What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-24 compared with 2020-03-04 · 150 added, 128 removed, 156 unchanged (64% of the section changed)

2 unchanged sentences

We could also be affected by risks that we currently are not aware of or that we currently do not consider material to our business.

We are subject to risks related to public health crises or future outbreaks of health crises or other adverse public health developments such as the global pandemic associated with the 2019 novel coronavirus (COVID-19).

As a global healthcare solutions company, we are impacted by public health crises such as the global pandemic associated with COVID-19.

The outbreak has significantly increased uncertainty and unpredictability of global economic conditions and the demand for and supply of raw materials and finished goods required for our operations.

In addition, public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions and the adoption of remote working, have impacted our operations.

In these challenging and dynamic circumstances, we continue to work to protect our teammates and the public, maintain business continuity and sustain our operations, including ensuring the safety and protection of the people who work in our production and distribution centers across the world, many of whom support the manufacturing and delivery of products that are critical in response to the global pandemic.

We may restrict the operations of our production and distribution centers if we deem it necessary or if recommended or mandated by governmental authorities which would have an adverse impact on us.

There is a risk that revenues will decrease ultimately resulting in less cash flow, we may see longer duration in receivables collection, and the need to expedite payments to important suppliers may grow.

COVID-19 has impacted and may further impact our supply chains relative to global demand for our facial protection, nitrile gloves, and protective apparel products.

COVID-19 has also affected and may further affect the ability of suppliers and vendors to provide products and services to us or to do so at acceptable quality levels or prices.

Some of these factors could increase the demand for our products, while others could decrease demand or make it more difficult for us to serve customers.

For example, the significant reduction in elective surgical procedures, which began mid-March of 2020, resulted in a material negative impact on our revenue for 2020.

Any worsening of the COVID-19 pandemic or future outbreaks could result in similar reductions in elective surgical procedures or otherwise reduce demand for our products, any of which could have a material negative impact on our revenues and profit for future periods.

Although we have experienced significant growth in sales volumes for certain of our products (such as PPE) during the COVID-19 pandemic, as well as improved productivity and manufacturing output, there can be no assurance that such growth rates, increased sales volumes or other improvements will be maintained during or following the COVID-19 pandemic.

We may also see a decline in such growth rates and sales volumes when the impact of the pandemic subsides and the healthcare system returns to a more normalized state.

In particular, demand for such products may also decline as government-sponsored COVID-19 response stimulus, relief and production initiatives, such as those under the Defense Production Act (DPA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act, expire.

An accelerated shift of demand away from certain of our products and services could also adversely impact our revenues and profit margins.

Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates.

For example, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital.

Due to the speed with which the situation is developing and the uncertainty of its duration, any future outbreaks, similar pandemics, the timing of recovery, travel restrictions, business closures or business disruptions, a recession, depression or other sustained adverse market event

resulting from the spread of the COVID-19 and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, we are not able at this time to predict the extent to which the COVID-19 pandemic, or any future outbreaks or similar pandemics, may have a material effect on our financial or operational results.

However, the following adverse risks exist:

• Actions by the United States government or other foreign government could affect our business.

These actions include purchasing products that we make or sell, imposing new product standards or allowing the use of alternative products, instituting regulatory requirements to purchase only locally manufactured products, exercising control over manufacturing or distribution operations, including use of the DPA, taking trade actions including the imposition or removal of tariffs or import / export controls, subsidizing the supply of products, or other actions;

• Quarantine decisions by public or private entities may influence our ability to operate or our ability to ship or receive products.

For example, if shipping companies cease or reduce land or sea freight channels, raw material and finished good deliveries may be slowed or stopped;

• Our customers may change their payment patterns or lose their ability to pay invoices, which could have a material adverse impact on our cash flow;

• Our suppliers may increase pricing or impose new purchasing requirements, such as minimum purchase quantities or pay-in-advance payment terms, which could have a material adverse impact on our cash flow;

• Raw materials or finished goods that we require for our operations may not be available, or pricing for such items may increase beyond the willingness of our customers to pay;

• New competitors may enter our market, including both small and large scale manufacturers;

• COVID-19 illness among our workers in manufacturing or distribution operations could impact our operations or compel the closure of one or more facilities for an unknown period of time.

