404 $ 316,192 $ 20,022 $ 6,743 (1,487) $ (14,648) $ 328,713 Net loss — — — (5,316) — — — (5,316) Other comprehensive loss — — — — (7,317) — — (7,317) — — (16,426) (3,213) — — — (19,639) Equity compensation 244 2 4,902 — — — — 4,904 Exercise of options 140 1 1,730 — — — — 1,731 Employee stock purchase plan 37 1 589 — — — — 590 Redemption and repurchase of stock to cover tax withholdings (73) (1) (1,830) — — — — (1,831) Balance at June 30, 2021 40,742 $ 407 $ 305,157 $ 11,493 $ (574) (1,487) $ (14,648) $ 301,835 March 31,June 30, 2022 and 2021 have been prepared in accordance with (i) accounting principles generally accepted in the US for interim financial information and (ii) the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the US Securities and Exchange Commission (the “SEC”). Accordingly, such statements do not include all the information and disclosures that are required by accounting principles generally accepted in the US for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and six months ended March 31,June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes included in Artivion’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 22, 2022.March 31,June 30, 2022 in any of our Significant Accounting Policies from those contained in our Form 10-K for the year ended December 31, 2021.
2. Financial Instruments
June 30, 2022 June 30, 2022 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 10,025 $ — $ — $ 10,025 Total assets $ 10,025 $ — $ — $ 10,025 Long-term liabilities: Contingent consideration — — (44,400) (44,400) Total liabilities $ — $ — $ (44,400) $ (44,400) December 31, 2021 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 10,015 $ — $ — $ 10,015 Total assets $ 10,015 $ — $ — $ 10,015 Long-term liabilities: Contingent consideration — — (49,400) (49,400) Total liabilities $ — $ — $ (49,400) $ (49,400) and equityof up to $120.0$100.0 million to the former shareholders of Ascyrus upon the achievement of certain milestones and the sales-based additional earnout.10%12% and estimated future achievement of milestone dates between 2025 and 2026 to calculate the fair value of contingent consideration as of March 31,June 30, 2022. We will remeasure this liability at each reporting date and will record changes in the fair value of the contingent consideration in General, administrative, and marketing expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss.(Loss) Income. Increases or decreases in the fair value of the contingent consideration liability can result from changes in passage of time, discount rates, the timing and amount of our revenue estimates, and the timing and expectation of regulatory approvals.$1.8$3.2 million and $5.0 million for the three and six months ended June 30, 2022, respectively, and expense of $970,000 in fair value adjustments$3.3 million and $4.3 million for the three and six months ended March 31, 2022 andJune 30, 2021, respectively, in General, administrative, and marketing expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss,(Loss) Income, as a result of this assessment.
1,800March 31,June 30, 2022(47,600)(44,400)June 30, 2022 June 30, 2022 Cost Basis Unrealized
Holding
GainsEstimated
Market
ValueCash equivalents: Money market funds $ 10,025 $ — $ 10,025 Total assets $ 10,025 $ — $ 10,025 December 31, 2021 Cost Basis Unrealized
Holding
GainsEstimated
Market
ValueCash equivalents: Money market funds $ 10,015 $ — $ 10,015 Total assets $ 10,015 $ — $ 10,015 0no gross realized gains or losses on cash equivalents for the three and six months ended March 31,June 30, 2022 and 2021.March 31,June 30, 2022 and December 31, 2021 were comprised of the following (in thousands):June 30,
2022December 31,
2021Raw materials and supplies $ 34,565 $ 35,780 Work-in-process 11,856 9,712 Finished goods 27,897 31,479 Total inventories, net $ 74,318 $ 76,971 March 31,June 30, 2022 we had $14.7$14.2 million in consignment inventory, with approximately 37%39% in domestic locations and 63%61% in international locations. As of December 31, 2021 we had $12.9 million in consignment inventory, with approximately 43% in domestic locations and 57% in international locations.$44.0$44.8 million and $42.9 million as of March 31,June 30, 2022 and December 31, 2021, respectively.$2.7$2.6 million and $3.2 million as of March 31,June 30, 2022 and December 31, 2021, respectively.5. Goodwill and Other Intangible Assets
March 31,June 30, 2022 and December 31, 2021 the carrying values of our indefinite lived intangible assets were as follows (in thousands): June 30,
2022December 31,
2021Goodwill $ 240,939 $ 250,000 In-process R&D 2,025 2,208 Procurement contracts and agreements 2,013 2,013 Trademarks 226 66 March 31,June 30, 2022. In-process research and development, procurement contracts and agreements, and trademarks are included in Other intangibles, net on the Condensed Consolidated Balance Sheets as of March 31,June 30, 2022 and December 31, 2021.March 31,June 30, 2022 we concluded that our assessment of current factors did not indicate that goodwill or non-amortizing intangible assets are more likely than not to be impaired. We will continue to evaluate the recoverability of these non-amortizing intangible assets in future periods as necessary.March 31,June 30, 2022 and December 31, 2021 our entirethe carrying value of goodwill, balance wasall of which is related to our Medical devices segment.Medical Devices SegmentBalance as of December 31, 2021$250,000Foreign currency translation(2,171)Balance as of March 31, 2022$247,829Medical Devices Segment Balance as of December 31, 2021 $ 250,000 Foreign currency translation (9,061) Balance as of June 30, 2022 $ 240,939 March 31,June 30, 2022 and December 31, 2021 the gross carrying values, accumulated amortization, and approximate amortization period of our definite lived intangible assets were as follows (in thousands):June 30, 2022 June 30, 2022 Gross Carrying
ValueAccumulated
AmortizationNet Carrying
ValueWeighted Average
Useful Life
(Years)Acquired technology $ 205,124 $ 50,258 $ 154,866 17.7 Other intangibles: Customer lists and relationships 30,981 10,332 20,649 20.6 Distribution and manufacturing rights and know-how 9,031 4,798 4,233 5.0 Patents 4,136 3,160 976 17.0 Other 4,403 2,055 2,348 4.5 Total other intangibles $ 48,551 $ 20,345 $ 28,206 10.7 December 31, 2021 Gross Carrying
ValueAccumulated
AmortizationNet Carrying
ValueWeighted Average
Useful Life
(Years)Acquired technology $ 213,626 $ 46,632 $ 166,994 17.7 Other intangibles: Customer lists and relationships 31,148 9,618 21,530 20.5 Distribution and manufacturing rights and know-how 9,847 4,308 5,539 5.0 Patents 4,083 3,144 939 17.0 Other 3,969 1,762 2,207 4.4 Total other intangibles $ 49,047 $ 18,832 $ 30,215 10.6 Loss(Loss) Income (in thousands):Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Amortization expense $ 3,905 $ 4,238 $ 7,989 $ 8,498 March 31,June 30, 2022 scheduled amortization of intangible assets for the next five years is as follows (in thousands):Remainder
of 20222023 2024 2025 2026 2027 Total Amortization expense $ 7,437 14,662 14,302 12,452 12,233 12,113 $ 73,199 6. Income Taxes
40%29% and 34% for the three and six months ended June 30, 2022, respectively, as compared to a benefit of 30%under 1% and 20% for the three and six months ended March 31, 2022 andJune 30, 2021, respectively. Our income tax rate for the three and six months ended March 31,June 30, 2022 was primarily impacted by changes in our valuation allowance against our net deferred tax assets, non-deductible executive compensation, the foreign derived intangibleMarch 31,June 30, 2021 was primarily impacted by non-deductible executive compensation, changes in our valuation allowance against our net deferred tax assets, changes in our uncertain tax position liabilities, the research and development tax credit, and excess tax benefits on stock compensation.capitalfinance leases, net operating losses, amortization of research and experimentaldevelopment expenses, excess interest carryforward, stock compensation, and accrued compensation. Our deferred tax liabilities are primarily made up of intangible assets acquired in previous years, capitalfinance leases, and unrealized gains and losses.$22.9$22.7 million and $26.4 million as of March 31,June 30, 2022 and December 31, 2021, respectively. Our valuation allowance against our deferred tax assets was $14.8$16.2 million and $13.3 million as of March 31,June 30, 2022 and December 31, 2021, respectively, primarily related to net operating loss carryforwards and disallowed excess interest carryforwards.Operating leases: June 30,
2022December 31,
2021Operating lease right-of-use assets $ 56,376 $ 58,097 Accumulated amortization (13,717) (12,383) Operating lease right-of-use assets, net $ 42,659 $ 45,714 Current maturities of operating leases $ 3,207 $ 3,149 Non-current maturities of operating leases 42,141 44,869 Total operating lease liabilities $ 45,348 $ 48,018 Finance leases: Property and equipment, at cost $ 6,200 $ 6,759 Accumulated amortization (2,180) (2,105) Property and equipment, net $ 4,020 $ 4,654 Current maturities of finance leases $ 489 $ 528 Non-current maturities of finance leases 3,766 4,374 Total finance lease liabilities $ 4,255 $ 4,902 Weighted average remaining lease term (in years): Operating leases 12.3 12.5 Finance leases 8.4 8.8 Weighted average discount rate: Operating leases 5.9% 5.8% Finance leases 2.0% 2.0% Loss are as follows (in thousands):Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Amortization of property and equipment $ 131 $ 155 $ 268 $ 310 Interest expense on finance leases 22 28 47 57 Total finance lease expense 153 183 315 367 Operating lease expense 1,883 1,809 3,803 3,575 Sublease income (91) (92) (183) (216) Total lease expense $ 1,945 $ 1,900 $ 3,935 $ 3,726 Six Months Ended
June 30,Cash paid for amounts included in the measurement of lease liabilities: 2022 2021 Operating cash flows for operating leases $ 3,210 $ 2,957 Financing cash flows for finance leases 244 306 Operating cash flows for finance leases 44 57 Finance
Leases Operating
Leases Sublease
IncomeRemainder of 2022 $ 268 $ 2,506 $ 122 2023 575 5,606 — 2024 570 6,198 — 2025 549 5,124 — 2026 531 4,703 — Thereafter 2,127 41,447 — Total minimum lease payments $ 4,620 $ 65,584 $ 122 Less amount representing interest (365) (20,236) Present value of net minimum lease payments 4,255 45,348 Less current maturities (489) (3,207) Lease liabilities, less current maturities $ 3,766 $ 42,141 , until June 1, 2027 and June 1, 2025, respectively, subject to earlier springingLoss.(Loss) Income.March 31,June 30, 2022.March 31,June 30, 2022. The Convertible Senior Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. The initial conversion rate of the Convertible Senior Notes is 42.6203 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $23.46 per share, subject to adjustments. We use the if-converted method for assumed conversion of the Convertible Senior Notes for the diluted earnings per share calculation. The fair value and the effective interest rate of the Convertible Senior Notes as of March 31,June 30, 2022 was approximately $116.5$107.0 million and 5.05%, respectively. The fair value was based on market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy.interest,interest, and the amortization of the debt issuance costs as of the three months ended March 31, 2022 and 2021.. Interest on the Convertible Senior Notes began accruing upon issuance and is payable semi-annually. As of March 31,June 30, 2022 there were $2.4$2.2 million of unamortized debt issuance costs related to Convertible Senior Notes.(including (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. We may redeem for cash all or part of the Convertible Senior Notes at a redemption price equal to 100% of the principal amount of the redeemable Convertible Senior Notes, plus accrued and unpaid interest to, but excluding, the redemption date. No principal payments are due on the Convertible Senior Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the Convertible Senior Notes do not contain any financial covenants and do not restrict us from conducting significant restructuring transactions or issuing or repurchasing any of its other securities.June 30,
2022December 31,
2021Term loan balance $ 214,875 $ 216,000 Convertible senior notes 100,000 100,000 2.45% Sparkasse Zollernalb (KFW Loan 1) 403 566 1.40% Sparkasse Zollernalb (KFW Loan 2) 844 1,061 Total loan balance 316,122 317,627 Less unamortized loan origination costs (7,591) (8,504) Net borrowings 308,531 309,123 Less short-term loan balance (1,590) (1,630) Long-term loan balance $ 306,941 $ 307,493 $3.9$4.1 million and $4.0$8.0 million for the three and six months ended March 31,June 30, 2022, respectively, as compared to $4.9 million and $8.9 million for the three and six months ended June 30, 2021, respectively. Interest expense includes interest on debt and uncertain tax positions in both periods.March 31,June 30, 2022 represent our estimate of the probable losses and anticipated recoveries for incurred but not reported claims related to products sold and services performed prior to the balance sheet date.•Domestic hospitals – direct sales of products and preservation services.•International hospitals – direct sales of products and preservation services.•International distributors – generally these contracts specify a geographic area that the distributor will service, terms and conditions of the relationship, and purchase targets for the next calendar year.•CardioGenesis cardiac laser console trials and sales – CardioGenesis cardiac trialed laser consoles are delivered under separate agreements.
March 31,June 30, 2022 and 2021 the sources of revenue were as follows (in thousands):Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Domestic hospitals $ 39,508 $ 38,932 $ 76,501 $ 75,161 International hospitals 27,235 27,638 55,649 53,765 International distributors 12,152 9,504 23,216 18,146 CardioGenesis cardiac laser therapy 1,445 74 2,187 163 Total sources of revenue $ 80,340 $ 76,148 $ 157,553 $ 147,235 DESIGN ENGINEERINGDesign Engineering product order fulfillment. We assess the balance related to any arrangements in process and determine if the enforceable right to payment creates a material contract asset requiring disclosure. No material arrangements in process existed as of March 31,June 30, 2022 and 2021.March 31,June 30, 2022 and 2021 was not material.threesix months ended March 31,June 30, 2022 the Compensation Committee of our Board of Directors (the “Committee”) authorized awards from approved stock incentive plans of RSAs to non-employee directors and RSUs and PSUs to certain employees and company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 452,000509,000 shares and had an aggregate grant date marketfair value of $8.3$9.4 million.threesix months ended March 31,June 30, 2021 the Committee authorized awards from approved stock incentive plans of RSAs to non-employee directors, RSUs and PSUs to certain employees, and RSAs and PSUs to certain Company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 381,000487,000 shares and had an aggregate grant date marketfair value of $9.5$12.3 million.threesix months ended March 31,June 30, 2022 and 2021, respectively. The exercise prices of the options were equal to the closing stock prices on their respective grant dates.and 36,000 shares in both the threesix months ended March 31,June 30, 2022 and 2021 respectively, through the ESPP.weighted-averageweighted-average assumptions were used to determine the fair value of options and shares purchased under the ESPP:Three Months Ended
June 30, 2022Six Months Ended
June 30, 2022Stock Options ESPP Stock
OptionsESPP Expected life N/A 0.5 Years 5.0 Years 0.5 Years Expected stock price volatility N/A 0.31 0.40 0.31 Risk-free interest rate N/A 0.22% 1.89% 0.22% Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 RSA, RSU, and PSU expense $ 2,470 $ 1,695 $ 5,238 $ 3,745 Stock option and ESPP expense 611 572 1,183 1,159 Total stock compensation expense $ 3,081 $ 2,267 $ 6,421 $ 4,904 $174,000$147,000 and $157,000$321,000 in the three and six months ended March 31,June 30, 2022, respectively, and $152,000 and $309,000 in the three and six months ended June 30, 2021, respectively, of the stock compensation expense into our inventory costs and deferred preservation costs.
12. Loss Per Common Share
Three Months Ended
June 30,Six Months Ended
June 30,Basic loss per common share 2022 2021 2022 2021 Net loss $ (4,259) $ (2,178) $ (7,648) $ (5,316) Net loss allocated to participating securities 21 14 39 36 Net loss allocated to common shareholders $ (4,238) $ (2,164) $ (7,609) $ (5,280) Basic weighted-average common shares outstanding 40,031 38,943 39,941 38,841 Basic loss per common share $ (0.11) $ (0.06) $ (0.19) $ (0.14) Three Months Ended
June 30,Six Months Ended
June 30,Diluted loss per common share 2022 2021 2022 2021 Net loss $ (4,259) $ (2,178) $ (7,648) $ (5,316) Net loss allocated to participating securities 21 14 39 36 Net loss allocated to common shareholders $ (4,238) $ (2,164) $ (7,609) $ (5,280) Diluted weighted-average common shares outstanding 40,031 38,943 39,941 38,841 Diluted loss per common share $ (0.11) $ (0.06) $ (0.19) $ (0.14) March 31,June 30, 2022 and 2021 all stock options and awards were excluded from the calculation of diluted weighted-average common shares outstanding as these would be antidilutive due to the net loss.0no intersegment revenues.
Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Revenues: Medical devices $ 58,936 $ 56,076 $ 116,478 $ 109,421 Preservation services 21,404 20,072 41,075 37,814 Total revenues 80,340 76,148 157,553 147,235 Cost of products and preservation services: Medical devices 18,230 16,178 35,638 31,089 Preservation services 9,938 9,457 19,024 17,795 Total cost of products and preservation services 28,168 25,635 54,662 48,884 Gross margin: Medical devices 40,706 39,898 80,840 78,332 Preservation services 11,466 10,615 22,051 20,019 Total gross margin $ 52,172 $ 50,513 $ 102,891 $ 98,351
Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Products: Aortic stent grafts $ 23,833 $ 21,064 $ 49,339 $ 41,269 Surgical sealants 15,967 17,864 31,648 35,692 On-X 16,255 14,726 30,626 27,821 Other 2,881 2,422 4,865 4,639 Total products 58,936 56,076 116,478 109,421 Preservation services 21,404 20,072 41,075 37,814 Total revenues $ 80,340 $ 76,148 $ 157,553 $ 147,235 10-Q10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements give our expectations or forecasts of future events as of the date of this Form 10-Q. In some cases, words such as “could,” “may,” “might,” “will,” “would,” “shall,” “should,” “pro forma,” “potential,” “pending,” “intend,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “future,” “assume,” and variations of these types of words or other similar expressions identify forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this Form 10-Q. •Our belief that new products, new indications, global expansion, and business development are the four growth areas that will drive our business in the future;•The potential impact of the COVID-19 pandemic and the war in Ukraine on demand for and sales of our products and services, business operations, manufacturing operations, supply chain, cash flow, workforce, clinical and regulatory timelines, and our research and development projects;•Our belief that our distributors may delay or reduce purchases of products in US Dollars depending on the relative price of goods in their local currencies;•Our beliefs that the use of surgical adhesives and sealants, with or without sutures and staples, for certain indications can enhance the efficacy and cost-effectiveness of certain procedures through more effective and rapid wound closure;•Our beliefs and anticipation regarding the favorable attributes and benefits of our products and services, the basis on which our products and services compete, our physician education activities, the advantages of our relationships with organ and tissue procurement organizations and tissue banks, the FDA classification of our medical devices, our compliance with applicable laws and regulations, and the advantages of our intellectual property and its significance to our segments and our business as a whole, our relations with our employees, timelines regarding product launches and regulatory certifications, clearances, renewals, and approvals;•Our beliefs about potential competition and competitive products and services, potential adverse regulatory consequences, potential security vulnerabilities, and the associated potential adverse effects on our business;•Our beliefs regarding our global expansion efforts, including the international growth opportunity that would be provided by obtaining regulatory approval for BioGlue in China;•The dependencies affecting our ability to realize the anticipated business opportunities, growth prospects, synergies, and other benefits of the agreements with Endospan and Baxter and our acquisition of Ascyrus, and our beliefs about the costs and timelines for certain clinical trial milestones for the regulatory approvals of the NEXUS stent graft system in the US and the AMDS globally;•Our beliefs regarding the fair value of our acquisitions, divestitures, and other business development activities and the estimates and assumptions about the future achievements of milestones and future revenues and cash flows related to those business development activities, including our ability to achieve the milestones in the Baxter Transaction;•Our beliefs about the anticipated benefits from our corporate reincorporation and rebranding and the risks posed by the same;•Our beliefs about the present value and potential impairment of our intangible assets and leases;•Our beliefs about handpiece availability and CardioGenesis cardiac laser therapy revenue;•Our beliefs regarding the impact alternative anticoagulation therapy and transcatheter heart valve replacement may have on the number of patients choosing On-X mechanical heart valves;•Our beliefs about our ability to make timely transitions to our notified bodies and obtain renewals for our CE Marks impacted by Brexit and the transition to the Medical Device Regulation (“MDR”) in Europe, our ability to obtain derogations related to the same, and the impact these renewals and derogations may have on our business;•Our beliefs about our R&D and product pipeline, including our beliefs about the timing of our clinical trials and product launches;•Our beliefs regarding the seasonal nature of the demand for some of our products and services and the reasons for such seasonality, if any, and regarding the impact of consignment inventory on product sales, if any;•Our belief that our cash from operations and existing cash and cash equivalents will enable us to meet our current operational liquidity needs for at least the next twelve months, our expectations regarding future cash requirements, and the impact that our cash requirements might have on our cash flows for the next twelve months;•Our expectation regarding the impact on cash flows of undertaking significant business development activities and the potential need to obtain additional debt financing or equity financing;•Our belief that we will incur expenses for research and development projects, including for clinical research projects to gain regulatory approvals for products or indications, including On-X, aortic stent grafts, and BioGlue products, and for research and development for new products despite reduced planned spending due to COVID-19 and that our efforts to develop new products and technologies will likely require additional investment, research, and new clinical studies or data;•Our beliefs about pending and potential legal or other governmental or regulatory proceedings;•Our expectations regarding the timing of clinical research work and regulatory approvals for and expected distribution of products or indications, including On-X, aortic stent grafts, and BioGlue products, and CryoValve SGPV if the FDA reclassifies allograft heart valves as Class III medical devices;•Our beliefs and expectations regarding the utilization of net operating loss carryforwards from our acquisitions of JOTEC, On-X, Hemosphere, Inc., and Cardiogenesis Corporation;•Our beliefs about our operating results which may fluctuate significantly on a periodic basis as a result of internal and external factors, including reduced demand for our products, availability of products, materials, and supplies, strategic actions we take such as acquisitions or divestitures, unanticipated costs and expenses, market reception of our new or improved product offerings, and interest rate and currency fluctuations; and•Other statements regarding projections of future financial and business performance; anticipated growth and trends in our business and the markets relevant to our business, including as our growth relates to our competitors; the robustness and reliability of our workforce and supply chain; future production capacity and product supply; the availability and benefits of our products in the future; and the expected timing and impact of our strategic initiatives.10-Q10-Q are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. We assume no obligation, and expressly disclaim any duty, to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.$77.2$80.3 million for the three months ended March 31,June 30, 2022, a 9%6% increase from the three months ended March 31,June 30, 2021. The increase in revenues for the three months ended March 31,June 30, 2022 was primarily due to increases in aortic stent grafts revenues, preservation service revenues, and On-X product revenues, partially offset by decreases in surgical sealants and other product revenues.March 31,June 30, 2022. COVID-19 pandemic and the emergence of new variants on our business and recognize that COVID-19 and its effects could continue to negatively impact our business and results of operations during the remainder of 2022 and beyond. As an example, the COVID-19 pandemic has impacted certain aspects of the global supply chain and resulted in supply chain inflation. Although we have yet to experience any material effects of this impact on our supply chain or operations, we face an increasing risk that upstream disruptions may occur or worsen. As global economies continue to recover from the COVID-19 downturn, the expiration of COVID-19 related hiring freezes, increased opportunities for remote work, and increasing compensation pressure have resulted in a competition for talent and an unprecedentunprecedented number of retirements or career changes. The resulting worker shortages at all levels have impacted supply chains, and distribution channels, and employers’ and our own ability to adequately staff operations. Impact from theseThese shortages to date, including a shortage of trained staff capable of meeting the increased demand associated with releasing quarantined tissue, have impacted, and may impact our operations going forward. Hospitals and other healthcare providers have also experienced staffing shortages impacting ourPortionsNew variants of COVID-19 continue to emerge around the globe, increasing the case numbers and short-term quarantines which can each further impact our workforce and those of our operations are being impacted by publiccustomers and private vaccine mandates, which can impact hospital staffing, impact our specialized workforce, and impact the global supply chain, all of which can directly or indirectly impact our product sales, business operations, manufacturing operations, workforce, and research and development projects.vaccine mandates or vaccine encouragement programsvaccines on the spread of COVID-19 and its variants, global availability and acceptance of vaccines and their effectiveness against variants, the prevalence of vaccine mandates generally, disruptions to workforce availability, and any continuing impact on the global supply chain. If COVID-19 or its variants become more contagious, if efforts to further contain the effects of COVID-19 or its variants, including vaccine mandates or adoption,availability, are unsuccessful, if COVID-19, its variants, or disruptions to the global supply chain impact our supply chain or employee availability or productivity, or if we continue to experience periods of uncertainty due to COVID-19 or its variants, it could materially, adversely affect our revenues, financial condition, profitability, and cash flows.
Results of Operations
Revenues for the
Three Months Ended
June 30,Percent
Change
From Prior
YearRevenues as a Percentage of
Total Revenues for the
Three Months Ended
June 30,2022 2021 2022 2021 Products: Aortic stent grafts $ 23,833 $ 21,064 13% 30% 28% Surgical sealants 15,967 17,864 (11)% 20% 24% On-X 16,255 14,726 10% 20% 19% Other 2,881 2,422 19% 3% 3% Total products 58,936 56,076 5% 73% 74% Preservation services 21,404 20,072 7% 27% 26% Total $ 80,340 $ 76,148 6% 100% 100% Revenues for the
Six Months Ended
June 30,Percent
Change
From Prior
YearRevenues as a Percentage of
Total Revenues for the
Six Months Ended
June 30,2022 2021 2022 2021 Products: Aortic stent grafts $ 49,339 $ 41,269 20% 31% 28% Surgical sealants 31,648 35,692 (11)% 20% 24% On-X 30,626 27,821 10% 20% 19% Other 4,865 4,639 5% 3% 3% Total products 116,478 109,421 6% 74% 74% Preservation services 41,075 37,814 9% 26% 26% Total $ 157,553 $ 147,235 7% 100% 100% 9%6% and 7% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. The increase in revenues for the three months ended March 31,June 30, 2022 was primarily due to increasesan increase in revenues from aortic stent grafts, On-X products, preservation services, and other products, partially offset by a decrease in revenues from surgical sealants. The increase in revenues for the six months ended June 30, 2022 was due to an increase in revenues from aortic stent grafts, preservation services, On-X products, and On-Xother products, partially offset by decreasesa decrease in product revenues from surgical sealants, and other products.sealants. Excluding the effects of foreign exchange, revenues increased 11%9% and 10% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. Revenues for the three and six months ended March 31,June 30, 2022 and 2021 were negatively impacted in certain regions by delays or cancellations of some surgical procedures as a result of reduced hospital capacity and staffing and hospital restrictions due to the COVID-19 pandemic. A detailed discussion of the changes in product revenues and preservation services revenues for the three and six months ended March 31,June 30, 2022 is presented below.Products8%5% and 6% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. The increase for the three and six months ended March 31,June 30, 2022 was primarily due to increasesan increase in revenues from aortic stent grafts, On-X products, and On-Xother products, partially offset by decreasesa decrease in revenues fromin surgical sealants and other products.sealants. A discussion of the changes in product revenues for aortic stent grafts, surgical sealants, On-X products, and other productsproduct revenues is presented below.March 31,June 30, 2022, as compared to the three and six months ended March 31,June 30, 2021, the US Dollar strengthened in comparison to major currencies, resulting in revenue decreases when these foreign currency denominated transactions were translated into US Dollars. Future changes in these exchange rates could have a material, adverse effect on our revenues denominated in these currencies. Additionally, our sales to many distributors around the world are denominated in US Dollars, and although these sales are not directly impacted by currency exchange rates, we believe that some of our distributors may delay or reduce purchases of products in US Dollars depending on the relative price of these goods in their local currencies.OEMoriginal equipment manufacturing (“OEM”) aortic stent grafts products. Aortic arch stent grafts include our E-vita Open NEO, E-vita Open Plus, AMDS, NEXUS, E-vita Thoracic 3G, and E-nya products. Abdominal stent grafts include our E-xtra Design Engineering, E-nside, E-tegra, E-ventus BX, and E-liac products. Aortic stent grafts are used in endovascular and open vascular surgery for the treatment of complex aortic arch, thoracic, and abdominal aortic diseases. Our aortic stent grafts are primarily distributed in international markets.26%13% and 20% for the three and six months ended June 30, 2022, respectively, as compared to the three and six months ended June 30, 2021.March 31,June 30, 2022, as compared to the three months ended March 31, 2021.Revenues from aortic stent grafts, excluding OEM, increased 27% for the three months ended March 31, 2022, as compared to the three months ended March 31,June 30, 2021. This increase was primarily due to an increase in units sold, which increased revenues by 36%22%, and an increase in average sales prices, which increased revenues by 3%, partially offset by the effect of foreign exchange rates, which decreased revenues by 8%9%.a decreasean increase in average sales prices, which increased revenues by 10%, partially offset by the effect of certain products in certain regions,foreign exchange rates, which decreased revenues by 1%9%.forfrom aortic stent grafts, excluding OEM, increased 35%26% and 31% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. The increase in revenues was partially due to improved conditions from the COVID-19 pandemic for the three and six months ended March 31,June 30, 2022, as compared to the three and six months ended March 31,June 30, 2021. Revenues for the three and six months ended March 31,June 30, 2022 increased primarily in Europe, the Middle East, and Africa (collectively, “EMEA”"EMEA") and Asia Pacific (“APAC”("APAC"). The revenue increase in EMEA was primarily due to customer buying patterns in certain direct and indirect markets. The revenue increase in APAC was primarily due to an increase in sales of newly launched aortic stent grafts.grafts and distributor buying patterns in certain markets. OEM sales of aortic stent grafts accounted for less than 1% of product revenues for the three and six months ended March 31,June 30, 2022 and 2021.12%11% for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021. This decrease was primarily due to a decrease in volume of milliliters sold, which decreased revenues by 12%9%, and the effect of foreign exchange rates, which decreased revenues by 2%.On a constant currency basis, revenuesthreesix months ended March 31,June 30, 2022, as compared to the threesix months ended March 31,June 30, 2021. TheThis decrease was primarily due to a decrease in revenuevolume of milliliters sold, which decreased revenues by 11%, and the effect of foreign exchange rates, which decreased revenues by 2%, partially offset by an increase in average sales prices, which increased revenues by 2%.March 31,June 30, 2022, wasrespectively, as compared to the three and six months ended June 30, 2021 primarily due to revenue decreases in North America.America and EMEA. During the three and six months ended March 31,June 30, 2021 revenues from the sales of surgical sealants in North America were larger than in the three and six months ended March 31,June 30, 2022 primarily due to inventory restocking orders placed in the first quarterhalf of 2021 as hospitals experienced reduced impact from the COVID-19 pandemic and began resuming more normal operations. Revenues were negatively impacted during the three months ended March 31,first quarter of 2022 due to delays and cancellations of some surgical procedures due to hospital staffing challenges as a result of a new COVID-19 variant.48%51% and 50% of total surgical sealant revenues for the three and six months ended June 30, 2022, respectively, and 54% and 53% of total surgical sealant revenues for the three and six months ended March 31, 2022 andJune 30, 2021, respectively.March 31,June 30, 2022, as compared to the three months ended March 31, 2021.On-X revenues, excluding OEM, increased 10% for the three months ended March 31, 2022, as compared to the three months ended March 31,June 30, 2021. This increase was primarily due to an increase in volume of units sold, which increased revenues by 9%, and an increase in average sales prices, which increased revenues by 3%, partially offset by the effect of foreign exchange rates, which decreased revenues by 1%.10%13% and 12% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. The increase in revenues forin the three and six months ended March 31,June 30, 2022 was primarily due to revenue increases in North America, Latin America and EMEA. RevenuesThe revenue increases in these markets were positivelypartially due to improved conditions from the COVID-19 pandemic for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021. The increase in revenues in North America was also impacted in the North Americanmarket due toby increases in market share andshare. The increase in revenues in Latin America was also impacted by market penetration in certain regions. The increase in revenues in EMEA due to anwas also primarily impacted by increase of shipments in direct markets. On-X OEM sales accounted for less than 1% of product revenues for each ofboth the three and six months ended March 31,June 30, 2022 and 2021.Domestic revenues from On-X accounted for 65% and 64% of total On-X revenues for the three months ended March 31, 2022 and 2021, respectively.decreased 11%increased 19% and 5% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended June 30, 2021.March 31, 2021.On July 28,June 30, 2021 we entered into an asset purchase agreement and other ancillary agreements related to the sale of PerClot, a polysaccharide hemostatic agent used in surgery to Baxter, and an agreement to terminate all of our material agreements with Starch Medical, Inc. (“SMI”) related to PerClot (collectively the “Baxter Transaction”).The decrease in other revenues for the three months ended March 31, 2022 was primarily due to a decrease in PerClot product revenues, partially offset by an increase in CardioGenesis cardiac laser therapy product revenues, partially offset by a decrease in PerClot product revenues. The increase in CardioGenesis cardiac laser therapy product revenues for the three and six months ended June 30, 2022 was primarily due to our ability to resume limited sales of handpieces starting during the fourth quarter of 2021, as further described below. The decrease in PerClot product revenues for the three and six months ended March 31,June 30, 2022 was due to the Baxter Transaction, described in more detail in Part II, Item 7, “Sale of PerClot” of our annual report on Form 10-K for the year ended December 31, 2021. The increase in CardioGenesis cardiac laser therapy product revenues for the three months ended March 31, 2022 was primarily due to our ability to resume limited sales of handpieces during the fourth quarter of 2021, as further described below.March 31,June 30, 2021 we had minimal revenues from the CardioGenesis cardiac laser therapy product line as we did not have a supply of handpieces due to the FDA’s review of our supplier’s change in manufacturing location. After obtaining approval, our supplier resumed manufacturing a limited supply of handpieces allowing us to resume limited sales during the fourth quarter of 2021.11%7% for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021. The increase in revenues for the three months ended March 31,June 30, 2022 was primarily due to an increase in average sales prices, which increased revenues by 4%, and an increase in tissue shipments, which increased revenues by 3%.10%6%, and an increase in average sales prices, which increased revenues by 1%3%.Cost of Products and Preservation Services
Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Cost of products $ 18,230 $ 16,178 $ 35,638 $ 31,089 17%13% and 15% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. Cost of products for the three and six months ended March 31,June 30, 2022 and 2021 included costs related to aortic stent grafts, surgical sealants, On-X, and other products.March 31,June 30, 2022 was primarily due to an increase in shipments of aortic stent grafts in certain regions due to improved conditions from the COVID-19 pandemic as well as an increase in the cost of surgical sealants and aortic stent grafts, and, to a lesser extent, surgical sealants, as compared to the three and six months ended March 31,June 30, 2021.Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Cost of preservation services $ 9,938 $ 9,457 $ 19,024 $ 17,795 9%5% and 7% for the three and six months ended March 31,June 30, 2022, respectively, as compared to the three and six months ended March 31,June 30, 2021. Cost of preservation services includesincluded costs for cardiac and vascular tissue preservation services.March 31,June 30, 2022 was primarily due to an increase in shipments due to improved conditions from the COVID-19 pandemic as well as an increase in the processing cost of cardiac and vascular tissues, as compared to the three months ended March 31,June 30, 2021.Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Gross margin $ 52,172 $ 50,513 $ 102,891 $ 98,351 Gross margin as a percentage of total revenues 65% 66% 65% 67% 6%3% for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021. The increase for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021, was primarily due to an increase in shipments of cardiac tissues, aortic stent grafts, and On-X products, and cardiac tissues partially offset by a decrease in shipments of surgical sealants. Gross margin as a percentage of total revenues decreased for the three months ended March 31,June 30, 2022, as compared to the three months ended March 31,June 30, 2021, primarily due to an increase in product costs of certain products sold resulting from inflationary pressures of materials and labor, partially offset by a favorable mix of certain products sold during the three months ended June 30, 2022.and surgical sealants sold as well as an increase in product costs due to inflationary pressures of materials and laborcertain regions during the threesix months ended March 31,June 30, 2022.Operating Expenses
Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 General, administrative, and marketing expenses $ 38,983 $ 40,830 $ 77,938 $ 79,468 General, administrative, and marketing expenses as a percentage of total revenues 49% 54% 49% 54% increased 1%decreased 5% and 2% for the three and six months ended March 31,June 30, 2022, as compared to the three and six months ended March 31,June 30, 2021. The increasedecrease in General, administrative, and marketing expenses for the three and six months ended March 31,June 30, 2022, as compared to the three and six months ended June 30, 2021, was primarily due to an increase in personnel and stock compensation expenses partially offset by a decrease in business development expenses.$1.6$3.1 million and $4.7 million of business development income for the three and six months ended March 31,June 30, 2022, respectively, as compared to $1.5$3.4 million and $4.8 million of expense for the three and six months ended March 31, 2021.June 30, 2021, respectively. Business development expenses included $3.2 million and $5.0 million of income during the three and six months ended March 31,June 30, 2022, included $1.8 million of incomerespectively, related to the fair value adjustments for the Ascyrus contingent consideration, as compared to $970,000$3.3 million and $4.3 million of expense during the three and six months ended March 31, 2021.Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Research and development expenses $ 8,648 $ 8,360 $ 18,776 $ 16,114 Research and development expenses as a percentage of total revenues Research and development expenses as a percentage of total revenues 11% 11% 12% 11% 31%3% and 17% for the three and six months ended March 31,June 30, 2022, as compared to the three and six months ended March 31,June 30, 2021. Research and development spending for the three and six months ended March 31,June 30, 2022 and 2021 was primarily focused on clinical work to gain regulatory approvals for On-X, certain aortic stent grafts, and PerClot products.$3.9$4.1 million and $4.0$8.0 million for the three and six months ended March 31,June 30, 2022, respectively, as compared to $4.9 million and $8.9 million for the three and six months ended June 30, 2021, respectively. Interest expense for the three and six months ended March 31,June 30, 2022 and 2021 relates to interest on debt and uncertain tax positions.$133,000$3.8 million and $3.9 million for the three and six months ended March 31,June 30, 2022 as compared to $1.9, respectively. Other income, net was $1.3 million for the three months ended March 31,June 30, 2021. Other expense, net was $600,000 for the threesix months ended March 31, 2022 and 2021June 30, 2021. Other expense (income), net primarily includes the realized and unrealized effects of foreign currency gains and losses.Three Months Ended
June 30,Six Months Ended
June 30,2022 2021 2022 2021 Loss before income taxes $ (3,300) $ (2,183) $ (5,729) $ (6,684) Income tax expense (benefit) 959 (5) 1,919 (1,368) Net loss $ (4,259) $ (2,178) $ (7,648) $ (5,316) Diluted loss per common share $ (0.11) $ (0.06) $ (0.19) $ (0.14) Diluted weighted-average common shares outstanding 40,031 38,943 39,941 38,841 Earnings March 31,June 30, 2022 and 2021. The loss before income taxes for the three and six months ended March 31,June 30, 2022 and 2021 was negatively impacted by thean increase in operating expenses to support revenue expansion, and an increase in investments in the research and development pipeline, and clinical expenses.an unfavorable impact of foreign currency gains and losses, partially offset by the change in fair value of our financial instruments. The loss before income taxes for the three and six months ended June 30, 2021 was due to business development, integration and severance expenses primarily related to the Ascyrus acquisition, and investments in the research and development pipeline. The loss before income taxes for three and six months ended March 31,June 30, 2022 and 2021 was also negatively impacted by reduced revenue resulting from delays andor cancellations of some surgical procedures as a result of reduced hospital capacity and staffing and hospital restrictions due to the COVID-19 pandemic.40%29% and 34% for the three and six months ended June 30, 2022, respectively, as compared to a benefit of 30%under 1% and 20% for the three and six months ended March 31, 2022 andJune 30, 2021, respectively. The change in the tax rate for the three and six months ended March 31,June 30, 2022 was primarily due to changes in pre-tax book income, a decrease in the excess tax benefit related to stock compensation, and an increase in the estimated current year valuation allowance, as compared to the three and six months ended March 31,June 30, 2021.March 31,June 30, 2022 was primarily impacted by changes in our valuation allowance against our net deferred tax assets, non-deductible executive compensation, the foreign derived intangible income deduction, the research and development tax credit, changes in our uncertain tax position liabilities, and tax shortfalls on stock compensation.March 31,June 30, 2021 was primarily impacted by non-deductible executive compensation, changes in our valuation allowance against our net deferred tax assets, changes in our uncertain tax position liabilities, the research and development tax credit, and excess tax benefits on stock compensation.March 31,June 30, 2022 and 2021. Net loss and diluted loss per common share for the three and six months ended March 31,June 30, 2022 and 2021 was primarily due to loss before income taxes, as discussed above.March 31,June 30, 2022 net working capital (current assets of $244.5$240.4 million less current liabilities of $42.8$41.6 million) was $201.7$198.8 million, with a current ratio (current assets divided by current liabilities) of 6 to 1, compared to net working capital of $202.7 million and a current ratio of 6 to 1 at December 31, 2021.threesix months ended March 31,June 30, 2022 were for general working capital needs, capital expenditures for facilities and equipment, interest and principal payments under our Credit Agreement (defined below), interest payments under our Convertible Senior Notes (defined below), and repurchases of stock to cover tax withholdings. We funded our cash requirements through our existing cash reserves and proceeds from stock option exercises.March 31,June 30, 2022. The Convertible Senior Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. The initial conversion rate of the Convertible Senior Notes is 42.6203 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $23.46 per share, subject to adjustments. We use the if-converted method for assumed conversion of the Convertible Senior Notes for the diluted earnings per share calculation. The fair value and the effective interest rate of the Convertible Senior Notes as of March 31,June 30, 2022 was approximately $116.5$107.0 million and 5.05%, respectively. The fair value was based on market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. for the three months ended March 31, 2022, and 2021.. Interest on the Convertible Senior Notes began accruing upon issuance and is payable semi-annually.March 31,June 30, 2022 approximately 38%37% of our cash and cash equivalents were held in foreign jurisdictions.Six Months Ended
June 30,2022 2021 Cash flows used in: Operating activities $ (8,912) $ (392) Investing activities (4,994) (7,044) Financing activities (1,032) (3,737) Effect of exchange rate changes on cash and cash equivalents 310 242 Decrease in cash and cash equivalents $ (14,628) $ (10,931) $598,000$8.9 million and $3.0 million$392,000 for the threesix months ended March 31,June 30, 2022 and 2021, respectively.threesix months ended March 31,June 30, 2022 these non-cash items included $5.9$11.5 million in depreciation and amortization expenses, $3.2$6.1 million in non-cash compensation, $3.0 million of deferred income tax changes, $1.9 million of lease expenses, and $1.8$5.0 million in fair value adjustments of financial instruments.threesix months ended March 31,June 30, 2022 these included the unfavorable effect of $3.3$5.7 million due to timing differences between the recording of accounts payable and other current liabilities,, $1.7 $9.6 million due to the timing differences between recording receivables and the receipt of cash, $1.4$3.7 million due to an increase in inventory balances and deferred preservation costs, partially offset by $1.5and $0.2 million due to a decreasean increase in prepaid expenses and other assets.$2.7$5.0 million and $810,000$7.0 million for the threesix months ended March 31,June 30, 2022 and 2021, respectively. During the threesix months ended March 31,June 30, 2022 cash used in investing activities primarily included $2.2$4.1 million of cash used for capital expenditures.$235,000$1.0 million and $2.1$3.7 million for the threesix months ended March 31,June 30, 2022 and 2021, respectively. The current year cash used in financing activities was primarily due to $1.7 million for repurchases of common stock to cover tax withholdings and $694,000$1.4 million for the repayment of debt, partially offset by $2.3 million of proceeds from the exercise of stock options and issuances of common stock.$316.9$316.1 million of scheduled principal payments and $63.8$72.0 million in anticipated interest payments related to our Credit Agreement, Convertible Senior Notes, and other governmental loans.$2.2$4.1 million and $1.5$7.2 million for the threesix months ended March 31,June 30, 2022 and 2021, respectively. Capital expenditures for the threesix months ended March 31,June 30, 2022 were primarily related to routine purchases of manufacturing and tissue processing equipment, computer software, leasehold improvements needed to support our business, computer software, and computer equipment.$51.4$40.4 million as of March 31,June 30, 2022 and interest paid on the outstanding balances, if any, of our variable rate Revolving Credit Facility, Term Loan Facility, and Convertible Senior Notes. A 10% adverse change in interest rates, as compared to the rates experienced by us for the threesix months ended March 31,June 30, 2022, affecting our cash and cash equivalents, Term Loan Facility, Revolving Credit Facility, and Convertible Senior Notes would not have a material effect on our financial position, results of operations, or cash flows.Foreign Currency Exchange Rate Risk
product revenuesproducts are denominated in Euros, British Pounds, Swiss Francs, Polish Zlotys, Canadian Dollars, and Brazilian Reals and a portion of our General, administrative, and marketing expenses are denominated in Euros, British Pounds, Swiss Francs, Polish Zlotys, Canadian Dollars, Brazilian Reals, and Singapore Dollars. These foreign currency transactions are sensitive to changes in exchange rates. In this regard, changes in exchange rates could cause a change in the US Dollar equivalent of net income from transactions conducted in other currencies. As a result, we could recognize a reduction in revenues or an increase in expenses related to a change in exchange rates.March 31,June 30, 2022 affecting our third-party balances denominated in foreign currencies could impact our financial position or cash flows by approximately $8.0$7.0 million. An additional 10% adverse change in exchange rates from the weighted-average exchange rates experienced by us for the threesix months ended March 31,June 30, 2022 affecting our revenue and expense transactions denominated in foreign currencies would not have had a material impact on our financial position, profitability, or cash flows. Chief Operating Officer, and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Artivion have been detected. These inherent limitations include the realities that judgments in decision-makingdecision-making can be faulty and that breakdowns can occur because of simple error or mistake. Our Disclosure Controls have been designed to provide reasonable assurance of achieving their objectives.March 31,June 30, 2022 the CEO and CFO have concluded that our Disclosure Controls were effective at a reasonable assurance level to satisfy their objectives and to ensure that the information required to be disclosed by us in our periodic reports is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding disclosure and is recorded, processed, summarized, and reported within the time periods specified in the US Securities and Exchange Commission’s rules and forms.
March 31,June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.•Our product sales. Certain regions experienced continued impact on revenues in the firstsecond quarter of 2022 due to the COVID-19 pandemic, and in particular, the Omicron variant.emergence of new variants. In addition to COVID-19’s impact on procedure volumes, including an impact on procedure volumes due in part to COVID-19-related healthcare staffing shortages and shortages from workers exiting healthcare, we have observed additional downstream effects on our business, including an increase in delays or difficulty in collecting certain outstanding receivables, particularly with certain governmental payors in regions heavily impacted by COVID-19. The extent to which our financial performance will be impacted by the pandemic through the remainder of 2022 and beyond will depend largely on future developments, including changes in hospital utilization rates and staffing, the prevalence and severity of new variants and their impact on case numbers and short-term quarantines, and the global availability and acceptance of COVID-19 vaccines and their effectiveness against variants, and the prevalence of public and private vaccine mandates and local lockdowns.variants. COVID-19’s continued or increased impact on our financial performance may also increase the risks we face with respect to managing our indebtedness.•Our business operations. In 2020 we took several steps to address the impact of COVID-19 on our employees, cash consumption, and operations, including reducing expenditures and delaying investments. The reductions and delays we adopted could adversely impact our business operations or delay our recovery from the effects of the pandemic. Although we have begun to scale back many of these steps in most geographies, the COVID-19 virusoperations.operations, including the potential to impact our workforce availability as case numbers and short-term quarantines increase due to the spread of new variants. COVID-19 also continues to impact our business partners, including the various regulators and notified bodies that we rely on, which increases the regulatory risks we face, and specifically, the risks we face with respect to timely review and approval of new and renewal certifications, clearances, and approvals for our products.occur.occur and that increasing case numbers and short-term quarantines impact our workforce availability. Risks relating to the lingering effects of global supply chain disruptions may even continue after COVID-19’s risk as a global pandemic has subsided.•Our workforce. As some global economies have begun to emerge from the COVID-19 downturn, the expiration of COVID-19-related hiring freezes, increased opportunities for remote work, the Great Resignation and increasing compensation pressure have resulted in a war for talent and an unprecedentunprecedented number of career changes. The resulting worker shortages and increased labor costs at all levels have impacted supply chains, and distribution channels, and employers’ ability to adequately staff their operations. This has impacted not only our own ability to attract and retain employees, but also the ability of our customers who face increasing staffing pressures throughout their healthcare organizations.•Our research and development projects. In 2020 and parts of 2021 we reduced spending on research and development projects, including clinical research projects. These reductions could adversely impact future revenue, and additional reductions in spending could be implemented, further impacting future revenue. In addition, our ability to conduct our ongoing research and development projects in markets that are affected by COVID-19 has been, and could continue to be, adversely impacted. Enrollment and timelines for our clinical trials have been, and might continue to be, impacted as healthcare providers reprioritizere-prioritize resources, address staffing shortages, and limit access to healthcare facilities or as patients decline to participate or are hesitant to voluntarily visit healthcare facilities. In addition, staffing shortages and COVID-19-related impacts on government and regulatory agencies have slowed and might continue to slow timelines for regulatory actions, including approvals and re-certifications. if vaccine mandates become more prevalent, or if COVID-19, its variants, or disruptions to the global supply chain impact our supply chain or employee productivity, it could materially, adversely affect our revenues, financial condition, profitability, and cash flows. The nature and extent of these developments are highly uncertain and unpredictable and may vary greatly by region. These adverse developments or a prolonged period of uncertainty could adversely affect our financial performance.•Greater difficulties and costs associated with staffing, establishing and maintaining internal controls, managing foreign operations and distributor relationships, and selling directly to customers;•Broader exposure to corruption and expanded compliance obligations, including under the Foreign Corrupt Practices Act, the UK Bribery Law, local anti-corruption laws, Office of Foreign Asset Control administered sanction programs, the European Union’s General Data Protection Regulation, and other emerging corruption and data privacy regulations;•Overlapping and potentially conflicting, or unexpected changes in, international legal and regulatory requirements or reimbursement policies and programs;•Longer and more expensive collection cycles in certain countries, particularly those in which our primary customers are government-funded hospitals;•Changes in currency exchange rates, particularly fluctuations in the Euro as compared to the US Dollar;•Potential adverse financial impact and negative erosion of our operating profit margin over time due to increasing inflationary pressures, particularly through our supply chain; our exposure may be increased through our limited ability to raise prices and through global expansion where business occurs with, or pricing is set directly by, government entities, or we are party to long term pricing agreements with governments or local distributors, impacting our ability to pass on rising costs;•Potential adverse tax consequences of overlapping tax structures;structures or potential changes in domestic and international tax policy, laws, and treaties; and•Potential adverse financial and regulatory consequences resulting from the exit of the UK from the European Union, or “Brexit.”generally, however;generally; however, continuation or escalation of the war or increased export controls or additional sanctions imposed on or by Russia, its allies, or related entities could adversely affect our financial performance. Although we do not have any direct operations in Russia or Ukraine, it is difficult to predict the ultimate course of the war and we may face business operations and supply chain disruptions as a result, including disruptions related to shortages of materials, higher costs of materials and freight, freight delays, increased energy costs or energy shortages, travel disruptions, currency fluctuation, and disruptions to banking systems or capital markets.•Greater financial and other resources for research and development, commercialization, acquisitions, and litigation and to weather the impacts of COVID-19 and increased workforce competition;•Greater name recognition as well as more recognizable trademarks for products similar to products that we sell;•More established record of obtaining and maintaining regulatory product clearances or approvals;•More established relationships with healthcare providers and payors;•Lower cost of goods sold or preservation costs; and•Larger direct sales forces and more established distribution networks.•Source sufficient quantities of some human tissue or address potential excess supply of others. We rely primarily upon the efforts of third-parties to educate the public and foster a willingness to donate tissue. Factors beyond our control such as supply, regulatory changes, negative publicity concerning methods of tissue recovery or disease transmission from donated tissue, or public opinion of the donor process as well as our own reputation in the industry can negatively impact the supply of tissue;•Compete effectively, as we may be unable to capitalize on our clinical advantages or our competitors may have advantages over us in terms of cost structure, pricing, back-office automation, marketing, and sourcing; or•Mitigate sufficiently the risk that tissue can become contaminated during processing; that processed tissue cannot be end-sterilized and hence carries an inherent risk of infection or disease transmission or that our quality controls can eliminate that risk.•Competing effectively with our major competitors, as they may have advantages over us in terms of cost structure, supply chain, pricing, sales force footprint, and brand recognition;•We may be unable to obtain approval to commercialize BioGlue in certain non US countries as fast as our competitors do of their products or at all. We also may not be able to capitalize on new BioGlue approvals, including for new indications, in non US countries;•BioGlue contains a bovine blood protein. Animal-based products are subject to increased scrutiny from the public and regulators, who may seek to impose additional regulations, regulatory hurdles or product bans in certain countries on such products; BioGlue is a mature product and other companies may use the inventions disclosed in expired BioGlue patents to develop and make competing products; and•BioGlue faces potential adverse regulatory consequences resulting from the exit of the UK from the European Union, or “Brexit, as well as the impact of COVID-19 on regulatory authorities’ ability to timely recertifyre-certify the Conformité Européene Mark (“CE Mark”) for BioGlue” See Part I, Item 1A, “Risk Factors—Industry Risks— Our products and tissues are highly regulated and subject to significant quality and regulatory risks.”the following risks related to aortic stent grafts related risks based on our ability to:•Compete effectively with our major competitors, as they may have advantages over us in terms of cost structure, supply chain, pricing, sales force footprint, and brand recognition;•Develop innovative, high quality, and in-demand aortic repair products;•Respond adequately to enhanced regulatory requirements and enforcement activities, and particularly, our ability to obtain regulatory approvals and renewals globally;•Meet demand for aortic stent grafts as we seek to expand our business globally; and•Maintain a productive working relationship with our Works Council in Germany.•Compete effectively with some of our major competitors, as they may have advantages over us in terms of cost structure, supply chain, pricing, sales force footprint, and brand recognition;•Take market share in the mechanical heart valve market based on the FDA’s approved lower International Normalized Ratio (“INR”) indication for the On-X aortic heart valve or complete the associated FDA mandated post-approval studies;•Address clinical trial data or changes in technology that may reduce the demand for mechanical heart valves, such as data regarding transcatheter aortic valve replacement, or “TAVR” devices;•Manage risks associated with less favorable contract terms for On-X products on consignment at hospitals;•Respond adequately to enhanced international regulatory requirements or enforcement activities; and•Receive timely renewal certifications in certain markets.Continued fluctuation of foreign currencies relative to the US Dollar could materially, adversely affect our business.
recent sanctions against Russiaglobal inflationary pressures, and the ongoing war in Ukraine,some cases, currency crises, it is possible that foreign currency restrictions orcontrols, the development of multipleparallel exchange rates, or highly inflationary economies could arise in certain countries. It is also likely that inflation spikes will occur in Russia and neighboring countries putting those economies at risk of becoming highly inflationary. Fluctuations in exchange rates of Euros or other local currencies in relation to the US Dollar could materially reduce our future revenues as compared to the comparable prior periods. Should this occur, it could have a material, adverse impact on our revenues, financial condition, profitability, and cash flows.•We may incur added amortization expense over the estimated useful lives of some acquired intangible assets;•We may incur additional depreciation expense as a result of recording purchased tangible assets;•We may be required to incur material charges relating to any impairment of goodwill and intangible assets;•Cost of sales may increase temporarily if acquired inventory is recorded at fair market value;•If acquisition consideration consists of earn-outs, our earnings may be affected by changes in estimates of future contingent consideration; or•Earnings may be affected by transaction and integration costs, which are expensed immediately.unprecedentunprecedented number of career changes. The resulting competition and worker shortages at all levels have impacted supply chains and distribution channels and our ability to attract and retain the specialized workforce necessary for our business and operations.•Issue additional equity securities that would dilute our stockholders’ ownership interest;•Use cash we may need in the future to operate our business;•Incur debt, including on terms that could be unfavorable to us or debt we might be unable to repay;•Structure the transaction resulting in unfavorable tax consequences, such as a stock purchase that does not permit a step-up in basis for the assets acquired;•Be unable to realize the anticipated benefits of the transaction; or•Assume material unknown liabilities associated with the acquired business.•On December 1, 2017 we acquired JOTEC AG, a Swiss entity that we converted to JOTEC GmbH and subsequently merged with our Swiss acquisition entity, Jolly Buyer Acquisition GmbH and its subsidiaries;securityholderssecurity holders upon FDA approval of NEXUS;•On September 2, 2020 we acquired 100% of the outstanding shares of Ascyrus Medical LLC (“Ascyrus”), the developer of the Ascyrus Medical Dissection Stent (“AMDS”); and•On July 28, 2021 we entered into various agreements with Baxter International, Inc. (“Baxter”) and Starch Medical, Inc. (“SMI”) related to the sale of our PerClot assets to Baxter and the termination of our existing material agreements with SMI (collectively the “Baxter Transaction”).•Leverage our global infrastructure to sell and cross-market the acquired products;•Drive adoption of NEXUS and AMDS in the European and other markets, including our ability to manage the substantial requirements for NEXUS procedures for product training, implant support, and proctoring;•Bring acquired products to the US market, including our acquired aortic stent grafts;•Harness the aortic stent graft product pipeline and our research and development capabilities;•Obtain regulatory approvals in relevant markets, including our ability to timely obtain FDA PMA for PerClot as contemplated under the terms of the Baxter Transaction and to obtain or maintain Conformité Européene Mark (“CE Mark”) product certification for pipeline products, and to obtain or maintain certificationcertifications for pipeline and current products at all, and obtain timely CE Mark recertification for BioGlue;products;•Execute on development and clinical trial timelines for acquired products;•Manage global inventories, including our ability to manage inventories for product lines with large numbers of product configurations and manage manufacturing and demand cycles to avoid excess inventory obsolescence due to shelf life expiration, particularly for processed tissues and aortic stent grafts;•Carry, service, and manage significant debt and repayment obligations; and•Manage the unforeseen risks and uncertainties related to these transactions, including any related to intellectual property rights.•Disruptions to our day-to-day business operations including disruptions to our ability to receive or our customers’ ability to make timely payments;•Unanticipated delays or other impact on our pending regulatory applications or clinical trials arising from the Corporate Rebrand;•Confusion within the marketplace, particularly with multiple points of contact in our downstream product flow involving purchasing and accounts payable departments and end users;•Intellectual property risks associated with the adoption of a new corporate identity and trade dress; and•Loss of brand equity associated with our legacy brands, including our CryoLife and JOTEC brands that will become less prominent over time.•Our products and tissues allegedly have caused, and may in the future cause, patient injury, which has exposed, and could in the future expose, us to liability claims that could lead to additional regulatory scrutiny;•Our manufacturing and tissue processing operations are subject to regulatory scrutiny, inspections and enforcement actions, and regulatory agencies could require us to change or modify our operations or take other action, such as issuing product recalls or holds;•Regulatory agencies could reclassify, re-evaluate, or suspend our clearances or approvals, or fail, or decline to, issue or reissue our clearances or approvals that are necessary to sell our products and distribute tissues;•Adverse publicity associated with our products, processed tissues, or our industry could lead to a decreased use of our products or tissues, increased regulatory scrutiny, or product or tissue processing liability claims.(“EEA”) and other markets that require CE Marking. Additionally, to the extent the MDR places stricter requirements on manufacturers of custom-made devices, those new requirements could delay, impede, or otherwise impact the availability of our E-xtra Design Engineering products. Finally, COVID-19 has impacted the predictability and timelines associated with the MDR transition. (“MHRA”) has announced that CE Marking will continue to be recognized in the UK and certificates issued by EU-recognized Notified Bodies will continue to be valid in the UK market until June 30, 2023. Going forward, all devices marketed in the UK will require UK Conformity Assessed Marks certified by a UK Approved Body (the re-designation of the UK Notified Body).DEKRA has been unable to completeit significantly delayed its last audit in that process, a Phase 2 onsite audit, due to COVID-19 restrictions on travel, staffing shortages, and workload related to the transition to the MDR. We areWith the Phase 2 audit complete, we currently requestinganticipate completing the registration and renewal process during the fourth quarter of 2022. In the interim, we have requested and received from the majority of relevant territories, derogations from certain individual European countries to allow us to continue to commercialize BioGlue in those countries until we can complete the certification process with DEKRA. FailureFor derogations expiring before we anticipate receiving the renewal of the BioGlue CE Mark, we have requested and anticipate receiving, extensions of the previously granted derogations. That said, failure to timely obtainmaintain key derogations in certain countries, or any other delays in thisthe MDR transition, may have a material adverse effect on our ability to supply demand in affected jurisdictions, have a material, adverse impact on our business, and may also impact our Medical Device Single Audit Program (“MDSAP”) certifications. Failure to timely obtain new MDSAP certifications following their expiration may impact our ability to distribute covered products in Australia, Brazil, Canada, and Japan.We may not be successful in obtaining clinical results or regulatory clearances/approvals for new and existing products and services, and our approved products and services may not achieve market acceptance.
Healthcare policy changes may have a material, adverse effect on us.
•Incur or guarantee additional debt or create liens on certain assets;•Pay dividends on or make distributions of our share capital, including repurchasing or redeeming capital stock, or make other restricted payments, including restricted junior payments;•Enter into certain transactions with our affiliates including any transaction or merger or consolidation, liquidation, winding-up, or dissolution; convey, sell, lease, exchange, transfer or otherwise dispose of all or any part of our business, assets or property; or sell, assign, or otherwise dispose of any capital stock of any subsidiary;•Enter into certain rate swap transactions, basis swaps, credit derivative transactions, and other similar transactions, whether relating to interest rates, commodities, investments, securities, currencies, or any other relevant measure, or transactions of any kind subject to any form of master purchase agreement governed by the International Swaps•Amend, supplement, waive, or otherwise modify our or our subsidiariessubsidiaries' organizational documents in a manner that would be materially adverse to the interests of the lenders, or change or amend the terms of documentation regarding junior financing in a manner that would be materially adverse to the interests of the lenders;•Make changes to our and our subsidiaries’ fiscal year without notice to the administrative agent under the agreement;agent;•Enter into agreements which restrict our ability to incur liens;•Engage in any line of business substantially different from that in which we are currently engaged; and•Make certain investments, including strategic acquisitions or joint ventures.•Will not be required to lend any additional amounts to us; and•Could elect to declare all indebtedness outstanding, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend further credit, if applicable.
March 31,June 30, 2022 of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934:Period Total Number of
Common Shares
and Common Stock
Units PurchasedAverage Price
Paid per
Common ShareTotal Number
of Common Shares
Purchased as
Part of Publicly
Announced
Plans or ProgramsDollar Value
of Common Shares
That May Yet Be
Purchased Under the
Plans or Programs04/01/22 - 04/30/22 — $ — — $ — 05/01/22 - 05/31/22 451 20.35 — — 06/01/22 - 06/30/22 — — — — Total 451 $ 20.35 — $ — March 31,June 30, 2022 were tendered to us in payment of taxes on stock compensation and were not part of a publicly announced plan or program.
Description Delaware Certificate of Incorporation, effective January 1, 2022. (Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed January 4, 2022). Delaware Certificate of Amendment of Certificate of Incorporation, effective January 18, 2022. (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed January 20, 2022). Amended and Restated Bylaws of Artivion, Inc., a Delaware Corporation (Incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed January 20, 2022). 10.131.1†*Form of Artivion, Inc. Equity and Cash Incentive Plan Option Award Agreement10.2†*Form of Artivion, Inc. Equity and Cash Incentive Plan PSU Award Agreement10.3†*Form of Artivion, Inc. Equity and Cash Incentive Plan Restricted Stock Unit Award Agreement10.4†*Form of Artivion, Inc. Equity and Cash Incentive Plan Special PSU Award Agreement31.1*Certification by D. Ashley Lee pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Certification Pursuant To 18 USC. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002. XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101 _________________________
NATURES/s/ J. PATRICK MACKIN /s/ D. ASHLEY LEE -------------------------------------------------------------------------D. ASHLEY LEE Chairman, President, and
Chief Executive Officer
(Principal Executive Officer)Executive Vice President, and Chief Executive Officer
Chief Financial Officer(Principal Executive Officer)
(Principal Financial and
Accounting Officer)Accounting Officer)DATE May 6, 2022 ------------------------ DATE