lmat20220331

lmat20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


	FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-33092


LEMAITRE VASCULAR, INC.
(Exact name of registrant as specified in its charter)

Delaware

04-2825458

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


63 Second Avenue, Burlington, Massachusetts	01803
(Address of principal executive offices)	(Zip Code)

	(781) 221-2266
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	LMAT	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth Company “in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 21,951,998 shares of common stock, $.01 par value per share, outstanding as of April 29, 2022.

Table of Contents

LEMAITRE VASCULAR

FORM 10-Q

TABLE OF CONTENTS


			Page
Part I.	Financial Information:

	Item 1.	Financial Statements

		Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021	3

		Unaudited Consolidated Statements of Operations for the three-month periods ended March 31, 2022 and 2021	4

		Unaudited Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2022 and 2021	5

		Unaudited Consolidated Statements of Stockholders’ Equity for the three-month periods ended March 31, 2022 and 2021	6

		Unaudited Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2022 and 2021	7

		Notes to Unaudited Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosure about Market Risk	31

	Item 4.	Controls and Procedures	31

Part II.	Other Information:

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

	Item 6.	Exhibits	35

	Signatures		37

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

LeMaitre Vascular, Inc.

Consolidated Balance Sheets

	(unaudited)
	March 31,			December 31,
	2022			2021
	(in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	15,560		$	13,855
Short-term marketable securities		55,322			56,104
Accounts receivable, net of allowances of $777 at March 31, 2022 and $679 at December 31, 2021		21,386			19,631
Inventory and other deferred costs		46,664			46,104
Prepaid expenses and other current assets		2,479			4,189
Total current assets		141,411			139,883

Property and equipment, net		16,683			17,059
Right-of-use leased assets		14,687			15,071
Goodwill		65,945			65,945
Other intangibles, net		51,194			52,710
Deferred tax assets		1,977			1,566
Other assets		556			568
Total assets	$	292,453		$	292,802
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,194		$	2,340
Accrued expenses		12,918			16,332
Acquisition-related obligations		1,283			1,271
Lease liabilities - short-term		1,872			1,870
Total current liabilities		18,267			21,813
Lease liabilities - long-term		13,705			14,067
Deferred tax liabilities		68			70
Other long-term liabilities		2,626			2,701
Total liabilities		34,666			38,651

Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 3,000,000 shares; none outstanding		-			-
Common stock, $0.01 par value; authorized 37,000,000 shares; issued 23,509,859 shares at March 31, 2022, and 23,477,784 shares at December 31, 2021		235			235
Additional paid-in capital		183,305			181,630
Retained earnings		91,420			88,125
Accumulated other comprehensive loss		(4,624	)		(3,435	)
Treasury stock, at cost; 1,557,921 shares at March 31, 2022 and 1,554,905 shares at December 31, 2021		(12,549	)		(12,404	)
Total stockholders’ equity		257,787			254,151
Total liabilities and stockholders’ equity	$	292,453		$	292,802

See accompanying notes to consolidated financial statements.

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LeMaitre Vascular, Inc.

Consolidated Statements of Operations

(unaudited)

	Three months ended
	March 31,
	2022			2021
	(in thousands, except per share data)

Net sales	$	39,561		$	35,883
Cost of sales		13,599			12,084

Gross profit		25,962			23,799

Sales and marketing		7,850			6,466
General and administrative		7,252			6,544
Research and development		2,932			2,844

Total operating expenses		18,034			15,854

Income from operations		7,928			7,945

Other income (expense):
Interest income		108			1
Interest expense		-			(577	)
Foreign currency gain (loss)		(40	)		124

Income before income taxes		7,996			7,493
Provision for income taxes		1,958			1,564

Net income	$	6,038		$	5,929

Earnings per share of common stock:
Basic	$	0.28		$	0.29
Diluted	$	0.27		$	0.28

Weighted-average shares outstanding:
Basic		21,935			20,546
Diluted		22,103			20,847

Cash dividends declared per common share	$	0.125		$	0.110

See accompanying notes to consolidated financial statements.

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LeMaitre Vascular, Inc.

Consolidated Statements of Comprehensive Income

(unaudited)

	Three months ended
	March 31,
	2022			2021
	(in thousands)
Net income	$	6,038		$	5,929
Other comprehensive income (loss):
Foreign currency translation adjustment, net		(300	)		(937	)
Unrealized gain (loss) on short-term marketable securities		(889	)		(1	)
Total other comprehensive income (loss)		(1,189	)		(938	)

Comprehensive income	$	4,849		$	4,991

See accompanying notes to consolidated financial statements.

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LeMaitre Vascular, Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

										Accumulated
					*Additional*					*Other*								*Total*
	*Common Stock*				*Paid-in*		*Retained*			*Comprehensive*			*Treasury Stock*					*Stockholders*’
	*Shares*		*Amount*		*Capital*		*Earnings*			*Income (Loss)*			*Shares*		*Amount*			*Equity*


Balance at December 31, 2020		22,061,554	$	221	$	114,924	$	70,554		$	(1,525	)		1,538,572	$	(11,602	)	$	172,572

Net income								5,929											5,929
Other comprehensive income (loss)											(938	)							(938	)
Issuance of common stock for stock options exercised		63,895		-		1,385													1,385
Vested restricted stock units		5,974		-															-
Repurchase of common stock for net settlement of equity awards														2,241		(88	)		(88	)
Stock-based compensation expense						927													927
Common stock dividend paid								(2,262	)										(2,262	)
Balance at March 31, 2021		22,131,423	$	221	$	117,236	$	74,221		$	(2,463	)		1,540,813	$	(11,690	)	$	177,525

										Accumulated
					*Additional*					*Other*								*Total*
	*Common Stock*				*Paid-in*		*Retained*			*Comprehensive*			*Treasury Stock*					*Stockholders*’
	*Shares*		*Amount*		*Capital*		*Earnings*			*Income (Loss)*			*Shares*		*Amount*			*Equity*

Balance at December 31, 2021		23,477,784	$	235	$	181,630	$	88,125		$	(3,435	)		1,554,905	$	(12,404	)	$	254,151

Net income								6,038											6,038
Other comprehensive income											(1,189	)							(1,189	)
Issuance of common stock for stock options exercised		24,917		-		508													508
Vested restricted stock units		7,158		-															-
Repurchase of common stock for net settlement of equity awards														3,016		(145	)		(145	)
Stock-based compensation expense						1,167													1,167
Common stock cash dividend paid								(2,743	)										(2,743	)
Balance at March 31, 2022		23,509,859	$	235	$	183,305	$	91,420		$	(4,624	)		1,557,921	$	(12,549	)	$	257,787

See accompanying notes to consolidated financial statements.

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LeMaitre Vascular, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	For the three months ended
	March 31,
	2022			2021
	(in thousands)
Operating activities
Net income	$	6,038		$	5,929
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,373			2,624
Stock-based compensation		1,167			927
Fair value adjustment to contingent consideration obligations		(32	)		47
Provision for doubtful accounts		60			59
Provision for inventory write-downs		498			1,005
Foreign currency transaction loss		(428	)		33
Changes in operating assets and liabilities:
Accounts receivable		(1,951	)		(857	)
Inventory and other deferred costs		(1,267	)		(1,346	)
Prepaid expenses and other assets		1,692			638
Accounts payable and other liabilities		(3,439	)		(2,985	)
Net cash provided by operating activities		4,711			6,074
Investing activities
Purchases of property and equipment and other assets		(536	)		(1,059	)
Purchases of short-term marketable securities		-			(1	)
Net cash used in investing activities		(536	)		(1,060	)
Financing activities
Payments of long-term debt		-			(7,000	)
Proceeds from stock option exercises		508			1,385
Purchase of treasury stock for net settlement of equity awards		(145	)		(88	)
Common stock cash dividend paid		(2,743	)		(2,262	)
Net cash used in financing activities		(2,380	)		(7,965	)

Effect of exchange rate changes on cash and cash equivalents		(90	)		(288	)
Net increase (decrease) in cash and cash equivalents		1,705			(3,239	)
Cash and cash equivalents at beginning of period		13,855			26,764
Cash and cash equivalents at end of period	$	15,560		$	23,525

See accompanying notes to consolidated financial statements.

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LeMaitre Vascular, Inc.

Notes to Consolidated Financial Statements

March 31, 2022

(unaudited)

1. Organization and Basis for Presentation

Description of Business

Unless the context requires otherwise, references to LeMaitre, LeMaitre Vascular, we, our, and us refer to LeMaitre Vascular, Inc. and our subsidiaries. We develop, manufacture, and market medical devices and implants used primarily in the field of vascular surgery. We also derive revenues from the processing and cryopreservation of human tissues for implantation in patients. We operate in a single segment in which our principal product lines include the following: anastomotic clips, angioscopes, biologic vascular and dialysis grafts, biologic vascular and cardiac patches, carotid shunts, embolectomy catheters, occlusion catheters, radiopaque marking tape, synthetic vascular grafts and valvulotomes. Our offices and production facilities are located in Burlington, Massachusetts; Fox River Grove, Illinois; North Brunswick, New Jersey; Chandler, Arizona; Vaughan, Canada; Sulzbach, Germany; Milan, Italy; Madrid, Spain; Saint-Etienne, France; Hereford, England; Kensington, Australia; Tokyo, Japan; Shanghai, China; and Singapore.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation of the results of these interim periods have been included. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are updated as appropriate. The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the entire year. The information contained in these interim financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2021, including the notes thereto, included in our Form 10-K filed with the Securities and Exchange Commission (SEC) on February 28, 2022.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Due to the COVID-19 pandemic, there is heightened volatility and uncertainty in customer demand and the worldwide economy in general. However, the magnitude and duration of any impact on our revenues and operations from COVID-19 is uncertain and cannot be reasonably estimated at this time. The Company is not aware of any specific event or circumstance that would require an update to its accounting estimates or adjustments to the carrying value of its assets and liabilities as of May 10, 2022, the issuance date of this Quarterly Report on Form 10-Q. Actual results could differ from those estimates.

Consolidation

Our consolidated financial statements include the accounts of LeMaitre Vascular and the accounts of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

Our revenue is derived primarily from the sale of disposable or implantable devices used during vascular surgery. We sell primarily directly to hospitals and to a lesser extent to distributors, as described below, and, during the periods presented in our consolidated financial statements, entered into consigned inventory arrangements with either hospitals or distributors on a limited basis. We also derive revenues from the processing and cryopreservation of human tissues for implantation in patients. These revenues are recognized when services have been provided and the tissue has been shipped to the customer, provided all other revenue recognition criteria discussed in the succeeding paragraph have been met.

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We record revenue under the provisions of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard explains that to achieve the core principle, an entity should take the following actions:

SEC Form 10-Q filed by LeMaitre Vascular Inc.