10-Q

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, 2022
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 July 29, 2022
Common stock, Par Value $0.10 per share	1,785,989

ATRION CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

PART I. Financial Information		3
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Income (Unaudited) For the Three Months Ended June 30, 2022 and June 30, 2021	4
	Condensed Consolidated Balance Sheets (Unaudited) June 30, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended June 30, 2022 and June 30, 2021	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) For the Three and Six Months Ended June 30, 2022 and June 30, 2021	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	18
Item 4.	Controls and Procedures	18
PART II. Other Information		19
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 6.	Exhibits	20
SIGNATURES		21

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	(in thousands, except per share amounts)						(in thousands, except per share amounts)
Revenues	$	48,882		$	42,693		$	96,020		$	81,862
Cost of goods sold		28,049			24,826			55,943			47,656
Gross profit		20,833			17,867			40,077			34,206
Operating expenses:
Selling		2,629			1,874			5,146			3,800
General and administrative		5,622			4,753			10,723			8,925
Research and development		1,553			1,445			2,929			2,755
		9,804			8,072			18,798			15,480
Operating income		11,029			9,795			21,279			18,726
Interest and dividend income		292			183			429			399
Other investment income/(losses)		(308	)		963			(548	)		1,025
Other income		60			-			85			66
		44			1,146			(34	)		1,490
Income before provision for income taxes		11,073			10,941			21,245			20,216
Provision for income taxes		(1,725	)		(2,016	)		(3,398	)		(3,565	)
Net income	$	9,348		$	8,925		$	17,847		$	16,651
Net income per basic share	$	5.21		$	4.89		$	9.94		$	9.12
Weighted average basic shares outstanding		1,794			1,826			1,796			1,826
Net income per diluted share	$	5.20		$	4.88		$	9.91		$	9.10
Weighted average diluted shares outstanding		1,798			1,828			1,800			1,830
Dividends per common share	$	1.95		$	1.75		$	3.90		$	3.50

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

3

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2022			December 31, 2021
Assets	(in thousands)
Current assets:
Cash and cash equivalents	$	16,437		$	32,264
Short-term investments		34,146			29,059
Accounts receivable		27,539			21,023
Inventories		54,281			50,778
Prepaid expenses and other current assets		5,171			3,447
		137,574			136,571
Long-term investments		15,794			19,423
Property, plant and equipment		249,648			233,217
Less accumulated depreciation and amortization		140,842			135,245
		108,806			97,972
Other assets and deferred charges:
Patents		1,242			1,302
Goodwill		9,730			9,730
Other		2,171			2,266
		13,143			13,298
Total assets	$	275,317		$	267,264
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	17,861		$	13,076
Accrued income and other taxes		1,412			270
		19,273			13,346
Line of credit		-			-
Other non-current liabilities		9,589			9,622
Stockholders’ equity:
Common stock, par value $0.10 per share; authorized 10,000 shares, issued 3,420 shares		342			342
Paid-in capital		66,167			61,174
Retained earnings		368,165			357,324
Treasury shares, 1,632 at June 30, 2022 and 1,619 at December 31, 2021, at cost		(188,219	)		(174,544	)
Total stockholders’ equity		246,455			244,296
Total liabilities and stockholders’ equity	$	275,317		$	267,264

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

4

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2022			2021
	(In thousands)
Cash flows from operating activities:
Net income	$	17,847		$	16,651
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,866			6,210
Deferred income taxes		(535	)		1,092
Stock-based compensation		1,321			1,338
Net change in unrealized gains and losses on investments		475			(1,024	)
Net change in accrued interest, premiums, and discounts on investments		202			269
Other		-			25
		26,176			24,561
Changes in operating assets and liabilities:
Accounts receivable		(6,516	)		(6,237	)
Inventories		(3,503	)		2,573
Prepaid expenses		(2,201	)		(4,006	)
Other non-current assets		573			12
Accounts payable and accrued liabilities		2,165			(1,454	)
Accrued income and other taxes		1,141			234
Other non-current liabilities		502			345
Cash flows from operating activities		18,337			16,028
Cash flows from investing activities:
Property, plant and equipment additions		(15,247	)		(7,252	)
Purchase of investments		(22,322	)		(16,110	)
Proceeds from sale of investments		208			166
Proceeds from maturities of investments		19,978			19,246
Cash flows from investing activities		(17,383	)		(3,950	)
Cash flows from financing activities:
Purchase of treasury stock		(9,340	)		(10,488	)
Shares tendered for employees’ withholding taxes on stock-based compensation		(454	)		(585	)
Dividends paid		(6,987	)		(6,385	)
Cash flows from financing activities		(16,781	)		(17,458	)
Net change in cash and cash equivalents		(15,827	)		(5,380	)
Cash and cash equivalents at beginning of period		32,264			22,450
Cash and cash equivalents at end of period	$	16,437		$	17,070
Cash paid for:
Income taxes	$	3,952		$	5,095
Non-cash financing activities:
Non-cash effect of stock option exercises	$	4,008		$	6,012

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

5

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended
	Common Stock					Treasury Stock						Additional
	Shares											Paid-in		Retained
	Outstanding			Amount		Shares			Amount			Capital		Earnings			Total
Balances, April 1, 2021		1,827		$	342		1,593		$	(157,572	)	$	59,760	$	342,221		$	244,751
Net income															8,925			8,925
Stock-based compensation transactions		1					(1	)		15			710					725
Purchase of treasury stock		(17	)				17			(10,488	)							(10,488	)
Dividends															(3,192	)		(3,192	)
Balances, June 30, 2021		1,811		$	342		1,609		$	(168,045	)	$	60,470	$	347,954		$	240,721
Balances, April 1, 2022		1,795		$	342		1,625		$	(177,985	)	$	61,560	$	362,313		$	246,230
Net income															9,348			9,348
Stock-based compensation transactions		3					(3	)		(3,887	)		4,607					720
Shares surrendered in stock transactions		(1	)				1			(454	)							(454	)
Purchase of treasury stock		(9	)				9			(5,893	)							(5,893	)
Dividends															(3,496	)		(3,496	)
Balances, June 30, 2022		1,788		$	342		1,632		$	(188,219	)	$	66,167	$	368,165		$	246,455

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

6

ATRION CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

For the Six Months Ended
	Common Stock					Treasury Stock						Additional
	Shares											Paid-in		Retained
	Outstanding			Amount		Shares			Amount			Capital		Earnings			Total
Balances, January 1, 2021		1,826		$	342		1,594		$	(151,127	)	$	53,527	$	337,700		$	240,442
Net income															16,651			16,651
Stock-based compensation transactions		3					(3	)		(5,845	)		6,943					1,098
Shares surrendered in stock transactions		(1	)				1			(585	)							(585	)
Purchase of treasury stock		(17	)				17			(10,488	)							(10,488	)
Dividends															(6,397	)		(6,397	)
Balances, June 30, 2021		1,811		$	342		1,609		$	(168,045	)	$	60,470	$	347,954		$	240,721
Balances, January 1, 2022		1,801		$	342		1,619		$	(174,544	)	$	61,174	$	357,324		$	244,296
Net income															17,847			17,847
Stock-based compensation transactions		3					(3	)		(3,881	)		4,993					1,112
Shares surrendered in stock transactions		(1	)				1			(454	)							(454	)
Purchase of Treasury Stock		(15	)				15			(9,340	)							(9,340	)
Dividends															(7,006	)		(7,006	)
Balances, June 30, 2022		1,788		$	342		1,632		$	(188,219	)	$	66,167	$	368,165		$	246,455

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

7

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 with 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. 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 August 8, 2022, 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. At least quarterly, we evaluate our assumptions, judgments, and estimates, and make changes as we deem necessary.

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, 2021 (“2021 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):

	June 30,		December 31,
	2022		2021
Raw materials	$	26,888	$	23,733
Work in process		11,591		9,571
Finished goods		15,802		17,474
Total inventories	$	54,281	$	50,778

8

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(3) Income per share

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

	Three Months ended June 30,				Six Months ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share amounts)
Net income	$	9,348	$	8,925	$	17,847	$	16,651
Weighted average basic shares outstanding		1,794		1,826		1,796		1,826
Add: Effect of dilutive securities		4		2		4		4
Weighted average diluted shares outstanding		1,798		1,828		1,800		1,830
Earnings per share:
Basic	$	5.21	$	4.89	$	9.94	$	9.12
Diluted	$	5.20	$	4.88	$	9.91	$	9.10

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. Potential dilutive securities have been excluded when their inclusion would be anti-dilutive.

(4) Investments

As of June 30, 2022, 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 investments in equity securities we intend to hold longer than 12 months.

9

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

	June 30,  2022			December 31, 2021
Cash and cash equivalents:
Money market funds	$	6,979		$	29,876
Commercial paper		7,841			-
Cash deposits		1,617			2,388
Total cash and cash equivalents	$	16,437		$	32,264
Short-term investments:
Commercial paper (held-to-maturity)	$	20,495		$	2,248
Bonds (held-to-maturity)		13,418			26,831
Equity securities (available for sale)		243			-
Allowance for credit losses		(10	)		(20	)
Total short-term investments	$	34,146		$	29,059
Long-term investments:
Bonds (held-to-maturity)	$	10,586		$	13,405
Equity securities (available for sale)		4,828			5,468
Mutual funds (available for sale)		385			559
Allowance for credit losses		(5	)		(9	)
Total long-term investments	$	15,794		$	19,423
Total cash, cash equivalents and short and long-term investments	$	66,377		$	80,746

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. 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 June 30, 2022. During the second quarter of 2022, our allowance for credit losses related to short-term investments decreased by $3 thousand and our allowance for credit losses related to long-term investments decreased by $2 thousand.