Labor relations in our facilities related to COVID-19 could also negatively impact our operations;

• We may invest in additional manufacturing capacity for which demand slows in the future, which could have a material adverse impact on our cash flow;

• Technology infrastructure failures could materially inhibit our operations that currently include a substantial portion of remote work.

For example, voice or data line failures resulting from natural, manmade or cyber-attack could impair our ability to operate.

We have incurred additional costs to ensure we meet the needs of our customers, including increasing our workforce in order to produce or distribute certain essential products for our customers, providing personal protective equipment to our workforce, incremental shipping and transportation costs, incremental technology costs, and additional cleaning costs throughout our facilities.

We expect to continue to incur additional costs, which may be significant as we continue to implement operational changes in response to this pandemic, any future outbreaks or similar pandemics.

Further, our management is focused on mitigating COVID-19, which has required and will continue to require, a large investment of time and resources across our enterprise and will delay other value added services and strategic initiatives.

Additionally, some of our teammates are currently working remotely.

An extended period of remote work arrangements, and any worsening of the COVID-19 pandemic, or future outbreaks, could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

If we do not respond appropriately to the pandemic, any future outbreaks or similar pandemics, or if customers do not perceive our response to be adequate for the United States or our international markets, we could suffer damage to our reputation and our brands, which could adversely affect our business.

The impact of COVID-19 may also exacerbate other risks discussed in Item 1A.

Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us.

This situation is changing rapidly and additional impacts may arise that we are not aware of currently.

We face competition and accelerating pricing pressure.

The medical/surgical supply distribution industry in the United States is highly competitive and characterized by pricing pressure which accelerated in 2017 and has continued and put further margin pressure on our business.

We expect this margin pressure to continue.

The medical/surgical supply distribution industry in the United States is highly competitive and characterized by pricing and margin pressure for our business.

We compete with other national distributors and a number of regional and local distributors, as well as customer self-distribution models and, to a lesser extent, certain outsourced logistics companies.

1 unchanged sentence

Our success is dependent on the ability to compete on the above factors, while managing internal costs and expenses.

These competitive pressures could have a material adverse effect on our results of operations and financial condition.

In addition, in recent years, the healthcare industry in the United States has experienced and continues to experience significant consolidation in response to cost containment legislation and general market pressures to reduce costs.

This consolidation of our customers and suppliers generally gives them greater bargaining power to reduce the pricing available to them, which may adversely impact our results of operations and financial condition.

The healthcare outsourced logistics business in the United States is characterized by intense competition from a number of international, regional and local companies, including large conventional outsourced logistics companies and internet based non-traditional competitors that are moving into the healthcare and pharmaceutical distribution business.

This competitive market places continuous pricing pressure on us from customers and manufacturers that could adversely affect our results of operations and financial condition if we are unable to continue to retain and/or grow our revenues and to offset margin reductions caused by pricing pressures through cost control measures.

We have significant concentration in and dependence on certain healthcare provider customers and Group Purchasing Organizations.

In 2019, our top ten customers in the United States represented approximately 25% of our consolidated net revenue.

These competitive pressures could have a material adverse effect on our results of operations and financial condition.In addition, in recent years, the healthcare industry in the United States has experienced and continues to experience significant consolidation in response to cost containment legislation and general market pressures to reduce costs.

This consolidation of our

customers and suppliers generally gives them greater bargaining power to reduce the pricing available to them, which may adversely impact our results of operations and financial condition.

We have concentration in and dependence on certain healthcare provider customers and Group Purchasing Organizations.

In 2020 , although no single customer accounted for 5% of our consolidated net revenue, our top ten customers in the United States represented approximately 21% of our consolidated net revenue.

In addition, in 2020, approximately 72% of our consolidated net revenue was from sales to member hospitals under contract with our largest group purchasing organizations (GPO):

1 unchanged sentence

We could lose a significant healthcare provider customer or GPO relationship if an existing contract expires without being replaced or is terminated by the customer or GPO prior to its expiration.

Although the termination of our relationship with a given GPO would not necessarily result in the loss of all of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual healthcare provider customer relationship, could have a material adverse effect on our results of operations and financial condition.

Although the termination of our relationship with a given GPO would not necessarily result in the loss of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual healthcare provider customer relationship, could have a material adverse effect on our results of operations and financial condition.

Our operating income is dependent on certain significant domestic suppliers.

