MERIT MEDICAL SYSTEMS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related condensed notes thereto, which are included in Part I of this report. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties that may adversely impact our operations and financial results. These risks and uncertainties are discussed in Part I, Item 1A "Risk Factors" in the 2020 Annual Report on Form 10-K.
OVERVIEW
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related condensed notes thereto, which are included in Part
I of this report. We design, develop, manufacture, market and sell medical products for interventional and diagnostic procedures. For financial reporting purposes, we report our operations in two operating segments: cardiovascular and endoscopy. Our cardiovascular segment consists of four product categories: peripheral intervention, cardiac intervention, custom procedural solutions, and OEM. Within these product categories, we sell a variety of products, including cardiology and radiology devices (which assist in diagnosing and treating coronary arterial disease, peripheral vascular disease and other non-vascular diseases), as well as embolotherapeutic, cardiac rhythm management, electrophysiology, critical care, breast cancer localization and guidance, biopsy, and interventional oncology and spine devices. Our endoscopy segment consists of gastroenterology and pulmonology devices which assist in the palliative treatment of expanding esophageal, tracheobronchial and biliary strictures caused by malignant tumors. For the three-month period endedSeptember 30, 2021 , we reported sales of approximately$267.0 million , up approximately$23.0 million or 9.4%, compared to sales for the three-month period endedSeptember 30, 2020 of approximately$244.0 million . For the nine-month period endedSeptember 30, 2021 , we reported sales of approximately$796.3 million , up approximately$90.4 million or 12.8%, compared to sales for the nine-month period endedSeptember 30, 2020 of approximately$705.9 million . For the three and nine-month periods endedSeptember 30, 2021 , our net sales benefitted approximately$1.4 million and$11.4 million , respectively, from foreign currency fluctuations (net of hedging) assuming applicable foreign exchange rates in effect during the comparable prior-year period. Gross profit as a percentage of sales increased to 45.1% for the three-month period endedSeptember 30, 2021 compared to 41.8% for the three-month period endedSeptember 30, 2020 . Gross profit as a percentage of sales increased to 44.8% for the nine-month period endedSeptember 30, 2021 compared to 41.1% for the nine-month period endedSeptember 30, 2020 . Net income for the three-month period endedSeptember 30, 2021 was approximately$12.0 million , or$0.21 per share, compared to net loss of approximately($3.0) million , or ($0.05 ) per share, for the three-month period endedSeptember 30, 2020 . Net income for the nine-month period endedSeptember 30, 2021 was approximately$27.8 million , or$0.49 per share, compared to net loss of approximately($25.2) million , or ($0.46 ) per share, for the nine-month period endedSeptember 30, 2020 .
Recent Developments and Trends
In addition to the trends identified in the 2020 Annual Report on Form 10-K under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview," our business in 2021 has been impacted, and we believe will continue to be impacted, by the following recent events and trends:
We experienced overall improvements in sales trends in the three-month period
? ended September, with wide variation across regions of the world and within
certain geographic regions.
During the three months ended
? our Wrapsody ArterioVenous (AV) Access Efficacy Pivotal Study (the "WAVE
Study") of the Endovascular Stent Graft, and published the
30
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results from a prospective, observational, first-in-human study of the Merit
WRAPSODY Endoprosthesis in CardioVascular and Interventional Radiology.
As part of our Foundations for Growth program we have continued to focus on
? scrap reduction and manufacturing efficiency across manufacturing sites, which
has helped offset inflationary cost pressures in certain raw materials,
shipping, and freight expenses.
? As of
and net available borrowing capacity of approximately$456 million . RESULTS OF OPERATIONS The following table sets forth certain operational data as a percentage of sales for the periods indicated: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Net sales 100 % 100 % 100 % 100 % Gross profit 45.1 41.8 44.8 41.1
Selling, general and administrative expenses 32.4 29.6 32.5 30.9 Research and development expenses 6.4 5.5
6.4 6.0
Legal settlement - - - 2.6
Impairment charges - 8.4 0.5 4.0Contingent consideration expense (benefit) 0.4 (1.8)
0.4 0.1
Income (loss) from operations 6.0 0.0 4.9 (2.5)
Other expense - net (0.7) (0.9) (0.7) (1.3)Income (loss) before income taxes 5.3 (0.9)
4.2 (3.8)
Net income (loss) 4.5 (1.2) 3.5 (3.6)
Sales
Sales for the three-month period ended September 30, 2021 increased by 9.4%, or
approximately $23.0 million , compared to the corresponding period in 2020. Sales
for the nine-month period ended September 30, 2021 increased by 12.8%, or
approximately $90.4 million , compared to the corresponding period in 2020.
Listed below are the sales by product category within each of our financial
reporting segments for the three and nine-month periods ended September 30, 2021
and 2020 (in thousands, other than percentage changes):
Three Months Ended Nine Months Ended
September 30, September 30,
% Change 2021 2020 % Change 2021 2020
Cardiovascular
Peripheral Intervention 16.5 % $ 101,059 $ 86,778 21.5 % $ 299,573 $ 246,488
Cardiac Intervention 15.5 % 79,813 69,089 15.7 % 240,203 207,685
Custom Procedural Solutions (12.4) % 49,435 56,429 (3.9) % 143,492 149,369
OEM 21.9 % 29,397 24,117 11.3 % 89,734 80,592
Total 9.9 % 259,704 236,413 13.0 % 773,002 684,134
EndoscopyEndoscopy devices (3.2) % 7,317 7,562
7.0 % 23,257 21,737 Total 9.4 %$ 267,021 $ 243,975 12.8 %$ 796,259 $ 705,871 Cardiovascular Sales. Our cardiovascular sales for the three-month period endedSeptember 30, 2021 were approximately$259.7 million , up 9.9% when compared to the corresponding period of 2020 of approximately$236.4 million . Sales for the three-month period endedSeptember 30, 2021 were favorably affected by increased sales of: 31 Table of Contents
Peripheral intervention products, which increased by approximately
(a) million, or 16.5%, from the corresponding period of 2020. This increase was
driven primarily by sales of our radar localization, drainage, embolotherapy,
angiography, intervention, and biopsy products.
Cardiac intervention products, which increased by approximately $10.7 million, or 15.5%, from the corresponding period of 2020. This increase was
(b) driven primarily by sales of our intervention, fluid management (including
our Medallion® Syringes, which have seen increased demand due to COVID-19
vaccination efforts), angiography and access products.
OEM products, which increased by approximately
(c) the corresponding period of 2020. This increase was driven primarily by sales
of our angiography products and kits.
The foregoing increase in sales for the three-month period ended
Custom procedural solutions products, which decreased by approximately (
million, or (12.4)%, from the corresponding period of 2020. This decrease was
(d) driven primarily by decreased sales of critical care products (including an
and trays, offset partially by sales of kits.
Our cardiovascular sales for the nine-month period endedSeptember 30, 2021 were approximately$773.0 million , up 13.0% when compared to the corresponding period of 2020 of approximately$684.1 million . Sales for the nine-month period endedSeptember 30, 2021 were favorably affected by increased sales of:
Peripheral intervention products, which increased by approximately
(a) million, or 21.5%, from the corresponding period of 2020. This increase was
driven primarily by sales of our radar localization, embolotherapy, drainage,
biopsy, angiography and intervention products.
Cardiac intervention products, which increased by approximately $32.5 million, or 15.7%, from the corresponding period of 2020. This increase was
(b) driven primarily by sales of our intervention, fluid management (including
our Medallion® Syringes, which have seen increased demand due to COVID-19
vaccination efforts) and angiography products.
OEM products, which increased by approximately
(c) the corresponding period of 2020. This increase was driven primarily by sales
of our cardiac rhythm management/electrophysiology ("CRM/EP") products,
angiography products, and coatings.
The foregoing increase in sales for the nine-month period ended
Custom procedural solutions products, which decreased by approximately (
million, or (3.9)%, from the corresponding period of 2020. This decrease was
(d) driven primarily by sales of critical care products (including a (
million decrease in CulturaTM nasopharyngeal swab and test kit sales) and
trays, offset partially by increased sales of kits.
Endoscopy Sales. Our endoscopy sales for the three-month period ended
September 30, 2021 were approximately $7.3 million , down (3.2)%, when compared
to sales in the corresponding period of 2020 of approximately $7.6 million .
Sales for the three-month period ended September 30, 2021 were unfavorably
affected by decreased sales of our EndoMAXX® fully covered esophageal stent,
offset partially by increased sales of other stents and our Elation® Balloon
Dilator.
Our endoscopy sales for the nine-month period ended
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Geographic Sales
Sales trends for the three and nine-month periods endedSeptember 30, 2021 and 2020 were influenced by the incidence and timing of COVID-19 infections and the associated governmental and patient responses, which varied between countries and regions in both the current and prior-year periods. Listed below are sales by geography for the three and nine-month periods endedSeptember 30, 2021 and 2020 (in thousands, other than percentage changes): Three Months Ended Nine Months Ended September 30, September 30, % Change 2021 2020 % Change 2021 2020 United States 5.9 %$ 151,505 $ 143,109 12.3 %$ 451,648 $ 402,305 International 14.5 % 115,516 100,866 13.5 % 344,611 303,566 Total 9.4 %$ 267,021 $ 243,975 12.8 %$ 796,259 $ 705,871
United States Sales.U.S. sales for the three-month period endedSeptember 30, 2021 were approximately$151.5 million , or 56.7% of net sales, up 5.9% when compared to the corresponding period of 2020. The increase in our domestic sales in the three-month period endedSeptember 30, 2021 compared to the three-month period endedSeptember 30, 2020 was driven primarily by ourU.S. Direct and OEM businesses.U.S. sales for the nine-month period endedSeptember 30, 2021 were approximately$451.6 million , or 56.7% of net sales, up 12.3% when compared to the corresponding period of 2020. The increase in our domestic sales for the nine-month period endedSeptember 30, 2021 compared to the nine-month period endedSeptember 30, 2020 was driven primarily by ourU.S. direct business. International Sales. International sales for the three-month period endedSeptember 30, 2021 were approximately$115.5 million , or 43.3% of net sales, up 14.5% when compared to the corresponding period of 2020 of approximately$100.9 million . The increase in our international sales for the three-month period endedSeptember 30, 2021 , compared to the three-month period endedSeptember 30, 2020 , included increased sales in ourAsia Pacific ("APAC") operations of$6.6 million or 13.2%, in EMEA of$6.0 million or 13.6% and increased sales in the rest of the world ("ROW") of$2.1 million of 30.6%. International sales for the nine-month period endedSeptember 30, 2021 were approximately$344.6 million , or 43.3% of net sales, up 13.5% when compared to the corresponding period of 2020 of approximately$303.6 million . The increase in our international sales for the nine-month period endedSeptember 30, 2021 , compared to the nine-month period endedSeptember 30, 2020 , included increased sales in APAC of$21.8 million or 14.7%, in EMEA of$15.9 million or 11.7%, and in ROW of$3.4 million or 17.2%.
Gross Profit
Our gross profit as a percentage of sales increased to 45.1% for the three-month period endedSeptember 30, 2021 , compared to 41.8% for the three-month period endedSeptember 30, 2020 . The increase in gross profit percentage was primarily due to changes in product mix, lower amortization expense (as certain intangibles from prior acquisitions became fully amortized), and improvements in manufacturing variances from operational efficiencies and increased production volume, partially offset by higher freight costs. Our gross profit as a percentage of sales increased to 44.8% for the nine-month period endedSeptember 30, 2021 , compared to 41.1% for the nine-month period endedSeptember 30, 2020 . The increase in gross profit percentage was primarily due to lower amortization expense (as certain intangibles from prior acquisitions became fully amortized), changes in product mix, decreased obsolescence expense as a percentage of sales, and improvements in manufacturing variances from operational efficiencies and increased production volume. 33 Table of Contents Operating Expenses Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses increased approximately$14.3 million , or 19.7%, for the three-month period endedSeptember 30, 2021 compared to the corresponding period of 2020. As a percentage of sales, SG&A expenses were 32.4% for the three-month period endedSeptember 30, 2021 , compared to 29.6% for the corresponding period of 2020. For the three-month period endedSeptember 30, 2021 , compared to the corresponding period of 2020, labor-related costs increased due to higher commissions and bonus expense in the current-year period, in contrast to temporary salary cuts and furloughs in the prior-year period. We incurred$4.3 million of corporate transformation and restructuring costs, including consulting charges, during the three-month period endedSeptember 30, 2021 in connection with our Foundations for Growth program, compared to restructuring costs of$2.8 million for the three-month period endedSeptember 30, 2020 . These increased costs were offset partially by lower idle capacity costs due to increased production compared to the prior-year period. SG&A expenses increased approximately$41.3 million , or 18.9%, for the nine-month period endedSeptember 30, 2021 compared to the corresponding period of 2020. As a percentage of sales, SG&A expenses were 32.5% for the nine-month period endedSeptember 30, 2021 , compared to 30.9% for the corresponding period of 2020. For the nine-month period endedSeptember 30, 2021 , compared to the corresponding period of 2020, labor-related costs increased due to higher commissions and bonus expense in the current-year period, in contrast to temporary salary cuts and furloughs in the prior-year period. We incurred$17.0 million of corporate transformation and restructuring costs, including consulting charges, during the nine-month period endedSeptember 30, 2021 in connection with our Foundations for Growth program, compared to restructuring costs of$6.3 million for the nine-month period endedSeptember 30, 2020 . We also recorded approximately$6 million of contract termination costs in SG&A during the nine-month period endedSeptember 30, 2021 to renegotiate certain terms of an acquisition agreement. These increased costs were offset partially by lower idle capacity costs due to increased production compared to the prior-year period. Research and Development Expenses. Research and development ("R&D") expenses for the three-month period endedSeptember 30, 2021 were approximately$17.0 million , up 25.7%, when compared to R&D expenses in the corresponding period of 2020 of approximately$13.5 million . R&D expenses for the nine-month period endedSeptember 30, 2021 were approximately$50.8 million , up 19.9%, when compared to R&D expenses in the corresponding period of 2020 of approximately$42.4 million . The increase in R&D expenses for the three and nine-month periods endedSeptember 30, 2021 compared to the corresponding periods in 2020 was largely due to increased clinical expenses for certain R&D projects (including our WRAPSODY AV Access Efficacy Study), increased compensation expense due to temporary salary cuts and furloughs in the prior-year periods, and higher expenses related to implementation of the Medical Device Regulation in theEuropean Union . Legal Settlement. We recorded a settlement in the nine-month period endedSeptember 30, 2020 of$18.2 million in connection with an agreement in principle with theDepartment of Justice ("DOJ") to fully resolve the DOJ's investigation of certain marketing and promotional practices. Impairment Charges. For the nine-month period endedSeptember 30, 2021 we recorded impairment charges of approximately$4.3 million . These impairments included$1.6 million of intangible assets and$1.3 million of property and equipment due to the planned discontinuance of the Advocate™ Peripheral Angioplasty Balloon product line, sold under our license agreements with ArraVasc, and$1.4 million of impairments of certain ROU operating lease assets due to site consolidation decisions and changes in our projected cash flows for the underlying lease assets. For the three and nine-month periods endedSeptember 30, 2020 , we recorded impairment charges of approximately$20.6 million and$28.3 million , respectively. These impairments included a$3.5 million write-off in the first quarter of 2020 of our purchase option to acquire Bluegrass Vascular due to our decision not to exercise our option to purchase this company,$0.4 million impairment in the first quarter of property and equipment related to our distribution agreement with NinePoint,$2.4 million impairment in the second quarter of the customer list intangible asset from our ITL acquisition,$1.5 million impairment in the second quarter of our right-of-use operating lease asset associated with closure of a facility inCalifornia ,$2.5 million impairment in the third quarter related to our equity investment in the preferred shares of Fusion due to uncertainty about future product development and commercialization associated with the technologies, and$18.1 in the third quarter for intangible impairment charges based on planned closure and restructuring activities and uncertainty about 34
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future product development and commercialization associated with the acquired technologies due in part to the economic impacts of the COVID-19 pandemic.
Contingent Consideration Expense (Benefit). For the three and nine-month periods endedSeptember 30, 2021 , we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of approximately$1.1 million and$3.3 million , respectively, compared to contingent consideration expense (benefit) of($4.4) million and$0.9 million for the three and nine-month periods endedSeptember 30, 2020 . Expense (benefit) in each period relates to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.
Operating Income (Loss)
The following table sets forth our operating income (loss) by financial reporting segment for the three and nine-month periods endedSeptember 30, 2021 and 2020 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Operating Income (Loss) Cardiovascular$ 14,411 $ (1,702) $ 33,389 $ (20,662) Endoscopy 1,520 1,766 5,631 3,093 Total operating income (loss)$ 15,931 $ 64 $ 39,020 $ (17,569)
Cardiovascular Operating Income (Loss). Our cardiovascular operating income for the three-month period endedSeptember 30, 2021 was approximately$14.4 million , compared to cardiovascular operating loss in the corresponding period of 2020 of approximately($1.7) million . The increase in cardiovascular operating income during the three-month period endedSeptember 30, 2021 compared to the corresponding period of 2020 was primarily a result of higher sales ($259.7 million compared to$236.4 million ), higher gross margin and decreased impairment expense (none in the three-month period endedSeptember 30, 2021 compared to$20.6 million in the three-month period endedSeptember 30, 2020 ), partially offset by increased SG&A and R&D expenses and higher contingent consideration expense. Our cardiovascular operating income for the nine-month period endedSeptember 30, 2021 was approximately$33.4 million , compared to cardiovascular operating loss in the corresponding period of 2020 of approximately($20.7) million . The increase in cardiovascular operating income during the nine-month period endedSeptember 30, 2021 compared to the corresponding period of 2020 was primarily a result of higher sales ($773.0 million compared to$684.1 million ), higher gross margin, lower impairment expense ($4.3 million for the nine-month period endedSeptember 30, 2021 compared to$27.9 million for the nine-month period endedSeptember 30, 2020 ) and the$18.2 million legal settlement expense related to the DOJ inquiry recorded in the prior-year period, partially offset by increased SG&A and R&D expenses and higher contingent consideration expense. Endoscopy Operating Income. Our endoscopy operating income for the three-month period endedSeptember 30, 2021 was approximately$1.5 million , compared to endoscopy operating income of approximately$1.8 million for the corresponding period of 2020. This decrease in endoscopy operating income was primarily a result of increased operating expenses (due in part to temporary salary reductions and furloughs during the three-month period endedSeptember 30, 2020 ). Our endoscopy operating income for the nine-month period endedSeptember 30, 2021 was approximately$5.6 million , compared to endoscopy operating income of approximately$3.1 million for the corresponding period of 2020. This increase in endoscopy operating income was primarily a result of higher sales, improved gross margins (largely a result of the write-off of inventory related to the suspension of our distribution agreement with NinePoint in the first quarter of 2020, which did not repeat in 2021) and decreased impairment expense (none in the nine-month period endedSeptember 30, 2021 compared to approximately$0.4 million in the nine-month period endedSeptember 30, 2020 ). 35 Table of Contents Other Expense
Our other expense for the three-month periods endedSeptember 30, 2021 and 2020 was approximately($1.8) million and($2.2) million , respectively. The change in other expense was primarily related to decreased interest expense as a result of a lower effective interest rate and a lower average debt balance and a gain of approximately$0.5 million on the sale of the assets associated with our Hypotube product line in the third quarter of 2020. Our other expense for the nine-month periods endedSeptember 30, 2021 and 2020 was approximately($5.3) million and($8.9) million , respectively. The change in other expense was primarily related to decreased interest expense as a result of a lower effective interest rate and a lower average debt balance, an increase in interest income due to partial recoveries of loan interest from NinePoint which had previously been written off, and a gain of approximately$0.5 million on the sale of the assets associated with our Hypotube product line in the third quarter of 2020.
Effective Tax Rate
Our provision for income taxes for the three-month periods endedSeptember 30, 2021 and 2020 was a tax expense of approximately$2.2 million and$0.8 million , respectively, which resulted in an effective tax rate of 15.6% and (37.7)%, respectively. Our provision for income taxes for the nine-month periods endedSeptember 30, 2021 and 2020 was a tax expense (benefit) of approximately$5.9 million and($1.3) million , respectively, which resulted in an effective tax rate of 17.5% and 4.7%, respectively. The increase in the income tax expense and the corresponding change in the effective income tax rate for the three and nine-month periods endedSeptember 30, 2021 , when compared to the prior-year periods, was primarily due to a pre-tax loss during the 2020 periods, as well as a change in the jurisdictional mix of earnings. Our effective tax rate differs from theU.S. statutory rate primarily due to the impact of GILTI inclusions, state income taxes, foreign taxes, other non-deductible permanent items and discrete items (such as share-based compensation).
Net Income (Loss)
Our net income (loss) for the three-month periods endedSeptember 30, 2021 and 2020 was approximately$12.0 million and($3.0) million , respectively. The increase in our net income for the three-month period endedSeptember 30, 2021 was the result of several factors, including increased sales and improved gross margins, lower impairment expense (none in the three-month period endedSeptember 30, 2021 compared to$20.6 million in the three-month period endedSeptember 30, 2020 ), and lower interest expense, partially offset by increased SG&A expenses, increased R&D expenses and higher contingent consideration expense ($1.1 million expense in the three-month period endedSeptember 30, 2021 compared to($4.4) million benefit in the three-month period endedSeptember 30, 2020 ). Our net income (loss) for the nine-month periods endedSeptember 30, 2021 and 2020 was approximately$27.8 million and($25.2) million , respectively. This increase in our net income for the nine-month period endedSeptember 30, 2021 was the result of several factors, including increased sales and improved gross margins, the$18.2 million legal settlement related to the DOJ inquiry recorded in the prior-year period, lower impairment expense ($4.3 million in the nine-month period endedSeptember 30, 2021 compared to$28.3 million in the nine-month period endedSeptember 30, 2020 ), and lower interest expense, partially offset by increased SG&A expenses, which included approximately$6 million of contract termination costs, higher contingent consideration expense ($3.3 million in the nine-month period endedSeptember 30, 2021 compared to$0.9 million in the nine-month period endedSeptember 30, 2020 ) and increased R&D expenses.
LIQUIDITY AND CAPITAL RESOURCES
Capital Commitments, Contractual Obligations and Cash Flows
AtSeptember 30, 2021 andDecember 31, 2020 , our current assets exceeded current liabilities by$250.0 million and$244.7 million , respectively, and we had cash and cash equivalents of approximately$68.9 million and$56.9 million , respectively, of which approximately$63.7 million and$42.3 million , respectively, were held by foreign subsidiaries. We currently believe future repatriation of cash and other property held by our foreign subsidiaries will generally not be subject toU.S. federal income tax. As a result, we are not permanently reinvested with respect to our historic unremitted foreign 36
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earnings. In addition, cash held by our subsidiary inChina is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside ofChina . As ofSeptember 30, 2021 , andDecember 31, 2020 , we had cash and cash equivalents of approximately$33.6 million and$15.5 million , respectively, within our subsidiary inChina . Cash flows provided by operating activities. We generated cash from operating activities of approximately$101.4 million and$128.4 million during the nine-month periods endedSeptember 30, 2021 and 2020, respectively. Net cash provided by operating activities decreased approximately$26.9 million for the nine-month period endedSeptember 30, 2021 compared to the nine-month period endedSeptember 30, 2020 . Significant factors affecting operating cash flows during these periods included:
Net income (loss) was approximately
nine-month periods ended
? improvement in earnings was offset by a decrease in the non-cash adjustment for
the write-off of certain intangible and other long-term assets within the
statement of cash flows of
periods endedSeptember 30, 2021 and 2020, respectively. Cash provided by (used for) accounts receivable was approximately ($6.2 )
million and
? and 2020, respectively, due primarily to increased sales volume during the
nine-month period ended
of 2020.
Cash provided by (used for) inventories was approximately
? respectively, due primarily to efforts to manage inventory levels to support
the growth in sales and reduced production in the prior-year period during the
economic downturn related to the COVID-19 pandemic.
Cash flows used in investing activities. We used cash in investing activities of approximately$22.6 million and$36.8 million for the nine-month periods endedSeptember 30, 2021 and 2020, respectively. We used cash for capital expenditures of property and equipment of approximately$19.6 million and$35.6 million in the nine-month periods endedSeptember 30, 2021 and 2020, respectively. Capital expenditures in each period were primarily related to investment in facilities and property and equipment to support development and production of our products, and in 2020, these investments included construction of a new manufacturing and research and development facility inSouth Jordan, Utah , completed in early 2020. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately$30 to$40 million in 2021 for buildings, property and equipment.
Cash outflows invested in acquisitions for the nine-month periods ended
Cash flows used in financing activities. Cash used in financing activities for the nine-month periods endedSeptember 30, 2021 and 2020 was approximately$66.0 million and$91.2 million , respectively. We decreased our net borrowings by approximately$72.6 and$82.3 million for the nine-month periods endedSeptember 30, 2021 and 2020, respectively, by paying down our debt. We completed payment of contingent consideration of$10.6 million and$13.0 million for the nine-month periods endedSeptember 30, 2021 and 2020, respectively, which is classified as a financing activity, principally related to our acquisitions ofVascular Insights andCianna Medical, Inc , respectively. As ofSeptember 30, 2021 , we had outstanding borrowings of approximately$279 million under the Third Amended Credit Agreement, with additional available borrowings of approximately$456 million , based on the maximum net leverage ratio and the aggregate revolving credit commitment pursuant to the Third Amended Credit Agreement. Our interest rate as ofSeptember 30, 2021 was a fixed rate of 2.71% on$75 million as a result of an interest rate swap and a variable floating rate of 1.08% on$204.0 million . Our interest rate as ofDecember 31, 2020 was a fixed rate of 2.37% on$175 million as a result of an interest rate swap and a variable floating rate of 1.40% on$176.6 million . 37
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We currently believe that our existing cash balances, anticipated future cash flows from operations and borrowings under the Third Amended Credit Agreement will be adequate to fund our current and currently planned future operations for the next twelve months and the foreseeable future. In the event we pursue and complete significant transactions or acquisitions in the future, additional funds will likely be required to meet our strategic needs, which may require us to raise additional funds in the debt or equity markets.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements are reported in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations." of the 2020 Annual Report on Form 10-K. In the three and nine-month periods endedSeptember 30, 2021 , there were no material changes from the information provided therein.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial results are affected by the selection and application of
accounting policies and methods. In the three and nine-month periods ended
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements in this report, other than statements of historical fact, are "forward-looking statements" for purposes of these provisions, including, without limitation, any projections of earnings, revenues or other financial items, any statements of the plans and objectives of our management for future operations, any statements concerning proposed new products or services, any statements regarding the integration, development or commercialization of the business or any assets acquired from other parties, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All forward-looking statements included in this report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any forward-looking statement. In some cases, forward-looking statements can be identified by the use of terminology such as "may," "will," "expects," "plans," "should," "anticipates," "intends," "seeks," "believes," "estimates," "potential," "forecasts," "continue," or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct. Actual results will likely differ, and could differ materially, from those projected or assumed in the forward-looking statements. Prospective investors are cautioned not to unduly rely on any such forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Our actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and we assume no obligation to update or disclose revisions to those estimates. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections.
NOTICE REGARDING TRADEMARKS
This report includes trademarks, tradenames and service marks that are our
property or the property of others. Solely for convenience, such trademarks and
tradenames sometimes appear without any "™" or "®" symbol. However, failure to
include such symbols is not intended to suggest, in any way, that we will not
assert our rights or the rights of any applicable licensor, to these trademarks
and tradenames.
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