The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 26, 2026, or the 2025 Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Item 1A. Risk Factors” section of this Quarterly Report on Form 10-Q and the “Item 1A. Risk Factors” section of our 2025 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We are a global provider of medical devices and human tissue cryopreservation services largely used in the treatment of peripheral vascular disease, end-stage renal disease, and cardiovascular disease. We develop, manufacture, and market vascular devices to address the needs of vascular surgeons and, to a lesser degree, other specialties such as cardiac surgeons, general surgeons, and neurosurgeons. Our diversified portfolio of devices consists of brand name products that are used in arteries and veins and are well known to vascular surgeons. Our principal product offerings are sold globally, primarily in the United States, Europe, Canada, and Asia Pacific, or APAC. We estimate that the annual worldwide market for peripheral vascular devices exceeds $9 billion, within which we estimate that the market for our products is approximately $1 billion. We have grown our business using a three-pronged strategy: 1) pursuing a focused call point, 2) competing for sales of low-rivalry, niche products, and 3) expanding our worldwide direct sales force while acquiring complementary devices. We have used acquisitions as a primary means of further penetrating the peripheral vascular device market, and we expect to continue this strategy in the future. We currently manufacture most of our products in our Burlington, Massachusetts headquarters. Our products and services are used primarily by vascular surgeons who treat peripheral vascular disease through both open surgical methods and endovascular techniques. In contrast to interventional cardiologists and interventional radiologists, vascular surgeons can perform both open surgical and minimally invasive endovascular procedures, and therefore can provide a wider range of treatment options to their patients. Recently we have also begun to explore adjacent market customers, such as cardiac surgeons and interventional cardiologists. Our principal product lines include the following: anastomotic clips, biologic vascular and dialysis grafts, biologic vascular and cardiac patches, carotid shunts, embolectomy and occlusion catheters, radiopaque marking tape, synthetic vascular and dialysis grafts, and valvulotomes. Through our RestoreFlow allografts business, we also process and cryopreserve human vascular and cardiac tissue. Our principal biologic offerings include vascular and cardiac patches as well as vascular and dialysis grafts. In Q2 2026, biologics represented 55% of our worldwide sales. We believe our biologic devices represent differentiated and, in many cases, growing product segments. Our business opportunities include the following: •growing our direct sales force in North America, Europe, and APAC, including replacing distributors with our direct sales personnel; •increasing the average selling prices of our devices; •introducing our products into new territories upon receipt of regulatory approvals or registrations; •acquiring complementary products and transitioning distributor sales to LeMaitre; •updating existing products and introducing new products through research and development; and •consolidating product manufacturing into our Burlington, Massachusetts facilities. 18 We sell our products and services primarily through a direct sales force. Our worldwide headquarters is located in Burlington, Massachusetts, and we also have a North American sales office in Vaughan, Canada. We are moving our North American sales office to Mississauga, Canada in Q3 2026. Our European headquarters is located in Sulzbach, Germany, and we also have European sales offices in Milan, Italy; Madrid, Spain; Hereford, England; Dublin, Ireland; Maisons-Alfort, France; and Glattbrugg, Switzerland. Our APAC headquarters is located in Singapore, and we also have APAC sales offices in Tokyo, Japan; Shanghai, China; Docklands, Australia; Seoul, Korea; and Bangkok, Thailand. During the quarter ended June 30, 2026, approximately 95% of our net sales were generated in territories in which we employ direct sales representatives. We sell our products in other countries through distributors. As of June 30, 2026, our sales force comprised 163 sales representatives and export managers in North America, Europe, and APAC. Historically we have experienced success in lower-rivalry niche segments. In the valvulotome market, for example, our differentiated devices have historically allowed us to increase average selling prices without incurring significant unit share loss. In contrast, we have experienced less success in competitive markets such as the polyester vascular graft market, where we face competition from larger companies with greater resources and lower per unit costs. We have also experienced success in international markets, such as Europe, where we have a significant sales force, and sometimes offer lower average selling prices than in North America. If we continue to seek growth opportunities outside of North America, we may experience downward pressure on our gross margin. We obtain regulatory approvals for our devices and services in new product categories and geographies to further access the broader peripheral device market and selected other markets, thus extending our geographic reach. Recent approvals include clearance to sell the Artegraft bovine graft in the European Union (EU) in April 2025, Australia in June 2025, and Canada in December 2025, the Pruitt Aortic Occlusion Catheter in the EU in May 2025, and the Pruitt Occlusion Catheter in China in June 2025. Separately, our regulatory efforts to maintain approvals in the EU and the United Kingdom (UK) have succeeded ahead of the full EU transition from the Medical Device Directive (MDD) to the Medical Device Regulation (MDR) and the UK transition to the United Kingdom Conformity Assessed (UKCA) mark. As of June 30, 2026, we have substantially all of our product approvals in the EU and UK. The European Commission has designated the end of 2028 as the final MDR CE mark transition deadline. Historically, we have provided cryopreservation services for our RestoreFlow allografts primarily in the US, UK, and Canada. In October 2025, we received approval from the German authority on tissue banking to allow provision of these services in the German market. We began providing cryopreservation services for our RestoreFlow allografts in Germany in May 2026. Our strategy for growing our business includes acquisitions of complementary product lines and companies, which can be difficult to identify, negotiate, and purchase. There can be no assurance that we will be able to do so in the future. •In December 2025, we entered into an agreement with Andramed GmbH to purchase the assets of their AndraValvulotome business for $1.8 million plus additional payments of up to $0.8 million, contingent upon the passage of time and, separately, receipt of a regulatory approval. Occasionally we discontinue or divest products that are no longer complementary to our business or not commercially viable. •During 2025, we made the decision to terminate our cardiovascular porcine patch distribution agreement with Elutia. Previously, in April 2023, we had entered into an agreement with Elutia to become the exclusive U.S. distributor of their cardiovascular porcine patches. Under the agreement, we could distribute the products for three years with an option to acquire Elutia’s worldwide cardiovascular porcine patch business during the second and third years of the agreement. This product totaled approximately $1.8 million in 2025 revenues. •During 2025, we made the decision to wind down the CardioCel 3D and DuraSure product lines. These product lines totaled approximately $0.5 million in 2025 revenues. •During 2025, we made the decision to wind down the AnastoClip AC Closure System in North America. This product totaled approximately $0.7 million in 2025 revenues. From time to time we may undertake SKU reductions and attempt to transition sales to other SKUs or products with similar features. Any of these actions may result in inventory write-offs and temporary or permanent negative impacts to our sales, gross margin, and customer relationships. •During 2026, we made the decision to wind down the Flexcel single-size pack offerings to simplify our Flexcel portfolio while continuing to offer the Flexcel multi-size packs to customers. These Flexcel single-size product packs totaled approximately $0.9 million in revenue for the six months ended June 30, 2026. 19 Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins through elimination of an intermediary, we periodically enter into transactions with country-specific distributors to transition their sales of our medical devices into our direct sales organization: •In March 2025, we entered into a distribution transition agreement with our Portuguese distributor to sell products directly in Portugal and dissolve the existing distribution arrangement. We have been selling direct-to-hospitals in Portugal since May 2025. The distribution termination fees are expected to total approximately $0.2 million. •In June 2025, we entered into a distribution transition agreement with our Czech distributor to sell products directly in Czechia and dissolve the existing distribution arrangement. We have been selling direct-to-hospitals in Czechia since July 2025. The distribution termination fees are expected to total approximately $0.1 million. •In 2026, in conjunction with the purchase of the AndraValvulotome assets from Andramed GmbH, we entered into several distribution transition agreements with existing distributors of the product line in European countries, including those in Germany, France, Italy, the UK, and other smaller markets. We have been selling direct-to-hospitals in these countries subsequent to the execution of the transition agreements in 2026. The total distribution termination fees for all AndraValvulotome related distributors are expected to total approximately $0.5 million. In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate manufacturing into our Burlington facilities. We expect these plant consolidations and manufacturing transfers will result in improved control over production quality as well as reduced costs. Our most recent manufacturing transfers are: •In October 2019, we acquired the CardioCel and VascuCel biologic patch businesses from Anteris. The transfer to Burlington was substantially completed in 2023. In June 2023, the MDR CE mark application for these Burlington-produced devices was submitted, and we obtained approval in January 2025, allowing for distribution of these patches in the EU. We began distributing these Burlington-produced patches in the United States, Canada, and select APAC markets in 2024. •In February 2026, we announced the transition of our allograft tissue processing from our Fox River Grove facility to Burlington. This transition is expected to be substantially complete by the end of 2026. Our execution of these initiatives may affect the comparability of our financial results and may cause fluctuations from period to period. In February 2024, we began implementing a new enterprise resource planning, or ERP, system to replace our financial reporting and planning system. In the United States, we transitioned from our legacy ERP system to our newly implemented Microsoft Dynamics D365 system in February 2024. We implemented this new system in the UK in February 2025, Ireland in April 2026, and Canada in July 2026. We intend to continue rolling out the new system in our other international locations on a staged basis. The new ERP system has been beneficial in a number of areas, including inventory management, pricing programs, financial operations and real-time reporting. As of June 30, 2026, we have net capitalized costs on our balance sheet of $4.7 million associated with this ERP system. Fluctuations in the exchange rates between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the six months ended June 30, 2026, approximately 45% of our sales took place outside of the United States, largely in currencies other than the U.S. dollar. We expect foreign currencies will represent a significant percentage of future sales. Selling, marketing, and administrative costs related to these sales are also denominated in foreign currencies, thereby partially mitigating our bottom-line exposure to exchange rate fluctuations. If there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require less of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will record more revenue in U.S. dollars than we would have if the exchange rate had not changed. For the six months ended June 30, 2026, we estimate that the effects of changes in foreign exchange rates increased our reported sales by approximately $2.4 million, as compared to rates in effect for the six months ended June 30, 2025. Net Sales and Expense Components The following is a description of the primary components of our net sales and expenses: Net sales. We derive our net sales from the sale of our products and services, less discounts and returns. Net sales include the shipping and handling fees paid for by our customers. Most of our sales are generated by our direct sales force and are shipped and billed to hospitals or clinics globally. In countries where we do not have a direct sales force, sales are primarily to distributors, who in turn sell to hospitals and clinics. In limited cases our products are held on consignment at a hospital or clinic prior to purchase; in those instances we recognize revenue at the time the product is used in surgery rather than at shipment. 20 Cost of sales. We manufacture the majority of the products that we sell. Our cost of sales consists primarily of manufacturing personnel wages, raw materials and components, depreciation of property and equipment, and other allocated manufacturing overhead, including an allocation of our quality department expenses. Additionally, cost of sales includes the freight expenses we pay to ship products to customers, inventory scrap charges, and excess and obsolescence expenses. Sales and marketing. Sales and marketing expense consists primarily of salaries, commissions, contests, stock-based compensation, travel and entertainment, sales meetings, attendance at vascular and cardiac congresses, training programs, advertising and product promotions, direct mail, and other marketing costs. Additionally, sales and marketing expense includes customer service department personnel charges. General and administrative. General and administrative expense consists primarily of executive, finance and human resource salaries, stock-based compensation, legal and accounting fees, information technology expense, intangible asset amortization expense, and insurance expense. Research and development. Research and development expense primarily includes costs associated with obtaining and maintaining regulatory approval of our products, salaries, laboratory testing, and supply costs. It also includes costs associated with the design and execution of clinical studies and costs to transfer the manufacturing of acquired product lines to our Burlington facility. Additionally, research and development expense includes costs associated with the design, development, testing, and enhancement of new or existing products. Other income (expense). Other income (expense) primarily includes interest and dividend income, realized gains (losses) from the sale of debt and equity investments, unrealized gains (losses) from equity investments, interest expense for the Senior Convertible Notes, foreign currency gains (losses), and other miscellaneous gains (losses). Income tax expense. We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses or profits in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned foreign subsidiaries. Our consolidated tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S. tax reporting purposes. Results of Operations Comparison of the three- and six-month periods ended June 30, 2026, to the three- and six-month periods ended June 30, 2025: The following table sets forth for the periods indicated our net sales by geography and the change between the specified periods expressed as a percentage increase or decrease: Three months ended June 30, Six months ended June 30, (unaudited) Percent Percent 2026 2025 change 2026 2025 change (in thousands) (in thousands) Net sales $ 70,382 $ 64,232 10 % $ 136,933 $ 124,103 10 % Net sales by geography: Americas $ 43,454 $ 41,321 5 % $ 85,050 $ 80,279 6 % Europe, Middle East and Africa 22,137 18,840 18 % 42,424 35,799 19 % Asia Pacific 4,791 4,071 18 % 9,459 8,025 18 % Total $ 70,382 $ 64,232 10 % $ 136,933 $ 124,103 10 % Net sales. Net sales increased by $6.2 million, or 10%, to $70.4 million for the three months ended June 30, 2026, compared to $64.2 million for the three months ended June 30, 2025. The increase was driven primarily by higher average selling prices, higher unit volumes shipped to customers, and the European launch of Artegraft in the second half of 2025. Graft sales increased $5.1 million, shunt sales increased $1.1 million, and patches sales increased $0.6 million. Catheter sales decreased $0.9 million due to the increased sales volumes related to the April 2025 recall of our TufTex Over-the-Wire, Pruitt Occlusion, and Pruitt Irrigation catheters. We estimate that the weaker U.S. dollar increased net sales by $0.4 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. Direct-to-hospital net sales were 95% of our total net sales for both the three months ended June 30, 2026 and 2025. Net sales increased by $12.8 million, or 10%, to $136.9 million for the six months ended June 30, 2026, compared to $124.1 million for the six months ended June 30, 2025. The increase was driven by higher average selling prices, higher unit volumes shipped 21 to customers, and the European launch of Artegraft in the second half of 2025. Graft sales increased $9.2 million, shunt and valvulotome sales each increased $1.8 million, and clip sales increased $1.0 million, offset by decreased sales of catheters of $0.4 million, decreased sales of tape of $0.3 million, and decreased sales of patches of $0.2 million due to the termination of our distribution agreement with Elutia in 2025. We estimate that the weaker U.S. dollar increased net sales by $2.4 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. Direct-to-hospital net sales were 95% and 94% of our total net sales for the six months ended June 30, 2026 and 2025. Net sales by geography. Net sales in the Americas increased $2.1 million, or 5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $2.4 million, shunts and patches of $0.3 million each, and valvulotomes of $0.1 million, offset by decreased sales of catheters of $0.7 million. Net sales in the Americas increased $4.8 million, or 6%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $5.4 million, valvulotomes of $0.6 million, and shunts of $0.5 million, offset by decreased sales of patches of $1.1 million, due to the termination of our distribution agreement with Elutia in 2025, and catheters of $0.6 million. Net sales in Europe, Middle East, and Africa, or EMEA, increased $3.3 million, or 18%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $2.5 million, shunts of $0.7 million, patches of $0.3 million, and valvulotomes of $0.1 million, offset by decreased sales of catheters of $0.4 million. Net sales in EMEA increased $6.6 million, or 19%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of grafts of $3.5 million, shunts of $1.2 million, valvulotomes of $1.1 million, and patches of $0.7 million. Net sales in APAC increased $0.7 million, or 18%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was driven primarily by increased sales of clips, grafts, and catheters of $0.2 million each and shunts of $0.1 million. Net sales in APAC increased $1.4 million, or 18%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was driven primarily by increased sales of clips of $0.5 million, grafts of $0.3 million, patches, catheters, and shunts of $0.2 million each, and valvulotomes of $0.1 million. Gross Profit. The following table sets forth the change in our gross profit and gross margin for the periods indicated: Three months ended June 30, Six months ended June 30, (unaudited) Percent Percent 2026 2025 Change change 2026 2025 Change change (in thousands) (in thousands) Gross profit $ 50,764 $ 44,974 $ 5,790 13 % $ 99,160 $ 86,394 $ 12,766 15 % Gross margin 72.1 % 70.0 % 2.1 % * 72.4 % 69.6 % 2.8 % * * Not applicable Gross profit increased $5.8 million, or 13%, to $50.8 million for the three months ended June 30, 2026, as compared to $45.0 million for the three months ended June 30, 2025, and gross margin increased by 210 basis points to 72.1% in the period, as compared to 70.0% for the three months ended June 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and patches. The increase in gross margin was driven primarily by sales price increases, favorable product mix, and lower shipping costs. The increase was partially offset by unfavorable manufacturing efficiencies and higher excess and obsolescence charges during the period. Gross profit increased $12.8 million, or 15%, to $99.2 million for the six months ended June 30, 2026, as compared to $86.4 million for the six months ended June 30, 2025, and gross margin increased by 280 basis points to 72.4% in the period, as compared to 69.6% for the six months ended June 30, 2025. The increase in gross profit was driven primarily by increased sales, particularly from grafts, shunts, and valvulotomes. The increase in gross margin was driven primarily by sales price increases, favorable product mix, including decreased sales of comparatively lower margin porcine patches due to the decision to end our distribution agreement with 22 Elutia, and lower shipping costs. The increase was partially offset by higher scrap and excess and obsolescence charges during the period. Operating Expenses. The following tables set forth changes in our operating expenses for the periods indicated and the change between the specified periods expressed as a percentage increase or decrease: Three months ended June 30, Six months ended June 30, Percent Percent (unaudited) 2026 2025 $ Change change 2026 2025 $ Change change (in thousands) (in thousands) Sales and marketing $ 14,408 $ 14,895 $ (487 ) (3 )% $ 28,923 $ 29,107 $ (184 ) (1 )% General and administrative 11,110 10,396 714 7 % 23,156 20,883 2,273 11 % Research and development 4,847 3,541 1,306 37 % 8,907 7,636 1,271 17 % Total $ 30,365 $ 28,832 $ 1,533 5 % $ 60,986 $ 57,626 $ 3,360 6 % Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 % of Net Sales % of Net Sales Change % of Net Sales % of Net Sales Change Sales and marketing 20 % 23 % (3 )% 21 % 23 % (2 )% General and administrative 16 % 16 % 0 % 17 % 17 % 0 % Research and development 7 % 6 % 1 % 7 % 6 % 1 % Sales and marketing. For the three months ended June 30, 2026, sales and marketing expenses decreased 3% to $14.4 million. The decrease was driven primarily by lower compensation and related expenses of $0.4 million, including lower commissions and contest expenses of $0.2 million. Sales force headcount was 163 as of June 30, 2026, a 2% increase from June 30, 2025. As a percentage of net sales, sales and marketing expenses decreased to 20% for the three months ended June 30, 2026, down from 23% for the three months ended June 30, 2025. For the six months ended June 30, 2026, sales and marketing expenses decreased 1% to $28.9 million. The decrease was driven primarily by lower commissions and contest expenses of $0.5 million, offset by increased sales meetings and trade show expenses of $0.3 million. As a percentage of net sales, sales and marketing expenses decreased to 21% for the six months ended June 30, 2026, down from 23% for the six months ended June 30, 2025. General and administrative. For the three months ended June 30, 2026, general and administrative expenses increased 7% to $11.1 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $0.5 million. Professional fees and outside services expenses increased $0.4 million, offset by decreased travel and training expenses of $0.1 million. As a percentage of net sales, general and administrative expenses remained consistent at 16% for the three months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, general and administrative expenses increased 11% to $23.2 million. The increase was driven primarily by higher headcount and wage increases, which resulted in increased compensation and related expenses of $1.3 million. Professional fees and outside services expenses increased $0.8 million and general supplies expenses increased $0.5 million, offset by lower facility expenses of $0.2 million. As a percentage of net sales, general and administrative expenses remained consistent at 17% for the six months ended June 30, 2026 and 2025, respectively. Research and development. For the three