1 unchanged sentence

In 2020, sales of products of our ten largest domestic suppliers accounted for approximately 41% of consolidated net revenue.

In the Global Solutions segment, no sales of products of any individual suppliers exceeded 10% of our consolidated net revenue for 2019.

No sales of products of any individual suppliers exceeded 10% of our consolidated net revenue for 2020.

We rely on suppliers to provide agreeable purchasing and delivery terms and performance incentives.

Our ability to sustain adequate operating income has been, and will continue to be, dependent upon our ability to obtain favorable terms and incentives from suppliers, as well as suppliers continuing use of third-party distributors to

sell and deliver their products.

A change in terms by a significant supplier, the decision of such a supplier to distribute its products directly to healthcare providers rather than through third-party distributors, or a key supplier’s failure to sell and deliver us products necessary to meet our customers’ demands could have a material adverse effect on our results of operations and financial condition.

An interruption in the ability of our business to manufacture products may have a material adverse effect on our business.

We manufacture the majority of our products in nine facilities:

four in the United States, one each in Thailand, Ireland and Honduras and two in Mexico.

If one or more of these facilities experience damage, or if these manufacturing capabilities are otherwise limited or stopped due to quality, regulatory or other reasons, including pandemic, natural disasters, geopolitical events, prolonged power or equipment failures, labor disputes or unsuccessful imports/exports of products as well as supply chain transportation disruptions, it may not be possible to timely manufacture the relevant products at required levels or at all.

A reduction or interruption in any of these manufacturing processes could have a material adverse effect on our business, results of operations, financial condition and cash flows.

An inability to obtain key components, raw materials or manufactured products from third parties may have a material adverse effect on our Global Products segment.

Our Global Products segment depends on the availability of various components, raw materials and manufactured products supplied by others for its operations.

If the capabilities of suppliers and third-party manufacturers are limited or stopped, due to quality, regulatory or other reasons, including pandemic, natural disasters, geopolitical events, prolonged power or equipment failures, labor disputes or unsuccessful imports/exports of products as well as supply chain transportation disruptions, or other reasons, that could negatively impact our ability to manufacture or deliver our products and could lead to exposure to regulatory actions.

Further, for quality assurance or cost effectiveness, we have purchased from sole suppliers certain components and raw materials such as polymers used in our products, and we expect to continue to purchase these components and raw materials from these sole suppliers.

Although there are other sources in the market place for these items, we may not be able to quickly establish additional or replacement sources for certain components or materials due to regulations and requirements of the U.S.

Food and Drug Administration (FDA) and other regulatory authorities regarding the manufacture of our products.

The loss of any sole supplier or any sustained supply interruption that affects the ability to manufacture or deliver our products in a timely or cost effective manner could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our Global Products segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations.

Our Global Products segment relies on product inputs, such as polypropylene and nitrile, as well as other commodities, in the manufacture of its products.

Prices of these commodities are volatile and have fluctuated significantly in recent years, which may contribute to fluctuations in our results of operations.

The ability to hedge commodity prices is limited.

Furthermore, due to competitive dynamics, we may be unable to pass along commodity-driven cost increases through higher prices.

If we cannot fully offset cost increases through other cost reductions, or recover these costs through price increases or

surcharges, we could experience lower margins and profitability which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our results of operations may suffer upon the bankruptcy, insolvency, or other credit failure of a customer that has a substantial amount owed to us.

28 unchanged sentences

We may not be able to refinance, extend or repay our substantial indebtedness which would have a material adverse affect on our financial condition.

Our 2021 Notes and our 2024 Notes become due and payable on September 2021 and December 2024, respectively.

We anticipate that we will need to raise capital in order to repay the 2021 Notes and/or the 2024 Notes.

As of December 31, 2019, we owed $238 million under our 2021 Notes and $275 million under our 2024 Notes.

If we are unable to raise sufficient capital

to repay these obligations at maturity and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default.

Additionally, our Credit Agreement has a “springing maturity date” with respect to the revolving loans and the Term A loans and the Term B loans.

If as of the date 91 days prior to the maturity date of our 2021 Notes all outstanding amounts under the 2021 Notes have not been paid in full, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility and the Term A loans shall be the date that is 91 days prior to the maturity date of the 2021 Notes.

