Financial Instruments and Fair Value Measurements |
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| Financial Instruments and Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy based on the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level One: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level Two: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level Three: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying values of financial instruments, including trade receivables, other receivables and accounts payable, approximate their fair values due to their short-term maturities. The carrying value of the outstanding balances under the Enovis Credit Agreement, which bears a variable interest rate indexed to the Secured Overnight Financing Rate (SOFR), approximates fair value as it reprices when market interest rates change. Based on current interest rates for similar types of borrowings, the estimated fair value of the Company’s total debt, including the Senior unsecured convertible notes, the Term Loan, and the Revolver, was $1.3 billion and $1.3 billion as of July 3, 2026 and December 31, 2025, respectively. The estimated fair value, a Level Two valuation in the fair value hierarchy, may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. As of July 3, 2026, the Company held $4.9 million in Level Three liabilities arising from contingent consideration related to acquisitions that may settle in cash. The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements. These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements. A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates. The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is $1.4 million to $4.9 million. The one contingent consideration arrangement that previously had no limit was settled and amended to a fixed limit as of July 3, 2026 and no other unlimited arrangements exist. In the second quarter of 2026, the Company settled contingent consideration related to the 2022 acquisition of Kico Knee Innovation Company Pty Limited and made a payment of $5.7 million. The settlement also resulted in a $5.7 million non-cash gain upon the reversal of a portion of the contingent consideration liability. There were no transfers in or out of Level One, Two or Three during the six months ended July 3, 2026.
Purchase of royalty interest liability In the first and second quarters of 2025, the Company entered into agreements to buyout the economic interest in future royalty payments in connection with the termination of certain legacy product development agreements related to certain of the Company’s U.S. Reconstructive products. The aggregate gross buyout amount under such agreements is $56.5 million, payable over nine years. The Company recorded charges to the Condensed Consolidated Statements of Operations of $45.8 million in the year ended December 31, 2025, representing the discounted liability upon entering the agreements. As of July 3, 2026, the outstanding discounted liability under these agreements due within the next twelve months is $4.3 million, which is recorded in Accrued liabilities, and the non-current portion is $31.1 million, which is recorded in Other liabilities on the Condensed Consolidated Balance Sheet. In the six months ended July 3, 2026 and July 4, 2025, the Company made payments of $4.3 million and $2.9 million, respectively, which are reflected in Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Deferred Compensation Plans The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers. As of July 3, 2026 and December 31, 2025 the fair value of these plans were $21.5 million and $19.9 million, respectively. These plans are deemed to be Level Two within the fair value hierarchy. Forward Currency Contracts The Company’s objective in using forward currency contracts is to add stability to the Company’s earnings and to protect the U.S. Dollar value of forecasted transactions. To accomplish this objective, the Company entered into forward currency contract agreements between the U.S. Dollar and the Mexican Peso as part of its risk management strategy. At December 31, 2025, the Company’s Mexican Peso forward currency contracts were fully settled and there were no notional amounts outstanding as of July 3, 2026. These forward currency contract agreements were designated and qualified as cash flow hedges. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in Unrealized gain (loss) on hedging activities, net of tax within the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, the Company recognizes the gain or loss in earnings within Cost of Sales in its unaudited Condensed Consolidated Statements of Operations. The contracts are recorded at fair value and deemed to be Level Two in the fair value hierarchy. During the three and six months ended July 3, 2026, the Company recognized a gain of $0.3 million and $1.3 million, respectively, in Cost of Sales on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges that previously settled in the fourth quarter of 2025. At July 4, 2025, the Company’s forward currency contracts had a Mexican Peso notional amount of approximately $506.0 million and a U.S. Dollar aggregate notional amount of $24.7 million. During the three and six months ended July 4, 2025, the Company recognized a realized loss of $0.3 million and $1.5 million, respectively, in Cost of Sales on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges. The Company also entered into forward currency contracts on February 19, 2026 for the purpose of managing its exposure to currency exchange rate risk arising from intercompany loan balances between foreign-denominated subsidiaries (the “February 2026 forwards”). The February 2026 forwards were designated and qualified as fair value hedges and matured on July 2, 2026. During the three and six months ended July 3, 2026, the Company recognized a net gain of $5.0 million and $12.7 million, respectively, in Selling, general, and administrative expense on its Consolidated Statements of Operations related to the effect of exchange rate movements on its forward currency contract derivatives. The Company entered into new forward currency contracts during the second quarter of 2026 for the purpose of managing its exposure to currency exchange rate risk arising from intercompany loan balances between foreign-denominated subsidiaries. As of July 3, 2026, the outstanding forward currency contracts, which mature on April 15, 2027, have notional amounts of $150.1 million to purchase U.S. Dollars and sell Euros and $153.0 million to purchase U.S. Dollars and sell Swiss Francs. These contracts were designated and qualified as fair value hedges as of July 3, 2026. Cross-currency Swap Contracts The Company has cross-currency swap agreements to hedge its net investment in its Swiss Franc-denominated legal entity and its subsidiaries against adverse movements in exchange rates between the U.S. Dollar and the Swiss Franc. Certain of these cross-currency swap agreements are designated and qualified as net investment hedges. As of July 3, 2026, the designated cross-currency swap agreements had an aggregate Swiss Franc notional amount of approximately CHF 1.1 billion and an aggregate U.S. Dollar notional amount of $1.4 billion. The remaining cross-currency swap agreements were not designated as hedging instruments and had an aggregate Swiss Franc notional amount of CHF 81.4 million and an aggregate U.S. Dollar notional amount of $101.3 million as of July 3, 2026. Both the designated and undesignated cross-currency swap agreements are recorded at fair value and deemed to be Level Two in the fair value hierarchy. Cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement. For derivatives designated as net investment hedges, the change in fair value attributable to foreign currency exchange rate movements are recorded in Accumulated other comprehensive loss within the Condensed Consolidated Balance Sheet and reported as part of the foreign currency translation adjustment in the Condensed Consolidated Statements of Comprehensive Income (Loss). Amounts recorded in Accumulated other comprehensive income (loss) are reclassified out of Accumulated other comprehensive income (loss) into earnings only upon the sale or substantial liquidation of the hedged net investment. The Company recognized interest income on its designated cross-currency swap agreements of $10.5 million and $20.5 million for the three and six months ended July 3, 2026 and $12.0 million and $24.3 million for three and six months ended July 4, 2025, respectively, which is included within Interest expense, net in the Condensed Consolidated Statements of Operations, consistent with the accounting for designated derivative instruments. As of January 1, 2026, three cross-currency swap agreements previously designated as net investment hedges, with an aggregate Swiss Franc notional amount of CHF 273.0 million were dedesignated. The dedesignation resulted from the aggregate notional amount of designated cross-currency swaps exceeding the Company’s net investment in its Swiss Franc-denominated legal entity and its subsidiaries due to the prior-year goodwill impairment charges. In February 2026, the Company partially reduced the excess of the cross-currency swap notional amount relative to the hedge of net investment through a legal entity restructuring. As of April 4, 2026 two of the undesignated agreements were able to be re-designated as net investment hedges, with an aggregate Swiss Franc notional amount of CHF136.5 million. For the cross-currency swap agreements that are not designated as net investment hedges, changes in fair value are recognized in non-operating Other income (expense), net in the Consolidated Statement of Operations. For the three and six months ended July 3, 2026, the Company recognized a mark-to-market fair value loss of $2.2 million and $1.9 million, respectively, and received $1.4 million and $3.7 million cash interest benefit related to its undesignated cross-currency swap agreements, which are both presented within Other income (expense), net in the Consolidated Statement of Operations, consistent with the accounting for undesignated derivative instruments. In January 2025, cross-currency swap agreements designated as net investment hedges with an aggregate Swiss Franc notional amount of CHF 272 million were de-designated and settled for a $1.6 million cash inflow reflected within investing activities in the Consolidated Statements of Cash Flows. The $2.5 million gain on settlement is reported in the Condensed Consolidated Balance Sheet as part of Accumulated other comprehensive income (loss) and in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the foreign currency translation adjustment. The Company contemporaneously entered into new cross-currency swap agreements for the same Swiss Franc notional amount and designated them as a hedge of its net investment in its Swiss Franc-denominated subsidiaries. The following table presents the effect of the Company’s designated hedging instruments on Accumulated other comprehensive income (loss) for the three and six months ended July 3, 2026 and July 4, 2025:
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of July 3, 2026 and December 31, 2025:
(1) The Company classifies derivative assets and liabilities as current when the settlement date of the contract is one year or less.
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| Fair Value Disclosures | Financial Instruments and Fair Value Measurements The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy based on the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level One: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level Two: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level Three: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying values of financial instruments, including trade receivables, other receivables and accounts payable, approximate their fair values due to their short-term maturities. The carrying value of the outstanding balances under the Enovis Credit Agreement, which bears a variable interest rate indexed to the Secured Overnight Financing Rate (SOFR), approximates fair value as it reprices when market interest rates change. Based on current interest rates for similar types of borrowings, the estimated fair value of the Company’s total debt, including the Senior unsecured convertible notes, the Term Loan, and the Revolver, was $1.3 billion and $1.3 billion as of July 3, 2026 and December 31, 2025, respectively. The estimated fair value, a Level Two valuation in the fair value hierarchy, may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. As of July 3, 2026, the Company held $4.9 million in Level Three liabilities arising from contingent consideration related to acquisitions that may settle in cash. The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements. These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements. A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates. The gross range of outcomes for contingent consideration arrangements that have a fixed limit on the maximum payout is $1.4 million to $4.9 million. The one contingent consideration arrangement that previously had no limit was settled and amended to a fixed limit as of July 3, 2026 and no other unlimited arrangements exist. In the second quarter of 2026, the Company settled contingent consideration related to the 2022 acquisition of Kico Knee Innovation Company Pty Limited and made a payment of $5.7 million. The settlement also resulted in a $5.7 million non-cash gain upon the reversal of a portion of the contingent consideration liability. There were no transfers in or out of Level One, Two or Three during the six months ended July 3, 2026.
Purchase of royalty interest liability In the first and second quarters of 2025, the Company entered into agreements to buyout the economic interest in future royalty payments in connection with the termination of certain legacy product development agreements related to certain of the Company’s U.S. Reconstructive products. The aggregate gross buyout amount under such agreements is $56.5 million, payable over nine years. The Company recorded charges to the Condensed Consolidated Statements of Operations of $45.8 million in the year ended December 31, 2025, representing the discounted liability upon entering the agreements. As of July 3, 2026, the outstanding discounted liability under these agreements due within the next twelve months is $4.3 million, which is recorded in Accrued liabilities, and the non-current portion is $31.1 million, which is recorded in Other liabilities on the Condensed Consolidated Balance Sheet. In the six months ended July 3, 2026 and July 4, 2025, the Company made payments of $4.3 million and $2.9 million, respectively, which are reflected in Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Deferred Compensation Plans The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers. As of July 3, 2026 and December 31, 2025 the fair value of these plans were $21.5 million and $19.9 million, respectively. These plans are deemed to be Level Two within the fair value hierarchy. Forward Currency Contracts The Company’s objective in using forward currency contracts is to add stability to the Company’s earnings and to protect the U.S. Dollar value of forecasted transactions. To accomplish this objective, the Company entered into forward currency contract agreements between the U.S. Dollar and the Mexican Peso as part of its risk management strategy. At December 31, 2025, the Company’s Mexican Peso forward currency contracts were fully settled and there were no notional amounts outstanding as of July 3, 2026. These forward currency contract agreements were designated and qualified as cash flow hedges. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in Unrealized gain (loss) on hedging activities, net of tax within the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, the Company recognizes the gain or loss in earnings within Cost of Sales in its unaudited Condensed Consolidated Statements of Operations. The contracts are recorded at fair value and deemed to be Level Two in the fair value hierarchy. During the three and six months ended July 3, 2026, the Company recognized a gain of $0.3 million and $1.3 million, respectively, in Cost of Sales on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges that previously settled in the fourth quarter of 2025. At July 4, 2025, the Company’s forward currency contracts had a Mexican Peso notional amount of approximately $506.0 million and a U.S. Dollar aggregate notional amount of $24.7 million. During the three and six months ended July 4, 2025, the Company recognized a realized loss of $0.3 million and $1.5 million, respectively, in Cost of Sales on its Condensed Consolidated Statements of Operations related to its forward currency contracts designated as cash flow hedges. The Company also entered into forward currency contracts on February 19, 2026 for the purpose of managing its exposure to currency exchange rate risk arising from intercompany loan balances between foreign-denominated subsidiaries (the “February 2026 forwards”). The February 2026 forwards were designated and qualified as fair value hedges and matured on July 2, 2026. During the three and six months ended July 3, 2026, the Company recognized a net gain of $5.0 million and $12.7 million, respectively, in Selling, general, and administrative expense on its Consolidated Statements of Operations related to the effect of exchange rate movements on its forward currency contract derivatives. The Company entered into new forward currency contracts during the second quarter of 2026 for the purpose of managing its exposure to currency exchange rate risk arising from intercompany loan balances between foreign-denominated subsidiaries. As of July 3, 2026, the outstanding forward currency contracts, which mature on April 15, 2027, have notional amounts of $150.1 million to purchase U.S. Dollars and sell Euros and $153.0 million to purchase U.S. Dollars and sell Swiss Francs. These contracts were designated and qualified as fair value hedges as of July 3, 2026. Cross-currency Swap Contracts The Company has cross-currency swap agreements to hedge its net investment in its Swiss Franc-denominated legal entity and its subsidiaries against adverse movements in exchange rates between the U.S. Dollar and the Swiss Franc. Certain of these cross-currency swap agreements are designated and qualified as net investment hedges. As of July 3, 2026, the designated cross-currency swap agreements had an aggregate Swiss Franc notional amount of approximately CHF 1.1 billion and an aggregate U.S. Dollar notional amount of $1.4 billion. The remaining cross-currency swap agreements were not designated as hedging instruments and had an aggregate Swiss Franc notional amount of CHF 81.4 million and an aggregate U.S. Dollar notional amount of $101.3 million as of July 3, 2026. Both the designated and undesignated cross-currency swap agreements are recorded at fair value and deemed to be Level Two in the fair value hierarchy. Cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement. For derivatives designated as net investment hedges, the change in fair value attributable to foreign currency exchange rate movements are recorded in Accumulated other comprehensive loss within the Condensed Consolidated Balance Sheet and reported as part of the foreign currency translation adjustment in the Condensed Consolidated Statements of Comprehensive Income (Loss). Amounts recorded in Accumulated other comprehensive income (loss) are reclassified out of Accumulated other comprehensive income (loss) into earnings only upon the sale or substantial liquidation of the hedged net investment. The Company recognized interest income on its designated cross-currency swap agreements of $10.5 million and $20.5 million for the three and six months ended July 3, 2026 and $12.0 million and $24.3 million for three and six months ended July 4, 2025, respectively, which is included within Interest expense, net in the Condensed Consolidated Statements of Operations, consistent with the accounting for designated derivative instruments. As of January 1, 2026, three cross-currency swap agreements previously designated as net investment hedges, with an aggregate Swiss Franc notional amount of CHF 273.0 million were dedesignated. The dedesignation resulted from the aggregate notional amount of designated cross-currency swaps exceeding the Company’s net investment in its Swiss Franc-denominated legal entity and its subsidiaries due to the prior-year goodwill impairment charges. In February 2026, the Company partially reduced the excess of the cross-currency swap notional amount relative to the hedge of net investment through a legal entity restructuring. As of April 4, 2026 two of the undesignated agreements were able to be re-designated as net investment hedges, with an aggregate Swiss Franc notional amount of CHF136.5 million. For the cross-currency swap agreements that are not designated as net investment hedges, changes in fair value are recognized in non-operating Other income (expense), net in the Consolidated Statement of Operations. For the three and six months ended July 3, 2026, the Company recognized a mark-to-market fair value loss of $2.2 million and $1.9 million, respectively, and received $1.4 million and $3.7 million cash interest benefit related to its undesignated cross-currency swap agreements, which are both presented within Other income (expense), net in the Consolidated Statement of Operations, consistent with the accounting for undesignated derivative instruments. In January 2025, cross-currency swap agreements designated as net investment hedges with an aggregate Swiss Franc notional amount of CHF 272 million were de-designated and settled for a $1.6 million cash inflow reflected within investing activities in the Consolidated Statements of Cash Flows. The $2.5 million gain on settlement is reported in the Condensed Consolidated Balance Sheet as part of Accumulated other comprehensive income (loss) and in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) as part of the foreign currency translation adjustment. The Company contemporaneously entered into new cross-currency swap agreements for the same Swiss Franc notional amount and designated them as a hedge of its net investment in its Swiss Franc-denominated subsidiaries. The following table presents the effect of the Company’s designated hedging instruments on Accumulated other comprehensive income (loss) for the three and six months ended July 3, 2026 and July 4, 2025:
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of July 3, 2026 and December 31, 2025:
(1) The Company classifies derivative assets and liabilities as current when the settlement date of the contract is one year or less.
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