10

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the amortized cost of our held-to-maturity bonds at June 30, 2022 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	$	2,243	$	630	$	8,547	$	11,420
BBB/BB		-		-		12,585		12,585
TOTAL	$	2,243	$	630	$	21,132	$	24,005

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 June 30, 2022:
Money market	1		6,979	$	-	$	-		$	6,979
Commercial paper	2		28,337	$	-	$	(37	)	$	28,300
Bonds	2		24,005	$	2	$	(275	)	$	23,732
Mutual funds	1		476	$	-	$	(91	)	$	385
Equity investments	2		6,054	$	-	$	(983	)	$	5,071
As of December 31, 2021:
Money Market	1		29,876	$	-	$	-		$	29,876
Commercial paper	2		2,248	$	-	$	-		$	2,248
Bonds	2		40,236	$	97	$	(37	)	$	40,296
Mutual funds	1		558	$	1	$	-		$	559
Equity investments	2		5,675	$	-	$	(207	)	$	5,468

The carrying value of our investments is reviewed quarterly for changes in circumstances or the occurrence of events that suggests an investment may not be fully recoverable. The bonds represent investments in various issuers at June 30, 2022. The unrealized losses for some of these bond investments reflect changes in interest rates following their acquisition. As of June 30, 2022, we had six bond investments in a loss position for more than 12 months.

At June 30, 2022, the length of time until maturity of the commercial paper we owned ranged from less than a month to six months and the length of time to maturity for the bonds ranged from less than a month to 42 months.

As of June 30, 2022, there were expenditures of $2.4 million related to property, plant, and equipment included in our accounts payable and accrued liabilities balance.

11

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(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):

June 30, 2022						December 31, 2021
Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization
	15.67	$	13,840	$	12,598		15.67	$	13,840	$	12,538

Aggregated amortization expense for patents and licenses was $30 thousand in each of the three-month periods ended June 30, 2022 and 2021 and $60 thousand in each of the six month periods ended June 30, 2022 and 2021.

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

2023	$	113
2024	$	113
2025	$	112
2026	$	112
2027	$	108

(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 revenue by geographic area, based on shipping destination, for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
United States	$	29,346	$	24,649	$	56,341	$	46,687
European Union		8,142		7,987		17,479		15,751
All other regions		11,394		10,057		22,200		19,424
Total	$	48,882	$	42,693	$	96,020	$	81,862

12

ATRION CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of revenue by product line for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Fluid Delivery	$	21,556	$	20,920	$	45,670	$	39,995
Cardiovascular		18,082		13,157		33,385		25,987
Ophthalmology		1,804		2,102		2,888		3,796
Other		7,440		6,514		14,077		12,084
Total	$	48,882	$	42,693	$	96,020	$	81,862

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. We 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.

13

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 June 30, 2022, we reported revenues of $48.9 million, up 14 percent, operating income of $11.0 million, up 13 percent, and net income of $9.3 million, up 5 percent from the three months ended June 30, 2021.

Results for the three months ended June 30, 2022

Consolidated net income totaled $9.3 million, or $5.21 per basic and $5.20 per diluted share, in the second quarter of 2022. This is compared with consolidated net income of $8.9 million, or $4.89 per basic and $4.88 per diluted share, in the second quarter of 2021. The income per basic share computations are based on weighted average basic shares outstanding of 1,794 thousand in the 2022 period and 1,826 thousand in the 2021 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,798 thousand in the 2022 period and 1,828 thousand in the 2021 period.

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Consolidated revenues of $48.9 million for the second quarter of 2022 were 14.5 percent higher than revenues of $42.7 million for the second quarter of 2021. Our second quarter 2022 results were favorably impacted by a 37% increase in Cardiovascular revenues compared to the second quarter of 2021.

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

	Three Months Ended June 30,
	2022		2021
Fluid Delivery	$	21,556	$	20,920
Cardiovascular		18,082		13,157
Ophthalmology		1,804		2,102
Other		7,440		6,514
Total	$	48,882	$	42,693

Cost of goods sold of $28.0 million for the second quarter of 2022 was 13 percent higher than our cost of goods sold of $24.8 million for the second quarter of 2021, primarily due to higher sales volumes. Our cost of goods sold in the second quarter of 2022 was 57.4 percent of revenue compared to 58.2 percent of revenue in the second quarter of 2021.

Gross profit of $20.8 million in the second quarter of 2022 was $3.0 million or 16.6 percent higher than in the comparable 2021 period. Our gross profit percentage in the second quarter of 2022 was 42.6 percent of revenues compared with 41.8 percent of revenues in the second quarter of 2021. The increase in gross profit percentage in the 2022 period compared to the 2021 period was related to increases in sales of higher margin products, improvements in pricing, and improved efficiency in our manufacturing processes.

Our second quarter 2022 operating expenses of $9.8 million were $1.7 million higher than the operating expenses for the second quarter of 2021. This increase was attributable to an $869 thousand increase in general and administrative expenses, primarily for compensation and depreciation, a $755 thousand increase in selling expenses, primarily for compensation and commissions, and a $108 thousand increase in R&D expenses, primarily for supplies.

Operating income of $11 million in the second quarter of 2022 represented a $1.2 million, or 12.6 percent, increase in operating income over second quarter 2021 operating income. This increase was due to higher sales and gross profit discussed above, partially offset by higher operating expenses. Operating income was 22.6 percent of revenues for the second quarter of 2022 and 22.9 percent of revenues for the second quarter of 2021.

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Interest and dividend income in the second quarter of 2022 was $292 thousand compared with $183 thousand for the same period in the prior year. The increase in interest and dividend income was due to dividends received on equity investments.

Other investment income in the second quarter of 2022 was a $308 thousand loss compared with Other investment income of $963 thousand in the second quarter of 2021. 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 $1.7 million for second quarter of 2022 compared with $2.0 million for the second quarter of 2021. The effective tax rate for the second quarter of 2022 was 15.6 percent compared with 18.4 percent for the second quarter of 2021. The decrease in the second quarter 2022 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.

Results for the six months ended June 30, 2022

Consolidated net income totaled $17.8 million, or $9.94 per basic and $9.91 per diluted share, in first six months of 2022. This is compared with consolidated net income of $16.7 million, or $9.12 per basic and $9.10 per diluted share, in the first six months of 2021. The income per basic share computations are based on weighted average basic shares outstanding of 1,796 thousand in the 2022 period and 1,826 thousand in the 2021 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,800 thousand in the 2022 period and 1,830 thousand in the 2021 period.

Consolidated revenues of $96.0 million for the first six months of 2022 were 17.3 percent higher than revenues of $81.9 million for the first six months of 2021. This increase in revenue was due to increased sales volumes in our Cardiovascular, Fluid Delivery, and Other product lines.

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

	Six Months Ended June 30,
	2022		2021
Fluid Delivery	$	45,670	$	39,995
Cardiovascular		33,385		25,987
Ophthalmology		2,888		3,796
Other		14,077		12,084
Total	$	96,020	$	81,862

Cost of goods sold of $55.9 million for the first six months of 2022 was $8.3 million higher than in the comparable 2021 period. This increase was mainly due to higher sales volumes. Our cost of goods sold in the first six months of 2022 was 58.3 percent of revenues compared to 58.2 percent of revenues in the first six months of 2021.

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Gross profit was $40.0 million in the first six months of 2022 and $34.2 million in the first six months of 2021. Our gross profit percentage was 41.7 percent of revenues in the first six months in 2022 and 41.8 percent in 2021.

Operating expenses of $18.8 million for the first six months of 2022 were $3.3 million higher than the operating expenses for the first six months of 2021. This increase was attributable to a $1.798 million increase in general and administrative expenses, primarily for compensation and depreciation, a $1.35 million increase in selling expenses, primarily for compensation and travel costs, and a $174 thousand increase in R&D expenses, primarily for supplies.

Operating income of $21.3 million for the first six months of 2022 represented a $2.6 million, or 14 percent increase, in operating income from the first six months of 2022. Operating income was 22.2 percent of revenues for the first six months of 2022 and 22.9 percent of revenues for the first six months of 2021.

Interest and dividend income for the first six months of 2022 was $429 thousand, compared with $399 thousand for the same period in the prior year. The increase in interest and dividend income was primarily due to dividends received on equity investments.

Other investment income for the first six months of 2022 was a $548 thousand loss compared to $1.0 million gain in the first six months of 2021. 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.

Income tax expense was $3.4 million for the first six months in 2022 and $3.6 million for the first six months in 2021. The effective tax rate for the first six months of 2022 was 16.0 percent, compared with 17.6 percent for the first six months of 2021. The decrease in the 2022 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 2022 to be approximately 17 percent.

Liquidity and Capital Resources

As of June 30, 2022, 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 June 30, 2022 and we were in compliance with all financial covenants.

At June 30, 2022, we had a total of $66.4 million in cash and cash equivalents, short-term investments, and long-term investments. At December 31, 2021, cash and cash equivalents, short-term investments, and long-term investments totaled $80.7 million.

Cash flows from operating activities of $18.3 million for the six months ended June 30, 2022 were primarily comprised of net income plus the net effect of non-cash expenses and an increase in accounts payable. During the first six months of 2022, we used $22.3 million for the purchase of investments, $15.2 million for the addition of property and equipment, $7.0 million for dividends, and $9.3 million for the purchase of treasury stock. During the same period, maturities and sales of investments generated $20.2 million in cash. For the six months ended June 30, 2021, cash flows from operating activities of $16.0 million were primarily comprised of net income plus the net effect of non-cash expenses, offset by increases in accounts receivable. During the first six months of 2021, we used $16.1 million for the purchase of investments, $7.3 million for the addition of property and equipment, $10.5 million for the purchase of treasury stock and $6.4 million for dividends. During the same period, maturities and sales of investments generated $19.4 million in cash.

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At June 30, 2022, we had working capital of $118.3 million, including $16.4 million in cash and cash equivalents and $34.1 million in short-term investments, compared to working capital of $123.2 million at December 31, 2021. The $4.9 million decrease in working capital during the first six months of 2022 was primarily related to an increase in accounts payable and accrued expenses of $4.8 million.

We believe that our $66.4 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 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 continues to impact the global economy, cause market instability and uncertainty in the labor market, and put pressure on supply chains and healthcare systems, and it has impacted, and will likely continue to impact, our business. The pandemic continues to evolve and the full extent of its impact will depend on future developments, which are highly uncertain and cannot be determined at this time. We will continue to monitor the COVID-19 pandemic as well as resulting legislative and regulatory changes to manage our response and assess and seek to mitigate potential adverse impacts on our business. For additional discussion regarding the COVID-19 pandemic and our related risks, see Part I, Item 1A, “Risk Factors” included in our 2021 Form 10-K.

