Financial Analysis

COMMITMENTS AND CONTINGENCIES Cooperation Agreement. The Company holds an exclusive licensing agreement (Cooperation Agreement) to co-develop and commercialize equipment incorporating pulsed field ablation (PFA) technology. The Cooperation Agreement requires the Company to pay contingent consideration, settled in cash, with a maximum total payout of $28,000 if all milestones are achieved successfully through the agreement term ending in 2034. As of the reporting date, the Company has paid $6,000 towards milestone achievements which were recorded as research and development expense when each milestone was achieved. For the three and six months ended June 30, 2026, no milestones were achieved and therefore, there was no financial impact during the periods. For the three and six months ended June 30, 2025, payments made under the agreement were $5,000. The agreement also contains provisions requiring future royalty payments on devices incorporating co-developed technology upon commercialization. Purchase Agreements. The Company enters into standard purchase agreements with suppliers in the ordinary course of business, generally with terms that allow cancellation. In 2022, the Company entered into a clinical trial management agreement for the LeAAPS clinical trial. The terms of the agreement require payments upon achievement of various enrollment and project milestones over the estimated ten-year term; however, the agreement may be terminated early for any reason. Furthermore, th …

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BORROWINGS AND FINANCING OBLIGATION Asset backed revolving credit facility. The Company has an asset-based credit facility (Credit Agreement) with JPMorgan Chase Bank, N.A. (JPMCB, also the administrative agent) and Silicon Valley Bank (a division of First-Citizen Bank and Trust Company). The Credit Agreement provides a $125,000 asset-based revolving credit facility (ABL Facility), and the Company may request an increase in the revolving commitment up to $40,000 (not to exceed a total of $165,000). A portion of the ABL Facility, limited to $5,000, is available for the issuance of letters of credit by JPMCB or other financial institutions. JPMCB in its sole discretion, may create swingline loans by advancing floating rate revolving loans requested. Any such swingline loans will reduce availability under the ABL Facility on a dollar-for-dollar basis. On January 9, 2026, the Company entered into a First Amendment to Credit Agreement. The First Amendment provides a three-year extension of the term of the Credit Agreement, and all outstanding borrowings are due upon the maturity of the Credit Agreement on January 9, 2029. Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time without premium or penalty. Any voluntary prepayments will not reduce lender commitments under the ABL Facility. The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding un …

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EQUITY COMPENSATION PLANS The Company has two share-based incentive plans: the 2023 Stock Incentive Plan (2023 Plan) and the 2018 Employee Stock Purchase Plan (ESPP). Stock Incentive Plan Under the 2023 Plan, the Board of Directors may grant restricted stock awards or restricted stock units (collectively RSAs), nonstatutory stock options, performance share awards, performance share units or stock appreciation rights to Company employees, directors and consultants, and may grant incentive stock options to Company employees. The Compensation Committee of the Board of Directors, as the administrator of the 2023 Plan, has the authority to determine the terms of any awards, including the number of shares subject to each award, the exercisability of the awards and the form of consideration. As of June 30, 2026, 7,287 shares of common stock have been reserved for issuance under the 2023 Plan, and 3,251 shares were available for future grants. The Company issues registered shares of common stock for stock option exercises, restricted stock grants and performance share award payments. Employee Stock Purchase Plan Under the ESPP, shares of the Companys common stock may be purchased at a discount (15%) to the lesser of the closing price of the Companys common stock on the first or last trading day of the offering period. The offering period (currently six months) and the offering price are subject to change. Participants may not purchase more than $25 of the Companys common stock in a c …

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FAIR VALUE Fair value is defined as the exchange price that would be received for an asset or paid to settle a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure the fair value of assets and liabilities, the Company uses the following fair value hierarchy based on three levels of inputs: Level 1Observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table represents the Companys fair value hierarchy for its financial assets measured at fair value on a recurring basis as of June 30, 2026: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total Assets: Money market funds $ 157,082 $ $ $ 157,082 Total assets $ 157,082 $ $ $ 157,082 There were no changes in the levels or methodology of measurement of financial …

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INCOME TAX PROVISION The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The Company uses the asset and liability method to determine its provision for income taxes. The Companys provision for income taxes in interim periods is computed by applying the discrete method and is based on financial results through the end of the interim period. The Company determined that using the discrete method is more appropriate than using the annual effective tax rate method. The Company is unable to estimate the annual effective tax rate with sufficient precision to use the effective tax rate method, which requires a full-year projection of income. The effective tax rate for the three months ended June 30, 2026 and 2025 was 5.0% and (4.4%). The effective tax rate for the six months ended June 30, 2026 and 2025 was 7.7% and (4.0%). The Companys worldwide effective tax rate differs from the US statutory rate of 21% primarily due to valuation allowances. The Company's federal, state, local and foreign tax returns are subject to review by various taxing authorities. The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting net operating losses. However, if required, the Company will recognize interest and penalties within income tax expense and within the related tax liability. …

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LEASES The Company has operating and finance leases for office, manufacturing and warehouse facilities and automobiles. The Companys leases have remaining lease terms of less than two years to ten years. Options to renew or extend leases beyond their initial term have been excluded from measurement of the right-of-use (ROU) assets and lease liabilities as exercise is not reasonably certain. The weighted average remaining lease term and the discount rate for the reporting periods are as follows: June 30, 2026 December 31, 2025 Operating Leases Weighted average remaining lease term (years) 4.8 5.1 Weighted average discount rate 7.0 % 7.0 % Finance Leases Weighted average remaining lease term (years) 4.2 4.7 Weighted average discount rate 7.0 % 7.0 % A letter of credit for $1,250 issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of June 30, 2026. The components of lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating lease cost $ 471 $ 491 $ 1,001 $ 957 Finance lease cost: Amortization of right-of-use assets 261 262 523 524 Interest on lease liabilities 119 142 245 289 Total finance lease cost $ 380 $ 404 $ 768 $ 813 Short-term lease expense was not significant for the three and six months ended June 30, 2026 and 2025. Supplemental cash flow information related to leases is as follows: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Cash pa …

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REVENUE The Company develops, manufactures and sells devices designed for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and temporarily blocking pain by ablating peripheral nerves. These devices are marketed to a broad base of medical centers globally and primarily used by cardiothoracic and thoracic surgeons. The Company recognizes revenue when control of promised goods is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. United States revenue by product type is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Open ablation $ 40,885 $ 36,468 $ 79,965 $ 69,776 Minimally invasive ablation 6,031 7,839 12,417 16,319 Pain management 27,058 21,168 49,417 38,438 Appendage management 51,614 45,108 99,994 87,199 Total United States $ 125,588 $ 110,583 $ 241,793 $ 211,732 International revenue by product type is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Open ablation $ 11,243 $ 10,349 $ 20,759 $ 19,344 Minimally invasive ablation 2,020 2,372 3,933 4,385 Pain management 2,380 2,033 4,370 3,822 Appendage management 12,373 10,802 23,998 20,476 Total International $ 28,016 $ 25,556 $ 53,060 $ 48,027 Revenue attributed to customer geographic locations is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 United States $ 125,588 $ 110,583 $ 241,793 $ 211,732 Eu …

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