Likewise, if as of the date 91 days prior to the maturity date of our 2024 Notes, all outstanding amounts under the 2024 Notes have not been paid in full, the Termination Date of the Term B loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.

We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations.

Upon a default, our lenders would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets.

Our 2024 Notes become due and payable in December 2024.

We may need to raise capital in order to repay the 2024 Notes.

As of December 31, 2020, we owed $246 million in principal under our 2024 Notes.

If we are unable to raise sufficient capital to repay this obligation at maturity and we are otherwise unable to extend the maturity dates or refinance this obligation, we would be in default.

Additionally, our Credit Agreement has a “springing maturity date” with respect to the Term B Loan.

If as of the date 91 days prior to the maturity date of our 2024 Notes, all outstanding amounts under the 2024 Notes have not been paid in full, the Termination Date of the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.

We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay this obligation or that we will be able to extend the maturity dates or otherwise refinance this obligation.

Upon a default, our lenders would have

the right to exercise its rights and remedies to collect, which would include foreclosing on our assets.

Accordingly, a default would have a material adverse effect on our business and financial condition.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Certain borrowings under our credit agreements bear interest at variable rates and expose us to interest rate risk.

Certain borrowings under our Credit Agreement and Receivables Securitization Program bear interest at variable rates and expose us to interest rate risk.

If interest rates were to increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our earnings and cash flows will correspondingly decrease.

Our credit facilities and our existing notes have restrictive covenants that could limit our financial flexibility.

The indentures that govern our existing notes and our credit facilities contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests.

Our Credit Agreement, including our Term Loans and Revolver, Receivables Securitization Program, as well as the indentures that govern our existing senior notes, contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests.

Our credit facilities and the indentures governing our existing notes include restrictions that, among other things, limit our ability to:

incur indebtedness;

engage in mergers, consolidations and liquidations;

make asset dispositions, restricted payments and investments;

engage in acquisitions, mergers, consolidations and liquidations;

use of proceeds from asset dispositions for general corporate purposes, restricted payments, or investments;

enter into transactions with affiliates;

make capital expenditures;

and amend, modify or prepay certain indebtedness.

Under our credit facilities, we are subject to financial covenants that require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition and limit our capital expenditures.

Our failure to comply with these restrictions or covenants could result in a default under the agreements governing the relevant indebtedness.

If a default under the credit facilities and the indentures governing our existing notes is not cured or waived, such default could result in the acceleration of debt or other payment obligations under our debt or other agreements that contain cross-acceleration, cross-default or similar provisions, which could require us to repurchase or pay debt or other obligations prior to the date it is otherwise due.

Our ability to comply with covenants contained in the credit facilities and the indentures governing our existing notes and any other debt or other agreements to which we are or may become a party, may be affected by events beyond our control, including prevailing economic, financial and industry conditions.

Our ability to comply with covenants contained in the credit facilities, including the Credit Agreement and Receivables Securitization Program, and the indentures governing our existing senior notes and any other debt or other agreements to which we are or may become a party, may be affected by events beyond our control, including prevailing economic, financial and industry conditions.

Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

An interruption in the ability of our business to manufacture products may have a material adverse effect on our business.

We manufacture the majority of our products in eight facilities, three in the United States, one each in Thailand, Ireland and Honduras and two in Mexico.

If one or more of these facilities experience damage, or if these manufacturing capabilities are otherwise limited or stopped due to quality, regulatory or other reasons, including natural disasters, geopolitical events, prolonged power or equipment failures, labor disputes or unsuccessful imports/exports of products as well as supply chain transportation disruptions, it may not be possible to timely manufacture the relevant products at required levels or at all.

A reduction or interruption in any of these manufacturing processes could have a material adverse effect on our business, results of operations, financial condition and cash flows.

An inability to obtain key components, raw materials or manufactured products from third parties may have a material adverse effect on our Global Products segment.

Our Global Products segment depends on the availability of various components, raw materials and manufactured products supplied by others for its operations.

If the capabilities of suppliers and third-party manufacturers are limited or stopped, due to quality, regulatory or other reasons, that could negatively impact our ability to manufacture or deliver our

products and could lead to exposure to regulatory actions.

Food and Drug Administration (FDA) and other regulatory authorities regarding the manufacture of our products.

We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.