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 2022, 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. 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 pandemic; the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 pandemic 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For the quarter ended June 30, 2022, we did not experience any material changes in market risk exposures that affect the quantitative and qualitative disclosures presented in our 2021 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 June 30, 2022. 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 June 30, 2022 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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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 2021 Form 10-K.

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 June 30, 2022.

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)
4/1/2022 to 4/30/2022		-		-		-		168,553
5/1/2022 to 5/31/2022		3,557	$	619.41		3,557		164,996
6/1/2022 to 6/30/2022		5,969	$	618.19		5,969		159,027
Total		9,526	$	618.65		9,526		159,027

(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 June 30, 2022, we had repurchased 90,973 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.

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Item 6. Exhibits.

Exhibit Index

Exhibit
Number	Description
10.1	Retirement Agreement between Atrion Corporation and Jeffery Strickland dated July 29, 2022
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

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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: August 8, 2022	By:	/s/ David A. Battat
		David A. Battat
		President and
		Chief Executive Officer
Date: August 8, 2022	By:	/s/ Jeffery Strickland
		Jeffery Strickland
		Vice President and
		Chief Financial Officer
		(Principal Accounting and   Financial Officer)

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EX-10.1

EXHIBIT 10.1

RETIREMENT AGREEMENT

THIS RETIREMENT AGREEMENT (the “Agreement”), dated July 29, 2022, by and between ATRION CORPORATION, a Delaware corporation (the “Company”), and JEFFERY STRICKLAND (“Executive”).

WITNESSETH:

WHEREAS, Executive is currently employed by the Company and serves as an officer or director of the Company and its subsidiaries (the Company and all such subsidiaries are referred to collectively herein as the “Company Entities”); and

WHEREAS, Executive wishes to retire from employment with the Company Entities on the Retirement Date (as defined below) and the Company has agreed to such retirement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Company and Executive hereby agree as follows:

1. Executive’s Retirement. Executive agrees to retire from and terminate his employment with the Company, and the Company agrees to such retirement and termination, under the terms and conditions set forth in this Agreement. On the Retirement Date, Executive will cease to be an employee and a director (if applicable) of the Company Entities, and Executive hereby agrees to resign from any and all offices, directorships, and other positions with the Company Entities and to execute all documents reasonably requested by the Company to further effectuate such resignations.

(a) Executive’s retirement will be effective and his employment with the Company Entities will terminate on March 3, 2023 (the “Retirement Date”).

(b) Executive will continue to serve as the Vice President and Chief Financial Officer, Secretary and Treasurer of the Company, and all offices, directorships, and other positions he currently holds, until the Retirement Date. During the period through the Retirement Date, Executive will support the transition of his duties and responsibilities as an officer and director of the Company Entities to other executives as directed by the Company’s Chief Executive Officer and will perform such other duties as are assigned to him by the Company’s Chief Executive Officer.

2. Base Salary and Benefits.

(a) Except as otherwise provided in this Agreement, Executive will continue to receive his annual base salary of Three Hundred Thousand and No/100 Dollars ($300,000.00), prorated through the Retirement Date, subject to such Deferral Elections (as such term is defined in the Company’s Nonqualified Deferred Compensation Plan, which is hereinafter referred to as the “NQDC Plan”) as Executive has made or may hereafter make with respect to such annual base salary pursuant to the NQDC Plan, and will continue to be eligible to participate in, and be entitled to all benefits under, the Company’s plans, programs, agreements, and policies applicable to him as a Company employee through the Retirement Date, consistent with the Company’s payroll and benefits practices and procedures. On the first day other than a Saturday, Sunday, or day observed by the Federal government as a legal holiday (a “Business Day”) after the Retirement Date, Executive shall be paid a lump sum in an amount equal to all accrued and unpaid vacation pay computed as of the Retirement Date on the basis of his current annual base salary.

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(b) The Company will provide the following benefits to which Executive is not otherwise entitled: If Executive timely and properly elects COBRA continuation coverage under the Company’s health plan for Executive and his spouse, the Company will pay the premiums on Executive’s behalf for such coverage at the contribution level in effect for executive officers of the Company until the earlier of: (i) December 31, 2023 and (ii) the date Executive becomes covered under another health plan, including Medicare.

3. Bonuses. If Executive (i) signs this Agreement and does not revoke it during the Agreement Revocation Period (defined in Paragraph 18 hereof), (ii) signs and does not revoke the General Release attached hereto as Exhibit A (the “General Release”) in accordance with the provisions thereof, and (iii) provides services on a full-time basis until the Retirement Date, on the first Business Day after the Retirement Date Executive will be paid (A) a retention bonus in the amount of Five Hundred Fifty Thousand and No/100 Dollars ($550,000.00), which retention bonus is in lieu of any incentive bonus under the Company’s Short-Term Incentive Compensation Plan or other short-term incentive compensation plan or arrangement that the Company may hereafter adopt, and (B) the second installment of his incentive bonus under the Company’s Short-Term Incentive Compensation Plan for 2021 in the amount of One Hundred Twelve Thousand Five Hundred and No/100 Dollars ($112,500.00), subject to the Deferral Election that Executive has made with respect to such incentive bonus pursuant to the NQDC Plan (together, the “Bonus Payments”). Bonus Payments shall be administered consistent with the requirements for the short-term deferral exception under Section 409A of the Internal Revenue Code of 1986, as amended, and regulations thereunder (“Section 409A”), as described in Treas. Reg. Section 1.409A-1(b)(4).

4. Equity Incentive Plan.

(a) If Executive (i) signs this Agreement and does not revoke it during the Agreement Revocation Period (defined in Paragraph 18), (ii) signs and does not revoke the General Release in accordance with the provisions thereof, and (iii) provides services on a full-time basis until the Retirement Date, on the Retirement Date the 131.72 restricted stock units granted to the Executive on August 23, 2019 under the Amended and Restated Atrion Corporation 2006 Equity Incentive Plan (the “2006 Plan”), together with the dividend equivalents credited with respect to those restricted stock units since the date of grant (collectively, the “2019 RSUs”), will be accelerated and will vest on the Retirement Date, with settlement to be in accordance with the Restricted Stock Unit Award Agreement dated as of August 23, 2019 between the Company and Executive.

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(b) All unvested restricted stock units granted to Executive on July 1, 2020, together with the dividend equivalents credited with respect to those restricted stock units, will vest (or be forfeited) and if and when vested will be settled in accordance with the First Amended and Restated Restricted Stock Unit Award Agreement dated as of December 29, 2020between the Company and Executive.

5. Continued Employment; Early Termination of Executive’s Employment. During the period of Executive’s continued employment through the Retirement Date, or the earlier termination of employment as set forth below (the date of which earlier termination is herein referred to as the “Termination Date”), Executive will act in good faith and in a professional manner.

(a) If the Company determines, in good faith, that Executive has materially violated any of the terms of this Agreement, the provisions of any employment or similar agreement, confidentiality or similar agreement, other agreement with the Company, or the Company’s Code of Business Conduct or other Company written policy generally applicable to employees of Executive’s level and position while a Company employee, the Company may terminate Executive’s employment after giving Executive written notice, a reasonable opportunity to cure, and Executive has failed to cure, and in such event the date of such termination will be Executive’s Termination Date for purposes of this Agreement. If Executive voluntarily resigns without the approval or consent of the Company before the Retirement Date described in Paragraph 1 hereof, his Termination Date for purposes of this Agreement will be the effective date of such resignation. Upon any such termination before the Retirement Date, Executive (i) will not be eligible to receive any annual base salary amounts under Paragraph 2 hereof for any periods after the Termination Date or eligible to receive the Bonus Payments described in Paragraph 3 hereof; (ii) will forfeit all rights to the August 2019 RSUs described in Paragraph 4(a) hereof, and (iii) if such termination does not meet the definition of “retirement” as such term is defined in that certain First Amended and Restated Restricted Stock Unit Award Agreement dated as of December 29, 2020, will forfeit all rights to the restricted stock units under Paragraph 4(b) hereof, including without limitation any right to a distribution with respect to restricted stock units described in Paragraph 4(b) hereof effective immediately upon such Termination Date. Executive’s rights, if any, to benefits under the NQDC Plan, vacation, health, and welfare plans, and retirement plans will be governed by the applicable plan, program, or policy provisions.

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(b) If Executive’s employment is terminated by the Company before the Retirement Date for any reason other than a termination as described in Paragraph 5(a) hereof, or if Executive’s employment is terminated before the Retirement Date upon Executive’s death or Disability, (i) Executive (or his estate, in the event of Executive’s death) will be entitled to receive within ten (10) Business Days after the Termination Date (A) a lump-sum cash payment equal to the amount of his annual base salary prorated through the Termination Date and a lump-sum payment in an amount equal to all accrued and unpaid vacation pay computed as of the Termination Date on the basis of his current annual base salary, and (B) the Bonus Payments described in Paragraph 3 hereof, (ii) on the Termination Date, the August 2019 RSUs, together with the dividend equivalents credited with respect to those restricted stock units, will be accelerated and will vest, with settlement to be in accordance with the Restricted Stock Unit Award Agreement dated as of August 23, 2019, (iii) if such termination is due to Executive’s death or Disability or if such termination meets the definition of “retirement” as such term is defined in that certain First Amended and Restated Restricted Stock Unit Award Agreement dated as of December 29, 2020, on the Termination Date all unvested restricted stock units granted to Executive on July 1, 2020, together with the dividend equivalents credited with respect to those restricted stock units, will be accelerated and will vest, with settlement to be in accordance with said First Amended and Restated Restricted Stock Unit Award Agreement, and (iv) the benefits described in Paragraph 2(b) hereof. Executive’s rights, if any, to benefits under the NQDC Plan, vacation, health, and welfare plans, and retirement plans will be governed by the applicable plan, program, or policy provisions. The term “Disability” shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

6. Release of Claims. Executive shall execute the General Release attached hereto as Exhibit A. Failure to execute and deliver the General Release, or revocation of the General Release within the prescribed period, shall terminate the Company’s obligations in this Agreement, except as otherwise provided in Paragraph 5(b) hereof.

