What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-11 compared with 2021-03-05 · 98 added, 84 removed, 273 unchanged (40% of the section changed)

5 unchanged sentences

Our financial performance depends on sales growth and increasing demand for our legacy and acquired product portfolios, and we may not be able to successfully manage the recent, and future, expansion of our operations.

Through our acquisitions of Parcus Medical and Arthrosurface in early 2020, we significantly broadened our technology and development platforms and commercialization infrastructure and expanded our addressable market from the global OA pain management market to the substantially larger joint preservation market.

Our future success depends on growth in sales of both our legacy and acquired products.

6 unchanged sentences

Implement the financial, accounting, and management systems needed to manage our expanded business and growing demand for our products.

There can be no assurance that our acquired, and future, products will achieve significant market acceptance on a timely basis, or at all.

Failure of some or all of our future products to achieve significant market acceptance, or our failure to successfully manage future growth, could have a material adverse effect on our business, financial condition, and results of operations.

There can be no assurance that our current and future, products will achieve significant market acceptance on a timely basis, or at all.

Failure of some or all of our products to achieve significant market acceptance, or our failure to successfully manage future growth, could have a material adverse effect on our business, financial condition, and results of operations.

Substantial competition could materially affect our financial performance.

We compete with many companies, including large pharmaceutical companies and large and specialized medical devices companies, across all of our product lines.

For our OA Pain Management products, our principal competitors include Sanofi Genzyme, Zimmer Biomet, Inc., Bioventus Inc., and Ferring Pharmaceuticals, as well as other companies that are commercializing or developing competitive products.

Our key competitors for our Joint Preservation and Restoration products include Arthrex, Inc., the DePuy Synthes Companies of Johnson & Johnson, Smith & Nephew PLC., Stryker Corporation, and Zimmer Biomet, Inc., as well as certain smaller organizations that focus on subsets of the larger industry, such as Catalyst OrthoScience, Treace Medical, Paragon 28 and Shoulder Innovations.

Many of these companies have substantially greater financial resources, larger research and development staffs, more extensive marketing and manufacturing organizations, and more experience in the regulatory process than us.

6 unchanged sentences

Important market makers, like group purchasing organizations and integrated delivery networks, have increased their negotiating leverage, and if these market makers demand significant price concessions or if we are excluded as a supplier by these market makers, our product revenue could be adversely impacted.

There can be no assurance that we will be able to compete against current or future competitors or that competition will not have a material adverse effect on our business, financial condition, and results of operations.

Our business may be adversely affected if consolidation in the healthcare industry leads to demand for price concessions or if we are excluded from being a supplier by a group purchasing organization or similar entity.

6 unchanged sentences

A significant portion of our revenues are derived from a small number of customers, the loss of which could materially adversely affect our business, financial condition and results of operations.

We have historically derived the majority of our revenues from a small number of customers who resell our products to end-users, and most of these customers are significantly larger companies than us.

In 2020 five customers accounted for 58% of product revenue, with DePuy Synthes Mitek Sports Medicine, part of the Johnson & Johnson Medical Companies, or Mitek, alone accounting for 49% of product revenue.

While we have substantially and successfully diversified our sales channels, including through the implementation of a direct commercial model in the United States, we expect to continue to be dependent on a small number of large customers for a substantial portion.

We have historically derived the majority of our revenues from a small number of customers who resell our products to end-users.

Most of these customers are significantly larger companies than us.

In 2021, DePuy Synthes Mitek Sports Medicine, part of the Johnson & Johnson Medical Companies, or Mitek, accounted for 45% of our revenue.

While we have started to diversify our sales channels, including through the implementation of a direct commercial model in the United States for our Joint Preservation and Restoration products, we expect to continue to be dependent on a small number of large customers for a substantial portion of our business.

The failure of key customers to purchase our products in the amounts they historically have or in amounts that we expect would seriously harm our business.

3 unchanged sentences

Any termination, change, reduction, or delay in orders could seriously harm our business, financial condition, and results of operations.

The loss of any one of our major customers or the delay of significant orders from such customers, even if only temporary, could reduce or delay our recognition of revenues, harm our reputation in the industry, and reduce our ability to accurately predict cash flow, and, as a consequence, it could seriously harm our business, financial condition, and results of operations.

The loss of any one of our major customers, the delay of significant orders from such customers or our inability to timely supply product to these customers (including due to production and shipping delays attributable to supply or staffing shortages during the ongoing COVID-19 pandemic), even if only temporary, could reduce or delay our recognition of revenues, harm our reputation in the industry, and reduce our ability to accurately predict cash flow, and, as a consequence, could seriously harm our business, financial condition, and results of operations.

We experience quarterly sales volume variation, which makes our future results difficult to predict and makes period-to-period comparisons potentially not meaningful.

We experience quarterly fluctuations in our products sales as a result of multiple factors, many of which are outside of our control.

We experience quarterly fluctuations in our product sales as a result of multiple factors, many of which are outside of our control including our arrangement with Mitek which performs the vast majority of the downstream sales and marketing activities to customers and end-users.

Therefore, we are subject to fluctuations in Mitek’s sales patterns and corresponding ordering patterns.

These quarterly fluctuations create uncertainty as to the volume of sales that we may achieve in a given period.

5 unchanged sentences

Although we believe that alternative sources for many of these and other components and raw materials that we use in our manufacturing processes are available, we cannot be certain that the supply of key raw materials will continue to be available at current levels or will be sufficient to meet our future needs.

For the manufacture of bone preserving joint technologies, we engage a single third-party organization as a contract manufacturer.

The COVID-19 pandemic has impacted, and may continue to impact, our supply chain as the companies that produce our products, product components or otherwise support our manufacturing processes, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize and store our products, are, or may be, disrupted, temporarily closed or experience worker shortages for a sustained period of time.

For example, for the manufacture of bone preserving joint technologies, we engage a single third-party organization as a contract manufacturer.

Any supply interruption could harm our ability to manufacture our products until a new source of supply is identified and qualified.

1 unchanged sentence

Our manufacturing processes involve inherent risks, and disruption could materially adversely affect our business, financial condition, and results of operations.

The operation of biomedical manufacturing plants involves many risks, including the risks of breakdown, failure, or substandard performance of equipment, the need to comply with the requirements of directives of government agencies, including the FDA, and the occurrence of natural and other disasters.

The operation of biomedical manufacturing plants involves many risks, including the risks of breakdown, failure, substandard performance of equipment, the inability of production runs to pass internal quality standards, the need to comply with the requirements of directives of government agencies, including the FDA, and the occurrence of natural and other disasters.

Such occurrences could have a material adverse effect on our business, financial condition, and results of operations during the period of such operational difficulties and beyond.

1 unchanged sentence

The testing, marketing, and sale of human health care products entail an inherent risk of allegations of product liability, and there can be no assurance that substantial product liability claims will not be asserted against us.

Although we have not received any material product liability claims to date and believe that we have adequate insurance coverage to cover such product liability claims should they arise, there can be no assurance that material claims will not arise in the future or that our insurance will be adequate to cover all situations.

Although we have not received any material product liability claims to date and we believe that we have adequate insurance coverage to cover such product liability claims should they arise, there can be no assurance that material claims will not arise in the future or that our insurance will be adequate to cover all situations.

Moreover, there can be no assurance that such insurance, or additional insurance, if required, will be available in the future or, if available, will be available on commercially reasonable terms.

8 unchanged sentences

We may face circumstances in the future that will result in impairment charges, including, but not limited to, goodwill impairment and in-process research and development charges.

As of December 31, 2020, we had long-lived assets, including goodwill and in-process research and development charges, of $149.8 million.

If the fair value of any of our long-lived assets, including those that we acquired in the acquisitions of Arthrosurface and Parcus Medical, decreases as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.

As of December 31, 2021, we had long-lived assets in the amount of $137.8 million.

If the fair value of any of our long-lived assets, including those that we acquired in the acquisitions of Arthrosurface and Parcus Medical, decrease as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.

We are required to test intangible assets with indefinite life periods for potential impairment annually and on an interim basis if there are indicators of a potential impairment.

4 unchanged sentences

We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business.

During 2020 we appointed Cheryl R.

Blanchard, Ph.D.

as our President and Chief Executive Officer and Michael Levitz as our Executive Vice President, Chief Financial Officer, and Treasurer.

We may face challenges building our business in accordance with our strategy as result of having both a chief executive officer and a chief financial officer that are relatively new to our company.

We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel.

2 unchanged sentences

The failure to hire and retain such personnel could have a material adverse effect on our business, financial condition, and results of operations.

We may require capital in the future.

We may require additional capital in the future.

We cannot give any assurance that such capital will be available at all or on terms acceptable to us, and if it is available, additional capital raised by us could dilute your ownership interest or the value of your shares.

7 unchanged sentences

Progress with preclinical studies, clinical trials, and product approvals and clearances by the FDA and other agencies;

Requirement to conduct additional preclinical studies and clinical trials for future products;

The cost and timing of our efforts to manage our manufacturing capabilities and related costs;

13 unchanged sentences

Risks Related to Our Commercialization Activities

Our license agreements with Mitek provide substantial control of Monovisc and Orthovisc in the United States to Mitek, and Mitek’s actions could have a material impact on our business, financial condition and results of operations.

Our license and distribution agreements with Mitek related to Monovisc and Orthovisc provide Mitek with, among other things, the exclusive right to market and sell Monovisc and Orthovisc in the United States, unilateral decision-making authority over the sale, price, and promotion of Monovisc and Orthovisc, substantial control over the future development of Monovisc and Orthovisc related to the treatment of pain associated with osteoarthritis, a license to manufacture and have manufactured such products in the event that we are unable to supply Mitek with Monovisc or Orthovisc in accordance with the terms of the relevant agreement, and certain rights of first refusal with respect to future products we develop for the treatment of pain associated with osteoarthritis.

Our license agreements with Mitek provide substantial control of Monovisc and Orthovisc in the United States to Mitek, and Mitek ’

s actions could have a material impact on our business, financial condition and results of operations.

Our license and distribution agreements with Mitek related to Monovisc and Orthovisc provide Mitek with, among other things, the exclusive right to market and sell Monovisc and Orthovisc in the United States, unilateral decision-making authority over the sale, price, and promotion of Monovisc and Orthovisc in the United States, substantial control over the future development of Monovisc and Orthovisc related to the treatment of pain associated with osteoarthritis, a license to manufacture and have manufactured such products in the event that we are unable to supply Mitek with Monovisc or Orthovisc in accordance with the terms of the relevant agreement, and certain rights of first refusal with respect to future products we develop for the treatment of pain associated with osteoarthritis.

In exchange, Mitek pays us a transfer price calculated with reference to historical end-user prices in the market and a fixed royalty rate per product on their net product sales.

1 unchanged sentence

We may not succeed in our integration and buildout of our direct sales channel in the United States, and our failure to do so could negatively impact our business and financial results.

Since 2019, and with our expanded commercial infrastructure as a result of the Parcus Medical and Arthrosurface acquisitions, we have sold our Joint Preservation and Restoration family directly to customers, including hospitals and ASCs, through our direct sales representatives and large network of independent third party distributors.

Beginning in 2019, and with our expanded commercial infrastructure, as a result of the Parcus Medical and Arthrosurface acquisitions, we have sold our Joint Preservation and Restoration family of products directly to customers, including hospitals and ASCs, through our direct Anika sales team and large network of independent third-party distributors.

This approach was a departure from our historical distribution model in the United States, and we cannot be certain that we will be successful in implementing and executing on this commercial approach or that, even if we are able to implement it, the approach will be successful at scale.

We may not be able to attract or retain the sophisticated personnel required for our approach, to identify or negotiate favorable or acceptable terms with distribution agents, to achieve in-market pricing at the levels we have targeted, or to timely execute on our strategies for market penetration generally.

We may not be able to attract or retain the sophisticated personnel required for our approach, to identify or negotiate favorable or acceptable terms with distribution agents, to achieve in-market pricing at the levels we have targeted, to develop and tailor our product portfolio to be specifically desired by clinicians who practice in ASCs, or to timely execute on our strategies for market penetration generally.

Our failure to successfully implement and execute on this commercial approach could have a material adverse effect on our business, financial condition, and results of operations.

1 unchanged sentence

Our success is dependent, in part, upon the efforts of our marketing, distribution, and logistics partners, including our sales agent partners in the United States, and the terms and conditions of our relationships with such partners.

We cannot assure you that our partners, including Mitek, will not seek to renegotiate their current agreements on terms less favorable to us or terminate such agreements.

We cannot assure you that our commercial partners, including Mitek, will not seek to renegotiate their current agreements on terms less favorable to us or terminate such agreements.

A failure to maintain relationships with our commercial partners on terms satisfactory to us, or at all, could result in a material adverse effect on our operating results.

10 unchanged sentences

Also, the U.S.

Congress, certain state legislatures, and certain foreign governments and regulatory agencies have considered reforms, including, among other items, the potential repeal of the Affordable Care Act or reference drug pricing in the United States, which may affect current reimbursement practices and create additional uncertainty about the pricing of our products, including the potential implementation of controls on health care spending through limitations on the growth of Medicare and Medicaid spending.

Congress, certain state legislatures, and certain foreign governments and regulatory agencies have considered reforms, including, among other items, any material changes to the Affordable Care Act or the potential repeal of reference drug pricing in the United States, which may affect current reimbursement practices and create additional uncertainty about the pricing of our products, including the potential implementation of controls on health care spending through limitations on the growth of Medicare and Medicaid spending.

There can be no assurance that third party reimbursement coverage will be available or adequate for any products or services developed by us.

1 unchanged sentence

Domestic and international reimbursement laws and regulations may change from time to time.

Lack of adequate coverage and reimbursement provided by governments and other third-party payers for our products and services, including continuing coverage for Monovisc and Orthovisc in the United States, and any change of classification by the Centers for Medicare and Medicaid Services for Orthovisc and Monovisc, could have a material adverse effect on our business, financial condition, and results of operations.

Lack of adequate coverage and reimbursement provided by governments and other third-party payers for our products and services, including continuing coverage for Monovisc and Orthovisc in the United States, and any change of classification by the Centers for Medicare and Medicaid Services for reimbursement of Orthovisc and Monovisc, could have a material adverse effect on our business, financial condition, and results of operations.

Risks Related to Our Product Development and Regulatory Compliance

1 unchanged sentence

In the second quarter of 2018, we received and analyzed the results of our second Phase III clinical trial for Cingal and found that the data did not meet the primary study endpoint of demonstrating a statistically significant difference in pain reduction between Cingal and the approved steroid component of Cingal at the six-month time point.

After discussions, FDA indicated that an additional Phase III clinical trial would be necessary to support U.S.

After discussions, the FDA indicated that an additional Phase III clinical trial would be necessary to support U.S.

marketing approval for Cingal.

In 2019, we decided to conduct a pilot study to enable us to evaluate our full-scale Phase III clinical trial design, including patient and site selection criteria, and increase the probability of success for the Phase III trial.

In September 2020 the first patient has been enrolled in the pilot study.

We have experienced and may continue to experience significant delays in patient enrollment, to-date mainly as a result of the COVID-19 Pandemic, or the pilot study may otherwise not be successful.

If the pilot study is successful, we expect to commence an additional Phase III trial, but we cannot guarantee the success of any additional Phase III trial.

In 2019, we began the design of a pilot study to enable us to evaluate our full-scale Phase III clinical trial design, including patient and site selection criteria, and increase the probability of success for the Phase III trial.

In September 2020 the first patient was enrolled in the pilot study.

We completed enrollment in the pilot study in November 2021 and we are currently evaluating the clinical results of the study and expect to complete the review of our analysis in the middle of 2022.

We cannot guarantee that the results from the pilot study will be successful.

If the pilot study is successful, we expect to commence an additional Phase III trial in 2022, but we cannot guarantee the success of any additional Phase III trial.

Because the results of the pilot study or any additional Phase III trial, or other unforeseen future developments, could have a substantial negative impact on the timeline for and the cost associated with a potential Cingal regulatory approval, our overall business condition, financial results, and competitive position could be affected.

1 unchanged sentence

and foreign governmental approvals for our products may have a material adverse effect on our business, financial condition and results of operations.

Several of our current products under development, and certain future products we may develop, will require clinical trials to determine their safety and efficacy for United States and international marketing approval by regulatory bodies, including the FDA.

Product development and approval within the FDA framework takes a number of years and involves the expenditure of substantial resources.

There can be no assurance that the FDA will accept submissions related to our new products or the expansion of the indications of our current products, and, even if submissions are accepted, there can be no guarantee that the FDA will grant approval for our new products, on a timely basis, if at all.

Several of our current products under development, and certain future products we may develop, will require clinical trials to determine their safety and efficacy for marketing approval by regulatory bodies, including the FDA.

Product development and approval within the FDA and international regulatory frameworks takes a number of years and involves the expenditure of substantial resources.

There can be no assurance that the FDA or other regulatory authorities will accept submissions related to our new products or the expansion of the indications of our current products, and, even if submissions are accepted, there can be no guarantee that the FDA or other regulatory authorities will grant approval for our new products, on a timely basis, if at all.

In addition to regulations enforced by the FDA, we are subject to other existing and future federal, state, local, and foreign regulations applicable to product approval, which may vary significantly across jurisdictions.

5 unchanged sentences

The relevant approval or clearance may also include other significant conditions of approval such as post-market testing, tracking, or surveillance requirements.

Any of these factors could significantly impact our competitive position in relation to such products and could have a negative impact on the sales of such products.

Once obtained, we cannot guarantee that FDA or international product approvals will not be withdrawn or that relevant agencies will not require other corrective action, and any withdrawal or corrective action could materially affect our business and financial results.

3 unchanged sentences

Our operations and products are subject to extensive regulation, compliance with which is costly and time consuming, and our failure to comply may result in substantial penalties, including recalls of our products.

The FDA and foreign regulatory bodies impose extensive regulations applicable to our operations and products, including regulations governing product standards, packing requirements, labeling requirements, quality system and manufacturing requirements, import restrictions, tariff regulations, duties, and tax requirements.

The FDA and foreign regulatory bodies impose extensive regulations applicable to our operations and products, including regulations governing product and sterilization standards, packing requirements, labeling requirements, quality system and manufacturing requirements, import restrictions, tariff regulations, duties, and tax requirements.

We cannot assure you that we will be able to achieve and maintain compliance required for FDA, CE marking, or other foreign regulatory approvals for any or all of our operations and products or that we will be able to produce our products in a timely and profitable manner while complying with applicable requirements.

7 unchanged sentences

In the event our future, or current, products, including HA generally, are classified, or re-classified, as human drugs, combination products, or biologics by the FDA or an applicable international regulatory body, the applicable review process-related to such products is typically substantially longer and substantially more expensive than the review process to which they are currently subject as medical devices.

In 2018, FDA publicly indicated its intent to consider HA products for certain indications for regulation as a drug and has indicated that industry should submit new products or indication expansions to the OCP to designate the appropriate FDA office for review.

In 2018, FDA publicly indicated its intent to consider HA products for certain indications for regulation as a drug and has indicated that industry should submit new products or indication expansions to its Office of Combination Products to designate the appropriate FDA office for review.

There exists uncertainty with respect to the final interpretation, implementation, and consequences of this development, and this or any other potential regulatory changes in approach or interpretation similar in substance to those mentioned in this paragraph and affecting our products could materially impact our competitive position, business, and financial results.

Additionally, the implementation of the new European Medical Device Regulation, or EU MDR, set to take full effect in 2021, is expected to change several aspects of the existing regulatory framework in Europe.

Additionally, the implementation of the new European Medical Device Regulation, or EU MDR, which was fully put into effect in 2021, is expected to change several aspects of the existing regulatory framework in Europe.

Specifically, the EU MDR will require changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety information for Class III products, and bi-annual reporting for Class II products, Unique Device Identification, or UDI, for all products, submission of core data elements to a European UDI database prior to placement of a device on the market, reclassification of medical devices, and multiple other labeling changes.

Approvals for certain of our currently-marketed products could be curtailed or withdrawn as a result of the implementation of the EU MDR, and acquiring approvals for new products could be more challenging and costly.

Compliance with this and any other requirements could be time consuming and costly, and our failure to comply may subject us to significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations.

Approvals for certain of our currently marketed products could be curtailed or withdrawn as a result of the implementation of EU MDR, and acquiring approvals for new products could be more challenging and costly.

We are currently reviewing our products that we are currently selling in European markets as to the impact of EU MDR.

There may be products that we may not continue to market in Europe as expected demand may not be worth the cost of this regulatory compliance.

We may rely on third parties to support certain aspects of our clinical trials.

1 unchanged sentence

We have hired experienced clinical development and regulatory staff, and we have also retained the services of knowledgeable external service providers, including consultants and clinical research organizations, to develop and supervise our clinical trials and regulatory processes.

Despite our internal investment in staffing, we will remain dependent upon these third-party contract research organizations to carry out portions of our clinical and preclinical research studies for the foreseeable future.

Despite our internal investment in staffing, we will remain dependent upon these third-party contract research organizations and consultants to carry out portions of our clinical and preclinical research studies and regulatory filing assistance for the foreseeable future.

As a result, we have had and will have less control over the conduct of the clinical trials, the timing and completion of the trials, the required reporting of adverse events, and the management of data developed through the trials than would be the case if we were relying entirely on our own staff.

19 unchanged sentences

There can be no assurance that our current management systems will be adequate or that we will be able to manage our recent or future growth successfully.

Any failure to do so could have a material adverse effect on our business, operating results and financial condition.

We may not generate the expected benefits of our acquisitions, and the ongoing integration of those acquisitions could disrupt our ongoing business, distract our management and increase our expenses.

2 unchanged sentences

This will require that we continue to integrate more closely the companies’

product offerings and research and development capabilities, retain key employees, assimilate diverse corporate cultures, further integrate management information systems, consolidate the acquired operations and manage geographically dispersed operations, among other things, each of which could pose significant challenges.

product offerings and research and development capabilities, retain key employees, assimilate diverse corporate cultures, further integrate management and financial information systems, consolidate the acquired operations and manage geographically dispersed operations, among other things, each of which could pose significant challenges.

The difficulty of combining the acquired companies with our company may be increased by the need to integrate personnel, and changes effected in the combination may cause key employees to leave.

To succeed in the market for joint preservation and restoration, we must also invest additional resources, primarily in the areas of sales and marketing, to extend name recognition and increase market share.

It is possible that the integration process could take longer than anticipated and could result in the loss of valuable employees, additional and unforeseen expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the acquisitions.

There may be increased risk due to integrating financial reporting and internal control systems.

The diversion of the attention of management created by the integration process, any disruptions or other difficulties encountered in the integration process, and unforeseen liabilities or unanticipated problems with the acquired businesses could have a material adverse effect on our business, operating results and financial condition.

While we are working diligently to complete integration activities, the employee disruptions, communication challenges and management diversion created by the COVID-19 pandemic present particular challenges to our integration of Arthrosurface and Parcus Medical and could make it difficult to effectively and timely complete our integration goals.

We have recorded an impairment to goodwill and a reduction in the fair value of contingent consideration in connection with the acquisitions that will be driven in part by an increase in the significant uncertainty surrounding the effect that COVID-19 will have on near-term cash flows of our new subsidiaries.

The integration of the two acquired companies into our operations has taken longer than originally anticipated and has required more effort and expense than was originally planned.

This has resulted, and may continue to result, in the loss of valuable employees, additional and unforeseen expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices, policies and compensation arrangements, any of which could adversely affect our ability to achieve the anticipated benefits of the acquisitions.

There may be increased risk due to the ongoing integration of financial reporting and internal control systems.

Any diversion of the attention of management created by the integration process, any disruptions or other difficulties encountered in the integration process, and unforeseen liabilities or unanticipated problems with the acquired businesses could have a material adverse effect on our business, operating results and financial condition.

While we are working diligently to complete integration activities, employee disruptions, production and communication challenges and management diversion created by the COVID-19 pandemic present particular challenges to our continued integration of Arthrosurface and Parcus Medical and have made it more challenging than anticipated to effectively and timely complete our integration goals.

We recorded an impairment to goodwill in 2020 and a reduction in the fair value of contingent consideration in connection with the acquisitions that was driven in part by an increase in the significant effect that COVID-19 has had and is expected to continue to have an impact on near-term cash flows of our new subsidiaries.

There can be no assurance that these acquisitions will provide the benefits we expect or that we will be able to integrate and develop the operations of Parcus Medical and Arthrosurface successfully.

7 unchanged sentences

Customers of any companies we acquire may, in response to the consummation of the acquisitions, delay or defer purchasing decisions, which could adversely affect the success of our acquired businesses.

Similarly, employees of acquired companies may experience uncertainty about their future roles, which may adversely affect our ability to attract and retain key management, sales, marketing, and technical personnel following an acquisition.

As our international sales and operations grow, we could become increasingly subject to additional economic, political, and other risks that could harm our business.

Since we manufacture our products for sale worldwide, our business is subject to risks associated with doing business internationally.

During 2020, 2019, and 2018, 21%, 21%, and 19%, respectively, of our product sales were to international distributors.

During 2021, 2020, and 2019, 23%, 21%, and 21%, respectively, of our product sales were to international customers.

We continue to be subject to a variety of risks, which could cause fluctuations in the results of our international and domestic operations.

11 unchanged sentences

Difficulties in managing international operations;

Burdens of complying with a wide variety of foreign laws.

Burdens of complying with a wide variety of foreign laws, including MDR and GDPR among others.

Our success depends, in part, on our ability to anticipate and address these and any new risks.

4 unchanged sentences

We rely on a combination of copyright, trademark, patent, and trade secret laws, confidentiality procedures, and contractual provisions to protect our proprietary rights.

Our success will depend, in part, on our ability to obtain and enforce patents and trademarks, to protect trade secrets, to obtain licenses to technology owned by third parties when necessary, and to conduct our business without infringing on the proprietary rights of others.

The patent positions of pharmaceutical, medical product, and biotechnology firms, including ours, can be uncertain and involve complex legal and factual questions.

6 unchanged sentences

We have a policy of seeking patent protection for patentable aspects of our proprietary technology.

We intend to seek patent protection with respect to products and processes developed in the course of our activities when we believe such protection is in our best interest and when the cost of seeking such protection is not inordinate.

However, no assurance can be given that any patent application will be filed, that any filed applications will result in issued patents, or that any issued patents will provide us with a competitive advantage or will not be successfully challenged by third parties.

The protections afforded by patents will depend upon their scope and validity, and others may be able to design around our patents.

We also rely upon trade secrets and proprietary know-how for certain non-patented aspects of our technology.

11 unchanged sentences

Our operations are located in areas impacted by the COVID-19 pandemic, and those operations have been, and may continue to be, adversely affected by the COVID-19 pandemic.

The coronavirus has impacted the social and economic framework in the United States and Italy.

The coronavirus has impacted the social and economic framework globally.

Our administrative, research and development, and manufacturing operations are principally performed at our U.S.

1 unchanged sentence

Though our Italian operations represent a relatively small percentage of our consolidated business, we conduct commercial activity, product development, sales, logistics, inventory management and supply chain activities, and other services in our office in Padova, Italy.

Our business operations in the United States and Italy are subject to potential business interruptions arising from protective measures that have been taken by Italian, U.S., Massachusetts and Florida regulators and other agencies and governing bodies.

Business disruptions elsewhere in the world could also negatively affect the sources and availability of components and materials that are essential to the operation of our business in both the United States and Italy.

Our commercial day-to-day operations have been impacted due to the worldwide cancellation or delay of elective procedures, and timelines associated with certain clinical studies and research and development programs have been delayed.

Stay-at-home orders, business closures, travel restrictions, supply chain disruptions, employee illness or quarantines, and other extended periods of interruption to our business could result in disruptions to our operations, could cause us to cease or delay operations, and could prevent our customers from receiving shipments or processing payments.

Our commercial day-to-day operations have been significantly impacted by the worldwide cancellation or delay of elective procedures in hospitals and ASCs, and timelines associated with certain clinical studies and research and development programs have been delayed.

Stay-at-home orders, business closures, travel restrictions, supply chain disruptions, employee illness or quarantines, our or our suppliers’

ability to hire employees and other extended periods of interruption to our business have resulted in disruptions to our operations, caused us to cease or delay operations, and prevented our customers from receiving shipments or processing payments.

All of these impacts could continue as COVID-19 continues to impact our business.

To mitigate the spread of COVID-19, we have transitioned a significant portion of our employee population to a remote work environment, but employees who are unable to work remotely continue to work at our facilities.

There can be no assurances that safety measures we have implemented will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 outside of our workplace.

There can be no assurances that the safety measures we have implemented will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 outside of our workplace.

If a number of our essential employees become sick or otherwise unable to continue working during the current or any future epidemic, our operations may be harmed.

Also, remote work environment may exacerbate various cybersecurity risks to our business, including an increased demand for information technology resources, an increased risk of phishing and other cybersecurity attacks, and an increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information.

Extended periods of interruption to our corporate, development or manufacturing facilities due to the COVID-19 pandemic could cause us to lose revenue and market share, which would depress our financial performance and could be difficult to recapture.

Our business may also be harmed if travel within, to or from the United States and Italy continues to be restricted or inadvisable.

Also, the remote work environment may exacerbate various cybersecurity risks to our business, including an increased demand for information technology resources, an increased risk of phishing and other cybersecurity attacks, and an increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information.

Extended periods of interruption to our corporate, development or manufacturing facilities due to the COVID-19 pandemic have caused or could cause us to lose revenue and market share, which has depressed and could continue to depress our financial performance and may be difficult to recapture.

Travel restrictions within, to or from the United States United, Kingdom and Italy have negatively impacted the ability of our employees to do their jobs effectively and efficiently, including impacting our employees’

abilities to meet with clinicians and present and train them on our products.

If travel continues to be restricted or inadvisable, these negative impacts could continue.

In addition, employee disruptions and remote working environments related to the COVID-19 pandemic have impacted, and are continuing to impact, the efficiency and pace with which we work and develop our product candidates and our manufacturing capabilities.

The COVID-19 pandemic has resulted in a significant reduction in the number of elective surgeries being performed, which has decreased the usage of, and revenue from, certain of our products.

In addition, the COVID-19 pandemic and related economic uncertainties has increased challenges associated with hiring highly skilled and experienced employees and may continue to create challenges and/or adversely impact employee retention due to the additional financial, family, and health burdens that many employees may be experiencing.

Our industry’s highly competitive market for skilled workers and leaders may negatively affect our ability to retain qualified employees.

Losing members of our senior management and other highly skilled personnel could prevent us from achieving our business objectives or divert management’s attention to seeking qualified replacements and ensuring seamless transitions.

The COVID-19 pandemic has resulted in a significant reduction in the number of elective surgeries being performed, and has slowed the pace of new product approvals by current and potential customers, which has decreased the usage of, and revenue from, certain of our products.

A significant portion of the demand for our products results from the usage of our products in elective surgeries.

As COVID-19 reached a global pandemic level in March 2020, the volume of elective surgery procedures worldwide, including in the U.S.

and Western Europe, was declining precipitously, as healthcare systems diverted resources to meet the increasing demands of managing COVID-19 and as patients deferred elective surgeries to avoid the risk of exposure to the coronavirus.

The American College of Surgeons, U.S.

surgeon general, and other public health bodies have recommended delaying elective surgeries during the COVID-19 pandemic, and surgeons and medical societies are evaluating the risks of minimally invasive surgeries in the presence of infectious diseases.

In the fourth quarter of 2020, certain areas of the United States and certain other countries began experiencing increasing infection rates, which makes future results difficult to predict.

The decreased number of procedures performed has negatively impacted our revenue and operating results, and it is impossible to reasonably predict when the level of elective procedures will begin to return to pre-COVID-19 levels.

There is significant uncertainty in light of ongoing infection rates in many areas of the United States and in various international jurisdictions.

Procedure volumes have not returned to pre-COVID-19 levels and there is no guarantee that the positive trends will continue.

As a result, elective procedures may yet again decline substantially in future periods, especially in geographies with substantial COVID-19 infection rates.

In the United States, COVID-19 policymaking has been handled largely on a state-by-state, and in some cases a city-by-city, basis.

The international outlook is similar, as countries are taking varying approaches to combating the pandemic and returning to pre-COVID operations.

The pace of recovery will be phased and regionally determined based on local orders and the overall impact of COVID-19.

A continuation of the decreased level of elective procedures due to COVID-19 will result in a loss of sales and profits and other material adverse effects on our business and operating results.

Elective surgeries have been curtailed a number of times during COVID-19 since 2020, including variant surges in 2021 in many parts of the globe due to restrictions on surgeries put in place by governments or healthcare providers, staffing shortages, and positive COVID-19 diagnoses or quarantines.

While many restrictions have eased with COVID-19 vaccines now becoming available, the elective surgery market faced additional pandemic-related challenges in the second half of 2021 due to regional surges in COVID-19 Delta variant cases and staffing shortages.

In December 2021, the COVID-19 Omicron variant prompted additional government restrictions on elective procedures, led to additional COVID-19 diagnoses, and created additional surgical staffing challenges.

Although the rate of elective procedures has started to increase in some locations, the systemic limits on elective surgery capacity negatively impacted our revenue and operating results.

In addition, primarily as a result of the impacts of COVID-19 including stay-at-home orders and other attempts to limit in-person meetings, hospitals and ASCs have at times delayed having meetings of their committees to review and approve the introduction of new products into their facilities.

As we are focused on growing our business by introducing new products to existing and new hospital and ASC customers, the inability to have our products timely reviewed and approved by these customers has also negatively impacted our revenue and operating results.

It is uncertain whether elective surgeries will continue to be negatively impacted or halted again in the future by a resurgence of COVID-19 or when our customers or potential customers will start reviewing and approving new products again on a more regular cadence.

There remains uncertainty in light of ongoing infection rates in many areas of the United States and in various international jurisdictions.

Procedure volumes have not yet returned to pre-COVID-19 levels and there is no guarantee that the recent positive trends will continue.

As a result, elective procedures may yet again decline, and the ability to get our products timely reviewed and approved by customers may continue to be challenged, especially in geographies with substantial COVID-19 infection rates or policies that cause staffing shortages.

Globally, the pace of recovery will be phased and regionally determined based on local orders and the overall impact of COVID-19.

A continuation of the decreased level of elective procedures due to COVID-19, or the continued slower pace of new product approvals, will result in a loss of sales and profits and other material adverse effects on our business and operating results.

The COVID-19 pandemic could adversely impact our development activities, preclinical studies and clinical trials, which could significantly impair our long-term business plans and operating results.

2 unchanged sentences

The timing of our clinical trials depends on our ability to recruit patients to participate as well as the completion of required follow-up periods.

The COVID-19 global pandemic has had and may continue to have a sustained impact on our ability to recruit and follow-up with patients either due to continued or renewed restrictions on travel or shelter-in-place orders or policies, or due to changes in patient willingness to participate in trials or travel to study sites during the pandemic.

Additionally, COVID-19 related study site policies may create delays or setbacks in our ability to continue to enroll or to dose patients.

The COVID-19 global pandemic has had and may continue to have a sustained impact on our ability to recruit, enroll and follow-up with patients either due to continued or renewed restrictions on travel or shelter-in-place orders or policies, or due to changes in patient willingness to participate in trials or travel to study sites during the pandemic.

Additionally, COVID-19 related study site policies, including performing elective procedures, may create delays or setbacks in our ability to continue to enroll or to treat patients.

The timeline for recruiting patients, conducting trials and obtaining regulatory approval of our product candidates may be delayed, which could result in increased costs, delays in advancing our product candidates, delays in testing the effectiveness of our product candidates or termination of the clinical trials altogether.

Factors resulting from the COVID-19 pandemic that could delay or otherwise adversely affect the completion of our preclinical activities and the planned activities related to our clinical trials, as well as our business generally, include:

the potential diversion of healthcare resources away from the conduct of preclinical activities and clinical trials to focus on pandemic concerns, including the availability of necessary materials and the attention of physicians serving as our clinical trial investigators, hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our prospective clinical trials;

7 unchanged sentences

The COVID-19 pandemic has resulted in significant governmental measures in many countries being implemented to control the spread of COVID-19, including restrictions on manufacturing and the movement of employees.

As a result of COVID-19 and the measures designed to contain its spread, our suppliers may not have the materials, capacity, or capability to supply our needed materials and other supplies according to our schedule and specifications.

Further, there may be logistics issues, including our ability and our supply chain’s ability to quickly ramp up production, and transportation demands that may cause further delays.

As a result of COVID-19 and the measures designed to contain its spread, certain of our suppliers have not had the materials, capacity, or capability to supply our needed materials and other supplies that we require to manufacture our products according to our schedule and specifications.

It is uncertain whether and to what extent these supply chain challenges will continue as the COVID-19 pandemic continues to evolve.

Further, logistics issues, including our ability and our supply chain’s ability to quickly ramp up production, and transportation demands may cause delays.

If our suppliers’

operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive.

operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive or require approval from regulatory agencies which could cause further delays.

Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.

If the duration of the production and supply chain disruption continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.

If the duration of the production and supply chain disruptions continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.

Risks Related to Ownership of Our Common Stock

7 unchanged sentences

Our operating results in future quarters may be below the expectations of equity research analysts and investors.

In such an event, the price of our common stock would likely decline, perhaps substantially.

Our charter documents contain anti-takeover provisions that may prevent or delay an acquisition of our company.

10 unchanged sentences

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