15 unchanged sentences

The regulatory clearance and approval process may result in, among other things, delayed, if at all, realization of product net sales, substantial additional costs and limitations on the types of products we may bring to market or their indicated uses, any one of which could have a material adverse effect on our results of operations, financial condition and cash flows.

Our inability to adequately integrate acquisitions could have a material adverse effect on our operations.

In connection with our growth strategy, we from time to time acquire other businesses, including the Halyard acquisition (Halyard) and Byram Healthcare (Byram), that we believe will expand or complement our existing businesses and operations.

The integration of acquisitions involves a number of significant risks, which may include but are not limited to, the following:

Expenses and difficulties in the transition and integration of operations and systems;

Retention of current customers and the ability to obtain new customers;

The assimilation and retention of personnel, including management personnel, in the acquired businesses;

Accounting, tax, regulatory and compliance issues that could arise;

Difficulties in implementing uniform controls, procedures and policies in our acquired companies;

Unanticipated expenses incurred or charges to earnings based on unknown circumstances or liabilities;

Failure to realize the synergies and other benefits we expect from the acquisition or at the pace we anticipate;

General economic conditions in the markets in which the acquired businesses operate;

Difficulties encountered in conducting business in markets where we have limited experience and expertise;

Failure to fully integrate information technology;

Inadequate indemnification from the seller;

Failure of the seller to perform under any transition services agreement.

If we are unable to successfully complete and integrate our strategic acquisitions in a timely manner, our business, growth strategies and results of operations could be adversely affected.

Our Global Products segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations.

Our Global Products Segment relies on product inputs, such as polypropylene and nitrile, as well as other commodities, in the manufacture of its products.

Prices of these commodities are volatile and have fluctuated significantly in recent years, which may contribute to fluctuations in our results of operations.

The ability to hedge commodity prices is limited.

Furthermore, due to competitive dynamics, we may be unable to pass along commodity-driven cost increases through higher prices.

If we cannot fully offset cost increases through other cost reductions, or recover these costs through price increases or surcharges, we could experience lower margins and profitability which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our business may be adversely affected if we are unable to adequately establish, maintain, protect and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of such rights.

Our intellectual property is an important part of our business.

Failure to adequately protect our intellectual property rights could result in our competitors offering similar products and services, potentially resulting in the loss of our competitive advantage and a decrease in our revenue, which would adversely affect our business prospects, financial condition and results of operations.

Our success depends in part on our ability to protect our proprietary rights and intellectual property.

We rely on a combination of intellectual property rights, such as patents, trademarks, copyrights, trade secrets (including know-how) and domain names, in addition to employee and third-party confidentiality agreements, intellectual property licenses and other contractual rights, to establish, maintain, protect and enforce our rights in our technology, proprietary information and processes.

For example, we rely on trademark protection to protect our rights to various marks as well as distinctive logos and other marks associated with our products and services.

Furthermore, intellectual property laws and our procedures and restrictions provide only limited protection and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated.

If we fail to protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete.

Other parties may also independently develop technologies, products and services that are substantially similar or superior to ours.

We also may be forced to bring claims against third parties.

However, the measures we take to protect our intellectual property from unauthorized use by others may not be effective, and there can be no assurance that our intellectual property rights will be sufficient to protect against others offering technologies, products or services that are substantially similar or superior to ours and that compete with our business.

Our management’s attention may be diverted by these attempts, and we may need to use funds in litigation to protect our proprietary rights against any infringement, misappropriation or other violation.

We may become subject to litigation brought by third parties claiming infringement, misappropriation or other violation by us of their intellectual property rights.

Our commercial success depends in part on avoiding infringement, misappropriation or other violations of the intellectual property and proprietary rights of third parties.

However, we may become party to disputes from time to time over rights and obligations concerning intellectual property held by third parties.

For example, third parties may allege that we have infringed upon or not obtained sufficient rights in the technologies used in our products and services.

We cannot assure that we are not infringing or violating, and have not infringed or violated, any third-party intellectual property rights, or that we will not be held to have done so or be accused of doing so in the future.

Any claim that we have violated intellectual property or other proprietary rights of third parties, with or without merit, and whether or not it results in litigation, is settled out of court or is determined in our favor, could be time consuming and costly to address and resolve, and could divert the time and attention of management and technical personnel from our business.

Our liability insurance may not cover potential claims of this type adequately or at all.