7. Release of Unknown Claims. For the purpose of implementing a full and complete release, Executive expressly acknowledges that the release that he gives pursuant to the General Release is intended to include in its effect, without limitation, claims that he did not know or suspect to exist in his favor at the time of the effective date of this Agreement, regardless of whether knowledge of such claims, or the facts upon which they might be based, would materially have affected the settlement of this matter, and that the consideration given under the Agreement was also for the release of those claims and contemplates the extinguishment of any such unknown claims.

8. No Severance Pay or Benefits. Executive agrees and acknowledges that, except as expressly set forth in this Agreement, Executive is not entitled to receive from the Company, and Executive expressly waives any and all rights to, any payments or benefits, including but not limited to severance pay or benefits in any form, or any perquisites or property of any type, after the Retirement Date or the Termination Date, if earlier (other than payments in accordance with Executive’s rights, if any, to benefits under the Company’s Nonqualified Deferred Compensation Plan, health and welfare plans, or retirement plans and similar arrangements).

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9. Section 409A Compliance. Payments and benefits payable pursuant to this Agreement are intended either to be exempt from Section 409A, e.g., as payments that would fall within the “short‐term deferral period” within the meaning of Treasury Regulation Section 1.409A‐1(b)(4), to the extent available, or to comply with the provisions of Section 409A. This Agreement shall be interpreted to avoid any penalty or sanctions under Section 409A. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to the maximum extent permitted to be exempt from or compliant with Section 409A and, if necessary, any such provision shall be deemed amended to comply with Section 409A and regulations thereunder. In connection therewith:

(a) It is intended that each installment of the payments and benefits hereunder shall be treated as a separate “payment” for purposes of Section 409A.

(b) To the extent that payments and benefits under this Agreement are deferred compensation subject to Section 409A and are contingent upon Executive’s taking any employment‐related action, including without limitation execution (and non‐revocation) of another agreement, such as a release agreement, and the period within which such action(s) may be taken by Executive would begin in one calendar year and expire in the following calendar year, then such amounts or benefits shall be paid in such following calendar year.

(c) If as of the Retirement Date, Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B) or any successor provision thereto), then with regard to any payment or provision of benefit that is subject to Section 409A as deferred compensation and is due upon or as a result of Executive’s “separation from service,” notwithstanding any contrary provision under this Agreement, such payment or benefit shall not be made or provided, to the extent making or providing such payment or benefit would result in additional taxes or interest under Section 409A, until the date which is the earlier of (A) expiration of the six‐month period measured from such “separation from service,” and (B) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump‐sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them in this Agreement.

(d) Although this Agreement is intended to be exempt from or compliant with Section 409A, the Company neither makes nor has made any representation, warranty, or guarantee of any federal, state, or local tax consequences of Executive’s entitlements under this Agreement, including, but not limited to, under Section 409A.

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10. Compensation Paid. Executive represents, warrants, and agrees that all forms of compensation and other monies, including paychecks, paid to Executive by the Company to date have been accurately calculated, have represented the proper amounts due to Executive and have been based on the Company’s merit‐based compensation system. Certain of the payments and benefits set forth in Paragraphs 3 and 4 of this Agreement is consideration for the General Release and is in excess of what Executive is entitled to receive. If Executive or someone on Executive’s behalf claims any entitlement to further compensation from the Company, Executive agrees that the Company is entitled to full offset of the amounts set forth in this Agreement.

11. Post-Employment Obligations.

(a) Following any termination of Executive’s employment with the Company Entities, Executive agrees not to disclose, publicize or communicate to any person or entity, in any manner whatsoever, any confidential or proprietary information concerning or belonging to the Company Entities which has come to Executive’s attention during Executive’s employment with the Company Entities, unless authorized in writing by the Company or required by law. As used in this Agreement, “confidential or proprietary information” includes, but is not limited to, all information disclosed to Executive or known by Executive as a consequence of or through Executive’s employment, which is not generally known in the industry in which the Company Entities are or may become engaged, about the Company Entities’ or an affiliate’s business, products, processes and services, including, but not limited to, information relating to research, development, inventions, computer program designs, flow charts, source and object codes, products and services under development, pricing and pricing strategies, marketing and selling strategies, power generating, servicing, purchasing, accounting, engineering, costs and costing strategies, sources of supply, customer lists, customer requirements, business methods or practices, training and training programs and the documentation thereof. It also includes, but is not limited to, proprietary information and trade secrets of the Company Entities. It will be presumed that information supplied to the Company Entities from outside sources is “confidential or proprietary information” unless and until it is designated otherwise. Executive also agrees that before making any legally required disclosure of the Company’s “confidential or proprietary information”, to the extent permitted by law, Executive will give the Company as much advance written notice as possible and will reasonably cooperate with the Company prior to such disclosure should any of the Company Entities decide to seek a protective order or other means of preserving the confidentiality of such information.

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(b) For a period of twelve (12) months following the later of (i) date on which Executive’s employment with the Company Entities terminates for any reason and (ii) date on which the Executive’s consulting engagement, if any, with the Company Entities terminates, Executive will not engage, directly or indirectly, for the benefit of Executive or others, in any activity or employment the performance of which will require or call upon Executive to use or disclose any of the Company’s “confidential or proprietary information” obtained, provided or otherwise acquired, directly or indirectly, during Executive’s employment with the Company Entities, notwithstanding any undertaking by Executive to the contrary. This paragraph will not be construed to limit in any way Executive’s obligation not to use or disclose the Company’s “confidential or proprietary information” as set forth in the immediately preceding paragraph. In the event of any violation of this paragraph, the post-termination restriction period will be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the duration of the restriction period contained in this paragraph will be tolled during any period of such violation.

(c) Notwithstanding this Paragraph 11(c), Executive acknowledges that the U.S. Defend Trade Secrets Act of 2016 (the “DTSA”) provides that an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, the DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (x) files any document containing the trade secret under seal and (y) does not disclose the trade secret, except pursuant to court order.

(d) Executive agrees to deliver to the Company on or before the date on which Executive’s employment with the Company Entities terminates for any reason or, if later, the date on which a consulting engagement with the Company Entities terminates, all “confidential or proprietary information,” as defined above, as well as, in reasonably good working order, any equipment, documents, files, lists, or other written, graphic, or electronic records relating to the Company Entities’ business and all copies of such materials, which are at such time, or which have been, in Executive’s possession or under Executive’s control.

(e) Executive agrees not to speak disparagingly of the Company Entities or the products, services, or business of the Company Entities or about their current or former officers, directors, or employees. This provision shall not be construed to prohibit Executive from making statements which Executive believes in good faith to be truthful in the ordinary course of providing services for the Company Entities or when required by a legally compelled process, including by deposition, interrogatory, request for documents, subpoena, civil investigative demand, or similar process, by an order or proceeding of a court, agency, or authority.

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(f) In signing this Agreement, Executive assures the Company that Executive has carefully read and considered all of the terms of this Agreement, including the restraints imposed under this Paragraph 11. Executive acknowledges that these restraints are necessary for the reasonable and proper protection of the Company’s “confidential or proprietary information”, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent Executive from obtaining other suitable employment during the period in which Executive is bound by the restraints.

12. Future Cooperation. Following the date on which Executive’s employment with the Company Entities terminates for any reason, for as long as may be reasonably required by the Company Entities, Executive will respond to reasonable requests for information from the Company regarding matters that may arise in the business of the Company Entities. Executive will respond to any such requests from the Company promptly. Executive will fully and completely cooperate with the Company Entities, their advisors and their legal counsel with respect to any litigation that is pending against the Company Entities and any claim or action that may be filed against the Company Entities in the future. Such cooperation will include Executive making Executive available at reasonable times and places for interviews, reviewing documents, testifying in a deposition or a legal or administrative proceeding and providing advice to the Company Entities in preparing defenses to any pending or potential future litigation, actions or investigations initiated by or against the Company Entities, whether administrative, civil or criminal in nature. Executive specifically agrees that, if required by law to provide sworn testimony regarding any matter related to the Company Entities, Executive will consult with and have Company-designated legal counsel present for such testimony (with the Company being responsible for the costs of such designated counsel), and Executive will cooperate with the Company’s attorneys to assist their efforts, holding all privileged attorney-client matters in strictest confidence. Executive shall be compensated fairly at prevailing market terms for his cooperation and services as described in this Paragraph 12, and the Company will pay or reimburse Executive for any approved travel expenses reasonably incurred solely as a result of Executive’s cooperation with the Company Entities pursuant to this Paragraph 12. Executive further acknowledges that Executive has disclosed to the Company any information Executive has concerning any acts or omissions involving any of the Company Entities or any of their employees, officers, directors, stockholders, representatives, attorneys or agents that Executive has reason to believe may be unlawful or may involve any unlawful conduct by the Company Entities, and Executive will promptly notify the Company in writing if Executive becomes aware of any potential claim or proposed investigation, action or litigation against any of the Company Entities.

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13. Assistance to Others. Executive agrees not to assist or cooperate, in any way, directly or indirectly, with any person, entity or group (other than a governmental authority) involved in any proceeding, inquiry or investigation of any kind or nature against or involving the Company Entities or any of the other Releasees (as defined in the General Release), except as required by law, subpoena or other compulsory process. Moreover, Executive agrees that to the extent Executive is compelled to cooperate with such third parties, Executive will disclose to the Company in advance that Executive intends to cooperate and disclose the manner in which Executive intends to cooperate. Further, Executive agrees that within three (3) days after such cooperation, Executive will meet with representatives of the Company and disclose the information that Executive provided to the third party. This Paragraph 13 is to be broadly construed and is to include conversations, informal comments, confirmations, suggestions or advice of any type to third parties, their counsel or their advisors. Further, but without limiting Paragraph 11 above, if Executive is legally required to appear or participate in any proceeding that involves or is brought against the Company Entities or the other Releasees, Executive agrees to disclose to the Company in advance what Executive plans to say or produce and otherwise cooperate fully with the Company or the other Releasees.

