UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

☒ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended September 30, 2021

 

or

 

☐ 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 001-32982

 

Atrion Corporation

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

63-0821819

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

One Allentown Parkway, Allen, Texas 75002

(Address of Principal Executive Offices) (Zip Code)

 

(972) 390-9800

(Registrant’s Telephone Number, Including Area Code)

 

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

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, Par Value $0.10 per share

ATRI

The Nasdaq Global Select 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 Registration 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 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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

Title of Each Class

 

Number of Shares Outstanding at

October 28, 2021

Common stock, Par Value $0.10 per share

 

1,800,723

 

 

 

 

ATRION CORPORATION AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

PART I. Financial Information

 

2

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Unaudited) For the Three and Nine Months Ended September 30, 2021 and September 30, 2020

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets (Unaudited) September 30, 2021 and December 31, 2020

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) For the Three and Nine Months Ended September 30, 2021 and 2020

 

6

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

8

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

14

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

20

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

20

 

 

 

 

 

 

PART II. Other Information

 

20

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

20

 

 

 

 

 

 

Item 1A.

Risk Factors

 

20

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

21

 

 

 

 

 

 

Item 6.

Exhibits

 

 21

 

 

 

 

 

 

SIGNATURES

 

22

 

 

 
1

Table of Contents

 

PART I

 

FINANCIAL INFORMATION

 

 
2

Table of Contents

 

Item 1. Financial Statements.

 

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(in thousands, except per share amounts)

 

Revenues

 

$ 42,855

 

 

$ 33,785

 

 

$ 124,716

 

 

$ 115,348

 

Cost of goods sold

 

 

25,065

 

 

 

18,887

 

 

 

72,720

 

 

 

63,114

 

Gross profit

 

 

17,790

 

 

 

14,898

 

 

 

51,996

 

 

 

52,234

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

2,081

 

 

 

1,888

 

 

 

5,882

 

 

 

5,660

 

General and administrative

 

 

4,838

 

 

 

4,039

 

 

 

13,763

 

 

 

13,066

 

Research and development

 

 

1,393

 

 

 

1,388

 

 

 

4,147

 

 

 

4,165

 

 

 

 

8,312

 

 

 

7,315

 

 

 

23,792

 

 

 

22,891

 

Operating income

 

 

9,478

 

 

 

7,583

 

 

 

28,204

 

 

 

29,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

 

281

 

 

 

303

 

 

 

680

 

 

 

1,161

 

Other investment income (losses)

 

 

(173 )

 

 

678

 

 

 

852

 

 

 

5

 

Other income

 

 

-

 

 

 

-

 

 

 

67

 

 

 

-

 

 

 

 

108

 

 

 

981

 

 

 

1,599

 

 

 

1,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

9,586

 

 

 

8,564

 

 

 

29,803

 

 

 

30,509

 

Provision for income taxes

 

 

(1,309 )

 

 

(1,321 )

 

 

(4,875 )

 

 

(5,764 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$ 8,277

 

 

$ 7,243

 

 

$ 24,928

 

 

$ 24,745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per basic share

 

$ 4.59

 

 

$ 3.96

 

 

$ 13.71

 

 

$ 13.46

 

Weighted average basic shares outstanding

 

 

1,803

 

 

 

1,829

 

 

 

1,818

 

 

 

1,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per diluted share

 

$ 4.58

 

 

$ 3.95

 

 

$ 13.68

 

 

$ 13.42

 

Weighted average diluted shares outstanding

 

 

1,806

 

 

 

1,834

 

 

 

1,822

 

 

 

1,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

 

$ 1.95

 

 

$ 1.75

 

 

$ 5.45

 

 

$ 4.85

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 
3

Table of Contents

 

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) 

 

 

 

September 30,
2021

 

 

December 31,

2020

 

Assets

 

(in thousands)

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$ 23,656

 

 

$ 22,450

 

Short-term investments

 

 

29,590

 

 

 

19,258

 

Accounts receivable

 

 

25,221

 

 

 

16,445

 

Inventories

 

 

47,307

 

 

 

50,298

 

Prepaid expenses and other current assets

 

 

7,992

 

 

 

3,868

 

 

 

 

133,766

 

 

 

112,319

 

 

 

 

 

 

 

 

 

 

Long-term investments

 

 

24,898

 

 

 

46,207

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

229,719

 

 

 

218,912

 

Less accumulated depreciation and amortization

 

 

132,650

 

 

 

123,977

 

 

 

 

97,069

 

 

 

94,935

 

 

 

 

 

 

 

 

 

 

Other assets and deferred charges:

 

 

 

 

 

 

 

 

Patents

 

 

1,332

 

 

 

1,421

 

Goodwill

 

 

9,730

 

 

 

9,730

 

Other

 

 

2,139

 

 

 

2,278

 

 

 

 

13,201

 

 

 

13,429

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 268,934

 

 

$ 266,890

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 13,914

 

 

$ 13,200

 

Accrued income and other taxes

 

 

902

 

 

 

436

 

 

 

 

14,816

 

 

 

13,636

 

 

 

 

 

 

 

 

 

 

Line of credit

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Other non-current liabilities

 

 

14,839

 

 

 

12,812

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $0.10 per share; authorized 10,000 shares, issued 3,420 shares

 

 

342

 

 

 

342

 

Paid-in capital

 

 

60,764

 

 

 

53,527

 

Retained earnings

 

 

352,717

 

 

 

337,700

 

Treasury shares,1,619 at September 30, 2021 and 1,594 at December 31, 2020, at cost

 

 

(174,544 )

 

 

(151,127 )

Total stockholders’ equity

 

 

239,279

 

 

 

240,442

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$ 268,934

 

 

$ 266,890

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 
4

Table of Contents

 

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$ 24,928

 

 

$ 24,745

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

9,527

 

 

 

8,517

 

Deferred income taxes

 

 

1,613

 

 

 

1,315

 

Stock-based compensation

 

 

1,766

 

 

 

1,540

 

Net change in unrealized gains and losses on investments

 

 

(853 )

 

 

256

 

Net change in accrued interest, premiums, and discounts

 

 

 

 

 

 

 

 

on investments

 

 

385

 

 

 

25

 

Other

 

 

24

 

 

 

22

 

 

 

 

37,390

 

 

 

36,420

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(8,776 )

 

 

1,136

 

Inventories

 

 

2,991

 

 

 

(6,529 )

Prepaid expenses

 

 

(4,125 )

 

 

(1,468 )

Other non-current assets

 

 

138

 

 

 

(258 )

Accounts payable and accrued liabilities

 

 

326

 

 

 

839

 

Accrued income and other taxes

 

 

466

 

 

 

586

 

Other non-current liabilities

 

 

415

 

 

 

(1,977 )

Cash flows from operating activities

 

 

28,825

 

 

 

28,749

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Property, plant and equipment additions

 

 

(11,596 )

 

 

(14,899 )

Purchase of investments

 

 

(18,110 )

 

 

(40,025 )

Proceeds from sale of investments

 

 

165

 

 

 

899

 

Proceeds from maturities of investments

 

 

29,391

 

 

 

30,223

 

Cash flows from investing activities

 

 

(150 )

 

 

(23,802 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Purchase of treasury stock

 

 

(16,988 )

 

 

(17,037 )

Shares tendered for employees’ withholding taxes on stock-based compensation

 

 

(585 )

 

 

(55 )

Dividends paid

 

 

(9,896 )

 

 

(8,907 )

Cash flows from financing activities

 

 

(27,469 )

 

 

(25,999 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

1,206

 

 

 

(21,052 )

Cash and cash equivalents at beginning of period

 

 

22,450

 

 

 

45,048

 

Cash and cash equivalents at end of period

 

$ 23,656

 

 

$ 23,996

 

 

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Income taxes

 

$ 5,540

 

 

$ 4,518

 

Non-cash financing activities:

 

 

 

 

 

 

 

 

Non-cash effect of stock option exercises

 

$ 6,012

 

 

 

-

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements

 

 
5

Table of Contents

 

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

For the Three Months Ended September 30, 2021 and 2020

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

Shares Outstanding

 

 


Amount

 

 


Shares

 

 


Amount

 

 

Paid-in

Capital

 

 

Retained Earnings

 

 

Total

 

Balances, July 1, 2020

 

 

1,829

 

 

$ 342

 

 

 

1,591

 

 

$ (149,329 )

 

$ 53,020

 

 

$ 329,494

 

 

$ 233,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,243

 

 

 

7,243

 

Stock-based compensation transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

561

 

 

 

 

 

 

 

562

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

-

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,214 )

 

 

(3,214 )

Balances, September 30, 2020

 

 

1,829

 

 

$ 342

 

 

 

1,591

 

 

$ (149,328 )

 

$ 53,581

 

 

$ 333,523

 

 

$ 238,118

 

 

Balances, July 1, 2021

 

 

1,811

 

 

$ 342

 

 

 

1,609

 

 

$ (168,045 )

 

$ 60,470

 

 

$ 347,954

 

 

$ 240,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,277

 

 

 

8,277

 

Stock-based compensation transactions

 

 

1

 

 

 

 

 

 

 

(1 )

 

 

1

 

 

 

294

 

 

 

 

 

 

 

295

 

Purchase of treasury stock

 

 

(11 )

 

 

 

 

 

 

11

 

 

 

(6,500 )

 

 

 

 

 

 

 

 

 

 

(6,500 )

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,514 )

 

 

(3,514 )

Balances, September 30, 2021

 

 

1,801

 

 

$ 342

 

 

 

1,619

 

 

$ (174,544 )

 

$ 60,764

 

 

$ 352,717

 

 

$ 239,279

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

 

 
6

Table of Contents

 

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

For the Nine Months Ended September 30, 2021 and 2020

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional

 

 

 

 

 

 

 

 

Shares Outstanding

 

 


Amount

 

 


Shares

 

 


Amount

 

 

Paid-in

Capital

 

 

Retained Earnings

 

 

Total

 

Balances, December 31, 2019

 

 

1,855

 

 

$ 342

 

 

 

1,565

 

 

$ (132,260 )

 

$ 52,043

 

 

$ 317,745

 

 

$ 237,870

 

Cumulative change in accounting principal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36 )

 

 

(36 )

Balances, January 1, 2020

 

 

1,855

 

 

$ 342

 

 

 

1,565

 

 

$ (132,260 )

 

$ 52,043

 

 

$ 317,709

 

 

$ 237,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,745

 

 

 

24,745

 

Stock-based compensation transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

1,538

 

 

 

 

 

 

 

1,562

 

Shares surrendered in stock transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55 )

 

 

 

 

 

 

 

 

 

 

(55 )

Purchase of treasury stock

 

 

(26 )

 

 

 

 

 

 

26

 

 

 

(17,037 )

 

 

 

 

 

 

 

 

 

 

(17,037 )

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,931 )

 

 

(8,931 )

Balances, September 30, 2020

 

 

1,829

 

 

$ 342

 

 

 

1,591

 

 

$ (149,328 )

 

$ 53,581

 

 

$ 333,523

 

 

$ 238,118

 

 

Balances, January 1, 2021

 

 

1,826

 

 

$ 342

 

 

 

1,594

 

 

$ (151,127 )

 

$ 53,527

 

 

$ 337,700

 

 

$ 240,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,928

 

 

 

24,928

 

Stock-based compensation transactions

 

 

4

 

 

 

 

 

 

 

(4 )

 

 

(5,844 )

 

 

7,237

 

 

 

 

 

 

 

1,393

 

Shares surrendered in stock transactions

 

 

(1 )

 

 

 

 

 

 

1

 

 

 

(585 )

 

 

 

 

 

 

 

 

 

 

(585 )

Purchase of treasury stock

 

 

(28 )

 

 

 

 

 

 

28

 

 

 

(16,988 )

 

 

 

 

 

 

 

 

 

 

(16,988 )

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,911 )

 

 

(9,911 )

Balances, September 30, 2021

 

 

1,801

 

 

$ 342

 

 

 

1,619

 

 

$ (174,544 )

 

$ 60,764

 

 

$ 352,717

 

 

$ 239,279

 

 

The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.

 

 
7

Table of Contents

 

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

(1)

Basis of Presentation

 

 

 

The accompanying unaudited condensed consolidated financial statements of Atrion Corporation and its subsidiaries (collectively referred to herein as “Atrion,” the “Company,” “we,” “our,” or “us”) have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, these statements include all normal and recurring adjustments necessary to present a fair statement of our consolidated results of operations, financial position, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity US GAAP requires management to make estimates and assumptions that can have a significant impact on our revenue, operating income, and net income, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments, and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments, and estimates, and make changes as we deem necessary.

 

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of November 8, 2021, the date of issuance of this Quarterly Report on Form 10-Q. However, these estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Form 10-K”).

 

(2)

Inventories

 

 

 

Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the first-in, first-out method. The following table details the major components of inventories (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Raw materials

 

$ 20,994

 

 

$ 20,308

 

Work in process

 

 

10,357

 

 

 

11,339

 

Finished goods

 

 

15,956

 

 

 

18,651

 

Total inventories

 

$ 47,307

 

 

$ 50,298

 

 

 
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(3)

Income per share

 

 

 

The following is the computation for basic and diluted income per share:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(in thousands, except per share amounts)

 

Net income

 

$ 8,277

 

 

$ 7,243

 

 

$ 24,928

 

 

$ 24,745

 

Weighted average basic shares outstanding

 

 

1,803

 

 

 

1,829

 

 

 

1,818

 

 

 

1,839

 

Add: Effect of dilutive securities

 

 

3

 

 

 

5

 

 

 

4

 

 

 

5

 

Weighted average diluted shares outstanding

 

 

1,806

 

 

 

1,834

 

 

 

1,822

 

 

 

1,844

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$ 4.59

 

 

$ 3.96

 

 

$ 13.71

 

 

$ 13.46

 

Diluted

 

$ 4.58

 

 

$ 3.95

 

 

$ 13.68

 

 

$ 13.42

 

 

 

Incremental shares from stock options and restricted stock units were included in the calculation of weighted average diluted shares outstanding using the treasury stock method. Dilutive securities representing zero and two shares of common stock for the quarters ended September 30, 2021 and 2020, respectively, and an average of two and eight shares of common stock for the nine months ended September 30, 2021 and 2020, respectively, were excluded from the computation of weighted average diluted shares outstanding because their effect would have been anti-dilutive.

 

 

 

(4)

Investments

 

 

 

As of September 30, 2021, we held investments in commercial paper, bonds, money market accounts, mutual funds, and equity securities. The commercial paper and bonds are considered held-to-maturity and are recorded at amortized cost in the accompanying consolidated balance sheets. The money market accounts, equity securities, and mutual funds are recorded at fair value in the accompanying consolidated balance sheets. The fair values of these investments were estimated using recently executed transactions and market price quotations. We consider as current assets those investments which will mature in the next 12 months including interest receivable on the long-term bonds. The remaining investments are considered non-current assets including our investment in equity securities we intend to hold longer than 12 months.

 

 
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The components of the Company’s cash and cash equivalents and our short- and long-term investments are as follows (in thousands):

 

 

 

September 30,

2021

 

 

December 31,

2020

 

Cash and cash equivalents:

 

 

 

 

 

 

Cash deposits

 

$ 11,124

 

 

$ 16,628

 

Money market funds

 

 

12,532

 

 

 

4,822

 

Commercial paper

 

 

-

 

 

 

1,000

 

Total cash and cash equivalents

 

$ 23,656

 

 

$ 22,450

 

Short-term investments:

 

 

 

 

 

 

 

 

Commercial paper (held-to-maturity)

 

$ 4,746

 

 

$ 5,178

 

Bonds (held-to-maturity)

 

 

24,860

 

 

 

14,101

 

Allowance for credit losses

 

 

(16 )

 

 

(21 )

Total short-term investments

 

$ 29,590

 

 

$ 19,258

 

Long-term investments:

 

 

 

 

 

 

 

 

Mutual funds (available for sale)

 

$ 531

 

 

$ 563

 

Bonds (held-to-maturity)

 

 

19,551

 

 

 

41,619

 

Allowance for credit losses

 

 

(24 )

 

 

(52 )

Equity securities (available for sale)

 

 

4,840

 

 

 

4,077

 

Total long-term investments

 

$ 24,898

 

 

$ 46,207

 

Total cash, cash equivalents and short and long-term investments

 

$ 78,144

 

 

$ 87,915

 

 

 

We utilize a lifetime “expected credit loss” measurement objective for the recognition of credit losses for held-to-maturity securities at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. Our credit loss calculations for held-to-maturity securities are based upon historical default and recovery rates of bonds rated with the same rating as our portfolio. We also apply an adjustment factor to these credit loss calculations based upon our assessment of the expected impact from current economic conditions on our investments, including the impact of COVID-19. We monitor the credit quality of debt securities classified as held-to-maturity through the use of their respective credit ratings and update them on a quarterly basis with our latest assessment completed on September 30, 2021. During the third quarter of 2021, our allowance for credit losses related to short-term investments decreased by $8 thousand and our allowance for credit losses related to long-term investments decreased by $2 thousand.

 

 
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The following table summarizes the amortized cost of our held-to-maturity bonds at September 30, 2021, aggregated by credit quality indicator (in thousands):

 

Held-to-Maturity Bonds

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality

Indicators

 

Fed Govt.

Bonds/Notes

 

 

Municipal

Bonds

 

 

Corporate

Bonds

 

 

Totals

 

AAA/AA/A

 

$ 2,448

 

 

$ 637

 

 

$ 31,664

 

 

$ 34,749

 

BBB/BB

 

 

-

 

 

 

-

 

 

 

9,662

 

 

 

9,662

 

TOTAL

 

$ 2,448

 

 

$ 637

 

 

$ 41,326

 

 

$ 44,411

 

 

 

Our investments are required to be measured for disclosure purposes at fair value on a recurring basis. Our investments are considered Level 1 or Level 2 as detailed in the table below. The fair values of these investments were estimated using recently executed transactions and market price quotations. The amortized cost and fair value of our investments, and the related gross unrealized gains and losses, were as follows as of the dates shown below (in thousands):

 

 

 

Gross Unrealized

 

 

 

Level

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

As of September 30,

2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market

 

 

1

 

 

 

12,532

 

 

$ -

 

 

$ -

 

 

$ 12,532

 

Commercial paper

 

 

2

 

 

 

4,746

 

 

$ 1

 

 

$ -

 

 

$ 4,747

 

Bonds

 

 

2

 

 

 

44,411

 

 

$ 185

 

 

$ (5 )

 

$ 44,591

 

Mutual funds

 

 

1

 

 

 

510

 

 

$ 21

 

 

$ -

 

 

$ 531

 

Equity investments

 

 

2

 

 

 

5,675

 

 

$ -

 

 

$ (835 )

 

$ 4,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market

 

 

1

 

 

 

4,822

 

 

$ -

 

 

$ -

 

 

$ 4,822

 

Commercial paper

 

 

2

 

 

 

6,178

 

 

$ -

 

 

$ -

 

 

$ 6,178

 

Bonds

 

 

2

 

 

 

55,720

 

 

$ 505

 

 

$ (44 )

 

$ 56,181

 

Mutual funds

 

 

1

 

 

 

599

 

 

$ -

 

 

$ (36 )

 

$ 563

 

Equity investments

 

 

2

 

 

 

5,675

 

 

$ -

 

 

$ (1,598 )

 

$ 4,077

 

 

 

The carrying value of our investments is reviewed quarterly for changes in circumstances or the occurrence of events that suggest an investment may not be fully recoverable. The bonds represent investments in various issuers at September 30, 2021. The unrealized losses for some of these bond investments reflect changes in interest rates following their acquisition. As of September 30, 2021, we had one bond investment in a loss position for more than 12 months.

 

 

 

At September 30, 2021, the length of time until maturity of the commercial paper we owned ranged from less than a month to seven months and the length of time to maturity for the bonds ranged from less than a month to 51 months.

 

 

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(5)

Patents and Licenses

 

 

 

Patents and license fees paid for the use of other entities’ patents are amortized over the useful life of the patent or license. The following tables provide information regarding patents and licenses (dollars in thousands):

 

September 30, 2021

 

 

December 31, 2020

 

Weighted Average
Original Life
(years)

 

 

Gross
Carrying
Amount

 

 


Accumulated
Amortization

 

 

Weighted Average
Original Life
(years)

 

 

Gross
Carrying
Amount

 

 


Accumulated
Amortization

 

 

15.67

 

 

$ 13,840

 

 

$ 12,508

 

 

 

15.67

 

 

$ 13,840

 

 

$ 12,419

 

 

 

Aggregated amortization expense for patents and licenses was $30 thousand in the three-month periods ended September 30, 2021 and 2020 and $90 thousand in the nine-month periods ended September 30, 2021 and 2020.

 

 

 

Estimated future amortization expense for each of the years set forth below ending December 31 is as follows (in thousands):

 

2022

$117

2023

$113

2024

$113

2025

$112

2026

$112

 

(6)

Revenues

 

 

 

We recognize revenue when performance obligations under the terms of a contract with our customer are satisfied. This occurs with the transfer of control of our products to customers when products are shipped. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Sales and other taxes we may collect concurrent with revenue-producing activities are excluded from revenue.

 

A summary of revenues by geographic area, based on shipping destination, for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):

  

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

United States

 

$ 25,447

 

 

$ 19,925

 

 

$ 72,134

 

 

$ 65,648

 

Germany

 

 

2,517

 

 

 

2,485

 

 

 

6,981

 

 

 

8,640

 

Italy

 

 

1,690

 

 

 

1,841

 

 

 

6,672

 

 

 

5,395

 

China

 

 

2,047

 

 

 

1,490

 

 

 

6,259

 

 

 

4,488

 

Other countries less than 5% of revenues

 

 

11,154

 

 

 

8,044

 

 

 

32,670

 

 

 

31,177

 

Total

 

$ 42,855

 

 

$ 33,785

 

 

$ 124,716

 

 

$ 115,348

 

 

 
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A summary of revenues by product line for the three and nine months ended September 30, 2021 and 2020 is as follows (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Fluid Delivery

 

$ 19,011

 

 

$ 16,512

 

 

$ 59,006

 

 

$ 60,620

 

Cardiovascular

 

 

16,064

 

 

 

11,297

 

 

 

42,051

 

 

 

36,963

 

Ophthalmology

 

 

1,192

 

 

 

1,171

 

 

 

4,987

 

 

 

2,970

 

Other

 

 

6,588

 

 

 

4,805

 

 

 

18,672

 

 

 

14,795

 

Total

 

$ 42,855

 

 

$ 33,785

 

 

$ 124,716

 

 

$ 115,348

 

 

 

More than 99 percent of our total revenue in the periods presented herein is pursuant to shipments initiated by a purchase order (our “contract”) and recognized at a single point in time when the performance obligation of the product being shipped is satisfied, rather than recognized over time, and is presented as a receivable on the balance sheet. Payment is typically due within 30 days.

 

We maintain an allowance for doubtful accounts to reflect estimated losses resulting from the failure of customers to make required payments. Effective January 1, 2020, we adopted a new credit loss accounting methodology to calculate our credit loss allowance for our trade receivables following a lifetime “expected credit loss” measurement objective. An account is written off when we determine the receivable will not be collected. Historically, bad debt has been immaterial.

 

We have elected to recognize the cost of shipping as an expense in cost of sales when control over the product has transferred to the customer.

 

We do not make any material accruals for product returns and warranty obligations because our returns and warranty obligations have been very low due to our focus on quality control.

 

We do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount for which we have the right to invoice. We believe that the complexity added to our disclosures by the inclusion of a large amount of insignificant detail in attempting to disclose information about immaterial contracts would potentially obscure more useful and important information.

 

 

  

(7)

Recent Accounting Pronouncements

 

 

 

From time to time, new accounting pronouncements applicable to us are issued by the Financial Accounting Standards Board or other standards-setting bodies. We generally adopt these standards as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

 

 
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Item 2.

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

 

 

 

Overview

 

We develop and manufacture products primarily for medical applications. We market components to other equipment manufacturers for incorporation in their products and sell finished devices to physicians, hospitals, clinics, and other treatment centers. Our medical products primarily serve the fluid delivery, cardiovascular, and ophthalmology markets. Our other medical and non-medical products include instrumentation and disposables used in valves and inflation devices used in marine and aviation safety products.

 

Our products are used in a wide variety of applications by numerous customers. We encounter competition in all of our markets and compete primarily on the basis of product quality, price, engineering, customer service, and delivery time.

 

Our business strategy is to provide hospitals, physicians, and other healthcare providers with the tools they need to improve the lives of the patients they serve. To do so, we provide a broad selection of products in the areas of our expertise. We have diverse product lines serving primarily the fluid delivery, cardiovascular, and ophthalmic markets, and this diversity has served us well as we encounter changing market conditions. Research and development, or R&D, efforts are focused on improving current products and developing highly-engineered products that meet customer needs and serve niche markets with meaningful sales potential. Proposed new products may be subject to regulatory clearance or approval prior to commercialization and the time period for introducing a new product to the marketplace can be unpredictable. We also focus on controlling costs by investing in modern manufacturing technologies and controlling purchasing processes. We have been successful in consistently generating cash from operations and have used that cash to reduce or eliminate indebtedness, to fund capital expenditures, to make investments, to repurchase stock, and to pay dividends.

 

Our strategic objective is to further enhance our position in our served markets by:

 

 

·

Focusing on customer needs;

 

·

Expanding existing product lines and developing new products;

 

·

Maintaining a culture of controlling cost; and

 

·

Preserving and fostering a collaborative, entrepreneurial management structure.

 

·

For the three months ended September 30, 2021, we reported revenues of $42.9 million, up 27 percent, operating income of $9.5 million, up 25 percent, and net income of $8.3 million, up 14 percent from the three months ended September 30, 2020.

 

 

 

 

Results for the three months ended September 30, 2021

 

Consolidated net income totaled $8.3 million, or $4.59 per basic and $4.58 per diluted share, in the third quarter of 2021. This is compared with consolidated net income of $7.2 million, or $3.96 per basic and $3.95 per diluted share, in the third quarter of 2020. The income per basic share computations are based on weighted average basic shares outstanding of 1,803 thousand in the 2021 period and 1,829 thousand in the 2020 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,806 thousand in the 2021 period and 1,834 thousand in the 2020 period.

 

 
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Consolidated revenues of $42.9 million for the third quarter of 2021 were 26.8 percent higher than revenues of $33.8 million for the third quarter of 2020. Our third quarter 2021 results were favorably impacted by a 42% increase in Cardiovascular revenues compared to the third quarter of 2020 when many surgeries were postponed due to COVID-19. Additionally, all other major product lines were also up compared to last year’s third quarter.

 

 

 

Revenues by product line were as follows (in thousands):

 

 

 

Three Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Fluid Delivery

 

$ 19,011

 

 

$ 16,512

 

Cardiovascular

 

 

16,064

 

 

 

11,297

 

Ophthalmology

 

 

1,192

 

 

 

1,171

 

Other

 

 

6,588

 

 

 

4,805

 

Total

 

$ 42,855

 

 

$ 33,785

 

 

 

Cost of goods sold of $25.1 million for the third quarter of 2021 was 32.7 percent higher than our cost of goods sold of $18.9 million for the third quarter of 2020, primarily due to higher sales volumes, higher manufacturing costs, and an unfavorable product sales mix. Our cost of goods sold in the third quarter of 2021 was 58.5 percent of revenues compared to 55.9 percent of revenues in the third quarter of 2020.

 

 

 

Gross profit of $17.8 million in the third quarter of 2021 was $2.9 million or 19.4 percent higher than in the comparable 2020 period. Our gross profit percentage in the third quarter of 2021 was 41.5 percent of revenues compared with 44.1 percent of revenues in the third quarter of 2020. The decrease in gross profit percentage in the 2021 period compared to the 2020 period was primarily related to higher manufacturing costs and an unfavorable product sales mix.

 

Our third quarter 2021 operating expenses of $8.3 million were $997 thousand higher than the operating expenses for the third quarter of 2020. This increase was attributable to a $799 thousand increase in general and administrative expenses primarily in depreciation and outside services. Selling expenses increased $193 thousand primarily for travel and outside services. R&D expenses increased slightly by $5 thousand with offsetting balances in higher compensation and lower supplies and outside services.

 

Operating income of $9.5 million in the third quarter of 2021 represented a $1.9 million, or 25.1 percent, increase in operating income over third quarter 2020 operating income and was due to higher sales discussed above. Operating income was 22.1 percent of revenues for the third quarter of 2021 and 22.4 percent of revenues for the third quarter of 2020.

 

 
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Table of Contents

 

 

Interest and dividend income in the third quarter of 2021 was $281 thousand compared with $303 thousand for the same period in the prior year. The decline in interest and dividend income was largely due to lower interest rates in the 2021 period as compared to the 2020 period.

 

 

 

Other investment income in the third quarter of 2021 was a $173 thousand loss compared with Other investment income of $678 thousand in the third quarter of 2020. These amounts were attributable to unrealized gains and losses on equity investments resulting from changes in the market values of the investments in each quarter.

 

Income tax expense was $1.3 million for the both the third quarter of 2021 and 2020. The effective tax rate for the third quarter of 2021 was 13.7 percent compared with 15.4 percent for the third quarter of 2020. The decrease in the 2021 period’s effective tax rate compared to the prior-year period was primarily related to increased tax benefits for sales outside the United States under the foreign derived intangible income deduction as well as the R&D tax credit.

 

Results for the nine months ended September 30, 2021

 

Consolidated net income totaled $24.9 million, or $13.71 per basic and $13.68 per diluted share, in first nine months of 2021. This is compared with consolidated net income of $24.7 million, or $13.46 per basic and $13.42 per diluted share, in the first nine months of 2020. The income per basic share computations are based on weighted average basic shares outstanding of 1,818 thousand in the 2021 period and 1,839 thousand in the 2020 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,822 thousand in the 2021 period and 1,844 thousand in the 2020 period.

 

Consolidated revenues of $124.7 million for the first nine months of 2021 were higher than revenues of $115.3 million for the first nine months of 2020. This increase in revenue was due to increased sales in our Cardiovascular, Other, and Ophthalmology product lines.

 

Revenues by product line were as follows (in thousands):

 

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Fluid Delivery

 

$ 59,006

 

 

$ 60,620

 

Cardiovascular

 

 

42,051

 

 

 

36,963

 

Ophthalmology

 

 

4,987

 

 

 

2,970

 

Other

 

 

18,672

 

 

 

14,795

 

Total

 

$ 124,716

 

 

$ 115,348

 

 

 

Cost of goods sold of $72.7 million for the first nine months of 2021 was $9.6 million higher than in the comparable 2020 period. This increase was mainly due to higher sales volumes, higher manufacturing costs, and an unfavorable product sales mix. Our cost of goods sold in the first nine months of 2021 and 2020 was 58.3 percent and 54.7 percent of revenues, respectively.

 

 
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Gross profit was $52.0 million in the first nine months of 2021 and $52.2 million in the first nine months of 2020. Our gross profit percentage was 41.7 percent of revenues in the first nine months in 2021 and 45.3 percent in 2020. This decrease was driven by higher manufacturing costs and an unfavorable product sales mix.

 

 

 

Operating expenses of $23.8 million for the first nine months of 2021 were $901 thousand higher than the operating expenses for the first nine months of 2020. This increase was primarily in general and administrative expense as a result of higher compensation.

 

Operating income of $28.2 million for the first nine months of 2021 represented a $1.1 million, or 3.9 percent decrease, in operating income from the first nine months of 2020. Operating income for the first nine months in 2021 and 2020 was 22.6 percent and 25.4 percent of revenues, respectively.

 

Interest and dividend income for the first nine months of 2021 was $680 thousand, compared with $1.2 million for the same period in the prior year. The decline in interest and dividend income was largely due to lower interest rates in the 2021 period versus the 2020 period.

 

Other investment income for the first nine months of 2021 was $852 thousand compared to $5 thousand in the first nine months of 2020. These amounts were attributable to unrealized gains and losses on equity investments resulting from changes in the market values of our investments in each time period. The impact of COVID-19 on equity markets in the 2020 period also impacted our investments.

 

Income tax expense was $4.9 million for the first nine months in 2021 and $5.8 million for the first nine months in 2020. The effective tax rate for the first nine months of 2021 was 16.4 percent, compared with 18.9 percent for the first nine months of 2020. The decrease in the 2021 period effective tax rate was primarily related to increased tax benefits for sales outside the United States under the foreign derived intangible income deduction as well as the R&D tax credit. We expect the effective tax rate for 2021 to be approximately 15 percent.

 

Liquidity and Capital Resources

 

As of September 30, 2021, we had a $75.0 million revolving credit facility with a money center bank pursuant to which the lender is obligated to make advances until February 28, 2024. The credit facility is secured by substantially all of our inventories, equipment, and accounts receivable. Interest under the credit facility is assessed at 30-day, 60-day or 90-day LIBOR, as selected by us, plus 1.0 percent and is payable monthly. We had no outstanding borrowings under the credit facility at September 30, 2021 and we were in compliance with all financial covenants.

 

At September 30, 2021, we had a total of $78.1 million in cash and cash equivalents, short-term investments, and long-term investments. At December 31, 2020, cash and cash equivalents, short-term investments, and long-term investments were $87.9 million.

 

Cash flows from operating activities of $28.8 million for the nine months ended September 30, 2021 were primarily comprised of net income plus the net effect of non-cash expenses, increases in accounts receivable, and prepaid expenses. During the first nine months of 2021, we used $18.1 million for the purchase of investments and $11.6 million for the addition of property and equipment. During the same period, maturities and sales of investments generated $29.4 million in cash.

 

 
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At September 30, 2021, we had working capital of $119.0 million, including $23.7 million in cash and cash equivalents and $29.6 million in short-term investments compared to working capital of $98.7 million at December 31, 2020. The $20.3 million increase in working capital during the first nine months of 2021 was primarily related to an increase in short term investments of $10.3 million and an increase in accounts receivable of $8.8 million.

 

 

 

We believe that our $78.1 million in cash, cash equivalents, short-term investments, and long-term investments, along with cash flows from operations and available borrowings of up to $75.0 million under our credit facility, will be sufficient to fund our cash requirements for at least the foreseeable future, including the costs associated with the planned expansion of one of our manufacturing facilities. We believe that our strong financial position would allow us to access equity or debt financing should that be necessary.

 

COVID-19 Impact

 

The COVID-19 pandemic has resulted in travel and other restrictions to reduce the spread of the disease, including governmental orders across the globe, which, among other things, directed individuals to shelter at their places of residence, directed businesses and governmental agencies to cease non-essential operations at physical locations, prohibited certain non-essential gatherings, maintain social distancing, and order cessation of non-essential travel. As a result of these developments, we implemented work-from-home policies for certain of our employees. In addition, many of our customers implemented and are continuing similar measures in their facilities, which have delayed, and may continue to delay, the timing of some orders and deliveries. The effects of shelter-in-place and social distancing orders, government-imposed quarantines, and work-from-home policies may continue negatively impacting productivity and supply chains, disrupting our business, and delaying our development timelines beyond the delays we have already experienced and disclosed, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Such restrictions and limitations may also continue negatively impacting our access to regulatory authorities (which are affected, among other things, by applicable travel restrictions and may be delayed in responding to inquiries, reviewing filings, and conducting inspections); our ability to perform regularly scheduled quality checks and maintenance; and our ability to obtain services from third-party specialty vendors and other providers or to access their expertise as fully and timely as needed. The COVID-19 pandemic has resulted and may continue resulting in the loss of some of our key personnel, either temporarily or permanently. In addition, our sales and marketing efforts have been negatively impacted and may be further negatively impacted by postponement or cancellation of face-to-face meetings and restrictions on access by non-essential personnel to hospitals or clinics to the extent such measures slow down adoption or further commercialization of our marketed products. The demand for our products has been and may continue to be adversely impacted by the restrictions and limitations adopted in response to the COVID-19 pandemic, particularly to the extent they affect the patients’ ability or willingness to undergo elective surgeries. As a result, some of our inventory may become obsolete and may need to be written off, impacting our operating results. These and similar, and perhaps more severe, disruptions in our operations may materially adversely impact our business, operating results, and financial condition.

 

 
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The global COVID-19 pandemic continues to evolve as progress in fighting the pandemic is being made in the United States and some other countries with greater percentages of the populations being vaccinated. However, the ultimate impact of the pandemic remains highly uncertain and subject to change. Accordingly, we do not yet know the full impact that the pandemic will have on our business, healthcare systems, or the global economy.

 

Forward-Looking Statements

 

Statements in this Management’s Discussion and Analysis and elsewhere in this Quarterly Report on Form 10-Q that are forward looking are based upon current expectations, and actual results or future events may differ materially. Therefore, the inclusion of such forward-looking information should not be regarded as a representation by us that our objectives or plans will be achieved. Such statements include, but are not limited to, our effective income tax rate for 2021, our ability to fund our cash requirements for the foreseeable future with our current assets, long-term investments, cash flow and borrowings under the credit facility, our access to equity and debt financing, and the impact of the COVID-19 pandemic on our business and operations, and our financial results. Words such as “expects,” “believes,” “anticipates,” “intends,” “should,” “plans,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements contained herein involve numerous risks and uncertainties, and there are a number of factors that could cause actual results or future events to differ materially, including, but not limited to, the following: the risk that the COVID-19 pandemic leads to further material delays and cancellations of, or reduced demand for, procedures in which our products are utilized; curtailed or delayed capital spending by hospitals and other healthcare providers; disruption to our supply chain; closures of our facilities; delays in training; delays in gathering clinical evidence; diversion of management and other resources to respond to the COVID-19 outbreak; the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 virus further disrupts local economies and causes economies in our key markets to enter prolonged recessions; changing economic, market and business conditions; acts of war or terrorism; the effects of governmental regulation; the impact of competition and new technologies; slower-than-anticipated introduction of new products or implementation of marketing strategies; implementation of new manufacturing processes or implementation of new information systems; our ability to protect our intellectual property; changes in the prices of raw materials; changes in product mix; intellectual property and product liability claims and product recalls; the ability to attract and retain qualified personnel; and the loss of, or any material reduction in sales to, any significant customers. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic review which may cause us to alter our marketing, capital expenditures or other budgets, which in turn may affect our results of operations and financial condition. The forward-looking statements in this Quarterly Report on Form 10-Q are made as of the date hereof, and we do not undertake any obligation, and disclaim any duty, to supplement, update or revise such statements, whether as a result of subsequent events, changed expectations or otherwise, except as required by applicable law.

 

 
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Table of Contents

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

For the quarter ended September 30, 2021, we did not experience any material changes in market risk exposures that affect the quantitative and qualitative disclosures presented in our 2020 Form 10-K.

 

Item 4.

Controls and Procedures.

 

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2021. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting for the quarter ended September 30, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

We have no pending legal proceedings of the type described in Item 103 of Regulation S-K.

 

Item 1A.

Risk Factors.

 

As of the date of this Report, there has been no material change in the risk factors described in our 2020 Form 10-K, as supplemented by the risk factor described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

 

 
20

Table of Contents

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

The table below sets forth information with respect to our purchases of our common stock during each month in the three month period ended September 30, 2021.

 


Period

 


Total Number of Shares Purchased

 

 


Average Price Paid per Share

 

 


Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

 

 

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)

 

7/1/2021 to 7/31/2021

 

 

10,705

 

 

$ 607.15

 

 

 

10,705

 

 

 

174,190

 

8/1/2021 to 8/31/2021

 

 

--

 

 

 

--

 

 

 

--

 

 

 

174,190

 

9/1/2021 to 9/30/2021

 

 

--

 

 

 

--

 

 

 

--

 

 

 

174,190

 

Total

 

 

10,705

 

 

$ 607.15

 

 

 

10,705

 

 

 

174,190

 

 

(1)

On May 21, 2015, our Board of Directors approved a stock repurchase program pursuant to which we can repurchase up to 250,000 shares of our common stock from time to time in open market or privately-negotiated transactions. At September 30, 2021, we had repurchased 75,810 shares of our common stock authorized under the program approved in May 2015. Our stock repurchase program has no expiration date but may be terminated by our Board of Directors at any time.

 

Item 6.

Exhibits.

 

Exhibit Index

 

Exhibit

Number

 

Description

10.1

 

Form of Restricted Stock Unit Award Agreement under Atrion Corporation 2021 Equity Incentive Plan

31.1

 

Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer

31.2

 

Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer

32.1

 

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002

32.2

 

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes – Oxley Act Of 2002

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 
21

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Atrion Corporation

(Registrant)

       
Date: November 8, 2021 By: /s/ David A. Battat

 

 

David A. Battat

 
   

President and

 
    Chief Executive Officer  

 

 

 

 

Date: November 8, 2021

By:

/s/ Jeffery Strickland

 

 

 

Jeffery Strickland

 

 

 

Vice President and

 

 

 

Chief Financial Officer

(Principal Accounting and Financial Officer)

 

 

 
22

 

EXHIBIT 10.1

 

ATRION CORPORATION

2021 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

THIS AWARD AGREEMENT (the “Agreement”) is made and entered into effective as of [DATE] by and between ATRION CORPORATION, a Delaware corporation (the “Company”), and [NAME OF PARTICIPANT] (the “Participant”), pursuant to the Atrion Corporation 2021 Equity Incentive Plan, as it may be amended or restated from time to time (the “Plan”). Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Plan and subject to the execution of this Agreement, the Committee has granted, and the Participant desires to receive, an Award.

 

NOW, THEREFORE, for and in consideration of the premises, the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

 

1. AWARD OF RESTRICTED STOCK UNITS. On the Grant Date specified on Exhibit A attached hereto, the Company granted to the Participant an Award in the form of Restricted Stock Units (“RSUs”) entitling the Participant to receive from the Company, without payment, one share of Common Stock (a “Share”) or a cash payment respecting each RSU set forth on said Exhibit A.

 

2. EFFECT OF PLAN. The RSUs are in all respects subject to, and shall be governed and determined by, the provisions of the Plan (all of the terms of which are incorporated herein by reference) and to any rules which might be adopted by the Board or the Committee with respect to the Plan to the same extent and with the same effect as if set forth fully herein. The Participant hereby acknowledges that all decisions and determinations of the Committee shall be final and binding on the Participant, his beneficiaries, and any other person having or claiming an interest in the RSUs.

 

3. VESTING. The restrictions under this Award shall lapse and the RSUs shall vest on the Vesting Dates as set forth in Exhibit A or such earlier dates as set forth in the Plan. Any RSUs as to which the restrictions shall not have lapsed and which are not vested shall be forfeited upon the Participant’s Termination of Service.

 

4. DIVIDEND EQUIVALENTS. If the Company declares a cash dividend payable to the holders of its Common Stock during the period prior to lapse of the restrictions and the vesting of RSUs, then, on the dividend payment date, the Company shall credit Dividend Equivalents to the Participant’s Stock Award Account as follows: (A) all such Dividend Equivalents shall be credited in the form of RSUs and (B) the number of RSUs to be credited to the Stock Award Account as Dividend Equivalents shall be equal to the quotient determined by dividing (i) the product of (A) the cash dividend payable per share of Common Stock multiplied by (B) the sum of the Stock Account Balance as of the record date for the dividend by (ii) the Fair Market Value of a share of Common Stock on the dividend payment date. If the Participant’s RSUs have been settled after the record date but prior to the dividend payment date, any Dividend Equivalents that would be credited pursuant to this Section 4 shall be settled on, or as soon as practicable after, the dividend payment date. For purposes of Section 409A, the payment of Dividend Equivalents shall be construed as earnings and the time and form of payment of such Dividend Equivalents shall be treated separately from the time and form of payment of any Award that gave rise to the Dividend Equivalent. The RSUs credited to the Participant as Dividend Equivalents as a result of dividends paid by the Company with respect to shares of Common Stock shall be subject to the restrictions and forfeiture provisions set forth in Paragraph 3 above.

 

 

 

 

5. DISTRIBUTION OF OR PAYMENT RESPECTING RSUS.

 

(a) The Participant’s RSUs shall be distributed in shares of Common Stock (either by delivery of a stock certificate or certificates to the Participant or the Participant’s designee or by registration in book-entry form) or paid in cash or part cash and part shares of Common Stock as specified on Exhibit A, with the amount of cash to be determined as set forth in Paragraph 5(b), as soon as administratively practicable following the vesting of the applicable RSUs and, in any event, no later than March 15 of the calendar year following the year in which the applicable RSUs vest. Notwithstanding the foregoing, the Company may delay a distribution of shares of Common Stock or payment in settlement of RSUs if it reasonably determines that such ownership or issuance of such shares of Common Stock or payment is not feasible due to applicable exchange controls, securities regulations, tax laws, or other provisions of applicable law, as determined by the Company in its sole discretion, provided that such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no distribution or payment shall be delayed under this Paragraph 5(a) if such delay will result in a violation of Section 409A. All distributions made in shares of Common Stock shall be made by the Company only in the form of whole shares. The Company, may, in its sole discretion round any fractional share up or down to the nearest whole share or distribute the fractional share in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value of a share of Common Stock as of the date immediately preceding the date set forth above.

 

(b) The amount of cash payable with respect to each RSU shall be equal to the Fair Market Value of a share of Common Stock on the day immediately preceding the payment date set forth in Paragraph 5(a).

 

6. Securities Law Restrictions. Acceptance of this Agreement shall be deemed to constitute the Participant’s acknowledgement that the RSUs shall be subject to such restrictions and conditions on any resale and on any other disposition as the Company shall deem necessary under any applicable laws or regulations or in light of any stock exchange requirements.

 

 

 

 

7. ASSIGNMENT. The RSUs are personal to the Participant and may not in any manner or respect be assigned or transferred, otherwise than by will or the laws of descent and distribution, unless and until the shares of Common Stock into which the shares of Common Stock are converted have been issued or payment has been made, and all restrictions applicable to such shares of Common Stock have lapsed. No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding any other provision hereof, and subject to the approval of the Committee in its sole discretion, the Participant may transfer the RSUs to family members or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws; provided that the Participant receives no consideration for the transfer of such RSUs and the transferred RSUs shall continue to be subject to the same terms, conditions, and restrictions as were applicable to such Award immediately before the transfer and such RSUs shall vest according to the same terms as applied to the Participant.

 

8. No Right to Continued SERVICE. Neither the Plan nor this Agreement shall give the Participant the right to continued service with the Company or any Subsidiary or shall adversely affect the right of the Company or any Subsidiary to terminate the Participant’s service with or without cause at any time, subject to the provisions of any applicable service agreement.

 

9. TAX WITHHOLDING.

 

(a) Regardless of any action the Company or the Subsidiary for which the Participant provides service (the “Applicable Subsidiary”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account, or other applicable taxes (“Tax Items”) in connection with the Award, the Participant hereby acknowledges and agrees that the ultimate liability for all Tax Items legally due by the Participant is and remains the responsibility of the Participant. Further, if the Participant has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company or the Applicable Subsidiary may be required to withhold or account for Tax Items in more than one jurisdiction.

 

(b) The Participant acknowledges and agrees that the Company and the Applicable Subsidiary: (i) make no representations or undertakings regarding the treatment of any Tax Items in connection with any aspect of the Award, including, but not limited to, the award or vesting of the RSUs, the delivery of the Shares upon vesting and conversion or the subsequent sale of Shares acquired upon vesting and conversion; and (ii) do not commit to structure the terms of the Award or any aspect of the Award to reduce or eliminate the Participant’s liability for Tax Items.

 

 

 

 

(c) Prior to vesting and conversion of the RSUs, the Participant must pay or make adequate arrangements satisfactory to the Company or the Applicable Subsidiary to satisfy all withholding obligations for Tax Items of the Company or the Applicable Subsidiary arising from vesting and conversion of the RSUs. In this regard, in lieu of all or any part of a cash payment, the Participant may elect to satisfy all or part of the withholding obligations for Tax Items by (i) having the Company withhold a portion of the Shares issuable upon vesting and conversion of the RSUs or (ii) delivering shares of Common Stock owned by the Participant, duly endorsed for transfer, to the Company, in each case with a Fair Market Value equal to the amount of the withholding obligations to be satisfied in such manner. The Company or the Applicable Subsidiary will remit the total amount paid or withheld for Tax Items to the appropriate tax authorities.

 

10. SECTION 409A. This Agreement is intended to comply with Section 409A and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes and penalties under Section 409A. Notwithstanding the foregoing, the Company makes no representation that the payments and benefits provided hereunder comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A.

 

11. COUNTERPART EXECUTION. This Agreement may be executed in any number of counterparts (including electronic signatures or facsimile copies), each of which shall be considered an original, and such counterparts shall, together, constitute and be one and the same instrument.

 

12. MISCELLANEOUS.

 

(a) The Participant’s rights under this Agreement can be modified, suspended, or canceled only in accordance with the terms of the Plan. This Agreement may not be changed orally but may be changed only by an agreement in writing signed by the party against whom or which enforcement of any waiver, change, modification, or discharge is sought.

 

(b) The invalidity or unenforceability of any provision hereof shall in no way affect the validity of enforceability of any other provision of this Agreement.

 

(c) This Agreement shall bind the parties and their respective heirs, executors, administrators, successors, and assigns. Nothing contained herein shall be construed as an authorization or right of any party to assign his or its respective rights or obligations hereunder, and the Participant shall have no right to assign this Agreement, and any such attempted assignment shall be ineffective.

 

(d) This Agreement shall be subject to the applicable provisions, definitions, terms, and conditions set forth in the Plan, and the terms of the Plan shall govern in the event of any inconsistency between the Plan and this Agreement.

 

(e) Any document relating to participation in the Plan or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Award Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address, if any, provided for the Participant by the Company or an Affiliate, or upon deposit in the U.S. Mail, or with a nationally recognized overnight courier service, with postage and fees prepaid, addressed to the other party at the current address on file with the Company or at such other address as such party may designate in writing from time-to-time to the other party.

 

(f) This Agreement shall be interpreted and construed according to and governed by the laws of the State of Delaware without regard to that state’s conflicts of laws rules.

 

[Signatures appear on the following page.]

 

 

 

IN WITNESS WHEREOF, the Company and the Participant have executed and delivered this Agreement as of the day and year first written above.

 

 

 

ATRION CORPORATION

 

 

   

 

By: _________________________________

 

 

Name: _______________________________  
 

 

Title: ________________________________  
 

 

   

 

 

____________________________________

 

 

 

Participant

 

  

 

 

 

EXHIBIT A

 

TO

 

AWARD AGREEMENT

 

1.

Grant Date: ________________________________

 

 

2.

Number of Restricted Stock Units: ______________*

 

 

3.

Form of Settlement (Stock/Cash): _______________

 

 

4.

Vesting Schedule:

 

Percentage of Grant*

Vesting Date 

 

 

 

* Subject to adjustment as provided in Paragraph 4 of the Award Agreement.

 

 

 

EXHIBIT 31.1

 

Chief Executive Officer Certification

 

I, David A. Battat, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Atrion Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and we have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over the financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: November 8, 2021

 

       

 

/s/ David A. Battat

 

 

 

David A. Battat

 

 

    President and

Chief Executive Officer

 

 

EXHIBIT 31.2

 

Chief Financial Officer Certification

 

I, Jeffery Strickland, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Atrion Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and we have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over the financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: November 8, 2021

/s/ Jeffery Strickland

 

 

 

Jeffery Strickland

 

 

   

Vice President and
Chief Financial Officer

 

 

EXHIBIT 32.1 

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES – OXLEY ACT OF 2002

 

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Atrion Corporation (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 8, 2021 /s/ David A. Battat

 

 

David A. Battat

 
   

President and Chief Executive Officer

 

 

The foregoing certification is made solely for purpose of 18 U.S.C. § 1350 and not for any other purpose.

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES – OXLEY ACT OF 2002

 

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Atrion Corporation (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 8, 2021

/s/ Jeffery Strickland

 

 

Jeffery Strickland

 
   

Vice President and

 
   

Chief Financial Officer

 

 

The foregoing certification is made solely for purpose of 18 U.S.C. § 1350 and not for any other purpose.