Any of these events could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our business and operations depend on the proper functioning of critical facilities, supply chain and distribution networks.

Damage or disruption to our supply chain and distribution capabilities due to weather, natural disaster, fire, terrorism, pandemic, strikes, the financial and/or operational instability of key suppliers, geo-political events or other reasons could impair our ability to distribute products and conduct our business.

Damage or disruption to our supply chain and distribution capabilities due to pandemic, weather, natural disaster, fire, terrorism, strikes, the financial and/or operational instability of key suppliers, geo-political events or other reasons could impair our ability to distribute products and conduct our business.

To the extent that we are unable, or it is not financially feasible, to mitigate the likelihood or potential impact of such events, or to manage effectively such events if they occur, there could be a material adverse effect on our business, financial condition or results of operations.

For example, in December 2019, a strain of the novel coronavirus (COVID-19) was reported to have surfaced in Wuhan, China and additional cases have been reported globally.

The coronavirus has caused supply chain disruptions for certain manufacturers of medical products and an increased demand for these products resulting in the implementation of product allocations by certain manufacturers.

At this point, the extent to which the coronavirus may impact our results is uncertain.

For example, COVID-19 has caused supply

chain disruptions for certain manufacturers of medical products and an increased demand for these products resulting in the implementation of product allocations by certain manufacturers.

Our operations depend on the proper functioning of information systems, and our business could be adversely affected if we experience a cyber-attack or other systems breach .

3 unchanged sentences

Our business and results of operations may be materially adversely affected if systems are interrupted or damaged by unforeseen events (including cyber-attacks) or fail to operate for an extended period of time, or if we fail to appropriately enhance our systems to support growth and strategic initiatives.

Our distribution and outsourced logistics services rely on the performance and upkeep of our information systems.

If our information systems are interrupted, damaged or fail to operate, our customers could be negatively impacted which could have a material adverse effect on our results of operations.

Our investment in Fusion5 may continue to incur losses.

Fusion5 is a new enterprise with limited operating history.

In 2018, Fusion5 began managing bundled payment episodes under the BCPI-A program.

As of December 31, 2019, Fusion5 had incurred losses exceeding the revenue generated.

Due to the nature of the BPCI-A program and Fusion5’s contracts with the Centers for Medicare and Medicaid Services (CMS) and healthcare providers, the timing of payments to Fusion5 may differ from our expectations.

Additionally, under certain of its contracts with healthcare providers, generally referred to as “risk-share” or “gain-share” contracts, Fusion5 takes financial risk for a portion of costs of medical procedures delivered by its customers.

If these costs exceed, in the aggregate, fees paid to

or savings generated by Fusion5 under its contracts with customers, Fusion5 may continue to incur losses.

Further, changes to the BPCI-A program by CMS with respect to payment timing could have a material adverse effect on our financial results.

We are subject to stringent regulatory and licensing requirements.

22 unchanged sentences

The Corporate Integrity Agreement provides that Byram shall, among other things, establish and maintain a compliance program, including a corporate compliance officer and committee, a code of conduct, comprehensive compliance policies and procedures, training and monitoring, a review process for certain arrangements between Byram and referral sources, a compliance hotline, an open door policy and a disciplinary process for compliance violations.

The Corporate Integrity Agreement further provides that Byram shall provide periodic reports to the OIG, complete certain regular certifications and engage an Independent Review Organization to perform reviews of certain arrangements between Byram and referral sources.

The Corporate Integrity

Agreement further provides that Byram shall provide periodic reports to the OIG, complete certain regular certifications and engage an Independent Review Organization to perform reviews of certain arrangements between Byram and referral sources.

Failing to meet the Corporate Integrity Agreement obligations could have material adverse consequences for Byram including monetary penalties for each instance of non-compliance.

3 unchanged sentences

As a result, we are subject to the tax laws and regulations of the United States federal, state and local governments and of various foreign jurisdictions.

From time to time, legislative and regulatory initiatives are proposed, including but not limited to proposals to repeal LIFO (last-in, first-out) treatment of

inventory in the United States or changes in tax accounting methods for inventory, import tariffs and taxes, or other tax items.

From time to time, legislative and regulatory initiatives are proposed, including but not limited to proposals to repeal LIFO (last-in, first-out) treatment of inventory in the United States or changes in tax accounting methods for inventory, import tariffs and taxes, or other tax items.

In addition, a new presidential administration and a new Congress recently took office in the United States.

It is not yet known what changes Congress, working with the President, will make to existing tax laws and how those changes (if any) will affect the economy, our business, results of operations, financial condition and cash flows.

These and other changes in tax laws and regulations could adversely affect our tax positions, tax rate or cash payments for taxes.

12 unchanged sentences

These and other possible consequences of financial and economic decline could have a material adverse effect on our business, results of operations and financial condition.

We operate within the European Union and therefore may be affected by the United Kingdom's withdrawal from the European Union.

We operate within the European Union (the E.U.).

The United Kingdom's (the U.K.) exit from the E.U.

(commonly referred to as Brexit) and the resulting significant change to the U.K.’s relationship with the E.U.

and with countries outside the E.U.

(and the laws, regulations and trade deals impacting business conducted between them) could disrupt the overall economic growth or stability of the U.K.

and otherwise negatively impact our operations in Europe.

withdrew from the European Union, effective January 31, 2020, and is now in a period of transition.

All existing trading arrangements will be maintained through December 31, 2020, the end of the transition period.

will negotiate future trading arrangements during the transition period.

An exit without a trade agreement in place would result in the United Kingdom losing access to free trade agreements for goods and services with the European Union and other countries.

To the extent new trading arrangements are negotiated, the implementation of any agreements reached, and the changes to current operations and processes resulting therefrom, could have an adverse impact on our operations.

Depending on the outcome of these negotiations, it is possible that Brexit will result in our E.U.

operations becoming subject to materially different, and potentially conflicting, laws, regulations or tariffs which could require costly new compliance initiatives or changes to legal entity structures or operating practices.

Furthermore, in the event the U.K.

leaves the E.U.

without new trade agreements, there may be additional adverse impacts on immigration and trade between the U.K.

or countries outside the E.U.

Such impacts could have an adverse effect on our business and results of operations.

The ultimate effects of Brexit on us will depend on the specific terms of any negotiated trading arrangements the U.K.

reach to provide access to each other’s respective markets.

Our continued success is substantially dependent on positive perceptions of our reputation.

One of the reasons why customers choose to do business with us and why teammates choose us as a place of employment is the reputation that we have built over many years.

To be successful in the future, the Company must continue to preserve, grow and leverage the value of our brand.

To be successful in the future, we must continue to preserve, grow and leverage the value of our brand.

Reputational value is based in large part on perceptions of subjective qualities.

6 unchanged sentences

The amount of income taxes we pay is subject to ongoing audits by U.S.

federal, state and local tax authorities and by

federal, state and local tax authorities and by non-U.S.

tax authorities.

2 unchanged sentences

If these audits result in assessments different from our reserves, our future results may include unfavorable adjustments to our tax liabilities.

Recent significant changes to our executive leadership team and any future loss of members of such team, and the resulting management transitions might harm our future operating results.

We have recently experienced significant changes to our executive leadership team.

In 2019, we named several new key leaders, including a new President & Chief Executive Officer, Executive Vice President & Chief Financial Officer, Executive Vice President & Chief Operating Officer and Executive Vice President & Chief Commercial Officer.

These types of management changes have the potential to disrupt our operations due to the operational and administrative inefficiencies, added costs, increased likelihood of turnover, and the loss of personnel with deep institutional knowledge, which could result in significant disruptions to our operations.

In addition, we must successfully integrate the new executive leadership team members within our organization in order to achieve our operating objectives, and changes in key leadership positions may temporarily affect our financial performance and results of operations as new leadership becomes familiar with our business.

Our goodwill may become impaired, which would require us to record a significant charge to earnings in accordance with generally accepted accounting principles.

2 unchanged sentences

Although we believe our assumptions and estimates are reasonable and appropriate, any changes in key assumptions, including a failure to meet business plans or other unanticipated events and circumstances such as a rise in interest rates, may affect the accuracy or validity of such estimates.

As a result of impairment tests performed during 2018, we recorded an impairment charge related to goodwill of $397.6 million.

No impairment charge was recorded in 2019.

We may be further required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill is determined, which charge could adversely affect our results of operations.

No impairment charges to goodwill were recorded in 2020 or 2019.

We may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill is determined, which charge could adversely affect our results of operations.

The market price for our common stock may be highly volatile.

2 unchanged sentences

• the publication of earnings estimates or other research reports and speculation in the press or investment community;

• the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

• changes in our industry and competitors;

• changes in government or legislation;

• changes in our board of directors or management;

• our financial condition, results of operations and cash flows and prospects;

• activism by any single large shareholder or combination of shareholders;

• lawsuits threatened or filed against us;

• any future issuances of our common stock, which may include primary offerings for cash, stock splits, issuances in connection with business acquisitions, issuances of restricted stock/units and the grant or exercise of stock options from time to time;

• trading volume of our common stock;

• general market and economic conditions;

• any outbreak or escalation of hostilities in areas where we do business;

In addition, the NYSE can experience extreme price and volume fluctuations that can be unrelated or disproportionate to the operating performance of the companies listed on NYSE.

• impact of the COVID-19 pandemic, any worsening of the COVID-19 pandemic, or future outbreaks and any future pandemics;

• the other factors discussed in Item 1A.

Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us.

In addition, the NYSE can experience price and volume fluctuations that can be unrelated or disproportionate to the operating performance of the companies listed on NYSE.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of actual operating performance.

1 unchanged sentence

This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on our business.

We cannot assure you that the proposed Movianto sale will be completed.

On January 16, 2020, we announced our intention to sell our Movianto business for cash proceeds of $133 million and

an expected completion date in the first half of 2020.

There are a number of risks and uncertainties relating to the Movianto

For example, the Movianto sale may not be completed, or may not be completed in the timeframe, on the terms or in the

manner currently anticipated, as a result of a number of factors, including, among other things, the failure of one or more of the

conditions to closing.

There can be no assurance that the conditions to closing of the Movianto sale will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the sale.

We and the Movianto business will be subject to business uncertainties while the sale is pending that could adversely affect our business and the Movianto business.

The announcement and pendency of the Movianto sale could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates.

Although we intend to take actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us and/or the Movianto business to seek to change existing business relationships.

In addition, employee retention could be negatively impacted during the pendency of the sale.

If key teammates depart because of concerns relating to the uncertainty and difficulty of the integration process, our business could be harmed.

The uncertainties related to the pending Movianto sale could have a negative impact on our ability to manage existing operations, which could adversely affect our business, financial condition and results of operations.

Additionally, investor perceptions about the terms or benefits of the Movianto sale could have a negative impact on our business and the trading prices of our securities, including the 2021 and 2024 Notes.

Our inability to adequately integrate acquisitions could have a material adverse effect on our operations.

In connection with our growth strategy, we from time to time acquire other businesses, that we believe will expand or complement our existing businesses and operations.

The integration of acquisitions involves a number of significant risks, which may include but are not limited to, the following:

• Expenses and difficulties in the transition and integration of operations and systems;

• Retention of current customers and the ability to obtain new customers;

• The assimilation and retention of personnel, including management personnel, in the acquired businesses;

• Accounting, tax, regulatory and compliance issues that could arise;

• Difficulties in implementing uniform controls, procedures and policies in our acquired companies;

• Unanticipated expenses incurred or charges to earnings based on unknown circumstances or liabilities;

• Failure to realize the synergies and other benefits we expect from the acquisition or at the pace we anticipate;

• General economic conditions in the markets in which the acquired businesses operate;

• Difficulties encountered in conducting business in markets where we have limited experience and expertise;

• Failure to fully integrate information technology;

• Inadequate indemnification from the seller;

• Failure of the seller to perform under any transition services agreement.

If we are unable to successfully complete and integrate our strategic acquisitions in a timely manner, our business, growth strategies and results of operations could be adversely affected.

Our ability to attract and retain talented and qualified teammates is critical to our success and competitiveness.

The success of our business depends on our ability to attract, engage, develop and retain qualified and experienced teammates, including key executives.

We may not be able to successfully compete for, attract, or retain qualified and experienced teammates.

Competition among potential employers might result in increased salaries, benefits or other employee-related costs, or in our failure to recruit and retain teammates.

We may experience sudden loss of key personnel due to a variety of causes, including illness, and must adequately plan for succession of key executive roles.

Teammates might not successfully transition into new roles.

Any of these risks might have a materially adverse impact on our business operations and our financial position or results of operations.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors