PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements.) This section presents Atrion Corporation's unaudited condensed consolidated financial statements and accompanying notes, providing a detailed interim financial overview [Condensed Consolidated Statements of Income](index=2&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) This section details Atrion Corporation's unaudited condensed consolidated statements of income for the reported interim periods Three Months Ended September 30 (in thousands, except per share amounts) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Revenues | $41,911 | $44,631 | -6.1% | | Cost of goods sold | $28,175 | $26,978 | +4.4% | | Gross profit | $13,736 | $17,653 | -22.2% | | Operating income | $4,066 | $9,603 | -57.7% | | Net income | $2,939 | $8,839 | -66.7% | | Net income per basic share | $1.67 | $4.95 | -66.2% | | Net income per diluted share | $1.67 | $4.94 | -66.2% | | Dividends per common share | $2.20 | $2.15 | +2.3% | Nine Months Ended September 30 (in thousands, except per share amounts) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Revenues | $125,742 | $140,651 | -10.6% | | Cost of goods sold | $79,671 | $82,921 | -3.9% | | Gross profit | $46,071 | $57,730 | -20.3% | | Operating income | $15,915 | $30,882 | -48.5% | | Net income | $12,987 | $26,686 | -51.3% | | Net income per basic share | $7.38 | $14.89 | -50.5% | | Net income per diluted share | $7.37 | $14.86 | -50.4% | | Dividends per common share | $6.50 | $6.05 | +7.4% | [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents Atrion Corporation's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity at period end As of September 30, 2023 vs. December 31, 2022 (in thousands) | Asset/Liability/Equity | Sep 30, 2023 | Dec 31, 2022 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $658 | $4,731 | -$4,073 | | Short-term investments | $3,839 | $21,152 | -$17,313 | | Accounts receivable | $23,290 | $23,951 | -$661 | | Inventories | $82,946 | $65,793 | +$17,153 | | Total current assets | $115,743 | $119,397 | -$3,654 | | Property, plant and equipment (net) | $126,766 | $123,754 | +$3,012 | | Total assets | $264,809 | $264,712 | +$97 | | Accounts payable and accrued liabilities | $13,915 | $18,024 | -$4,109 | | Accrued income and other taxes | $1,351 | $74 | +$1,277 | | Line of credit | $4,500 | $0 | +$4,500 | | Total current liabilities | $15,266 | $18,098 | -$2,832 | | Total stockholders' equity | $240,182 | $239,541 | +$641 | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines Atrion Corporation's unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities Nine Months Ended September 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | Change | | :----------------------------------- | :--- | :--- | :----- | | Net cash provided by operating activities | $9,148 | $28,947 | -$19,799 | | Net cash used in investing activities | -$4,557 | -$8,199 | +$3,642 | | Net cash used in financing activities | -$8,664 | -$25,887 | +$17,223 | | Net change in cash and cash equivalents | -$4,073 | -$5,139 | +$1,066 | | Cash and cash equivalents at end of period | $658 | $27,125 | -$26,467 | [Notes to Condensed Consolidated Statement of Changes in Stockholders' Equity](index=5&type=section&id=NOTES%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) This section provides notes to Atrion Corporation's condensed consolidated statement of changes in stockholders' equity for the interim periods Stockholders' Equity Changes (in thousands) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :----------------------------------- | :----------- | :----------- | | Total Stockholders' Equity (Nine Months) | $240,182 | $246,275 | | Net Income (Nine Months) | $12,987 | $26,686 | | Dividends (Nine Months) | -$11,456 | -$10,847 | | Purchase of Treasury Stock (Nine Months) | -$1,667 | -$14,430 | | Metric | Sep 30, 2023 | Sep 30, 2022 | | :----------------------------------- | :----------- | :----------- | | Total Stockholders' Equity (Three Months) | $240,182 | $246,275 | | Net Income (Three Months) | $2,939 | $8,839 | | Dividends (Three Months) | -$3,878 | -$3,841 | | Purchase of Treasury Stock (Three Months) | $0 | -$5,090 | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides explanatory notes to Atrion Corporation's unaudited condensed consolidated financial statements [(1) Basis of Presentation](index=6&type=section&id=(1)%20Basis%20of%20Presentation) Unaudited condensed consolidated financial statements are prepared under US GAAP for interim reporting, with management's estimates evaluated quarterly - Statements are prepared in accordance with US GAAP for interim financial information and include all normal and recurring adjustments[19](index=19&type=chunk) - Management's estimates and assumptions are based on historical experience and other reasonable factors, evaluated quarterly[19](index=19&type=chunk) [(2) Inventories](index=6&type=section&id=(2)%20Inventories) Inventories are valued at the lower of cost or net realizable value using FIFO, increasing by **$17,153 thousand** due to raw materials, WIP, and finished goods - Inventories are stated at the lower of cost or net realizable value, with cost determined by the first-in, first-out method[21](index=21&type=chunk) Inventory Components (in thousands) | Component | Sep 30, 2023 | Dec 31, 2022 | Change | | :---------------- | :----------- | :----------- | :----- | | Raw materials | $37,890 | $33,329 | +$4,561 | | Work in process | $17,036 | $13,618 | +$3,418 | | Finished goods | $28,020 | $18,846 | +$9,174 | | Total inventories | $82,946 | $65,793 | +$17,153 | [(3) Income per share](index=7&type=section&id=(3)%20Income%20per%20share) Basic and diluted income per share calculations show a significant decrease for the three and nine months ended September 30, 2023 Income Per Share (Three Months Ended September 30) | Metric | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Net income | $2,939 | $8,839 | | Weighted average basic shares outstanding | 1,760 | 1,786 | | Weighted average diluted shares outstanding | 1,761 | 1,788 | | Basic EPS | $1.67 | $4.95 | | Diluted EPS | $1.67 | $4.94 | Income Per Share (Nine Months Ended September 30) | Metric | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Net income | $12,987 | $26,686 | | Weighted average basic shares outstanding | 1,761 | 1,793 | | Weighted average diluted shares outstanding | 1,762 | 1,796 | | Basic EPS | $7.38 | $14.89 | | Diluted EPS | $7.37 | $14.86 | - Incremental shares from stock options and restricted stock units are included in diluted EPS calculation using the treasury stock method, excluding anti-dilutive securities[24](index=24&type=chunk) [(4) Investments](index=7&type=section&id=(4)%20Investments) The Company's investments include bonds, money market, mutual funds, and equity securities, with total cash, cash equivalents, and investments decreasing from **$34,552 thousand** to **$13,971 thousand** - Investments include bonds (held-to-maturity at amortized cost), money market accounts, mutual funds, and equity securities (recorded at fair value)[25](index=25&type=chunk) Cash, Cash Equivalents, and Investments (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $658 | $4,731 | -$4,073 | | Short-term investments | $3,839 | $21,152 | -$17,313 | | Long-term investments | $9,474 | $8,669 | +$805 | | Total cash, cash equivalents and investments | $13,971 | $34,552 | -$20,581 | Fair Value of Investments (in thousands) | Investment Type | Sep 30, 2023 Fair Value | Dec 31, 2022 Fair Value | | :----------------------------------- | :---------------------- | :---------------------- | | Money market | $656 | $2,380 | | Commercial paper | $0 | $13,967 | | Bonds | $7,447 | $11,424 | | Mutual funds | $1,725 | $350 | | Equity investments | $4,001 | $5,469 | - As of September 30, 2023, the Company had six bond investments in a loss position for more than 12 months, with maturities ranging from less than a month to 27 months[32](index=32&type=chunk)[33](index=33&type=chunk) [(5) Patents and Licenses](index=9&type=section&id=(5)%20Patents%20and%20Licenses) Patents and license fees are amortized over their useful lives, with expenses of **$28 thousand** (3 months) and **$85 thousand** (9 months) for Sep 30, 2023 - Patents and license fees are amortized over their useful life, with a weighted average original life of 15.67 years[36](index=36&type=chunk) Amortization Expense (in thousands) | Period | 2023 | 2022 | | :----------------------------------- | :--- | :--- | | Three months ended Sep 30 | $28 | $29 | | Nine months ended Sep 30 | $85 | $89 | Estimated Future Amortization Expense (in thousands) | Year | Amount | | :--- | :----- | | 2024 | $113 | | 2025 | $112 | | 2026 | $112 | | 2027 | $108 | | 2028 | $108 | [(6) Revenues](index=9&type=section&id=(6)%20Revenues) Revenue is recognized upon product shipment, with total revenues decreasing by **6.1%** (3 months) and **10.6%** (9 months) due to declines in Fluid Delivery and Other product lines - Revenue is recognized when performance obligations are satisfied with the transfer of control of products to customers upon shipment, with payment typically due within 30 days[39](index=39&type=chunk)[43](index=43&type=chunk) Revenue by Geographic Area (in thousands) | Region | Three Months Sep 2023 | Three Months Sep 2022 | Nine Months Sep 2023 | Nine Months Sep 2022 | | :---------------- | :-------------------- | :-------------------- | :------------------- | :------------------- | | United States | $26,146 | $27,779 | $78,594 | $84,121 | | European Union | $6,695 | $6,371 | $21,361 | $23,851 | | All other regions | $9,070 | $10,481 | $25,787 | $32,679 | | Total | $41,911 | $44,631 | $125,742 | $140,651 | Revenue by Product Line (in thousands) | Product Line | Three Months Sep 2023 | Three Months Sep 2022 | Nine Months Sep 2023 | Nine Months Sep 2022 | | :---------------- | :-------------------- | :-------------------- | :------------------- | :------------------- | | Fluid Delivery | $17,717 | $19,303 | $52,591 | $64,973 | | Cardiovascular | $17,170 | $16,780 | $51,568 | $50,165 | | Ophthalmology | $2,700 | $1,607 | $6,849 | $4,495 | | Other | $4,324 | $6,941 | $14,734 | $21,018 | | Total | $41,911 | $44,631 | $125,742 | $140,651 | [(7) Recent Accounting Pronouncements](index=10&type=section&id=(7)%20Recent%20Accounting%20Pronouncements) The Company adopts new accounting standards as effective, expecting no material impact from recently issued, not-yet-effective pronouncements - The Company generally adopts new accounting standards as of the specified effective date[46](index=46&type=chunk) - Recently issued standards not yet effective are not expected to have a material impact on consolidated financial statements upon adoption[46](index=46&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=10&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial performance, condition, liquidity, capital resources, and external factors for the three and nine months ended September 30, 2023 [Overview](index=10&type=section&id=Overview) Atrion develops medical products for fluid delivery, cardiovascular, and ophthalmology, focusing on quality, R&D, customer needs, and controlled growth - Atrion Corporation develops and manufactures products primarily for medical applications, serving fluid delivery, cardiovascular, and ophthalmology markets[48](index=48&type=chunk) - The business strategy emphasizes product quality, price, engineering, customer service, and delivery time, with R&D focused on improving current products and developing highly-engineered niche products[48](index=48&type=chunk)[49](index=49&type=chunk) - Strategic objectives include focusing on customer needs, expanding product lines, investing in future growth while controlling costs, and preserving a collaborative, entrepreneurial management culture[50](index=50&type=chunk)[51](index=51&type=chunk) [Results for the three months ended September 30, 2023](index=11&type=section&id=Results%20for%20the%20three%20months%20ended%20September%2030%2C%202023) Q3 2023 revenues decreased **6.1%** to **$41,911 thousand**, operating income fell **57.7%** to **$4,066 thousand**, and net income dropped **66.7%** to **$2,939 thousand** due to lower sales and higher costs Key Financial Results (Three Months Ended September 30, in thousands, except EPS) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Revenues | $41,911 | $44,631 | -6.1% | | Operating income | $4,066 | $9,603 | -57.7% | | Net income | $2,939 | $8,839 | -66.7% | | Net income per basic share | $1.67 | $4.95 | -66.2% | | Net income per diluted share | $1.67 | $4.94 | -66.2% | - Revenues decreased by **6.1%** due to an **8.2%** decrease in Fluid Delivery revenue and a **37.7%** decrease in Other product line revenue, although the rate of decline has narrowed as supply chain shortages eased[53](index=53&type=chunk)[54](index=54&type=chunk) - Gross profit decreased by **22.2%** to **$13.7 million**, with the gross profit percentage falling from **39.6%** to **32.8%** due to higher manufacturing costs[54](index=54&type=chunk)[55](index=55&type=chunk) - Operating expenses increased by **$1.6 million**, driven by a **$959 thousand** increase in general and administrative expenses and a **$618 thousand** increase in R&D expenses[55](index=55&type=chunk) - Other investment income shifted from a **$764 thousand** gain in Q3 2022 to a **$782 thousand** loss in Q3 2023, primarily due to unrealized gains and losses on equity investments[58](index=58&type=chunk) [Results for the nine months ended September 30, 2023](index=12&type=section&id=Results%20for%20the%20nine%20months%20ended%20September%2030%2C%202023) Nine-month revenues declined **10.6%** to **$125,742 thousand**, operating income fell **48.5%** to **$15,915 thousand**, and net income dropped **51.3%** to **$12,987 thousand** due to lower sales and higher costs Key Financial Results (Nine Months Ended September 30, in thousands, except EPS) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Revenues | $125,742 | $140,651 | -10.6% | | Operating income | $15,915 | $30,882 | -48.5% | | Net income | $12,987 | $26,686 | -51.3% | | Net income per basic share | $7.38 | $14.89 | -50.5% | | Net income per diluted share | $7.37 | $14.86 | -50.4% | - Revenue decrease was driven by a **19.1%** decline in Fluid Delivery and a **29.9%** decline in Other product lines[60](index=60&type=chunk) - Gross profit percentage decreased from **41.0%** in 2022 to **36.6%** in 2023 due to higher manufacturing costs[62](index=62&type=chunk) - Operating expenses increased by **$3.3 million**, primarily due to a **$2.4 million** increase in general and administrative expenses and a **$925 thousand** increase in R&D expenses[62](index=62&type=chunk) - Other investment income shifted from a **$216 thousand** gain in the first nine months of 2022 to a **$1.4 million** loss in the same period of 2023, attributable to unrealized gains and losses on equity investments[63](index=63&type=chunk) - The effective tax rate decreased from **16.2%** to **14.1%**, primarily due to the impact of the R&D tax credit on lower income before income taxes[64](index=64&type=chunk)[65](index=65&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) Total cash and investments decreased to **$14,000 thousand**; **$4,500 thousand** drawn on a **$75,000 thousand** credit facility, with working capital at **$100,500 thousand** - As of September 30, 2023, total cash, cash equivalents, short-term investments, and long-term investments were **$14.0 million**, down from **$34.6 million** at December 31, 2022[66](index=66&type=chunk) - The Company has a **$75.0 million** revolving credit facility, with **$4.5 million** outstanding borrowings and **$70.5 million** available as of September 30, 2023[66](index=66&type=chunk)[68](index=68&type=chunk) - Working capital decreased by **$822 thousand** to **$100.5 million**, primarily due to a decrease in cash and short-term investments, partially offset by an increase in inventory and prepaid expenses[68](index=68&type=chunk) - Cash flows from operating activities for the nine months ended September 30, 2023, were **$9.1 million**, a decrease from **$28.9 million** in the prior year[67](index=67&type=chunk) [COVID-19 Impact](index=13&type=section&id=COVID-19%20Impact) COVID-19's direct business impact has diminished, but global uncertainties persist; the Company continues to monitor related changes - The impact of COVID-19 on the business has largely diminished, but uncertainties remain regarding global economy, supply chains, and healthcare systems[69](index=69&type=chunk) - The Company continues to monitor COVID-19 and resulting legislative and regulatory changes to mitigate potential adverse impacts[69](index=69&type=chunk) [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) Forward-looking statements are based on current expectations, subject to risks, and the Company disclaims any obligation to update them - Forward-looking statements are based on current expectations, and actual results or future events may differ materially due to numerous risks and uncertainties[70](index=70&type=chunk)[71](index=71&type=chunk) - The Company does not undertake any obligation to supplement, update, or revise forward-looking statements, except as required by applicable law[71](index=71&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=14&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes in market risk exposures were reported for Q3 2023 compared to the 2022 Form 10-K - No material changes in market risk exposures were experienced for the quarter ended September 30, 2023, compared to the 2022 Form 10-K[72](index=72&type=chunk) [Item 4. Controls and Procedures](index=14&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023[73](index=73&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[73](index=73&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=14&type=section&id=Item%201.%20Legal%20Proceedings.) Atrion Corporation has no pending legal proceedings as described in Item 103 of Regulation S-K - The Company has no pending legal proceedings of the type described in Item 103 of Regulation S-K[73](index=73&type=chunk) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to risk factors were reported as of the date of this report compared to the 2022 Form 10-K - No material change in the risk factors described in the 2022 Form 10-K as of the report date[74](index=74&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=14&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section details the Company's stock repurchase program and its activity during the reporting period [Issuer Purchases of Equity Securities](index=14&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) Details of the Company's stock repurchase program, including shares authorized, repurchased, and remaining available - The Board of Directors approved a stock repurchase program on May 21, 2015, authorizing the repurchase of up to **250,000 shares** of common stock[74](index=74&type=chunk) - No repurchases were made during the three months ended September 30, 2023[74](index=74&type=chunk) - As of September 30, 2023, **121,247 shares** had been repurchased under the program, with **128,753 shares** remaining available for repurchase[74](index=74&type=chunk) [Item 6. Exhibits](index=14&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the Form 10-Q, including SOX certifications and XBRL taxonomy documents Exhibit Index | Number | Description | | :----- | :--------------------------------------------------------------------------------------------------------------------------------------------------- | | 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 | [SIGNATURES](index=15&type=section&id=SIGNATURES) The report is duly signed by Atrion Corporation's President/CEO and VP/CFO as of November 7, 2023 - The report was signed by David A. Battat, President and Chief Executive Officer, and Cindy Ferguson, Vice President and Chief Financial Officer, on November 7, 2023[77](index=77&type=chunk)[78](index=78&type=chunk)

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 June 30, 2023 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 orOther | --- | |-----------------------| | | | | | ...

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 March 31, 2023 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) | --- | --- | |----------------------------|--------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ___________to ___________ Commission File Number 001-32982 _______________________ Atrion Corporation (Exact name of Registrant as specified in its chart ...