What changed in this filing

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Item 1A. Risk Factors

2025-05-09 compared with 2024-11-01 · 28 added, 31 removed, 6 unchanged (91% of the section changed)

1 unchanged sentence

“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Other than the risk factors set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K.

If we fail to retain our key executives or recruit and hire new employees, our operations and financial results may be adversely affected while we attract other highly qualified personnel.

Our future success depends, in part, on our ability to continue to retain our executive officers and other key employees and recruit and hire new employees.

All of our executive officers and other employees are at-will employees, and therefore may terminate employment with us at any time with no advance notice.

In particular, we are highly dependent upon our management team, especially our President and Chief

Executive Officer and the rest of our senior management.

The replacement of key personnel involves significant time and costs, may significantly delay or prevent the achievement of our business objectives and may harm our business.

In addition, we do not carry any “key person” insurance policies that could offset potential loss of service under applicable circumstances.

Transitions in executive leadership can adversely affect relationships with our customers, suppliers, and employees, make it difficult to attract and retain talent, and disrupt execution of our strategy, sales growth, and our efforts to enhance our operations.

Additionally, such transitions can require significant payments to recruit and attract qualified employees to join our company and may involve severance payments to certain departing employees.

Changes in key management positions may temporarily affect our financial performance and results of operations as the new management becomes familiar with our business and establishes their team dynamic.

For example, in February 2024, we appointed a new Chief Executive Officer who replaced our prior Chief Executive Officer, who had been in the role for 17 years.

We experienced some disruption within the sales organization at the time of the Chief Executive Officer transition, which led to decreased productivity and higher salesforce turnover, as well as the termination of employment of our Senior Vice President of U.S.

Since the beginning of the second quarter of fiscal 2024, we have hired new leaders for sales, medical affairs, clinical, reimbursement and human resources, completing the expansion of the executive team.

Accordingly, our future financial performance will depend on our ability to attract, motivate, integrate and retain our senior management and employees.

In addition, many of our employees have become vested in a substantial amount of stock or number of stock options.

Our employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly below the market price of our common stock.

Although non-compete agreements are becoming more disfavored and, in some cases, banned, many executive officers and employees in the medical device industry are still subject to strict non-compete or confidentiality agreements with their employers.

In addition, some of our existing and future employees are subject to confidentiality agreements with previous employers.

Our competitors may allege breaches of and seek to enforce such non-compete agreements or initiate litigation based on such confidentiality agreements.

Such litigation, whether or not meritorious, may impede our ability to attract or use executive officers and other key employees who have been employed by our competitors and may result in claims against us.

If third-party payors do not provide adequate coverage and reimbursement for the use of Barostim, our revenue will be negatively impacted.

Medicare reimbursement levels are important to increasing adoption of Barostim because nearly two-thirds of the target patient population for Barostim is over the age of 65.

On January 1, 2024, Barostim was reassigned to New Technology APC 1580, which carries an average payment amount of $45,000.

In July 2024, CMS proposed OPPS rules for 2025, including moving Barostim procedures back to APC 5465, which would reduce the average payment amount for Barostim to $31,000.

We believe the data supports creation of a Level 6 Neurostimulator APC and will work with CMS with the goal of achieving this, or alternatively, leaving Barostim in New Technology APC 1580 for another year.

In August 2024, CMS reassigned the Barostim implant procedure for the inpatient setting as part of the IPPS final rule for CMS’ Fiscal Year 2025, which took effect on October 1, 2024.

On that date, Barostim was reassigned to MS-DRG 276, which carries a national average payment of approximately $43,000, a significant increase from the previous payment range of $17,000-$23,000, which is expected to facilitate increased access to the therapy for patients with heart failure.

Additionally, the American Medical Association's CPT Editorial Panel approved new Category I codes for Barostim therapy, expected to take effect January 1, 2026.

Any future decline in the amount Medicare is willing to reimburse our customers for procedures using Barostim could make it difficult for new customers to adopt Barostim and could create additional pricing pressure for us, which could adversely affect our ability to invest in and grow our business.

From time to time, physicians and hospitals have in the past experienced, and others may experience, delays in Medicare reimbursement, which have delayed or may delay their willingness to schedule additional Barostim procedures.

Other than the risk factor set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K.

Barostim is also subject to extensive governmental regulation in foreign jurisdictions, such as Europe, and our failure to comply with applicable requirements could cause our business to suffer.

In the European Economic Area (“EEA”), Barostim was required to comply with the Essential Requirements laid down in Annex I to the European Union (“EU”) Active Implantable Medical Devices Directive.

Compliance with these requirements was a prerequisite to affixing the CE mark to Barostim.

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark to Barostim, we underwent a conformity assessment procedure, which varied according to the type of medical device and its classification.

Except for low-risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer could issue an EU Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure required the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.

Depending on the relevant conformity assessment procedure, the Notified Body would audit the Quality Management System and examine the Technical File for the manufacture, design and final inspection of our devices.

The Notified Body would issue a CE Certificate of Conformity following successful completion of this conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the Essential Requirements.

This Certificate would entitle the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EU Declaration of Conformity.

As a general rule, demonstration of conformity of medical devices and their manufacturers with the Essential Requirements must be based on, among other things, the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.

Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use and that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device (e.g., product labeling and instructions for use) are supported by suitable evidence.

This assessment must be based on clinical data, which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature.

With respect to active implantable medical devices or Class III devices, the manufacturer must conduct clinical studies to obtain the required clinical data, unless reliance on existing clinical data from equivalent devices can be justified.

The conduct of clinical studies in the EEA is governed by detailed regulatory obligations.

These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee.

This process can be expensive and time-consuming.

Regulations in the EU were updated to require compliance to Regulation (EU) 2017/745 on Medical Devices (“MDR”).

Additional amendments to the regulation have delayed required implementation dates to December 31, 2027.

Compliance with the new regulation required extensive updates to the quality system and device technical file documentation to new requirements.

Updates were made and annual Notified Body inspections assessing compliance of the quality system to the MDR have been ongoing since 2020.

An application was

made for Barostim to comply with the general safety and performance requirements of the EU MDR.

Final approval and certificates of compliance for both the technical file and quality system were issued on April 9, 2025.

We are required to continue to submit updates for any substantial changes to the design, manufacturing or quality system for assessment against the MDR requirements.

Annual audits by the Notified Body are required to verify that we continue to meet the MDR requirements.

The current integrated platform technology, Barostim is approved under the MDR.

Barostim Legacy is not approved under MDR, but can still be sold under the Active Implantable Medical Device Directive (“AIMDD”) approval through 2027.

Failing to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension, or withdrawal of our CE Certificates of Conformity by our Notified Body (the National Standards Authority of Ireland), which could impair our ability to market products in the EEA in the future.

Unregistered Sales of Equity Securities and Use of Proceeds

3 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors