COVER PAGE
COVER PAGE - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-34045 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 54-1887631 | |
Entity Address, Address Line One | 2711 Centerville Road, | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Wilmington, | |
Entity Address, State or Province | DE | |
Entity Address, Postal Zip Code | 19808 | |
City Area Code | (302) | |
Local Phone Number | 252-9160 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | ENOV | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,539,676 | |
Entity Registrant Name | Enovis Corp | |
Entity Central Index Key | 0001420800 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 428,502 | $ 395,117 | $ 834,653 | $ 770,574 |
Cost of sales | 180,143 | 179,211 | 351,229 | 348,768 |
Gross profit | 248,359 | 215,906 | 483,424 | 421,806 |
Selling, general and administrative expense | 207,881 | 193,657 | 415,046 | 382,137 |
Research and development expense | 18,918 | 15,661 | 37,111 | 30,503 |
Amortization of acquired intangibles | 32,249 | 31,824 | 64,289 | 62,610 |
Insurance settlement gain | 0 | (33,034) | 0 | (33,034) |
Restructuring and other charges | 3,805 | 2,245 | 6,440 | 4,664 |
Operating income (loss) | (14,494) | 5,553 | (39,462) | (25,074) |
Interest expense, net | 4,076 | 4,546 | 9,728 | 11,610 |
Debt extinguishment charges | 0 | 20,104 | 0 | 20,104 |
Unrealized gain on investment in ESAB Corporation | 0 | (135,537) | 0 | (135,537) |
Other expense, net | 753 | 0 | 92 | 0 |
Income (loss) from continuing operations before income taxes | (19,323) | 116,440 | (49,282) | 78,749 |
Income tax benefit | (4,713) | (4,211) | (11,826) | (3,847) |
Net income (loss) from continuing operations | (14,610) | 120,651 | (37,456) | 82,596 |
Income (loss) from discontinued operations, net of taxes | 4,797 | (43,666) | 4,485 | 10,690 |
Net income (loss) | (9,813) | 76,985 | (32,971) | 93,286 |
Less: net income attributable to noncontrolling interest from continuing operations - net of taxes | 182 | 130 | 374 | 397 |
Less: net income attributable to noncontrolling interest from discontinued operations - net of taxes | 0 | 0 | 0 | 966 |
Net income (loss) attributable to Enovis Corporation | $ (9,995) | $ 76,855 | $ (33,345) | $ 91,923 |
Net income (loss) per share - basic | ||||
Net income (loss) per share, continuing operations, basic (in usd per share) | $ (0.27) | $ 2.23 | $ (0.70) | $ 1.52 |
Net income (loss) per share, discontinued operations, basic (in usd per share) | 0.09 | (0.81) | 0.08 | 0.18 |
Net income (loss) per share, consolidated, basic (in usd per share) | 1.42 | (0.61) | 1.70 | |
Net income (loss) per share, continuing operations, diluted (in usd per share) | (0.27) | 2.21 | (0.70) | 1.51 |
Net income (loss) per share, discontinued operations, diluted (in usd per share) | 0.09 | (0.80) | 0.08 | 0.18 |
Net income (loss) per share, consolidated operations, (in usd per share) | $ (0.18) | $ 1.41 | $ (0.61) | $ 1.69 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (9,813) | $ 76,985 | $ (32,971) | $ 93,286 |
Other comprehensive income (loss): | ||||
Foreign currency translation, net of tax expense | 11,311 | (30,876) | 21,895 | (84,337) |
Unrealized gain on hedging activities, net of tax expense | (5,449) | 0 | (5,449) | 9,028 |
Amounts reclassified from Accumulated other comprehensive loss: | ||||
Amortization of pension and other post-retirement net actuarial gain, net of tax expense | (882) | 0 | (882) | 629 |
Other comprehensive income (loss) | 4,980 | (30,876) | 15,564 | (74,680) |
Comprehensive income (loss) | (4,833) | 46,109 | (17,407) | 18,606 |
Less: comprehensive income (loss) attributable to noncontrolling interest | 190 | (1,303) | 406 | (408) |
Comprehensive income (loss) attributable to Enovis Corporation | $ (5,023) | $ 47,412 | $ (17,813) | $ 19,014 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Parenthetical] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation, tax | $ 0 | $ 0 | $ 0 | $ 338 |
Unrealized gain on hedging activities, tax | (1,740) | 0 | (1,740) | 2,711 |
Amortization of pension and other post-retirement net actuarial loss, tax | $ (41) | $ 0 | $ (41) | $ 199 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 32,491 | $ 24,295 |
Trade receivable, less allowance for credit losses | 298,976 | 267,380 |
Inventories, net | 453,897 | 426,643 |
Prepaid expenses | 26,758 | 28,550 |
Other current assets | 75,117 | 48,155 |
Total current assets | 887,239 | 795,023 |
Property, plant and equipment, net | 260,754 | 236,741 |
Goodwill | 2,034,087 | 1,983,588 |
Intangible assets, net | 1,110,950 | 1,110,727 |
Lease asset - right of use | 61,739 | 66,881 |
Other assets | 88,784 | 80,288 |
Total assets | 4,443,553 | 4,273,248 |
LIABILITIES AND EQUITY | ||
Current portion of long-term debt | 0 | 219,279 |
Accounts payable | 147,180 | 135,628 |
Accrued liabilities | 206,493 | 210,292 |
Total current liabilities | 353,673 | 565,199 |
Long-term debt, less current portion | 400,000 | 40,000 |
Non-current lease liability | 47,567 | 51,259 |
Other liabilities | 191,553 | 166,989 |
Total liabilities | 992,793 | 823,447 |
Equity: | ||
Common stock, $0.001 par value; 133,333,333 shares authorized; 54,534,111 and 54,228,619 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 55 | 54 |
Additional paid-in capital | 2,944,094 | 2,925,729 |
Retained earnings | 542,387 | 575,732 |
Accumulated other comprehensive loss | (37,898) | (53,430) |
Total Enovis Corporation equity | 3,448,638 | 3,448,085 |
Noncontrolling interest | 2,122 | 1,716 |
Total equity | 3,450,760 | 3,449,801 |
Total liabilities and equity | $ 4,443,553 | $ 4,273,248 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheet (Parenthetical) [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 8,158 | $ 7,965 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 133,333,333 | 133,333,333 |
Common Stock, Shares, Issued | 54,534,111 | 54,228,619 |
Common Stock, Shares, Outstanding | 54,534,111 | 54,228,619 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest |
Balance at Dec. 31, 2021 | $ 4,661,433 | $ 52 | $ 4,544,315 | $ 589,024 | $ (516,013) | $ 44,055 |
Balance, beginning, shares (in shares) at Dec. 31, 2021 | 52,083,078 | |||||
Net income (loss) | 16,301 | 15,068 | 1,233 | |||
Distributions to noncontrolling owners | (941) | (941) | ||||
Other comprehensive (loss) income, net of tax | (43,804) | (43,466) | (338) | |||
Conversion of tangible equity units into common stock | $ 2 | (2) | ||||
Conversion of tangible equity units into common stock (in shares) | 1,691,845 | |||||
Common stock-based award activity | 11,056 | 11,056 | ||||
Common stock-based award activity (in shares) | 255,957 | |||||
Balance at Apr. 01, 2022 | 4,644,045 | $ 54 | 4,555,369 | 604,092 | (559,479) | 44,009 |
Balance, ending, shares (in shares) at Apr. 01, 2022 | 54,030,880 | |||||
Balance at Dec. 31, 2021 | 4,661,433 | $ 52 | 4,544,315 | 589,024 | (516,013) | 44,055 |
Balance, beginning, shares (in shares) at Dec. 31, 2021 | 52,083,078 | |||||
Net income (loss) | 93,286 | |||||
Other comprehensive (loss) income, net of tax | (74,680) | |||||
Distribution of ESAB Corporation | 499,981 | |||||
Balance at Jul. 01, 2022 | 3,491,463 | $ 54 | 2,897,207 | 680,947 | (88,941) | 2,196 |
Balance, ending, shares (in shares) at Jul. 01, 2022 | 54,111,118 | |||||
Balance at Apr. 01, 2022 | 4,644,045 | $ 54 | 4,555,369 | 604,092 | (559,479) | 44,009 |
Balance, beginning, shares (in shares) at Apr. 01, 2022 | 54,030,880 | |||||
Net income (loss) | 76,985 | 76,855 | 130 | |||
Other comprehensive (loss) income, net of tax | (30,876) | (29,443) | (1,433) | |||
Common stock-based award activity | 8,570 | 8,570 | ||||
Distribution of ESAB Corporation | (1,207,261) | (1,666,732) | 499,981 | (40,510) | ||
Common stock-based award activity (in shares) | 80,238 | |||||
Balance at Jul. 01, 2022 | 3,491,463 | $ 54 | 2,897,207 | 680,947 | (88,941) | 2,196 |
Balance, ending, shares (in shares) at Jul. 01, 2022 | 54,111,118 | |||||
Balance at Dec. 31, 2022 | 3,449,801 | $ 54 | 2,925,729 | 575,732 | (53,430) | 1,716 |
Balance, beginning, shares (in shares) at Dec. 31, 2022 | 54,228,619 | |||||
Net income (loss) | (23,158) | (23,350) | 192 | |||
Other comprehensive (loss) income, net of tax | 10,584 | 10,560 | 24 | |||
Common stock-based award activity | 8,044 | 8,044 | ||||
Common stock-based award activity (in shares) | 264,535 | |||||
Balance at Mar. 31, 2023 | 3,445,271 | $ 54 | 2,933,773 | 552,382 | (42,870) | 1,932 |
Balance, ending, shares (in shares) at Mar. 31, 2023 | 54,493,154 | |||||
Balance at Dec. 31, 2022 | 3,449,801 | $ 54 | 2,925,729 | 575,732 | (53,430) | 1,716 |
Balance, beginning, shares (in shares) at Dec. 31, 2022 | 54,228,619 | |||||
Net income (loss) | (32,971) | |||||
Other comprehensive (loss) income, net of tax | 15,564 | |||||
Balance at Jun. 30, 2023 | 3,450,760 | $ 55 | 2,944,094 | 542,387 | (37,898) | 2,122 |
Balance, ending, shares (in shares) at Jun. 30, 2023 | 54,534,111 | |||||
Balance at Mar. 31, 2023 | 3,445,271 | $ 54 | 2,933,773 | 552,382 | (42,870) | 1,932 |
Balance, beginning, shares (in shares) at Mar. 31, 2023 | 54,493,154 | |||||
Net income (loss) | (9,813) | (9,995) | 182 | |||
Other comprehensive (loss) income, net of tax | 4,980 | 4,972 | 8 | |||
Common stock-based award activity | 10,322 | $ 1 | 10,321 | |||
Common stock-based award activity (in shares) | 40,957 | |||||
Balance at Jun. 30, 2023 | $ 3,450,760 | $ 55 | $ 2,944,094 | $ 542,387 | $ (37,898) | $ 2,122 |
Balance, ending, shares (in shares) at Jun. 30, 2023 | 54,534,111 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENT OF EQUITY Statement of Stockholders' Equity [Parenthetical] - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Other comprehensive income (loss), tax | $ (1,781) | $ 0 | $ 0 | $ 3,248 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | Dec. 31, 2022 | |
Statement of Cash Flows [Abstract] | |||||||
Net income (loss) | $ (9,813) | $ (23,158) | $ 76,985 | $ 16,301 | $ (32,971) | $ 93,286 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and other impairment charges | 105,033 | 117,300 | |||||
Stock-based compensation expense | 16,981 | 19,793 | |||||
Non-cash interest expense | 1,481 | 1,658 | |||||
Unrealized gain on investment in ESAB Corporation | 0 | (135,537) | 0 | (135,537) | |||
Debt extinguishment charges | 0 | 20,104 | 0 | 20,104 | |||
Deferred income tax expense (benefit) | (107) | 2,174 | |||||
Loss on sale of property, plant and equipment | 533 | 352 | |||||
Changes in operating assets and liabilities: | |||||||
Trade receivables, net | (25,912) | (33,123) | |||||
Inventories, net | (10,476) | (92,910) | |||||
Accounts payable | 8,324 | 15,919 | |||||
Other operating assets and liabilities | (27,326) | (48,329) | |||||
Net cash provided by (used in) operating activities | 35,560 | (39,313) | |||||
Cash flows from investing activities: | |||||||
Purchases of property, plant and equipment and intangibles | (67,248) | (47,796) | |||||
Proceeds from sale of property, plant and equipment | 0 | 2,746 | |||||
Acquisitions, net of cash received, and investments | (98,740) | (35,123) | |||||
Net cash used in investing activities | (165,988) | (80,173) | |||||
Cash flows from financing activities: | |||||||
Payments under term credit facility | (219,468) | (785,000) | |||||
Proceeds from borrowings on term credit facility | 370,000 | 450,000 | |||||
Repayments of borrowings on revolving credit facilities and other | (11,538) | (607,618) | |||||
Repayments of borrowings on Euro senior notes | 0 | (386,278) | |||||
Repayments of borrowings on Senior notes | 0 | (300,000) | |||||
Distribution from ESAB Corporation, net | 0 | 1,143,369 | |||||
Proceeds from issuance of common stock, net | 1,385 | 1,727 | |||||
Payment of debt extinguishment costs | 0 | (12,704) | |||||
Deferred consideration payments and other | (1,668) | (9,795) | |||||
Net cash provided by (used in) financing activities | 138,711 | (506,299) | |||||
Effect of foreign exchange rates on Cash and cash equivalents | (87) | 2,020 | |||||
Increase (decrease) in Cash and cash equivalents | 8,196 | (623,765) | |||||
Cash and cash equivalents, beginning of period | $ 24,295 | $ 719,370 | 24,295 | 719,370 | $ 719,370 | ||
Cash and cash equivalents, end of period | $ 32,491 | $ 95,605 | $ 32,491 | $ 95,605 | $ 24,295 |
General
General | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Enovis Corporation (the “Company” or “Enovis”) was previously Colfax Corporation (“Colfax”) until its separation into two differentiated, independent, and publicly traded companies on April 4, 2022 (the “Separation”). Upon completion of the Separation, the Company retained its specialty medical technology business, changed its name to Enovis Corporation, and began trading under the stock symbol “ENOV” on the New York Stock Exchange on April 5, 2022. Enovis is an innovation-driven medical technology growth company dedicated to developing clinically differentiated solutions that generate measurably better patient outcomes and transform workflows. The Company conducts its business through two operating segments, “Prevention & Recovery” and “Reconstructive”. The Prevention & Recovery segment provides orthopedic and recovery science solutions, including devices, software, and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease. The Reconstructive segment provides surgical implant solutions, offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger and surgical productivity tools. The Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Certain prior period amounts have been reclassified to conform to the current period presentation. The Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), filed with the SEC on March 1, 2023. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting PronouncementsThe Company has not adopted any new accounting standards during the six months ended June 30, 2023. There are no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial position, results of operations or cash flows. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations The Company’s discontinued operations include the following: (1) operating results of ESAB Corporation (“ESAB”) prior to Separation, (2) charges related to previously retained asbestos contingencies from certain divested businesses for which we did not retain an interest in the ongoing operations that were fully transferred to ESAB in conjunction with the Separation, and (3) certain expenses related to the Separation and prior divestitures. The following table presents the financial results of the Company’s discontinued operations: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (in thousands) Net sales $ — $ — $ — $ 647,911 Cost of sales — — — 423,580 Selling, general and administrative expense — — — 125,529 Restructuring and other charges — — — 5,304 Asbestos charges — — — 3,194 Divestiture-related expenses (1) 5,600 35,463 6,011 45,941 Operating (loss) income (5,600) (35,463) (6,011) 44,363 Interest expense (2) — — — 8,035 (Loss) income from discontinued operations before income taxes (5,600) (35,463) (6,011) 36,328 Income tax (benefit) expense (3) (10,397) 8,203 (10,496) 25,638 (Loss) income from discontinued operations, net of taxes $ 4,797 $ (43,666) $ 4,485 $ 10,690 (1) Divestiture-related expenses include a charge for the release of a tax indemnification with ESAB for the three and six months ended June 30, 2023, and charges of $35.3 million and $45.0 million associated with the Separation for the three and six months ended July 1, 2022, respectively. (2) Interest expense was allocated to discontinued operations based on allocating $1.2 billion of corporate level debt to discontinued operations consistent with the dividend received from ESAB and the debt repaid at the time of the Separation. (3) Includes benefit of release of uncertain tax positions for the three and six months ended June 30, 2023. Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $26.2 million. Cash used in investing activities related to discontinued operations for the six months ended July 1, 2022 was $3.2 million. |
Acquisitions and Investments
Acquisitions and Investments | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Investments | Acquisitions and Investments 2023 Acquisitions On June 28, 2023, the Company completed the Novastep acquisition in its Reconstructive segment, a leading player in Minimally Invasive Surgery (MIS) foot and ankle solutions with a best-in-class MIS bunion system serving a rapidly growing portion of the global bunion segment. The acquisition is accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the acquisition date. The Company paid $96.9 million for the acquisition, net of cash received. The Company has allocated $39.8 million to goodwill and $52 million to intangible assets acquired. The acquisition accounting reflects our preliminary estimates and are subject to adjustment. The acquired goodwill value is primarily driven by the expected synergies from cross-selling Novastep products to existing Enovis foot & ankle customers. The acquisition broadens our reconstructive product offerings for the foot and ankle market and expands our customer base in Europe. Purchase accounting procedures are ongoing and revisions may be recorded in future periods during the measurement period. In April 2023, the Company entered into a definitive agreement to acquire the SEAL external fixation product line from D.N.E., LLC. The transaction closed on July 20, 2023 for a purchase price of $28 million, subject to working capital adjustments. 2022 Acquisitions On May 6, 2022, the Company completed a business acquisition in its Reconstructive segment of KICo Knee Innovation Company Pty Limited and subsidiaries, an Australian private company doing business as 360 Med Care, by acquiring 100% of its equity interests. 360 Med Care is a medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers. The acquisition is accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the acquisition date. The Company paid $14.3 million for the acquisition, net of cash received, and recorded estimated contingent consideration at fair value of $12.8 million related to expected results over future revenue targets. The Company has allocated $16.3 million to goodwill and $18.2 million to intangible assets acquired. The purchase price accounting for this acquisition was finalized. The 360 Med Care acquisition broadens our customer base in Australia and adds to our overall product offerings. On July 5, 2022, the Reconstructive segment of the Company acquired a controlling interest of Insight Medical Systems (“Insight”). Insight’s flagship solution, ARVIS, is an FDA-cleared augmented reality solution precisely engineered for the specific needs of hip and knee replacement surgery. The ARVIS navigation unit consists of a hands-free heads-up display worn by the surgeon which provides surgical guidance at the point of care in a streamlined, space-conserving and cost-effective manner compared to traditional robotic offerings. The acquisition is accounted for under the acquisition method of accounting as a step-acquisition, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the acquisition date. The Company made initial investments in Insight in 2020 and 2021, which were initially carried at cost. During the third quarter of 2022, the Company acquired an additional 53.7% interest in Insight for $34.2 million net of cash received, and recorded contingent consideration of $5.0 million, which is the maximum amount payable under the agreement based on Insight’s achievement of certain milestones related to ARVIS. The Company holds a 99.5% interest in Insight and recognized an initial $0.3 million noncontrolling equity interest in its financial statements attributed to Insight. The Company allocated $36.3 million to goodwill and $38.4 million to intangible assets acquired. The purchase price accounting for this acquisition was finalized. Goodwill is primarily driven by expected synergies between ARVIS’ augmented reality surgical guidance system and our existing customer base and existing products. The Company does not expect any of the goodwill to be deductible for tax purposes. As a result of obtaining control of Insight, the Company remeasured its initial investments to fair value, resulting in a $8.8 million gain in the fourth quarter of 202 2. During the six months ended July 1, 2022, the Company also completed two asset acquisitions and one investment in its Prevention & Recovery segment. The asset acquisitions broaden the Company’s product offering and distribution network. Aggregate purchase consideration for the two asset acquisitions and one investment was $18.2 million, of which $13.6 million was paid in cash and $4.6 million of deferred and contingent consideration. For further information on prior year acquisitions and investments, refer to Note 5. “Acquisitions and Investments” in the in the Company’s 2022 Form 10-K. Investments As of June 30, 2023, the balance of investments held by the Company without readily determinable fair values w as $20.7 million . The investments are carried at cost minus impairments, if any, plus adjustments for fair value indicators from observable price changes in orderly transactions for the identical or similar investment of the same issuer. There have been no impairments or upward adjustments in the current year or since acquisition of these investments. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue [Abstract] | |
Revenue | Revenue The Company provides orthopedic solutions, including products and services spanning the full continuum of patient care, from injury prevention to rehabilitation. While the Company’s sales are primarily derived from three sales channels including dealers and distributors, insurance, and direct to consumers and hospitals, substantially all of the Company’s revenue is recognized at a point in time. The Company disaggregates its revenue into the following segments: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Prevention & Recovery: U.S. Bracing & Support $ 114,963 $ 111,185 $ 219,338 $ 214,220 U.S. Other P&R 67,729 65,296 130,076 123,010 International P&R (1) 90,783 87,302 174,801 171,388 Total Prevention & Recovery 273,475 263,783 524,215 508,618 Reconstructive: U.S. Reconstructive 106,146 90,643 209,638 179,122 International Reconstructive 48,881 40,691 100,800 82,834 Total Reconstructive 155,027 131,334 310,438 261,956 Total $ 428,502 $ 395,117 $ 834,653 $ 770,574 (1) Includes favorable currency impact of $0.1 million and unfavorable currency impacts of $4.1 million for the three and six months ended June 30, 2023, respectively. Given the nature of the businesses, the Company does not generally have unsatisfied performance obligations with an original contract duration of greater than one year. The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates, implicit price concessions, and other discounts. The Company includes estimated amounts of variable consideration in the transaction price to the extent that it is probable there will not be a significant reversal of revenue. Allowance for Credit Losses The Company’s estimate of current expected credit losses on trade receivables considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. In calculating and applying its current expected credit losses, the Company disaggregates trade receivables into business segments due to risk characteristics unique to each segment given the individual lines of business and market. The business segments are further disaggregated based on either geography or product type. The Company uses a loss rate methodology in calculating its current expected credit losses, considering historical write-offs over a defined lookback period in deriving a historical loss rate. The expected credit loss model considers current conditions and reasonable and supportable forecasts for current and projected macroeconomic factors. A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Condensed Consolidated Balance Sheets is as follows: Six Months Ended June 30, 2023 Balance at Charged to Expense, net Write-Offs, Deductions and Other, net Foreign Balance at (In thousands) Allowance for credit losses $ 7,965 $ 1,844 $ (1,709) $ 58 $ 8,158 |
Net Loss Per Share from Continu
Net Loss Per Share from Continuing Operations | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share from Continuing Operations | Net Loss Per Share from Continuing Operations Net loss per share from continuing operations was computed as follows: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands, except share and per share data) Computation of Net income (loss) per share from continuing operations - basic: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ (14,792) $ 120,521 $ (37,830) $ 82,199 Weighted-average shares of Common stock outstanding – basic 54,510,688 54,080,549 54,418,554 53,969,738 Net income (loss) per share from continuing operations – basic $ (0.27) $ 2.23 $ (0.70) $ 1.52 Computation of Net income (loss) per share from continuing operations - diluted: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ (14,792) $ 120,521 $ (37,830) $ 82,199 Weighted-average shares of Common stock outstanding – basic 54,510,688 54,080,549 54,418,554 53,969,738 Net effect of potentially dilutive securities - stock options and restricted stock units — 441,300 — 489,134 Weighted-average shares of Common stock outstanding – diluted 54,510,688 54,521,849 54,418,554 54,458,872 Net income (loss) per share from continuing operations – diluted $ (0.27) $ 2.21 $ (0.70) $ 1.51 (1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $0.2 million and $0.4 million for the three and six months ended June 30, 2023 and $0.1 million and $0.4 million for the three and six months ended July 1, 2022. The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for both the three and six months ended June 30, 2023 excludes 1.2 million shares underlying outstanding stock-based compensation awards, as their inclusion would be anti-dilutive. The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for both the three and six months ended July 1, 2022 excludes 0.4 million shares underlying outstanding stock-based compensation awards, as their inclusion would be anti-dilutive. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three and six months ended June 30, 2023, Loss from continuing operations before income taxes was $19.3 million and $49.3 million, while Income tax benefit was $4.7 million and $11.8 million, respectively. The effective tax rate was 24.4% and 24.0% for the three and six months ended June 30, 2023, both of which differed from the 2023 federal statutory rate of 21% mainly due to non-U.S. income taxed at lower rates, release of valuation allowance on non-U.S. attributes, tax credits for research and development, and release of uncertain tax positions. This was offset by other non-deductible expenses and U.S. taxation on international operations. During the three and six months ended July 1, 2022, Income from continuing operations before income taxes was $116.4 million and $78.7 million, while Income tax benefit was $4.2 million and $3.8 million, respectively. The effective tax rate was (3.6)% and (4.9)% for the three and six months ended July 1, 2022, both of which differed from the 2022 U.S. federal statutory rate of 21% mainly due to non-deductible unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Equity | 8. Equity Share Repurchase Program In 2018, the Company’s Board of Directors authorized the repurchase of shares of the Company’s Common stock from time-to-time on the open market or in privately negotiated transactions. No repurchases of the Company’s Common stock have been made under this plan since the third quarter of 2018. As of June 30, 2023, the remaining stock repurchase authorization provided by the Board of Directors was $100 million. The timing, amount and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors. There is no term associated with the remaining repurchase authorization. Accumulated Other Comprehensive Loss The following tables present the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the six months ended June 30, 2023 and July 1, 2022. All amounts are net of tax and noncontrolling interest, if any. Accumulated Other Comprehensive Loss Components Net Unrecognized Pension Benefit Cost Foreign Currency Translation Adjustment Unrealized Loss on Hedging Activities Total (In thousands) Balance at January 1, 2023 $ 12,207 $ (65,637) $ — $ (53,430) Other comprehensive income (loss) before reclassifications: Foreign currency translation adjustment 383 21,480 — 21,863 Loss on net investment hedges — — (5,449) (5,449) Other comprehensive income (loss) before reclassifications 383 21,480 (5,449) 16,414 Amounts reclassified from Accumulated other comprehensive income (loss) (882) — — (882) Net Other comprehensive income (loss) (499) 21,480 (5,449) 15,532 Balance at June 30, 2023 $ 11,708 $ (44,157) $ (5,449) $ (37,898) Accumulated Other Comprehensive Loss Components Net Unrecognized Pension and Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain on Hedging Activities Total (In thousands) Balance at January 1, 2022 $ (85,559) $ (475,125) $ 44,671 $ (516,013) Other comprehensive income (loss) before reclassifications: Foreign currency translation adjustment 470 (61,257) — (60,787) Loss on long-term intra-entity foreign currency transactions — (21,779) — (21,779) Gain on net investment hedges — — 9,028 9,028 Other comprehensive income (loss) before reclassifications 470 (83,036) 9,028 (73,538) Amounts reclassified from Accumulated other comprehensive loss 629 — — 629 Net Other comprehensive income (loss) 1,099 (83,036) 9,028 (72,909) Distribution of ESAB Corporation 84,460 469,220 (53,699) 499,981 Balance at July 1, 2022 $ — $ (88,941) $ — $ (88,941) |
Inventories, Net
Inventories, Net | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net Inventories, net consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Raw materials $ 98,223 $ 100,038 Work in process 32,838 28,164 Finished goods 383,815 357,143 514,876 485,345 Less: allowance for excess, slow-moving and obsolete inventory (60,979) (58,702) $ 453,897 $ 426,643 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Term loan $ — $ 219,279 Revolving credit facilities and other 400,000 40,000 Total debt 400,000 259,279 Less: current portion — (219,279) Long-term debt $ 400,000 $ 40,000 Debt Redemptions In conjunction with the Separation, which occurred on April 4, 2022, the Company repaid all obligations under its previous credit agreement and entered into a new credit agreement (the “Enovis Credit Agreement”) with certain of its existing bank lenders. Additionally, on April 7, 2022, after the completion of the Separation, the Company completed the redemptions of its 3.25% Euro Senior Notes due 2025 (the “Euro Senior Notes”) and its 6.375% Senior Notes due 2026 (the “2026 Notes”). As a result of these changes, the Company recorded Debt extinguishment charges of $20.1 million in the second quarter of 2022, comprised of $12.7 million in redemption premiums and $7.4 million in noncash write-offs of original issue discount and deferred financing fees. Enovis Term Loan and Revolving Credit Facility The Enovis Credit Agreement became effective on April 4, 2022 and consists of a $900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date. The Enovis Credit Agreement also had a term loan with an initial aggregate principal amount of $450 million which has been fully extinguished (the “Enovis Term Loan”). The Revolver contains a $50 million swing line loan sub-facility. Certain U.S. subsidiaries of the Company guarantee the obligations under the Enovis Credit Agreement. On November 18, 2022, the Company completed an exchange with a lender under the Enovis Credit Agreement of 6,003,431 shares of common stock of ESAB, representing all of the retained shares in ESAB following the Separation, for $230.5 million of the $450.0 million in Enovis Term Loan outstanding under the Enovis Credit Agreement, net of cost to sell. On March 1, 2023, the Company extinguished the remaining outstanding balance on the Enovis Term Loan with borrowings on the Revolver. The Enovis Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments, or pay dividends. In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 3.75:1.00 for the fiscal quarter ending June 30, 2023, stepping down to 3.50:1.00 for the fiscal quarter ending June 30, 2024, and (ii) a minimum interest coverage ratio of 3.00:1:00. The Enovis Credit Agreement contains various events of default (including failure to comply with the covenants under the Enovis Credit Agreement and related agreements), and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Enovis Credit Agreement. As of June 30, 2023, the Company was in compliance with the covenants under the Enovis Credit Agreement. As of June 30, 2023, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 6.32%, excluding accretion of original issue discount and deferred financing fees, and there was $500 million available on the Revolver. The Compan y has $4.0 million in deferred f inancing fees recorded in conjunction with the Enovis Credit Agreement as of June 30, 2023, which are being accreted to Interest expense, net primarily using a straight-line method over the life of the facility. Euro Senior Notes The Company had senior unsecured notes with an aggregate principal amount of €350 million due in May 2025, with an interest rate of 3.25%. The Euro Senior Notes were redeemed on April 7, 2022 at a 100.813% redemption premium after the completion of the Separation. Tangible Equity Unit (“TEU”) Amortizing Notes The Company previously had 6.50% TEU amortizing notes at an initial principal amount of $15.6099 per note with equal quarterly cash installments of $1.4375 per note representing a payment of interest and partial payment of principal. The Company paid $6.5 million of principal on the TEU amortizing notes in 2022. The final installment payment was made on January 15, 2022. 2026 Notes The Company had senior notes with a remaining principal amount of $300 million, which were due on February 15, 2026 and had an interest rate of 6.375%. The 2026 Notes were redeemed on April 7, 2022 at a 103.188% redemption premium after the completion of the Separation. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Accrued compensation and related benefits $ 52,814 $ 51,384 Accrued taxes 16,288 13,676 Accrued freight 4,533 3,955 Contingent consideration - current portion 7,832 8,812 Warranty liability- current portion 2,826 2,804 Accrued restructuring liability 1,057 1,090 Accrued third-party commissions 25,643 24,958 Customer advances and billings in excess of costs incurred 3,423 3,560 Lease liability - current portion 22,278 24,281 Accrued interest 545 2,921 Accrued rebates 9,277 13,715 Accrued professional fees 8,774 15,670 Accrued royalties 5,892 5,777 Other 45,311 37,689 $ 206,493 $ 210,292 Accrued Restructuring Liability The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company. A summary of the activity in the Company’s restructuring liability included in Accrued liabilities in the Condensed Consolidated Balance Sheets is as follows: Six Months Ended June 30, 2023 Balance at Beginning of Period Provisions Payments Balance at End of Period (In thousands) Restructuring and other charges: Termination benefits (1) $ 972 $ 3,122 $ (3,096) $ 998 Facility closure costs and other (2) 118 3,318 (3,377) 59 Total $ 1,090 6,440 $ (6,473) $ 1,057 Non-cash charges (2) 301 Total Provisions (3) $ 6,741 (1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities, site cost structures, and product lines. (3) For the six months ended June 30, 2023, $3.3 million and $3.4 million of th e Company’s total provisions were related to the Prevention & Recovery and Reconstructive segments, respectively. Restructuring and other charges includes $0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended June 30, 2023. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Financial Instruments and Fair Value Measurements [Abstract] | |
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements The carrying values of financial instruments, including trade receivables, other receivables and accounts payable, approximate their fair values due to their short-term maturities. The estimated fair value of the Company’s debt, which was $400.0 million as of June 30, 2023, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. As of June 30, 2023, the Company held $21.6 million in Level Three liabilities arising from contingent consideration related to acquisitions. The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements. These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements. A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates. During the six months ended June 30, 2023 the Company recorded a reduction in contingent consideration of $0.8 million due to a final agreement on the payout from an acquisition in 2020 and payments of $0.9 million, offset by increases for interest accretion and effect of foreign currency. The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is zero to $10.0 million. There are two contingent consideration arrangements that have no limits and are based on a percentage of sales in excess of a benchmark over a three-year period and five-year period, respectively. There were no transfers in or out of Level One, Two or Three during the six months ended June 30, 2023. Deferred Compensation Plans The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers. As of June 30, 2023 and December 31, 2022 the fair value of these plans were $13.5 million and $10.3 million, respectively. These plans are deemed to be Level Two within the fair value hierarchy. Foreign Currency Contracts As of June 30, 2023 and December 31, 2022, the Company had foreign currency contracts related to purchases and sales with notional values of $0.0 million and $0.8 million, respectively. During the six months ended June 30, 2023, the Company recognized an unrealized gain of $0.0 million and realized loss of $1.4 million on its Condensed Consolidated Statements of Operations related to its derivative instruments. The realized loss is recorded in Other expense, net on Condensed Consolidated Statements of Operations. Net investment hedges On April 18, 2023, the Company entered into cross-currency swap agreements to hedge its net investment in its Swiss Franc-denominated subsidiaries against adverse movements in exchange rates between the U.S. Dollar and the Swiss Franc. These swap agreements are designated and qualify as net investment hedges. These contracts have a Swiss Franc notional amount of approximately ₣403 million and a U.S. Dollar aggregate notional amount of $450 million at June 30, 2023. Cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement. For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in Accumulated other comprehensive income (loss) in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the cumulative translation adjustment. Amounts are reclassified out of Accumulated other comprehensive loss into earnings when the hedged net investment is either sold or substantially liquidated. During the three and six months ended June 30, 2023, the Company received interest income on its Cross-currency swap derivatives of $2.1 million, which is included within Interest expense, net in the Condensed Consolidated Statements of Operations. The following table presents the amount of loss recognized in Other comprehensive loss for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Loss on cross-currency swaps $ (7,189) $ — $ (7,189) $ — $ (7,189) $ — $ (7,189) $ — The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Other current assets Other liabilities Other current assets Other liabilities (In thousands) Derivatives designated as hedging instruments: Cross-currency swaps $ 9,977 $ 17,166 $ — $ — $ 9,977 $ 17,166 $ — $ — |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is involved in various pending legal, regulatory, and other proceedings arising out of the ordinary course of the Company’s business. None of these proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings, management of the Company believes that either it will prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded as incurred. Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company. For further description of the Company’s litigation and contingencies, reference is made to Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company conducts its continuing operations through the Prevention & Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments. ▪ Prevention & Recovery - a leader in orthopedic solutions and recovery sciences, providing devices, software, and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease. • Reconstructive - an innovation market-leader positioned in the fast-growing surgical implant business, offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger and surgical productivity tools. The Company’s management, including the chief operating decision maker, evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and certain other charges, MDR and other costs, strategic transaction costs, stock-based compensation, depreciation and other amortization, acquisition-related intangible asset amortization, and inventory step-up charges from the results of the Company’s operating segments. The Company’s segment results were as follows: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Net sales: Prevention & Recovery $ 273,475 $ 263,783 $ 524,215 $ 508,618 Reconstructive 155,027 131,334 310,438 261,956 $ 428,502 $ 395,117 $ 834,653 $ 770,574 Segment Adjusted EBITDA (1) : Prevention & Recovery $ 39,323 $ 35,148 $ 65,018 $ 61,518 Reconstructive 26,359 21,042 57,075 42,399 $ 65,682 $ 56,190 $ 122,093 $ 103,917 (1) The following is a reconciliation of Loss from continuing operations before income taxes to Adjusted EBITDA: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Income (loss) from continuing operations before income taxes (GAAP) $ (19,323) $ 116,440 $ (49,282) $ 78,749 Restructuring and other charges (1) 3,806 2,555 6,742 5,508 MDR and other costs (2) 8,997 4,421 16,793 7,048 Strategic transaction costs 5,435 12,707 17,065 24,403 Stock-based compensation 8,868 7,821 15,776 14,529 Depreciation and other amortization 20,794 19,450 40,745 37,950 Amortization of acquired intangibles 32,249 31,824 64,289 62,610 Inventory step-up 27 4,893 146 9,977 Interest expense, net 4,076 4,546 9,728 11,610 Other expense, net 753 — 92 — Debt extinguishment charges — 20,104 — 20,104 Insurance settlement gain (3) — (33,034) — (33,034) Unrealized gain on investment in ESAB Corporation — (135,537) — (135,537) Adjusted EBITDA (non-GAAP) $ 65,682 $ 56,190 $ 122,093 $ 103,917 (1) Restructuring and other charges in cludes $— million and $0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively. Restructuring and other charges in cludes $0.3 million and $0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively. (2) Primarily related to costs specific to compliance with medical device reporting reg ulations and other requirements of the European Union Medical Devices Regulation. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations. (3) Insurance settlement gain is related to the 2019 acquisition of DJO. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (9,995) | $ 76,855 | $ (33,345) | $ 91,923 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Certain prior period amounts have been reclassified to conform to the current period presentation. The Condensed Consolidated Balance Sheet as of December 31, 2022 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. |
Use of Estimates | The Company makes certain estimates and assumptions in preparing its Condensed Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates. |
New Accounting Pronouncements | There are no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial position, results of operations or cash flows. |
Discontinued Operations and Dis
Discontinued Operations and Disposal Groups (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Financial Results of Discontinued Operations | The following table presents the financial results of the Company’s discontinued operations: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (in thousands) Net sales $ — $ — $ — $ 647,911 Cost of sales — — — 423,580 Selling, general and administrative expense — — — 125,529 Restructuring and other charges — — — 5,304 Asbestos charges — — — 3,194 Divestiture-related expenses (1) 5,600 35,463 6,011 45,941 Operating (loss) income (5,600) (35,463) (6,011) 44,363 Interest expense (2) — — — 8,035 (Loss) income from discontinued operations before income taxes (5,600) (35,463) (6,011) 36,328 Income tax (benefit) expense (3) (10,397) 8,203 (10,496) 25,638 (Loss) income from discontinued operations, net of taxes $ 4,797 $ (43,666) $ 4,485 $ 10,690 (1) Divestiture-related expenses include a charge for the release of a tax indemnification with ESAB for the three and six months ended June 30, 2023, and charges of $35.3 million and $45.0 million associated with the Separation for the three and six months ended July 1, 2022, respectively. (2) Interest expense was allocated to discontinued operations based on allocating $1.2 billion of corporate level debt to discontinued operations consistent with the dividend received from ESAB and the debt repaid at the time of the Separation. (3) Includes benefit of release of uncertain tax positions for the three and six months ended June 30, 2023. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue [Abstract] | |
Schedule of Revenue by Major Customers by Reporting Segments | The Company disaggregates its revenue into the following segments: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Prevention & Recovery: U.S. Bracing & Support $ 114,963 $ 111,185 $ 219,338 $ 214,220 U.S. Other P&R 67,729 65,296 130,076 123,010 International P&R (1) 90,783 87,302 174,801 171,388 Total Prevention & Recovery 273,475 263,783 524,215 508,618 Reconstructive: U.S. Reconstructive 106,146 90,643 209,638 179,122 International Reconstructive 48,881 40,691 100,800 82,834 Total Reconstructive 155,027 131,334 310,438 261,956 Total $ 428,502 $ 395,117 $ 834,653 $ 770,574 (1) Includes favorable currency impact of $0.1 million and unfavorable currency impacts of $4.1 million for the three and six months ended June 30, 2023, respectively. |
Financing Receivable, Allowance for Credit Loss | A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Condensed Consolidated Balance Sheets is as follows: Six Months Ended June 30, 2023 Balance at Charged to Expense, net Write-Offs, Deductions and Other, net Foreign Balance at (In thousands) Allowance for credit losses $ 7,965 $ 1,844 $ (1,709) $ 58 $ 8,158 |
Net Loss Per Share from Conti_2
Net Loss Per Share from Continuing Operations (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share from Continuing Operations | Net loss per share from continuing operations was computed as follows: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands, except share and per share data) Computation of Net income (loss) per share from continuing operations - basic: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ (14,792) $ 120,521 $ (37,830) $ 82,199 Weighted-average shares of Common stock outstanding – basic 54,510,688 54,080,549 54,418,554 53,969,738 Net income (loss) per share from continuing operations – basic $ (0.27) $ 2.23 $ (0.70) $ 1.52 Computation of Net income (loss) per share from continuing operations - diluted: Net income (loss) from continuing operations attributable to Enovis Corporation (1) $ (14,792) $ 120,521 $ (37,830) $ 82,199 Weighted-average shares of Common stock outstanding – basic 54,510,688 54,080,549 54,418,554 53,969,738 Net effect of potentially dilutive securities - stock options and restricted stock units — 441,300 — 489,134 Weighted-average shares of Common stock outstanding – diluted 54,510,688 54,521,849 54,418,554 54,458,872 Net income (loss) per share from continuing operations – diluted $ (0.27) $ 2.21 $ (0.70) $ 1.51 (1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $0.2 million and $0.4 million for the three and six months ended June 30, 2023 and $0.1 million and $0.4 million for the three and six months ended July 1, 2022. |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Components Net Unrecognized Pension Benefit Cost Foreign Currency Translation Adjustment Unrealized Loss on Hedging Activities Total (In thousands) Balance at January 1, 2023 $ 12,207 $ (65,637) $ — $ (53,430) Other comprehensive income (loss) before reclassifications: Foreign currency translation adjustment 383 21,480 — 21,863 Loss on net investment hedges — — (5,449) (5,449) Other comprehensive income (loss) before reclassifications 383 21,480 (5,449) 16,414 Amounts reclassified from Accumulated other comprehensive income (loss) (882) — — (882) Net Other comprehensive income (loss) (499) 21,480 (5,449) 15,532 Balance at June 30, 2023 $ 11,708 $ (44,157) $ (5,449) $ (37,898) Accumulated Other Comprehensive Loss Components Net Unrecognized Pension and Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Unrealized Gain on Hedging Activities Total (In thousands) Balance at January 1, 2022 $ (85,559) $ (475,125) $ 44,671 $ (516,013) Other comprehensive income (loss) before reclassifications: Foreign currency translation adjustment 470 (61,257) — (60,787) Loss on long-term intra-entity foreign currency transactions — (21,779) — (21,779) Gain on net investment hedges — — 9,028 9,028 Other comprehensive income (loss) before reclassifications 470 (83,036) 9,028 (73,538) Amounts reclassified from Accumulated other comprehensive loss 629 — — 629 Net Other comprehensive income (loss) 1,099 (83,036) 9,028 (72,909) Distribution of ESAB Corporation 84,460 469,220 (53,699) 499,981 Balance at July 1, 2022 $ — $ (88,941) $ — $ (88,941) |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories, net consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Raw materials $ 98,223 $ 100,038 Work in process 32,838 28,164 Finished goods 383,815 357,143 514,876 485,345 Less: allowance for excess, slow-moving and obsolete inventory (60,979) (58,702) $ 453,897 $ 426,643 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Term loan $ — $ 219,279 Revolving credit facilities and other 400,000 40,000 Total debt 400,000 259,279 Less: current portion — (219,279) Long-term debt $ 400,000 $ 40,000 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Liabilities [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following: June 30, 2023 December 31, 2022 (In thousands) Accrued compensation and related benefits $ 52,814 $ 51,384 Accrued taxes 16,288 13,676 Accrued freight 4,533 3,955 Contingent consideration - current portion 7,832 8,812 Warranty liability- current portion 2,826 2,804 Accrued restructuring liability 1,057 1,090 Accrued third-party commissions 25,643 24,958 Customer advances and billings in excess of costs incurred 3,423 3,560 Lease liability - current portion 22,278 24,281 Accrued interest 545 2,921 Accrued rebates 9,277 13,715 Accrued professional fees 8,774 15,670 Accrued royalties 5,892 5,777 Other 45,311 37,689 $ 206,493 $ 210,292 |
Summary of Restructuring Liability | A summary of the activity in the Company’s restructuring liability included in Accrued liabilities in the Condensed Consolidated Balance Sheets is as follows: Six Months Ended June 30, 2023 Balance at Beginning of Period Provisions Payments Balance at End of Period (In thousands) Restructuring and other charges: Termination benefits (1) $ 972 $ 3,122 $ (3,096) $ 998 Facility closure costs and other (2) 118 3,318 (3,377) 59 Total $ 1,090 6,440 $ (6,473) $ 1,057 Non-cash charges (2) 301 Total Provisions (3) $ 6,741 (1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities, site cost structures, and product lines. (3) For the six months ended June 30, 2023, $3.3 million and $3.4 million of th e Company’s total provisions were related to the Prevention & Recovery and Reconstructive segments, respectively. Restructuring and other charges includes $0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended June 30, 2023. |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Financial Instruments and Fair Value Measurements [Abstract] | |
Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) | The following table presents the amount of loss recognized in Other comprehensive loss for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Loss on cross-currency swaps $ (7,189) $ — $ (7,189) $ — $ (7,189) $ — $ (7,189) $ — |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Other current assets Other liabilities Other current assets Other liabilities (In thousands) Derivatives designated as hedging instruments: Cross-currency swaps $ 9,977 $ 17,166 $ — $ — $ 9,977 $ 17,166 $ — $ — |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The Company’s segment results were as follows: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Net sales: Prevention & Recovery $ 273,475 $ 263,783 $ 524,215 $ 508,618 Reconstructive 155,027 131,334 310,438 261,956 $ 428,502 $ 395,117 $ 834,653 $ 770,574 Segment Adjusted EBITDA (1) : Prevention & Recovery $ 39,323 $ 35,148 $ 65,018 $ 61,518 Reconstructive 26,359 21,042 57,075 42,399 $ 65,682 $ 56,190 $ 122,093 $ 103,917 (1) The following is a reconciliation of Loss from continuing operations before income taxes to Adjusted EBITDA: Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (In thousands) Income (loss) from continuing operations before income taxes (GAAP) $ (19,323) $ 116,440 $ (49,282) $ 78,749 Restructuring and other charges (1) 3,806 2,555 6,742 5,508 MDR and other costs (2) 8,997 4,421 16,793 7,048 Strategic transaction costs 5,435 12,707 17,065 24,403 Stock-based compensation 8,868 7,821 15,776 14,529 Depreciation and other amortization 20,794 19,450 40,745 37,950 Amortization of acquired intangibles 32,249 31,824 64,289 62,610 Inventory step-up 27 4,893 146 9,977 Interest expense, net 4,076 4,546 9,728 11,610 Other expense, net 753 — 92 — Debt extinguishment charges — 20,104 — 20,104 Insurance settlement gain (3) — (33,034) — (33,034) Unrealized gain on investment in ESAB Corporation — (135,537) — (135,537) Adjusted EBITDA (non-GAAP) $ 65,682 $ 56,190 $ 122,093 $ 103,917 (1) Restructuring and other charges in cludes $— million and $0.3 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively. Restructuring and other charges in cludes $0.3 million and $0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively. (2) Primarily related to costs specific to compliance with medical device reporting reg ulations and other requirements of the European Union Medical Devices Regulation. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations. (3) Insurance settlement gain is related to the 2019 acquisition of DJO. |
General (Details)
General (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 2 |
Discontinued Operations - Finan
Discontinued Operations - Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Disposal Group, Including Discontinued Operations, Statement of Income | ||||
(Loss) income from discontinued operations, net of taxes | $ 4,797 | $ (43,666) | $ 4,485 | $ 10,690 |
Fabrication Technology | ||||
Disposal Group, Including Discontinued Operations, Statement of Income | ||||
(Loss) income from discontinued operations, net of taxes | 4,485 | 10,690 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Disposal Group, Including Discontinued Operations, Statement of Income | ||||
Net sales | 0 | 0 | 0 | 647,911 |
Cost of sales | 0 | 0 | 0 | 423,580 |
Selling, general and administrative expense | 0 | 0 | 0 | 125,529 |
Restructuring and other charges | 0 | 0 | 0 | 5,304 |
Asbestos charges | 0 | 0 | 0 | 3,194 |
Divestiture-related expenses | 5,600 | 35,463 | 6,011 | 45,941 |
Operating (loss) income | (5,600) | (35,463) | (6,011) | 44,363 |
Interest expense | 0 | 0 | 0 | 8,035 |
(Loss) income from discontinued operations before income taxes | (5,600) | (35,463) | (6,011) | 36,328 |
Income tax (benefit) expense(3) | (10,397) | 8,203 | $ (10,496) | 25,638 |
(Loss) income from discontinued operations, net of taxes | $ 4,797 | (43,666) | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | ESAB Corporation | ||||
Disposal Group, Including Discontinued Operations, Statement of Income | ||||
Divestiture-related expenses | $ 35,300 | |||
Interest expense | 1,200,000 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Air and Gas | ||||
Disposal Group, Including Discontinued Operations, Statement of Income | ||||
Divestiture-related expenses | $ 45,000 |
Discontinued Operations - Narra
Discontinued Operations - Narratives (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations $ in Millions | 6 Months Ended |
Jul. 01, 2022 USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash (used in) provided by operating activities, discontinued operations | $ 26.2 |
Cash used in investing activities, discontinued operations | $ 3.2 |
Acquisitions and Investments -
Acquisitions and Investments - Narrative (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jul. 20, 2023 USD ($) | Jun. 28, 2023 USD ($) | May 06, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jul. 01, 2022 USD ($) acquisition investment | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |||||||
Acquisition, net of cash received | $ 98,740,000 | $ 35,123,000 | |||||
Goodwill | $ 1,983,588,000 | 2,034,087,000 | $ 1,983,588,000 | ||||
Number of asset acquisitions | acquisition | 2 | ||||||
Number of investments | investment | 1 | ||||||
Equity investment without readily determinable fair value | 20,700,000 | ||||||
Equity investment without readily determinable fair value, impairment | 0 | ||||||
Equity investment without readily determinable fair value, upward adjustment | $ 0 | ||||||
Subsequent event | |||||||
Business Acquisition [Line Items] | |||||||
Asset acquisition, consideration | $ 28,000,000 | ||||||
Insight | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition, net of cash received | 34,200,000 | ||||||
Goodwill | 36,300,000 | 36,300,000 | |||||
Intangible assets acquired | $ 38,400,000 | $ 38,400,000 | |||||
Ownership interests acquired | 53.70% | 53.70% | |||||
Contingent consideration, liability | $ 5,000,000 | $ 5,000,000 | |||||
Step acquisition, ownership interest, percentage | 99.50% | 99.50% | |||||
Noncontrolling interest | $ 300,000 | $ 300,000 | |||||
Remeasurement gain on initial investments | $ 8,800,000 | ||||||
Reconstructive Segment | Novastep | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition, net of cash received | $ 96,900,000 | ||||||
Goodwill | 39,800,000 | ||||||
Intangible assets acquired | $ 52,000,000 | ||||||
Reconstructive Segment | Knee Innovation Company PTY Limited | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition, net of cash received | $ 14,300,000 | ||||||
Goodwill | 16,300,000 | ||||||
Intangible assets acquired | $ 18,200,000 | ||||||
Ownership interests acquired | 100% | ||||||
Contingent consideration, liability | $ 12,800,000 | ||||||
Prevention and Recovery | |||||||
Business Acquisition [Line Items] | |||||||
Number of asset acquisitions | acquisition | 2 | ||||||
Number of investments | investment | 1 | ||||||
Asset acquisition and investment, consideration | $ 18,200,000 | ||||||
Payments to acquire assets | 13,600,000 | ||||||
Contingent consideration | $ 4,600,000 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Revenue from contract with customer | $ 428,502 | $ 395,117 | $ 834,653 | $ 770,574 |
Prevention and Recovery | ||||
Revenue from contract with customer | 273,475 | 263,783 | 524,215 | 508,618 |
Prevention and Recovery | Bracing and Support | U.S. | ||||
Revenue from contract with customer | 114,963 | 111,185 | 219,338 | 214,220 |
Prevention and Recovery | Other Prevention and Recovery | U.S. | ||||
Revenue from contract with customer | 67,729 | 65,296 | 130,076 | 123,010 |
Prevention and Recovery | Prevention and Recovery | International | ||||
Revenue from contract with customer | 90,783 | 87,302 | 174,801 | 171,388 |
Foreign currency loss | 100 | (4,100) | ||
Reconstructive Segment | ||||
Revenue from contract with customer | 155,027 | 131,334 | 310,438 | 261,956 |
Reconstructive Segment | Surgical | U.S. | ||||
Revenue from contract with customer | 106,146 | 90,643 | 209,638 | 179,122 |
Reconstructive Segment | Surgical | International | ||||
Revenue from contract with customer | $ 48,881 | $ 40,691 | $ 100,800 | $ 82,834 |
Revenue - Allowance for Credit
Revenue - Allowance for Credit Loss Rollforward (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at Beginning of Period | $ 7,965 |
Charged to Expense, net | 1,844 |
Write-Offs, Deductions and Other, net | (1,709) |
Foreign Currency Translation | 58 |
Balance at End of Period | $ 8,158 |
Net Loss Per Share from Conti_3
Net Loss Per Share from Continuing Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Earnings Per Share [Abstract] | ||||
Net loss from continuing operations attributable to Parent | $ (14,792) | $ 120,521 | $ (37,830) | $ 82,199 |
Weighted-average shares of Common stock outstanding - basic (in shares) | 54,510,688 | 54,080,549 | 54,418,554 | 53,969,738 |
Net loss per share from continuing operations-basic (in usd per share) | $ (0.27) | $ 2.23 | $ (0.70) | $ 1.52 |
Net effect of potentially dilutive securities - stock options and restricted stock units (in shares) | 0 | 441,300 | 0 | 489,134 |
Weighted-average shares of Common stock outstanding - diluted (in shares) | 54,510,688 | 54,521,849 | 54,418,554 | 54,458,872 |
Net loss per share from continuing operations - diluted (in usd per share) | $ (0.27) | $ 2.21 | $ (0.70) | $ 1.51 |
Less: net income attributable to noncontrolling interest from continuing operations - net of taxes | $ 182 | $ 130 | $ 374 | $ 397 |
Net Loss Per Share from Conti_4
Net Loss Per Share from Continuing Operations - Narrative (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share | 1,200 | 400 | 1,200 | 400 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Loss from continuing operations before income taxes | $ (19,323) | $ 116,440 | $ (49,282) | $ 78,749 |
Income tax benefit | $ 4,713 | $ 4,211 | $ 11,826 | $ 3,847 |
Effective tax rate | 24.40% | (3.60%) | 24% | (4.90%) |
Equity Textual (Details)
Equity Textual (Details) | Jun. 30, 2023 USD ($) |
Equity [Abstract] | |
Stock repurchase program, authorized amount | $ 100,000,000 |
Equity - AOCL Components (Detai
Equity - AOCL Components (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning Balance | $ (53,430) | ||
Foreign currency translation adjustment | 21,863 | $ (60,787) | |
Loss on long-term intra-entity foreign currency transactions | (21,779) | ||
Gain (loss) on on net investment hedges | (5,449) | 9,028 | |
Other comprehensive income (loss) before reclassifications | 16,414 | (73,538) | |
Amounts reclassified from Accumulated other comprehensive loss | (882) | 629 | |
Net current period other comprehensive income (loss) | 15,532 | (72,909) | |
Distribution of ESAB Corporation | $ (1,207,261) | 499,981 | |
Ending Balance | (37,898) | ||
Accumulated Other Comprehensive Loss | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning Balance | (53,430) | (516,013) | |
Distribution of ESAB Corporation | 499,981 | ||
Ending Balance | (88,941) | (37,898) | (88,941) |
Net Unrecognized Pension Benefit Cost | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning Balance | 12,207 | (85,559) | |
Foreign currency translation adjustment | 383 | 470 | |
Loss on long-term intra-entity foreign currency transactions | 0 | ||
Gain (loss) on on net investment hedges | 0 | 0 | |
Other comprehensive income (loss) before reclassifications | 383 | 470 | |
Amounts reclassified from Accumulated other comprehensive loss | (882) | 629 | |
Net current period other comprehensive income (loss) | (499) | 1,099 | |
Distribution of ESAB Corporation | 84,460 | ||
Ending Balance | 0 | 11,708 | 0 |
Foreign Currency Translation Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning Balance | (65,637) | (475,125) | |
Foreign currency translation adjustment | 21,480 | (61,257) | |
Loss on long-term intra-entity foreign currency transactions | (21,779) | ||
Gain (loss) on on net investment hedges | 0 | 0 | |
Other comprehensive income (loss) before reclassifications | 21,480 | (83,036) | |
Amounts reclassified from Accumulated other comprehensive loss | 0 | 0 | |
Net current period other comprehensive income (loss) | 21,480 | (83,036) | |
Distribution of ESAB Corporation | 469,220 | ||
Ending Balance | (88,941) | (44,157) | (88,941) |
Unrealized Loss on Hedging Activities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning Balance | 0 | 44,671 | |
Foreign currency translation adjustment | 0 | 0 | |
Loss on long-term intra-entity foreign currency transactions | 0 | ||
Gain (loss) on on net investment hedges | (5,449) | 9,028 | |
Other comprehensive income (loss) before reclassifications | (5,449) | 9,028 | |
Amounts reclassified from Accumulated other comprehensive loss | 0 | 0 | |
Net current period other comprehensive income (loss) | (5,449) | 9,028 | |
Distribution of ESAB Corporation | (53,699) | ||
Ending Balance | $ 0 | $ (5,449) | $ 0 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 98,223 | $ 100,038 |
Work in process | 32,838 | 28,164 |
Finished goods | 383,815 | 357,143 |
Inventory, gross | 514,876 | 485,345 |
Less: allowance for excess, slow-moving and obsolete inventory | (60,979) | (58,702) |
Inventories, net | $ 453,897 | $ 426,643 |
Debt - Components (Details)
Debt - Components (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total Debt | $ 400,000 | $ 259,279 |
Less: current portion | 0 | (219,279) |
Long-term debt | 400,000 | 40,000 |
Term loan | ||
Debt Instrument [Line Items] | ||
Total Debt | 0 | 219,279 |
Revolving credit facilities and other | ||
Debt Instrument [Line Items] | ||
Total Debt | $ 400,000 | $ 40,000 |
Debt -Textual (Details)
Debt -Textual (Details) $ / shares in Units, $ in Thousands, € in Millions | 3 Months Ended | 6 Months Ended | |||||||
Nov. 18, 2022 USD ($) shares | Apr. 07, 2022 USD ($) | Apr. 04, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jul. 01, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jul. 01, 2022 USD ($) | Apr. 01, 2022 EUR (€) | Dec. 31, 2021 $ / shares | |
Debt extinguishment charges | $ 0 | $ 20,104 | $ 0 | $ 20,104 | |||||
Debt converted, shares issued (in shares) | shares | 6,003,431 | ||||||||
Tangible equity units issued, interest rate | 6.50% | ||||||||
Tangible equity unit, initial principal amount (in usd per share) | $ / shares | $ 15.6099 | ||||||||
Tangible equity unit, quarterly cash distribution (in usd per share) | $ / shares | $ 1.4375 | ||||||||
Tangible equity unit, repayment | $ 6,500 | ||||||||
Letters of credit and surety bonds outstanding | 6,900 | 6,900 | |||||||
Senior Notes | |||||||||
Debt extinguishment charges | 20,100 | ||||||||
Redemption premium on retired debt | 12,700 | ||||||||
Non cash write -offs of original issue discount and deferred financing fee | $ 7,400 | ||||||||
Bilateral agreements | |||||||||
Credit facility | 30,000 | 30,000 | |||||||
2025 Senior Notes | |||||||||
Debt instrument, interest rate, stated percentage | 3.25% | ||||||||
Principal amount | € | € 350 | ||||||||
2025 Senior Notes | Senior Notes | |||||||||
Debt instrument, interest rate, stated percentage | 3.25% | ||||||||
Redemption price, percentage | 100.813% | ||||||||
2026 Notes | |||||||||
Debt instrument, interest rate, stated percentage | 6.375% | ||||||||
Principal amount | $ 300,000 | ||||||||
Redemption price, percentage | 103.188% | ||||||||
2026 Notes | Senior Notes | |||||||||
Debt instrument, interest rate, stated percentage | 6.375% | ||||||||
Enovis Credit Agreement | |||||||||
Swing line loan sub-facility | $ 50,000 | ||||||||
Deferred financing costs | $ 4,000 | $ 4,000 | |||||||
Enovis Credit Agreement | Term loan | |||||||||
Principal amount | $ 450,000 | 450,000 | |||||||
Debt converted amount | $ 230,500 | ||||||||
Enovis Credit Agreement | Revolving Credit Facility | |||||||||
Credit facility | $ 900,000 | ||||||||
Debt instrument covenant minimum interest coverage ratio | 3 | ||||||||
Weighted average interest rate | 6.32% | 6.32% | |||||||
Amount available on the Revolver | $ 500,000 | $ 500,000 | |||||||
Enovis Credit Agreement | Revolving Credit Facility | Debt Covenant Period Two | |||||||||
Debt instrument covenant maximum total leverage ratio (step down) | 3.75 | ||||||||
Enovis Credit Agreement | Revolving Credit Facility | Debt Covenant Period Three | |||||||||
Debt instrument covenant maximum total leverage ratio (step down) | 3.50 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities [Abstract] | ||
Accrued compensation and related benefits | $ 52,814 | $ 51,384 |
Accrued taxes | 16,288 | 13,676 |
Accrued freight | 4,533 | 3,955 |
Contingent consideration - current portion | 7,832 | 8,812 |
Warranty liability- current portion | 2,826 | 2,804 |
Accrued restructuring liability | 1,057 | 1,090 |
Accrued third-party commissions | 25,643 | 24,958 |
Customer advances and billings in excess of costs incurred | 3,423 | 3,560 |
Lease liability - current portion | 22,278 | 24,281 |
Accrued interest | 545 | 2,921 |
Accrued rebates | 9,277 | 13,715 |
Accrued professional fees | 8,774 | 15,670 |
Accrued royalties | 5,892 | 5,777 |
Other | 45,311 | 37,689 |
Accrued liabilities | $ 206,493 | $ 210,292 |
Accrued Liabilities -Restructur
Accrued Liabilities -Restructuring Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Period | $ 1,090 | |||
Provisions before non-cash charges | 6,440 | |||
Non cash impairment restructuring provisions | 301 | |||
Restructuring, Settlement and Impairment Provisions | 6,741 | |||
Payments | (6,473) | |||
Balance at End of Period | $ 1,057 | 1,057 | ||
Restructuring and other related charges | 3,806 | $ 2,555 | 6,742 | $ 5,508 |
Cost of Sales | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring and other related charges | 0 | $ 300 | 300 | $ 800 |
Prevention and Recovery | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring, Settlement and Impairment Provisions | 3,300 | |||
Reconstructive Segment | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring, Settlement and Impairment Provisions | 3,400 | |||
Termination benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Period | 972 | |||
Provisions before non-cash charges | 3,122 | |||
Payments | (3,096) | |||
Balance at End of Period | 998 | 998 | ||
Facility closure costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at Beginning of Period | 118 | |||
Provisions before non-cash charges | 3,318 | |||
Payments | (3,377) | |||
Balance at End of Period | $ 59 | $ 59 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements - Narrative (Details) SFr in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 USD ($) contingentConsideration | Jun. 30, 2023 USD ($) contingentConsideration | Dec. 31, 2022 USD ($) | Jun. 30, 2023 CHF (SFr) contingentConsideration | |
Financial Instruments and Fair Value Measurements [Abstract] | ||||
Long-term Debt, Fair Value | $ 400,000,000 | $ 400,000,000 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Number of contingent consideration arrangements, unlimited and based on percentage of sales in excess of benchmark | contingentConsideration | 2 | 2 | 2 | |
Foreign currency contracts related to customer sales contracts | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Derivative asset, notional amount | $ 0 | $ 0 | $ 800,000 | |
Unrealized gains on derivatives | 0 | |||
Loss on derivative | 1,400,000 | |||
Currency Swap | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Derivative, interest income | 2,100,000 | 2,100,000 | ||
Currency Swap | Net Investment Hedging | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Derivative, notional amount | $ 450,000,000 | $ 450,000,000 | SFr 403 | |
Measurement Input, Expected Term | Minimum | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Contingent consideration, measurement input | 3 | 3 | 3 | |
Measurement Input, Expected Term | Maximum | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Contingent consideration, measurement input | 5 | 5 | 5 | |
2022 Acquisitions | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Payment for contingent consideration liability | $ 900,000 | |||
Contingent consideration arrangements, maximum range low | $ 0 | 0 | ||
Contingent consideration arrangements, maximum range high | 10,000,000 | 10,000,000 | ||
2020 Acquisition | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Change in amount of contingent consideration, liability | (800,000) | |||
Fair Value, Inputs, Level 3 | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Contingent consideration, liability | 21,600,000 | 21,600,000 | ||
Fair Value, Inputs, Level 2 | ||||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||||
Deferred compensation plans asset | $ 13,500,000 | $ 13,500,000 | $ 10,300,000 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - Loss Recognized in Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Derivative [Line Items] | ||||
Loss recognized in other comprehensive income | $ (7,189) | $ 0 | $ (7,189) | $ 0 |
Currency Swap | ||||
Derivative [Line Items] | ||||
Loss recognized in other comprehensive income | $ (7,189) | $ 0 | $ (7,189) | $ 0 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measurements Derivative Instruments in Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other current assets | Other current assets |
Designated As Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative asset | $ 9,977 | |
Derivative liability | 17,166 | |
Currency Swap | Designated As Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative asset | 9,977 | $ 0 |
Derivative liability | $ 17,166 | $ 0 |
Segment Information - Results a
Segment Information - Results and Reconciliation of Operating Loss to Adjusted EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Net sales | $ 428,502 | $ 395,117 | $ 834,653 | $ 770,574 |
Adjusted EBITDA (non-GAAP) | 65,682 | 56,190 | 122,093 | 103,917 |
Income (loss) from continuing operations before income taxes (GAAP) | (19,323) | 116,440 | (49,282) | 78,749 |
Restructuring and other related charges | 3,806 | 2,555 | 6,742 | 5,508 |
MDR and other costs | 8,997 | 4,421 | 16,793 | 7,048 |
Strategic transaction costs | 5,435 | 12,707 | 17,065 | 24,403 |
Stock-based compensation | 8,868 | 7,821 | 15,776 | 14,529 |
Depreciation and other amortization | 20,794 | 19,450 | 40,745 | 37,950 |
Amortization of acquired intangibles | 32,249 | 31,824 | 64,289 | 62,610 |
Inventory step-up | 27 | 4,893 | 146 | 9,977 |
Interest expense, net | 4,076 | 4,546 | 9,728 | 11,610 |
Other expense, net | 753 | 0 | 92 | 0 |
Debt extinguishment charges | 0 | (20,104) | 0 | (20,104) |
Insurance settlement gain | 0 | (33,034) | 0 | (33,034) |
Adjusted EBITDA (non-GAAP) | 65,682 | 56,190 | 122,093 | 103,917 |
Restructuring and other related charges | 3,806 | 2,555 | 6,742 | 5,508 |
Cost of Sales | ||||
Restructuring and other related charges | 0 | 300 | 300 | 800 |
Restructuring and other related charges | 0 | 300 | 300 | 800 |
Prevention and Recovery | ||||
Net sales | 273,475 | 263,783 | 524,215 | 508,618 |
Adjusted EBITDA (non-GAAP) | 39,323 | 35,148 | 65,018 | 61,518 |
Adjusted EBITDA (non-GAAP) | 39,323 | 35,148 | 65,018 | 61,518 |
Reconstructive Segment | ||||
Net sales | 155,027 | 131,334 | 310,438 | 261,956 |
Adjusted EBITDA (non-GAAP) | 26,359 | 21,042 | 57,075 | 42,399 |
Adjusted EBITDA (non-GAAP) | $ 26,359 | $ 21,042 | $ 57,075 | $ 42,399 |