14. Employment and Other Agreements. Executive agrees and acknowledges that, except as otherwise expressly provided in this Agreement with regard to severance pay, benefits, or similar amounts, the provisions of agreements that Executive previously entered into with the Company, and that are intended to survive Executive’s termination, including but not limited to any restrictive covenant or similar agreements, will remain in full force and effect. In connection therewith, Executive reaffirms Executive’s intent to comply with all post‐employment obligations of Executive to the Company under such agreements. Nothing herein or in the General Release shall impair (i) Executive’s indemnification rights or the Company’s obligations under the Company’s Bylaws or under that certain Indemnification Agreement dated as of May 20, 2003 between the Company and Executive, including the Company’s obligations thereunder respecting D & O Insurance (as defined therein) or (ii) Executive’s rights, if any, to participate in and receive benefits from any retirement plan or health and welfare benefit plan sponsored by the Company Entities or the NQDC Plan, in accordance with the terms and conditions of such plans.

15. Successors. This Agreement shall be binding upon Executive and the Company and their heirs, representatives, executors, administrators, successors, insurers, and assigns, and shall inure to the benefit of each and all of them and to their heirs, representatives, executors, administrators or assigns.

16. Applicable Law and Venue. THIS AGREEMENT SHALL BE INTERPRETED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE OF TEXAS, AND VENUE FOR THE RESOLUTION OF ANY DISPUTES (LOCATION OF ANY LAWSUIT) SHALL BE SOLELY IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS, OR IF FEDERAL JURISDICTION DOES NOT EXIST, IN STATE COURT IN SITTING IN COLLIN COUNTY, TEXAS.

17. Severability. The fact that one or more paragraphs (or portion thereof) of this Agreement may be deemed invalid or unenforceable by any court shall not invalidate the remaining Paragraphs or portions of such paragraphs of this Agreement.

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18. Certain Acknowledgments. Executive acknowledges that he is signing this Agreement voluntarily with full knowledge of its contents. If Executive decides not to sign this Agreement, the Company will not retaliate against Executive. Executive is not relying on any promise or representation not specifically and explicitly made in this Agreement. This Agreement may not be amended or modified except by a written agreement signed by Executive and an authorized officer of the Company. Executive understands that any changes that the parties agree to make to this Agreement after it has been presented to Executive, whether such changes are material or non‐material, will not extend the amount of time Executive has to consider the Agreement.

19. Notices.Every notice or other communication relating to this Agreement will be in writing, and will be mailed to or delivered to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices and communications by Executive to the Company will be mailed or delivered to the Company at its principal executive office, and all notices and communications by the Company to Executive may be given to Executive personally or may be mailed to Executive at Executive’s last known address, as reflected in the Company’s records. Any notice addressed as herein provided will be deemed to be given or received (i) if delivered by hand, on the date of such delivery, (ii) if delivered by courier or mailed by overnight mail, on the first business day following the date of such delivery or mailing, and (iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.

20. Consideration and Revocation Periods. Executive understands that he may take up to twenty-one (21) days following Executive’s receipt of this Agreement to consider this Agreement. Executive understands that he may use as much or as little of this period as Executive chooses before signing the Agreement. Executive is advised to consult with an attorney before signing this Agreement. If Executive accepts this Agreement, he must sign it and return it to Company’s Chief Executive Officer on or before the expiration of the twenty-one (21)‐day period. By signing this Agreement, Executive acknowledges that he was afforded a period of at least twenty-one (21) days from the date this Agreement was presented to Executive in which to consider it. In addition, Executive understands that he has a period of seven (7) days immediately following the date of signing this Agreement within which to revoke this Agreement (the “Agreement Revocation Period”). To revoke this Agreement, Executive understands that he must provide written notification of revocation to the Chief Executive Officer within seven (7) days immediately following the date Executive signed it.

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21. Entire Agreement. This Agreement, together with the General Release, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements, oral and written, between the parties hereto with respect to the subject matter hereof. In the event of any inconsistency between any provision of this Agreement and any provision of any plan, employee handbook, personnel manual, program, policy, arrangement or agreement of the Company or any of the other Company Entities, the provisions of this Agreement shall control.

22. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and both of which taken together constitute one and the same agreement. Delivery of any signature page via telecopy or other electronic transmission shall be deemed equivalent to physical delivery of the original signature page.

[Signature page follows.]

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IN WITNESS WHEREOF, the Company and Executive have executed and delivered this Agreement as of the date first set forth above.

ATRION CORPORATION
By:	/s/ David A. Battat
Name:	David A. Battat
Title:	President & CEO
/s/ Jeffery Strickland
JEFFERY STRICKLAND

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Exhibit A

GENERAL RELEASE

THIS GENERAL RELEASE (“General Release”) is signed and executed by JEFFERY STRICKLAND (“Executive”), for the benefit of ATRION CORPORATION (the “Company”) on its own behalf and on behalf of its predecessors, successors, assigns, subsidiaries and affiliates (the Company and all such other entities are referred to collectively herein as the “Company Entities”). Capitalized terms used, but not otherwise defined, in thisGeneralRelease will have the meanings given to such terms in the Retirement Agreement previously entered into between Executive and the Company (the “Agreement”).

WHEREAS, pursuant to Paragraph 1 of the Agreement, the Executive’s Retirement Date is March 3, 2023; and

WHEREAS, as set forth in Paragraph 2 of the Agreement, Executive must execute, and not revoke, this General Release within the specified time period set forth in Paragraph 5 hereof in order to receive certain of the payments and other benefits set forth in the Agreement

NOW, THEREFORE, in consideration of the Company’s obligation to make certain of the payments and other benefits set forth in the Agreement, Executive hereby agrees as follows:

1. Release in Full of All Claims. Executive acknowledges that, in exchange for signing and not revoking this General Release, Executive will receive certain benefits that Executive is not otherwise entitled to receive from the Company and which exceed amounts otherwise due to Executive if he retires on the Retirement Date. In addition, Executive acknowledges that other than the benefits set forth in, and to be paid in accordance with, the Retirement Agreement, as of the date on which Executive executes this General Release, Executive has been paid or has received all leave (paid or unpaid), vacation pay, reimbursements, compensation, wages, bonuses, commissions, incentives, retention awards, equity-based compensation and/or benefits of any kind that Executive is entitled to receive from the Company Entities and that are due to Executive. Notwithstanding the foregoing and except as otherwise provided in the Agreement, Executive’s rights, if any, to participate in and receive benefits from any retirement plan or health and welfare benefit plan sponsored by the Company Entities and Company’s Nonqualified Deferred Compensation Plan following the Retirement Date will be governed by the terms of such plans.

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Executive hereby irrevocably and unconditionally waives, releases and forever discharges the Company Entities, including their past and present employees, officers, directors, managers, stockholders, agents, affiliates, subsidiaries, , successors, assigns, and other representatives, and anyone acting on their joint or several behalf (collectively, the “Releasees”), of, from and for any and all claims, charges, actions, rights, causes of action, lawsuits, liabilities, losses, damages, costs, expenses and demands of any nature whatsoever, at law or in equity, whether known or unknown, fixed or contingent, suspected or unsuspected, apparent or concealed, asserted or unasserted, foreseen or unforeseen, that Executive now has, has ever had or may have against the Releasees (or any of them) based upon, arising out of, concerning, relating to or resulting from any act, omission, matter, fact, occurrence, transaction, claim, contention, statement, or event occurring or existing at any time in the past up to and including the date on which Executive signs this General Release, including, without limitation, all claims arising out of or in any way relating to Executive’s employment and other association with the Company Entities and the termination thereof, and Executive hereby covenants that Executive has not and will not file a lawsuit to assert such claims.

Such claims and rights include those of which Executive is aware and those for which Executive may be unaware. Such claims extend to those arising under any contract (either express or implied) and those involving any tort or personal injury Executive may have suffered. Such claims and rights also include those which may arise under any federal, state or local statute or under common law, including those dealing with employment discrimination, such as the federal Age Discrimination in Employment Act (the “ADEA”), as amended by the Older Workers Benefit Protection Act (the “OWBPA”), Title VII of the Civil Rights Act of 1964, as amended, the Americans With Disabilities Act, the Employee Retirement Income Security Act of 1974, as amended, and the Worker Adjustment and Retraining Notification Act and the applicable state or local statutory provision which may arise under any other legal restriction on an employer’s rights with respect to its employees. Executive also waives all rights Executive might have to share in any damages awarded under any class action, Securities Exchange Commission (“SEC”), Equal Employment Opportunity Commission (“EEOC”) or state Civil Rights Commission complaint or as a result of any federal, state or local administrative agency action.Nothing in the foregoing will be interpreted as a waiver of rights or claims that may arise after the date on which this General Release is executed, nor will any part of this General Release be interpreted to mean that Executive is prohibited from filing a charge with, providing information for or participating as a witness in an investigation undertaken by or a proceeding initiated by the SEC or the EEOC pursuant to any of the statutes each enforces. The only exceptions to this waiver and release of claims are with respect to: (a) claims for benefits under applicable Workers’ Compensation laws for occupational injuries or illnesses, (b) Executive’s rights to any monetary award from a government-administered whistleblower award program, such as that offered by the SEC pursuant to Section 21F of the Securities Exchange Act of 1934, as amended, (c) Executive’s rights to enforce the terms of this General Release, (d)Executive’s indemnification rights under the Company’s Bylaws and under that certain Indemnification Agreement dated as of May 20, 2003, (d) Executive’s rights, if any, to participate in and receive benefits from any retirement plan or health and welfare benefit plan sponsored by the Company Entities and Company’s Nonqualified Deferred Compensation Plan in accordance with the terms of such plan, and (d) claims to challenge the validity of this General Release under the ADEA or claims that Executive cannot waive by operation of law.

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If any person, organization, or other entity should bring a claim against the Releasees involving any matter covered by this General Release, Executive will not accept any personal relief in any such action, including damages, attorneys’ fees, costs and all other legal or equitable relief (provided that, for purposes of clarity, Executive does not waive Executive’s right to accept any whistleblower award described in clause (b) of the preceding paragraph or any monetary recovery under the Dodd-Frank Wall Street Reform and Consumer Protection Act or The Sarbanes-Oxley Act of 2002). Nothing contained in this General Release will be construed to prohibit or impede Executive (or any other individual) from reporting possible violations of law or regulation or filing a charge with or participating in any investigation by the EEOC, the National Labor Relations Board, the SEC or any other governmental authority or from making truthful disclosures regarding any allegedly unlawful employment practice by the Company Entities. For the avoidance of doubt, and notwithstanding anything in this General Release to the contrary, Executive understands that nothing contained in this General Release is intended to interfere with or discourage Executive from testifying or participating in any investigation or proceeding by any governmental authority regarding possible legal violations or from engaging in future activities protected under the whistleblower statutes administered by any governmental authority, and nothing contained in this General Release waives or releases Executive’s right to receive money for disclosing such information to any governmental authority. Executive further understands that Executive will not be subject to retaliation by the Releasees for a disclosure made pursuant to this Paragraph 1.

Executive affirms that, as of the date on which he executes this General Release, Executive has not filed any lawsuit, charge, claim or complaint with any governmental authority or in any court against the Releasees, and further affirms that he will not file, commence, prosecute, or participate in any judicial or arbitral action or proceeding against any Releasees based upon or arising out of any act, omission, transaction, occurrence, contract, claim, or event existing or occurring on or before the date Executive signs this General Release except as otherwise permitted in this Paragraph 1.

2. Acknowledgements. Executive reaffirms Executive’s continuing obligations set forth in Paragraphs 11, 12, and 13 of the Agreement.

3. No Assignment of Claims.Executive hereby represents and warrants that Executive has not previously assigned or purported to assign or transfer to any person or entity any of the claims or causes of action herein released.

4. No Admission of Wrongful Conduct. Executive acknowledges that the Company Entities and the other Releasees are not admitting any unlawful or otherwise wrongful conduct or liability to Executive or Executive’s heirs, executors, administrators, assigns, agents or other representatives. Executive and the Company further understand and agree that this General Release will not be admissible as evidence in any court or administrative proceeding, except that either party may submit this General Release to any appropriate forum in the event of an alleged breach of the Agreement or this General Release or a claim by either party concerning the enforceability or interpretation of this General Release.

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5. Waiver and Acknowledgement. Executive, pursuant to and in compliance with the rights afforded Executive under the OWBPA, (a) is advised to consult with an attorney before executing this General Release, (b) has had, at Executive’s option, at least twenty-one (21) days to consider this General Release, (c) may revoke this General Release at any time within the seven (7) day period immediately following the date on which Executive executes this General Release (the “Release Revocation Period”), (d) is advised that this General Release will not become effective or enforceable until the Release Revocation Period has expired, and (e) is advised that Executive is not waiving claims that may arise after the date on which Executive executes this General Release. Executive must execute and deliver this General Release to David A. Battat, by email (delivery receipt requested) at dbattat@HalkeyRoberts.com (the “Designated Address”)or by personal delivery to Cindy Ferguson at One Allentown Parkway, Allen, Texas 75002no sooner than the February 21, 2023 and no later than 11:59 pm Central Time on February 24, 2023 (the “Release Deadline”). If this General Release is delivered by email as here in above provided, the hard copy of the executed General Release shall be delivered as soon as practicable thereafter to Cindy Ferguson at One Allentown Parkway, Allen, Texas 75002. Any revocation by Executive must be in writing and delivered by email (delivery receipt requested) to the Designated Address or by personal delivery to Cindy Ferguson at One Allentown Parkway, Allen, Texas 75002. For this revocation to be effective, such written notice must be received by David A. Battat, by email (delivery receipt requested) at the Designated Address, or by Cindy Ferguson, by personal delivery at One Allentown Parkway, Allen, Texas 75002 no later than 11:59 pm Central Time on the last day of the Release Revocation Period. If this General Release is not revoked within the Release Revocation Period, this General Release will become effective and enforceable on the date immediately following the last day of the Release Revocation Period.

Executive acknowledges that the Company’s obligation to pay certain of the benefits set forth in the Agreement is contingent on Executive (i) executing and delivering this General Release to the Designated Address on or prior to the Release Deadline (but no earlier than February 21, 2023), and (ii) not revoking this General Release during the Release Revocation Period. If Executive does not execute and deliver this General Release on, or executes and delivers this General Release after the Release Deadline, or if Executive revokes this General Release during the Release Revocation Period, the Company’s obligations under the Agreement shall terminate; provided, however, in the event Executive does not execute this General Release prior to the Release Deadline by reason of the termination of Executive’s employment by the Company for any reason other than a termination described in Paragraph 5(a) of the Agreement before the Release Date or by reason of Executive’s death or Disability preceding such Release Deadline, the provisions of Paragraph 5(b) of the Agreement shall remain in full force and effect.

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6. Voluntary Execution. Executive acknowledges that Executive is executing this General Release voluntarily and of Executive’s own free will and that Executive fully understands and intends to be bound by the terms of this General Release.

7. Governing Law; Venue. Any and all legal action initiated to enforce any right or obligation arising out of or relating to this General Release, or concerning the subject matter hereof, will be brought in and determined only in federal court in the United States District Court for the Eastern District of Texas, or if federal jurisdiction does not exist, in state court in sitting in Collin County, Texas, to the full extent permitted by law. This General Release will in all respects be interpreted, construed, enforced and governed by and in accordance with the internal substantive laws of the State of Texas, or by federal law where applicable, exclusive of any rules pertaining to conflicts of laws.

8. Entire Agreement. This General Release, together with the Agreement, constitute the entire agreement between the Company and Executive with respect to the subject matter hereof, and there are no other written or oral agreements, understandings or arrangements except as set forth in this General Release and the Agreement.

9. Severability. Should any provision of this General Release be declared or be determined by any court or arbitrator to be illegal, invalid, void or unenforceable, the remaining parts, terms or provisions will not be affected thereby, and said illegal, invalid, void or unenforceable part, term or provision will be modified or amended to render it enforceable to the maximum extent permitted by law or, if necessary, will be deemed not to be part of this General Release. The waiver of a breach of any of the provisions of this General Release will not operate or be construed as a waiver of any other provision of this General Release or a waiver of any subsequent breach of the same provision.

[Signature page follows.]

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IN WITNESS WHEREOF, Executive hereby certifies that he has read this General Release in its entirety and has voluntarily executed it, as of the date set forth under Executive’s signature.

Not valid if signed by Executive after the Release Deadline.

JEFFERY STRICKLAND

Date:

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EX-31.1

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: August 8, 2022	/s/ David A. Battat
	David A. Battat
	President and
	Chief Executive Officer

EX-31.2

EXHIBIT 32.1

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: August 8, 2022	/s/ Jeffery Strickland
	Jeffery Strickland
	Vice President and
	Chief Financial Officer

EX-32.1

  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, 2022 (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: August 8, 2022	/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.

EX-32.2

  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, 2022 (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: August 8, 2022	By:	/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.

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Cover - shares	6 Months Ended
	Jun. 30, 2022	Jul. 29, 2022
Cover [Abstract]
Entity Registrant Name	Atrion Corporation
Entity Central Index Key	0000701288
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	false
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2022
Entity Filer Category	Large Accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		1,785,989
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-32982
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	63-0821819
Entity Address Address Line 1	One Allentown Parkway
Entity Address City Or Town	Allen
Entity Address State Or Province	TX
Entity Address Postal Zip Code	75002
City Area Code	972
Local Phone Number	390-9800
Security 12b Title	Common stock, Par Value $0.10 per share
Trading Symbol	ATRI
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Revenues	$ 48,882	$ 42,693	$ 96,020	$ 81,862
Cost of goods sold	28,049	24,826	55,943	47,656
Gross profit	20,833	17,867	40,077	34,206
Operating expenses:
Selling	2,629	1,874	5,146	3,800
General and administrative	5,622	4,753	10,723	8,925
Research and development	1,553	1,445	2,929	2,755
Operating Expenses	9,804	8,072	18,798	15,480
Operating income	11,029	9,795	21,279	18,726
Interest and dividend income	292	183	429	399
Other investment income/(losses)	(308)	963	(548)	1,025
Other income	60	0	85	66
Other Operating Income	44	1,146	(34)	1,490
Income before provision for income taxes	11,073	10,941	21,245	20,216
Provision for income taxes	(1,725)	(2,016)	(3,398)	(3,565)
Net income	$ 9,348	$ 8,925	$ 17,847	$ 16,651
Net income per basic share	$ 5.21	$ 4.89	$ 9.94	$ 9.12
Weighted average basic shares outstanding	1,794	1,826	1,796	1,826
Net income per diluted share	$ 5.20	$ 4.88	$ 9.91	$ 9.10
Weighted average diluted shares outstanding	1,798	1,828	1,800	1,830
Dividends per common share	$ 1.95	$ 1.75	$ 3.90	$ 3.50

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 16,437	$ 32,264
Short-term investments	34,146	29,059
Accounts receivable	27,539	21,023
Inventories	54,281	50,778
Prepaid expenses and other current assets	5,171	3,447
Total Current Assets	137,574	136,571
Long-term investments	15,794	19,423
Property, plant and equipment	249,648	233,217
Less accumulated depreciation and amortization	140,842	135,245
Total Property, Plant And Equipment	108,806	97,972
Other assets and deferred charges:
Patents	1,242	1,302
Goodwill	9,730	9,730
Other	2,171	2,266
Total Other Assets	13,143	13,298
Total assets	275,317	267,264
Current liabilities:
Accounts payable and accrued liabilities	17,861	13,076
Accrued income and other taxes	1,412	270
Total Current Liabilities	19,273	13,346
Line of credit	0	0
Other non-current liabilities	9,589	9,622
Stockholders' equity:
Common stock, par value $0.10 per share; authorized 10,000 shares, issued 3,420 shares	342	342
Paid-in capital	66,167	61,174
Retained earnings	368,165	357,324
Treasury shares,1,632 at June 30, 2022 and 1,619 at December 31, 2021, at cost	(188,219)	(174,544)
Total stockholders' equity	246,455	244,296
Total liabilities and stockholders' equity	$ 275,317	$ 267,264

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Stockholders' Equity
Common Stock, Shares Par Value	$ 0.10	$ 0.10
Common Stock, Shares Authorized	10,000	10,000
Common Stock, Shares Issued	3,420	3,420
Treasury Stock, Shares	1,632	1,619

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income	$ 17,847	$ 16,651
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,866	6,210
Deferred income taxes	(535)	1,092
Stock-based compensation	1,321	1,338
Net change in unrealized gains and losses on investments	475	(1,024)
Net change in accrued interest, premiums, and discounts on investments	202	269
Other	0	25
Other Operating	26,176	24,561
Changes in operating assets and liabilities:
Accounts receivable	(6,516)	(6,237)
Inventories	(3,503)	2,573
Prepaid expenses	(2,201)	(4,006)
Other non-current assets	573	12
Accounts payable and accrued liabilities	2,165	(1,454)
Accrued income and other taxes	1,141	234
Other non-current liabilities	502	345
Cash flows from operating activities	18,337	16,028
Cash flows from investing activities:
Property, plant and equipment additions	(15,247)	(7,252)
Purchase of investments	(22,322)	(16,110)
Proceeds from sale of investments	208	166
Proceeds from maturities of investments	19,978	19,246
Cash flows from investing activities	(17,383)	(3,950)
Cash flows from financing activities:
Purchase of treasury stock	(9,340)	(10,488)
Shares tendered for employees' withholding taxes on stock-based compensation	(454)	(585)
Dividends paid	(6,987)	(6,385)
Cash flows from financing activities	(16,781)	(17,458)
Net change in cash and cash equivalents	(15,827)	(5,380)
Cash and cash equivalents at beginning of period	32,264	22,450
Cash and cash equivalents at end of period	16,437	17,070
Cash paid for:
Income taxes	3,952	5,095
Non-cash financing activities:
Non-cash effect of stock option exercises	$ 4,008	$ 6,012

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings
Balance, shares at Dec. 31, 2020		1,826	1,594
Balance, amount at Dec. 31, 2020	$ 240,442	$ 342	$ (151,127)	$ 53,527	$ 337,700
Net income	16,651				16,651
Stock-based compensation transactions, shares		3	(3)
Stock-based compensation transactions, amount	1,098		$ (5,845)	6,943
Shares surrendered in stock transactions, shares		(1)	1
Shares surrendered in stock transactions, amount	(585)		$ (585)
Purchase of treasury stock, shares		(17)	17
Purchase of treasury stock, amount	(10,488)		$ (10,488)
Dividends	(6,397)				(6,397)
Balance, shares at Jun. 30, 2021		1,811	1,609
Balance, amount at Jun. 30, 2021	240,721	$ 342	$ (168,045)	60,470	347,954
Balance, shares at Mar. 31, 2021		1,827	1,593
Balance, amount at Mar. 31, 2021	244,751	$ 342	$ (157,572)	59,760	342,221
Net income	8,925				8,925
Stock-based compensation transactions, shares		1	(1)
Stock-based compensation transactions, amount	725		$ 15	710
Purchase of treasury stock, shares		(17)	17
Purchase of treasury stock, amount	(10,488)		$ (10,488)
Dividends	(3,192)				(3,192)
Balance, shares at Jun. 30, 2021		1,811	1,609
Balance, amount at Jun. 30, 2021	240,721	$ 342	$ (168,045)	60,470	347,954
Balance, shares at Dec. 31, 2021		1,801	1,619
Balance, amount at Dec. 31, 2021	244,296	$ 342	$ (174,544)	61,174	357,324
Net income	17,847				17,847
Stock-based compensation transactions, shares		3	(3)
Stock-based compensation transactions, amount	1,112		$ (3,881)	4,993
Shares surrendered in stock transactions, shares		(1)	1
Shares surrendered in stock transactions, amount	(454)		$ (454)
Purchase of treasury stock, shares		(15)	15
Purchase of treasury stock, amount	(9,340)		$ (9,340)
Dividends	(7,006)				(7,006)
Balance, shares at Jun. 30, 2022		1,788	1,632
Balance, amount at Jun. 30, 2022	246,455	$ 342	$ (188,219)	66,167	368,165
Balance, shares at Mar. 31, 2022		1,795	1,625
Balance, amount at Mar. 31, 2022	246,230	$ 342	$ (177,985)	61,560	362,313
Net income	9,348				9,348
Stock-based compensation transactions, shares		3	(3)
Stock-based compensation transactions, amount	720		$ (3,887)	4,607
Shares surrendered in stock transactions, shares		(1)	1
Shares surrendered in stock transactions, amount	(454)		$ (454)
Purchase of treasury stock, shares		(9)	9
Purchase of treasury stock, amount	(5,893)		$ (5,893)
Dividends	(3,496)				(3,496)
Balance, shares at Jun. 30, 2022		1,788	1,632
Balance, amount at Jun. 30, 2022	$ 246,455	$ 342	$ (188,219)	$ 66,167	$ 368,165

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Basis of Presentation

6 Months Ended

Jun. 30, 2022

Basis of Presentation

1- Basis Of Presentation

(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 with 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. 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 August 8, 2022, 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. At least quarterly, we evaluate our assumptions, judgments, and estimates, and make changes as we deem necessary.

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, 2021 (“2021 Form 10-K”).

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Inventories

6 Months Ended

Jun. 30, 2022

Inventories

2- Inventories

(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):

	June 30,		December 31,
	2022		2021
Raw materials	$	26,888	$	23,733
Work in process		11,591		9,571
Finished goods		15,802		17,474
Total inventories	$	54,281	$	50,778

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Income Per Share

6 Months Ended

Jun. 30, 2022

Income Per Share

3- Income Per Share

(3) Income per share

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

	Three Months ended June 30,				Six Months ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share amounts)
Net income	$	9,348	$	8,925	$	17,847	$	16,651
Weighted average basic shares outstanding		1,794		1,826		1,796		1,826
Add: Effect of dilutive securities		4		2		4		4
Weighted average diluted shares outstanding		1,798		1,828		1,800		1,830
Earnings per share:
Basic	$	5.21	$	4.89	$	9.94	$	9.12
Diluted	$	5.20	$	4.88	$	9.91	$	9.10

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. Potential dilutive securities have been excluded when their inclusion would be anti-dilutive.

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Investments

6 Months Ended

Jun. 30, 2022

Investments

4- Investments

(4) Investments

As of June 30, 2022, 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 investments in equity securities we intend to hold longer than 12 months.

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

	June 30,  2022			December 31, 2021
Cash and cash equivalents:
Money market funds	$	6,979		$	29,876
Commercial paper		7,841			-
Cash deposits		1,617			2,388
Total cash and cash equivalents	$	16,437		$	32,264
Short-term investments:
Commercial paper (held-to-maturity)	$	20,495		$	2,248
Bonds (held-to-maturity)		13,418			26,831
Equity securities (available for sale)		243			-
Allowance for credit losses		(10	)		(20	)
Total short-term investments	$	34,146		$	29,059
Long-term investments:
Bonds (held-to-maturity)	$	10,586		$	13,405
Equity securities (available for sale)		4,828			5,468
Mutual funds (available for sale)		385			559
Allowance for credit losses		(5	)		(9	)
Total long-term investments	$	15,794		$	19,423
Total cash, cash equivalents and short and long-term investments	$	66,377		$	80,746

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. 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 June 30, 2022. During the second quarter of 2022, our allowance for credit losses related to short-term investments decreased by $3 thousand and our allowance for credit losses related to long-term investments decreased by $2 thousand.

The following table summarizes the amortized cost of our held-to-maturity bonds at June 30, 2022 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	$	2,243	$	630	$	8,547	$	11,420
BBB/BB		-		-		12,585		12,585
TOTAL	$	2,243	$	630	$	21,132	$	24,005

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 June 30, 2022:
Money market	1		6,979	$	-	$	-		$	6,979
Commercial paper	2		28,337	$	-	$	(37	)	$	28,300
Bonds	2		24,005	$	2	$	(275	)	$	23,732
Mutual funds	1		476	$	-	$	(91	)	$	385
Equity investments	2		6,054	$	-	$	(983	)	$	5,071
As of December 31, 2021:
Money Market	1		29,876	$	-	$	-		$	29,876
Commercial paper	2		2,248	$	-	$	-		$	2,248
Bonds	2		40,236	$	97	$	(37	)	$	40,296
Mutual funds	1		558	$	1	$	-		$	559
Equity investments	2		5,675	$	-	$	(207	)	$	5,468

The carrying value of our investments is reviewed quarterly for changes in circumstances or the occurrence of events that suggests an investment may not be fully recoverable. The bonds represent investments in various issuers at June 30, 2022. The unrealized losses for some of these bond investments reflect changes in interest rates following their acquisition. As of June 30, 2022, we had six bond investments in a loss position for more than 12 months.

At June 30, 2022, the length of time until maturity of the commercial paper we owned ranged from less than a month to six months and the length of time to maturity for the bonds ranged from less than a month to 42 months.

As of June 30, 2022, there were expenditures of $2.4 million related to property, plant, and equipment included in our accounts payable and accrued liabilities balance.

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Patents and Licenses

6 Months Ended

Jun. 30, 2022

Patents and Licenses

5- Patents And Licenses

(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):

June 30, 2022						December 31, 2021
Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization
	15.67	$	13,840	$	12,598		15.67	$	13,840	$	12,538

Aggregated amortization expense for patents and licenses was $30 thousand in each of the three-month periods ended June 30, 2022 and 2021 and $60 thousand in each of the six month periods ended June 30, 2022 and 2021.

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

2023	$	113
2024	$	113
2025	$	112
2026	$	112
2027	$	108

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Revenues

6 Months Ended

Jun. 30, 2022

Revenues

6- Revenues

(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 revenue by geographic area, based on shipping destination, for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
United States	$	29,346	$	24,649	$	56,341	$	46,687
European Union		8,142		7,987		17,479		15,751
All other regions		11,394		10,057		22,200		19,424
Total	$	48,882	$	42,693	$	96,020	$	81,862

A summary of revenue by product line for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Fluid Delivery	$	21,556	$	20,920	$	45,670	$	39,995
Cardiovascular		18,082		13,157		33,385		25,987
Ophthalmology		1,804		2,102		2,888		3,796
Other		7,440		6,514		14,077		12,084
Total	$	48,882	$	42,693	$	96,020	$	81,862

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. We 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.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2022

Recent Accounting Pronouncements

7- Recent Accounting Pronouncements

(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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Inventories (Tables)

6 Months Ended

Jun. 30, 2022

Inventories

Schedule Of Inventories

	June 30,		December 31,
	2022		2021
Raw materials	$	26,888	$	23,733
Work in process		11,591		9,571
Finished goods		15,802		17,474
Total inventories	$	54,281	$	50,778

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Income Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Income Per Share

Schedule Of Computation Of Basic And Diluted Income Per Share

	Three Months ended June 30,				Six Months ended June 30,
	2022		2021		2022		2021
	(in thousands, except per share amounts)
Net income	$	9,348	$	8,925	$	17,847	$	16,651
Weighted average basic shares outstanding		1,794		1,826		1,796		1,826
Add: Effect of dilutive securities		4		2		4		4
Weighted average diluted shares outstanding		1,798		1,828		1,800		1,830
Earnings per share:
Basic	$	5.21	$	4.89	$	9.94	$	9.12
Diluted	$	5.20	$	4.88	$	9.91	$	9.10

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Investments (Tables)

6 Months Ended

Jun. 30, 2022

Investments

Schedule Of Cash And Cash Equivalents Andshort And Long-term Investments

	June 30,  2022			December 31, 2021
Cash and cash equivalents:
Money market funds	$	6,979		$	29,876
Commercial paper		7,841			-
Cash deposits		1,617			2,388
Total cash and cash equivalents	$	16,437		$	32,264
Short-term investments:
Commercial paper (held-to-maturity)	$	20,495		$	2,248
Bonds (held-to-maturity)		13,418			26,831
Equity securities (available for sale)		243			-
Allowance for credit losses		(10	)		(20	)
Total short-term investments	$	34,146		$	29,059
Long-term investments:
Bonds (held-to-maturity)	$	10,586		$	13,405
Equity securities (available for sale)		4,828			5,468
Mutual funds (available for sale)		385			559
Allowance for credit losses		(5	)		(9	)
Total long-term investments	$	15,794		$	19,423
Total cash, cash equivalents and short and long-term investments	$	66,377		$	80,746

Schedule Of Investments, Held-to-maturity Securities

Credit Quality Indicators	Fed Govt. Bonds/Notes		Municipal Bonds		Corporate Bonds		Totals
AAA/AA/A	$	2,243	$	630	$	8,547	$	11,420
BBB/BB		-		-		12,585		12,585
TOTAL	$	2,243	$	630	$	21,132	$	24,005

Schedule Of Gross Unrealized Gains And Losses On Investments

				Gross Unrealized
	Level	Cost		Gains		Losses			Fair Value
As of June 30, 2022:
Money market	1		6,979	$	-	$	-		$	6,979
Commercial paper	2		28,337	$	-	$	(37	)	$	28,300
Bonds	2		24,005	$	2	$	(275	)	$	23,732
Mutual funds	1		476	$	-	$	(91	)	$	385
Equity investments	2		6,054	$	-	$	(983	)	$	5,071
As of December 31, 2021:
Money Market	1		29,876	$	-	$	-		$	29,876
Commercial paper	2		2,248	$	-	$	-		$	2,248
Bonds	2		40,236	$	97	$	(37	)	$	40,296
Mutual funds	1		558	$	1	$	-		$	559
Equity investments	2		5,675	$	-	$	(207	)	$	5,468

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Patents and Licenses (Tables)

6 Months Ended

Jun. 30, 2022

Patents and Licenses

Schedule Of Patents And Licenses

June 30, 2022						December 31, 2021
Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Original Life (years)		Gross Carrying Amount		Accumulated Amortization
	15.67	$	13,840	$	12,598		15.67	$	13,840	$	12,538

Schedule Of Estimated Future Amortization Expense

2023	$	113
2024	$	113
2025	$	112
2026	$	112
2027	$	108

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Revenues (Tables)

6 Months Ended

Jun. 30, 2022

Revenues (Tables)

Schedule Of Revenues By Geographic Area

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
United States	$	29,346	$	24,649	$	56,341	$	46,687
European Union		8,142		7,987		17,479		15,751
All other regions		11,394		10,057		22,200		19,424
Total	$	48,882	$	42,693	$	96,020	$	81,862

Schedule Of Revenues By Product

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Fluid Delivery	$	21,556	$	20,920	$	45,670	$	39,995
Cardiovascular		18,082		13,157		33,385		25,987
Ophthalmology		1,804		2,102		2,888		3,796
Other		7,440		6,514		14,077		12,084
Total	$	48,882	$	42,693	$	96,020	$	81,862

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Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventories
Raw Material	$ 26,888	$ 23,733
Work In Process	11,591	9,571
Finished Goods	15,802	17,474
Total Inventories	$ 54,281	$ 50,778

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Income per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Per Share
Net Income	$ 9,348	$ 8,925	$ 17,847	$ 16,651
Weighted Average Basic Shares Outstanding	1,794	1,826	1,796	1,826
Add: Effect Of Dilutive Securities	4	2	4	4
Weighted Average Diluted Shares Outstanding	1,798	1,828	1,800	1,830
Earnings Per Share:
Basic	$ 5.21	$ 4.89	$ 9.94	$ 9.12
Diluted	$ 5.20	$ 4.88	$ 9.91	$ 9.10

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Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Cash And Cash Equivalents
Money Market Funds	$ 6,979	$ 29,876
Commercial Paper	7,841	0
Cash Deposits	1,617	2,388
Total Cash And Cash Equivalents	16,437	32,264	$ 17,070	$ 22,450
Short-term Investments
Commercial Paper (held-to-maturity)	20,495	2,248
Bonds (held-to-maturity)	13,418	26,831
Equity Securities (available For Sale)	243	0
Allowance For Credit Losses	(10)	(20)
Total Short-term Investments	34,146	29,059
Long-term Investments
Bonds (held-to-maturity)	10,586	13,405
Equity Securities (available For Sale)	4,828	5,468
Mutual Funds (available For Sale)	385	559
Allowance For Credit Losses	(5)	(9)
Total Long-term Investments	15,794	19,423
Total Cash, Cash Equivalents And Short And Long-term Investments	$ 66,377	$ 80,746

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Investments (Details 1) $ in Thousands	Jun. 30, 2022 USD ($)
Debt Securities, Held-to-maturity	$ 24,005
AAA /AA/A [Member]
Debt Securities, Held-to-maturity	11,420
BBB/BB [Member]
Debt Securities, Held-to-maturity	12,585
Fed Govt. Bonds/Notes [Member]
Debt Securities, Held-to-maturity	2,243
Fed Govt. Bonds/Notes [Member] | AAA /AA/A [Member]
Debt Securities, Held-to-maturity	2,243
Fed Govt. Bonds/Notes [Member] | BBB/BB [Member]
Debt Securities, Held-to-maturity	0
Municipal Bonds [Member]
Debt Securities, Held-to-maturity	630
Municipal Bonds [Member] | AAA /AA/A [Member]
Debt Securities, Held-to-maturity	630
Municipal Bonds [Member] | BBB/BB [Member]
Debt Securities, Held-to-maturity	0
Corporate Bonds [Member]
Debt Securities, Held-to-maturity	21,132
Corporate Bonds [Member] | AAA /AA/A [Member]
Debt Securities, Held-to-maturity	8,547
Corporate Bonds [Member] | BBB/BB [Member]
Debt Securities, Held-to-maturity	$ 12,585

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Investments (Details 2) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Securities, Held-to-maturity	$ 24,005
Money Market Funds [Member]
Debt Securities, Held-to-maturity	6,979	$ 29,876
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Gross Unrealized Fair Value	6,979	29,876
Commercial Paper [Member]
Debt Securities, Held-to-maturity	28,337	2,248
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(37)	0
Gross Unrealized Fair Value	28,300	2,248
Bonds [Member]
Debt Securities, Held-to-maturity	24,005	40,236
Gross Unrealized Gains	2	97
Gross Unrealized Losses	(275)	(37)
Gross Unrealized Fair Value	23,732	40,296
Mutual funds (available for sale) [Member]
Debt Securities, Held-to-maturity	476	558
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(91)	0
Gross Unrealized Fair Value	385	559
Equity investments [Member]
Debt Securities, Held-to-maturity	6,054	5,675
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(983)	(207)
Gross Unrealized Fair Value	$ 5,071	$ 5,468

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Investments (Details Narrative) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Allowance For Credit Losses Related To Long Term Investments	$ 2
Securities Maturity, Description	less than a month to 42 months
Allowance For Credit Losses Related To Short Term Investments	$ 3
Accounts Payable And Accrued Liabilities [Member]
Expenditures to property, plant, and equipment	$ 2,400

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Patents and Licenses (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Patents and Licenses
Weighted Average Original Life (years)	15 years 8 months 1 day	15 years 8 months 1 day
Gross Carrying Amount	$ 13,840	$ 13,840
Accumulated Amortization	$ 12,598	$ 12,538

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Patents and Licenses (Details 1) $ in Thousands	Dec. 31, 2021 USD ($)
Patents and Licenses
2023	$ 113
2024	113
2025	112
2026	112
2027	$ 108

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Patents and Licenses (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Patents and Licenses
Aggregate Amortization Expense	$ 30	$ 60

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Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Total Revenues	$ 48,882	$ 42,693	$ 96,020	$ 81,862
European Union [Member]
Total Revenues	8,142	7,987	17,479	15,751
All other regions [Member]
Total Revenues	11,394	10,057	22,200	19,424
United States [Member]
Total Revenues	$ 29,346	$ 24,649	$ 56,341	$ 46,687

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Revenues (Details 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Total Revenues	$ 48,882	$ 42,693	$ 96,020	$ 81,862
Fluid Delivery [Member]
Total Revenues	21,556	20,920	45,670	39,995
Cardiovascular [Member]
Total Revenues	18,082	13,157	33,385	25,987
Ophthalmology [Member]
Total Revenues	1,804	2,102	2,888	3,796
Other [Member]
Total Revenues	$ 7,440	$ 6,514	$ 14,077	$ 12,084