months ended June 30, 2026, research and development expenses increased 37% to $4.8 million. The increase was driven primarily by higher third-party service fees and general supplies associated with the current transfer of our allograft tissue processing from our Fox River Grove facility to Burlington, which resulted in increased expenses of $0.9 million. Facility expenses increased $0.4 million due to start-up costs associated with the new Billerica shipping warehouse since the inception of the lease beginning on January 1, 2026. The transfer of shipping operations to the Billerica shipping warehouse started in June 2026. As a percentage of net sales, research and development expenses increased to 7% for the three months ended June 30, 2026, up from 6% for the three months ended June 30, 2025. 23 For the six months ended June 30, 2026, research and development expenses increased 17% to $8.9 million. The increase was driven primarily by higher facility expenses of $0.6 million, general supplies expenses of $0.5 million, and professional fees and outside services expenses of $0.1 million. As a percentage of net sales, research and development expenses increased to 7% for the six months ended June 30, 2026, up from 6% for the six months ended June 30, 2025. Income tax expense. We recorded a tax provision of $5.1 million on pre-tax income of $22.2 million for the three months ended June 30, 2026, compared to a $4.3 million tax provision on pre-tax income of $18.1 million for the three months ended June 30, 2025. We recorded a tax provision of $9.1 million on pre-tax income of $41.9 million for the six months ended June 30, 2026, compared to a tax provision of $7.5 million on pre-tax income of $32.3 million for the six months ended June 30, 2025. Our effective income tax rate was 23.2% and 21.8% for the three- and six-month periods ended June 30, 2026. Our tax expense for the current period is based on an estimated annual effective tax rate of 22.8%, adjusted in the applicable quarterly periods for discrete stock option exercises and other discrete items. Our income tax expense for the current period varies from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises. Our effective income tax rate was 23.7% and 23.3% for the three- and six-month periods ended June 30, 2025. Our 2025 provision was based on the estimated annual effective tax rate of 23.8%, adjusted in the applicable quarterly period for discrete stock option exercises and other discrete items. Our income tax expense for the three- and six-month periods ended June 30, 2025 varied from the statutory rate mainly due to the generation of federal and state tax credits, permanent items, different statutory rates from our foreign entities, and a discrete item for stock option exercises. We monitor the mix of profitability by tax jurisdiction and adjust our annual expected rate on a quarterly basis as needed. While it is often difficult to predict the final outcome or timing of the resolution for any particular tax matter, we believe our tax reserves reflect the probable outcome of known contingencies. We assess the likelihood that our deferred tax assets will be realized through future taxable income and record a valuation allowance to reduce gross deferred tax assets to an amount that we believe is more likely than not to be realized. As of June 30, 2026, we have provided a valuation allowance of $1.7 million for deferred tax assets primarily related to Australian net operating loss and capital loss carry forwards and Massachusetts tax credit carry forwards that are not expected to be realized. On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act ("OBBBA") into law. Key corporate tax provisions include the restoration of 100% bonus depreciation for qualifying assets, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, updates to GILTI and FDII rules, amendments to energy credits, and expanded Section 162(m) aggregation requirements. The impact of these adjustments is reflected in our tax provision and financial statements for the three- and six-month periods ended June 30, 2026. We will continue to monitor future legislative developments and assess their impact on our tax position and financial reporting. Liquidity and Capital Resources As of June 30, 2026, our cash and cash equivalents were $26.6 million, as compared to $28.2 million as of December 31, 2025. We had $349.6 million in short-term marketable securities as of June 30, 2026, as compared to $330.9 million as of December 31, 2025. Our cash and cash equivalents are bank deposits and liquid investments with maturities of 90 days or less at the date of purchase held in our operating bank accounts. Our short-term marketable securities primarily include corporate debt securities, U.S. government agency securities, and money market investments with maturities of 90 days or less at the date of purchase held outside of our operating bank accounts. As of June 30, 2026, our short-term marketable securities reflected an unrealized loss of $1.0 million as a result of market interest rates. On February 19, 2026, our Board of Directors authorized the repurchase of up to $100.0 million of our common stock through transactions on the open market, in privately negotiated purchases, or otherwise until February 18, 2027. The repurchase program may be suspended or discontinued at any time. To date we have not made any repurchases under this or any prior program. Convertible Senior Notes On December 19, 2024, we issued $172.5 million aggregate principal amount of convertible senior notes due 2030, or the Senior Convertible Notes, in a Rule 144A private placement to qualified institutional buyers pursuant to an indenture dated December 19, 2024, by and between us and U.S. Bank Trust Company, National Association, or the Indenture. The Senior Convertible Notes will mature on February 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds from the issuance of the Senior Convertible Notes were approximately $167.7 million, net of debt issuance costs totaling $4.8 million. The Senior Convertible Notes bear interest at a rate of 2.50% per year, and interest is payable semiannually in arrears on August 1 and 24 February 1 of each year. For the six months ended June 30, 2026, we made $2.2 million in interest payments. We did not make any interest payments for the six months ended June 30, 2025. The initial conversion rate is 8.3521 shares of common stock per $1,000 principal amount of the Senior Convertible Notes, which represented an initial conversion price of approximately $119.73 per share of common stock and a premium of approximately 30% over the closing price of our common stock on December 16, 2024. In connection with the most recent payment made on June 4, 2026 of a quarterly cash dividend of $0.25 per share (an increase from the quarterly dividend amount of $0.16 per share as of the time of issuance of the Senior Convertible Notes), the conversion rate of the Senior Convertible Notes was increased to 8.3820 shares of common stock per $1,000 principal amount of the Senior Convertible Notes, which represents a conversion price of approximately $119.30 per share of common stock. A similar adjustment to the conversion rate will be made upon payment of the quarterly cash dividend of $0.25 on September 3, 2026, and upon payment of subsequent quarterly dividends in excess of $0.16 per share. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events as described in the Indenture. Noteholders may convert all or a portion of their Senior Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2025, if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of Senior Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock, as described in the Indenture; (4) if we call (or are deemed to have called) any Senior Convertible Notes for redemption; and (5) at any time from, and including, August 1, 2029, until the close of business on the second scheduled trading day immediately before the maturity date. We have the right to elect to settle conversions either in cash, shares of common stock, or in a combination of cash and shares of our common stock. Prior to February 5, 2028, the Senior Convertible Notes will not be redeemable. On or after February 5, 2028, until the 40th scheduled trading day immediately before the maturity date, we may redeem for cash all or any portion of the Senior Convertible Notes (subject to the partial redemption limitation set forth in the Indenture), at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption. In addition, calling any Senior Convertible Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Senior Convertible Note, in which case the conversion rate applicable to the conversion of that Senior Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. Operating and Capital Expenditure Requirements We require cash to pay our operating expenses, make capital expenditures, and pay our long-term liabilities. Since our inception, we have funded our operations through public offerings and private placements of equity securities, short-term and long-term borrowings, and funds generated from our operations. We recognized operating income of $38.2 million for the six months ended June 30, 2026, compared to $28.8 million for the six months ended June 30, 2025. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents and short-term marketable securities, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following: •revenues generated by sales of our products and services; •costs associated with expanding our manufacturing, marketing, sales, and distribution efforts; •payments associated with potential future quarterly cash dividends to our common stockholders; •payments associated with income and other taxes; •future acquisition-related payments; •costs associated with our initiatives to sell direct-to-hospital in new countries; •costs of obtaining and maintaining FDA and other regulatory clearances; •the number, timing, and nature of acquisitions, divestitures, and other strategic transactions; and •potential future share repurchases. 25 We believe that our cash, cash equivalents, short-term marketable securities, and the interest we earn on these balances will enable us to fund our operating expenses, capital expenditures requirements, and Senior Convertible Note interest payments for at least twelve months following the filing of this Form 10-Q and, together with our anticipated future cash, cash equivalents, and short-term marketable securities, to meet our known long-term cash requirements. We may need to raise additional funding, which might not be available on desirable terms or at all. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Cash Flows Six months ended June 30, 2026 2025 Net Change (in thousands) Cash and cash equivalents $ 26,625 $ 27,177 $ (552 ) Cash flows provided by (used in): Operating activities $ 31,058 $ 29,330 $ 1,728 Investing activities (24,199 ) (20,669 ) (3,530 ) Financing activities (8,271 ) (8,003 ) (268 ) Net cash provided by operating activities. Net cash provided by operating activities was $31.1 million for the six months ended June 30, 2026, consisting of $32.7 million in net income, adjusted for non-cash items of $11.0 million (including primarily depreciation and amortization of $5.3 million, stock-based compensation of $4.0 million, provisions for inventory write-offs and credit losses of $1.9 million, amortization of issuance costs on convertible senior notes of $0.4 million, foreign currency transaction effect on income of $0.1 million, offset by non-cash investment income of $0.8 million), and a net use of working capital of $12.7 million. The net cash used for working capital was driven by decreases in accounts payable and other liabilities of $6.5 million, increases in accounts receivable of $2.9 million, increases in inventory and other deferred costs of $1.9 million, and increases in prepaid expenses and other assets of $1.4 million. Net cash provided by operating activities was $29.3 million for the six months ended June 30, 2025, consisting of $24.8 million in net income, adjusted for non-cash items of $10.7 million (including primarily depreciation and amortization of $5.2 million, stock-based compensation of $4.0 million, provisions for inventory write-offs and credit losses of $1.4 million, and amortization of issuance costs on convertible senior notes of $0.4 million, offset by foreign currency effect on income of $0.3 million), and net use of working capital of $6.2 million. The net cash used for working capital was driven by increases in accounts receivable of $5.3 million, increases in inventory and other deferred costs of $3.5 million, and decreases in accounts payable and other liabilities of $1.3 million, offset by increases in accrued interest of $2.2 million and decreases in prepaid expenses and other liabilities of $1.7 million. Net cash used in investing activities. Net cash used in investing activities was $24.2 million for the six months ended June 30, 2026, consisting of purchases of short-term marketable securities of $231.4 million, purchases of property and equipment of $5.1 million, and payments related to acquisitions of $0.2 million, offset by proceeds from short-term marketable securities of $212.5 million. Net cash used in investing activities was $20.7 million for the six months ended June 30, 2025, consisting of purchases of short-term marketable securities of $17.8 million, purchases of property and equipment of $2.7 million, and payments related to acquisitions of $0.1 million. Net cash used in financing activities. Net cash used in financing activities was $8.3 million for the six months ended June 30, 2026, consisting of dividend payments of $11.4 million and deferred payments for acquisitions of $0.1 million, offset by proceeds from stock option exercises of $3.3 million, net of shares repurchased to pay employee payroll taxes. Net cash used in financing activities was $8.0 million for the six months ended June 30, 2025, consisting of dividend payments of $9.0 million and deferred payments for acquisitions of $1.4 million, offset by proceeds from stock option exercises of $2.5 million, net of shares repurchases to pay employee payroll taxes. Dividends In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows: 26 Record Date Payment Date Per Share Amount Dividend Payment (in thousands) Fiscal Year 2026 March 12, 2026 March 26, 2026 $ 0.25 $ 5,711 May 21, 2026 June 4, 2026 $ 0.25 $ 5,716 Fiscal Year 2025 March 13, 2025 March 27, 2025 $ 0.20 $ 4,517 May 15, 2025 May 29, 2025 $ 0.20 $ 4,520 August 21, 2025 September 4, 2025 $ 0.20 $ 4,535 November 20, 2025 December 4, 2025 $ 0.20 $ 4,538 On July 28, 2026, our Board of Directors approved a quarterly cash dividend on its common stock of $0.25 per share payable on September 3, 2026, to stockholders of record at the close of business on August 20, 2026. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in our 2025 Form 10-K. Recent Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations, or cash flows is disclosed in Note 1 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.